A new California Workers’ Compensation Institute study on the Independent Medical Review process, used to resolve workers’ comp medical disputes, shows that the number of IMR decision letters hit an all-time low in 2021 as pharmaceutical disputes – especially those involving opioids – have continued to decline since the state adopted evidence-based chronic pain and opioid guidelines and a prescription drug formulary.

Data for CWCI’s study was derived from more than 1.1 million IMR decision letters issued from 2015 through 2021 in response to applications submitted to the state after a Utilization Review (UR) physician modified or denied a workers’ comp medical service request.

In addition to measuring changes in IMR volume, the authors used the data to measure shifts in the mix of medical services reviewed and uphold rates by major medical service category; IMR response times; regional variations; the distribution of prescription drug IMRs and uphold rates for various drug categories; the proportion of IMRs involving medical service request modifications among six service categories; and the concentration of IMRs involving high-volume medical providers.

The IMR letter count showed that since peaking at 184,735 letters in 2018, IMR letter volume has declined for three years in a row, falling to 163,899 letters in 2019, 136,738 letters in 2020, and 133,494 letters in 2021.

While some of that decline reflects decreasing claim volume in 2020 – the first year of the pandemic – the study found that much of the decline came after the Division of Workers’ Compensation (DWC) incorporated Chronic Pain and Opioid Guidelines into the Workers’ Compensation Medical Treatment Schedule in late 2017 and implemented a Prescription Drug Formulary.

Overall, there were more than 51,000 fewer IMR letters in 2021 than in 2018, with more than half of that decline occurring in 2020, when IMR letter volume fell by more than 27,000 letters.

Since 2018, IMR letter counts have been down across all medical service categories, though the huge reduction in IMR disputes involving prescription drug requests has led to a redistribution of IMRs among the major medical service categories.

The biggest percentage increases have been in physical therapy; injections; and durable medical equipment, prosthetics, orthotics and supplies (DMEPOS), each of which saw their share of the IMR letters increase by 2.4 to 3.1 percentage points since 2018. Last year’s overall IMR uphold rate of 92.0 percent was up from 89.4 percent in 2020 and was the highest uphold rate since IMR took effect in 2014, though here too the results varied by medical service category, with uphold rates ranging from 84.9% to 95% among the different categories.

The study’s regional analysis identified areas of the state where 2021 IMR letter volume was high or low relative to each region’s workers’ compensation claim volume.

Los Angeles County, widely known as a hotbed for workers’ compensation litigation, accounted for 24.7% of California’s 2021 workers’ comp claims and 27.6% of the IMR letters, while in contrast, IMR letter volume was disproportionately low in the Inland Empire/Orange County region, which had 20.7% of the state’s claims but 13.9% of the IMR letters.

Surprisingly, the greatest disparity between claim volume and IMR letters was in the San Francisco Bay Area, which had 17.8% of the claims but 25.7% of the IMR letters. The study notes that one factor that likely contributed to that disparity is the prevalence of pain management specialists in the Bay Area.

A review of the doctors with the highest number of IMR disputes last year showed that five of the top six in the state were pain management specialists, and four of the top six were located in the Bay Area, which would at least partially explain the disproportionate share of IMR letters – especially those involving prescription drug disputes – sent to the region.

In a recent study by FRISS, a risk and compliance solution provider for P&C insurance companies worldwide, the challenges and opportunities facing insurers in their efforts to combat fraud throughout the entire policy lifecycle are highlighted. The study gathered input from over 400 insurance professionals worldwide and provides insight into topics such as fraud schemes, data challenges, process automation and more.

Survey respondents have differing views on the challenges and benefits of fraud detection software solutions. The common theme however is the data challenge; from underwriting to claims to special investigations. The difficulty is harnessing timely data to respond quickly when fraud is detected. FRISS’ past biennial surveys indicate that insurance professionals have struggled with inadequate data – either poor-quality internal data or limited access to external data sources.

COVID-19 will have a lasting impact on insurance, in large part because the pandemic has accelerated digital processes. Insurers must continue to address their technology debt by digitizing core processes, migrating to the cloud and embracing flexible sourcing models. Insurers are using a multilayered approach to minimize their risk of fraud, and improving protection at the front door at underwriting is definitely an area of focus. While these trends are continuing, insurers also are better positioned to take advantage of digital tools to combat fraud end-to-end.

Exactly how much fraud impacts the industry is always hard to pinpoint, however according to the Coalition Against Insurance Fraud, in the US alone, fraud steals at least $80 billion every year from American consumers. Creativity and persistence in claims fraud is therefore a serious threat for insurers. Fraudsters continue to perpetrate schemes against insurers and inevitably work to exploit emerging system gaps, continuing to drive up the cost of insurance for honest consumers. For 41% of survey respondents, keeping up with modern fraudster modus operandi was their greatest challenge in effective responding to fraud. The top fraud schemes that saw an increase in popularity the past year are claiming false injuries, nondisclosure of relevant information and staged accidents.

The industry generally agrees fraud accounts for about 10% of all claims cost. However, one change since the prior survey is an increase in the percentage of claims suspected as fraudulent. In 2021 the suspicion of claims containing a potential element of misrepresentation or fraud rose to 20% – a rise predicted by FRISS in the previous report.

Having the right data in the right place, and in real time, is essential to improving fraud detection. With many insurers utilizing digital processes for almost all of their operations, the ability to see real-time data identifying potential fraud is hugely beneficial across the policy lifecycle – from first-party policy requests, to underwriting, and of course as claims are reported. The difficulty is harnessing timely data to respond quickly when fraud is detected. FRISS’s past biennial surveys indicate insurance professionals have struggled with inadequate data – either poor-quality internal data or limited access to external data sources. This year, amongst the top challenges in fighting fraud again where data protection and privacy, internal data quality and inadequate access to external data.

