Author: WorkCompAcademy

An article on the ProPublica/NPR website proudly announces that a “race to the bottom” in state workers’ compensation laws has the Labor Department calling for “exploration” of federal oversight and federal minimum benefits.

This announcement is the culmination of many ProPublica/NPR stories that featured injured workers who lost their homes, were denied surgeries or were even denied prosthetic devices recommended by their doctors.

The ProPublica/NPR series prompted a letter last fall from 10 prominent Democratic lawmakers, who urged Labor Department action to protect injured workers in the wake of a ProPublica/NPR series on changes in workers’ comp laws in 33 states. The ten ranking Democrats on key Senate and House committees claimed there was a “pattern of detrimental changes in state workers’ compensation laws” that have reduced protections and benefits for injured workers over the past decade.

The response to this letter was a report from the Labor Department that calls for “exploration” of “the establishment of standards that would trigger increased federal oversight if workers’ compensation programs fail to meet those standards.”

The report claims that there “have seen significant changes to the workers’ compensation laws, procedures, and policies in numerous states, which have limited benefits, reduced the likelihood of successful application for workers’ compensation, and/or discouraged injured workers from applying for benefits. These include changes that have resulted in the denial of claims that were previously compensated, a decrease in the adequacy of cash benefits to those awarded compensation, imposition of restrictions regarding the medical care provided to injured workers, and the institution of new procedural and evidentiary rules that create barriers for injured workers who file claims. In addition, the elimination by several state legislatures of Second Injury Funds – that is, state-administered funds that provide compensation for injuries not otherwise covered – creates additional holes in the fabric of insurance and coverage.

The agency also suggests a fresh look at reestablishing a 1972 Nixon administration commission that recommended minimum benefits and urged Congress to act if states failed to comply.

To clearly understand the implications of this recommendation, it is important to know the history of the financial waste triggered by the Nixon Commission report after it was published in 1972. In essence, the report was critical of just about every aspect of the various state workers’ compensation systems, and recommended improvements or enhancements to every specie of benefits. If states did not improve their programs in conformity to these recommendations, there was a threat of a federal takeover of all state systems.

For example, the Nixon Commission concluded in 1972 that “Many disabled workers fail to receive vocational services partly because they are not aware of their rights, partly because they lack motivation because of a fear they will lose compensation benefits if rehabilitated, and partly because they cannot afford the out-of-pocket costs of maintenance during instruction.”  Thus the report went on to “recommend that the medical-rehabilitation division within each State’s workmen’s compensation agency be given the specific responsibility of assuring that every worker who could benefit from vocational rehabilitation services be offered those services”.

A few years later, California, as well as many other states, appeased the federal government by adopting some of the Nixon Commission mandates. For example California adopted mandatory vocational rehabilitation. The history of that financial disaster is well documented. Rehabilitation programs easily cost more than $100,000 per claim and rarely produced a return to work outcome. A whole cottage industry of vendors grew around the program. The futility of the program became apparent about 20 years later when a $16,000 cap was placed on the costs of a rehabilitation program. That “reform” was subsequently ineffective, so vocational rehabilitation as a program was scrapped, and instead there have been various forms of training vouchers that pay for training, but no financial benefit to the worker directly. The voucher program is largely unused.

If someone were to add up the industry costs of vocational rehabilitation alone from its birth to its death, it would be a staggering amount of wasted money, spent mostly to appease the federal wonks who thought they knew what they are doing.

With this history in mind, the big question is “is the industry about to face another costly Nixon Commission redux?”

Governor Brown signed AB 2503 into law. The new law will require a physician providing treatment to an injured worker to send any requests for authorization for medical treatment, with supporting documentation, to the claims administrator for the employer, insurer, or other entity according to rules adopted by the administrative director. The bill would also make technical changes to existing law. This new law would incorporate changes to Section 4610 of the Labor Code provided by this bill and the companion sweeping overhaul to the UR process specified in SB 1160 which has also been signed by the Governor.  They were in effect companion bills.

According to the author of this law, “it is often difficult for health care providers in the workers’ compensation system to obtain timely approval for treatment of injured workers because it is difficult to know where to send RFAs”.

“Whether it is intentionally complex systems, or bureaucratic inefficiency, physicians report that upon sending RFAs to what appears to be the correct recipient, they are frequently advised that the RFA and attendant medical materials must be sent elsewhere.”

Further, the timeframes within which responses from the UR entity must be provided do not begin to run until the RFA is sent to the “correct” location. The bill is intended to clarify where the RFA and related materials must be sent, so that the time frames specified in statute will be more effective.

According to the author and sponsor, the silence in existing law on where a physician should send a RFA is creating difficulty for healthcare providers and is creating delays in the provision of medical treatment.

