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Commercial Insurance Broker Pleads Guilty to Embezzling Premiums

Matthew Arriaga, 37, of Ventura pleaded guilty to four counts of felony grand theft after embezzling more than $99,440 in premiums prior to his arrest in October of 2013. While out on bail, Arriaga continued his criminal activity which added to his charges and landed him back in custody.

“The fact that this former insurance agent lied to consumers and then continued to commit the same crime while out on bail is appalling,” said Insurance Commissioner Dave Jones. “California has a vibrant insurance marketplace and the criminal activity of those looking to degrade the trust of professional agents will not be tolerated.”

A Department of Insurance investigation revealed that Arriaga was collecting premium payments for commercial liability policies and failing to place the policies with an insurance company. In some instances Arriaga would forward funds after his clients’ policies were canceled due to lack of payment. According to investigators, while out on bail and working under a suspended license, Arriaga continued to embezzle funds from at least two additional victims. After insurance investigators discovered  the continued criminal activity, with cooperation with the Ventura County District Attorney’s Office, Arriaga’s bail was revoked and he remained in custody from May 19, 2014 until his conviction.

Arriaga is the second suspect to plead guilty to multiple felony charges stemming from an investigation into a wholesale and retail commercial insurance agency co-owned by Arriaga. Last April, David Patrick Clark, 53, pleaded guilty to one count of Grand theft and has been sentenced to 90 days in Ventura County Jail, five years formal felony probation and ordered to pay more than $97,445 in restitution to victims. third suspect, James Fayed III, 40, who worked with Arriaga and Clark, is due in Ventura County Superior Court on September 29, 2014 for a preliminary hearing on four felony counts of grand theft by embezzlement.

DME Company Owner Found Guilty in a 10-Year, $8.3 Million Fraud Scheme

On July 31, 2014, a federal jury in Los Angeles found that the former owner of a durable medical equipment (DME) supply company located in Carson, California, was guilty of health care fraud charges relating a 10-year scheme in which Medicare was fraudulently billed more than $8 million for DME that was not medically necessary.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney André Birotte Jr. of the Central District of California, Special Agent in Charge Glenn R. Ferry of the Department of Health and Human Services Office of Inspector General (HHS-OIG) Los Angeles Region, Assistant Director in Charge Bill L. Lewis of the FBI’s Los Angeles Field Office and Special Agent in Charge Erick Martinez of the IRS-Criminal Investigation’s (IRS-CI) Los Angeles Field Office made the announcement.

Olufunke Ibiyemi Fadojutimi, 42, of Carson, California, is a registered nurse and the former owner of Lutemi Medical Supply. He was found guilty after trial of one count of conspiracy to commit health care fraud, seven counts of health care fraud and one count of money laundering. Sentencing will be scheduled at a later date.

The trial evidence showed that between September 2003 and January 2013, Fadojutimi and others paid cash kickbacks to patient recruiters and physicians for fraudulent prescriptions for DME, such as power wheelchairs, that the Medicare patients did not actually need. Fadojutimi and others then used these prescriptions to bill Medicare for the power wheelchairs and other DME. Approximately $8.3 million in false and fraudulent claims were submitted to Medicare, and Medicare paid almost $4.3 million on those claims.

The case is being investigated by HHS-OIG Los Angeles Region, the FBI and IRS-CI Los Angeles Field Office. The case is being prosecuted by Trial Attorneys Fred Medick and Blanca Quintero of the Criminal Division’s Fraud Section, and was previously prosecuted by the Fraud Section’s Jonathan T. Baum.

The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California. The Medicare Fraud Strike Force operations are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative announced in May 2009, between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,900 defendants who have collectively billed the Medicare program for more than $6 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

Independent Medical Review Records Submission Process Improved

The Division of Workers’ Compensation (DWC) has posted an update on improvements for submitting independent medical review (IMR) records.

Beginning with letters sent Monday, August 4, 2014, the Independent Medical Review Organization, Maximus Federal Services, will be including with each Notice of Assignment and Request for Information (“NOARFI”) a cover sheet with barcodes. This barcoded sheet will help ensure that documents submitted are associated with the appropriate IMR case quickly and with improved accuracy.

Parties responding to the NOARFI should include this barcoded sheet on the top of each document submission. An example of the barcoded sheet is posted online. DWC will continue to post updates and notifications regarding improvements in the IMR system on the IMR updates page.

