More than one truth – California workers’ comp

Before we jump into the above-cited topic, courtesy of the ever-enlightening Alex Swedlow, are Myths and Facts about work comp

• States with larger work comp agencies do NOT have higher work comp costs.  Nor is there a correlation due to red- or blue-state status.
• There is no correlation between fee schedules and total medical costs
• The arrival of an attorney on a claim (a quarter of CA claimants have attorneys) directly and significantly increases claim costs.
• There’s a strong correlation between attorneys per capita and work comp costs. Alex shared a great heat map illustrating this in various regions of Cali; shockingly SoCal has higher attorney involvement rates.

So, why is California’s WC medical so hard to manage?

1. It’s a very big state in terms of people and size
2. Almost no shared risk; copays, deductibles, etc that influence buying decisions
3. Disputes and dispute resolution have been a major issue

It’s this last issue that has gotten much of the attention – so CWCI has done a lot of research and published numerous studies on UR, IMR, dispute resolution and related matters.

There are two key takeaways – the vast majority of requested services flow thru the system without any review, and there’s a core group of bad actor docs who are flooding the dispute resolution system with requests for services that they know full well are going to be rejected. (this last is my interpretation).

Typically, once a utilization review system is put in place along with clinical guidelines, providers learn what will and will not be approved, and modify their behavior accordingly. For some reason, that hasn’t been the case in California, where the volume of IMR decisions increased by 15% from 2014 – 2015 – the opposite of what happened in TX.

Digging deeper, the aberrant behavior is concentrated in SoCal, due primarily to a relatively tiny number of physicians in Los Angeles.

In fact a mere 10 providers were responsible for one of every eight IMR decisions. And, 128 docs generated 48% of all IMR decisions.

These appeals are driven in large part by pharmacy – California’s annual spend on WC drugs is around a billion dollars, and about half of IMR decisions revolve around pharmaceuticals.  If CA implements a formulary, this spend could be cut by 15% to perhaps 50%.

Clearly the issue in California is NOT the wholesale denial of necessary care. Rather, it IS the fact that a very, very few providers are abusing the system while trying to deliver crappy medicine to their work comp patients.