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Tag: 2018 News

OSIP Proposes Changes to Reporting Rules

The Office of Self-Insurance Plans is a program within the director’s office of the Department of Industrial Relations responsible for the oversight and regulation of workers’ compensation self-insurance in California.

OSIP is also responsible for establishing and insuring that required security deposits are posted by self-insurers in amounts sufficient to collateralize against potential defaults by self-insured employers and groups.

OSIP has posted proposed regulations that will require self-insured public entities to file annual reports providing demographic, claim and financial data regarding their workers’ compensation programs. The reports will be due by October 1 of each year and shall cover liabilities for the preceding July 1 – June 30 fiscal year.

The proposed regulations, mandated by Governor Edmund G. Brown Jr.’s 2012 workers’ compensation reforms, will allow for greater transparency of the solvency and viability of self-insured workers’ compensation programs and the true liabilities of public entities.

As specified by Labor Code section 3702.2(a), the changes would require public entities to report portions of their financial statements pertaining to workers’ compensation liabilities.

Public entities would also be required to provide aggregate information as a point of reference for other public entities.

The proposed regulations were developed in accordance with the recommendations of a 2014 report conducted by the Commission on Health and Safety and Workers’ Compensation, Examination of California Public Sector Self-Insurance Workers’ Compensation Program.

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

A public hearing on the proposed regulations has been scheduled for 10 a.m. January 23, 2019, in Room 11 at the Elihu M. Harris State Building, 1515 Clay Street, Oakland, 94612. Members of the public may also submit written comments on the regulations until 5 p.m. that day.

WCRI Reports ASC 40% Less than Hospitals

Forty years ago, virtually all surgery was performed in hospitals.

Now, ambulatory surgery centers (ASCs) are health care facilities that offer patients the convenience of having surgeries and procedures performed safely outside the hospital setting. At a time when most developments in health care services and technology typically come with a higher price tag, ASCs stand out as an exception to the rule.

The Workers Compensation Research Institute found an overall shift away from hospital care in workers comp systems across 18 states, with the trend toward receiving care at less-expensive ambulatory surgical centers and nonhospital settings.

Using data from 2002 to 2016, virtually all study states saw a downturn in the percentage of claims with both hospital inpatient and outpatient services, according to Rebecca Yang, a senior public policy analyst with the Cambridge, Massachusetts-based institute.

Business Insurance reports that “Part of the shift follows the trend in general health care and part of it might be influenced by states,” Ms. Yang told listeners on a webinar, noting that several states have introduced medical fee schedule changes and other reforms that caused payers to rethink more-expensive hospital care as a first resort.

The study states included California, Connecticut, Florida, Georgia, Illinois, Indiana, Iowa, Louisiana, Massachusetts, Michigan, Minnesota, New York, North Carolina, Pennsylvania, Tennessee, Texas, Virginia and Wisconsin.

Technological advances, now in place at surgical centers and other nonhospital locations, are helping to fuel the trend away from hospital care for injured workers, she said.

Lower prices at surgical centers are also spurring the switch, she added. The WRCI data found that care in the nonhospital setting is typically 40% less expensive than that at hospitals.

Surgeries, among the most costly care, were focus of the research, she said. Knee surgeries performed at ambulatory surgical centers cost 21% to 76% less than at hospitals at 14 states included in the study, according to Ms. Yang’s presentation.

For treatment performed at hospitals, outpatient services are increasing, with cumulative data from 2000 to 2016 showing 39.6% more outpatient activity and only 1.7% more inpatient admissions over that same time, according to data presented during the webinar.

CMS to Prioritize Reporting Penalties in 2019

Section 111 of the Medicare/Medicaid SCHIP Extension Act (MMSEA) of 2007, at its most basic level, requires insurers and self-insureds to both identify Medicare beneficiaries with whom they pay benefits or settlements associated with workers’ comp, no fault or liability claims and – once identified – report data to Medicare as directed by the Secretary of Health & Human Services.

The reporting act originally mandated that failure to comply with the reporting requirements “shall be subject to a civil money penalty of $1,000 for each day of noncompliance” for each individual for which the information should have been submitted. With the threat of severe penalties, the insurance industry quickly responded, obtaining Responsible Reporting Entity (RRE) IDs and implementing claims system updates and section 111 compliance programs as quickly as possible.