Insurers Consider Cost-Effectiveness of Commercial Weight Loss Strategies

As weight loss becomes more about health than vanity, insurers might increasingly be footing the bill for non-surgical reducing methods, researchers say. And they’ll want to know which ones are the best investment. And such might be the case in California workers’ compensation where a weight loss program may be ordered as part of treatment for a physical injury or a pre-surgical recommendation that is delaying the case.

In a new analysis reported by Reuters Health, the popular Weight Watchers program and the drug Qsymia were the most cost-effective strategies to lose weight. If a third-party payer didn’t cover the high cost of Jenny Craig’s food, that would be the most effective plan, the study found. “To me the main message is that there are only a few viable options for weight loss,” Eric Finkelstein told Reuters Health in an email. “(Weight Watchers) and Qsymia currently provide the best bang for the buck but Jenny Craig is most effective.” Finkelstein is the study’s lead author from the Duke-National University of Singapore Graduate Medical School and the Duke Global Health Institute. He’s also worked with Jenny Craig, Weight Watchers and a number of companies that manufacture weight loss drugs.

Insurers and employers are under increasing pressure to cover weight loss strategies for their customers and employees, Finkelstein said. “As such, they care both about the costs and potential benefits,” he said. “To date, no study has been conducted that compares all programs against each other.”

For the new analysis, Finkelstein and his co-author reviewed randomized controlled trials – the “gold standard” of medical research – that evaluated non-surgical weight loss strategies over at least one year. They then paired those results with data on prices to estimate the cost per kilogram of weight loss and cost per “quality adjusted life year,” which is the cost for each year of life gained by using the program or drug. After excluding studies that lasted less than a year or had other problems, their analysis included Weight Watchers and Vtrim, both diet and lifestyle programs, the Jenny Craig meal-replacement program and the drugs Qsymia, Lorcaserin and Orlistat.

The researchers found that the average cost per kilogram (2.2 pounds) lost ranged from about $155 for Weight Watchers to about $546 with the Roche drug Orlistat, which is available by prescription as Xenical or over-the-counter as Alli. The second most cost-effective strategy at about $204 per kilo was Qsymia, a drug from VIVUS, Inc., which provided some support for the study. The Vtrim program was the third most cost-effective strategy per kilo of weight lost, followed by Jenny Craig, the drug lorcaserin – marketed as Belviq by Arena Pharmaceuticals GmbH. Orlistat was the most expensive per kilo.

Insurers and policymakers often prefer to consider treatments based on their cost per quality adjusted life year gained, and typically interventions are considered effective if that cost is less than $50,000. The researchers found that Weight Watchers, at $34,630, was the cheapest program per quality adjusted life year gained. It was followed by Qsymia, which is more effective at fostering weight loss, but more expensive at $54,130 per quality adjusted life year gained.

“As an individual the choice of which to choose should be based on perceived costs and benefits and all may be viable options given (their) benefits that extend beyond (cost-effectiveness) analysis,” Finkelstein said. Those benefits include the taste of food and convenience, for example.

As someone paying for the program, however, he said he would limit his investment to programs proven to work and those that have the participant take on some cost responsibility, such as weight loss success. Finkelstein also cautioned that these results are based on clinical trial results. Participants often receive the programs, food or drugs for free. “Real world results could be better or worse,” he said.

WCAB Proposes Repeal of Rules of the Court Administrator

The Workers’ Compensation Appeals Board has issued a notice of public hearing regarding proposed amendments to its Rules of Practice and Procedure. The primary purpose of this rulemaking is to repeal the Rules of the Court Administrator and to move the non-duplicative ones into the WCAB’s Rules, with some largely non-substantive changes. These changes are authorized by Assembly Bill 1426 (Stats. 2011, ch. 639 [AB 1426]), which eliminated the position of Court Administrator and deemed the Court Administrator’s regulations to be regulations of the WCAB. The rulemaking also proposes to make largely non-substantive changes to a limited number of existing WCAB Rules.

The public hearing will start at 10 a.m. on Wednesday, September 17 in the Santa Barbara Room, Basement Level, of the Hiram Johnson State Office Building at 455 Golden Gate Avenue, San Francisco, CA 94102. Members of the public may also submit written comment on the proposed Rules amendments until 5 p.m. that day.

The WCAB’s notice of the proposed rulemaking, the text of the proposed regulations, and the initial statement of reasons can be found at the board’s website.

