Earlier this week I attended the Maine Workers Comp Summit; spoke on the impact of health reform on workers’ comp. One of the sessions pertained to coding medical bills, and some of the intricacies thereof.
For one (me) who spends the majority of their time dealing with higher level, strategic and tactical issues and concerns, this deep dive into medical coding brought me back to my days as an HMO data analyst – and reminded me that there’s more than one devil in the details…
These days, its more important than ever to avoid paying for diagnoses that are not directly related to the work comp injury or illness, as those payments may well trigger higher MSA allocations. Reportedly, CMS’ Boston office has stated their position on a payer’s responsibility is rather definitive; if more than $300 is reimbursed for a condition, the payer ‘owns’ that condition.
An interesting issue – well, kind of interesting to those of us who find this stuff interesting – regards the lack of coding for left or right. several in the audience noted they’d had problems in the past when they paid bills for procedures/therapy on one arm or leg when it was the other appendage that was injured at work. Evidently, the provider had not, and does not have to, send medical records or notes for the non-comp condition, therefore the payer wasn’t aware of the other injury. So when the bill for the right knee/shoulder/hand came in, the bill reviewer/adjuster saw it was the correct body part and authorized payment.
This is most definitely not new news to anyone who’s spent a big portion of their waking hours immersed in the intricacies of coding, but served as a welcome reminder to the rest of us of the challenges inherent in what looks to be a very straightforward, if not simple, methodology.
What does this mean for you?
It’s far too easy to measure bill processing by throughput, but neglecting the quality and accuracy of the coding may well be missing the forest for the trees.

Under the radar, there’s increasing evidence that employment is up, hiring is up, and the economy is recovering – and with it, the workers comp industry.
I had several conversations today that validated what I’ve been hearing for several weeks – there’s a good bit more new activity in manufacturing, construction, and logistics/transportation than there was a few months ago – activity that requires new hiring.
Evidence of this not-yet-in-the-official-reports trend comes from several sources, most importantly activity at occ health clinics. There’s been a lot of pre-employment screenings and physicals, drug testing for truck drivers and equipment operators, and a significant uptick in new workers comp injuries of late. The screenings and testings are obvious indicators of hiring, while the new injuries likely result from a faster pace of work, more overtime, and more temp workers doing jobs they are less than familiar with. (The data do indicate significant additional hiring of temp workers, with 17,000 new hires last month)
Last week’s employment report provides additional color – emplloyment was up for temporary workers and in construction. And, revisions for the two previous months indicated employment was actually higher than the original estimates.
Several work comp specialty managed care vendors are also seeing an influx of new claims, particularly among vendors that provide services common in the initial stages of a claim.
Anecdotally, (I know, a lot of this is anecdotal), I was speaking with the hiring manager for a Maine manufacturer; they have a bunch of open jobs that they can’t find ‘just the right person’ to fill. The manager was frustrated by the ops head’s inability to understand that the applicant pool wasn’t as deep or wide as he wanted. The net? There were several – actually, more than ‘several’, jobs that were going to be filled with people that may not have fit the ops boss’ specific criteria.
I bring this to your attention, dear reader, to suggest there are lots of employers looking for lots of workers, (three million workers, to be precise) but many of these employers are waiting to find just the right worker. It may well be they’ll soon give up their persnicketiness and start hiring who’s available. If – and when – that occurs, things will get better in a hurry.
What does this mean for you?
Very, very welcome news that the worst is almost behind us.

Health Strategy Associates’ First Annual Survey of Work Comp Claims IT Systems is underway. The Survey seeks input from front-line folks and execs in claims and IT, and we’ll be comparing and contrasting responses to see if – or perhaps more accurately where – there’s a disconnect or differences in opinions between the two groups.
Sandy Blunt is the brains behind the Survey; he’s been responsible for several systems selection processes and as a former CEO and COO of large comp payers, he brings a depth of experience that we’re very fortunate to have.
We’re using SurveyMonkey to collect and tabulate responses; the survey takes about 15 minutes to complete. If you are interested in participating shoot Sandy an email – his address is SBluntAThealthstrategyassocDOTcom (substitute symbols for AT and DOT).
Respondents receive a detailed copy of the Survey Report.
A brief summary version will also be available to the general public. Customized analyses of and presentations on Survey findings will be offered as well. Of course, no respondent-specific information will be provided in any version of the Survey report.
Sandy will be providing a snapshot of findings here a couple times over the next few weeks.

