10 Ways to Fix CA Workers' Comp

10 Ways to Fix CA Workers' Comp

Today, the California Division of Workers’ Compensation (DWC) will host a virtual public meeting “to hear ideas to improve the efficiency and quality of care provided to injured workers.”

We encourage workers’ comp providers to sign up and be heard (link below). Unfortunately, you’ll only be heard for a maximum of 3 minutes, the amount of time the DWC allows anyone who wishes to speak.

DaisyBill has spent nine years navigating everything that’s wrong with the current system. We represent over 1,500 California providers who continue to treat injured workers, despite rampant inefficiency and unfairness. So far in 2021, these providers have submitted over 1.4 million California workers’ comp bills and almost 200,000 Second Review appeals to dispute incorrect bill payments.

Based on our extensive experience, below we list 10 changes to California workers’ comp that would empower providers to treat injured workers more efficiently and sustainably.

Rather than try to squeeze one or more proposals into the 3-minute time limit allotted for each speaker at the DWC meeting, we believe it would be more efficient (See? We’re doing it already) to share our proposals in this space.

If you plan to attend the event, we encourage you to echo any of the proposals below.

1. Make Authorization (Actually) Guarantee Payment

The Problem: Prior to treating an injured worker, California requires the doctor to submit a completed DWC RFA Form to obtain authorization from the employer for the proposed treatment (yep, in California employers determine whether treatment is medically necessary).

Doctors and staff pour massive amounts of time, effort, and hassle into submitting proper Requests For Authorization (RFAs), and tracking the employers’ Utilization Review (UR) decisions. But too often, even after the employer approves the requested treatment, payers still refuse to reimburse doctors for authorized treatment. 

How is this possible? The payer (falsely) claims lack of authorization — even when authorization is clear and verifiable — and the DWC often deems authorization "disputes" ineligible for Independent Bill Review (IBR). The payer and the DWC essentially leave the doctor unpaid, even when the employer unquestionably authorized the treatment.

The Fix: The State of California should stop falling for the payers’ gambit of (falsely) claiming lack of authorization to avoid IBR. When clear proof of authorization exists, IBR should proceed.

Further, the DWC should penalize claims administrators that refuse to pay doctors for authorized services when the authorization is submitted with the bill.

Authorization to treat an injured worker should guarantee payment. No excuses, no exceptions. Of course, to accomplish the above, we’ll first need to…

2. Reform How UR Decisions Are Communicated

The Problem: There’s a double standard when it comes to authorization — and it’s causing chaos.

As mentioned above, to request authorization, the doctor must submit the DWC RFA form, filled out correctly. But the claims administrator may respond to the RFA however they choose. If they want, the claims administrator can share the UR decision in haiku form. The result is a mess.

For example, some claims administrators:

  • Respond with pages of irrelevant information, through which providers must dig to figure out what’s authorized
  • Respond to a single RFA with separate UR decisions for each requested treatment
  • Return “conditional” authorization, illegally claiming they can rescind authorization if the doctor isn’t in the right Medical Provider Network (MPN)
  • Send UR decisions setting arbitrary deadlines by which the doctor must render the authorized treatment
  • Direct the provider to contact a network to arrange care for the injured worker

The Fix: Stop the flow of irrelevant information dumps and conditional authorizations by requiring claims administrators to respond to the RFA form on the RFA form.  Alternatively, create a standardized UR decision form that claims administrators must use in response to the RFA (AND penalize claims administrators that fail to send compliant UR decisions).

3. End the MPN System

The Problem: Many claims administrators use Medical Provider Networks (MPNs) to improperly deny payment, or force providers into revenue discount agreements.

In theory, MPNs are a way for employers to maintain a trusted circle of providers for their employees. In real life, insurers and other entities have hijacked MPNs to justify questionable discounts, to illegally rescind authorization, and to bully doctors into Preferred Provider Organizations (PPOs).

On top of all that, it’s next to impossible for doctors to keep track of which MPNs they’re in. Currently, the DWC lists over 2,600 MPNs registered in California. Payers, some of which maintain dozens of MPNs, add and delete doctors from each willy-nilly, leaving patients and providers lost as to where exactly they can give and receive care.

Worst of all, the evidence suggests that MPNs are having no discernible positive impact on controlling employer costs. Take a look at this 1,238 page PDF of Gallagher Bassett’s MPN; we defy anyone to explain how it helps injured workers receive care. 