Although equal weight will be accorded to oral and written comments, the WCAB prefers written comments to oral testimony and prefers written comments submitted by e-mail. If written comments are timely submitted, it is not necessary to present oral testimony at the public hearing.

Comments may be submitted by e-mail to WCABRules@dir.ca.gov or they may be mailed to: Workers’ Compensation Appeals Board, Attention: Annette Gabrielli, Regulations Coordinator, P.O. Box 429459, San Francisco CA 94142-9459.

The WCAB will consider all timely public comments and it encourages all interested members of the workers’ compensation community to participate in this important process.

WCIRB Report Shows Improving But Still Difficult California Work Comp Economics

The Workers’ Compensation system in California is more than 100 years old. It covers more than a half million employers and provides benefits to 800,000 injured workers annually. The WCIRB has released the new WCIRB Report on the State of the California Workers’ Compensation Insurance System. The Report, which the WCIRB plans to update annually, summarizes the cost of workers’ compensation insurance based on premiums paid by insured employers, shows how premium dollars are distributed among various system components, and identifies key cost drivers such as frequency and the average cost of claims. The Report also contains a brief summary of how post-Senate Bill No. 863 (2012) costs are emerging compared to initial projections.

Insurer rates have been slowly increasing over the past five years but are not significantly different from the rates charged in the 1970s. A steady long term decline in the frequency of claims has to some extent offset increasing medical and other costs. Yet rates charged in California have been markedly higher than rates charged in other states. The largest component of claims cost is the medical treatment benefit.

Claim frequency was 49.5 claims per 1000 employees per year back in 1991. There has been a steady decrease to 14.2 claims per 1000 employees per year in 2009. This has increased slightly to 16.6 claims per 1000 employees per year estimated for 2014. Note that this slight increase coincided with the onset of the great recession. Geographically, the largest percentage increase during that period was in Los Angeles County where claim frequency increased by 19% between 2009 and 2012 compared to the bay area which showed a 3 percent decrease over the same time frame. California also lead the nation in increase claim frequency during this period. Simply stated, Los Angeles County led the state that led the nation in workers’ compensation claim frequency increases after the commencement of the great recession of 2008. A number of explanations can come to mind as an explanation for this notable phenomena.

California reported medical costs per claim are among the highest in the country with an average cost more than 70% above the median level. This is the result of three factors. The high proportion of indemnity claims involving permanent disability, the longer duration of medical treatment in California, and higher level of medical-legal costs.

Loss adjustment expenses include the costs of the administration of claims, attorney and other legal expenses, the cost of medical cost containment programs, and other court and claims-related expenses. These costs have increased steadily since 2005. Instead of declining after the 2013 enactment of SB 863, these expenses increased by 7% per claim. Loss adjustment ratios are generally higher in California than for the average of other states. One reason is high litigation rates especially in the Los Angeles area and a large number of active liens. The unexpected high frequency of IMRs conducted pursuant to SB 863 is also impacting loss adjustment expenses.

With respect to SB 863, lien savings are emerging at a greater than expected level. However indemnity claim frequency is emerging at a higher rate than projected. The overall long term cost effects of SB 863 have yet to be fully determined.

California combined loss ratios are improving, but remain over 100%. In 2011 the loss ratio peaked at 119% and has now declined to 107%. Insurers can generate a profit with a combined ratio above 100% provided there be a favorable investment climate. However, long term ratios above 110% are not sustainable.

Supreme Court Limits Recovery of Caregiver Injured by Alzheimer’s Patient to Workers’ Comp

Bernard Cott contracted with a home health care agency to assist with his 85-year-old wife and codefendant Lorraine Cott, who had long suffered from Alzheimer’s disease. The agency assigned plaintiff Carolyn Gregory to work in the Cotts’ home.

Gregory was trained to care for Alzheimer’s patients, and had done so in other assignments. She knew they could be violent. Bernard told her Lorraine was combative and would bite, kick, scratch, and flail. Gregory’s duties included supervising, bathing, dressing, and transporting Lorraine, as well as some housekeeping. In September 2008, Gregory was washing dishes while Lorraine sat at the kitchen table. Bernard was not at home. As Gregory was washing a large knife, Lorraine approached her from behind, bumped into her, and reached toward the sink. When Gregory attempted to restrain Lorraine, she dropped the knife, which struck her wrist. As a result, Gregory lost feeling in several fingers and experienced recurring pain.