It’s not a crime for North Dakota state employees to use taxpayer funds to fly first class; run up hundreds of dollars in bar bills; pay for hotel rooms – then not use them; spend thousands to go to Tony Robbins seminars; pay millions to redo executive homes; drop twenty grand to go to the Presidential Inauguration; wasteful, indecent, unethical, but not illegal.
But a state employee can be convicted of a felony when his head of finance orders and pays for food for employee meetings and celebrations; discharged employees don’t pay back money they don’t owe; and the agency he runs provides employees with gift cards for motivational rewards – gift cards worth ten bucks each.
Oh, and the state employee, former state fund CEO Sandy Blunt never ordered, authorized, signed for, used, took, distributed, or otherwise handled any gift certificate. The program had been running for SIX years before Sandy arrived and the agency had a complete system running that did not include nor require his approval.
Unbelievable, but true.
That’s the situation in NoDak, where former state fund CEO Sandy Blunt was convicted of the crime for misusing more than $10,000, a sum that the prosecutor got to by adding up lots of flowers, cards, cakes, and sick leave (that had been acceptable when his predecessor authorized them) plus moving expenses paid to an employee who was fired (and, it turns out, didn’t have to pay anything back).
Yet somehow when the state university’s employees waste millions, it’s not a crime?
Can someone explain this? Anyone?

There’s been a lot going on in New York’s work comp system; heated discussions over adoption of disability and medical treatment guidelines, an uproar over assessments for self insured groups, and ongoing actions and attempted actions regarding the pharmacy fee schedule have kept our attention focused on the Empire State for lo, these many months.
Now comes news that New York may be the first state to dramatically increase payment for cognitive services. I heard this from WorkCompCentral’s Mike Whitely, who informed me that New York Work Comp Board Chair Bob Beloton is looking to raise reimbursement for physician evaluation and management codes by 30%.

Mike will have much more on this tomorrow (read WCC to see); I’ll focus my comments on the whys and wherefores.
First off, this is a good move, for many reasons. Fees haven’t been increased for 14 years in New York, making it high time for a raise.
Second, if there’s one service that is waaay under-valued in work comp, it is the time the treating physician spends with the injured worker, discussing the injury and treatment options, providing insights into medical care under work comp, educating the worker and their family about return to work, and discussing same with the employer and insurer. A 30% increase is money well spent.
Third, this will hopefully draw the attention of other states, and get them thinking about the significance of cognitive services.
All that said, I do have a major concern – as should you. About half of the care delivered to work comp claimants in NY is thru a discounted network. These networks may well try to keep their current discount arrangement, as a higher fee schedule will mean they deliver more ‘savings’ and thus earn higher fees (they get paid on a percentage of the ‘savings’, or the delta beween the fee schedule and contracted reimbursement amount).
It will be too bad if this (possible) increase doesn’t result in actual increases in reimbursement, and instead just makes networks more profitable.
What does this mean for you?
Good news.

Summer is ending next week, and favorable tax treatment will sunset not much later. With the end of vacation season fast approaching, investors will likely step up the pace, while owners looking to maximize their take-home are motivated to get deals done before 2011.
Another big motivator is the large amount of cash sitting idle as private equity firms have been waiting for things to settle down before risking their investors’ funds.
Here’s what’s happening.
ISG Holdings announced this am that they have finalized their purchase of Bunch and Associates. The deal took forever to close, but now that ISG owns the managed care vendor look for Bunch to dump their Ingenix relationship and move to Stratacare (part of ISG’s holdings).
Part of Bunch’s attraction for ISG was the potential to move their bill review from Ingenix to Stratacare, a move that will increase margins by a couple million bucks. This won’t be easy nor smooth, as Bunch has built a lot of logic in and around the PowerTrak bill review system, logic that has helped Bunch sell their services to self-insured employers. There are going to be some pointed conversations down in Lakeland (Florida, Bunch’s home) as the new owners look to maximize margins while customers, and customer advocates, look to proceed with caution.
Earlier this summer, Odyssey Investment Partners’ One Call Medical acquired transportation and translation company STOPS, broadening its workers comp portfolio. From a synergy perspective, this makes sense as injured workers often need transportation to their MRI appointment; as the largest MRI network in work comp, OCM should be able to leverage the relationship quickly.
Injured Workers Pharmacy has been looking for a buyer for some time, and the book is still out. IWP got hammered when NY changed their work comp pharmacy regs a couple years back, and has since moved into other states where they try to get claimant attorneys to get their clients to buy drugs thru IWP. Payers report IWP’s costs are much higher than the same, or essentially identical drugs purchased thru PBMs’ retail networks, making IWP persona non grata in the payer community.
PT firm Align Networks was rumored to be considering a sale this fall, but reportedly has decided to hold off for now.
There are a few more possible deals in the works, but we’ll have to wait and see what develops. I’d expect at least two more transactions in the space before the end of the year, perhaps more.

