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DWC Schedules MPN Regulations Public Meeting

The Division of Workers’ Compensation (DWC) has scheduled a public meeting to discuss the issues related to drafting regulations regarding the SB 863 changes to medical provider networks. The meeting will be held: on Wednesday, Jan. 30, 2013 from 10 a.m. to noon at the Elihu Harris State Office Building Auditorium located at 1515 Clay Street in Oakland.

This is the first opportunity for the public to provide input to the Division on regulations to implement MPN changes under SB 863. Specifically, the following issues will be addressed:

  • New MPN applicants
  • Reapproval process
  • Petition process for MPN suspension/revocation
  • Administrative penalties
  • MPN audits/investigations
  • Independent Medical Review (IMR) process

CWCI Says Opioid Drug Monitoring Could Save $57.2 Million

As debate swirls about future funding for California’s $3.7 million a year Controlled Substance Utilization Review and Evaluation System (CURES), a new California Workers’ Compensation Institute study asserts that allowing 3rd party payer access to CURES would improve quality of care and strengthen utilization and cost control over opioid prescriptions dispensed to injured workers, which for accident year 2011 claims alone would cut California workers’ compensation claim costs by an estimated $57.2 million

Excessive use of prescription painkillers has become a nationwide public health problem, and a huge cost driver in California workers’ compensation, where highly addictive “Schedule-II” narcotics such as oxycontin and fentanyl have been widely used, even for relatively minor sprain and strain injuries. In 2011, the Division of Workers’ Compensation adopted chronic pain management guidelines to help control the use of these drugs to treat injured workers, but they have continued to account for a growing proportion of workers’ compensation prescriptions. One tool California does have to combat prescription drug abuse is CURES, its 3-year old electronic prescription monitoring program run by the Department of Justice. CURES allows doctors, pharmacists and law enforcement to track the prescription history of patients receiving opioids to identify fraud and abuse patterns. Many workers’ compensation stakeholders assert that access to CURES data, coupled with enhanced medical cost containment strategies (including pharmacy benefit managers, medical provider network monitoring and utilization review) could significantly reduce inappropriate opioid prescriptions dispensed to injured workers. However, since a $70 million cut in the Department of Justice budget was announced in late 2011, the state has struggled to come up with the $3.7 million a year needed to fund CURES.

Using data from prior studies and CWCI’s Industry Claims Information System database, authors Alex Swedlow and John Ireland estimate that 23 percent of the 500,000 California job injury claims in accident year 2011 involved opioid prescriptions. Though the Institute projects that access to CURES would generate no savings on the 41 percent of workers’ compensation opioid claims involving a single prescription, potential savings from reduced medical and indemnity payments on the 59 percent of the opioid claims involving multiple prescriptions would range between 3 to 7 percent – or $57.2 million on the accident year 2011 claims.

Debate over the funding of CURES continues, as Attorney General Kamala Harris this week urged Governor Brown to restore funding for the program in light of the state’s improving budget picture. In the meantime, the Institute has released its analysis in a white paper, “Estimated Savings from Enhanced Opioid Management Controls Through Third Party Payer Access to CURES.” The white paper is available in the Research section of the Institute’s website,

Fontana Gardener Charged With Fraud

The San Bernardino County District Attorney reports that Jose Cortez, 54, of Fontana, has been charged with workers’ compensation fraud and perjury.

In Oct. 2010, Cortez received an occupational injury as a result of his duties as a gardener for L. Barrios and Associates Landscaping. A large tree branch had fallen and landed on Cortez causing injury. He was then transported to an area hospital where he was treated under the workers’ compensation system and released with minor work restrictions.

The following year – between April and Sept. 2011 – private insurance investigators working on a tip began conducting video surveillance of Cortez. On six different occasions, he was observed performing his normal duties as a gardener with no obvious signs of pain or discomfort.

In Sept. 2012 Investigators from the San Bernardino County District Attorney’s Office Workers’ Compensation Insurance Fraud Unit conducted a thorough criminal investigation. During the surveillance they observed and photographed Cortez performing his normal duties as a gardener with no obvious signs of pain or discomfort; however, Cortez was still collecting insurance benefits after reporting that he could not perform his work-related duties.

