Sea Change in Workers Comp SB 863 Overview and Update

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1 Sea Change in Workers Comp SB 863 Overview and Update May 14, 2015 Panelist: Destie Overpeck Administrative Director Division of Workers Compensation Rupali Das, M.D. Executive Medical Director Division of Workers Compensation License 1 No

2 Why SB 863? PD benefits had been cut by more than 50% as a result of SB 899 (2004) Delivery of medical treatment: Employees complained of delays and denials of care Employers complained of runaway cost and the inability to block unnecessary medical treatments Delays in dispute resolution Costs in CA remained among the highest in the nation License No

3 Senate Bill 863: Workers Compensation Reform 2012 Bipartisan bill Labor management negotiation Guiding principles Restore PD benefits Improve access to appropriate p medical care Reduce costs for employers Where possible, increase system efficiency License No

4 Workers Compensation Benefits Medical care: To help the injured worker recover from an injury or illness caused by work Temporary disability (TD) benefits: Payments to the injured worker if the injury prevents him/her fromdoingusual jobwhile recovering Permanent disability (PD) benefits: Payments if injured worker doesn't recover completely Supplemental job displacement (SJDB) benefits: (if date of injury is in 2004 or later): Vouchers to help pay for retraining or skill enhancement if injured worker doesn't recover completely and doesn't return to work up to $6000 Death benefits: Payments to the spouse, children or other dependents if a worker dies from a job injury or illness. Return to Work Supplement: (if date of injury is on or after 1/1/13) $5000 License No

5 TD Benefits for injuries on or after 1/1/15 Average Weekly Earnings Temporary Disability Rate Below $ $ $ $1, /3 x Average Weekly Wage Above $1, $1, License No

6 Overview of SB 863 Changes Permanent Disability Medical Treatment QMEs/AMEs Utilization Review Independent Medical Review (IMR) Medical Provider Networks (MPN) Reimbursement for services Independent d tbill Review (IBR) Fee schedules Liens Other Supplemental Job Displacement Voucher Return to Work Fund SlfI Self Insured demployers License No

7 Permanent Disability Benefits PD benefits increase a main focus of statute Prior to 1/12, max weekly rate was $ for most severe (70 99% PD rating) Approx 30% increase occurred in two steps DOI on/after 1/1/13 DOI on/after 1/1/14 / max increased to weekly rate of $290 Rating formula modifier now 1.4 (used to be ) represents diminished future earning capacity License No

8 DWC Regulations License No

9 SB 863 signed 9/18/12, effective 1/1/13 SB 863 required 16 setsofimplementing regulations: 13 SB 863 sets of regulations have been completed 6 emergency SB 863 regulations were in effect by 1/1/13 RTW Supplemental Payment in effect on 4/13/15 Ambulatory surgery center (ASC) regulations save $80M per year Reduction of spinal implant duplicate payment saves $110M per year Lien filing fee regulations save $690M per year (WCRIB) License No

10 SB 863 Status Results Effective Date Per Implementation Labor Code Ambulatory Surgery Center Completed WCIRB 2/14: 26 28% Jan. 1, 2013 (ASC) Regulations effective: decrease in ASC costs ($80 LC /1/13 M) Spinal Implant (Inpatient Fee Schedule) LC Completed Regulations effective: 1/1/13 WCIRB 2/14: 56% fee reduction; reduced incentives ($110 M) Jan. 1, 2013 Interpreter Certification Completed Gov t Code et seq. Emergency regs effective: LC 4600, /1/13 / Regulations effective: 8/13/13 CCHI and National Board certification tests for medical Jan. 1, 2013 Extended to 3/1/14 per AB 1376 License No

11 SB 863 Implementation Lien filing fees and e document filing LC , Status Results Effective Date Per Labor Code Completed Emergency regs effective: 1/1/13 Final regulations effective: 12/16/ % less lien filings $61.7 M lien fees collected as of 3/15 WCRIB: $690 M savings a year Jan. 1, 2013 (Preliminary injunction prohibits activation fee) IBR; Paper and Electronic Billing LC 139.5, ,.3,.4,.6, 4622 Completed Emergency regs effective: 1/1/13 Final regulations effective: 2/12/14 3,115 IBR applications rec d as of 1/28/15 For dates of service on or after Jan. 1, 2013 IMR, UR (including RFA form) Completed LC 139.5, 4610, , Emergency regs effective: 1/1/13 Final regulations effective: 2/12/14 312,377 IMR applications rec d as of 2/15 39,212 open IMR requests (13% of total) For injuries on or after Jan. 1, 2013; For decisions communicated on or after July 1, 2013 License No