Since all treatment must be authorized, what is the purpose of an MPN? There are no defensible reasons to burden providers with the administrative hassle necessary to manage over 2,600 of these needless friction points.

The Fix: California legislators tried to fix this. Assembly Bill 1465 — in its original form — would have allowed injured workers to choose a provider from a statewide network, effectively rendering MPNs null. But at the 11th hour, the bill was gutted, replacing the entire plan with a toothless “study.”

California should resurrect the original intent of AB 1465, and end this corrupted MPN system once and for all.

4. End PPO Discounts by Enforcing LAB § 4609

The Problem: California Labor Code Section 4609 theoretically protects providers against “silent” PPOs, i.e. the leasing of contractual discounts without the provider’s knowledge. Yet often, when a provider requests proof of the agreement used to discount their reimbursements, claims administrators cannot produce the signed PPO contract.  

Workers’ comp doctors are routinely shocked to discover that once the PPO gets a signature on a discount contract (and often, even without a signature), the PPO rings the dinner bell for insurers, bill review companies, and other entities, who can barely keep from trampling each other on their way to the discount trough.

Repeatedly, DaisyBill clients have requested that claims administrators furnish evidence of a signed PPO contract — and zero payers have been able to furnish the requested contract that (supposedly) allows the payer to take the provider’s revenue.

Daily, DaisyBill publishes data as evidence that discount entities reduce reimbursement for California providers to rates well below those allowed by the Official Medical Fee Schedule (OMFS), making the treatment of injured workers financially unsustainable. The result of this unfettered discount sharing is stories like our recent article, “PPOs Helped Close Our Doors.”

The Fix: California must enforce Labor Code §4609. When the claims administrator cannot actually produce the (signed) contract at the provider’s request, the state should restore any disputed reimbursement amounts, disallow further discounts (AND penalize claims administrators that ignore the Labor Code).

5. Sanction Payers for Creating Needless Disputes

The Problem: Claims administrators deny or adjust payments for blatantly invalid reasons, seemingly betting that the doctor will fail to dispute the incorrect reimbursement. Claims administrators know that California allows the claims administrator to keep the doctor’s payment, by default, if the doctor fails to appeal an incorrect reimbursement.

To receive payment for a single bill, California workers’ comp requires a doctor to submit up to three separate submissions, as follows:

  1. An initial bill, followed by
  2. A Second Review appeal, followed by
  3. A $180 fee to file for IBR

And the DWC can’t figure out why doctors won’t treat injured workers?!

It’s a rigged game of chicken — the payer pulls a deeply cynical move, like denying the initial bill by falsely asserting lack of authorization (even though the doctor included proof of authorization with the bill). If the doctor manages to appeal the false denial, the payer will deny the Second Review appeal as a duplicate bill submission. If the doctor fails to pay $180 to file for IBR, the payer keeps the doctor’s revenue.

Bogus denials and incorrect reimbursements force providers to either capitulate, or commit HUGE administrative resources to receive correct payment.

Worse, as the provider escalates the dispute, the DWC allows the payer to change its reasons for denying payment. For Second Review appeals, the payer can assert a different denial reason than initially cited in the original EOR. When the provider requests IBR, the DWC allows the payer to change its denial or adjustment reasoning again.

The Fix: California allows payers to keep providers’ reimbursement by default, unless the doctor fights back by timely filing a Second Review appeal and paying $180 to file for IBR. Instead, California should protect providers by penalizing payers that repeatedly attempt to game the appeal system.

Additionally, payers should not be allowed to change the denial or adjustment reasoning reflected in the original EOR, as a dispute moves through different stages of appeal.

6. Clarify IBR Eligibility Rules

The Problem: The DWC and its IBR proxy, Maximus, are wildly inconsistent and self-contradictory regarding which disputes qualify for IBR.

There is no shortage of examples. In case after case, the DWC has deemed disputes ineligible for IBR, despite IBR having resolved identical cases on numerous other occasions. Usually, it’s because the DWC claims some kind of “threshold” issue, like liability (or unbelievably, authorization), disqualifies the dispute — regardless of whether a threshold issue actually exists.

It’s hard to imagine anything more wasteful, infuriating, and frankly embarrassing for the state.

