Can California’s comp system be fixed?

David Deitz, MD PhD was last up at CWCI, his task to bring it all together by asking an apparently simple and straightforward question:

What can California learn from Washington?

Or put another way, “Can California’s workers comp system be fixed?”


First off, there still isn’t much of a focus on quality of care in California.  Outcomes in workers comp are still worse than in group health – despite more care for many of the same conditions.  Many state systems still rely on judicial, administrative, or otherwise “non-medical” authorities to make decisions about what are essentially medical issues; fortunately California does not. Cue the IMR complaints…

That’s good news; however just by virtue of being a work comp patient, things aren’t so good. A 2005 JAMA-published analysis indicated 83% of studies (175 out of 211) found that just being a WC claimant was associated with worse outcome after surgery.

There’s a lot of research and analytics and reporting in the non-workers ‘comp medical world related to outcomes, costs, and cost effectiveness, with “a lot” especially true when compared to the paucity of such research in workers’ comp outside of L&I, CWCI, and a couple other sources.

Dr Deitz referred to a “massive number of care improvement initiatives that are going on throughout the health care system” (paraphrasing), a trend that will continue with or without, ACA. Again, this may help work comp as better care = better care for work comp too + a healthier population.

David also noted the questions we are encountering in workers comp are nowhere to be heard in the real world; there are no questions about evidence-based medicine in group health.  EBM is embedded in the very fabric of health care contracting, delivery, measurement. It is accepted fact, a core operating principle, fundamental. And the work comp systems would benefit immensely from a healthy dose of EBM.

One supporting data point is what’s happened in Texas, where they named a Medical Director and adopted guidelines, strong UR, formularies, EDI, and measurement of results.  While Texas isn’t perfect, it’s gotten a lot better.

Unfortunately along with Washington, Texas is one of only two states that has made significant progress in adopting changes that have significantly improved medical care delivered to injured workers.  However, it’s not for lack of opportunity.  Dr W Brose’s HELP Pain Medical Network is just one source of high-quality, workers’ comp-specific and relevant data on treatment outcomes.

The money quote – “workers’ comp is the most costly and inefficient way to deliver medical care that humankind has ever invented.”

And care improvement is possible in WC but requires systematic reform.

We have a system that is inefficient, very expensive, and delivers poor quality care.  That has to change.

Dr Deitz’ final point – improvements in workers’ comp medical care MUST happen.




Medicare doc fix – here we (don’t) go again…

The annual caterwauling about Medicare physician reimbursement has begun.

For those who just want the takeaway – there very likely won’t be any substantive, long-term “fix”, but rather another temporary – and very slight – increase in reimbursement.

The latest version of Congress is arguing back and forth about what to do to address the Sustainable Growth Rate or SGR, with the GOP sharply divided and more liberal Dems objecting to any fix that will require seniors to pay more for their Medicare.

What’s going to prevent a longer-term fix is simple; by not doing a long-term fix and thereby kicking the can down the road, Congress doesn’t have to recognize – and deal with – a big addition to the federal deficit.

Well, that and the normal inability of Congress to do anything at all.

Lest you think this is new, it has been going on for over a decade; here’s more detail - just in case you want to be the center of attention at your next cocktail party…

The Medicare SGR formula/process was first implemented in 2000, intended to establish an annual budget for Medicare’s physician expenses and thereby better control what had been steadily increasing costs. Each year, if the total amount spent on physician care by Medicare exceeded a cap, the reimbursement rate per procedure for the following year would be adjusted downward.

And for thirteen of the last fourteen years, reimbursement – according to SGR – should have been cut, but each year (except 2002) it was actually increased, albeit marginally. Because Congress didn’t fix the problem, each year the difference between what Medicare was supposed to spend on docs and what Medicare actually spent was added to an off-the-books deficit.

The result is a deficit that is now about 210 billion dollars, a deficit that we’re carrying on our books.  Don’t blame CMS, blame Congress.

The reason the deficit is still there, and still growing, is simple - fixing SGR permanently will require acknowledging the deficit and thereby adding it to the total debt.

As we discussed a while back, not fixing SGR may well be worse, as it is a fatally flawed cost containment “approach”. The SGR attempts to use price to control cost. The complete failure of the SGR approach to control cost is patently obvious as utilization continues to grow at rapid rates. This was a problem seven years ago, and its done nothing but get worse. Not only does the SGR approach contribute to cost growth, it also ‘values’ procedures – doing stuff to patients – more than primary care.

It’s not quite that straight forward, but pretty close. For those who want way more detail, read this

What does this mean for you? 

For readers in the work comp world, any change to Medicare’s fee schedule will eventually affect many state work comp fee schedules – but this is by no means straightforward.

