Much clarity was brought to the IMR process, costs, efficiency, and IMR filers by the next speaker, CWCI SVP and CFO Rena David.  Speaking about 2014 data, Rena noted:

• 4.1 percent of treatment requests were “IMR eligible”
• There were about 261,000 IMR service decisions made in 2014
• Days from application to final determination was 134 in January 2014l that dripped to 50 in December
• 91% of the IMR reviews upheld the UR decision, and thereby the denial was deemed as appropriate.
• Overall, 5.4% of all treatment requests are being denied or modified

Pharmacy accounted for almost 45% of requests, with decisions upheld 92% of the time.  And;

• 12% of IMRs were for compounds, consistent with overall figures; 98% of the time compound requests were deemed to be not medically necessary.
• 23% of IMRs for anti-depressants overturned the UR decision, the highest percentage for any drug category.
• Only 2 percent of anti-anxiety medication denials were overturned
• Oftentimes, information available AFTER the original UR decision was made was used in the IMR process to overturn the UR decision.

There were ten individual providers who represented fully 15% of claims; the top two individual providers each submitted the equivalent of 10 requests a day…

A key takeaway – Rena noted that for judges and other non-medical people to be in a position to determine what medical treatments are and are not appropriate is “unfathomable”.

She also noted that “without oversight, injured workers may receive deleterious care”, citing:

• A worker anxious abut an an epidural injection was denied propophyl
• A complete spinal fusion was requested for a 76 year old man with evidence of arthritis.

What does this mean for you?

IMR works, and would be working a lot better if bad actors weren’t jamming the system with spurious requests for damaging, or at best inappropriate, medical services.

One of the best places to visit on business is the SF Bay Area – great people, great wine, great food, a fun vibe, and, of course, the site of one of my favorite meetings – CWCI’s annual meeting.

The most-of-the day meeting started with State Fund Chair Vern Steiner’s quick business review, followed by CWCI Alex Swedlow’s review of the rollout and trends following the rollout of California’s most recent reform – namely SB 863.

Alex highlighted changes in Ambulatory Surgery Center fees after SB 863 implementation, perhaps the most significant change being the 29 percent decrease in amount paid.  Closely tied to the ASC cost was the notorious double-charge for surgical implants.  Once that double-charge was removed, something surprising happened.

The volume of hospital inpatient discharges has been declining overall, driven by – in large part – a rather dramatic drop in the number of discharges associated with spinal implants. CWCI estimates savings of around $60 million for 2014 alone.

Overall, spinal surgery discharges dropped by over ten percent from 2008 – 2013.

Alex also reviewed MPNs and physician networks; here are my key takeaways:

• 81% of “first year” visits have been to network providers – and this figure has been steady since 2010.
• That’s a big jump from about 55% back in pre-MPN days
• However – and it’s a big “however”, is the savings attributed to care within networks in MPNs have decreased from 16% below non-network to just 3 percent.

On to a discussion of drug costs – pharma costs were 13.2% of all medical benefits in 2012, a rather dramatic increase from 6.7 percent just seven year previously.

This 13.2 percent equates to $1.2 billion in direct spend – of which 30 percent is Schedule II and III drugs – the most potent opioids.

With drug costs escalating rapidly, one has to look for answers, and one answer may be a formulary.  There’s a lot of detail here related to drugs that are within and outside formulary, how formularies are set up, and motivations thereof. That said, the potential savings are rather amazing.  To wit:

• 96 percent of CA approved brand drugs would have been blocked by WA formulary along with 27 percent of generics
• The total savings is somewhere north of $400 million…

Next up, a discussion of the “medical cost containment” cost change, which have climbed to $2,330 in 2012, up from $1004 in 2005.

One of the primary drivers may well be the IMR program.  Fortunately CWCI just published a research paper describing payor efficiency in complying with Division of Workers Comp UR audit standards.  This is critical, as the data show if payors are complying with requirements for content, timeliness, and correct communication regarding UR requests.

97 percent of the time payers are compliant – far above the 85 percent standard set by DWC. And this has been consistent since 2009.

In my post last week related to ProPublica’s Demolition article, I said:

Informed sources indicated that reporters Michael Grabell of ProPublica and NPR’s Howard Berkes failed to contact WCRI before this week; a rather stunning oversight on the part of the reporters.