Specifically, AB 2503 would require that a RFA is submitted directly to a claims administrator, rather than a UR vendor or some other third party. In doing so, AB 2503 will make precisely clear where a RFA should be submitted so that a request for medical treatment can be timely assessed, avoiding unnecessary delays.

The sponsor of this bill, the California Orthopaedic Association (COA), argued that existing law’s silence on where a physician should submit a request for authorization of medical treatment has the potential to create great mischief.

Specifically, COA notes that different employers/insurers have different policies for where a RFA should be submitted, which can lead to confusion for physicians. COA argues that, by specifically stating where a RFA must be submitted, AB 2503 will minimize confusion and delays, leading to better medical treatment for injured workers.

There was no opposition to this law noted in the legislative record.

Governor Brown signed SB 1160 into law on the last day of the legislative session. This bill makes a series of significant, wide-ranging changes to the operation and UR processes, approval of UR processes, and lien filing and collection. This bill expedites medical care at the beginning of an injured worker’s claim, modernizes data collection in the workers’ compensation system, and implements anti-fraud measures in the filing and collection of liens.

Specifically, with respect to UR operation, this bill:

1) Provides that, with respect to medical treatment that is provided through a medical provider network (MPN), a health care organization (HCO), other employer-directed provider, or a pre-designated physician, no prospective UR may be undertaken for the first 30 days of treatment.
2) Provides several exceptions to the “no UR” rule, including surgery, medications not covered by the formulary, psychological treatment, non x-ray imaging, durable medical equipment (DME) if total costs for all DME exceeds $250, and home health care services.
3) Requires any treatment provided within the first 30 days to be reported to the employer or claims administrator – failure by the provider to properly report treatment can lead to revocation of the “no UR” rule.
4) Authorizes an employer to conduct retrospective UR to ensure compliance with evidence-based medicine standards, and if a pattern of non-compliance is discovered, the “no UR” rule could be revoked or the provider removed from the MPN.

With respect to UR Process Approval:

5) Prohibits explicitly an employer or claims administrator from providing a UR organization with financial incentives to deny or modify treatment.
6) Requires financial interest disclosure of UR entities be shared with DWC.
7) Requires any UR organization to be accredited by an entity specified by the DWC, subject to exceptions for certain public entities that have internal systems approved by the DWC. The entity must be independent and non-profit. Until the rules are approved by the AD, the entity will be URAC.
8) Provides authority to the DWC to approve UR processes.

With respect to UR and Medical Guideline Modernization:

9) Requires, through the URAC accreditation process, the availability of peer-to-peer communication in the event of a UR modification or denial.
10)Requires the AD to develop a mandatory electronic system for sharing documents necessary to conduct UR.
11)Adopts new procedures designed to better facilitate delivery of information for purposes of IMR.
12)Establishes an expedited five-day time frame for IMR decisions related to medications on the formulary.
13)Provides that MTUS may be updated with evidence-based medicine standards by an expedited process.

With respect to Anti-Fraud Measures:

14)Requires, for liens filed on or after January 1, 2017, a lien filer to specify in the lien filing the basis upon which the lien is authorized.
15)Requires these same data elements to be added to pre-existing liens, but allows until July 1, 2017, for lien filers to comply.
16)Provides that the failure to comply with the requirements noted above results in a dismissal of the lien with prejudice.
17)Provides that in the event a lien filer is charged with workers’ compensation fraud, Medi-Cal fraud, or Medicare fraud, all liens are stayed pending resolution of the charges.
18)Prohibits, for liens on or after January 1, 2017, any assignment of liens unless the person has ceased doing business in the capacity held at the time the expenses were incurred and has assigned all rights, title, and interest in the remaining accounts receivable to the assignee. The assignment of a lien, in violation of this paragraph is invalid by operation of law.
19)Clarifies existing law on liens assigned between 2013 and 2016 by codifying Chorn v. WCAB (Workers’ Compensation Appeals Board) (2016), 2016 Cal. App. LEXIS 232 and states these amendments to be declaratory of existing law.

Aon Global Risk Consulting, released its biennial Health Care Workers’ Compensation Barometer report, which explores trends in frequency, severity and overall loss rates related to workers’ compensation in the health care industry. The report finds that for the 2017 accident year, health care systems will face a complex environment of emerging risks that will have a direct impact on workers’ compensation.

The report, which analyzed data from approximately 1,600 heath care facilities across the country, found that while the severity of workers’ compensation claims has been increasing at a rate of two percent annually, the frequency of claims is expected to decrease one percent annually. The report also found that the industry should see loss rates increase by a projected one percent.

