It Starts with the Regulators

The task of weeding out the "bad doctors" who would wreck the workers' compensation system starts with the regulators.

By Mark Walls

I had the honor of being the final speaker at the recent International Association of Industrial Accident Boards and Commissions National Conference.The IAIABC is an association of regulators charged with making the rules and enforcing the statutes that govern the various states' workers' compensation systems.

My topic was outside influences that will impact the future of workers' compensation.With medical costs now accounting for 60 percent of all claims dollars, much of my focus was on cost drivers in medical.

Ana's Apportioned Story (10/01/12)
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Progress with Opioids (02/21/12)
Medical Provider Fraud (12/11/12)
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The current "standard" for controlling workers' compensation medical costs is a fee schedule, designating the maximum amount a medical provider can charge for a service.As the continued escalation in medical costs shows, focusing on fee-for-service does not control medical costs.This makes sense in that most states' workers' comp fee schedules are higher than what Medicare and group health would pay for the same services.The cost savings comes from "billed" charges.Let's face it: billed charges in the medical field are like "suggested retail price" for consumer goods.No one pays billed charges.

Another flaw with the fee-for-service cost savings model is the administrative charge associated with bill review.The claims administrator charges a fee for re-pricing the bill to the fee schedule.Fees charged by the administrator for this service can be significant, up to 30 percent of savings from the re-pricing of the bill.In other words, the responsible entity is never paying just the fee schedule amount for the medical service provided; instead the total payment includes the amount dictated by the fee schedule plus an administrative charge on every bill.

Another way to control workers' compensation medical costs is to focus on utilization.Several states have attempted to do this with mandatory utilization review for certain procedures.This has had mixed success, and generally frustrates everyone involved because of the time delays that are inherent in this process.Every claim is different, so it is very difficult to come up with universal utilization standards.

So what is the answer?I feel the focus should be on quality of care.If we can provide injured workers with the best possible care, we will get the best possible medical outcomes.This will result in costs savings because unnecessary treatment and disability is avoided.Isn't the goal of the entire system to provide the injured worker with the best possible outcome?

Well, perhaps.Consider the fact that personal injury lawyers receive higher compensation when the outcome for the injured worker is worse.While some attorneys will refer their clients to high quality medical providers, too often the referral is to a medical provider who may be well known for providing long periods of disability, frequent surgeries, and poor outcomes for the injured workers.Consider these examples:

·A January 2011 study from the Johns Hopkins University School of Medicine examined workers' compensation medical treatment in Louisiana.They found that 3.7 percent of the physicians treating workers' compensation patients accounted for 72 percent of the workers' compensation costs.http://www.hopkinsmedicine.org/news/media/releases/workers_comp_research_provides_insight_into_curbing_health_care_costs

·A May 2011 study from the California Workers Compensation Institute (CWCI) showed that 3 percent of the prescribing physicians accounted for 55 percent of all Schedule II opioid medication in the workers' compensation system.http://www.cwci.org/document.php?file=1438.pdf

I can tell you that the medical providers mentioned in the studies above are most likely not on any employer's preferred-provider list.The injured worker is getting referred to these doctors by their attorney.Ask any adjuster and they will tell you this happens all the time.

So, how do we fix this problem?This is where the regulators come in.Consider Texas as an example of how this problem can be solved.Texas used to have some notorious medical providers in workers' compensation.Some of these physicians had been sued so many times that they lost all hospital privileges.That did not stop them from treating, as they simply set up operating rooms in their offices and continued to perform surgeries.Attorneys kept referring injured workers to these physicians, which produced horrible outcomes for injured workers.The solution in Texas was to create an "approved" list for workers' compensation medical providers. Texas realized that identifying the best doctors was not always easy, but identifying the doctors who provided the worst outcomes was a simple analysis of the data.The doctors who performed unnecessary treatment and surgeries which produced poor outcomes for the injured workers were removed from the workers' compensation system.

After my session, I was approached by several regulators who asked for my source material because they are considering conducting similar studies in their states.As the title of this article stated, controlling workers' compensation medical costs starts with the regulators.The first step is identifying the source of the problem.I applaud those regulators who are willing to take steps to protect injured workers from medical harm, and ultimately provide injured workers with the best possible workers' compensation claim outcomes.

MARK WALLS is assistant vice president of claims for Safety National, as well as founder of the Work Comp Analysis Group on LinkedIn.

September 8, 2011

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