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Insurance Fraud Survey Predicts More to Come

Insurance fraud is on the rise That’s the consensus of a majority of respondents to a 2013 survey commissioned by FICO. With just a few exceptions, most survey respondents expect most categories of personal lines to experience an increase in fraud losses of 10% to 20% or more in 2012 versus the prior year. A majority of those surveyed, more than 60%, attribute the continued rise in fraud, more than any other factor, to sustained economic hardship in America.

Some 57% of respondents anticipate an increase in personal property fraud by individual policy holders. Around 58% said the same for personal auto insurance fraud, and 69% expect a rise in workers’ compensation fraud.

Only around 11% of respondents view criminal gangs as the number-one factor driving insurance fraud increases. Yet 61% expect to see an increase in auto insurance fraud perpetrated by organized rings, and 55% believe the same for workers’ compensation fraud. This underscores a growing need for solutions that enable insurers to identify organized criminal activity. Some 30% of respondents report that they are already using link analysis in their efforts to detect fraud today, applying predictive analytics to find patterns among different claims that suggest organized activity.

When asked to identify their major priorities in the fight against fraud (from a list of 12 choices), 52.2% cited the detection of fraud in a claim before it is paid, and 39.6% cited adopting or upgrading their fraud analytics capabilities. These two top priorities go hand in hand –predictive analytics offer the most effective and efficient solution for accurately detecting fraud early in the claims process, enabling carriers to sharply limit their losses due to payments against fraudulent claims. About 45% of the survey respondents said they are using predictive analytics for fraud detection in their operations today, compared to around 29% using rules-based systems in an attempt to stop known types of fraud. This is a strong indication that analytics-powered solutions are becoming more widespread, although there is still plenty of room for adoption in the industry. Besides being more efficient and yielding fewer false positives compared to stand-alone, rules-based systems, analytics have the advantage of being able to adapt quickly to new and emerging fraud schemes beyond those already known.

Around 54% of the respondents surveyed employ anti-fraud teams, either centralized or dedicated to specific lines of business. However, only 20% cited the hiring of additional special investigative unit personnel among their major priorities. This suggests that many of the insurers surveyed continue to face headcount constraints, and need to figure out ways that smaller teams can work larger caseloads.

13 States Now Follow California Physician Dispensed Prescription Reforms

In 2007, California became the first state to change reimbursement rules with the intention of equalizing the prices paid for physician- and pharmacy-dispensed prescriptions.

A 2012 WCRI study found that the 2007 change in California reduced the average prices paid for physician-dispensed prescriptions to close to the prices paid to pharmacies for the same drug. After the reform, many physicians continued to dispense in California – nearly half of all prescriptions were dispensed at doctors’ offices in post-reform California.

Since then, the WCRI says that a number of states have adopted reforms similar to those in California. As of July 2013, at least 13 other states have made law or rule changes with the intention of reducing the prices paid for physician-dispensed drugs while continuing to allow physicians to dispense drugs directly to their patients. These states include Alabama, Arizona, Connecticut, Florida, Georgia, Idaho, Illinois, Indiana, Michigan, Mississippi, Oklahoma, South Carolina, and Tennessee. Florida also made law changes, effective July 2011, that were aimed at eliminating so-called pill mills by prohibiting all Florida physicians from dispensing Schedules II and III narcotics.

A few states have sought to prohibit or severely limit physicians from dispensing prescription drugs directly to their patients. In the United States, six states prohibit physician dispensing in general; Massachusetts, New York, and Texas, Montana, Utah, and Wyoming. Louisiana limits physician dispensing of narcotics to a 48-hour supply.

According to the new WCRI study, The Prevalence and Costs of Physician-Dispensed Drugs, most states still allow physicians to dispense prescription drugs at their offices directly to the patient. Previous WCRI studies reported considerably higher prices paid for physician-dispensed prescriptions when compared with prices paid to pharmacies for the same drug. These studies also reported rapid growth of physician dispensing in several study states.