Enter the SMART Act. On January 10, 2013, President Obama signed into law the Medicare IVIG Access and Strengthening Medicare and Repaying Taxpayers Act of 2012. The SMART Act, among other things, softened the language relative provide CMS with discretion not only to the imposition of the penalty but also into the amount of the penalty.

Now, civil money penalties “may be subject to a civil money penalty of up to $1,000 for each day of noncompliance with respect to each claimant.” The SMART Act also required the Secretary to quickly solicit proposals determining “specified practices for which such sanctions will and will not be imposed” via the regulatory process.

About a year after the SMART Act was signed into law, CMS kicked off the rulemaking process with an advance notice of proposed rulemaking (ANPRM). The ANPRM sought comment on: what types of practices “would or would not” result in the imposition of civil money penalties; methods to determine the dollar amount of civil money penalties; and ways in which CMS may define what constitutes “good faith efforts” to identify a Medicare beneficiary. CMS received thirty four written comments to the ANPRM, but has done little since issuing the ANPRM.

In the ten years following the introduction of mandatory insurer reporting, the industry has yet to see any evidence of enforcement in the form of the imposition of dreaded civil money penalties.

However, CMS has issued yet another abundantly clear signal that Medicare Secondary Payer (MSP) enforcement will be a priority in 2019.

Now, an additional notice on the Office of Management and Budget (OMB) website has been posted which indicates that CMS will move forward with a Notice of Proposed Rulemaking (NPRM) on “Civil Monetary Penalties (CMPs) and Medicare Secondary Payer Requirements.”

FDA Continues Tough Stance Against New Opioids

The U.S. Food and Drug Administration has declined to approve an abuse-deterrent version of Mallinckrodt Plc’s opioid painkiller Roxicodone, saying some parts of the company’s application need further evaluation.

Mallinckrodt is one of the nation’s largest manufacturers of oxycodone – the most commonly abused prescription painkiller after hydrocodone in 2016.

The treatment is a reformulated version of the company’s commonly abused painkiller Roxicodone, intended to make the drug less desirable and more difficult to be abused by snorting or injecting.

The decision comes after an advisory panel to the FDA voted 10-7 in favor of the drug, saying it should be labeled as abuse deterrent only by the nasal route.

“While all the abuse deterrent properties of this medication are perhaps not as robust as we might like, it is an important advance over the existing formulation,” Brian Bateman, a panel member who had voted in favor of the drug’s approval, had then said.

The panel members, during the Nov. 14 meeting, also raised concerns of Mallinckrodt’s treatment creating the same problem as Endo International Plc’s reformulated Opana ER did.

Endo withdrew the drug from the market last year after postmarketing data showed that while the rates of nasal abuse associated with Opana fell, rates of intravenous abuse rose.

“We are evaluating the FDA’s letter and will request a meeting in the coming weeks to discuss it further,” Matt Harbaugh, president of the company’s specialty generics unit said in a statement.

Apportionment of PD on Pathology Affirmed

Aaron Lindh, was employed as a law enforcement officer when he sustained injury arising out of and in the course of employment to his left eye. More specifically, Lindh took three to six blows to the left side of his head while engaged in a canine training course.

Afterwards, he “suffered severe headaches lasting between several hours to one or two days.” Over a month later, while off-duty, Lindh suddenly lost most of the vision in his left eye.

Dr. David Kaye, a neuro-ophthalmologist and the QME, concluded, as had the other physicians, that Lindh’s “blood circulation to his left eye was defective.” He stated Lindh “did not have any disability prior to receiving the blows to the head.” And “[a]bsent the injury,” he thought Lindh “most likely would have retained a lot of his vision in that eye,” although he could not “guess” how much. Dr. Kaye agreed “it [was] possible that [Lindh] could have gone his entire life without losing vision.” He also agreed, however, that even had Lindh not suffered the blows to his head, he still could have lost his vision “due to this underlying condition.”

