Workers' Compensation Daily News for May 23, 2013
50% of Physicians Now Use Electronic Health Records
Thu, 23 May 2013 09:11:42 - Pacific Time
Wider adoption of electronic health recrords (EHR) is critical to the broader health care improvement efforts, including efficiencies within the workers' compensation health system. These efforts - improving care coordination, reducing duplicative tests and procedures, and rewarding hospitals for keeping patients healthier - are all made possible by widespread use of EHRs. Health IT systems give doctors, hospitals, and other providers the ability to better coordinate care and reduce errors and readmissions that can cost more money and leave patients less healthy. In turn, efforts to improve care coordination and efficiency create further incentive for providers to adopt health IT.
HHS Secretary Kathleen Sebelius announced this week that more than half of all doctors and other eligible providers have received Medicare or Medicaid incentive payments for adopting or meaningfully using electronic health records (EHRs). HHS has met and exceeded its goal for 50 percent of doctor offices and 80 percent of eligible hospitals to have EHRs by the end of 2013.
Since the Obama administration started encouraging providers to adopt EHRs, usage has increased dramatically. According to the Centers for Disease Control and Prevention survey in 2012, the percent of physicians using an advanced EHR system was just 17 percent in 2008. Today, more than 50 percent of eligible professionals (mostly physicians) have demonstrated meaningful use and received an incentive payment. For hospitals, just nine percent had adopted EHRs in 2008, but today, more than 80 percent have demonstrated meaningful use of EHRs.
"We have reached a tipping point in adoption of electronic health records," said Secretary Sebelius. "More than half of eligible professionals and 80 percent of eligible hospitals have adopted these systems, which are critical to modernizing our health care system. Health IT helps providers better coordinate care, which can improve patients’ health and save money at the same time."
The Obama administration has encouraged the adoption of health IT starting with the passage of the Recovery Act in 2009 because it is an integral element of health care quality and efficiency improvements. Doctors, hospitals, and other eligible providers that adopt and meaningfully use certified electronic health records receive incentive payments through the Medicare and Medicaid EHR Incentive Programs. Part of the Recovery Act, these programs began in 2011 and are administered by the Centers for Medicare and Medicaid Services and the Office of the National Coordinator of Health Information Technology.
Feds Seek to Regulate Compounding Pharmacies
Thu, 23 May 2013 09:11:36 - Pacific Time
A bill, approved Wednesday by the Senate Health, Education, Labor and Pensions Committee, would create a new category of regulation by the Food and Drug Administration for some drug compounding companies. The bill now heads to the full Senate.
According to the story in the Washington Post, the Senate bill would establish a new category of FDA oversight that would apply to a part of the industry that has grown rapidly over the past two decades, from small corner pharmacies into businesses that operate like large-scale drug manufacturers. Many of these pharmacies, known as compounders, make a wide array of sterile medications, including antibiotics and painkillers, and ship them across state lines. Unlike traditional compounding pharmacies that custom-mix medication for individual patients based on prescriptions, these compounders often ship drugs without a prescription. These products, unlike drugs made by major pharmaceutical manufacturers, are not FDA-approved. And the enterprises do not face the same level of scrutiny from the FDA that traditional drugmakers do.
Under the Senate bill, companies that make sterile products without or in advance of a prescription and sell those products across state lines would be required to register with the FDA and be subject to regular inspections.
Some consumer groups say the category is too narrowly defined. Only companies that meet all the criteria would be covered. Excluded would be large compounding pharmacies that sell defective or life-threatening oral drugs, topical creams and gels, said Nasima Hossain with the U.S. Public Interest Research Group, a consumer advocacy organization. A compounder that sells in only one state would also be exempt. In addition, "anything in pill form wouldn’t qualify, and many chemotherapy drugs are in pill form," said Diana Zuckerman, president of the Cancer Treatment and Prevention Fund. Public Citizen, a consumer advocacy group, has opposed the creation of a separate category of FDA oversight for large-scale compounding pharmacies. It says it would be better to require the companies to follow the safety requirements that apply to commercial drug manufacturers. The FDA has sought greater oversight of certain types of compounding pharmacies since the fall outbreak.