Doctors literally attach identical previous cases to their IBR requests, spelling out the appropriate precedent, only to find the DWC’s coin landed on “tails” that day, and the dispute is ineligible. The only recourse then is to file a costly, time-consuming lien where payment can be delayed for years.

The Fix: The DWC and Maximus must look at their contradictory decisions (seriously, just follow the links above) and decide one way or another what constitutes a “threshold” issue and what doesn’t. Inform the public, then stick to the standard consistently.

7. Enforce IBR Decisions

The Problem: Even when a provider pays $180 to go through the soul-crushing hassle of fighting and winning an appeal, there’s zero guarantee the payer will comply and pay what’s owed.

We’ve seen it over and over. Disputed payment owed, penalties, interest payments, and restorations of the $180 IBR filing fee simply don’t make it to the doctor — despite the DWC’s and/or Maximus’ orders.

People who fail to pay traffic tickets end up with a bench warrant. But for some reason, insurers who owe providers are apparently on the honor system (which they happily ignore).

The Fix: Create a few California-specific procedure codes, and make disputed payment amounts owed, penalties, interest payments, and IBR filing fees billable by the provider. Currently, such payments are (pardon us while we stifle the laughter) “self-executing,” i.e. the payer is simply trusted to do the right thing → This. Does. NOT. Work.

8. Reform Medical-Legal Record Review

The Problem: Attorneys for both parties dump comical amounts of medical records on Medical-Legal physician evaluators, sending costs into the stratosphere.

By far, the single biggest contributor to rising Medical-Legal evaluation costs is record review. That’s because no one seems to care if the records a physician receives are necessary, redundant, or even relevant.

Recently, a DaisyBill provider received almost 8,000 pages of records for a single evaluation. At $3 per page (for every page not included in the base evaluation fee), those records added $22,878 to the bill — for a $2,015 evaluation.

Don’t blame the doctors for out-of-control costs; physician evaluators must review what they’re sent.

The Fix: Standardize the information collected for workplace injuries and illnesses. It’s almost 2022, and workers’ comp has been in existence for over a century. The technology exists to collect the data necessary to better understand the treatment required and given to injured workers.

California workers’ comp would work infinitely better by replacing the ancient forms with well-thought-out requests for information that doctors are paid to collect.

9. Update the Intake Process

The problem: California workers’ comp is stuck in the pre-digital age when it comes to managing and accessing patient information.

For Medicare or group healthcare patients, a doctor’s staff can easily access demographic and billing information via the patient’s card or ID number. No such luck in workers’ comp.

The intake process for an injured worker is laborious and extraordinarily time-consuming for the doctor's staff. California workers’ comp expects doctors' staff to somehow contact the adjuster (good luck!) and gather all of the information listed on this intake form.

The Fix: The state should require claims administrators to send providers a pre-established, mandated form listing all the information a doctor requires to treat an injured worker.

That includes the applicable MPN, where to fax RFAs for authorizations, the electronic billing clearinghouse used by the claims administrator, the Payer ID assigned to the claims administrator, the assigned Primary Treating Physician (PTP), and more. This information should be readily available for distribution by the claims administrator to doctors willing to treat injured workers.

10. Enforce Workers’ Comp Laws, Regulations, and Rules

The Problem: Payers ignore state workers’ comp laws, regulations and rules — because it’s better than even money they’ll get away with it.

Where to begin? From failing to comply with laws requiring payers to accept electronic bills and return electronic Explanations of Review (EORs), to fabricating the details of EORs, to ignoring appeals, to ignoring the results of appeals, the list goes on longer than any blog post should.

All of this is the purview of the DWC, except the DWC abdicated its responsibility long ago. Doctors in California are left fending for themselves in a rigged system.

Because of that, payers simply don’t go out of their way to stay compliant. Worst-case scenario, the provider wins an appeal and maybe the payer has to comply. Best case, the provider doesn’t fight back and the payer keeps money they never earned — driving doctors out of the system and limiting options for injured workers.

The Fix: If DaisyBill can easily access all the data necessary to determine payer compliance, so can the California DWC. The DWC needs to start enforcing payer compliance with state laws, regulations and rules.

Some of the proposals above are relatively easy to execute. Others would require a serious investment of time and effort. All of them would save precious time and resources, with the clear vision and political will necessary to make them happen.

Your move, California.

Make workers’ comp a better investment. From fee schedule calculators to billing software to complete managed billing, DaisyBill has your back. Contact us to learn more.


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