Turning the Clock Back on California’s Workers’ Compensation System

The California Applicants’ Attorney Association (CAAA) is promoting AB 1107 to California Legislators in hopes of materially modifying utilization review exemptions for medical treatment. CAAA has gone on the record stating that they are “dealing with a system that is broken and has failed to deliver the necessary medical care to workers who suffer job-related injuries, whether by lack of accountability or blatant discrimination”.

Is AB 1107 a step in the right direction in promoting prompt, adequate medical treatment for injured workers in the State of California?

In concept, AB 1107 seems like a reasonable idea:  Remove layers of potentially unnecessary validation for the medical necessity of medical treatment and expedite the delivery of said treatment to the injured worker. The bill’s overly simplistic approach, however, sets the California workers’ compensation industry up for trip to the past – more than a decade in the past.

Removing Utilization Review

According to California’s Division of Workers’ Compensation (DWC), Utilization Review (UR) is the process used by employers or claims administrators to review treatment to determine if it is medically necessary. UR is used to decide whether or not to approve medical treatment recommended by a physician which must be based on the medical treatment guidelines.

UR has been under the microscope in California for a number of years. UR over-use is frequently debated on the California workers’ compensation education conference circuit and is often credited to be a material driver of spending waste in the state. However, it is important to realize that inappropriate medical treatment administered by a physician (within an MPN, or otherwise) such as a spinal fusion, would be costlier and may cause more harm to the injured worker than good.

The public’s interest in the program seemingly peaked with the publication of the King v. CompPartners, Inc. case in August 2018. California’s Supreme Court ruled that workers’ compensation law provides the exclusive remedy for an employee who alleges injuries caused by a utilization reviewer’s denial of medical treatment.

Editorials published following the case verdict have argued that the workers’ compensation system may not be working as legislature intended. Consequently, I made a prediction in a blog published in September 2018 that there would be an effort “to unravel the UR and IMR processes”. This is precisely the aim of AB 1107 and its proponents.

Unintended Consequences of AB 1107

If the fundamental purpose of UR is to decide whether or not to approve medical treatment, which must be based on California’s adopted evidence- based medical treatment guidelines and drug formulary, the byproduct of eliminating this process is effectively removing the use of evidence-based medicine in determining medical necessity for requested treatments.

A study by the California Workers’ Compensation Institute (CWCI) captures the impact of removing UR on the use magnetic resonance imaging (MRI) in Washington State. Washington’s Department of Labor and Industries (L&I) measured the effect of eliminating UR on MRI use in 2003. Their assessment found an increase of 54% in spinal MRI scans and a 72% jump in lower extremity MRI scans. According to L&I, reviewers were unable to identify any other factors than the removal of UR that accounted for the material increases in MRIs.

Bypassing UR is equal to bypassing the use of evidence-based medicine, a cornerstone of California’s workers’ compensation approval process. Evidence-based medicine was adopted to control over-utilization of medical services, set parameters for effective care, and to reduce treatment costs.

By the Numbers

The validation of the use of evidence-based medicine through UR has proven to be effective in California. The most recent study by the CWCI on Independent Medical Reviews (IMR) volume and outcomes states that UR decisions have been upheld 90.7% of the time.

This means that IMR physician reviewers agreed with UR physician reviewers 90.7% of the time on the modification or denial of the treating provider’s medical request. It is important to emphasize that the treatment request modifications, denials and subsequent independent reviews were conducted by physicians. IMR decisions incorporate the review of medical records and other information provided to support the request, as well as a review of recommendations from California’s evidence-based medical treatment utilization schedule (MTUS).

CWCI’s data also identifies that the majority of disputed medical services that go through IMR originate from a small number of physicians. Specifically, the top 10% of physicians identified in the IMR decision letters issued for the study period (1,190 doctors) accounted for 86% of the disputed service requests, while the top 1% (119 providers) accounted for 44% of the disputed services.

DWC Administrative Director George Parisotto addressed an audience at the California Self Insurers Association’s 2019 annual education conference and stated that according to DWC data, 85% of workers’ compensation claims that request IMR are represented by an attorney. This brings into question whether the high volume of IMRs is attorney driven.

An assessment of California’s workers’ compensation reforms (including IMR) conducted by the Department of Industrial Relations (DIR) reported that the average medical costs per claim (excluding medical cost containment expenses) decreased by about 8% between 2011 and 2015 while benefits for workers for permanent disability increased approximately 30%. The report also found that more than $41 million in Return to Work supplemental payments had been disbursed to eligible workers whose benefits are disproportionately low in comparison to their earnings losses.

“A focus on evidence-based medicine has had wide-ranging impact, reducing costs and unnecessary treatment and creating an efficient Independent Medical Review (IMR) to resolve disputes.” (California DIR)

By the numbers, medical disputes in California are not widespread. When disputes arise, the dispute resolution process (i.e., UR and IMR) is effective in protecting injured workers from inappropriate medical treatment and employers from unnecessary expense.

The workers’ compensation system in California is far from perfect. However, methods to expedite the delivery of care to injured workers already exist. Examples range from 30-day Pass-through / 30-day Exemption Items per SB 1160, Expedited Review, and Prior Authorization Lists. IMR processing timeframes have also improved to 9-days (average age from receipt of complete medical records) as of November 2018 (Parisotto, George. CSIA Conference Presentation. 09 April 2019).

The solution is not to repeal more than a decade of progress by passing over-reaching legislation. The solution is aligning with partners that value scientific evidence, improved health outcomes, collaboration with all stakeholders involved in the care and claim continuum, and whose practices are founded in transparency.

The vehicle to deliver prompt and appropriate medical treatment to injured workers is fueled by evidence-based medicine. If the California workers’ compensation community continues to work with the DWC to ensure the use of it in the clinic, the solutions that AB 1107 seeks to produce will come to fruition.

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