I was wrong, and I apologize for the error.  Turns out at least one of the reporters attended WCRI’s 2014 meeting, and they did email WCRI multiple times requesting various reports and research documents.  The error is mine and mine alone and is solely due to my misinterpretation of conversation with sources.

Speaking about ProPublica/NPR’s recent work comp reporting at last week’s WCRI conference, WCRI President and CEO Rick Victor PhD. noted it is very difficult to write a balanced article using anecdotes as the basis.

Dr Victor’s point assumes one is looking to write a balanced article.

While there are numerous examples of what I see as bias in the initial article, here’s one that makes the case. It pertains to choice of physician; the authors infer this is a “limitation of benefits.”  I disagree with that inference for multiple reasons, but let’s focus on this statement:

“In 37 states, workers can’t pick their own doctor or are restricted to a list provided by their employers.”

This sentence is factually inaccurate.

There are two reports from WCRI that speak to choice of physician; neither provides support for that statement.  It appears the authors added two different and distinct categories – states with employer initial choice, and states restricting employee choice – to arrive at the 37 number.

Considering the first category, states with employer initial choice, many states allow employees to change doctors via various mechanisms and without employer approval.  ID, ME, MI, NC, NM, UT, and VT are examples.

Re the second category, restrictions on employee choice are many and varied; certainly they aren’t limited to requiring the worker to pick from a “list provided by their employers.”

Some states allow employees to make one change on their own, others allow a judicial entity to authorize a change, others have different mechanisms.  In fact, there are only 15 states that allow the employer to “select [the initial treating] provider without limitation”; several of those allow the employee to change via various mechanisms.

I’d suggest that it would be just as inaccurate to say “35 states allow employees to choose their physician” as it was for the authors to write “In 37 states, workers can’t pick their own doctor or are restricted to a list provided by their employers.”

Put another way, it would be equally “accurate”.

I’m not splitting hairs here – this as an example of what I believe to be a bias that pervades this and other articles published to date.  There is much nuance and complexity in workers’ comp regulation, nuance that, if not supportive of the authors’ apparent bias, they apparently chose to ignore or misrepresent.

I don’t make this statement lightly. Grabell and Berkes are highly experienced, well-thought-of professional reporters.  I’m just a blogger, albeit one who happens to know a lot about work comp.

There’s an awful lot more to this, but you – and I – have work to do and don’t have time to fact-check every statement.

What does this mean for you?

If you see this differently, if you think I’m being unfair, if, as one subscriber said in an email they inadvertently sent me that I’m a “shill for the insurance industry”, I’d like to hear how and why I’m getting this wrong.

The variation in the cost to manage work comp clams varies wildly across states – from a low of less than $4000 in Wisconsin to more than twice that in Louisiana.

And, these costs are steadily increasing at annual rates betwen 4% and 11%.

Litigation is a big cost driver in several states, accounting for more than half of expenses in CA MN FL and LA.  WCRI’s Carol Telles described the factors contributing to those differences, noting bill review, networks, and other medical cost management efforts are a factor particularly in non-fee schedule states.  Other drivers are choice of medical provider and mandated medical management tools including UR and guidelines.

Telles contrasted Texas and New Jersey, states that have quite different approaches to medical managment and the regulation thereof.  Somewhat counter-intuitively, Texas is highly regulated, while NJ is most assuredly not. NJ has no fee schedule, treatment guidelines or UR, but does have employer direction and has allowed networks since 2011.

TX has required medical guidelines and UR, a drug formulary, and eliminated “informal” networks several years ago.  Networks are highly regulated and there is a medicare-based fee schedule.

To paraphrase Ms Telles, “Medical management may reduce costs, but there is a cost associated with that effort.”  She made that statement while discussing Texas – the data indicates medical management costs have stablized at 21% of medical costs per claim since 2011 (however medical costs per claim continue to increase).

Telles provided some excellent insights into litigation rates, costs, and drivers as well; factors contributing to expenses include:

• complexity and length of dispute resolution process
• process for obtaining and challenging medicl opinions on MMI
• settlement usage

Notably, defense attorney expense was the largest single component in most states; however as plaintiff attorney fees are usually included in the indemnity fees we don’t know what the plaintiff attorney expenses were.