UCLA Study Says “Futile Treatment” Common in ICUs

A new study published in the JAMA Internal Medicine and summarized by Reuters Health says that more than one in ten patients being treated in intensive care units (ICUs) was at some point receiving what doctors deemed to be futile care. In those cases, critical care doctors believed people would never survive outside an ICU or that the burdens of their care “grossly outweighed” any benefits. And, researchers found, treating each of those patients cost about $4,000 every day.

“Many physicians find that the provision of futile care is not only contradictory to their professional responsibility, but harmful to patients,” Dr. Neil Wenger, director of the UCLA Healthcare Ethics Center at the David Geffen School of Medicine, and senior author of the study, said. “The biggest issue, more important than the cost issue, is the use of highly advanced medical care that was designed to rescue people that instead gets used to prolong the dying process,” such as ventilators and medicines that raise blood pressure, he told Reuters Health.

For their study, Wenger and his colleagues first convened a group of 13 doctors who worked in critical care to agree on a definition of futile treatment. Categories included care for patients who were permanently unconscious or for whom death was imminent, or treatment that could not achieve the patient’s goals.

Then, the researchers surveyed the attending critical care specialist in five ICUs every day for three months about each of that doctor’s patients to find out how many were receiving futile care under the focus group’s definition. During the study period, 36 doctors assessed 1,136 patients, with an average of six assessments per patient. Of those patients, 123 – or 11 percent – were determined to be receiving futile treatment, and another 98 (8.6 percent) were perceived as receiving probably futile treatment.

Eighty-four of those receiving futile care died before discharge, and another 20 died within six months of their ICU stay, the researchers reported in JAMA Internal Medicine. The rest were left in “severely compromised” states, with many kept alive by machines. Wenger and his team calculated hospital costs for futile care were about $4,000 per day, adding up to $2.6 million of treatment provided unnecessarily.

Dr. Michael Niederman, chair of the department of medicine at Winthrop-University Hospital in Mineola, New York, said how often futile care is provided is likely to vary between ICUs. “It’s very difficult to come up with a definition of futile care,” he told Reuters Health. “I think there are many things we do where over time we realize we’re unable to help the patient.”

Niederman, who has studied futile care but wasn’t involved in the new research, said along with the costs of providing intensive care that is unlikely to help, there may be times when such treatment hurts other patients as well. For example, many very sick patients in the ICU are on antibiotics, even if they don’t currently have an infection. One study he cited showed one quarter of them developed multi-drug resistant bacteria – which could then be spread to other patients on the unit.

Of course, the researchers said, doctors are not making treatment decisions on their own, and families may have different opinions on what constitutes futile care, or when the benefits of treatment outweigh the burdens. “Many times family members have a sense of guilt and responsibility to their loved ones that they want everything done, and I think many times they don’t understand what it means to do everything,” Niederman said.

“The implied discussion here is, do we have the resources in this country to give people care whenever they want it regardless of whether we think the care has benefit?” he said. “That’s a very difficult discussion.” Wenger said for him, the study highlights the importance of having conversations with patients about their end-of-life care while they are still able to participate in those talks. “It’s a very complex process making decisions for very ill patients who are on the brink of death,” he said. “The main message is that early discussions and advance planning are absolutely critical.”

Hospitalizations for Valley Fever Increase In California

Coccidioidomycosis commonly known as “cocci” or “valley fever” as well as “California fever” and “San Joaquin Valley fever” is a fungal disease.that is sometimes claimed to be an industrial injury especially among construction workers or those exposed to newly excavated work sties.

It is endemic in certain parts of Arizona, California, Nevada, New Mexico, Texas, Utah and northern Mexico. It is dormant during long dry spells, then develops as a mold with long filaments that break off into airborne spores when the rains come. The spores, known as arthroconidia, are swept into the air by disruption of the soil, such as during construction, farming, or an earthquake.

