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Efforts to identify and prosecute provider fraud in the California workers compensation system is likely having an impact in both reducing such payments and lowering their associated costs, according to a new report.
As of April 7, more than 450 medical providers had been indicted and/or suspended by the California Department of Industrial Relations from practicing in the state’s system.
“Many of these providers previously billed and were paid significant amounts for workers compensation-related services,” the report released Tuesday by the Workers Compensation Insurance Rating Bureau of California stated. “While many of the procedures billed by these providers may have been for legitimate services, the suspension of their practices in California’s workers compensation is likely a significant driver of reduced medical costs.”
Within California’s comp system, the share of medical payments to indicted providers declined to 1.9% in the second half of 2017 from 7.2% in the second half of 2012, while the share of paid transactions by indicted providers fell to 1.4% from 4.4% over the same time period, according to the report.
The total medical payments to indicted providers peaked in 2013, when 23% of medical lien payments, 14% of pharmaceutical payments and 4% of payments for other medical services were made to these providers, according to the report. Since 2013, the share of total payments to indicted providers declined across all types, but the proportion of medical lien payments to these providers increased by 130% from 2013 to 2017.
The fraud enforcement effort was seen as a factor in these declining trends, with much of the reduction in medical costs in California’s system driven by provisions of S.B. 863, including independent medical review, as well as subsequent legislation related to lien filing and other system components, according to WCIRB.
The California Department of Industrial Relations is making premium fraud a priority this year as part of the department’s overall fight against workers compensation insurance scams.