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Xerox Acquires StrataCare and CareSolutions

Xerox announced a definitive agreement to acquire ISG Holdings, Inc. for $225 million, creating a comprehensive workers’ compensation suite of offerings for clients in the property and casualty insurance industry. In addition to Xerox’s current workers’ compensation business offered through CompIQ, Xerox will add the following ISG subsidiaries and their offerings to its portfolio:

— StrataCare, based in Irvine, Calif., provides comprehensive web-based medical bill review software, workflow and outsourcing solutions.
— Bunch CareSolutions, based in Lakeland, Fla., provides medical management solutions with real-time integration between medical bill review and nurse case management.

StrataCare provides web-based medical bill management software. It has more than 350 employees across its operations here and a regional office in Amarillo, Texas.

The acquisition of ISG expands Xerox’s services to property and casualty insurance carriers, third-party administrators, managed care services providers, governments and self-administered employers who require comprehensive reviews of medical bills and implementation of care management plans stemming from workers’ compensation claims. This acquisition complements Xerox’s current support of the top 20 U.S. property, casualty and commercial health insurance companies, touching nearly two-thirds of the nation’s insured population.

“The workers’ compensation industry generates $60 billion in medical payments each year – that equates to approximately 75 million bills in need of financial validation,” said Bob Zapfel, president, Xerox Services. “This acquisition demonstrates our commitment to the property and casualty sector and makes us an industry leader in workers’ compensation bill review software and care management services.”

ISG’s secure and compliant SaaS (Software as a Service) cloud delivery platform, care management services and analytics blended with Xerox’s world-class transactional expertise will allow clients to benefit from a true end-to-end solution. “Xerox provides a solid, secure foundation to continue to enhance our software and technology based services,” Paul Glover, ISG’s chairman and CEO. “The depth and breadth of Xerox’s services and resources provide ISG’s customers confidence in our ability to meet and exceed their needs into the future.”

Once the acquisition is complete, the brands will go to market as StrataCare, A Xerox Company and Bunch CareSolutions, A Xerox Company. The operations of StrataCare and Bunch CareSolutions and its 700 employees in Irvine, Calif., Lakeland, Fla., and Amarillo, TX, will continue to be led by Glover, who will report to Connie Harvey, chief operating officer of Xerox’s commercial healthcare and insurance business.  The two units, which will be branded as Xerox companies, are expected to have about 700 employees overall when the transaction is completed.

SCIF Increases Premium Revenue to Over $1 Billion

State Compensation Insurance Fund’s 2013 Annual Report, released on its Web site today, shows an increase in net premiums to more than one billion dollars and a decrease in its combined ratio of more than 10 percent. The strong growth in 2013 premiums was a result of a hardening market combined with its introduction of Tiered pricing in March. Other key financial highlights for 2013 include:

1) A $100 million dividend;
2) Policyholders’ surplus increased by six percent compared to last year;
3) More than 98.4 percent of its bond portfolio received the National Association of Insurance Commissioners’ highest quality credit rating.

State Fund maintained a balanced investment portfolio that was focused on both credit quality and investment yield. In 2013, State Fund started investing in stocks as a result of the passage of SB 1513 which expanded State Fund’s investment authority. At year end, State Fund had $917 million in common stocks.

“State Fund has seen tremendous successes in one hundred years of doing business and supported those that have shaped California to succeed and grow,” said Carol Newman, Acting President and CEO in the report. “As we enter our next century, we’ve implemented an ambitious plan to redesign our operations and reduce costs to California’s employers, making us a financially stronger and more efficient organization.”

In 2010, State Fund began a transformation that has reduced annual fixed expenses by $300 million dollars. These savings will help State Fund maintain fair pricing and bring greater value to more California employers.

Work Comp Industry Lags Behind in Technology and Innovation

The Insurance Journal just published a special report that highlights 10 current workers’ compensation challenges ahead for the industry. One of the 10 that stands out deals with innovation and technology.

According to the report, when it comes to technological innovations, the health care industry’s advancements dwarf anything that’s developed in the workers’ comp industry for years, says Thomas Lynch, founder and CEO of Lynch Ryan and Associates Inc., a management consulting firm for workers’ compensation cost control based in Wellesley, Mass., and publisher of the blog WorkersCompInsider.com. “The P/C insurance industry is very slow to innovate and is lagging behind other industries, as well as other parts of the insurance industry, in adoption and rapid movement to technology usage and innovation,” he says.

In Lynch’s view, the workers’ comp industry is way behind and it must catch up.

“For example, there’s a huge move now in the Veterans Administration called the Blue Button Project, where if you’re a patient you have a portal. You can go in and you can see all your medical records. You can communicate with your doctors. It’s a great back and forth system.” There’s nothing quite like it the workers’ comp industry, he says. “That kind of patient back and forth could really be a benefit in, wellness programs, in claims administration.”