“Mr. Cortez had previously stated that he was unable to perform the full range of his duties,” said Deputy District Attorney Scott Byrd, who is assigned to the case. “However, our investigation revealed that he had misrepresented the extent of his injuries and received more compensation than he was entitled to.”

Criminal charges were filed Monday against Cortez, resulting in a felony arrest warrant being issued. Cortez was taken into custody outside his residence without incident by District Attorney Investigators. He was transported and booked at the San Bernardino County Sheriff’s West Valley Detention Center. Cortez was arraigned Tuesday in San Bernardino Superior Court, where he entered a plea of not guilty. If convicted as charged, he faces eight years in County Prison.

“This type of fraud is harmful because it causes premiums that businesses have to pay to go higher,” said Byrd. “It drains business profits, which in turn costs honest workers money in raises or other benefits that they may have been eligible to receive.”

Unity Surgical Outpatient Center Fraud Trial to Take Six Months

Two administrators pleaded guilty Friday to 101 fraud and other charges related to a case that prosecutors say was the largest medical-fraud operation in the nation, while three others charged are expected to go to trial later this year.

According to the report in the Orange County Register, four of the five defendants, office workers at a Buena Park surgical outpatient center, including an attorney, already were tried and convicted in Superior Court Judge Thomas Goethals court in November after a 10-week trial on charges either of filing false tax returns or failing to file taxes or both. A doctor, also charged in the case, has not been tried yet.

The four defendants already prosecuted in the first phase of their cases were personnel connected to Unity Surgical Outpatient Center, where healthy people from all over the United States were recruited for unneeded surgeries, including tummy tucks and hysterectomies, generating $154 million in billings to insurance companies.

When Goethals sentenced the four in December to prison terms on the tax-evasion convictions and ordered them to pay millions in restitution in the first phase of the case, he also told them he would add no additional time to their sentences if they plead guilty to the fraud counts.

The judge said then he felt the tax convictions and the fraud charges were all part of the same “ugly, expensive … felonious scenario.”

Administrators Rosalinda Landon, 66, who received five years and four months on the tax counts, and Dee Francis, 63, who was sentenced to six years in prison on tax charges, accepted the judge’s offer. Unity accountant Andrew Harnen, 58, received the same term as Landon, and lawyer Roy Dickson, 64, got two years and eight months. All four defendants were ordered to pay restitution, ranging from $41,000 to $1.1 million. Harnen and Dickson, each facing more than 100 counts, including insurance fraud and grand theft, did not take the judge’s offer and will to go to trial later this year.

The case is expected to last more than six months, which would make it one of the longest criminal trials in Orange County. If convicted on those counts, the two face more than 55 years in prison.

Orange County prosecutors William Overtoom and George McFetridge have said that Unity doctors performed 1,307 invasive procedures on patients, including some who were recruited and paid between $300 and $1,000 to undergo unnecessary colonoscopies, hysterectomies, the removal of cysts, and treatment of sweaty palms and hemorrhoids.

The prosecutors say Unity billed insurance companies $154 million in a scheme in which 2,841 healthy people from all over the country were recruited for the unneeded surgeries.

Study Says Patients Rarely Told About Medication Mistakes

Patients and their families are rarely told when hospitals make mistakes with their medicines, according to a new study. Most medication mistakes did not harm patients, the researchers found, but those that did were more likely to happen in intensive care units (ICUs). And ICU patients and families were less likely to be told about errors than patients in other hospital units. “For the most part, our findings were in keeping with what the existing literature tells us about the where and how of medication errors in a hospital,” wrote Dr. Asad Latif, the study’s lead author, in an email to Reuters Health. “The most surprising finding was what we do about them, at least in the immediate time around when they occur,” added Latif, from the Johns Hopkins University School of Medicine in Baltimore.

The summary in Reuters Health say that using a database of about 840,000 voluntarily reported medication errors from 537 U.S. hospitals between 1999 and 2005, the researchers found that ICUs accounted for about 56,000, or 6.6 percent, of the errors. The rest happened in non-ICU units of the hospital. The vast majority of the mistakes – about 98 percent – didn’t lead to a patient being harmed, but those that did were more likely to happen in the ICUs, the researchers reported in Critical Care Medicine.