12 SB 863 Implementation Status Effective Date Per Labor Code QME LC 139.5, 4610, , Completed Emergency regs effective: 1/1/13 Final regulations effective: 9/16/13 For injuries on or after Jan. 1, 2013; For decisions communicated on or after July 1, 2013 SJDB Completed LC , , Emergency regs effective: 1/1/13 New forms effective: 1/1/14 Physician Fee Schedule (RBRVS) LC Completed Regulations effective: 1/1/14 Jan. 1, 2013 Jan. 1, 2014 Predesignation/ Chiropractor PTP LC 4600 Completed Regulations effective: 7/1/14 Jan. 1, 2014 License No

13 SB 863 Implementation MPN LC and Status Next Steps Effective Date Per Labor Code Completed Regulations effective: 8/27/14 Jan. 1, 2013 Copy Services Fee Schedule LC Completed Regulations effective: 7/1/15 Dec. 31, 2013 Interpreter Fee Schedule LC 5811 Draft regulations posted on DWC forum through 5/7/15 Begin formal rulemaking Jan. 1, 2013 License No

14 SB 863 Implementation Home Health Care Fee Schedule LC 4600, Status Next Steps Effective Date Per Labor Code RAND study posted: 1/27/15 Public meeting: 3/3/15 Post draft regulations on DWC forum July 1, 2013 Benefit Notice Regulations LC Public hearing: 9/3/14 15 day comment period: 5/11/15 Issue revisions for 15 day comment period Return to Work Supplemental Program LC (DIR regulations) Completed Regulations effective: 4/13/15 For injuries occurring on or after 1/1/13 License No

15 Utilization Review and Independent Medical Review License No

16 Utilization Review (UR) UR is the process used by employers to review treatment to determine if it is medically necessary. All employers handling their workers compensation claims are required by law to have a UR program. Treatment requests must be submitted on the DWC Request for Authorization (RFA) form. UR is required to use the DWC Medical Treatment Utilization Schedule to determine medical necessity. Anyone handling claims can approve treatment recommended by a doctor. Only a doctor in an appropriate specialty can deny or modify recommended treatment. License No

17 Independent Medical Review (IMR) Process to appeal recommended treatment that was modified or denied following UR Replaces Qualified Medical Evaluator procedure Medical expertise to resolve treatment disputes to provide timely, appropriate p care for injured workers IMR contractor is Maximus Federal Services Costs paid by the employer For applications after Jan. 1, 2015: $390 Withdrawal fee: $123 Not the Medical Provider Network IMR program License No

18 IMR Process Requested by injured worker/designee 30 days from issuance of UR determination Complete IMR application requires: Signed, completed IMR Form May have authorized Representative Copy of UR determination letter Copy of application sent to claims administrator IMR may be terminated at any time if treatment is approved and documentation is provided License No

19 Timeline: Complete IMR Request UR delay/denial/modification Up to 30 days IMR request submitted to MFS MFS assigns to reviewer & requests medical records q Up to 50 days MFS issues determination License No

20 IMR Highlights IMR applications are filed for between 1% and 5% of all medical treatment requests IMR decisions are issued less than 30 days after receipt of complete medical records The largest category of IMR requests are for medications 42% of 2014 IMR decisions: pharmaceuticals 26% of pharmaceutical IMRs: narcotic pain medications Overturns UR decisions in 12% of final determinations Disproportionately more IMR cases than injury claims were filed in Los Angeles, Inland Empire, Central Coast License No

21 DWC Quality Assurance for IMR Conductoversight oversight of program Continuous process improvements Track metrics and conduct data analysis Random review quality of final decisions Provide transparency Redacted decision letters publicly available Decisions/IMR_Decisions.asp Report issued din Educate stakeholders to improve quality of care for workers License No

22 Most treatment requests are approved 550, ,000 new WC claims filed every year requiring medical treatment. 2014: 26.2 million treatment request bills reported to DWC s Workers Compensation Information System for 2013 date of service (all dates of injury). 486,000 treatments disputed through IMR (high estimate) 187,000 IMR applications, 145,000 IMR final determinations, 2.6 treatments per IMR letter. License No

23 2014 disputed treatments with IMR FDLs compared to 2013 paid medical bills Millions Thousand 26.2 million 2014 estimated number of IMR disputed treatment issues esbased onimr Applications and an average of 2.6 Treatment Issues per IMR Final Determination Letter date of service medical bill lines for all dates of injury from WCIS data License No

24 2014 IMR: Pharmaceutical Issues Dominate Pharmaceuticals Therapies (PT/OT) Miscellaneous Equipment Diagnostic Test Surgery* Service Category Not Avail. Radiology Acupuncture/Chiropractic Evaluation & Mgmt Psychology/Psychiatry Facilities/Home Health Care 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% *Surgical issues include surgical procedures, pre and post operative care, andengagement of assistant surgeons. % Of All Treatment Decisions, N=275,476 License No

25 2014 Pharmaceutical IMR Decisions: Top Drug Classes, Random Sample 30% 25% 20% 15% 10% 5% 0% Narcotic analgesic Topical analgesic Muscle relaxant Proton pump inhibitor Antidepressant NSAID Anxiolytics, sedatives, hypnotics Benzodiazepine Random sample of 780 pharmaceutical IMR decisions from License No