Gregory has received workers’ compensation for this injury. She also sued the Cotts for negligence and premises liability, with a claim against Lorraine for battery. The trial court granted a defense motion for summary judgment. A divided Court of Appeal affirmed, holding that Gregory’s claims were barred by the primary assumption of risk doctrine. The California Supreme Court affirmed the judgment in the case of Gregory v. Cott.

The question in this case is whether patients suffering from Alzheimer’s disease are liable for injuries they inflict on health care workers hired to care for them at home. Because agitation and physical aggression are common late-stage symptoms of the disease, injuries to caregivers are not unusual, California and other jurisdictions have established the rule that Alzheimer’s patients are not liable for injuries to caregivers in institutional settings. The California Supreme Court concluded that the same rule applies to in-home caregivers who, like their institutional counterparts, are employed specifically to assist these disabled persons. It is a settled principle that those hired to manage a hazardous condition may not sue their clients for injuries caused by the very risks they were retained to confront. “This conclusion is consistent with the strong public policy against confining the disabled in institutions. If liability were imposed for caregiver injuries in private homes, but not in hospitals or nursing homes, the incentive for families to institutionalize Alzheimer’s sufferers would increase. Our holding does not preclude liability in situations where caregivers are not warned of a known risk, where defendants otherwise increase the level of risk beyond that inherent in providing care, or where the cause of injury is unrelated to the symptoms of the disease.”

“As a general matter, Alzheimer’s patients and their families are liable under Civil Code section 41 for the injuries they inflict. Our holding bars recovery by only one class of plaintiffs: those employed to care for the patient. We also note that institutionalization is not an effective solution to the problem of injury to caregivers in general; as we have seen, it is not uncommon for Alzheimer’s patients to injure employees in institutions.”

“After weighing the public policies involved, we agree with those sister-state jurisdictions which have concluded that workers’ compensation, rather than tort recovery, is the appropriate means of compensating hired caregivers for injuries caused by Alzheimer’s patients.”

The dissenting opinion noted that “This is a hard case involving sad facts.” The dissent went on to point out several situations in which a caregiver will not be covered by workers’ compensation, and primary assumption of risk will bar any recovery for injuries of the type Gregory suffered, thus denying the caregiver any remedy for those injuries. Workers’ Compensation may not be available when there is no workers’ compensation insurance, or when the injured person is an independent contractor. “Under today’s ruling, the agency-provided home caregiver who is an independent contractor is barred from suing for injuries under the primary assumption of risk, and pursuant to long established principles he or she is denied workers’ compensation benefits as well.”

WCAB Clarifies UR Time Limits and That UR Not Required For Denied Body Parts

Shalisa Chamberlain was employed as a veterinary technician by Humphrey and Giacopuzzi Veterinary Hospital when she sustained injury to her low back, soft tissue, neck, buttocks, right hip, and feet due to weight gain.  She further alleged to have sustained injury to her psyche, vision, balance, urology, weight gain, brain, and internal organs.

Applicant’s PTP, Dr. Moelleken, issued a report on March 5, 2013 (signed March 16, 2013) and requested authorization for the following: (I) One year extension of gym membership; (2) Follow-ups with a psychiatrist; (3) Pain management follow-ups with Dr. Kenly; (4) Urology consultation to evaluate urinary retention and incontinence; (5) Neurology consultation to address headaches; (6) Follow-up in four weeks (not addressed in the WCJ’s Findings and Award); (7) 16 hours of home health assistance every week; and 8. Eight visits of additional chiropractic treatment for neck and back.

After receiving Dr. Moelleken’s report, State Fund submitted the following issues to UR: (I) the prospective request for a one-year gym membership extension; (2) the prospective request for “unknown home health assistant for 16 hours per week for unknown number of weeks”; and (3) the prospective request for eight sessions of chiropractic manipulation. State Fund did not request a UR with respect to the other treatment recommendations by Dr. Moelleken. The April 2, 2013 UR determination did not certify the request for gym membership, 16 hours of home health assistance per week, and eight sessions of chiropractic treatment.

The WCJ found that applicant sustained industrial injury “to her low back, soft tissue, neck, buttocks, right hip, and feet due to weight gain; and claims lo have sustained injury to her psyche, vision, balance, urology, weight gain, brain, and internal organs.” Thus there was no finding of injury to the disputed body parts. The WCJ also found that defendant’s utilization review (UR) determination was untimely and concluded that applicant was entitled to the following medical treatment: (a) a one-year gym membership extension; (b) a follow-up with a psychologist; (c) a follow-up with a psychiatrist; (d) pain management follow-ups with Dr. Kenly; (e) a urology consultation; (f) a neurology consultation; (g) 16 hours of home health assistance every week; and (h) eight visits of additional chiropractic treatment for the neck and back.