About four percent of the errors in ICUs ended up harming a patient, compared with about two percent of errors in non-ICU wards. That’s not surprising given the fragile condition of ICU patients and the more intensive treatment they receive, the authors note. Of errors that may have led to patient deaths, 18 occurred in ICUs and 92 in non-ICU areas of the hospital. In ICUs and non-ICUs, errors of omission – failing to give a patient the medication – were most common. Harmful errors most often involved devices like IV lines and mistakes in calculating medication dosages. More than half of the time, no actions were taken after an error. In fact, only a third of the hospital staff who made the reported mistakes were immediately told about their errors.

“And the patient and/or their family is immediately informed when an error occurs barely two percent of the time, despite literature supporting full disclosure and their desire to be promptly informed,” Latif said. Still, Latif said it would be premature for patients and their families to be concerned based just on their findings. “Studies like this give us the opportunity to find out how we are actually doing, compared to how we think we are doing,” he said. “They help us discover associations between the outcomes we are interested in and their potential causes and consequences.”

Recent research has found that instituting a blame-free reporting system in hospitals increases the number of reported mistakes. According to the new paper, one prior study demonstrated that medication errors can add an extra $2.8 million in costs at a single hospital. Latif added that the healthcare system is always trying to reduce medication mistakes. “However nothing is fool-proof as we show in our study; there is always the human factor to take into account. The key is what we do if they do happen and to keep striving for perfection,” Latif said

Obama Signs SMART Act Expediting Medicare Settlements

To usher in the New Year, Congress passed H.R. 1845, which contains, in part, the bipartisan Strengthening Medicare and Repaying Taxpayers (“SMART”) Act. The SMART Act, as adopted, amends several portions of the Medicare Secondary Payer (“MSP”) statute and aims to simplify and soften portions of the statute that have been burdensome to beneficiaries and industry stakeholders. This legislation has now been signed into law by President Obama. Notably, the beneficial provisions of the SMART Act apply only to non-group health plans (i.e., workers’ compensation, no-fault and liability insurance (including self-insurance) plans) and not to employer group health plans.

According to a summary prepared by the Association Corporate Counsel, “conditional” payments occur where Medicare pays for items or services that are later determined to be the financial responsibility of a group health plan or non-group health plan (each a “primary plan”). In the non-group health plan context, the Centers for Medicare and Medicaid Services (“CMS”) can seek to recover medical costs associated with the illness, injury or incident giving rise to the claim from the non-group health plan or from Medicare beneficiaries or others who receive settlement proceeds. In practice, most demand letters associated with liability settlements are sent to Medicare beneficiaries.

Under current CMS policy, CMS does not issue a “final” conditional payment determination amount until after settlement. Although preliminary information concerning conditional Medicare payments can be obtained prior to settlement, the dispute resolution process post-settlement regarding the appropriate amount can be lengthy and complicated. This has been a source of considerable frustration for Medicare beneficiaries. Further, CMS’ refusal to provide a final conditional payment amount prior to settlement creates additional risk for non-group health plans because CMS can recover Medicare conditional payments from a primary plan for injury related medical care notwithstanding the fact that the plan has already paid the claim and obtained a release for such medical care. Not knowing the final conditional payment amount prior to settlement impedes the non-group health plan’s ability to directly satisfy Medicare’s interests (e.g., by sending one check to Medicare and another to the claimant) because payment of settlement proceeds must generally be made promptly after settlement. This has lead liability insurance and other plans to seek work around release provisions designed to ensure that Medicare’s interests are, in fact, satisfied, adding to the complexities (and timeframes) for settlement.

The SMART Act addresses these concerns by requiring that CMS make a “statement of reimbursement” available to the Medicare beneficiary, his or her authorized representatives, and/or the non-group health plan with the beneficiary consent’s on a secure website prior to settlement of a non-group health plan claim. The settling parties can rely upon the statement as the final agency determination of Medicare conditional payments where certain conditions are met. This will allow the parties to factor the final “lien” amount into their settlement negotiations and allow primary plans to implement more direct and effective strategies for ensuring satisfaction of Medicare’s recovery rights (such as issuing separate checks to the beneficiary and Medicare). The statute imposes specific procedures around the statement of reimbursement process, including timelines for notice to the government in advance of an expected settlement and timelines for CMS’ response. CMS must promulgate final regulations to implement this process within nine months after the SMART Act enactment.

