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Reforms Would Cut $1.4B to Fund $700M Benefit Increase

  • State: California
  • Topic: Top
By Greg Jones, Western Bureau ChiefA still-confidential workers' compensation reform proposal ne…

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8 Comments (2 Replies)

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Rhonda Wofford Aug 10, 2012 a 4:08 am PDT

An astronomical transfer of wealth and power to insurance carriers and the self-insured taken straight from the pockets of injured workers, medical providers, interpreters, outpatient surgery centers, home health, and copy centers. It will tax interpreters and lien claimants and incentivize non-payment of all types of bills by carriers. It will do away with the simple protections of a second opinion for spine surgery, and Utilization Review and greatly strengthen MPN's. The authors propose to place these changes into a legislative vehicle already passed through committees to avoid any oversight or public comment. This is underground legislation at its worst!!! They should not be allowed to sneak through the backdoor changes that would have never been allowed through the frontdoor.

George Corson Aug 10, 2012 a 6:08 am PDT

I am glad that we may have a plan to pay workers for disability and control the previously unrestrained Photocopier charges and Interpreters. Both are commodities that can easily be placed within a hard Fee Schedule and reduce litigation. I believe that keeping a worker within a valid MPN is much better for a claim than exposing the Treater's (and referrals) to a 10% settlement on potentially reasonable treatment, merely because the Applicant Attorney has no skin in the game on cost.

Michael Carmenita Aug 10, 2012 a 8:08 am PDT

Might as well voted for Meg Whitman.

workdoc 6 Aug 10, 2012 a 5:07 pm PDT

It is 2004 all over again. The insurance companies and large employers are trying to screw the injured workers , doctors and attorneys. I would have thought that he huge savings that occurred from 2004 would have been enough. Lien filing fees again? Valdez, close MPN loopholes? All of this is expected when only one side is heard. RBRVS? The only reason is to pay doctors less! And does the injured worker get much out of this or are the carriers again enriched. Please, let's be fair. Get all stakeholders involved in reform this time. Doctors, applicant attorneys, small employers need to be part of this. As a doctor, I work in this arena everyday. Don't I desrve to be heard, too. No more 3AM sneak through legislation, please

John Swan Aug 11, 2012 a 6:08 am PDT

As usual an effort is being made to right past wrongs and get a fair deal on the table. As usual all of us personally vested in the Workers' Compensation system have reason to fear what are they going to do to me next and how is this going to effect my life. The truth remains our California System is still one of the most expensive to deliver as compared to other States . We as Californians need to step up to the challenge of a new process and make this deal work for those injured employees that count on a fair system and those financially injured employers who pay the bill.

MARTIN PRYAL Aug 11, 2012 a 9:08 pm PDT

Well, the first salvo has landed in an attempt to finally restore a fair balance between the needs of injured workers and employers with a proposal from both sides of the stakeholder aisle attempting to conform to a fiscally neutral “grand compromise” requested by Governor Brown. However, although laudable in scope and intent, this clearly conservative proposal from the major players is too short sighted, limited in scope and miserably penny pinching.

Let’s look at the facts as proposed and I believe you will agree with my analysis:

California is clearly a state in deep financial trouble. Whole cities are declaring bankruptcy and resolution of the housing debacle is nowhere on the horizon. Drastic times require drastic measures and, painful as it may be, we all have to chip in and tighten our belts when we are called upon to do our duty. Clearly, this was the laudable intent of our players.

In my estimation, the pertinent aspects of this proposal are as follows:

Injured workers will receive $700 million in increased benefits in return for a paltry $1.4 billion in reduced system costs. Lord knows injured workers have gotten the short end of the stick following the major reforms in 2003 and 2004. Without doubt, they deserve this miniscule increase in benefits and have deserved these benefits for way too long. However, I say this proposal does not go far enough! Billions more is available to the system and beleaguered payers, allowing increased benefits to injured workers. The real cost drivers that must be controlled are the unscrupulous medical service providers billing for excessive and unnecessary services; attorneys filing frivolous and unsubstantiated law suits; patent and uncontrolled fraud-the list seems to go on unendingly.

