BI’s Article search uses Boolean search capabilities. If you are not familiar with these principles, here are some quick tips.

To search specifically for more than one word, put the search term in quotation marks. For example, “workers compensation”. This will limit your search to that combination of words.

To search for a combination of terms, use quotations and the & symbol. For example, “hurricane” & “loss”.

Login Register Subscribe

Fee schedule changes could cost Calif. comp system $270M

rising chart

Changes to California’s workers compensation fee schedules implemented this spring could add an additional $270 million in medical costs to the state’s workers comp system.

The California Division of Workers Compensation’s modifications to billing procedures in the Official Medical Fee Schedule and its reimbursement revamp of the Medical-Legal Fee Schedule, which took effect March 1 and April 1, respectively, may not just impact the cost of evaluation and management visits and medical-legal reviews, they may also set the stage for abuse, some experts say.

The Oakland-based Workers Compensation Insurance Ratings Bureau last week presented its estimates of the fiscal impact of changes based on historical comp data, predicting that the E&M changes, when adjusted for inflation, could raise costs by 15%.

The modifications to the medical-legal fee schedule — which is the state’s schedule for reimbursing qualified medical evaluators for reviewing workers comp medical records, writing medical-legal reports and testifying in trials — are predicted to increase fees for such reviews by 22%, according to the WCIRB.

“Taking all of this together, this is not particularly good news for the California workers compensation system, and it’s coming just as the small businesses and the economy overall are trying to recover from COVID,” said Robert Hartwig, clinical associate professor and director of the Risk and Uncertainty Management Center at the University of South Carolina in Columbia.

Modifications to E&M services reimbursements, which account for about 15.9% of overall medical costs in the California workers comp system, including self-insureds, could have an estimated system impact of $170 million, WCIRB analysts said. The change to medical-legal review reimbursements, which comprise about 6.5% of overall medical costs, could have an estimated $100 million system impact.

While the E&M system increases stem mainly from changes in procedure codes, about 11% of the potential price increase in medical-legal reviews comes from a record review reimbursement overhaul that has many defense attorneys concerned. The prior schedule, which had been in place since 2006, had paid QMEs an hourly fee. The new schedule, introduced by the California Division of Workers Compensation in February, will pay QMEs a flat fee of $2,015 for a comprehensive case review plus an additional $3 per page for any records in excess of 200 pages.

“I see a lot of potential frictional costs in terms of how the fee schedule and the new procedures are going to be implemented,” said Aaron Hemmings, shareholder in the Woodland Hills and Thousand Oaks, California, offices of Stander Reubens Thomas Kinsey APC, which represents employers.

In the medical-legal review process, plaintiff and defense attorneys are meant to agree, in theory, on the medical records sent to the QME, Mr. Hemmings said. However, these files tend to be extensive and contain duplicates and irrelevant records, he said.

“I think that most people are overestimating the level of cooperation between the parties,” Mr. Hemmings said. “I hope I’m proven wrong.”

Defense attorneys, whose insurance or employer clients bear the cost of medical-legal reviews, may have the resources to send smaller files of curated pages to the QME, whereas plaintiffs attorneys generally have high caseloads, lack the personnel to pre-review extensive medical files and don’t have the financial incentive to do so, said Jeff Adelson, Newport Beach, California-based co-managing shareholder of Adelson McLean APC.

“A doctor may get a set of 500 (pages for review) from one side, 500 from another, and maybe 400 pages will be duplicates,” he said. “The price of what should be a straightforward finding can be really high. A client will have to ask themselves, ‘Is there really value in spending $15,000 to $20,000 for a medical report?’”

Plaintiffs attorneys may use the per-page fees as a “sword to try to threaten the employers into higher settlement amounts — or face multiple (medical-legal) evaluations at this increased cost,” Mr. Hemmings said. “I just see a lot of the burden falling on the employers and the defendants … and the potential for abuse. We’ll see how it all unfolds. I think it’s going to be a big change in how we do business.”