California Should Follow Texas' Lead

Saturday, September 23, 2006 | 0

By David J. DePaolo, Esq.

It should not have come as a surprise that a study published by the American College of Occupational and Environmental Medicine (ACOEM) found that injured workers treated by medical networks that did NOT use utilization review missed the fewest days of work and were the least expensive to treat. After all, it is to the benefit of industrial medicine specialists to promote their own services without the burden or hindrance of second guessing and oversight.

Researchers in the study published in the September edition of the Journal of Occupational and Environmental Medicine said the study shows reductions in costs and missed work time for cases managed by a network of specialized occupational health care providers. They concluded that early management by a specialist in treating injured workers -- most of whom were occupational medicine physicians -- resulted in significant reductions in lost time and costs in workers' compensation.

"Utilization review seems to have little impact on the behavior of experienced health care providers pre-selected for their ability to appropriately treat and manage workers' compensation cases," Dr. Edward Bernacki with Johns Hopkins University of Medicine said.

With their experience and expertise in treating injured workers, occupational medicine physicians appear to be able to reduce patient disability, using fewer medical resources, without insurance company oversight, the researchers concluded.

The costs of care were also lower for claims managed in the network: about $12,500, compared with $20,400 for traditional claims. Average costs for medical care were $3,995 with Omnet Gold versus $9,850 for traditional care. Other costs, such as management fees and legal expenses, were also lower with Omnet Gold, the researchers said.

The difficulty in translating these results to the rest of the real workers' compensation world is that there are so few doctors willing to get back in to industrial medicine, according to physician groups such as the California Society of Industrial Medicine and Surgery.

"As a treating physician, medical-legal evaluator and utilization reviewer, I have been exposed to many instances where utilization review is misused or abused and has resulted in extensive delays or denial of appropriate care," Dr. Michael C. Post, president of the California Society of Industrial Medicine and Surgery, wrote to me in an e-mail. "I have heard from many of my colleagues and associates who are frustrated by the UR process mandated by the Labor Code. Unfortunately, several have significantly reduced or ceased treating injured workers because of the additional time and effort necessary to address these issues."

Even the Medical Director of State Compensation Insurance Fund (SCIF) said that utilization review has gone too far.

Dr. Gideon Letz is quoted in the latest issue of the Work Comp Examiner as stating, "Putting the good practitioners through all the UR hoops every time is costing occupational medicine."

So what do we do with utilization review? It was implemented, and yes necessary, to curb abusive medical practices, but so were Medical Provider Networks.

I think Texas has it right. The Texas model is provider-market driven whereas the California model is administrator-market driven.

The Texas Workers' Compensation Health Care Network (HCN), is modeled after the California system with the exception that it is not, as Sen. Burt Solomons, author of the Texas reform bill HB-7 puts it, "micromanaged" like California. Texas HCNs are not required to follow UR. They are not even required to follow any treatment or disability guidelines. Only "out of network" treatment is subject to UR and guidelines for treatment and disability protocols. Texas decided to let the market determine HPN efficiency, rather than the government.

The California model created a whole new sub-industry ripe for use and abuse. Like medical bill review, utilization review companies have been created, and profit nicely from the mandates of Labor Code Section 4610. While I haven't looked under the hood of any utilization review companies, my guess is that many of them are owned directly or indirectly by administrators and carriers as secondary bastions of profitability.

Only time will tell, but my guess is that the Texas model is more efficacious, efficient, fair and cheaper in the stated goals of faster return to work, cheaper medical, and lower indemnity.

Those companies, especially those whose financial interests are directly tied to the claims administration functions of carriers and TPAs will fight tooth and nail, but in my opinion, Labor Code Section 4610 needs to be amended to exempt MPNs from utilization review, and let the market dictate the behavior of the physicians and injured workers who find themselves governed by medical provider networks.

Nationally, medical networks are the "Next Big Thing" in work comp. States that are looking, watching and learning from the policies of California and Texas will benefit the most, as the two largest workers' compensation states once again will be the proving grounds for good, bad or indifferent policy. In the meantime, it seems to me that California is better served by following the lead of Texas, and exempting MPNs from the constriction of mandatory utilization review and treatment/disability guidelines.

David J. DePaolo is the President and CEO of WorkCompCentral.

Mr. DePaolo's slideshow presentation to the Insurance Council of Texas Annual Workers' Compensation Conference 9/20/2006 is available in PDF format by clicking here. The audio portion in WMA format can be downloaded (right click, "save as") in WMA format here (8 MB).

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