Category Archives: Fees

California Work Comp: What a Mess!

Kevin Tremblay, V.P., National Accounts for SMS National Solutions in Altamonte Springs, Florida, and a connection of mine on LinkedIn, penned the following article about California work comp and liens.

Normally, I shy away from articles involving California work comp, but on one or two occasions have written articles about it that I feel fit the subject of this blog. This article is one of those, but is more about the mismanagement of one state’s work comp system, rather than the state of affairs of the entire system nationwide.

Here is Kevin’s article in full:

California Workers Compensation System – Liens, Waste and Medical Provider Billed Charges

The California workers’ compensation system is unique like no other state in the country. There are two distinct sides of the equation in California workers’ compensation, Applicant and Defense.

Applicant-The party, usually the claimant that opens a case at the local Workers Compensation Appeals Board (WCAB) office by filing an application for adjudication of claim.

Defense-The party, usually the employer or its insurance company opposing the claimant in a dispute over services and benefits.

Lien-A right or claim for payment against a workers’ compensation case. A lien claimant, such as a medical provider, can file a form with the local Workers Compensation Appeals Board to request payments of money owed in a workers’ compensation case.

OMFS-The official medical fee schedule is promulgated by the DWC, Department of workers Compensation administrative director under labor code section 5307.1 and can be found in section 9789.10 of title 8, California code of regulations. It is used for payment of medical services required to treat work related injuries and illnesses. The California Official Medical Fee Schedule is considered prima facie evidence of reasonableness.

A lien claimant has the burden of proving that any amount charged is reasonable, and a lien claimant must prove that there are “extraordinary circumstances” that justify a fee that exceeds the Official Medical Fee Schedule.

According to some recent reports, an expected 500,000 liens will be filed by treating medical providers in the California Workers Compensation system in 2015, costing employers and insurers an estimated $200 million dollars in loss adjustment expenses and delaying claims adjudication.

Some of these liens forces some employers or insurance companies to settle liens they may not be legally obligated to pay simply to settle and close the claim to avoid paying additional disability, administrative and legal costs. Emphasis here on, ‘forces

Some additional statistical findings reported by the DWC are:

  • Medical treatment liens account for more than 60 percent of the liens filed, and 80 percent of the dollars in dispute.
  • $1.5 billion per year is claimed in medical lien disputes after adjusting for amended lien files.
  • One-third of medical liens involve disputes over the application of the Official Medical Fee Schedule.
  • Authorization for treatment was in dispute in seven out of 10 medical liens surveyed.
  • Reasons treatment was not authorized were: 37 percent provider not authorized to treat (mostly out-of-network); 7 percent denied claims; 6 percent medical necessity of treatment rejected by utilization review; 1 percent contested body parts; 20 percent authorization status unknown or not stated.
  • The volume of liens filings is sensitive to procedural changes, such as the adoption or repeal of a $100 filing fee and the adoption of new filing procedures.
  • Up to 30 percent of medical liens are prematurely submitted before the time has elapsed for the claims administrator to pay or object to the provider’s bill.
  • Ten percent of medical liens are submitted on the date the service is provided.
  • Nearly one quarter of medical liens are filed more than two years after the last date of services for which payment is claimed, including 6 percent that are filed five or more years after the last date of services.

The report was based on information provided by the Division of Workers’ Compensation, and was an attempt to characterize the problem so policymakers can propose solutions to the lien problem.

Source: CHSWC/InsuranceJournal.com

The Lien System Game:

Bill ($5,000) – Paid ($1,000)-in accordance with OMFS

Fee to file the lien the claim in court by medical provider $150.00

Lien balance $4000

Demand: $3800

Offer: $2000

Negotiation continues

Collector says $3200 is the bottom line for him

Adjuster forced to pay and settle to avoid additional claim cost agreement at $3200

So while the DWC and legislators continue to sort over of resolve the issues of the lien process, what can adjuster’s implement to mitigate the process and reduce claims costs? The following strategies are a good place to start:

  • How much is the lien?
  • How much is the OMFS or reasonable value of the lien?
  • What are your lien defenses?
    • AOE/COE
    • MPN
    • OMFS or other fee schedules / IBR
    • Reasonableness & Necessity
    • UR / IMR
    • Other technical issues
  • What evidence do you have to support your position? Objection letters? MPN Notices?
  • Did you serve your evidence on the lien claimants and/or your counsel?
  • What are the probable economics of your decision to settle or fight?
  • How much are you willing to pay to settle or resolve the lien?
  • We paid per OMFS & DOS is after 1/1/13
  • You failed to request 2nd review within 90 days (LC 4603.2(e)(2))
  • You failed to request IBR within 30 days from 2nd review (LC 4603.6(a)
  • You are done. The Code says: “the bill shall be deemed satisfied and neither the employer nor the employee shall be liable for any further payments.”
  • Any appearance at the board on your lien will result in a petition for costs & sanctions! [LC 5811 & Valdez decision (en banc) (77 CCC 1113)]

The State of California has taken recent measures with the advent of SB863 and labor codes 9792.5.12 and 4903.1(b) regarding independent bill review process and tighter lien submission rules. California legislators need to continue to act and close the loop holes in existing laws to mitigate and eventually eliminate the magnitude of waste and abuse by certain medical providers that is currently taking place and plaguing the workers’ compensation system.

