WSI’s legal folks are going around their own Medical Director to outside, part-time, contract medical directors when they want a certain opinion.

Thanks to Tony, I learned of the dispute between the North Dakota state fund’s medical director and that august entity’s legal department early today (hat tip to WorkCompCentral’s Peter Mantius); it took me quite a bit longer to get the back story on this mess.

And it is a mess.

Here’s the issue.  When the claims and legal departments want a specific answer about a medical issue on certain claims they DON’T ask WSI’s Medical Director.  No, they send it to one of two outside reviewers and skip routing it to, or even involving their in-house, full-time, employed Medical Director.  By all accounts the Medical Director, a Dr Luis Vilella, is widely respected, known to be a “team player”, and interested in nothing more than ensuring the claimant gets the right medical treatment and the correct medical determination.

Evidently some claims and legal folks at WSI don’t like it when their view of a claim is inconsistent with that of Dr V, which is why they avoid involving the good doctor on specific claims.  This has been going on for some months, until finally Dr V sent a letter about the issue to WSI’s director, the famous ex-state-trooper-now-workers’comp-CEO Bryan Klipfel. (the letter was obtained by the local paper in a freedom of information request)

In part, Vilella’s letter read: “How can WSI impartially adjudicate a medical claim when its own Director of Legal Services, Attorney Green, disregards litigation support that WSI’s Medical Director offers on matters of disease and injury causation?”

It would be bad enough if this was only on one claim – but it most definitely isn’t.  In fact, sources indicate this has been happening for several years, including at least two incidents where WSI managers tried to alter his medical opinions.  In addition, Vilella is being marginalized within WSI; excluded from meetings focused on medical topics, prevented from meeting with Sedgwick’s on-site auditors; and pushed three levels down below Klipfel in the reporting structure.

So we have the Medical Director in a work comp insurer – and a relatively tiny one at that – who reports up to a guy who reports up to another guy who reports up to a third guy who THEN reports to the top guy.  In Klipfel’s defense, he recently decided to fix that really stupid reporting structure, and Dr V will be reporting directly to him.

That said, Klipfel knew legal and claims were marginalizing Dr V ever since former boss Sandy Blunt was run out of town on a rail.   With Sandy’s departure, it appears as if the legal geniuses at WSI decided they were not only brilliant legal minds, but they were more suited to make medical decisions than a medical doctor.

After all, why would a state experiencing an explosive growth in workers’ comp claims, many of them complex, difficult, and traumatic, ever want to have a medical director in a position of authority?  In actuality, the treatment of Vilella reflects something much more troubling than just a series of blatantly stupid decisions by claims and legal.

It is prima facie evidence of Klipfel’s – and the WSI Board’s – complete lack of understanding of the primary importance of medical in workers’ comp claims.  Medical drives well over half of direct claims costs, and heavily influences the indemnity portion.  Yet the acknowledged expert in medical was multiple levels below the CEO – who, by the way, had ZERO experience in work comp, or business for that matter, until he was appointed to the top job.

I don’t know Vilella, but I do know several other folks at WSI. The ones I know are good people, doing the best job they can in very trying circumstances.  They really truly want to help injured workers.

It is too bad they are being “led” by idiots.

Alex Swedlow, a certified rock star in the world of work comp analytics, held forth on medical dispute resolution as it exists in California.

MDR covers conflicts around the cost, utilization, and “standard of care”, these are evaluated against regulations, guidelines, fee schedules, and refereed by a judge, peer review doc, or some panel of designated experts.

California bill SB 863’s impacts were addressed, and include the following:

• 3 million liens processed over ten years, but the re-enactment of a fee to file liens in 2013 has cut lien filing fee by over 80%
• 90% of 2011-2012 liens came from a ten-mile radius in LA – but only 25% of WC claims
• change to reimbursement for ASCs dropped 28% after a 31% drop in the relevant fee schedule

Now on to the most fun part of 863 – the Independent Medical Review (IMR) “program”.  As Alex said, “boy has IMR been proven popular.”

Volume is 12x the expected volume and runs above 12,000 per MONTH.

Just under 50% of all medical management fees are from UR.