Yesterday I discussed the ongoing debate about potential changes to California’s work comp fee schedule.
In case my position was too subtle, I’ve got grave reservations about using RBRVS (Medicare) as the basis for a work comp physician fee schedule. That said, it looks like RBRVS will replace the current methodology, but there’s still a lot of tweaking to do before the move is finalized.
Today we’ll dive into facility costs, which look to be rising rapidly in the Golden State, driven in part by a loophole in the regs that allow double billing for spinal implants, along with consolidation in the hospital market and the attendent market power. This power is allowing hospitals to get ever-higher pricing in their negotiations with work comp network providers, which, in turn, is reducing ‘savings’ delivered by those networks to payers.
Here’s a quick review of the CA facility fee schedule and some of the nuances and effects thereof.
Inpatient
The Official Medical Fee Schedule (OMFS) for inpatient care is facility-specific, based on Medicare’s MS-DRG methodology plus a 20% multiplier. Thus, WC pays about 20% more than Medicare for inpatient services. The idea behind MS-DRGs was sound – pay hospitals more accurately based on better coding of comorbidities and complications.
In reality, costs have escalated under MS-DRGs as hospitals have gotten better at coding, leading to payments almost 5% higher than projected under the previous DRG methodology.
According to a study published in July of last year by RAND, the spinal implant pass-through results in additional costs of at least $60 million to the system, and that estimate was based on Medicare’s average payment for the devices. Anecdotally, it appears that many work comp payers are likely paying well above that level. Efforts are underway to address this issue, but in the meantime payers are paying much more than they should for these devices.
Additionally, it isn’t too much of a leap to think that this over-payment may drive additional unnecessary utilization, as unscrupulous providers seek to maximize their revenues by performing as many procedures as possible.
Ambulatory surgery
This has been a bone of contention (sorry) for some time for WC payers in California. The regs actually peg reimbursement to hospital fees, at the same 120% of Medicare, resulting in reimbursement that many view as excessive. Quite excessive. Regulators are looking to revise the regs, and many expect reimbursement to decline as a result.
The revision process is happening as you read this; the latest proposal calls for adjusting the ambulatory surgical center fee schedule by reducing the multiplier for ambulatory surgical center facility fees to 100% of the Medicare outpatient fee schedule, plus a 2% reimbursement for high cost outlier cases. (here’s the latest update.)
So, what’s the net?
I’d argue, as many have, that the work comp facility fee schedule is too high. In some other states this wouldn’t be too much of an issue, as most bills would be repriced to a network discount, negating the fee schedule problem (albeit not entirely).
Unfortunately for payers in California, hospitals’ negotiating power has grown to the point where they can often dictate terms to large group health payers, who have much more bargaining power than work comp networks. In many instances, networks are negotiating deals with hospitals that are not much better than fee schedule
The result? Of late we’re seeing payers’ facility costs climb by double digits, with little relief in sight.
So what to do?
Rather than look for discounts, look at underlying costs. There are wide variations between and among facilities for the same services, and by comparing costs and outcomes, payers can identify facilities that, while they may not offer a ‘discount’ per se, offer a much lower price than a hospital that does promises a discount.
A good place to start is the Dartmouth Atlas where you can find cost and outcome data for specific hospitals.