The California Department of Industrial Relations Division of Workers Compensation requested that RAND review the California workers’ compensation Medical Legal fee schedule, which has not been revised since 2007. RAND published it findings in a new 30 page report.

Remarkably, RAND points out that the business model for QME reporting has evolved to a system engineered by “management organizations” that “pay the physician performing the evaluation.”

In this regard RAND reports that “Management organizations provide administrative and support services to a significant percentage of physicians performing ML examinations. Typically, these organizations provide office space, scheduling, and transcription services, obtain the medical records pertinent to the examination, submit the required ML reports, bill for the services, and pay the physician performing the evaluation.”

“The physicians under contract to these organizations are listed as individuals on DWC’s listing of qualified QMEs but the practice locations and phone numbers are those supported by the management company. Some management organizations do not require an exclusive contract, so that the listings for an individual (limited to ten locations by SB 863) may be associated with more than one management organization and/or their private practice location.”

Users of ML reports indicated that 10-20% of initial evaluations involve supplemental reports that result from the lack of coordination between the ML examiners and the primary treating physicians over diagnostic tests needed for an evaluation and delays in obtaining the medical records in sufficient time for review before the scheduled examination.

Several claims administrators noted the tendency of some examiners to file initial evaluation reports that are incomplete with regard to one or more findings. This forces the claims administrator to either ask for a supplemental report or withhold payment until a complete report is filed. The latter action does not happen often because it could harm the claims administrator’s relationship with the examiner and potentially risks less favorable permanent disability ratings.

RAND found that the $250 per hour rate used to determine the ML allowances is significantly higher than the 2017 allowances for evaluation and management services that consist of similar activities.

It suggests converting the allowance for an extraordinarily complex evaluation into a flat rate based on the complexity of the issues that need to be addressed by the evaluator. Nine states have a flat rate payment, most of which vary by the type or number of body parts.

Consideration should be given to establishing policies that provide incentives for completing high quality reports that address the issues outlined in the cover letter(s) from the parties requesting the evaluation. Timely completion of reports could be incentivized by establishing a higher payment for timely submissions.