Author: WorkCompAcademy

A new California Workers’ Compensation Institute study shows that adopting a state-mandated workers’ comp prescription drug formulary such as those used in Texas and Washington State could reduce California workers’ compensation pharmacy payments by an estimated $124 million to $420 million a year while simultaneously raising the quality of care and reducing frictional costs in the system.

Drug formularies, which are widely used in group health, Medicare, and other federal health care programs are lists of approved drugs that define the scope, and in some cases, limit the variability in prices for certain types of drugs. Unlike California, states such as Texas, Washington and Ohio have mandatory formularies that apply uniform standards and drug lists for all injured workers in those jurisdictions.

To measure the potential effect of using a state-mandated formulary in California, the authors created a dataset of 1.6 million California workers’ compensation prescriptions filled between January 1, 2012 and June 30, 2013 and applied the Texas and Washington State formularies to these prescriptions. The results showed that applying the Texas formulary in the California workers’ compensation system would exclude 17 percent of the prescriptions and 29 percent of the payments, while Washington State’s more exclusive formulary would exclude 39 percent of the prescriptions and 70 percent of the payments. The study also estimated that using the Texas and Washington formularies in California would reduce brand-name drug payments between 42 and 95 percent, and reduce the use of controversial Schedule II opioid painkillers by 36 to 45 percent, reducing the associated payments for these drugs by 65 to 78 percent.

The study notes applying either formulary in California would sharply reduce workers’ comp prescription drug payments from current levels. When compared to current prescription drug utilization patterns and costs, the study estimated that the additional controls provided by a formulary could reduce total pharmaceutical payments in the system by 12 percent to 42 percent, which translates to a potential savings of $124 million to $420 million a year. The use of a state mandated formulary also would clarify the rules for drug selection, reduce the volume of ancillary services such as drug testing, and reduce administrative expenses for utilization review and independent medical review.

CWCI President Alex Swedlow said he is “aware of discussions” among officials within California’s workers’ compensation system over whether to adopt a mandated formulary.

According to the Insurance Journal, establishing such a formulary in California would not require action from the state Legislature. Instead, it could be done through regulatory changes by the state Division of Workers’ Compensation. Mark Walls, vice president of communications and strategic analysis at Safety National, said insurers are interested in adopting a formulary as a way to drive down costs and stem opioid misuse. However, the system could face opposition from prescription drug manufacturers.

Pulling the curtain back on long-hidden industry relationships, the federal government revealed that U.S. doctors and teaching hospitals had $3.5 billion worth of financial ties with drug and medical-device makers in the last five months of 2013. The details published in a new government database have been sought for years by consumer advocates and lawmakers concerned that conflicts of interest in the medical profession are jeopardizing patient care and costing taxpayer-funded health programs. This first batch of payment data covers just five months of 2013, but it shows the extensive ties medical companies have forged with doctors and academic medical centers across the country. About 546,000 U.S. physicians and 1,360 teaching hospitals received some form of compensation.

According to the story and analysis by the Los Angeles Times, California doctors and hospitals received 18% of the U.S. total, or $638 million, for the five-month period. In all, the data show nearly $2.5 billion in direct payments to medical providers – with 60% of that related to research. There was an additional $1 billion reported for medical providers’ ownership stakes in companies. That includes grants from companies and money that doctors invested themselves.

Advocates have long been concerned that this corporate largess – from speaking and consulting fees to luxury trips and meals – can lead to patients getting the wrong drugs or medical procedures. Those decisions can harm patients and drive up the nation’s $3-trillion medical tab, experts warn. Consumer advocates hailed the release of the information after years of debate in Congress and steadfast opposition from industry groups. “This exposure will require everybody to talk about something that’s been underground,” said Lisa McGiffert, director of Consumers Union’s Safe Patient Project in San Francisco. “It’s a widespread practice that does influence the kind of care patients get.”

The Physician Payments Sunshine Act, originally authored by Sen. Charles E. Grassley (R-Iowa), was included in the Affordable Care Act that President Obama signed in 2010 amid growing demands for more openness in the U.S. healthcare system. In the last several years, the Obama administration has lifted some of the secrecy by publishing data on how much hospitals charge for medical procedures and how much the massive federal Medicare program pays individual physicians. However, federal officials urged people not to rush to conclusions because financial ties between medical providers and manufacturers don’t necessarily signal wrongdoing. The database “does not identify which financial relationships are beneficial and which could cause conflicts of interest. It simply makes the data available to the public,” said Dr. Shantanu Agrawal, a deputy administrator at the Centers for Medicare and Medicaid Services.

Indeed, physicians and academic medical centers defend industry collaboration as essential to advance research into life-saving treatments. For example, drugs and devices that companies donate to doctors to use in their research are included in the database as company contributions. Critics also questioned the accuracy of the government data and the potential for doctors’ reputations to be tarnished unfairly. Similar complaints arose this year when Medicare published its physician payment data. “If the information made available to the public involves dollar amounts without full context, it can lead to gotcha-style news stories and healthcare providers facing the presumption of ethical wrongdoing even when they have done nothing wrong and their work is benefiting patients,” said Mary Grealy, president of the Healthcare Leadership Council, an association of medical industry leaders. Medical groups complained that physicians had not been given adequate opportunity to review the information before it was published.