The future of fraud detection lies in the use of advanced technologies to support real-time, large-volume, and highly precise modelling for claims and underwriting fraud. Fortunately, respondents do see significant benefits in fraud detection software. These include:

– –    Improve loss ratio, cited by 59%
– –    Stay ahead of developing fraud schemes, cited by 53%
– –    Increase investigator efficiency, cited by 52%

A hybrid approach of human expertise and predictive models will be essential in preventing losses. This will reduce the costs of underwriting and claims handling by removing unnecessary and error prone steps, and enables discovery of suspicious behavioural trends in data. This not only can augment the results of the existing data, it would give insurers an advantage when identifying the ever-changing schemes of fraudsters. Because FRISS believes that when insurance is more transparent and everyone can pay fair premiums that aren’t inflated by the real costs of fraud, businesses and individuals can thrive and achieve their dreams.

State Compensation Insurance Fund announced plans to distribute an approximate $55 million dividend to its qualifying policyholders with policies that took effect between January 1 and December 31, 2021.

This dividend equals approximately 5% of the estimated annual premium reported during that period.

In 2021, State Fund reported approximately $1.1 billion in estimated annual premium (EAP) and approximately $159 million in realized capital gains.

“Due to the significant capital gains we realized in our equity portfolio, and our strong financial position, we are able to return money to our policyholders for the third consecutive year,” said State Fund President & CEO Vern Steiner.

“We are always looking for ways to help our policyholders improve their bottom lines and invest in California’s economy and we’re pleased to be able to provide this support.”

Since its creation in 1914, State Fund has paid out more than $5 billion in dividends to policyholders.

State Fund policyholders eligible for the 2021 dividend will begin to receive their payments after the expiration date of their individual policies.

Last year, it announced plans to distribute an approximate $39 million dividend to its qualifying policyholders with policies that took effect between Aug. 27 and Dec. 31, 2020.

This 2020 dividend equaled approximately 10% of the estimated annual premium reported during that time period.

That announcement followed up State Fund’s August declaration of an approximate 10% mid-year dividend that applied to all policies incepted between Jan. 1 and Aug. 26, 2020. The dividend distribution for the entire year equals approximately $114 million.

The president launched a nationwide “Test to Treat” Initiative on March 8 that seeks to make treating COVID-19 simple: You get tested at a pharmacy-based clinic. If you’re positive and at high risk, you can get antiviral pills on the spot, which can cut the chance of developing severe disease by some 85%.

“It’s a very exciting time,” said Dr. Annie Luetkemeyer, professor of medicine at UC San Francisco, in a recent USC webinar.

According to the story in DailyNews, all told, more than 2,300 pharmacies, hospitals and medical providers are distributing the drugs in California. CVS, Walgreens and Rite Aid stores represent more than half of the stocked sites, with Kaiser Permanente, medical groups, hospitals, grocery chains and smaller pharmacies comprising much of the rest.

“The therapeutics are very different now than they were a year ago,” said Dr. George Rutherford, professor of epidemiology and biostatistics at UC San Francisco. They can be game-changers for people who can’t get vaccinated or who haven’t had a robust immune response after vaccination.

Test and treat can be helpful if it can be implemented well, said Dr. Elizabeth Hudson, regional chief of infectious diseases at Kaiser Permanente Southern California, which has 4.8 million members in Southern California.

What are these drugs?

Antivirals prevent viruses from making copies of themselves, while monoclonal antibodies bind to virus and help the body get rid of it. Here’s a few of the treatment options:

• Pfizer’s Paxlovid is the new star in the antiviral treatment arsenal. It’s a series of pills, taken orally. They contain nirmatrelvir, which stops the virus from replicating, and ritonavir, which helps the main drug stay in the body longer, at higher concentrations. It’s three tablets taken together, twice daily, for five days, for a total of 30 tablets. Paxlovid significantly reduced the proportion of people with COVID-19-related hospitalization or death from any cause by 88% compared to placebo, the U.S. Food and Drug Administration said when it issued an emergency use authorization in December.
• Also new is Merck’s molnupiravir, an antiviral that received emergency use authorization in December as well. It works by introducing errors into the virus’ genetic code, which prevents the virus from replicating. It’s only for patients 18 and older, as molnupiravir can affect bone and cartilage growth, the FDA said. It’s a course of four capsules taken orally every 12 hours for five days, for a total of 40 capsules.
• Veklury, the antiviral remdesivir, has been available since 2020 and isn’t part of the federal/state effort; clinics can order it directly. The drug must be delivered intravenously.
• Monoclonal antibodies must be given intravenously or through injection as well, within about 10 days after symptoms. Sotrovimab is effective against omicron and part of the federal effort; Evusheld is for those who can’t get COVID-19 vaccines for medical reasons, or who didn’t have robust immune responses to vaccination.

Candidates for these treatments are those at high risk for developing serious disease, including folks who are older, overweight, pregnant, diabetic or have heart issues and other underlying health problems.

People should act as quickly as possible, contacting their doctors or finding a Test to Treat site at a local CVS or Walgreens, officials said.

“Although supplies remain limited, more residents are receiving these treatments through pharmacies, partners, and providers,” L.A. County’s COVID-19 update said. “To date, Public Health has distributed 20,960 doses of Paxlovid, 39,764 doses of Molnupiravir, and 13,584 doses of Evusheld, with 73% of Paxlovid doses, 82% of Molnupiravir doses and 66% of Evusheld allocated to residents in the most under-resourced communities.”