The workers’ comp industry also lags in providing mobile claims reporting technology.”Even now, today, the usual way is that when you have a claim, you’ll go online and file a report online or you’ll make a phone call. Why couldn’t you take out your smartphone, have a voice activated app that could allow you to report directly into your carrier’s system which would, in real time, display for a claims adjuster?” he says. “Why can’t you, at the same time, take a picture of the incident on your smartphone and include that with the report ” the whole claim reported and done in five minutes. We can’t do that now and yet we can do it in other areas.”

“Workers’ comp and the rest of P/C has to get its act together, has to rededicate itself to delighting the customer, to having a dynamic relationship with the customer, and understanding that the customer is the most important thing in its universe,” Lynch says.

Salinas Claimant Sentenced to Eight Years, Eight Months

A 33-year-old former Salinas resident and truck driver was sentenced Friday to more than eight years in prison for workers’ compensation and welfare fraud, according to the Monterey County District Attorney’s Office.

The Salinas Californian reports that Chip Kyle Bolton, of Arizona, was found guilty after a jury trial in April of seven felony counts. Monterey County Superior Court Judge Russell Scott sentenced him to eight years and eight months in prison, a maximum penalty. Bolton claimed an on the job injury in 2011 and was receiving worker’s compensation payments, but was later caught on camera playing basketball. That’s despite his claims that he was having difficulty standing for more than hour and holding his baby daughter,

In 2011, Bolton reported an on-the-job injury to his employer. He received immediate and continued medical treatment under the workers’ compensation system and was placed on total temporary disability for injuries he described to his doctor, prosecutors said. Bolton also told a claims adjuster he couldn’t stand for more than an hour without a numbing sensation running from his hips to his knees, rendering him unable to hold his baby daughter, prosecutors said. Later that day, he was filmed at the YMCA exercising on an elliptical and playing basketball – activities he later denied at his deposition, the DA’s Office said.

Bolton also received periodic public assistance beginning in 2009. In 2012, while receiving this assistance, Bolton applied for and received unemployment insurance benefits. He signed, under penalty of perjury, documents attesting that he wasn’t receiving unemployment benefits when, in fact, he received and had cashed unemployment checks, prosecutors said. He was subsequently denied any benefits whatsoever because he didn’t accurately and truthfully provide information regarding his income, expenses and the number of people in his household, the DA’s Office said.

Judge Scott called Bolton a “perennial liar” in his sentencing, according to the DA’s Office. Per new realignment laws, Bolton will serve his prison sentence in Monterey County Jail. In total, Bolton will be responsible for $84,350.34 in restitution paid to the Department of Social Services and the Employment Development Department.

DWC Posts Third Modification to MPN Regulations

The Division of Workers’ Compensation (DWC) has posted a third 15-day notice of modification to the proposed medical provider networks (MPN) regulations to the DWC website. Members of the public are invited to present written comments regarding the proposed modifications to dwcrules@dir.ca.gov until 5 p.m. on Monday, May 19. The proposed modifications include:

1) Clarification of the definition of an Entity that Provides Physician Network Services.
2) Requirement for an Entity that Provides Physician Network services to provide an affirmation that they contract with physicians and other medical providers or contract with physician networks in their MPN application.
3) Specifies a 90-day time frame from the effective date of these regulations for DWC to assign a unique MPN Identification Number to existing MPNs.
4) Clarification of the instructions to submit an MPN application or MPN modification.
5) Deletion of the requirement to indicate if a physician is not currently taking new workers’ compensation patients in the MPN’s internet website posting of its roster of all treating physicians.
6) Added Civil Code sections 1633.1 et seq. governs electronically signed documents between private parties when obtaining physician acknowledgments.

The notice, text of the regulations, and forms can be found on the proposed regulations page.

Claimant Arrested for Failure to Disclose Correct Medical History

An Adelanto man who claimed he was bitten by a pit bull and injured while working as a cable installer has been charged with felony workers’ compensation fraud.

On March 27, 2008, Dario Rudas-Ortega, 53, reported that he had sustained an injury during the course of his employment. According to Senior Investigator Hector Vidal, Rudas-Ortega claimed he was bitten by a pit bull on his hands and forearms, and later alleged he sustained a left knee injury during the same attack. “Rudas-Ortega is charged with making a false statement in support of this claim for benefits, as well as failing to disclose information regarding his prior medical condition and prior medical treatment to the same body part,” Vidal said. It is alleged that as a result of his false statements and omissions, Rudas-Ortega received workers’ compensation benefits to which he was not entitled.

