Category: Daily News

During a recent webinar – Recognizing and Combatting Medical Fraud, Waste and Abuse in Property and Casualty – Verisk Analytics outlined the ways medical fraud is perpetrated and ways it can be identified and controlled. According to the company, it is estimated that $234 billion goes to medical fraud, waste and abuse in the healthcare system annually – that’s $28.5 million an hour.

And the problem is growing rapidly. In 2000, fraud accounted for 10 percent of Property and Casualty spend. In 2015, fraud accounts for 30 percent. Medical fraud costs an estimated $30 to $50 billion annually. In worker’s compensation, $5 billion annually is attributed to fraud with 30 percent of that attributed to prescription fraud and abuse.

Not surprising, personal injury protection (PIP) fraud totals $6.8 billion annually. One in four PIP claims in New York have a fraud component, while one in three in Florida do. The Florida Office of Insurance Regulation reported no-fault fraud and abuse cost the state’s consumers and insurers about $658 million in 2011.

The Verisk solutions manager outlined the following examples of fraud, waste and abuse: Misidentified procedures; Cost shifting; Drug seeking; Identity theft – patient or provider; High times – when a provider bills for more hours than are in a day; Template billing – everyone seen is billed for the same procedures and diagnoses; Specialty procedure and diagnoses codes mismatch; Upcoding; Evaluation and maintenance codes by PTs and MTs; Boiler plate billing; Accelerated treatment path – Evaluation and maintenance, MRI then surgery; Modifier abuse – code 59 is commonly used indicating more work so extra charges.

Insurance Research Council data released earlier this year found that claims with possible fraud and/or buildup were more likely to include chiropractic treatment, physical therapy, alternative medicine and pain clinics.

With the changes to the U.S. healthcare system over the past few years, there is evidence of a trend towards cost shifting from group healthcare to the Property and Casualty industry. Doctors are trying to make up for lost revenue by charging more in workers’ compensation and auto cases.

A former private security officer was sentenced to jail for five felony counts of workers’ compensation fraud stemming from an “accident” in 2009. Howard William Neel, 59, of Oroville, was sentenced to one year in the Butte County Jail as a condition of three years of probationary supervision. During that time Neel will also be required to complete a theft awareness and financial management program and to pay restitution to the workers’ compensation program.

According to the Butte County District Attorney’s Office, Neel was working as a private security officer for a local security company in December 2009 when another driver slightly backed into his Crown Victoria at a gas station. Neel claimed extensive back, neck and leg pain. He was treated at Enloe Medical Center and was taken off work.

In subsequent medical appointments, Neel told doctors the impact to his vehicle at the gas station had been so severe that his vehicle was “spun around”, knocking him down. But investigators obtained surveillance tape from the gas station and found the collision to be minor. The video showed Neel walking normally after the crash, but he started limping when the other party involved saw him. When that individual left, Neel started walking normally again.

Neel was seen by several doctors and repeatedly denied any back, neck or leg injuries prior to the December 2009 event. However, investigators found Neel suffered the same type of back injury while lifting boxes 10 years prior, which was also treated under the worker’s compensation system.

Additionally, Neel used a cane when he went to doctors’ offices, but undercover surveillance tapes showed him without any cane while working around his house or with his horses.

Senate Bill 863 imposed a $100 “activation fee” on liens filed prior to January 1, 2013.  Angelotti Chiropractic and other lien claimants sued in federal court challenging the constitutionality of these provisions claiming that SB 863 violates the Takings Clause, the Due Process Clause, and the Equal Protection Clause of the United States Constitution.

At first the case seemed to go their way. The trial court issued a preliminary injunction in the lien claimants’ favor as to the Equal Protection claim, but not as to the other claims.  The DIR appealed the district court’s issuance of the preliminary injunction and its denial of the motion to dismiss the Equal Protection claim. The 9th Circuit Court of Appeal reversed last June, and vacated the injunction in the published case of Angelotti Chiropractic Inc. v Christine Baker.

The panel held that the district court properly dismissed the Takings Clause claim because the economic impact of SB 863 and its interference with plaintiffs’ expectations was not sufficiently severe to constitute a taking. The panel further concluded that the lien activation fee did not burden any substantive due process right to court access and also rejected plaintiffs’ claim that the retroactive nature of the lien activation fee violated the Due Process Clause.

The lien claimants file a petition for rehearing in the 9th Circuit Court of Appeal. The 9th Circuit denied the petition last week.  It is possible but highly unlikely that the lien claimants can successfully pursue an appeal with the  U.S. Supreme Court.  This would not be the typical type of case of national significance the SCOTUS would be interested in hearing.  Thus this ruling is probably the end of the road for these lien claimants efforts to avoid SB 863 activation fees.

