California SB 863 Reforms: Adjusters Should Adjust - The Blowback From UR and IMR

California SB 863 Reforms: Adjusters Should Adjust - The Blowback From UR and IMR

 By Robert G. Rassp, Esq.

So, 2013 is just around the corner and we are gearing up to learn the new law and regulations so that we can apply them in our cases. We have an interim period between now and July 1, 2013 when disputes over medical necessity under utilization review denials, modifications or delays for injuries occurring prior to 1/1/13 are to be determined by an AME, PQME, or a WCJ. Disputes over physical therapy, epidural steroid injections (ESIs), discograms, and spinal surgery are to be resolved under the medical-legal method. Remember, spinal surgery second opinions under Labor Code section 4062(b) have been repealed and are no longer in effect for any date of injury as of 1/1/13, the effective date of SB 863.

For injuries occurring on or after 1/1/13 and for all injuries, regardless of the date of injury beginning on July 1, 2013, SB 863 took away judicial and medical-legal power of determining medical necessity in admitted injury cases, yielding to the utilization review process of Labor Code section 4610 and independent medical review under new Labor Code section 4610.5.

In 30 years of practicing law, there has been a sea change in the way claims examiners adjust workers’ compensation claims. Originally, upon receipt of a claim for industrial injuries, claims examiners would conduct the initial employer level investigation, authorize and schedule the injured employee for treatment, pay appropriate indemnity benefits, adjust the medical billing and hopefully close a file with a C&R. All of this was done with or without the assistance of legal counsel, but the essential adjusting of claims constituted the daily activities of the average claims examiner. What has happened during the last 30 years?

I recently attended the 21st National Workers’ Compensation & Disability Conference & Expo in Las Vegas and observed the Exhibit Hall, which looked like it was the size of three football fields. Everything a claims examiner does today seems to be outsourced – from the investigation company that performs the employer level investigation, the nurse case managers who manage the injured worker’s care while emphasizing cost containment measures, the bill reviewers, medical reviewers, UR companies, disability management companies (whatever function they perform is unknown), private disability evaluators, a “one-call” service that makes more than one call to schedule people for diagnostic studies, and a myriad of other services that adjusters no longer perform in a claim. Adjusters no longer adjust claims – they just assign these functions to outside vendors, supervise the results, react to them, and complete tons of paperwork.

Introduction of Independent Medical Review into California’s workers’ compensation system is a new element brought forth for several reasons. The official word is that IMR will better serve the workers’ compensation community by having medical necessity issues decided quickly by medical experts and not by judges or through the litigation process by medical-legal reporting from AMEs or PQMEs.

The proponents of IMR claim that the IMR process itself will promote more common sense approaches to medical treatment of injured workers. Expert physician review using California’s Medical Treatment Utilization Schedule (See Labor Code section 5307.27 and set forth in California Code of Regulations, title 8, sections 9792.20 et seq.), peer reviewed national treatment protocols, and expert opinion based on evidence based medicine will reduce medical treatment costs and eliminate unnecessary and ineffective treatment. IMR will quickly and efficiently resolve disputes over medical necessity.

Post surgery physical therapy that is routine in knee and shoulder surgery cases, medications for chronic pain, including the use of anti-depressants, diagnostic studies such as MRI and CT scans once a year (which is standard of care outside the workers’ compensation system in confirmed cases of progressive degenerative changes) to determine further deterioration or effect of treatment, ESIs instead of surgery, and repeat EMG/NCV studies that are routine in general medicine all are routinely denied under our UR process pursuant to Labor Code section 4610.

Section 4610 simply mandates that all claims administrators have a utilization review process in place – there is no statutory mandate to use it. As pointed out by the Supreme Court in SCIF vs. WCAB (Sandhagen) (2008) 44 Cal. 4th 230, 186 P.3d 535, 79 Cal. Rptr. 3d 171, 73 Cal. Comp. Cases 981, which was a fight over the need for an MRI scan, utilization review of anything is voluntary. Even the physical medicine limitations for 24 visits of physical therapy, occupational therapy and chiropractic can be overruled by a claims examiner under Labor Code section 4604.5(d)(2).

Now we introduce IMR and place the burden of appealing a UR denial, modification, or delay on the injured worker. Pursuant to Labor Code section 4610.5, the injured worker has 30 days from service of a UR denial, modification, or delay letter to sign and mail the Request For IMR to the Administrative Director to determine whether the dispute is really over medical necessity and then send it off to IMR through Maximus Federal Services in Reston, Virginia. Whereupon, the unknown IMR reviewer has 30 days to decide if the injured worker gets what medical treatment the employer’s own MPN physician is requesting, which was denied under the employer’s own UR process.