The WCAB changed course in its second en banc opinion on the landmark case of Jose Dubon v World Restoration, SCIF now known as Dubon II. The new decision comes as some relief to the defense industry that has seen major aspects of SB 863 evaporate in a flurry of judicial opinions attacking some of its major provisions. The applicant community no doubt will have consternation over this newest development.

Last February, the WCAB in Dubon I ruled that the WCAB rather than the IMR process must decide appropriate medical treatment in situations were UR was defective. It reasoned that if a UR decision is invalid because its integrity was undermined due to the defendant’s failure to provide the UR physician with adequate medical records or because the UR physician failed to consider them, there is no valid UR determination and no basis for the employee to invoke IMR. Although both the defendant and employee may submit medical records and reports to the IMR organization a defendant may not use this as a vehicle to cure defects in its UR process if the UR decision has been found invalid. Where there is no valid UR decision subject to IMR, the issue of medical necessity must be determined by the WCAB.

In a surprising reversal, the WCAB has now ruled:

1. A utilization review (UR) decision is invalid and not subject to independent medical review (IMR) only if it is untimely.
2. Legal issues regarding the timeliness of a UR decision must be resolved by the Workers’ Compensation Appeals Board (WCAB), not IMR.
3. All other disputes regarding a UR decision must be resolved by IMR.
4. If a UR decision is untimely, the determination of medical necessity may be made by the WCAB based on substantial medical evidence consistent with Labor Code section 4604.5.3

The new case reversed the prior ruling stating “Therefore, we will rescind our February 27, 2014 en banc decision in Dubon I and affirm the decision of the workers’ compensation administrative law judge (WCJ), which held that the medical necessity of applicant’s requested back surgery must be determined by IMR, notwithstanding any procedural defects in defendant’s timely UR decision.”

“In our February 27, 2014 en banc decision, we held that ‘[a] UR determination is invalid if it is untimely or suffers from material procedural defects that undermine the integrity of the UR determination’ and that ‘[m]inor technical or immaterial defects are insufficient to invalidate a defendant’s UR determination.’ (Dubon I, 79 Cal.Comp.Cases at pp. 315, 320.) We now modify our holding to conclude that a UR decision is invalid only if it is untimely.”

However, the WCAB went on to say that “Legal disputes over UR timeliness must be resolved by the WCAB.” With the exception of timeliness, “all other requirements go to the validity of the medical decision or decision-making process. The sufficiency of the medical records provided, expertise of the reviewing physician and compliance with the MTUS are all questions for the medical professional.” “With the exception of timeliness, all defects in the UR process can be remedied when appealed to IMR. The legislature has made it abundantly clear that medical decisions are to be made by medical professionals. To allow a WCJ to invalidate a UR decision based on any factor other than timeliness and substitute his or her own decision on a treatment request violates the intent of SB 863.”

“All requirements of section 4610 should be complied with, however, failure to do so will not invalidate a UR decision. A defective UR can be corrected by either exercising an internal UR appeal process, if available, or through IMR where both parties may submit records, and for which an appeal process has been established. Timeliness, however, cannot be fixed. Whether a UR decision is timely is a legal determination and must be decided by a WCJ.”

Commissioner Marguerite Sweeney concurred and dissented from the en banc decision. She would affirm Dubon I.

Not only are states approving the use of medical marijuana at an astounding pace, but at least two state supreme courts – in Colorado and in New Mexico – are taking up questions that center on marijuana and the workplace and workers’ compensation. According to the report in the Insurance Journal, such cases are of particular interest to those watching the workers’ comp space, and it has some wondering whether insurers will start being asked to pay for a substance that the federal government considers illegal.

And the National Council for Compensation Insurance (NCCI), says that insurers are starting to receive requests to pay for medical marijuana. However, there are those who believe that at this early stage questions arising around workers’ comp are all talk no action. “It’s got a lot more hype than what’s happening in the marketplace,” said John Leonard, president and CEO of Maine Employers’ Mutual Insurance Co. Leonard said he has surveyed his claims professionals and he’s so far found no instances where medical providers have requested marijuana to treat injured workers. “We have no knowledge of any prescriptions involving the use of medical marijuana,” he said, adding that he’s “perplexed” because that experience is contrary to what he’s so often hearing in the press.

NCCI has been concerned about the implications and been tracking the issue for quite some time, said Lori Lovgren, a state relations executive for the group. “We identified it as an emerging issue a couple of years ago,” Lovgren said, adding that medical marijuana has in many states “had a lot of success in the last few years in the legislature.” Like others in the workers’ comp space, NCCI is particularly interested in cases in Colorado and New Mexico.