Among the cases that go to elevated UR, about 43% are for pharmacy, most for opioids and compound drugs.  A third of IMR decisions are also for pharmacy.  There’s a lot of misunderstanding about how many medical requests are handled internally vs done by an outside physician reviewer.

Just under 6 percent of all treatment requests were denied or modified before getting to IMR.  4.7% of all treatment requests are denied at the IMR stage.

Less than one in 20 treatment requests are ultimately denied via IMR.

75% approved internally, 18% are approved by elevated review; 4.7% are ultimately denied by the IMR process.

Less than one in 20 treatment requests are ultimately denied via IMR.

CWCI’s next step is to look into how a pharmacy formulary would affect pharmacy spend and scripts; looks like it would dramatically reduce the use of opioids, brand drugs, and compounds.

Stay tuned and check their website for updates on CWCI research.

WCRI’s Thursday morning begins with a series of presentations and discussions on the impact of PPACA/Obamacare on workers’ comp.

According to WC Executive Director Rick Victor, “Few pieces of legislation have the potential to affect people both financially and personally as the ACA. ”

(Note – my sense is there’s way too much attribution of normal market changes -positive and negative – to ACA, more on that later)

Rick went on to provide a framework for understanding ACA with specific attention to individual states.  Among the key issues

Will expansion of care lead to:

Shortages of providers who treat injured workers, which may lead to longer disability and higher costs – Victor opined that in states where Medicaid expands shortages will be greater than in non-expansion states. Similarly in states with low health status and/or an older population. As an economist, Victor noted that prices might rise and that will reduce shortages – in this case, payers will pay providers above the fee schedule to get access to care.  There’s a precedent for this in Canada, where providers in Ontario treating work comp patients get paid more than when they treat non-occ patients.  This happens in Massachusetts today as well…

That said, WC ALREADY pays more for specialty care than Medicare or Medicaid or group health in almost all states, so additional payments are likely not necessary. Given a multitude of factors, WCRI predicts the states that will have primary care shortages are:

• California
• Florida
• Louisiana
• Texas
• New Mexico
• Nevada
• Mississippi

I’d note that most of these are states that – at present – aren’t expanding Medicaid.  If – or more likely when – they decide that Medicaid expansion is a good thing, the predicted provider shortage may get worse.

Healthier employees – The data suggests folks with insurance are healthier than those that are not insured.

Victor doesn’t seem to think ACA will reduce unnecessary care for injured workers. Notably, he didn’t give a time frame for that statement; I firmly believe the work done by PCORI WILL have a dramatic effect on the care that’s delivered to, say, patients with back pain.  That’s going to take time – years, not months, but it will have a big impact.

Lots of discussion of the impact of PPACA on cost shifting – and a wealth of data Rick presented that indicated providers find creative ways to upcode, shift procedure mix, or otherwise find ways to increase revenues in the face of price controls or other regulatory attempts to restrain costs.

My research indicates cost-shifting is a complicated issue.

There’s been a good bit of discussion – some on Mark Walls’ LinkedIn group, on the potential for PPACA to influence claiming behavior.  The net is, I just haven’t seen any credible research that indicates PPACA will lead to more claims.  I’ve discussed this in detail here.

Finally, be careful to NOT attribute anything and everything, good and bad to ACA. A lot of things were occurring before ACA, including provider consolidation, more and higher deductibles, rising costs.

Will ACA accelerate, decelerate or change these trends?  It is impossible to separate out ACA’s effect from that of other factors.

Rebecca Yang analyzed the impact of the 2011 30% fee schedule reduction on prices paid for professional services in IL. Here are the highlights…

• WC prices paid (not billed, or Fed Schedule) for office visits were 18% lower than group health and 15% below Medicare.
• Costs for office visits went from 20% above the study state average to 20% below that average after reform.
• Surgery was a VERY different story; arthroscopic knee surgery costs were 166% higher than group health and 380%+/- above Medicare.
• Actual prices paid dropped after the reduction, but by 24%, not 30%.  this was likely due to negotiations between the providers and network operators.  In addition, some providers dropped out of networks, eliminating any discount below FS.
• It appears utilization may have increased, off-setting a third to a half of the impact of price reduction.