26 Outcomes in 2014 IMR Final Determination Letters Overturn N=9,098 (6%) Partial Overturn N=8,222 (6%) Uphold N= 127,324 (88%) 2014 IMR Final Determination Letters, N=144,644 License No

27 2014: More IMR Cases than Injury Claims in Los Angeles, Inland Empire, Central Coast LOS ANGELES (N=53,641) INLAND EMPIRE (N=37,030) BAY AREA (N=34,471) CENTRAL VALLEY (N=18,499) CENTRAL COAST (N=13,608) SAN DIEGO (N=9,104) % of IMR Closed Cases % of WCIS Claims SACRAMENTO VALLEY (South) (N=7,671) EASTERN SIERRA FOOTHILLS (N=3,715) NORTH STATE SHASTA (N=3,333) SACRAMENTO VALLEY (North) (N=2,507) 0% 10% 20% 30% 40% License No

28 Monthly IMR Application Volume Steady License No

29 2014 IMR Applications: 62% Eligible Eligible Applications in Unique Eligible Received Jan 14 Feb 14 Mar 14 Apr 14 May 14 Jun 14 Jul 14 Aug 14 Sep 14 Oct 14 Nov 14 Dec 14 License No

30 Average 2.6 Treatment Issues per IMR Final Determination Letter 5 to 10 Issues 8% 10+ Issues 1% 1 Issue 44% 3 to 5 Issues 27% 2 Issues 20% 2014 Average 2.6 Issues per IMR with FDL Max Issues for single IMR FDL 37 License No

31 Most Injuries Date from 2012, ,000 30,000 25,000 20,000 15,000 10,000 5, License No

32 2014 IMR Closed Cases: 70% of Filed by Representative Injured Worker No Representative N=55,960 (30%) Injured Worker Representative N=132,012 (70%) 2014 Closed IMRs, N =187,972 License No

33 Medical Treatment Utilization Schedule TheMTUS provides bestpractices for treatingcommon work related injuries and illnesses. California doctors treating injured workers are required to use the MTUS as the basis of recommended treatment Consists of several chapters Neck and upper back Shoulder Elbow disorders Forearm, wrist, and hand Low back Knee Ankle and foot Stress related conditions Eye Acupuncture Chronic pain treatment Opioids for non cancer pain Postsurgical treatment License No

34 National Epidemic of Unintentional Prescription Drug related related Deaths CDC. Vital Signs: Overdoses of Prescription Opioid Pain Relievers United States, MMWR 2011; 60: 1 6. National Center for Health Statistics, 2012 License No

35 Opioid Treatment for Non Cancer Pain Basic Principles All opioid doses carry some risks Higher risks with some health conditions and medications Not first line of treatment May be used for severe acute pain with limited doses Combine with other types of treatment (e.g., physical therapy) Monitor use (e.g., check CURES*) Discontinue as soon as possible (taper) Follow patients on chronic treatment closely Recommendations consistent with Medical Board of California Opioid guidelines *Controlled Substance Utilization Review and Evaluation System License No

36 Integration Across Guidelines Opioid Guidelines Will enter 45 day Public Comment period (rulemaking) Along with Chronic Pain Other Treatment Guidelines Other guidelines to be updated soon thereafter MTUS Chapters Opioid Guideline Chronic Pain Treatment Guidelines License No

37 License No

38 Independent Bill Review (IBR) License No

39 Independent Bill Review (IBR) Process to resolve disputesregarding theamounts to be paid for medical services in the workers comp system Will not apply to cases: Where the injury itself is in dispute Where there is a dispute about whether or not the provider is authorized to treat the worker IBR provided by Maximus Federal Services License No

40 IBR: Who and What? Providers File for IBR Must us the AD form (DWC Form IBR 1) Provider must pay a fee ($195) Reimbursed by claims administrator if provider prevails May request consolidation of separate requests There must be a fee schedule for service billed May withdraw IBR request at any time prior to determination License No

41 IBR Applications, IBRApplications Through December 2014: N=2,969 License No

42 IBR: Physician Service Most Common 1,200 1,000 1, IBRApplications Through December 2014: N=2,969 License No

43 IBR Decisions with a Single Service: Most Decided in Favor of Provider Decided in favor of Claims Administrator, 552 (38%) Decided in favor of Provider, N= 887 (62%) 1439 out of 1952 IBR decisions thru December 2014 disputed payment for a single service License No

44 Resources DWC Medical Unit Forms Independent Medical Review Medical Treatment Utilization Schedule Regulations License No

45 Questions? Disclaimer Keenan & Associates is an insurance brokerage and consulting firm. It is not a law firm or an accounting firm. We do not give legal advice or tax advice and neither this presentation, the answers provided during the Question and Answer period, nor the documents accompanying this presentation constitutes or should be construed as legal or tax advice. You are advised to follow up with your own legal counsel and/or tax advisor to discuss how this information affects you. License No

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