The California WCIRB recently released a new study in which its researchers examine the impact that increased efforts to identify and prosecute provider fraud may be having on the California workers’ compensation system.

As of April 7, 2018 (the time of this analysis), more than 450 medical providers have been indicted and/or suspended by the DIR from practicing in the California’s workers’ compensation system. Many of these providers previously billed and were paid significant amounts for workers’ compensation-related services. While many of the procedures billed by these providers may have been for legitimate services, the suspension of their practices in California’s workers’ compensation is likely a significant driver of reduced medical costs.

The Impact of Medical Fraud Enforcement on California Workers’ Compensation study uses data from the WCIRB’s medical transaction database to analyze the volume and type of medical services that were performed by providers who were subsequently indicted or suspended for fraud (“Indicted Providers”).

The Indicted Providers identified in the WCIRB’s medical transaction data included medical doctors, pharmacists/ pharmacies and other providers and entities such as chiropractors, suppliers of durable medical equipment and hospitals. As shown in Chart 1, approximately half of the Indicted Providers were medical doctors and about one third were pharmacists or pharmacies. Medical doctors accounted for 55% of total medical payments to Indicted Providers, while pharmacists or pharmacies totaled approximately 30% of the payments.

Almost half of the providers received less than $100,000 in payments for medical services in the California workers’ compensation system, and about 10% received more than $10 million in medical payments.

Notable findings of the study include:

– Within the California workers’ compensation system, the share of medical payments to Indicted Providers declined from 7.2% in the second half of 2012 to 1.9% in the second half of 2017. The share of paid transactions by Indicted Providers also fell from 4.4% to 1.4% over the same time period.
– The payments to Indicted Providers for different medical services varied over time. For example, for the second half of 2012, Indicted Providers accounted for 5% of payments for Physician Fee Schedule Services, while by the second half of 2017, Indicted Providers accounted for 1.2% for Physician Fee Schedule Services.
– The proportion of payments to Indicted Providers for Medical Liens showed a steady increase, from 18% for the second half of 2012 to 45% for the second half of 2017.
– The time between when the service was provided and when the payment was made was noticeably longer for Indicted Providers than for Other Providers, with the exception of medical lien payments.

The complete study is accessible in the Research section of the WCIRB website