Infection is caused by inhalation of the particles. The disease is not transmitted from person to person. The infection ordinarily resolves leaving the patient with a specific immunity to re-infection. However, in some cases the infection may manifest itself repeatedly or permanently over the life of the patient. In those cases the industrial claim may be costly.

The U.S. national public health institute Centers for Disease Control and Prevention (CDC) called the disease a “silent epidemic” and acknowledged that there is no proven anticoccidioidal vaccine available.

And now a new CDC report shows an increase in California hospitalizations for Coccidioidomycosis over the last decade. Only 719 cases were reported annually in 1998. The annual number showed a steady increase up through 2011 when 5697 cases were reported. The incidence rate per 100,000 population increased from 2.1 in 1998 to a record of 14.9 in 2011 as well.

Similar increases were reported in Arizona, Nevada, New Mexico and Utah.

DWC Schedules QME Process Webinar for September 19

The Division of Workers’ Compensation’s (DWC) invites claims administrators, attorneys, and others to attend this online web training on the Qualified Medical Evaluator (QME) panel request process in order to obtain tips on how to successfully submit represented panel QME requests and to gain tools to make panel requests easier and more efficient leading to a shorter wait time to receive panels. The course will also help avoid common errors in incomplete or inappropriate requests.

The DWC says that up to 90% of represented panel QME requests are improperly submitted since SB 863 changes were implemented.

The course “The QME Process: How to Successfully Request a Represented Panel ” will take place online on Thursday, September. 19 from 2:00 to  3:00 PM. Pre-registration is not required for this free webinar meeting; however ports available for the training are limited. Attendees are encouraged to gather in groups to participate in this online training. The technical specifications for accessing the webinar are posted on the DWC website.

Please note, in order to save time before the meeting, check your system to make sure it is ready to use Microsoft Office Live Meeting. The audio option is not available when you choose the web access option for the webinar program. Instead, launch the Microsoft Live Meeting Client (requires software download). The software download takes approximately 15 to 20 minutes. We recommend that you login approximately 5 minutes before the meeting.

Anaheim Physician and Accomplice Get Jail Time for Fraud

Dr. Sri J. “Dr. J” Wijegunaratne of Anaheim and Godwin Onyeabor of Covina were convicted of fraudulently billing Medicare for medically unnecessary equipment and receiving paid kickbacks.

The Glendora Patch reports that Dr. Sri J. “Dr. J” Wijegunaratne was sentenced to 27 months for recommending motorized wheelchairs and other equipment that patients did not need and sometimes never used, according to Department of Justice prosecutors.

Co-defendant Godwin Onyeabor, who ran a San Bernardino medical supply firm, fraudulently billed Medicare for the medically unnecessary equipment and paid kickbacks to the doctor, according to the DOJ. Onyeabor, 50, of Covina, was sentenced to 51 months in federal prison.

During trial in Los Angeles federal court, several Medicare beneficiaries testified that they were lured to clinics with the promise of free items such as vitamins and juice, only to receive motorized wheelchairs that they did not need or want.

Over about five years, Onyeabor, Wijegunaratne and others submitted about $1.5 million in false claims to Medicare and received nearly $1 million in reimbursements, according to the DOJ. Wijegunaratne and Onyeabor were each found guilty in April of conspiracy and health care fraud charges.

Two others defendants, Heidi Morishita and Victoria N. Onyeabor, are scheduled to be sentenced Sept. 30 and Oct. 7, respectively.

Legislature Passes Limits on Professional Athlete Claims

Months of heavy lobbying by the National Football League and other professional sports team owners paid off when lawmakers gave final passage to a bill to limit most workers’ compensation claims by out-of-state professional athletes.

The bill, AB 1309 by Assemblyman Henry T. Perea (D-Fresno), cleared the Assembly on a 66-3 vote and was sent to Gov. Jerry Brown. The governor is expected to sign the bill into law, Perea’s office said.

