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Bill review costs siphon cash from California comp claims

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DANA POINT, Calif. — Too much money is spent on frictional costs such as bill review in the Los Angeles area, and it's taking money away from injured workers, panelists said during the 2015 California Workers' Compensation & Risk Conference in Dana Point, California, on Wednesday.

There's been a “tremendous” increase in frictional costs since S.B. 863 took effect on Jan. 1, 2013, Dawn Watkins, director of integrated disability management for Los Angeles Unified School District, said during a keynote session on the state of California workers comp. The law established an independent medical review program, among other things.

“The most important person in workers comp is that injured worker,” Ms. Watkins said. “That's where the money should be going. I shouldn't have to pay so much money on bill review.”

Kevin Confetti, San Francisco-based deputy chief risk officer for the University of California, said he was charged almost $100 million in medical costs last fiscal year, but ended up having to pay only $36 million.

“The fee schedule in California has been around a long time,” Mr. Confetti said. “Physicians know what it is, so why do they have such a hard time billing to the fee schedule? It's like they're trying to slip one past the goalie … They think, if I submit a bill that's two-thirds higher (than it should be), maybe someone will pay it.”

It's a problem that so many employers are paying “huge” medical bill review fees every year, he added. “We have to go beyond 863 and find out how to get the right amount of money to the injured employee.”

Mr. Confetti said the University of California's Los Angeles campus has higher litigation rates and more injured workers transferring to physicians of their choosing than other campuses.

While seven of the university's eight occupational health clinics have an 80% success rate of injured workers staying with the same occupational physician through the life of the claim, the rate in the Los Angeles basin is less than 50%, he said.

Injured workers there “can't wait to get away from our occupational physicians to a physician of their own choice,” Mr. Confetti said, noting that it's more about mindset than satisfaction.

One process that creates friction is when doctors tell an injured worker that a treatment is in their best interest, but that it has to go through utilization review and the insurance company likely won't let them have it, said Cincinnati-based Ann Schnure, vice president of risk management for Macy's Inc.

Panelists agreed that California physicians need to be better trained on the medical treatment utilization schedule.

While 25% to 30% of Macy's workers comp claims come out of California, the state generates 50% of the department store's costs, Ms. Schnure said.

In New York, which is a “huge state for Macy's,” the average cost per claim is actually higher than in California, Ms. Schnure added, but the total cost of risk is much higher in California than in other states.

She said there might be one $300,000 claim in New York, but there could be 20 $200,000 claims in California.