It’s Friday…and none too soon

What a %^&*$#$* week!

Like many, I spent far too much time this week dealing with the fallout from the ProPublica/NPR series on workers’ comp.  I really need to devote more time to real work, and less to educating folks after the fact…and cleaning up the mess.

One quick point; in the original Demolition article, the authors state:

in 2013, insurers had their most profitable year in over a decade, bringing in a hefty 18 percent return.

I’m not sure how they are defining “return”; usually it implies profit, but that doesn’t seem possible. I have a query into Michael Grabell, the Demolition article’s author, and will report back if/when I hear more.  According to NCCI, work comp insurers [opens pdf] delivered a 2013 pre-tax operating gain (for private insurers) around 14% while state fund gains were about half that.

Of course, that was a pretty very good year; over the last decade, workers comp writers averaged a 7.1% return on net worth, which is another way to look at “return”. Can’t locate any other data or research that is any where close to the 18% number; will let you know if something turns up.


MIchael Grabell of ProPublica responded to my query this afternoon and indicated the data came from NCCI and AM Best and was also referenced in John Burton’s Workers’ Compensation Resources Research Report.

Without getting too deep in the weeds re combined ratios, whether it’s appropriate or not to include dividends, and other minutiae, I can see why someone might look at those reports and get the impression WC is wildly profitable.

In general, it is inaccurate to say insurers’ return was 18 percent as this figure does NOT represent all insurers.

  1. NCCI reports data from the states where they work; this does not include California, New York, New Jersey and eight others. 
  2. NCCI and AMBest data is only for private carriers, and does not reflect state funds; these are also insurers and their “returns” were far less than 18%.
  3. Data from monopolistic states, where insurance is purchased from the state, is also not included.  Monopolistic states include OH ND WA WY.

More to the point, if you are trying to make the point that insurers are getting fat while workers are getting screwed, it’s helpful to point to a VERY profitable year.

However, if one wants to be objective, looking at one year does not provide an accurate picture of the financial status of any industry; one could just as easily look at 2009, 2010, or 2011 where private carrier results were break even at best.

Kudos to Jill Breard of LWCC and Elessa Young of UPMC – both found far too many typos in my blogs from last week’s WCRI conference.  I won’t tell you how many Jill and Elessa found – that would be mortifying.  Thanks ladies, your diligence is much appreciated!

There’s a great piece by WorkCompCentral’s Greg Jones this am about the IMR process in California; evidently someone inadvertently sent an email – “purportedly from [IMR vendor Maximus] to WorkCompCentral..” that indicates payers have failed to send medical records within 90 days for more than 5000 cases. While the number of cases with missing records has decreased significantly over the last year, there’s no indication any fines or financial penalties have been levied against the responsible entities.

Not sure what is going on here, or why, or who is responsible.

This story will have legs…


Spring is here in HealthWonk Land!

Ok, I’m a bit early…

here in upstate NY the sun is out, and my colleagues in New England can almost see the tops of the cars stuck in drifts created by aggressive snowplowing.

So, spring must be on the way!

To celebrate, Brad Wright has penned the biweekly edition of Health Wonk Review, bringing a fresh, sunny, and bright collection of thought pieces from Wonks like us direct to your internet-connected device.

Bask in the glow, knowing you’ll be in flip flops and shorts in just a couple of…months!

Workers’ wage replacement – the real story

WCRI’s Evelina Radeva focused on employee wage replacement, a particularly timely topic given NPR and ProPublica’s ongoing series on the Demolition of Workers’ Comp.

Suffice it to say that PP’s reporters would have greatly benefited from Ms Radeva’s presentation.  Informed sources indicated that reporters Michael Grabell and NPR’s Howard Berkes reporters failed to contact WCRI before this week; a rather stunning oversight on the part of the reppporters.

How any journalist reseaching workers’ comp could neglect to even call the nation’s pre-eminent research organization is beyond me.  They would have been well-served to engage early and often with WCRI and their many experts on all aspects of workers’ comp.

Radeva’s deep dive into weekly wage benefits in IN and NY; Indiana is raising their maximum weekly wage by some 20%, generally aligning Hoosiers with the other 15 states in the study set.  On average, 12% of workers hit the wage replacement cap across all 16 states.

Of note NY also increased their maximum weekly wage several years ago; California has as well.

Peter Rousmaniere raised an interesting question that unfortunately went beyond WCRI’s ability and mission – why is there a cap on the maximum weekly wage?

WCRI Rick Victor answered Peter’s question by noting the impact of tax brackets, the tax-free nature of work comp indemnity benefits and anecdotal information that higher-paid workers get other benefits from their employers that help offset lost wages – while acknowledging there is wide variation among and between the states.