In Colorado, in Coats v. Dish Network LLC, a man who was injured and using medical marijuana off-duty was terminated. A judge upheld the termination as lawful because use of marijuana, while it was legalized for both medicinal and non-medicinal uses in Colorado, violates federal law. The Colorado Court of Appeals affirmed the employer’s right to fire the employee, but the Colorado Supreme Court recently granted a review of the case.

Another case being closely watched is the New Mexico case of Vialpando v. Ben’s Automotive Services and Redwood Fire and Casualty. The case is believed to be the first in the nation in which a judge has ordered an insurance carrier to reimburse a workers’ comp claimant for the cost of medical marijuana to treat back pain. That case is being appealed to the New Mexico Supreme Court.

It’s not unreasonable to think that decisions from those high courts could lead the way in other states, said Mark Walls, vice president of communications and strategic analysis for Safety National. “Other states will look at those cases,” Walls said. And when it comes to medical marijuana, states have a history of playing follow the leader.

In 1996 California became the first state to legalize medical marijuana. Some 18 years later, it’s currently legal in 23 jurisdictions and the District of Columbia for medicinal use, and it’s legal without a prescription in Washington and Colorado. “There’s certainly a trend,” said Kambiz Akhavan, president and managing editor of ProCon.org, a nonprofit provider of data on a range of topics that include medical marijuana According to Akhavan, legalizing medical marijuana is now under consideration on a Florida ballot and in the Ohio and Pennsylvania legislatures.

Also trending upward is the list of illnesses that advocates believe marijuana can treat. Among those illnesses being tracked by ProCon.org are: appetite stimulation, Alzheimer’s, arthritis, asthma, Crohn’s, GI tract disorders, glaucoma, migraines, nausea from chemotherapy, general pain, and a host of psychological disorders including depression or schizophrenia, bipolar disorder and Tourette syndrome. “The list is quite long,” Akhavan said.

Other insurance challenges NCCI notes are: an absence of National Drug Code, which creates reimbursement issues; liability concerns for employers and insurance companies that pay for medical marijuana if additional injuries are caused by drug intoxication. And, given federal issues, many state courts will be reluctant to approve medical marijuana for the treatment of work-related injuries.

Sondra Andrews was employed by Securitas Security Services USA, Inc, an independent contractor retained by Verizon to provide security services at its facilities. Securitas employees are stationed at guard shacks, which are small, freestanding structures from which guards monitor those who enter and exit the Verizon facility. Normally an office chair is available for use by Securitas employees during their eight-hour shifts. However, a few days before the incident, the office chair broke. Marvin Kephart, another Securitas employee, replaced the broken chair with a barstool-type chair he obtained from one of Verizon’s buildings with the permission of a Verizon employee.

On the day of the accident, Andrews was working a graveyard shift. At approximately 4:00 a.m., Andrews attempted to get down from the replacement chair, but the top of her right foot became caught in the chair’s footrest. She stumbled trying to stand up from the chair causing both her and the chair to fall. Andrews sustained a fracture to her upper spine, which required surgery and a spinal fusion. She has not returned to work since the incident.

Andrews filed a negligence suit against Verizon, alleging it failed to exercise reasonable care, failed to provide a reasonably safe place for Andrews to work, and failed to “furnish, maintain or repair” a chair that was reasonably safe for her use. Andrews claimed Verizon “knew or should have known the chair was unsafe . . . .”

Verizon moved for summary judgment. After considering the parties’ submissions and conducting a hearing, the court granted Verizon’s summary judgment motion. The court reasoned that Andrews was an employee of Verizon’s independent contractor, and therefore she was required to prove Verizon “affirmatively contributed to the injury.” The court found no “such evidence has been presented.” Her case was therefore dismissed. The Court of Appeal affirmed in the unpublished case of Andrews v. Verizon.

“Generally, when employees of independent contractors are injured in the workplace, they cannot sue the party that hired the contractor to do the work. . . . [¶] By hiring an independent contractor, the hirer implicitly delegates to the contractor any tort law duty it owes to the contractor’s employees to ensure the safety of the specific workplace that is the subject of the contract.” (SeaBright Ins. Co. v. US Airways, Inc. (2011) 52 Cal.4th 590, 594; see Privette v. Superior Court (1993) 5 Cal.4th 689, 696; Toland v. Sunland Housing Group, Inc. (1998) 18 Cal.4th 253, 256.)

Two exceptions are potentially relevant here. First, an exception applies when the hirer’s act of providing unsafe equipment affirmatively contributed to the party’s injuries. (McKown v. Wal-Mart Stores, Inc. (2002) 27 Cal.4th 219, 225 (McKown).) Second, the hirer of an independent contractor may be held liable for injuries to the contractor’s employee if the hirer’s negligent exercise of retained control over safety conditions at a worksite “affirmatively contributed to the employee’s injuries.” (Hooker v. Department of Transportation (2002) 27 Cal.4th 198, 202 (Hooker).)

Neither exception applied here.