As to apportionment, it was Dr. Kaye’s “opinion that [Lindh’s] underlying vasospastic personality and vasculature placed him at high risk for damage to different parts of his body.” In discussing his initial apportionment of 90 percent (which he adjusted to 85 percent), Dr. Kaye stated, “90 percent [is] due to the underlying condition and 10 percent due to the stress of the injuries,” He subsequently repeated it was “unlikely” Lindh would have suffered a vision loss if he had not had the “underlying condition” of “vascular spasticity,” a condition that is “rare.”

The parties stipulated “the medical record, not including apportionment, rates 40 percent permanent disability, and with apportionment, rates six percent permanent disability.” The ALJ rejected Dr. Kaye’s apportionment analysis, and found Lindh had 40 percent permanent disability, and the WCAB affirmed the ALJ’s decision. The Court of Appeal reversed and ordered 85% apportionment in the published case of City of Petaluma v WCAB and Aaron Lindh.

The Court of Appeal rejected the arguments presented by the Board, and the California Applicant’s Attorneys Association acting as amicus,”that there must be medical evidence that an asymptomatic preexisting condition will, in and of itself, naturally progress to disable the claimant..” pointing out that the argument “reflects the law prior to 2004.”

The 2004 enactment of Senate Bill No. 899 overhauled the statutes governing apportionment. The Legislature intended to reverse a number of the features of the worker’s compensation law, including eliminating the bar against apportionment based on pathology and asymptomatic causes.

“Lindh’s suggestion that apportionment is required only where there is medical evidence the asymptomatic preexisting condition would invariably have become symptomatic, even without the workplace injury, reflects the state of the law prior to the 2004 amendments.”

Under the current law, the salient question is whether the disability resulted from both nonindustrial and industrial causes, and if so, apportionment is required.

Whether or not an asymptomatic preexisting condition that contributed to the disability would, alone, have inevitably become manifest and resulted in disability, is immaterial.

The post-amendment cases uniformly focus on whether there is substantial medical evidence the disability was caused, in part, by nonindustrial factors, which can include pathology and asymptomatic prior conditions for which the worker has an inherited predisposition.

RAND Finds QMEs Work for Management Organizations

The California Department of Industrial Relations Division of Workers Compensation requested that RAND review the California workers’ compensation Medical Legal fee schedule, which has not been revised since 2007. RAND published it findings in a new 30 page report.

Remarkably, RAND points out that the business model for QME reporting has evolved to a system engineered by “management organizations” that “pay the physician performing the evaluation.”

In this regard RAND reports that “Management organizations provide administrative and support services to a significant percentage of physicians performing ML examinations. Typically, these organizations provide office space, scheduling, and transcription services, obtain the medical records pertinent to the examination, submit the required ML reports, bill for the services, and pay the physician performing the evaluation.”

The physicians under contract to these organizations are listed as individuals on DWC’s listing of qualified QMEs but the practice locations and phone numbers are those supported by the management company. Some management organizations do not require an exclusive contract, so that the listings for an individual (limited to ten locations by SB 863) may be associated with more than one management organization and/or their private practice location.”

Users of ML reports indicated that 10-20% of initial evaluations involve supplemental reports that result from the lack of coordination between the ML examiners and the primary treating physicians over diagnostic tests needed for an evaluation and delays in obtaining the medical records in sufficient time for review before the scheduled examination.

Several claims administrators noted the tendency of some examiners to file initial evaluation reports that are incomplete with regard to one or more findings. This forces the claims administrator to either ask for a supplemental report or withhold payment until a complete report is filed. The latter action does not happen often because it could harm the claims administrator’s relationship with the examiner and potentially risks less favorable permanent disability ratings.

RAND found that the $250 per hour rate used to determine the ML allowances is significantly higher than the 2017 allowances for evaluation and management services that consist of similar activities.

It suggests converting the allowance for an extraordinarily complex evaluation into a flat rate based on the complexity of the issues that need to be addressed by the evaluator. Nine states have a flat rate payment, most of which vary by the type or number of body parts.

Consideration should be given to establishing policies that provide incentives for completing high quality reports that address the issues outlined in the cover letter(s) from the parties requesting the evaluation. Timely completion of reports could be incentivized by establishing a higher payment for timely submissions.

O.C. Physician Faces Compound Med Fraud Charge

A doctor and patient were charged with insurance fraud for billing over $850,000 to an insurance provider for medically unnecessary prescriptions.

