Hostile to Physicians, Harmful to Patients

Executive Summary

Employers themselves, the physicians of California shared the alarm of other employers as premiums for workers’ compensation insurance continued their unabated climb. Concerned by a program more focused on litigation than return to work, the California Medical Association (CMA) participated in negotiations that laid the foundation for legislative reform of the program in 2003.

Eighteen months into the reform effort, a CMA survey finds physicians filled with despair. The Workers’ Compensation Program (WC) in California remains costly, and the execution of reforms reveals hostility to injured workers and the physicians who treat them. Moreover, there is far too little attention to providing prompt and effective treatment that returns injured employees to their jobs. CMA’s survey finds:

• Clinical guidelines are inadequately developed and improperly implemented, depriving workers of timely and necessary medical care.
• Unresponsive, non-value-added, expensive, bureaucratic processes remain rampant. The processes add significant cost and delay, and yield results that are often overturned.
• Treatment decisions are made by individuals who lack the necessary clinical training and who do not meet the statutory requirements designed to protect the injured worker.
• Workers’ compensation insurance carriers continue to routinely delay payments and underpay claims. WC is recognized as being the worst payer in California.
• Many new “medical provider networks” demand steep discounts but offer no experience in managing workers’ compensation and no assurance they pass along savings to employers. Accounting rules allow their administrative and organizational expenses to be reported as medical costs.

Sixty-three percent of physicians in our survey indicate they intend to leave or reduce participation in WC. Of these, one third plan to quit entirely.

From the responses to the CMA Workers’ Compensation Survey, the overall perspective is a program that is hostile to physicians and often harmful to the patients they serve. The statutes imposing utilization review (UR) programs laid out certain guidelines that are not being followed, physicians said. The statutes called for the use of evidence-based, peer-reviewed, nationally recognized guidelines applied by individuals with the proper experience to interpret them within a maximum of 14 days. The law also requires documentation to support any modification, delay, or denial. This isn’t happening. Although the statutes call for prompt payment, physicians’ experience is that payments are delayed on average more than a month beyond the legal maximum of 45 working days. Denials and modifications are common for authorization requests and claims payment, and these denials are commonly appealed and overturned. The experience of California physicians under the reforms in 2003–2005 is primarily negative.

CMA agrees that reforms were necessary but is troubled by the lack of auditing and enforcement. As a result, employers and insurers operate outside the law. To correct these problems, CMA wants a strict audit program and aggressive enforcement through substantial penalties for non-compliance. In addition, the agency should end medical decision-making by non-physicians and non-credentialed medical professionals from out of state. CMA is also seeking strict enforcement of timely authorization rules that speed patient care, as well as streamlining of the system that currently results in lost and delayed claims, treatment, and payment. To improve the program, CMA asks that:

• Carriers use modern technology and systems that are properly designed and implemented to handle transactions efficiently, correctly, and timely. The rampant loss of claims, authorization requests, and requested documentation reveals a system that is badly broken.
• The Division for Workers’ Compensation (“Division”) address the gaps in the ACOEM guidelines and require compliance with the law in assuring professionals who apply the guidelines have the necessary training and experience. The Division act aggressively in penalizing those who fail to do so.
• The Division institute audits of payment and authorization deadlines at a level sufficient to thwart the disregard for timely processing. The Division must require a level of training that assures utilization reviewers and claims adjusters have the competence to perform their responsibilities properly.
• The Legislature should reexamine the medical provider network section of the law to ensure that it also addresses issues of quality and effectiveness. Discounting fees should not be the basis on which a physician is included or excluded in a network. When discounts are given, there should be required disclosure of any discounts from providers and strict accounting for the flow of dollars to ensure savings go to employees.