Lower fee schedules, increase costs?

Dr Rebecca Yang discussed the correlation of fee schedules and associated physician billing activity.

Key takeaways

  • There’s somewhat of a correlation between low office visit reimbursement rates and higher incidence of physician dispensing.
  • evidence from CA indicates that when th FS whas reduced, doctors coding practices did too – more office visits were coded as level 4 and level 5, while the frequency of lower level visits decreased proportionally
  • when the fee schedule was subsequently increased, the trend to more upcoding moderated – then resumed when the fee schedule was frozen again.
  • this experience was essentially replicated in Louisiana
  • in Florida, a change to the fee schedule for facility-based lumbar MRIs essentially increased reimbursement for “unscheduled” MRIs when compared to “scheduled” MRIs.  Perhaps you, dear reader, will not be shocked to learn that “unscheduled” MRIs went from about 1/3 of all lumbar MRIs to over 2/3 over the next few years.

What does this mean for you?

Blunt instruments – such as the physician fee schedules in place in 42 states – CAN BE opportunities for bad actors to game the system, while hurting the good folks.  

Not to say they should be abandoned, but rather it is necessary to think about what will happen if you change fees (or other care-based reimbursement rules) – not what you hope will happen.

ProPublica’s demolition of workers’ comp

Yesterday ProPublica published the first in what is apparently a series of articles on the workers comp systems around the country. This first effort focused on ‘reforms’ and generally indicated these are driven by big employers seeking to cut workers benefits and medical costs.

There is much coverage of grievous injuries, lost limbs, different compensation systems in different states and the role of big business in writing reforms.

I would suggest that writing about reforms, without discussing what’s driving the medical care reforms, is an oversight. And there was precious little discussion of cost drivers, but a lot of discussion about cost control methods, including a tortured passage attempting to describe California’s utilization review process, and the issues inherent therein.  Unfortunately, the coverage of this issue focused on the denials of care, not on the reasons therefore, the process that is used, and why some requests should be denied (more on that in a later post).

Re California, I asked friend and colleague Alex Swedlow for his thoughts on how ProPublica characterized cwci’s research; here’s his perspective…

 The article would benefit from a full discussion on how much and what type of care is approved and denied.  It’s true our study showed that about 91% of the disputed denied treatments are upheld by Independent Medical Review.  What is missing from the article is that denied disputes are only 6% of all treatment reqests and that the California worker’s comp system approves 95% of all treatment.  And the 5% that is ultimatly denied is another story.

The dramatic increase in utilization review in California has been driven largely by the plaintiffs bar, which has been using the IMR process to extend disability. One has to wonder why they have been doing this. In addition IMR increases are driven by by the overuse of drugs, the changes in medical practice patterns since the treating physician presumption was overturned, and the desire on the part of many to address the overtreatment that is rampant in Worker’s Compensation.

Moreover, there was no attempt to explain why employers are seeking to direct injured workers to specific providers or panels of providers. This was presented as a problem for injured workers, when that is inmost instances absolutely not the case.

In fact, the care direction by employers was treated as somehow harming injured workers.

I was excited when I heard propublica I was going to be taking this topic on. I have been impressed by propublica’s work on many fronts. There is much about Worker’s Compensation that needs improvement. Unfortunately, my take on this article is that it is quite one sided, and does not address many of the significant issues that are leading to harm for injured workers, employers and taxpayers. As an introduction to the topic, it is seriously flawed.

While there may be other articles coming in future weeks and months, the expectation that has been set by this article is that the system is somehow tilted in the employers favor. I can assure you that in most states, this is far from reality.

I’d suggest that the story is far from complete. It ignores the rampant profiteering that is the primary driver of the reforms described in generally negative terms, fails to point out the complicity of the claimants bar in extending disability, and completely misses the damage done by profiteering physicians over-prescribing opioids and benzodiazepines and failing to work closely with payers and employers.

Data point- the back surgery scandal in California led to many unnecessary back surgeries, much pain for claimants, and tens of millions in excess costs for employers and taxpayers.

There is no question big business is behind much of these reforms just as there is also no doubt state medical societies are overwhelmingly to blame for rampant abuse of the system in states such as Florida and Maryland.

Data point- the medical society and a drug dispensing firm used the same lobbyist who successfully kept doc dispensing operating in MD thereby increasing costs and extending disabilty.

Finally the story fails to address a critical point – namely the nature of the workforce, employment, injuries and the health care system has fundamentally changed in the last 100 years.

Of course it doesn’t work now. Women are a majority of workers, employment in services long ago overtook manufacturing and industry, Medicare exists, health care systems have radically changed, and the working population is much older fatter and less fit.