But in a statement, the FDA said it was concerned that certain aspects of the Senate bill would limit the agency’s enforcement ability. "Unfortunately, the proposed bill does not yet provide the clarity necessary to appropriately oversee this industry and may limit FDA’s ability to effectively protect the public health," the statement said.
One small wording change in the bill that passed the Senate panel could weaken the FDA’s authority, industry experts said. It says traditional compounding pharmacies are to be defined "pursuant to state law." State laws vary, so a company that might be considered a drug manufacturer in one state could be defined as a traditional compounding pharmacy in another and be regulated differently depending on state law.
Allison Preiss, a spokeswoman for Sen. Tom Harkin (D-Iowa), chair of the panel, said the bill is a work in progress and will continue to be refined as it moves through the legislative process. Read More...
New Federal Bill Seeks to Fix "Broken" Medicare Set Aside Process
Wed, 22 May 2013 05:34:35 - Pacific Time
Congress is again being asked to amend the Medicare Secondary Payment Act, just six months after enacting reform legislation dealing with the issue, which took five years to pass congressional muster. The Medicare Secondary Payer and Workers’ Compensation Settlement Agreements Act of 2013 was introduced this month in the House, sponsored by Rep. Dave Reichert, R-Wash., and Mike Thompson, D-Calif. The new legislation seeks to reform the processes and procedures used by Centers for Medicare and Medicaid Services (CMS) in its review of workers’ compensation settlement agreements.
According to the story in Property Casualty 360, strong supporters include members of the American Insurance Association and the Coalition for Medicare Secondary Payer Reform. The bill seeks to resolve the serious delays and confusion in the review of workers’ compensation Medicare set- asides by CMS, says to Melissa Shelk, AIA vice president for federal affairs, and Douglas Holmes, president of Strategic Services on Unemployment and Workers’ Compensation (UWC) and coordinator of the Coalition for Medicare Secondary Payer Reform.
"The CMS workers’ compensation Medicare Set-Aside (WCMSA) review process is broken, and this legislation seeks to fix the costly delays and problems within the system," Shelk said. "We believe that the CMS review process needs clear and consistent standards, timely resolution of coverage decisions and the ability to enable appeals when necessary."
Holmes said reform is being sought because the current procedure for review of workers’ compensation settlements provides no effective recourse. He said, "There is no avenue to compel a timely decision or appeal a bad one. The legislation introduced by Representatives Reichert and Thompson corrects this situation and many other costly problems and delays, for the benefit of all parties involved."
In December, Congress passed legislation sought by the insurance industry and other stakeholders since late 2008 that streamlines enforcement of the Medicare Secondary Payment program. The legislation is H.R. 1063, the SMART Act, or The Strengthening Medicare and Repaying Taxpayers Act. The bill is example of how difficult it is to get special interest legislation through Congress is so difficult. The SMART Act was first introduced in Congress in the fall of 2010, but momentum for passage was not generated until last September, when the House Energy and Committee staff coalesced on a rewritten bill crafted with bipartisan support and passed it in late September.
The reason that bill finally got through Congress is that supporters included plaintiffs and defense attorneys, brokers, insureds, insurers, insurance and trade associations, self-insureds and third-party administrators. Read More...
DWC Publishes Proposed Interpreter Regulations
Wed, 22 May 2013 05:34:30 - Pacific Time
The Division of Workers’ Compensation (DWC) has modified the proposed Interpreter Services regulations. DWC posted the modified regulation text and forms on the DWC website and electronically distributed the 15 - day notice of modification to interested parties. Members of the public may comment on the modifications until 5 p.m. on June 5, 2013.