Between May 2014 and September 2014, Sabina Maciel Acevedo, 48, who lives in Anaheim, is accused of completing four compound cream prescription forms for herself and three immediate family members without receiving medical examinations.

Dr. David Todd Asher, 50, who lives in Fullerton, is accused of signing all of the forms without examining any of the family members or customizing each prescription. He was a graduate of the Dartmouth Medical School in 1997.

The completed prescription forms were sent to San Dimas Pharmacy in Bakersfield to be fulfilled, and the pharmacy billed $855,210 to Acevedo’s prescription insurance, Express Scripts, which is provided through the Santa Ana Unified School District.

Acevedo is accused of receiving $19,504.57 in kickbacks for fulfilling these prescriptions through San Dimas Pharmacy.

Express Scripts and SAUSD noticed the unusual charges and contacted the Orange County District Attorney’s Office, Bureau of Investigation, who investigated this case.

Dr. Asher has been charged with Insurance fraud with sentencing enhancement allegations for over $100,000 loss and an aggravated white collar crime over $500,000. He faces 13 years and eight months in state prison.

His patient, Sabina Aceedo has been charged with insurance fraud and grand theft with a sentencing enhancement allegations of a crime resulting in over$100,000 loss.

Asher was previously prosecuted in the United States District Court, Central District of California in February 2007. He was charged with conspiracy and illegal kickbacks for patient referrals. He plead guilty to the conspiracy charge in October, 2007 and placed on probation. He stipulated to discipline with the Medical Board for that offense.

Asher now faces new disciplinary charges by the California Medical Board for his conduct while a medical director of Reflections Recovery Center in Costa Mesa. The second charge appears to be related to his signing prescriptions for compounded medications for several patients who had filled out the prescription.

Bioengineered Discs to end Back Pain

A multidisciplinary research team from the University of Pennsylvania’s Perelman School of Medicine, School of Engineering and Applied Science, and School of Veterinary Medicine is aiming to solve back pain by developing bioengineered intervertebral discs made out of an individual’s own stem cells.

The researchers at the University of Pennsylvania have been working for the past 15 years on bioengineered disc models – first in laboratory studies, then in small animal studies, and most recently in large animal studies.

The current standard of care does not actually restore the disc, so the  hope with this engineered device is to replace it in a biological, functional way and regain full range of motion.

Previously, the researchers tested the new discs – called “disc-like angle ply structures” (DAPS) – in rat tails for 5 weeks. In the new study, whose results appear in the journal Science Translational Medicine, the team developed the engineered discs even further. They then tested the new model – called ” endplate-modified DAPS” (eDAPS) – in rats again, but this time for up to 20 weeks.

Following several tests – MRI scans and several in-depth tissue and mechanical analyses – the researchers found that, in the rat model, eDAPS effectively restored original disc structure and function.

This initial success motivated the research team to study eDAPS in goats, and they implanted the device into the cervical spines of some of the animals. The scientists chose to work with goats because, as they explain, the cervical spinal discs of goats have similar dimensions to those of humans. Moreover, goats have semi-upright stature, allowing the researchers to bring their study one step closer to human trials.

The researchers’ tests on goats were also successful. They noticed that the eDAPS integrated well with the surrounding tissue, and the mechanic function of the discs at least matched, if not surpassed, that of the original cervical discs of the goats.

The researchers say that the next step will include conducting further, more extensive trials in goats, which will allow the scientists to understand better how well eDAPS works.

Moreover, the research team plans to test out eDAPS in models of human intervertebral disc degeneration, thus hopefully getting one step closer to clinical trials.

The researchers say it would be a paradigm shift for how we really treat these spinal diseases and how to approach motion sparing reconstruction of joints.

Uwaydah Connected Chiro Pleads Guilty

A 56-year-old chiropractor has pleaded guilty for his role in a massive workers’ compensation insurance fraud and conspiracy scheme.

Paul Turley (dob 11/12/62) of Granada Hills made a factual basis plea on Monday to one count each of conspiracy to commit insurance fraud, mayhem, insurance fraud and unlawful patient referral. As part of the written plea agreement filed with the court, Turley detailed his involvement in the scheme.