Regardless of how you feel about this and the comparison to how treatment is rendered for the same illnesses or injuries outside the workers’ compensation system, it remains to be seen if injured workers will get better, more efficient and effective medical treatment under the IMR process. The proponents tell us, even though IMR is a new concept for work related injuries, the IMR process will cause a blow-back where claims examiners can see where IMR routinely overrules UR denials, modifications and delays that we currently see in our cases. The thought is that claims examiners will see a pattern where IMR reverses UR denials, modifications or delays giving claims examiners the power to overrule UR denials in the first place, or to not even use UR at all for certain requested medical treatment requests.

In fact, some claims administrators have mandated their claims examiners to “bundle” pre-authorization for treatment and not even use UR. For example, for specific back injuries, one claims administrator pre-authorizes its own MPN physicians to provide up to 18 physical therapy visits, x-rays, an MRI scan and up to three epidural injections without any prior referral of a request for authorization to utilization review. The claims examiner simply authorizes the request for treatment from the physician. No middleman, no outside vendors, just common sense applying in these cases.

Utilization review costs about $125.00 for each referral. The cost of independent medical review has been set by regulation. Title 8 CCR section 9792.10.8 establishes a sliding scale for payment by claims administrators for the IMR process. For IMR by a medical doctor when the request is in 2013, the IMR will cost $560.00, or $495.00 if the reviewer is not a medical doctor, such as a psychologist. Expedited reviews cost $685.00 for an MD or $595.00 for a non-MD reviewer. If the IMR organization withdraws the IMR before receipt of the documentation from the parties, a withdrawal fee is $215.00. For IMR requests in 2014, these costs increase.

So for every single UR process, claims administrators are paying outside vendors about $125.00; for a typical IMR for a medical doctor review, the claims examiner will be paying $560.00. So that is $685.00 for the combined costs of UR and IMR for each request for authorization for treatment.

Look at the economics of this! Any attorney who represents injured workers should advise his or her clients – new ones and old ones – to sign the Request for Independent Medical Review on every single UR denial, modification or delay letter he or she receives from a claims administrator or its UR vendor. If an employer’s MPN physician prescribes treatment that is subject to UR and a denial, modification, or delay letter is sent to the injured worker, and if represented his or her attorney as required by the regulations (see tit. 8 Cal. Code Regulations section 9792.9(c)(4)), the injured worker should be advised by his or her counsel to sign and mail the Request for IMR to the DWC Administrative Director’s Medical Unit every single time a UR denial, modification or delay letter is received.

This will force the claims examiner to take a very close look at what is being denied, modified, or delayed and why. At any time, a claims examiner can overrule UR before the injured employee signs and mails a Request for IMR. The adjuster should adjust – beginning with when the treating MPN physician sends in the now required Request for Authorization for treatment form (See DWC Form RFA). Adjusters should not require their own MPN physicians to send requests for authorization to UR companies in the first place. Claims examiners should have the authority to adjust claims – pre-authorize treatment and stay out of the UR/IMR process, or if required to send everything through UR, to have the power from the claims administrator to overrule adverse UR determinations and allow the requested treatment. Let the adjuster adjust the claim!

In other words, good claims adjusting would leave out the UR and IMR process in the first place and be substituted by common sense or at least by some internal guidance from a medical director through the claims administrator organization. Claims examiners should be empowered to pick the battles over authorizing or not authorizing treatment – they should not be required to blindly require every RFA to go through UR.

In my office, every single UR denial, modification, or delay after 1/1/13 and after 7/1/13 will cost the claims examiner at least $685.00 for the UR and IMR process. Every attorney who represents injured workers has a duty to advise his or her client to appeal all adverse UR determinations. Perhaps this process will force adjusters to adjust medical treatment issues without creating the friction that is caused by the UR process in the first place.

Defense attorneys should always recommend that claims examiners include them in the UR/IMR loop, even though the regulations do not require service of UR or IMR notices on defense attorneys. This is because experience has shown that if a defense attorney is included for service of notices of UR denial, modification or delay, then sometimes a meaningful discussion between the defense attorney and the claims examiner will result in the requested treatment being authorized. This saves money in the long run and should be standard practice by claims examiners who have retained legal counsel.

Let the adjusters adjust these claims and stop relying on outside vendors to do their jobs for them!

© 2013 Robert G. Rassp, Esq. All rights reserved. Reprinted with permission. 

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