As an example, in the medical arena, the switch to a Medicare-based RBRVS physician payment system is long overdue. We can no longer afford the generous fee structure set forth in the Official Medical Fee Schedule. We no longer live in a society that is capable of supplying all of our needs with a minimal commitment on our part. We need to immediately conform our medical reimbursement fees to the realities of a decreased economic engine and reduced funds availability. Reality dedicates that virtually every year Medicare reimbursement for physician and other healthcare provider services is reduced-and, with the advent of rationed care provided within Obamacare, medical care payments by employers, when tied to the RBRVS Medicare fee schedule, should soon reach an all time low. This necessary financial boon to beleaguered payers will finally allow for provision of increased benefits to injured workers. It is anticipated that this financial windfall will also result in reduced insurance costs to employers, allowing greater overall employment. Realistically, when all of these reductions are fully realized, the revised cost of medical benefits payments in this proposal, at the very least, should realize well over $3-4 billion!

But wait, this proposal does not go far enough! In addition to no medical add-ons for psyche, sleep, and sex ADLs, greater savings can be realized by denying payment for the always questionable functional capacity evaluations, exorbitant compounded drug fees, unnecessary drug toxicity urinalysis-the list goes on and on. Just think of the money saved by denying all of these, and other, unnecessary and exorbitant cost drivers. Big Savings.

Disputes over surgery, treatment, and prescriptions (looks like only ML left) would go to an Independent Medical Reviewer (IMR) whose decision is final, with only limited grounds for appeal. Decisions would cost employers less than $500 each with no medical exam required, and the employer would not be liable for any self-procured care before the IMR decision issues-this must be one of the best provisions ever! Further, although the spinal surgery second opinion would be eliminated (did anyone ever use this anyway?), a system should be established that eliminates all spinal implant pass-through fees (physicians used to top quality but sky-high-priced hardware will just have to accept a more economical approach or refuse to operate). The costs of UR, a highly time-dependent and costly service presently mandated by law, would essentially be eliminated by the inexpensive IMR procedure. But wait, this proposal does not go far enough! There is no reason why rightfully cost conscious employers could not negotiate fees far less than $500 per decision. After all, since the physician is basically just reviewing medical records, there should be a provision for reduced compensation per decision for bulk decisions involving the same employer. Doctors are business people too. They know purchasing services in bulk frequently results in decreased per unit compensation. I say negotiate! Really Big Savings.

Rightfully excepting claims administrators, other entities are prohibited from owning ancillary services. I say no more license to steal, provider-owned MRI’s, DME, or physical medicine facilities and others that provide excessive and unnecessary evaluations and treatments; no more attorney-owned photocopy services. No more Mercedes my dear Doctors and Attorneys-get a Chevy just like the rest of us! Big Savings.

And, what about the ill-decided Valdez decision regarding admissibility of self-procured medical reports? Forget about it. The self-procured medical report can no longer be the sole basis for compensation. Besides, realistically, how many injured workers can afford self-procured medical care anyway? Most are just barely making it from check to check, and that was before trying to live on reduced TD rates. Do you really think you’ll find any attorneys chipping in to pay the costs?-think again. In addition, with the new lien regulations in effect, there will be few if any providers taking cases on lien. The few medical cases that are contested will be determined by a QME or PTP (ever hear of MPN medical profiling? The only income for many of these PTPs is from MPNs-no worry there). Big Savings.

Have to deal with the previous problem of MPN validity? Not any more-it’s gone. MPNs are presumed valid if AD approved and, failure to provide notice of the network to workers is not a basis for the employee to treat outside the network unless the failure to notify results in denial of care. No longer do busy employers have to worry about constant, costly, and meddlesome interruptions with demands for production of records to try to find some meaningless errors in certification and notification processes. Forget about Knight. Big savings.

Too many liens? Voodoos giving you heartburn? Not any more-shoot them with the Green Bullet. Try $150.00 payment for each lien filed. Can you imagine how many superfluous, minimal value interpreter, photocopy, and first aid liens will be eliminated that now clog up our legal system? However, it gets better. Liens that proceed to hearing generally require a lien representative, chart set up, etc. with attendant costs and expenses. Rarely do the liens settle for stated value. Providers are businessmen also. When assessing the costs associated with lien filing and representation, it becomes difficult to justify the $150 lien filing fee for amounts up to $500, or perhaps more. From an employer standpoint, money not paid is money earned that can be used to provide greater benefits. Big savings.