The case was referred to the San Bernardino County District Attorney’s Worker’s Compensation Fraud Unit in 2012 by the Zenith insurance company, after the company’s internal investigation concluded that false statements were made.Felony charges were filed April 14, 2014 (see attached complaint), and Rudas-Ortega was taken into custody by District Attorney Investigators and transported to West Valley Detention Center in Rancho Cucamonga where he was released on his own recognizance.

If convicted on all counts, Rudas-Ortega faces more than five years in County Prison. Arraignment is scheduled for June 19 in San Bernardino Superior Court. The case is being prosecuted by Deputy District Attorney David Simon of the Workers’ Compensation Insurance Fraud Unit.

DWC Posts RAND Study on ASC Services and Fees

The Department of Industrial Relations (DIR) has released a 102 page report “Ambulatory Surgical Services Provided Under California Workers’ Compensation: An Assessment of the Feasibility and Advisability of Expanding Coverage.”

Senate Bill 863, which was signed into law in 2012, requires DIR to study the feasibility of establishing a facility fee for Medicare’s “inpatient only” procedures performed in Ambulatory Surgery Centers (ASCs) and report its finding to the legislative committees. At present, Medicare does not have a fee schedule for these procedures when performed in outpatient settings.

The study’s key recommendations are to retain current OMFS policies with regard to “inpatient only” procedures performed in an ambulatory setting; and strengthen patient protections when procedures are performed in an ambulatory setting..

1) ASCs that are currently eligible for an Official Medical Fee Schedule (OMFS) facility fee are likely to be equipped to provide services that do not require a one-night stay. However, Medicare has several requirements for patient protection that are not found in the minimum accreditation requirements for physician-owned facilities that are not Medicare certified. These include accepting only patients who are likely to require less than a 24-hour stay, assuring appropriate post-discharge arrangements are made, and providing the patient with written disclosure of any financial interests between the ASC and the physician.

2) Data analyses and review of the literature do not provide strong support for removing any procedures from the “inpatient only” list with the possible exception of procedures related to anterior cervical spinal fusions.

3) Few “inpatient only” procedures are currently being performed in an ASC on either workers’ compensation or privately insured patients ages 18-64, with the exception of spinal instrumentation.

4) Current OMFS policies of prior authorization process for performing an “inpatient only” procedure in an ASC setting, which allows for individual consideration of the anticipated services, other procedures that will be performed during the same encounter, and post-discharge services, before the services are provided are preferable to an across-the-board pricing methodology.

Under current OMFS policies, “inpatient only” procedures are covered as an exception that permits a payer to authorize payment for an “inpatient only” service in an ambulatory setting at an agreed-upon rate when medically appropriate. If any services are to be removed from the “inpatient only” list for WC patients, an OMFS allowance is needed for those services. In this regard, Section 74 of SB 863 requires DIR to consider a fee set at 85 percent of the Medicare fee schedule amount for the service when performed on an inpatient basis.

RAND examined two basic policy alternatives for paying for these procedures in an ambulatory setting. Consistent with SB 863, the first option would be to pay for the ambulatory surgery based on a multiple of the Medicare inpatient rate for the procedures. The second option would be to base the rate on the amounts paid for comparable services under the hospital prospective payment system. It concluded that the less problematic approach would be to build on the current OMFS for outpatient services. The “inpatient only” procedures could be assigned to the most comparable APC.

Painful Injury? There’s an App For That!

Mobile medicine is helping chronic pain patients cope with and manage their condition thanks to new smartphone apps, which can track patients from a distance and monitor pain, mood, physical activity, drug side effects, and treatment compliance.

According to Robert Jamison, PhD, professor of anesthesia and psychiatry at Harvard Medical School and pain psychologist with Brigham and Women’s Hospital, smartphone apps are helping the shrinking ranks of pain specialists treat and monitor rapidly increasing populations of chronic pain sufferers. “Today the ratio is one pain specialist for every 10,000 patients, but mobile technology allows for easy time-effective coverage of patients at a low cost, offering significant opportunities to improve access to health care, contain costs, and improve clinical outcomes,” Jamison explained.

At the American Pain Society annual meeting, Jamison presented results of his research on smartphone apps, developed at Brigham and Women’s, for monitoring pain patients. He found that internet-based cognitive behavioral therapy could significantly decrease pain levels, improve function, and decrease costs compared to standard care.  “Online networks, for example, can promote communication, distraction, information sharing, self expression and social support,” Jamison said.  “We also believe online networks decrease feelings of withdrawn behavior and instill a greater willingness to return for treatment.” Jamison added that electronic diaries maintained by patients are more effective than paper diaries for evaluating pain levels, daily activities, treatment compliance and mood. Jamison said that while few studies have been conducted on text messaging as a pain management tool, texting has proven to be effective for managing patients with diabetes, hypertension, asthma, smoking cessation and weight loss.