Many stakeholders have expressed concern over the slow and cumbersome process available for beneficiaries who wish to dispute costs that a CMS contractor identifies as Medicare conditional payments on the basis that such costs are not related to the illness, injury or incident at issue. The SMART Act requires that the Secretary provide Medicare beneficiaries and their authorized representatives a “timely process to resolve the discrepancy.” Specifically, if the individual or representative provides documentation explaining the discrepancy and offering a proposal to resolve it, CMS must, in turn, determine whether there is a reasonable basis to include or exclude the claims at issue in the Medicare conditional payment amount within 11 business days after receipt of the document. Additional processes for resolution are specified. The statute does not allow any administrative or judicial review of the Secretary’s determinations under this new process. However, Medicare beneficiaries still would retain the ability, as under current law, to exercise formal administrative or judicial appeals to contest final conditional payment demands from CMS. The Secretary also must promulgate implementing regulations concerning these processes within nine months of enactment.

Under current MSP law, “Responsible Reporting Entities” are required to determine whether a claimant is a Medicare beneficiary and, if so, submit certain detailed information to CMS. An RRE that fails to report the claimant’s information, as required, “shall be subject to a civil monetary penalty of $1,000 for each day of non-compliance with respect to each claimant,” with no exception for good faith efforts to obtain the information. While CMS has yet to publish implementing regulations or, to our knowledge, impose any such penalty, the potential financial risk to RREs is substantial. The SMART Act modifies the statutory language to provide that an RRE “may be subject to a civil money penalty of up to $1,000 for each day of noncompliance” per claimant. Moreover, and equally important, the SMART Act requires the Secretary to publish notice within sixty days of enactment soliciting proposals on practices that will and will not be subject to sanctions for non-reporting, including not imposing sanctions for good faith efforts to identify beneficiaries, and thereafter issue final rules regarding such practices.

CWCI Study Sees High Carpal Tunnel Injuries for Hospital Workers

The California Workers’ Compensation Institute has released the sixth edition of its “Injury Scorecard” research series, providing detailed data on accident year (AY) 2001 to 2011 workers’ compensation claims experience for cases in which the primary diagnosis was carpal tunnel syndrome. The new Scorecard is based on data from 19,899 California open and closed job injury claims for carpal tunnel syndrome that through December 2011 resulted in total payments of $738 million. The Scorecard shows that over the 11-year span of the study, carpal tunnel claims accounted for less than 1% of California job injury claims, but 2.4% of all paid losses.

More than 60% of carpal tunnel claims come from the professional/clerical, manufacturing, and mercantile sectors, though since 2008, the highest growth rate of carpal tunnel claims has been among hospital workers, who accounted for nearly 14% of the claims since 2008, up from 6.3% in the prior five years. More than half of the carpal tunnel claims over the past decade have resulted in permanent disability (PD) – more than triple the rate for all job injury claims, and these PD cases account for nearly 89 cents out of every dollar paid on carpal tunnel claims. Since 2001, the average claim duration for carpal tunnel claims has been nearly 31 months from the claim filing date to claim closure – nearly triple the average of 10.8 months for all other work injury claims – and for carpal tunnel PD cases, the average duration has been nearly 4 years (1,406 days), or about 5 months longer than the average for PD cases involving other types of injuries. The Score Card notes a number of factors that may contribute to the longer claim durations in carpal tunnel cases including uncertainty and disputes over the cause and nature of the injury; notification and initial treatment delays; high levels of attorney involvement; the high incidence of lost time claims (especially PD claims), and treatment plans that often involve surgery followed by physical therapy and delayed return to work. As a result, average payments on carpal tunnel claims have consistently exceeded the average for all claims at 12, 24 and 36 months post injury. For example, for accident year 2007-2009 lost time claims, total benefit payments for carpal tunnel cases at 36 months post-injury averaged $35,129 ($16,980 medical + $18,149 indemnity); 20% more than the average of $29,211 ($15,646 medical + $13,565 indemnity) paid for all California workers’ compensation lost time claims.