In its petition for reconsideration, State Fund contends: (I) its UR determination was timely and, therefore, the WCJ’s Order of medical treatment that was denied through UR was improper; and (2) the WCJ’s Order of medical treatment for body parts that have not been determined as industrial was also improper. The WCAB reversed in part in the panel decision of Chamberlain v Humphrey and Giacopuzzi.

Labor Code section 4610 provides that prospective or concurrent UR decisions “shall be made in a timely fashion that is appropriate for the nature of the employee’s condition, not to exceed five working days from receipt of the information reasonably necessary to make the determination, but in no event more than 14 days from the date of the medical treatment recommendation by the physician.” Although section 4610(g)(l) states that these time limits run “from the date of the medical treatment recommendation,” Administrative Director Rule 9792.9(b)(2) clarifies the 14 days run “from the claims administrator’s receipt” of the treatment recommendation. (Cal. Code Regs., tit. 8, § 9792.9(b)(2).) Dr. Moelleken’s report is dated March 5, 2013, but signed March 16, 2013. State Fund received it on March 22, 2013. The UR denial itself memorializes the efforts State Fund made to obtain additional information about the treatment request from Dr. Moelleken. The UR company faxed Dr. Moelleken on March 27, 2013 and March 29, 2013, requesting additional information regarding the chiropractic treatment request; however, this additional information was never received.

Where a treating physician fails to respond to requests for additional information, the WCAB concluded that a defendant’s UR denial is timely if it is issued within five days of the last request for additional information (provided, of course, the 14-day absolute limit is met). State Fund’s April 2, 2013 UR denial issued 12 days after it received Dr. Moelleken’s report, within the 14 day time limit for receipt of additional information to make a determination of the treatment recommendation. Therefore, the UR denial issued “in no event more than 14 days” from receipt of the report, and the denial was therefore timely as to the industrially-related treatment addressed by State Fund’s UR denial.

The additional information requested by State Fund related only to the 4 chiropractic treatment. However the WCAB concluded that State Fund was not required to issue separate partial denials with respect to the gym membership and the home health assistance within five days of its 6 March 22, 2013 receipt of Dr. Moelleken’s report. Neither section 4610 nor AD Rule 9792.9 (as it read in early 2013) requires separate partial denials. To “read any such requirement into section 4610 or Rule 9792.9 because to do so would create a procedural morass, not only for defendants issuing UR determinations, but also for injured employees who now face a statutory deadline for requesting Independent Medical Review (!MR) with respect to any UR determination.”

UR determinations for non-industrial body parts are not relevant, since non-industrial treatment recommendations are not subject to UR. (Simmons v. State of California, Dept. of Mental Health (2005) 70 Cal.Comp.Cases 866 (Appeals Board en banc).) The dispute over authorization of these treatment requests are, therefore, returned to the trial level for further development of the record and determination whether the disputed body parts are industrially-related.

Excellence in Workers’ Compensation Risk Management Awards Announced

Each year, National Underwriter’s Excellence in Workers’ Compensation Risk Management Award recognizes three organizations with exemplary loss control, safety and return-to-work programs. They are the leaders in this arena, all featuring success stories showing proven results. This year’s winners are AmQuip, Danos and Iron Mountain. All three companies are being profiled in its special cover feature in NU’s August issue, and also will be honored on Aug. 18 during the 69th annual Workers’ Compensation Educational Conference (WCEC), set for Aug. 17-20 at the Orlando World Center Marriott in Florida.

AmQuip knows the secret to a successful workers’ compensation program: zero injuries. A tall order, to be sure – especially when your company rents out and operates nearly 700 cranes in 47 states to refineries, power plants, and industrial and building construction sites. Eliminating injuries, however, was far from impossible, according to Jeffrey C. Hammons, vice president of risk management for the Philadelphia-based crane rental provider. The right training and participation among employees, the company and its carriers greatly payed off – and a shared passion for the company and its values doesn’t hurt, either.”We’re one of the three largest employers of union [crane] operators in the country,” Hammons says, and while he’s quick to point out that AmQuip’s partnerships with a lengthy list of local unions attract many eager candidates to work for the company, he acknowledges that when you source 300 to 500 seasonal employees, they come with varied levels of training and professional development. And therein lies Hammons’ No. 1 challenge to his workers’ compensation program. AmQuip has averaged $46,000 a year in workers’ compensation costs since 2009. Its workers’ compensation budgets are reduced by 15% each year that the company comes in below its previous budget.

