California comp med-legal costs soar following changes

Payments for medical-legal services used to resolve medical disputes over compensability issues in California workplace injury claims have risen “sharply” under the new medical-legal fee schedule that took effect in 2021, according to a CWCI study.

In April 2021, anticipating a 25% increase in costs, the California Division of Workers’ Compensation implemented a new fee schedule for the first time since 2006. The previous schedule provided flat fee payments for “basic” and “complex” comprehensive evaluations and time-based payments for evaluations involving “extraordinary circumstances.”

The new schedule, which the CWCI researchers found caused costs to soar past predictions, replaced those three levels of service with a single, flat fee of $2,025 for forensic physicians, plus $3 per page for reviews exceeding 200 pages and time-based payments for video reviews. The new schedule also continued to allow additional fees for evaluations by those involving an interpreter and expanded fee multipliers to certain medical specialists. 

Comparing the utilization and reimbursement of med-legal services rendered before and after the new schedule’s effective date, using data from claims in accident years 2015 through 2021, CWCI found that replacing the three levels of evaluations with a single comprehensive evaluation reimbursed at a flat fee “likely had the biggest impact on average payments.” 

Basic evaluations accounted for about 40% of the evaluations paid under the new comprehensive service code, and the new flat fee increased the payment for these services by 222%. More complex evaluations represented 18% of the new evaluations, and payments for these services increased by 115%. 

While regulators hoped that the new schedule would lead to a redistribution of med-legal services, with fewer supplemental reports, the reports increased from 34.2% of med-legal services in 2019 to 37.8% under the new schedule.