The Score Card also features a profile of injured workers with carpal tunnel syndrome, as well as claim distributions by industry sector, injured worker county of residence, and nature and cause of injury. In addition, several Score Card exhibits compare the results for carpal tunnel claims to those for all California workers’ compensation claims (these include the exhibits showing the percentage of claims with PD payments within 3 years of injury; the attorney involvement data; the claim closure data; the prescription drug distributions; the breakdowns of medical development by Fee Schedule Section at 12 and 24 months post injury; the notice and treatment time lags; the medical network utilization rates; and the 12-, 24- and 36-month loss development).

CWCI Industry Score Cards and summary Bulletins are available to CWCI members and research subscribers on CWCI’s web site, Anyone wishing to subscribe may do so by going to CWCI’s online Store. The next Score Card in the series will focus on “Other Injuries, Poisonings and Toxic Effects.”

Survey Confirms Concerns Over Opioid Medications

Tampa, Florida-based CompPharma is a consortium of pharmacy benefit managers. It’s 9th annual survey report, titled “Prescription Drug Management in Workers’ Compensation” states that claims “payers have gotten the message: narcotics are highly problematic for workers’ comp claimants, employers and insurers.” The new survey confirms that addiction to opioid pain medications and the dispensing of drugs by doctors remain top concerns for workers’ compensation companies. The report relies on survey responses from insurers, third-party administrators, and employers with prescription expenses totaling nearly $475 million.

Concern over the long-term implications of prescribing narcotic pain medications to injured workers has grown during the past two years with respondents to this year’s survey conducted by CompPharma L.L.C. saying the issue remains “very significant.”

Despite relatively flat drug costs, respondents continue to be significantly concerned about the issue. In response to the question “How big a problem are drug costs?” on a 1 through 5 scale with 3 being “drug costs are equally as important as other medical cost issues,” drug costs were rated a 4.1, or “more important than other medical cost issues.” This was three-tenths of a point higher than last year’s results (3.8). Moreover, respondents are concerned (4.2) that drug costs will be more of a problem in the next 12-24 months than they are today.

And consistent with results from last year, respondents judged opioids to be a very significant problem, giving it an average of 4.8, identical to responses in the 2011 survey. This is the highest score for any survey question in the history of the survey, and a clear indicator of the level of the industry’s anxiety over a problem it has yet to fully understand, much less address.

The concern over physician dispensing has grown over the last few years, driven by payers’ own experience and the research from NCCI and WCRI quantifying the dramatic increase in the percentage of drug dollars going to pay for physician-dispensed medications.

In 2010, many responses noted newly implemented programs or steps designed to address opioid use. In 2011, implementing and upgrading those programs was the most common change to respondents’ pharmacy management programs.

Half of all respondents utilized a “urine drug-testing program to monitor claimant compliance.” Among those who did not answer in the affirmative were payers that operated in states where they could not require UDT, although they did encourage or recommend testing whenever possible. Others did not have “formal” programs but did reimburse for UDT and were in the process of setting up a program, or were discussing a program with their PBM. There is a clear indication that this tool is growing in popularity.

Pharmacy management in workers’ comp has evolved dramatically over the nine years that surveys have been taken. From a focus on the price of the pill and the size of the retail pharmacy network in 2003 to today’s concern about opioids, physician dispensing and clinical management, there has been a remarkable increase in sophistication and understanding. With that said, it is evident that despite all the attention paid to and resources focused on this issue, payers’ level of concern about pharmacy management continues to remain quite high.

One of Ten Most Wanted Health Care Fugitives Arrested in Canada

A fugitive convicted in a $1-million health-care fraud scheme in California was arrested in Canada. Police said Leonard Nwafor was detained on an extradition warrant at his Toronto residence. The U.S. Marshals Service contacted Toronto authorities in August to seek their help in finding Nwafor and issued the extradition warrant last month.

Nwafor fled California after the conviction. In 2010, he was sentenced in absentia to nine years in prison and ordered to pay more than $500,000 in restitution and $25,000 in fines. He was also ordered to forfeit more than $500,000 in stolen funds to the U.S. government.

Authorities believe he had been living in Canada since he fled. Nwafor was also wanted by the U.S. Postal Inspection Service, which had placed him among its 10 most-wanted fugitives. The agency charges that Nwafor opened fraudulent credit card accounts in Arizona and used the cards in Southern California.