The proposed modifications include:
- A new section that explains how an interpreter may be certified or provisionally certified to interpret at hearings, depositions or arbitrations.
- A new section that explains how an interpreter may be certified for medical treatment appointments or medical legal exams by passing the Certification Commission for Healthcare Interpreters (CCHI) exam.
- Revisions to the remaining sections to be consistent with the changes made by the two new section
DWC Struggles With Delays in QME Panels
Tue, 21 May 2013 08:17:36 - Pacific Time
The DWC published the following update on the processing of QME panels
"The Department of Industrial Relations (DIR) and the Division of Workers' Compensation (DWC) are commencing a thorough review of the existing delays in processing represented injured workers’ requests for Qualified Medical Examiner (QME) panels. DIR is committed to addressing the root cause of the delays and is taking steps to ensure that it is addressed systemically .
The delays were eliminated in the past through significant amounts of overtime work by DWC staff as well as the use of temporary student assistants. While those efforts were successful in the short-term, they were not sustainable, leading to reoccurring problems in processing QME panel requests for represented injured worker cases.
All available resources are currently being directed towards reducing the timelines in represented cases. We are conducting a thorough review of the work processes and the applicable regulations, and exploring long-term solutions to reduce the amount of staff time required to process panel requests and make the process more efficient. A technological infrastructure repair is underway.
We further estimate a reduction in the rate of incoming panel requests after July 1, 2013, when Independent Medical Review becomes applicable to all dates of injury. We are confident that the combination of re-directing resources, implementing new technology and the expected IMR - related decrease in panel requests will result in the permanent elimination of the processing delays . Thank you for your patience during this transition." Read More...
CWCI Study Shows Improvement in California Comp
Tue, 21 May 2013 08:16:48 - Pacific Time
As the economy recovers and Californians head back to work, the Sacramento Bee reports that total direct written premium in the Golden State's workers' compensation market continues to rise. Workers' comp premium reached $9 billion last year, which was $1.2 billion above 2011, the California Workers’ Compensation Institute reported. That marked the third consecutive year of premium growth, and it brought premium back up to the amount in 2007.
California premium level hit a low point of $6.9 billion in 2009 after soaring to a record $16.1 billion in 2004, CWCI said.
The Oakland-based nonprofit analyzed data compiled by the National Association of Insurance Commissioners and released by the California Department of Insurance.
In other findings, State Compensation Insurance Fund lost market share to 10 percent in 2012, down from 12.9 percent the previous year, CWCI said. Even so, State Fund, a quasi-public group, is still California’s largest provider of workers' comp insurance.
Zurich Insurance Group maintained the second spot, with the next three slots filled by Travelers Group, Hartford Fire and Casualty Group and Berkshire Hathaway Group. Read More...
Court of Appeal Approves Removal of Orthopedist from MPN
Mon, 20 May 2013 07:34:10 - Pacific Time
CorVel Healthcare, a workers’ compensation system MPN, terminated the contract of Douglas J. Roger M.D., an orthopedic surgeon for two reasons: First, he was unreachable by independent reviewing physicians hired by the network to evaluate four nonstandard treatments he was regularly prescribing for his workers’ compensation patients. Second, he was prescribing those nonstandard treatments on a wholesale basis, and not taking the time to justify their application to particular patients. The Court of Appeal in the unpublished case of Roger v. CorVel Healthcare held that CorVel was well within its rights in terminating his contract.
The case becomes more complicated. The MPN did not comply with the contract as regards the process of termination. The contract provided for a graduated, three-step disciplinary process based on first, second, and third offenses: first a warning letter, second a set of counseling "sessions," and only then, third, actual termination. And that did not happen. The network terminated the physician after one lengthy telephone discussion with one independent reviewing physician about one patient. The record is clear that Dr. Roger was not about to change his practice to conform to the network’s utilization review procedure, either by making himself readily accessible for peer review consultations, or by taking the time and effort to justify his nonstandard treatments on a patient-specific basis.
