RBRVS and Calif. Workers' Comp is Like Mixing Oil and Water

Tuesday, May 6, 2014 | 5

On Jan. 1, 2014, as part of Senate Bill 863, the California Division of Workers' Compensation replaced the Official Medical Fee Schedule with a new schedule based on the Resource-Based Relative Value Scale and Medicare. This change was imposed at the 11th hour of a legislative session with little or no consideration of its impact on the Workers' Compensation community.  The lawmakers probably surmised that there is nothing wrong with paying a WC treating doctor at the same rate and under the same rules that the government pays doctors for providing care under Medicare. However, applying Medicare reimbursements to WC treatment is like mixing oil and water.
 
While payers and employers may bask in the feeling that RBRVS is their panacea for reducing medical costs related to WC, this euphoria will be short lived once the payers recognize their newfound obligations and dilemmas.
 
As background, Medicare’s reimbursements are built from two components: the Relative Value Unit and a Conversion Factor .  The RVU measures and assigns a unit value to three combined resources needed to provide medical care:  1) Physician Work, i.e., the time, skill, training and intensity to provide the service, including the time spent with a patient; 2) Practice Expense, i.e., the office staff salaries, cost of equipment, rent, overhead, etc.; 3) The cost for Medical Malpractice Insurance. The amount payable for a service under Medicare’s RBRVS is calculated by multiplying the CF by the number of RVU units.
 
The RBRVS was developed to eliminate usual and customary fees and to implement a standardized method for calculating physician charges. When implemented in 1992, it was believed that medical costs would be lower if more was spent on preventive care and less on procedures to treat ailments after they appear. The goal was to financially encourage cognitive and preventative medicine and discourage treatment and testing. These objectives are inconsistent with WC injuries because the concept of preventive care does not exist in WC. Testing and treatment of a WC injury is mandated by treatment guidelines such as Medical Treatment Utilization Schedule and the American College of Occupational and Environmental Medicine. In other words, specific tests must be performed in order to determine the treatment that will be authorized and provided. In fact, the conversion to the RBRVS methodology punishes primary treating physicians by inadequately reimbursing them for complying with mandated guidelines not present in Medicare.
 
Treatment for a WC hand injury compared to a physical exam is an example of how RBRVS discriminates against a PTP. Putting aside the doctor’s time related to the treatment, RBRVS assigns the Practice Expense for doing an X-ray of the hand (CPT: 73120) a relative value of 0.66 of a unit. The Practice Expense for an annual physical (CPT: G0438) is 2.43 units. The indirect Practice Expense, such as rent, payroll and other overhead, associated with both of these services is equal. However, to perform the X-ray, there are additional direct costs for the X-ray equipment, supplies, technician, transcription of reports and other documentation as a prerequisite to receiving authorization for the X-ray. Nevertheless, RBRVS values the Practice Expense over 3 ½ times more for an annual physical than for an X-ray. 
 
The role of a PTP requires the physician to give opinions on all medical issues necessary to determine the employee's eligibility for compensation, the employee's continuing medical treatment, the decision whether to release the employee from care, the permanent and stationary status and the necessity for future medical treatment (§9785(a)(4)). In order to meet this burden, the PTP must elicit a detailed and comprehensive history from the patient and sometimes review extensive medical records to address causation of injury, occupational duties, work history, prior injury history and preexisting physical and possibly mental impairments. 
 
Unlike Medicare, the PTP is subject to being cross examined on opinions related to causation, need for treatment, apportionment, inability to temporarily or permanently perform occupational duties, temporary disability and permanent disability. The PTP is also subject to arbitrarily being removed from a Medical Provider Network (MPN) panel by the payor if these issues are not addressed. Therefore a significant amount of face-to-face time is spent with the patient addressing these issues; time not spent on a Medicare patient. Under the prior OMFS a doctor was reimbursed for this additional time. RBRVS precludes payment to the doctor for these additional services.
 
It is extremely rare for a Medicare doctor to spend additional time over a level 5 visit; whereas, it is common for a PTP to engage in a prolonged patient visit. Under the OMFS, a PTP would get reimbursed $171.19 for a prolonged visit (CPT: 99354). Under RBRVS, the prolonged visit is bundled into the visit and the PTP does not get paid for this service. PTPs will frequently receive hundreds or thousands of pages of medical records that they must review in order to formulate obligatory opinions. This is not common in Medicare. RBRVS bundles the record review (CPT: 99358) with the office visit and the PTP does not get paid for the many hours required to review and consider these records.
 
The elimination of reimbursements for obligatory services greatly affects the quality of treatment provided to the patient. A physician who does not get paid will not have the incentive or desire to spend the quality time needed to formulate opinions mandated by the WC system, compose appropriate documentation supporting treatment authorization requests and provide suitable treatment in highly complex cases. As claims examiners search for doctors willing to review records and appropriately document findings for no compensation, patients will suffer and frequently go from acute to chronic. This will contribute to increased medical costs. Other states that have merged RBRVS with WC have increased reimbursements to encourage quality care.
 
Medicare physicians do not submit reports with their bills (CMS-1500). Medicare physicians are kept honest by periodic random audits of the bills, with significant penalties if there is improper billing. RBRVS, as applied in California, places an untenable burden on claims examiners.
 
Before RBRVS, adjusters would simply send the bills to bill review, and computers would match the amount charged to the OMFS and automatic adjustments would be made. RBRVS now requires adjusters to learn, understand and analyze the new coding rules, guidelines and edits, i.e., correct coding, multiple procedure payment reductions, medically unlikely, etc. This process is not automated and the rules change quarterly. Becoming proficient takes years of practice and adjusters simply do not qualify and likely never will. When adjusting, denying or reducing a bill, an adjuster is required by law to provide a written explanation (“Reason Code”). Unlike Medicare, the adjuster must analyze every medical report to determine whether the report supports the CPT code being billed. Failure to make this analysis compromises the adjuster’s obligations to the physician and employer and may be construed as Unfair Claims Practice exposing the insurer to a bad-faith lawsuit by the employer.

Fred Kumetz is a workers’ comp attorney and chief executive officer of eData Services. Sunjanel Avecilla is a lecturer and consultant on medical coding, billing and practice management.