The Los Angeles Times says that last week, the measure received an overwhelming endorsement in the state Senate with a 34-2 vote. Perea’s proposal, which was opposed by the NFL Players’ Assn. and the AFL-CIO, would close a provision in California law that allowed players from out of state to file workers’ compensation claims for so-called cumulative trauma, including head injuries that manifested themselves years after their careers had ended.

Many of those players may have participated in just a handful of games in California over the course of their careers.

During the bill’s eight-month transit through the Legislature, team owners argued that California had become a de facto forum for claims filed against football, baseball, basketball, hockey and soccer franchises and their insurance companies.

Players unions countered that the employers don’t want to be responsible for their former workers’ head injuries and other ailments.

Former athletes have filed more than 4,400 claims involving head and brain injuries since 2006. This bill would not affect pending claims. Provisions that initially would have had a retroactive effect were removed by a September 5 amendment to the bill. The bill now contains language in paragraph 3600.5 (h) tat says “the amendments made to this section by the act adding this subdivision apply to all claims for benefits pursuant to this division filed on or after September 15 2013.” The previous version of the bill had provisions that would have applied retroactively to all pending claims not yet adjudicated. Thus thousands of these claims already in the system will continue to move forward.

Pundits say that Governor Brown will sign this bill into law. The governor has until Oct. 13 to sign or veto the bill.

Wife Arrested for Cashing Comp Benefits After Injured Husband Dies

Huntington Park resident Rosa Maria Barajas, the wife of injured worker Jesus Barajas, was arrested for allegedly continuing to cash workers’ compensation structured settlement benefits after her injured husband died. She was receiving approximately $18,000 per month, each month after his death in May 2010.

Jesus Barajas suffered an industrial accident in October of 1997 when he fell from a scaffold while working for Aramark Uniform Services. As a result of his accident and serious injuries, Jesus was comatose and declared legally brain dead. Due to his condition, Rosa was appointed his legal guardian in April of 1998 by the Workers’ Compensation Appeals Board and placed in charge of all his financial dealings and pending workers’ compensation suit.

New York Life contacted the California Department of Insurance in January of 2013 to report that Barajas was continuing to collect on her deceased husband’s workers’ compensation structured settlement. Barajas had been receiving monthly payments of over $18,000 that would continue only while Jesus Barajas was alive according to the September 2000 Workers’ Compensation Appeals Board Order. As part of the agreement Rosa Barajas was directed to notify New York Life in the event of the demise of her husband, but according to the investigators she failed to do so when Jesus Barajas died in May of 2010.

Bail has been set at $505,341. If convicted, Barajas faces up to five years in state prison and a fine in excess of $500,000.

Panel Decision Allows Use of AMA Guides 6th Edition to Support Lower WPI

Edward Frazier, a peace officer with the Department of Corrections, had a presumptive (L.C. 3212.1 0) industrial heart trouble with diagnosed hypertensive heart disease accompanied by mild left ventricular hypertrophy.

The AME, Dr. Ng, provided an analysis that in his opinion that under the American Medical Association Guides to the Evaluation of Permanent Impairment, Fifth Edition,Table 4-2, (Criteria for Rating Permanent Impairment Due To Hypertensive Cardiovascular Disease AMA 5lh edition) would require a finding that he has a 30% Whole Person Impairment. l

However, the AME was of the opinion that this WPI while appropriate is not an accurate representation of the injured worker’s impairment. Doctor Ng referred to the new AMA Guides 6th Edition as a “standard text or recent research data” to support his conclusion that 30%WPI was too high. He concluded the writers of this recent publication decided that the 30% WPI was too high for asymptomatic mild ventricular hypertrophy. The 6th edition he states shows that for a gentleman with the same mild left ventricular hypertrophy an impairment of 23% WPI is recommended. He concludes that the authors of the AMA guides sixth edition have recognized the accuracy problem (in the 5th edition) and reduced the whole person impairment to a rating of 24% for left ventricular hypertrophy. By inference it is his clinical judgment this lower WPI is more accurate.