But wait, this proposal does not go far enough! The last time a lien filing fee of $100 was assessed many years ago, it was determined it cost more for the state to process the lien than the fee covered. Inflation has increased since then so the new fee is now about equivalent to the old fee. If it didn’t work then, it probably won’t’ work now. However, a tiered lien filing fee schedule makes much more sense and generates considerably more cash. Perhaps a $200 fee should be established for liens up to $2000; a $300 fee for liens up to $3000 and so on. Liens over $15,000 clearly appear as prima facie exorbitant, and unless otherwise factually substantiated, should be assessed a penalty fee of 25% of the total value. Several benefits to this tiered approach ensue: litter liens ($750 and below) would be virtually eliminated; the work load on judges that are presently adjudicating the massive influx of voodoo and other liens would be reduced enormously, with perhaps a side benefit of requiring less judges; providers would think twice about running up such clearly excessive liens by terminating care early and limiting referrals; and the enormous monetary influx to the system would provide funds for clearly required efficiency streamlining, equipment modernizing, etc. (if the funds are not diverted for other worthy state projects such as road maintenance, assistance to the underprivileged, etc.). Further, why allow an excessive and unnecessary 18 months to file a lien? Six months is plenty. Fail to timely file, lose the lien. Big Savings.

It should be fairly obvious that much greater savings could be realized with closer scrutiny of the actual proposal-but I believe it is fairly evident the intent of the parties involved in these closed–door negotiations. I just wonder if they all smoked cigars and wore suspenders?

Seth Hirsch Aug 12, 2012 a 7:08 am PDT

Its all a bit mind boggling;numbing really-perhaps just another spoke in the wheel. If no psych add-on what about ACOEM and all the algorithims indicating psycho-social evaluation after 6 weeks-no improvement?What about failed back syndrome? At the outset:back. Surgery carried out results in complications-functional overlay. No psych add-on?! Recipe for disaster.

Ron Perelman Aug 12, 2012 a 8:39 pm PDT

I have lived in the workcomp arena since the early 80s, when the sysytem was quite simple and worked well. The reforms began in 1989, 1990, 1993, 2003, 2004 and 2005. With each reform, the system became more complex. Each side has become more polarized. Each reform has now led to a system that is out of control. The abuses ae on all sides and the patients are suffering. Treatment is dismally delayed at this point. PD is 40=50% of what it used to be. If another reform is needed, we need to build a new system from the bottom up. That means doctors, defense and applicant attorneys, injurd workers groups need to sit down together and work out a system that first provides care for the injured worker and then doesn't hammer all the other groups. The applicant aattorneys need to survive, the depense attorneys and claims people need to survive, but the system needs to be revamped from the bottom up. We need to get a system that allows common sense pleadings and treatment. ACOEM, ODG, MTUS UR all seemed right, but look what its led to. To answer Seth Hirsch, is there a place for psyche? Of course, but when someone injures their finger 2 weeks ago, isn't it a bit too early to consider a psyche impairment.? Please, let us come together nd work this out together, not what I am seeing here. Thank you

Nicholas DiSabatino Aug 12, 2012 a 10:08 pm PDT

There are some excellent insights within these posts.
As a provider in a small clinical setting I am likely to get hit hard for the continued extravagant utilization of larger clinics. It is always the small guys that get hit hard in the reform, and this country, this state, is supposed harness an environment favorable for small businesses, this should include providers. Why are the MPN's so impossible to get in? Sure, pass reforms. Get rid of superfluous cost drivers like functional capacity evaluations. But open up the MPN's to good doctors. That will be one huge wave of coming together on both sides. Open up all the MPNS for all doctors on good standing. Kick em out when they don't follow the rules. That will be one huge step toward reforms. Right now with MPN's so restricted, polarization is a inevitable phenomenon.

doclawyer Aug 13, 2012 a 3:07 pm PDT

So a two-fer for the insurance carriers; what a surprise! Now they propose to gain an additional two dollars at the "expense" of paying out an 'additional" one dollar; how "generous" of them. Carriers who less than 3 years ago helped bring this country to near financial collapse have thought of a new way to enriching themselves at the expense of other people. How utterly absurd can they be? Let's make them the same deal they want to make us today; increase your own costs by two dollars, and we will "give back" one dollar. How could they object, if they were hypocritical that is?

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