Nwafor was convicted at trial in September 2008 of conspiracy to commit health care fraud and health care fraud. At trial, evidence established that Nwafor, through his company, Pacific City Group Inc., aka Pacific City Medical Equipment, submitted $1,109,438 in fraudulent claims to Medicare. As a result of the fraudulent claims, Nwafor received $526,243 in payments from Medicare. The evidence presented at trial showed that almost all the claims Nwafor submitted to Medicare were for expensive, high-end power wheelchairs and wheelchair accessories that were not needed by the beneficiaries.

Elderly and disabled Medicare beneficiaries testified that individuals known as “marketers” approached them on the street, at home or in church and encouraged the beneficiaries to give the marketers their Medicare numbers and other personal information in exchange for free power wheelchairs. Evidence presented at trial established that Nwafor billed Medicare for power wheelchairs on behalf of more than 170 beneficiaries, none of whom actually needed the wheelchairs. The power wheelchairs Nwafor claimed Pacific City provided to the beneficiaries can be billed to Medicare for up to $7,000 each.

The evidence also showed that Nwafor supplied power wheelchairs to beneficiaries who were not able to use the chairs. One beneficiary, who was blind, testified that he could not see to operate the wheelchair and never used it. The same beneficiary also testified that a delivery driver working for Nwafor and the delivery driver’s girlfriend paid him $200 to refer them to other Medicare beneficiaries.

Another beneficiary testified about the aggressive techniques marketers used to recruit her and her husband into the fraudulent scheme. This beneficiary testified that an individual purporting to be from Medicare, but who was actually associated with Nwafor and his co-conspirators, threatened to terminate the Medicare benefits of the beneficiary and her husband unless they accepted two power wheelchairs that the beneficiary and her husband did not need.

The evidence at trial included testimony from Los Angeles-area physicians whose names appeared on prescriptions Nwafor used to support his false claims to Medicare. One of these physicians, a psychiatrist, testified that he does not prescribe power wheelchairs as part of his practice, and had never written a prescription for one. Other physicians testified that the prescriptions bearing their names were phony and that their handwriting was not on any of the prescriptions.

After his conviction, Nwafor admitted in documents he filed with the court that he purchased the prescriptions and documents he used to support his false claims to Medicare from a co-conspirator for approximately $1,300 per prescription. One of Nwafor’s co-conspirators, Ajibola Sadiqr, admitted that he purchased fraudulent prescriptions and documents from Nwafor to perpetrate his own fraudulent power wheelchair Medicare fraud scheme. Sadiqr pleaded guilty and is scheduled to be sentenced on April 12, 2010.

Scientists Develop Objective Measurement of Pain

Scientists have long searched for a method to objectively measure pain and a new study from Brigham and Women’s Hospital advances that effort. The study appears in the January 2013 print edition of the journal Pain.

Specifically, researchers studied 16 adults with chronic back pain and 16 adults without pain and used a brain imaging technique called arterial spin labeling to examine patterns of brain connectivity (that is, to examine how different brain regions interact, or “talk to each other”). They found that when a patient moved in a way that increased their back pain, a network of brain regions called Default Mode Network exhibited changes in its connections. Regions within the network (such as the medial prefrontal cortex) became less connected with the rest of the network, whereas regions outside network (such as the insula) became connected with this network. Some of these observations have been noted in previous studies of fibromyalgia patients, which suggests these changes in brain connectivity might reflect a general feature of chronic pain, possibly common to different patient populations.

“This is the first study using arterial spin labeling to show common networking properties of the brain are affected by chronic pain,” said study author Ajay Wasan, MD, MSc, Director of the Section of Clinical Pain Research at BWH. “This novel research supports the use of arterial spin labeling as a tool to evaluate how the brain encodes and is affected by clinical pain, and the use of resting default mode network connectivity as a potential neuroimaging biomarker for chronic pain perception.”

“While we need to be cautious in the interpretation of our results, this has the potential to be an exciting discovery for anyone who suffers from chronic pain,” said Marco Loggia, PhD, the lead author of the study and a researcher in the Pain Management Center at BWH and the Department of Radiology at Massachusetts General Hospital. “We showed that specific brain patterns appear to track the severity of pain reported by patients, and can predict who is more likely to experience a worsening of chronic back pain while performing maneuvers designed to induce pain. If further research shows this metric is reliable, this is a step toward developing an objective scale for measuring pain in humans.”