In conclusion the AME chose 24% as the most accurate description of this injured workers impairment. This percentage was a combination of his consideration of the analysis of the writers of the AMA 6th edition, his clinical judgment as well as his analogizing with the Coumadin paragraph 9.6C of the AMA 5th edition which has a lower impairment for asymptomatic conditions with serious health risks.

The 24% impairment after the formal rating resulted in a permanent partial disability of 44% which was awarded by the WCJ.

The WCAB denied reconsideration in the panel decision of Edward Frazier v State of California, CDCR – Correctional Training Facility.

Study Says Steroid Injections Offer Only Short Term Relief for CTS

Steroid shots for carpal tunnel syndrome may help some sufferers in the short term, but most people end up having surgery whether or not they get the shots, according to a small new study reported by Reuters Health.

Researchers in Sweden found that one year after diagnosis, three quarters of carpal tunnel patients who tried steroid shots and other treatments first had opted for surgery while more than 90 percent of those who did not get the shots had the surgery. “We did not know how effective steroid injections are so we were not expecting any particular result,” said lead author Dr. Isam Atroshi of Hässleholm Hospital.

According to this study, steroids usually don’t help enough to avoid surgery, which is “somewhat surprising” since many doctors routinely order the shots, Atroshi told Reuters Health. It’s estimated that one in 20 adults in the U.S. will experience carpal tunnel syndrome, as a result of pressure on the median nerve that runs from the arm into the hand, through the so-called carpal tunnel formed by bones and ligaments of the wrist. If ligaments forming the tunnel, or tendons that also run through the tunnel, become swollen, pressure on the nerve can cause tingling, weakness or pain in the wrist and hand. The condition, which can affect one or both hands, is initially treated with wrist splints, then if rest doesn’t bring improvement, with steroid shots. When neither splints nor steroids seem to help, the next step is surgery, an effective but costly remedy.

Atroshi and his coauthors gave injections of 80 milligrams methylprednisolone, or 40 milligrams of the steroid or a dummy shot to 111 carpal tunnel syndrome patients between 18 and 70 years old who had already tried wrist braces with no luck. Ten weeks later, patients who had received the steroids were less likely to report pain, numbness or tingling than those who got a placebo. At the one-year mark, however, 73 percent of the patients who got the 80 mg steroid shots had the surgery, as did 81 percent of patients who got the lower steroid dose and 92 percent of those who had a placebo shot. Though patients who got the highest dose of steroids were less likely to have surgery by one year, there were no differences between the three groups in reported pain at that point, according to the results published in the Annals of Internal Medicine.

Complications are unlikely with either treatment, Atroshi said. “Surgery is effective because, by dividing the ligament that forms the roof of the tunnel, or ‘opening’ the carpal tunnel, there will be a rapid dramatic decrease in the pressure and symptom relief, and the effect is usually durable,” he said.

The cause of carpal tunnel syndrome is not completely known, but it’s not surprising that surgery is more effective than shots, according to Dr. Charles Leinberry, a hand surgeon at the Rothman Institute in Philadelphia. Steroids temporarily reduce local swelling and relieve pressure in the tunnel, but surgery actually makes the tunnel bigger and is a permanent solution, said Leinberry, who was not involved in the study. “Surgery adds approximately 25 percent to the volume of the carpal tunnel area and provides more room for the tendons and nerves present in the tunnel,” he said.

Experts didn’t think the new study’s results would change the way carpal tunnel syndrome is treated. Most doctors first recommend splints, which can be very effective when used early, and take a medical image of the wrists to determine how severe the diseases is, Leinberry said. Steroids can help control pain for a short while if the disease is not severe, but can probably be skipped if the carpal tunnel syndrome is severe and requires surgery, he said.