The California Society Of Industrial Medicine (CSIMS) is the association exclusively representing the private physician practicing occupational medicine in California, has announced a new website, www.lienactivation.com, to assist lien holders to identify unresolved liens.

According to its website “unresolved liens filed prior to January 1, 2013 are subject to a $100 lien activation fee. This website will enable you to quickly and easily identify all of your unactivated liens and receive a detailed list via email. It doesn’t matter how or when your liens were filed, or if the name of the lien claimant was misspelled at the time of filing. You can find them all using our simple Lien Finder search tool.”

At this point there will be a clean up process where many of the liens will be dismissed for failure to pay an activation fee.  The few remaining will be litigated or settled, and perhaps five years after passage of  S.B. 863 the industry will achieve the desired effect of the law.

A major trend in contractual payment arrangements between medical providers and payers, intended to lower costs while improving the quality of care, triggers cost-shifting from group health plans to workers’ compensation, according to a new study reviewed by the CFO website. The shift hinders some employers from reaping the hoped-for cost benefits, study results suggest.

More medical providers are agreeing to full or partial capitation arrangements, under which they’re paid a set amount for each enrolled plan member assigned to them per period of time. It’s a counter to the fee-for-service model, under which providers have a financial motivation for ordering care that a patient may not actually need. Most recently, Blue Cross Blue Shield of Massachusetts, the state’s largest health insurer, announced new deals with three large health systems that “set budgets to care for patients and reward providers for keeping patients healthy and away from expensive hospital stays and procedures,” the Boston Globe reported.

Meanwhile, the prevalence of capitation arrangements is on the rise. A late-2014 study of reimbursements for care provided to 101 million people, conducted by Catalyst for Payment Reform, an employer-funded health policy group, found that 15% of what health insurers spend on medical bills is paid under capitation.

In some states, it’s a much bigger slice of the pie. For example, for Blue Cross Blue Shield of Massachusetts, 40% of its 2.1 million individual members will be, as of Jan. 1, covered under health plans that shift financial risk to medical providers.

That all sounds good – but there’s a little-discussed wrinkle. That is, for some common ailments, like soft-tissue back, knee, or shoulder pain, it’s often not clear whether the injury was work-related or non-occupational. Doctors are given a degree of discretion under workers’ compensation law to make that determination, which creates a conflict of interest, because they usually end up benefiting financially by classifying the injury as work-related.

A recent WCRI study found that soft-tissue injuries suffered by patients covered under capitated group health plans were 11% more likely to be classified as work-related. And that proportion rose to 31% in states where at least 22% of workers were covered by capitated plans. According to WCRI, if just 3% of soft-tissue-condition cases under group health plans were shifted to workers’ compensation, total workers’ comp costs would increase by $225 million in California alone. Providing two other examples, the institute said the comparable figures would be $100 million in Pennsylvania and $25 million in Iowa.

The Audit Unit of the Division of Workers’ Compensation (DWC) has posted draft revisions to the Benefit Notice Manual and sample benefit notices to the DWC forums for public comment. The Division welcomes suggestions from the workers’ compensation community to improve the quality and clarity of the draft notices.

The purpose of this manual is to present advice for accurate and timely completion of benefit notices and mandatory forms that meet the requirements of the Administrative Director’s regulations.The “safe harbor” provision of Title 8, Cal. Code of Regulations, section 9810(f) provides that “Benefit notices using the sample notices devised by the Administrative Director and available on the Division’s website are presumed to be adequate notice to the employee and, unless modified, shall not be subject to audit penalties.”

Various events in the life of a workers’ compensation claim trigger the requirement to issue a notice to the employee or claimant. There are required contents for each notice.

These regulations are effective as of January 1, 2016 The regulations apply to all workers’ compensation dates of injury, except as otherwise noted. The Division cautions the claims community that the revised notices may not be used until the regulations take effect on January 1.

The model notices presented in this 85 page manual are in English and Spanish and are the result of a combined effort of workers’ compensation professionals from insurers, self-insured employers, third-party administrators, and employer and employee representative groups working together with the Division of Workers’ Compensation. The intent of this effort is to provide forms which, if used in conjunction with the instructions provided, will improve communication with the injured worker and make it easier for the claims administrator to comply with the regulations governing the issuance of benefit notices.The Division anticipates posting the final revised Benefit Notice Manual and sample benefits notices to the Division’s website on or about October 15, 2015.

Ultimately, the claims administrator is responsible for compliance with the regulations governing the issuance of benefit notices, regardless of whether these model notices are used.  Failure to provide a correct and timely notice is one of the most often cited offense in the audit report prepared following the mandatory routine claim audit process.  Adherence to the guidance in the Manual would likely result in a much improved audit score.