Dr. Roger regularly prescribed four nonstandard treatments for his workers’ compensation patients. The first is known as a "surface EMG." An EMG can be done by needle, which is considered a separate procedure from surface EMGs, or it can be done by surface electrodes - hence the term "surface EMGs." Surface EMG’s are controversial. Insurers, generally speaking, don’t like them. The other nonstandard treatments were two ointments and one "medical food." The two ointments were a capsaicin compound referred to by the parties as wasabi-rub, the other a compound of various ingredients called Gaba-2K rub. The "medical food" was theramine tablets.Dr. Roger did not dispute that none of these four treatments are recommended for use in the medical treatment utilization schedule (MTUS) adopted by California Division of Workers’ Compensation. He prescribed them over 90 times, either individually or in some combination, over the course of the year following his sign-up with CorVel. And in each of those more than 90 cases, the proposed treatment was not "certified" for payment. Dr. Roger denigrates the non-certification memos as "cut and paste jobs" performed by nurses rather than actual doctors (even though they were signed by doctors), but cites no evidence to that effect. But Dr. Roger made himself practically unreachable during his tenure with CorVel. He testified he operated four offices during this period, and he had a personal policy of never returning any phone call from an independent reviewing physician unless he was at the office where the patient’s file was kept.
Even worse - and "worse" is the precise word the trial judge used for it - Dr. Roger resorted to the unethical practice of upcoding in order to be paid for the surface EMGs he prescribed.
Dr. Roger’s main theme, which is that a network like CorVel has no business telling fully qualified physicians - under the guise of utilization review - that they can’t prescribe what they think is best for their patients if it is otherwise perfectly legal. The Court of Appeal noted that "Dr. Roger himself was perfectly willing to accept denial of a prescribed treatment and simply assert a workers’ compensation lien later."
The Court of Appeal affirmed the trial court judgment that Dr. Roger take nothing by his breach of contract action. The Court noted that "While Dr. Roger’s workers’ compensation business may have declined considerably as a result of his termination, we cannot say that his termination was as a result of CorVel’s failure to follow the three-step termination process. Termination was inevitable, independent of that process." Read More...
Real Estate Agent Faces 14 Felony Charges
Mon, 20 May 2013 07:34:01 - Pacific Time
The Los Gatos Patch reports that Adrienne McGrath, 44, was arrested by Santa Clara County sheriff's authoriteis in San Jose after being charged with 14 felony charges related to violations of the California Insurance Code. McGrath, whose occupation is described as a real estate agent in a sheriff's arrest report, is facing three felonies for allegedly making a false fraudulent statement, either orally or in writing, of any fact material to the determination of the premium, rate, or cost of any policy of workers' compensation insurance, for the purpose of reducing such premiums.
She is also being accused of four felonies related to willfully failing to collect or truthfully account for and pay unemployment insurance.
She's additionally charged with two felonies related to knowingly undertaking or agreeing to pay without deduction from remuneration to workers the amount of any contributions to the disability fund required of such workers under the law.
Authorities also say McGrath committed two felonies for allegedly willfully failing to pay disability insurance and two felonies for failure or refusal to make unemployment insurance contributions.
A Santa Clara County sheriff's arrest report also indicates McGrath faces two felonies for willfully misrepresenting facts to the determination of the premium, rate, or cost of any policy of workers' compensation insurance issued or administered by the State Compensation Insurance Fund for the purpose of reducing the premium, rate, or cost of the insurance and one felony for making a false fraudulent statement. Read More...
