Data Seen as Tool to Curb Bad Actors Driving System Costs

Friday, March 24, 2017 | 5

OAKLAND, Calif. — A handful of physicians treating injured workers in a handful of counties are driving most of the costs, according to the president of the California Workers’ Compensation Institute.

Christine Baker

And hard numbers might be the key to identifying and eliminating those outliers, the state’s top work comp regulator and a key legislative consultant said during CWCI’s 53rd annual Meeting of Members on Thursday.

Speaking during a panel discussion titled “the taming of the skew,” Department of Industrial Relations Director Christine Baker said the last round of reforms with Senate Bill 863 constituted a “paradigm shift.” Provisions requiring the appropriateness of medical treatment to be decided based on scientific evidence with the independent medical review process and requiring providers to pay fees for filing liens have helped save $1.3 billion after accounting for the 30% increase in benefits paid to injured workers, she said.

Now, Baker said the DIR is focusing on more targeted fixes to improve California’s worker’s compensation system.

“I really want to emphasize the importance of data, because that does allow us to do the arthroscopic surgery work we need to do,” she said.

Baker said statistics that will be complied under the new utilization review requirements from last year’s Senate Bill 1160 will help identify “glitches” and delays in the delivery of medical care. The bill exempts most treatment requests from utilization review in the first 30 days after an injury. But in exchange, providers must submit the first report of injury as well as the request for authorization within five days of the initial office visit. Providers must submit bills within 30 days of the date of service, or they can lose the right to bypass utilization review.

Baker said she anticipates that those requirements will allow an almost real-time analysis of what’s happening with the delivery of medical treatment to identify any issues that are causing problems.

She also said the department will be working more closely with district attorneys throughout the state to identify patterns of fraudulent activity. Past discussions with prosecutors, who lamented the fact that some medical providers were funding their defense with proceeds from liens, led to provisions in SB 1160 requiring a stay on all liens filed by a person accused of fraud.

The fact that some providers were still treating injured workers while standing trial for fraud resulted in Assembly Bill 1244, which allows the state to suspend providers when criminal charges are filed.

Baker said the department has stayed more than 260,000 liens since the start of the year. A preliminary analysis of liens currently stayed found one provider generated bills for a half million dollars just for dispensing medications to injured workers.

What’s more, she said of the approximately 100 physicians who have been identified for fraud since 2014, about 40 were among the top 1% of providers in terms of total medical billing.

“I’m sure they’re not all of the ones that should be indicted for fraud,” Baker said. “There are probably more. But I think working together with the DAs, the FBI and the data that is behind all this, we will be able to see the patterns more clearly.”

Gideon Baum, principal consultant to the California Senate Labor Committee, spoke of a “data revolution” in the Legislature that led to SB 863. Only a couple of years after the previous reform was passed in 2004, a study initiated by the Commission on Health and Safety and Workers’ Compensation found SB 899 cut injured workers’ benefits by more than 50%, he said. And by 2010, the savings from SB 899 had eroded.

Lawmakers put their faith in stakeholders and said, “Come up with a data-driven process,” he said, and the “bottom line is they delivered.”

Senate Bill 863 took effect at the start of 2013. More than four years later, Baum said he’s not seeing the same issues that he saw with SB 899. The reason is that the latest round of reforms was driven by data from CWCI, CHSWC and other organizations, he said.

At the same time, Baum said, data collected in the effort to monitor SB 863 is helping identify some of the outliers. As an example, he pointed to CWCI data showing that the provider whose practice generated the largest number of IMR decisions in 2016 — 995 decision letters addressing 4,328 requested treatments — was ranked No. 313 in 2015.

“That’s the skew, that’s the tail" that wags the dog, he said.

In the past, Baum said lawmakers might have listened to an argument that the provider is a specialist and that’s why he or she appears to be such an outlier. But with the prosecution of the widespread fraud ring operating out of Pacific Hospital of Long Beach, he said he doesn’t think such an argument will carry weight any longer.

The Pacific Hospital scheme pulled back the curtain on how running and capping works, how kickbacks are paid, and made clear that in some there are endemic, sophisticated and well-financed fraud rings operating in California’s comp system.

“We don’t like the term organized crime — it’s a freighted term — but I don’t really know what else to call what we’re seeing in Los Angeles,” he said. “Because it's certainly criminal. And it’s certainly organized.”

In order to curb abuse, Baum said, he’d like to see the Division of Workers’ Compensation take on more of an enforcement role, rather than simply administering the system. And he said he’d like to revisit how the Fraud Assessment Commission allocates grant money to district attorneys to facilitate more effective prosecution of fraud rings.

“If the state of New York said, when they were dealing with the mob in construction, ‘We’re just going to pass out some money to the counties and we figure you guys will work it out,’ no one would have taken it seriously,” he said. “But that is what is happening in Los Angeles. It’s very difficult to come to any other conclusion than that.”

Dr. Basil Besh, president-elect of the California Orthopaedic Association, said that if there is an agreement that a small handful of mostly Southern California providers are driving most of the costs, he doesn’t understand why the Legislature keeps imposing burdensome requirements on the rest of the doctors who are following the rules.

Besh likened the approach of lawmakers to performing surgery with a hatchet rather than a scalpel. He said he can’t dispute data showing that the vast majority of treatment requests are approved without utilization review. But he also says he gets “ridiculous decisions” such as carpal tunnel release being denied because the worker had only seven of the eight signs to indicate the procedure was necessary.

“You wouldn’t tolerate that as a patient in your group health policy,” he said. “What we’ve done is, we’ve pointed at the 1%, 2% or 3% and said this is the reason we need to ration care across the entire board.”

CWCI data shows the average number of physical therapy and chiropractic visits in 2002 was about 50 for each service, while the outlier was almost 300 visits. So he asked why lawmakers set a cap of 24 visits on these treatments if the goal was to target the small percentage of providers.

“To say that the only way to get rid of folks that were prescribing 300 visits of therapy was to have a hard cap of 24, well, I’m not that smart but those numbers don’t pencil out to me,” Besh said.

Frank Neuhauser, a researcher at the University of California, Berkeley, asked the panelists whether there really is any mystery about who the bad actors are at this point. CWCI, for example, knows who is generating the large volume of IMR decisions. And the DWC's Workers’ Compensation Information System has data that can be used to identify outliers.

The U.S. Centers for Medicare and Medicaid Services publishes all payment data showing doctors' names, the services they’re billing for and how much they’re paid. He said he understands that the Labor Code restricts what information the DWC can release, but said maybe that’s something the Legislature should consider changing.

“We actually know exactly who these people are but we won’t name names, we call them ‘provider 1’ we call them ‘provider X’, but we won’t name names,” he said. “We need to take WCIS data and be able to publish it exactly like Medicare does.”

CWCI president Alex Swedlow said he sees some value to making WCIS data available to the public. Publishing payment amounts and outcomes is one of the best ways of improving the physician decision-making processes, he said.

In New England, when hospitals publish local mortality rates, health plans use that information to determine which providers they want to contract with, he said.

“There’s something about the public vetting that can really drive behavior,” he said.

Opening the panel, Swedlow said that many of the claimed flaws in California are not systemwide problems, but are a minority of cases that are so out of whack compared to the norm that they influence how things are perceived.

For example, he said, the top 1% of claims accounted for 25% of medical benefits and 23% of indemnity benefits. Only one-third of claims involve indemnity benefits, yet these account for 92.5% of total payments. Attorneys are involved in only 22% of claims, yet those claims account for 75% of total system payments.