He faces up to eight years in state prison. Sentencing is set for June 14.

Turley is among a dozen defendants who were indicted by a grand jury in 2015 for fraudulently billing tens of millions of dollars to insurance companies for fraudulent surgeries, prescription medications, fake MRIs, falsifying medical reports and office visits.

Prosecutors later divided the larger case into three smaller ones in an effort to streamline the complex litigation and re-filed several counts that previously had been dismissed. However, indictments remain against orthopedic surgeon, Dr. Munir Uwaydah, and his office manager, Wendee Luke, both of whom are fugitives.

The conspiracy allegedly included paying lawyers and marketers as much as $10,000 a month for illegal patient referrals, known as “capping.”

Nearly two dozen patients allegedly were deceived into having surgeries they thought would be performed by Uwaydah. Instead, a physician’s assistant who never attended medical school, carried out invasive and sometimes unnecessary surgeries. Uwaydah was not present in the operating room for all surgeries, prosecutors said.

In addition, nearly two dozen patients have lasting physical scars and many needed additional surgeries to repair the original injury. Last year, co-defendant Marissa Nelson (dob 11/29/76) pleaded guilty to one felony count of conspiracy to commit insurance fraud and admitted a special allegation of taking property of a value exceeding $3.2 million. She faces up to nine years in state prison when she is scheduled to be sentenced on Jan. 25.

The other 10 defendants are awaiting trial. Among the charges they each face are conspiracy, money laundering and unlawful patient referral. Some of the defendants also face aggravated mayhem charges.

The cases were investigated by the Los Angeles County District Attorney’s Bureau of Investigation and the Organized Crime Division. Deputy District Attorneys Dayan Mathai, Catherine Chon, Karen Nishita and Kennes Ma are prosecuting the case.

Drugmaker Pays $360M to Resolve Kickback Case

Actelion Pharmaceuticals US, Inc., has agreed to pay $360 million to resolve allegations that it violated the False Claims Act by paying kickbacks to Medicare patients through a purportedly independent charitable foundation.

When a Medicare beneficiary obtains a prescription drug covered by Medicare Part B or Part D, the beneficiary may be required to make a partial payment, which may take the form of a co-payment, co-insurance, or deductible. These co-pay obligations may be substantial for expensive medications.

Congress included co-pay requirements in these programs, in part, to encourage market forces to serve as a check on health care costs, including the prices that pharmaceutical manufacturers can demand for their drugs.

The Anti-Kickback Statute prohibits pharmaceutical companies from offering or paying, directly or indirectly, any remuneration – which includes money or any other thing of value – to induce Medicare patients to purchase the companies’ drugs.

Prosecutors alleged that Actelion used a foundation as a conduit to pay the co-pay obligations of thousands of Medicare patients taking Actelion’s PAH drugs. By doing so, the government alleged, Actelion was able to induce patients to purchase its drugs when the prices Actelion had set for those drugs otherwise could have posed a barrier to purchases.

The government alleges that Actelion routinely obtained data from the foundation detailing how many patients on each Actelion drug the foundation had assisted, how much the foundation had spent on those patients, and how much the foundation expected to spend on those patients in the future.

Actelion used this information to budget for future payments to the foundation on a drug-specific basis and to confirm that its contribution amounts to the foundation were sufficient to cover the copays of patients taking Actelion’s drugs, but not of patients taking other manufacturers’ PAH drugs.

Actelion engaged in this practice even though the foundation warned the company against receiving data concerning the foundation’s expenditures on copays for Actelion’s drugs.

Meanwhile, the government also alleged that Actelion had a policy of not permitting Medicare patients to participate in its free drug program, which was open to other financially needy patients, even if those Medicare patients could not afford their copays for Actelion’s drugs. Instead, to generate revenue from Medicare and induce purchases of its drugs, the government alleged that Actelion referred such Medicare patients to the foundation, which allowed the patients’ copays to be paid and resulted in claims to Medicare for the remaining cost.  

On June 16, 2017, after the alleged conduct, Johnson & Johnson acquired Actelion. Johnson & Johnson was not involved, directly or indirectly, in the alleged conduct and the allegations above do not relate in any way to Johnson & Johnson.