Federal Court Decisions Create Opportunity to Reduce MSA Allocations
Fri, 17 May 2013 09:18:10 - Pacific Time
The Baird Formula is a method of reducing EDD liens proportionately, when a worker's compensation claim is settled for less than its full amount. The formula was approved by the California Supreme Court in California-Western States Life Insurance Co. v. Industrial Accident Commission (Baird), 59 Cal.2d 257, 28 Cal.Rptr. 872, 379 P.2d 328 (1963). It seeks to assure fairness in proportional reductions of EDD liens by showing a reasonable estimate of the full value of the claims as if the worker had prevailed. The EDD lien is reduced so that the EDD does not receive a greater percentage of full recovery then does the injured worker. So, the question becomes, is it similarly possible to reduce the amount allocated to protect the interests of Medicare in a Workers' Compensation Medicare Set Aside (WCMSA) situation so that CMS does not receive a greater percentage recovery than the claimant? While there are no cases on this point in the world of workers' compensation claims, there are some new cases that may seem to agree with this concept in cases where a Liability Medicare Set Aside (LMSA) is required during the settlement of a liability case.
The United States District Court, W.D. Louisiana decided Benoit v. Neustrom, 2013 U.S. Dist. LEXIS 55971. on April 17, 2013. Michael Benoit suffered injuries while incarcerated. Michael Neustrom, as Sheriff of Lafayette Parish was sued for allegedly not recognizing his health condition, causing a delay in medical care leading to disabling neurologic injury. The Parties agreed to a settlement of $100,000 and Medicare claimed $2,777.78 for conditional payments it made related to the claim. Although the Parties did not contest what was owed to Medicare, there was concern regarding future Medical and CMS statements that its future interests must be protected. To do so, Plaintiff secured a LMSA with cost projections in the range of $277,758.62 - $333,267.02. Based on the settlement amount of only $100,000, an issue of how to fund the LMSA was obvious.
CMS was served notice of a Motion for Declaratory Judgment asking the Court how to proceed, but declined to appear. In lieu of its appearance, the U.S. Attorney sent its standard letter which included a handout from the MSP regional Coordinator for CMS in Region VI. According to such handout, Medicare’s interests must be protected, but CMS does not mandate a specific mechanism to protect those interests. It goes on to state the law does not require a "set - aside" in any situation, but it is [CMS] method of choice for workers’ compensation settlements .The law makes no distinction between workers’ compensation and liability cases. The implication therefore is that the LMSA would be a vehicle, but CMS has no approval mechanism in place. Absent a CMS approval, the LMSA could be later challenged by CMS.
Since CMS provides no other procedure to determine the adequacy of protecting Medicare’s interest for future medical, the Court decided it must act to fill the vacuum that is left. In doing so, the U.S. District Court made several important findings of fact, important to its determination which covered: 1) Jurisdictional basis; 2) Agreement that both liability and medical issues were contested; 3) The potential damage elements plaintiff would have recovered for had the case been tried; 4) The settlement amount of $100,000 represents a reasonable compromise; 5) Plaintiff will take more than 30 months to reach age 65; 6) A calculation of the allocation based on the settlement amount; 7) The need for Plaintiff’s wife to administer the fund, based on Plaintiff’s incapacitation; 8) The requirement to reimburse Medicare its conditional payment claim in full; and 9 ) No Party is attempting to maximize the settlement.
To arrive at the appropriate figure, the Court took the net settlement proceeds, after reimbursement of conditional payments to Medicare, attorneys’ fees and costs and divided it into the mid - point of the LMSA range that was presented to the Court, arriving at a ratio of 18.2%. That ratio was then applied to the net proceeds where the Court arrived at the $10,138 figure to fund the set-aside. The Court looked to the 11th Circuit decision in Bradley v. Sebelius for guidance. 621 F.3d 1330 (11th Cir. 2010). Bradley was an allocation case under the MSP with respect to conditional payments, holding that CMS must respect a judicial allocation based on the merits of the case.
Based upon the logic of these new federal decisions, perhaps it is time for the judicial creation of a "Baird" type formula for the resolution of conditional payments and set-aside allocations under California workers' compensation law. Read More...
