Peer Review and California Workers' Compensation

Saturday, October 23, 2004 | 0

The following article, presented in two parts, is by Mark Pew, Executive Vice President, Sales and Marketing of Professional Reviews Inc. (PRI). Mark advocates that peer review in the context of California workers' compensation is not only good for the system, but good for physicians as well. This first part is a narrative discussion. Part Two will consist of a FAQ (Frequently Asked Questions) about the process.

by Mark Pew

California's legislature has taken major steps to control the state's excessive workers' compensation costs. The Jan. 1, 2004 law and the workers' compensation reform package, signed by the Governor Arnold Schwarzenegger on April 16, 2004, have paved the way for new cost controls.

Among other key changes, the statutes laid the ground work for incorporating one of the most important cost-management tools in managed care: physician peer review.

A significant change occurred in the legal definition of medical necessity, known in California as "presumption." Prior to 2004, the law presumed that the treating physician made the final and unimpeachable decision on whether treatment was medically necessary or if it was addressing a work-related injury or illness. The new legislation altered the labor code's definition of "care necessary to cure or relieve" to treatment in accordance with evidence-based medicine, including American College of Occupational and Environmental Medicine (ACOEM) guidelines.

This new language produced two major changes.

1. The treating physician no longer has the final say regarding what is necessary and appropriate medical treatment. Instead, evidence-based medicine, including ACOEM guidelines, set those standards.

2. The law shifts the burden of proof onto the treating physician. In the past, the payer had to prove why the treatment was not medically necessary or appropriate. Now, the treating physician must prove why his or her treatment was or is medically necessary or appropriate. This proof must be accompanied by a preponderance of evidence.

The Significance of the Changes

Prior to 2004, the law presumed that the treating physician made the final and unimpeachable decision on whether treatment was medically necessary or if it was addressing a work-related injury or illness. Now, that decision is based on evidence-based medicine.

Evidence-based medicine involves treating patients according to medical guidelines that current research and current best-practices have proven to be most effective. To be considered evidence-based, these guidelines must be founded on science, they must be nationally recognized, and they need to have undergone peer review. There are a number of evidence-based medical guidelines, including ACOEM, The Mercy Study, and Official Disability Guidelines (ODG).

By shifting the burden of proof onto the treating physician, the law now requires the treating physician to justify questionable treatment. The provider needs to conduct quite a bit of research to find studies, cases and outcomes that counter currently accepted evidence-based medical standards. Few physicians will take on this onerous task. Only those who believe very strongly in their treatment and its efficacy will go to the trouble to find alternate evidence-based medical standards to support their positions.

For the first time in years, California's workers' compensation payers have the legal ability to challenge the treating physician's potentially inappropriate treatment decision, using evidence-based medicine. One of the most cost-effective ways to apply evidence-based medicine to a workers' compensation claim is through physician peer review.

What Is Physician Peer Review and Its Role In Workers Compensation?

In health care, physician peer review is the thorough examination of a patient's care by a physician or other licensed health care provider whose training is at least equal to that of the treating provider. Ideally, physician peer review should match discipline to discipline and specialty to specialty. That means having a chiropractor review a chiropractor's treatment, an MD review an MD's plan of care, and an orthopedic surgeon review an orthopedic surgeon's treatment.

As employed in workers' compensation, physician peer review is one of the methods used to determine if the patient is receiving care that is not appropriate - that is not medically necessary and/or it is not related to the work-related injury or illness. Physician peer review reduces the cost of workers' compensation claims by intercepting inappropriate treatment and encouraging the treating provider to modify care or discharge the patient, when appropriate.

The goal of physician peer review is to provide an objective and qualified medical report of the patient's condition and future treatment. This report, delivered without bias or preconceptions, provides the medical analysis needed by an insurance carrier or other workers' compensation payer to:
* Modify care;
* Continue treatment plan;
* Deny payment.

The process uses the physician reviewer's training and experience and combines it with science and commonly accepted treatments and clinical practices. The reviewer carefully evaluates medical records, comparing treatment to evidence-based medical guidelines and statutory requirements, and assesses the treatment's effectiveness.

The physician reviewer then attempts to contact the treating physician. Using evidence-based medical guidelines, the reviewer discusses the plan of care and the discharge plans with the provider. In the majority (65 percent, nationally) of cases involving inappropriate treatment, the reviewer's negotiations with the treating provider result in treatment modification or patient discharge.

On the other hand, peer review can also find that the treatment is appropriate. Peer review is not biased toward the carrier, employer, provider, or patient. The objective reviewer is only interested in ensuring that appropriate health care is being provided.