In his ongoing research, Jamison is studying 60 patients with chronic cancer and non-cancer pain who use a pain management smartphone app. “We hypothesized that the pain management smartphone app will help providers track patients and reduce emergency department visits and hospitalizations by 50 percent,” said Jamison.

A key feature of the pain management app is daily pain tracking in which patients are asked five questions about their pain, activity interference, sleep, mood, and overall status on a sliding scale of 1 to 10, and compare these with baseline ratings. Should pain ratings significantly increase from baseline or reach 9 or 10, the patient gets an immediate response that the pain specialist has been contacted.  “The pain management smartphone app can deliver non-pharmacological, cognitive behavioral treatment as well as prompt patients to stay active, comply with therapy, and develop pain coping skills,” Jamison reported. He added that the smartphone data can be summarized and transmitted every day into the patient’s electronic medical record.

Jamison noted that the average response rate to text messages to pain patients is 70 to 90 percent and that high responders show improved pain levels.

Katherine Zalewsk Appointed to WCAB

Katherine Zalewski, 51, of Richmond, has been appointed to the California Workers’ Compensation Appeals Board by Governor Brown.

Zalewski has served as chief counsel at the California Department of Industrial Relations since 2012. Immediately prior to her appointment as Chief Counsel, Ms. Zalewski was a Special Advisor in the Division of Workers’ Compensation’s Administrative Director’s office. Prior to that, she was a trial judge in the WCAB’s San Francisco District Office.

Prior to her appointment as a Workers’ Compensation Judge in 2009, Ms. Zalewski represented insurers and self-insured employers in workers’ compensation matters throughout Northern California. She was senior associate at Schmit Law Office from 2000 to 2009 and manager and attorney at Pacific Coast Services from 1998 to 2000 and at Express Network and Direct Legal Support Services from 1993 to 1998. She was an attorney at Kinder and Wuerfel from 1990 to 1993 at Finnegan and Marks from 1988 to 1990 and at Foreman and Brasso from 1986 to 1988.

Ms. Zalewski received her B.A. from the University of California, Berkeley in 1983 and her J.D. from Hastings College of the Law in 1986. This position requires Senate confirmation and the compensation is $131,952. Zalewski is registered to vote without party preference.

Doctors Succeed in Regenerating Muscle Tissue

U.S. doctors said on Wednesday they have succeeded in coaxing the regeneration of muscle tissue lost in people who suffered traumatic injuries, including wartime bomb wounds, with a new type of treatment that uses material from a pig’s bladder. Implanting the pig material at the wound site enticed the patient’s own stem cells – master cells that can transform into various kinds of cells in the body – to become muscle cells and regenerate tissue that had been lost, the researchers said.

According to the report in Reuters Health, the study was small, involving only five male patients, but its results suggested that this procedure could offer new hope to a category of patients, including troops who suffered major war injuries, with scant good treatment options, they added. All five patients, including two U.S. soldiers hurt by bombs planted by insurgents, had badly damaged leg muscles. The research was backed by $3 million in funding over five years from the U.S. Defense Department, said Dr. Stephen Badylak of the University of Pittsburgh, who led the study.

Thousands of American troops have been left with serious physical impairments after sustaining wounds involving major loss of muscle tissue in roadside bombings and other incidents since 2001 in the wars in Iraq and Afghanistan. When a large amount of muscle is lost in vehicle crashes, industrial accidents, bomb blasts or other traumas, the body is unable to replace it and the site forms scar tissue that lacks the functionality of the lost muscle.

Existing treatments include surgery to remove scar tissue or replace it with muscle from somewhere else in the body, but these methods do not yield satisfying results and are hard on patients, the researchers said. “Nothing has ever worked. There’s been multiple things tried: the hype and the hope of stem cell therapy, new surgical techniques,” Badylak said.

This study, published in the journal Science Translational Medicine, demonstrated for the first time the regeneration of functional muscle tissue in people with major muscle loss. “While the number of patients was small, we were very encouraged by the data. And we were seeing very dramatic improvements in quality of life for some of our patients,” added Dr. J. Peter Rubin of the University of Pittsburgh School of Medicine, another of the researchers.

The doctors implanted material from a pig’s urinary bladder called “extracellular matrix” – the non-cellular component including collagen present within all tissues and organs – to serve as scaffolding for the rebuilding of lost muscle mass. This material acted as a “homing device” to recruit existing stem cells in the body to rebuild healthy muscle tissue at the site of the injury, the researchers said.Pig parts have been used for years in surgical procedures. Pig bladder “extracellular matrix” has been used in hernia repair and fixing chest wall defects after cancer removal.

Before trying the procedure in people, the researchers said they successfully tested it in mice with muscle injuries.