NCCI Says Work Comp Industry Recovering
Fri, 17 May 2013 09:18:01 - Pacific Time
The workers’ compensation market is seeing encouraging signs. Premiums grew for the second consecutive year, the combined ratio declined and claim frequency continued to improve at a pace slightly greater than its long-term historic rate of decline. According to the summary in the Insurance Journal, In 2012, the workers’ comp calendar combined ratio dropped six points from 2011, coming it at 109. The drop in combined ratio marks the first decrease since 2006, according to the State of the Line workers ‘compensation market analysis published by NCCI.|"By many measures, the industry condition is indeed improving," said NCCI President and CEO Steve Klingel. "While we are pleased to see that the positives are beginning to outweigh the negatives, there remains great opportunity for improvement."
Long-term challenges still linger over the future of workers’ comp, says Klingel. External forces such as the economy, healthcare reform, and new legislation could still negatively affect the market. "But for now, we view the overall industry condition as encouraging," he says.
Net written premium (including state funds) also improved, increasing to $39.63 billion in 2012. The NCCI reports this is a 9 percent increase from 2011. Net written premiums increased 8 percent in 2011. The premium increases follow a cumulative 27 percent decline in premium from 2006-2010.
The report also revealed that lost-time claim frequency improved significantly in 2012 - down 5 percent on average in NCCI states. The 5 percent decline is slightly larger than NCCI’s long-term annual estimate of a of 2 to 4 percent decline per year. Previous NCCI research indicated that distortions in the calendar year premium data resulting from the recession and subsequent recovery affected our measure of claim frequency for 2010 and 2011. Current research indicates that those distortions are no longer significant for 2012.
Despite the improving conditions, the workers’ compensation line continues to deal with a variety of significant challenges, says NCCI Chief Actuary Dennis Mealy. "These include poor underwriting results, low investment yields, and continued uncertainty regarding the impact of the implementation of the federal healthcare reform bill," he said.
Even so, the fact that the industry is seeing a return to a long-term pattern of declines in frequency and premiums are on the rise suggests that the underwriting performance of the industry, while still not good, is not as bad as it has been over the last two to three years, says NCCI’s Chief Economist Harry Shuford. "For the last three years the operating gain, which basically measures the overall profitability in workers’ compensation, has basically been zero for three years in a row," Shuford said. "Investment income has been just sufficient enough to cover underwriting losses and there was nothing left over. This year there is some positive return due primarily from the improvement in underwriting results." Like Mealy, Shuford told Insurance Journal that he sees investment yields as a concern for the future health of the workers’ comp market. Read More...
Past Week News Archive
Federal Medicare Secondary Payer Law (MSP) Does Not Preempt State Comp Law: Thu, 16 May 2013 12:23:46 - Pacific Time: Read More...
WCAB Panel Allows Employer to Attend Applicant Deposition: Thu, 16 May 2013 12:23:39 - Pacific Time: Read More...
DWC Posts Proposed Changes to MPN Regulations: Wed, 15 May 2013 11:50:55 - Pacific Time: Read More...
Brookdale Inn Owner Pleads No Contest in Fraud Case: Wed, 15 May 2013 11:50:48 - Pacific Time: Read More...
Court of Appeal Rejects Peace Officer Presumption of Cardiac Injury: Tue, 14 May 2013 08:45:34 - Pacific Time: Read More...
Backlash Begins Over DSM-V: Tue, 14 May 2013 08:45:28 - Pacific Time: Read More...
Anti-Pro Athlete Bill Amended With Controversial 80-8 Rule: Fri, 10 May 2013 09:35:18 - Pacific Time: Read More...
Liberty Mutual Reports 31% Income Decline: Fri, 10 May 2013 09:35:11 - Pacific Time: Read More...
Study Says Antibiotics Could Cure 40% of Chronic Back Pain: Thu, 9 May 2013 08:43:54 - Pacific Time: Read More...
Many medical guidelines don't consider costs: Thu, 9 May 2013 08:37:26 - Pacific Time: Read More...