Danos’ culture of safety yields a record number of incident reduction in often treacherous conditions. Headquartered in Larose, La., Danos provides contract labor services, construction and fabrication, sandblasting and painting services and consultants to the oil and gas industry worldwide. Founded in 1947 and currently boasting a workforce of more than 1,600 employees, Danos operates in the U.S. Gulf of Mexico and gulf coast region, Texas, Wyoming, Pennsylvania, Ohio and in several foreign countries, supplying personnel for various on-site oil and gas industry projects and work sites, including pipelines. “We provide people,” says Mayet. “They are our product.” The work, as one would surmise, is inherently dangerous – particularly on work sites set over water, such as oil rigs. Even traveling to the work sites can be treacherous: Boats and helicopters are used for transportation of personnel and supplies. Swing ropes and cranes are used to transfer personnel and supplies from vessels to platform. Platforms include machinery, high-pressure wells, boat landings, steel decks, stairways and handrails, all of which need continuous maintenance and upkeep to control the effects of a salt water environment on steel surfaces and electrical machinery. Yet through its dedication in recent years to achieving operational excellence, Danos has reached all-time lows in its total recordable incident rates at a time when the company’s personnel, man-hours and exposures have increased tremendously. As its time on-site and total number of personnel have grown in recent years, incidents are on an inverse track.

When Geoffrey Smith joined the risk management team at Iron Mountain in 2008, it was clear that the company required a sea change when it came to its workers’ compensation program. As the largest records-management company in the U.S. with operations in 35 countries, Iron Mountain’s employees face a number of on-the-job exposures. “We pick up and store boxes of customer paper records, computer tapes and media, and then return these records to our customers upon request,” explains Smith – boxes that can easily weigh up to 80 pounds. As a result, back and shoulder injuries are common. He set and achieved the goal of reducing their costs by half within five years.

On Aug. 18 during the conference, NU Executive Managing Editor Shawn Moynihan will lead a special roundtable at 1 p.m. during which attendees can learn some of the secrets behind these award-winning programs. The award is sponsored by Helmsman Management Services, a third-party administrator that offers claims management, managed care and risk-control solutions for businesses with 1,000 employees or more. Presented by the Workers’ Compensation Institute, WCEC is the largest gathering of its kind in the nation and offers discipline-specific programs and breakout sessions from hundreds of national speakers.

WCIRB Publishes Aggregate Medical Payment Trends Report

The WCIRB released the California Workers’ Compensation Aggregate Medical Payment Trends report comparing medical payment transaction data from the fourth quarter of 2013 to the fourth quarter of 2012. WCIRB researchers used reported medical payment data representing more than 90% of the California insurance market and accounting for approximately $1.3 billion in payments annually.

Among the findings of the report:

1) On a type of provider basis, specialist physicians, surgeons and services for hospital and ambulatory surgical centers services dropped from 53.6% of total medical paid in Q4 2012 to 49.5% in Q4 2013. During that same period, payments to general practitioners and occupational health providers increased from 13.1% to 16.2% of total paid medical.

2) On a place of service basis, payments to hospitals and ambulatory surgical centers dropped from 31.3% of total medical paid in Q4 2012 to 28.0% in Q4 2013. During that same period, office-based services increased from 47.5% of paid in Q4 2012 to 51.4% of paid in Q4 2013.

3) On a procedure basis, pharmacy spending increased from 12.8% of paid medical in Q4 2012 to 13.7% of paid medical in Q4 2013. Payments for opiates slightly declined from 3.8% of total paid medical in Q4 2012 to 3.7% in Q4 2013.

4) Pharmaceutical payments for 2013 and 2012 averaged approximately 13% of total paid medical as reflected in the WCIRB’s medical transaction data, while payments to pharmacists and pharmacies averaged about 9.7% for both years. These findings suggest that 3% to 4% of paid medical may be generated from physician dispensing in offices.

5) The fastest growing procedure between Q4 2012 and Q4 2013 was Level 4 office visits for existing patients, which is defined by the Official Medical Fee Schedule (OMFS) as involving a detailed history and examination for moderately complex medical decision-making. This code also grew the fastest between Q3 2013 and Q4 2013.

The report is available in the Research and Analysis section of the WCIRB website