“As has been the case historically, the health care industry has experienced little volatility in workers’ compensation loss rates and, to augment that, claims frequency continues on a slow and steady decline,” said Martha Bronson, associate director and actuary for Aon Risk Solutions. “However, an aging workforce, safe patient handling issues and workplace violence are all emerging risks that need to be top of mind for the industry.”

Data from Aon’s 2016 Health Care Workers’ Compensation Barometer report finds that workers’ compensation claim costs increase as health care workers age, with the majority of those claims resulting from injuries to the back and shoulders. Fifty three percent of working nurses – a demographic that is the most frequently injured – are over the age of 50. A likely consideration for controlling these types of claims in the future and helping to ensure a healthy and safe workforce is education, specifically mentoring of the younger nursing population. While the report found that 58 percent of respondents have a program that develops younger workers, 61 percent do not have policies or programs that help transition older workers to a different work setting.

Aon’s Health Care Workers’ Compensation Barometer report also provides statistical information on historical frequency, severity, and overall loss rates specific to 11 states. Notably, the report finds that loss rates in California are almost double the countrywide rate and that claims severity is nearly three times that of the countrywide average of $23,950.

While loss prevention was the area of most concern for respondents, safe patient handling policies and controls are also top-of-mind in regards to minimizing risk of injury to health care workers. The report’s findings suggest that focusing on patient handling initiatives and best practices can aid in preventing workers’ compensation claims, thus helping mitigate both concerns. The average cost of a claim for systems that use Safe Patient Handling and Mobility standards is lower versus a facility that does not – $6,000 versus $7,800 – and overall these standards have reduced the incidence of health care worker injuries by up to 95 percent.

An alarming number of survey respondents – 91 percent – have experienced workplace violence in the past three years. However, approximately half of respondents indicate they are prepared for such an incident, with another 27 percent being very prepared. Eighty-one percent of respondents have a formal Workplace Violence Prevention Policy in place.

Dominic Colaizzo, chairman and U.S. Health Care practice leader for Aon Risk Solutions added, “While we recognize these emerging risks that are facing our industry in the year ahead, we also see that health care systems are ahead of the game. They are adhering to standards and utilizing best practices that are no doubt having a direct, positive effect on the number of workers’ compensation claims.”

The Department of Justice announced that Vibra Healthcare LLC, a national hospital chain headquartered in Pennsylvania, has agreed to $32.7 million settlement to resolve claims that Vibra violated the False Claims Act by billing Medicare for medically unnecessary services.

Vibra operates approximately 36 freestanding long term care hospitals (LTCHs) and inpatient rehabilitation facilities (IRFs) in 18 states. Its California facilities include Ballard Rehabilitation Hospital in San Bernardino, Kentfield Hospital in Marin County, Vibra Hospital of Sacramento, San Joaquin Valley Rehabilitation Hospital in Fresno, Vibra Hospital of Northern California in Redding, Vibra Hospital of San Diego and Kentfield Hospital of San Francisco.

LTCHs provide inpatient hospital services for patients whose medically complex conditions require long hospital stays and programs of care. IRFs are intended for patients needing rehabilitative services that require hospital-level care.

The government alleged that between 2006 and 2013, Vibra admitted numerous patients to five of its LTCHs and to one of its IRFs who did not demonstrate signs or symptoms that would qualify them for admission.

Moreover, Vibra allegedly extended the stays of its LTCH patients without regard to medical necessity, qualification and/or quality of care. In some instances, Vibra allegedly ignored the recommendations of its own clinicians, who deemed these patients ready for discharge.

As part of the settlement, Vibra also agreed to enter into a chain-wide corporate integrity agreement with the Inspector General of the U.S. Department of Health and Human Services.

Part of the allegations resolved by this settlement were originally filed under the qui tam or whistleblower provisions of the False Claims Act by Sylvia Daniel, a former health information coder at Vibra Hospital of Southeastern Michigan. Daniel filed her suit in the Southern District of Texas, where one of Vibra’s LTCHs was located. Under the False Claims Act, a private party, known as a relator, can file an action on behalf of the United States and receive a portion of the recovery. Daniel will receive at least $4 million.

This settlement illustrates the government’s emphasis on combating healthcare fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $30.7 billion through False Claims Act cases, with more than $18.5 billion of that amount recovered in cases involving fraud against federal healthcare programs.

This matter was handled by the Civil Division’s Commercial Litigation Branch; the U.S. Attorneys’ Offices for the Southern District of Texas in Houston and for the Western District of Kentucky; and the HHS-OIG. The qui tam case is captioned United States ex rel. Daniel v. Vibra Healthcare, LLC, Civil Action No. 10-5099 (S.D. Tex.).