After the collegial discussion, the peer reviewer documents the history, treatment plan and any agreements reached regarding on-going treatment. If the treating physician refuses to modify care or discharge the patient, the physician peer review report can be used in potential depositions, presentations and/or mediation with an Administrative Law Judge.

When Does Peer Review Occur?

Ideally, physician peer review is part of a managed care process that starts with less expensive intervention, such as telephonic or field case management. It can be used to determine medical necessity prior to treatment being delivered (pre-authorization), during the delivery of treatment, or retrospectively, through a comprehensive view of the entire continuum of care.

Physician peer review can come into the pre-authorization process when utilization management criteria cannot certify care as medically necessary. If the clinical guidelines followed for the pre-authorization of care indicate that the request cannot be approved without further review at a physician level, the nurse case manager could then elevate the case to physician peer review.

It is typically used in complex cases when a red flag goes up during the normal utilization review process. An adjuster or nurse case manager may notice that the treatment plan falls outside of standard guidelines. Perhaps a series of treatments have been delivered for a long time without the patient showing significant improvement or an unusual drug has been prescribed for a condition. An experienced nurse case manager or adjuster may suspect that the treatment is not appropriate but they need a qualified medical (physician-level) opinion in order to make payment decisions.

What Happened Before?

Prior to the current legislation, adjusters in California who were concerned about the direction a claim was taking had two choices. They could accept the treating physician's decision and allow the case to continue despite their misgivings. Or they could request a "qualified medical examination" or an "approved medical examination," both of which are forms of independent medical exams (IMEs).

What is an IME?

An IME involves another physician examining the patient. This is a one-time assessment of the patient's condition and does not necessarily include a thorough review of the current or previous treatment plan or even medical history. In contrast, physician peer review provides a comprehensive assessment of the case over time.

IMEs are appropriate in many situations, but they cost more and usually take longer than physician peer reviews. Physician peer review costs range from $210 to $350, compared to an IME, which averages $500 per exam. More importantly, scheduling and conducting IMEs take an average of four weeks, while the turnaround time for physician peer review is seven working days.

IMEs are necessary in certain cases and should remain in the managed care process. However, physician peer review should be the step before an IME, because it is less expensive, faster and provides a comprehensive overview of the case. In addition, physician peer review can narrow the focus of the medical examination, saving time and money.

New Tool to Close Old Claims

Some workers' compensation insurance companies in California have begun using physician peer review to clean up old claims. In many cases, medical expenses are being billed month after month, year after year.

The change in the law's presumption toward evidence-based medicine has strengthened the effectiveness of both peer reviews and IMEs in old or new cases. Shortly after the regulatory changes went into effect in January, PRI (Professional Reviews Inc.), a national peer review company, seized the opportunity to apply evidence-based medicine through peer review to California claims. PRI approached a major California workers' compensation insurance company and offered to conduct a pilot test on 120 chiropractic claims that the carrier had been unable to close. In some cases the injury dated back to the 1970s, yet chiropractic treatment was still occurring.

Chiropractor peer reviewers examined each case and contacted the treating chiropractor. Using evidence-based guidelines, the peer reviewers gained agreement from the treating providers to either modify or reduce the treatment in more than 50 percent of the cases. This program was conducted within four weeks and the carrier's potential savings is more than $1.7 million over a two-year period.

These are considered "potential" savings, because the peer review company cannot modify treatment or deny payment on its own. Peer review provides the objective, qualified medical report that enables the payer to make the proper next decision. Until the carrier exercises its rights to modify or deny, the savings are not yet real, hard dollars.

Since the successful pilot review, the insurance carrier has sent other difficult cases to PRI and other carriers have followed suit. PRI is currently reviewing California claims for three of the five largest insurance carriers working on pre-authorization, concurrent review and retrospective review.

Conclusion

California's legislative changes have facilitated the use of evidence-based medicine and physician peer review into the state's workers compensation claims management process. Physician peer review:
1. Assures that appropriate treatment is delivered to injured employees, which speeds recovery and return to work;
2. Reduces medical costs by eliminating charges for inappropriate treatment;
3. Eliminates both higher medical expense and indemnity costs associated with using only IMEs;
4. Gives payers a new tool for moving old claims off their books;
5. Can favorably impact litigation expenses by demonstrating the payer's commitment to appropriate care and providing a well-founded basis for decisions.

Peer review is already having a significant impact in California. As it becomes more common, treating providers are likely to modify their behavior, but if, and only if, they are aware that their treatment will be carefully, objectively and professionally, reviewed.

Mark Pew, Executive Vice President, Sales and Marketing, PRI, can be reaced at (800) 442-1555, ext 3352, or by e-mail at mpew@prium.net.

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The views and opinions expressed by the author are not necessarily those of workcompcentral.com, its editors or management.