It would have been quite helpful to discuss states where things are working well. Washington is one and Ohio has made great strides as well.

What does this mean for you?

If asked by a non-work-comp person about the article and subsequent pieces, you may want to suggest that reality is somewhat different from the world portrayed by ProPublica.

The latest data on physician dispensing from WCRI

Wcri’s experts summarized their latest research in doc dispensing in the second presentation.

A couple quick takeaways.

First, the efforts to control the price of the repackaged drugs dispensed by physicians has failed as the dispensers have effectively circumvented the rules or statute by creating “new” drugs that are remarkably similar to current medications.

this is particularly problematic in IL and CA.

Second, physicians in Florida were apparently prescribing and dispensing opioids more often than necessary as they stopped prescribing these meds when they could no longer profit from dispensing fees.

Pharmacy costs in CA are growing rapidly however the pain management guidelines seem to have led to a flattening in the growth of the more potent opioids.

CWCI exec dir Alex Swedlow provided his usual excellent debunking of the false claims made by doc dispensing advocates, noting costs are higher and disability duration longer.

The net – doc dispensing research overwhelmingly indicates the practice adds no value and benefits no one but the profiteering docs and their enablers.



Live blogging from WCRI

In lovely Boston this week for the annual WCRI meeting, a day and a half stuffed with Research findings data and interpretation thereof.

Warning- due to some laptop issues I’ll be posting from my iPhone, and you will undoubtedly see many more typos than usual. A prize to the reader who correctly totals all the typos over the next two days.

The conference begins with the usual WCRI disclaimer that the organization presents research results and does not take policy positions. I’m happy to infer what the results mean and what we should do about the findings.

The lead off session addressed the impact of ppaca on work comp, specifically cost shifting from group to work comp.

Olesya Fomenko Ph.D did the research on the topic with a focus on ACOs and their impact on case shifting from group to comp. Much of the discussion revolved around capitated vs fee for service reimbursement and the financial motivations of the treating provider. In a capitated system, the doc gets paid the same amount for all non-occ care, but makes more for treating occupational conditions as they are not covered under he capitation arrangement.

The key finding is the “growing use of capitation is likely to increase the number of soft tissue injuries seeking payment under WC.”  Obviously this is going to be more common in states where capitated plans are more common.  The research indicates a potential increase in soft tissue claims in the 12 or so states with a quarter or more of workers covered by capitated plans – CA NY PA MI MA etc.

If capitation increases, there may well be more states with characteristics indicating a higher propensity to shift cases from group to comp. Capitation has declined over the last decade, but the growth of acos is likely reversing this trend.

Whats not visible in the data is the question “were soft tissue claims under reported previously, and now that there are stronger financial incentives to correctly categorize claims, they are now correctly categorized?”

Pre-WCRI catch up…

With WCRI’s annual confab coming up Thursday am, meetings in Boston tomorrow, and lots going on already this week, here’s a quick summary of goings on from all over the health care world.

Kudos to Liberty Mutual’s (and fellow Syracuse University grad) Tammy Camillone; Tammy was just promoted to run Liberty’s bill review operation.  With the pending transition from Coventry’s 4.0 to Strataware, this is a big job – but one well within Tammy’s capabilities.

Healthplan membership climbed by 5.6 million members from Q3 2013 to Q3 2014. That’s not surprising; what is surprising is the big gains in ASO (administrative services only, or self-insured health plans for larger employers) business for Kaiser and Anthem.  While most growth was in the individual lines, the jump in employer plans indicates things are looking good for health plans across a broad spectrum of products. 

A study just published in JAMA indicates the risk of overdose from prescribed opioids may be significantly greater if the opioids are long-acting (e.g. OxyContin) vs short-acting.

To our knowledge, the findings of the present study provide the first evidence that the risk of unintentional overdose injury is related to the prescribed opioid’s duration of action. If replicated in other cohorts, our findings suggest that clinicians weighing the benefits and risks of initiating different opioid regimens should consider not only the daily dose prescribed but also the duration of opioid action, favoring short-acting agents whenever possible, especially during the first 2 weeks of therapy.

Thanks to Steven Feinberg MD for the tipoff.

Finally, there are good people in the world, and there are people who are not.

Goings-on in Maryland work comp highlights this all too well.  The physician dispensing advocates, their pawns at the Maryland medical societies, and their hired hitmen are all on the wrong side of right.

In pursuit of the almighty dollar, these slimeballs are quite willing to say anything, do anything, lie about anyone, distort any facts and compromise whatever morals they may once have had just so they can keep feeding at the trough.

A trough filled with dollars hard-earned by taxpayers and employers.