The lien process is certainly unique to the rest of the country’s state by state workers’ compensation system. So what is it? Unethical gaming of the system and adding tremendous unnecessary costs and clogging the California courts and workers’ compensation system, no question. Anything more, you decide…..

Increase in Physician Fees For Total Knee Replacements Due to Concentration in Orthopedic Markets

Health Affairs issued a study that said that there was a 7 percent increase in physician fees for total knee replacements due to the concentration of orthopedic groups.

According to the abstract, in the period 2001–10, the average professional fee for total knee arthroplasty was $2,537. During this time, in markets that moved from the bottom quartile of concentration to the top quartile, physician fees paid by private payers increased by $168 per procedure.

The increase nearly offset the $261 decline in fees that the authors observed, absent changes in market concentration.

Their findings suggest that caution should be used in implementing policies designed to encourage further group concentration, which could produce similar effects.

What does this mean to you, the employer? It means you are going to pay through the nose for knee surgeries as physician groups grow larger.

What does it mean to the workers’ comp industry? It means you are getting ripped off.

What does this mean for the medical travel industry? It means that you have to prove to US employers and carriers and insurance personnel that you really can save them money on knee surgery, and all other orthopedic surgeries.

Cosmetic, plastic, and other beautification surgeries are ok for some in the medical travel industry to offer, but to be really impactful, the industry must turn its attention to orthopedic surgery, as well as other medical services such as cancer treatment, heart surgery, etc.

That is when you will see increased volume in your businesses, that is when you will see increase numbers of patients, that is when medical travel will become possible for anyone who wants it, not just the well-to-do and those who want to look good.

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I am willing to work with any broker, carrier, or employer interested in saving money on expensive surgeries, and to provide the best care for their injured workers or their client’s employees.

Call me for more information, next steps, or connection strategies at (561) 738-0458 or (561) 603-1685, cell. Email me at: richard_krasner@hotmail.com. Ask me any questions you may have on how to save money on expensive surgeries under workers’ comp. Connect with me on LinkedIn and follow my blog at: richardkrasner.wordpress.com. Share this article, or leave a comment below.

 

Nickel and Dimed: Hospital Edition

Last week while I was drinking Indio and Dos Equis, Anthony Cirillo, president of Fast Forward Consulting, which specializes in experience management and strategic marketing for healthcare facilities wrote an article in Hospital Impact entitled, “Much like airlines, hospitals nickel and dime patients”, in which he says that hospitals have learned from the airline industry how to nickel and dime patients by making up reimbursement cuts by creatively finding ways to charge extra and often hidden fees.

Mr. Cirillo cites two articles in The New York Times by Elizabeth Rosenthal. The first article, “After Surgery, Surprise $117,000 Medical Bill From Doctor He Didn’t Know”, mentioned that a patient received a bill from an assistant surgeon he did not know was on his case. The bill was $117,000. The primary surgeon was reimbursed for $6,200, but the assistant surgeon billed for, and was reimbursed for the $117,000.

The second article, “As Insurers Try to Limit Costs, Providers Hit Patients With More Separate Fees”, discussed how providers are billing patients for separate fees such as a $1,400 emergency room fee, which the insurer paid , when a husband and wife went to a hospital for a scheduled induction of labor for their second child, and a $2,457 fee for “noncritical activation” of the trauma team in addition to the hospital’s $240 facility fee, after a woman drove her stepdaughter to an emergency room after a bicycle crash.

Cirillo said that patients do have options and choice when it comes to their healthcare. They can choose between local competitors, go cross-county, cross-state, out of state and out of country. Medical tourism continues to grow and with the increasing number of Joint Commission International accredited hospitals, employers are actively choosing to send people overseas.

This option, as I have been saying now for two years, should also apply to workers’ comp. Anyone who thinks that hospitals will not try to stick it to employers and comp carriers for their injured workers’ medical bills is sadly mistaken, fee schedule or no fee schedule.

Employers who are self-insured or who are in a state that allows them to opt-out of the statutory system, are vulnerable to this adding on of fees to the total hospital bill, on top of what the surgeon charges for the actual operation, much the same way patients in the two articles by Ms. Rosenthal were.

When the bill came from the hospital in which my father passed away in, the total bill was over $200,000. I looked through it to see if there were any charges that did not seem right, but could not find anything out of place. With his health insurance paying the majority of the bill, our portion was still over $900.

Cirillo also stated that as high-deductible plans become the norm, these fees impact consumers directly and then cause health premiums to rise in tandem. Sure, he states, there are legitimate fees typically not reimbursed, but then there are the wink and the nod fees that have become so commonplace that they fade into the background and people are numb to them just like the airline charges.

Some employers have high-deductible workers’ comp policies, and it would be incumbent on them and their brokers to explore alternatives to extra and added-on hospital bill fees, and as Mr. Cirillo said, medical tourism can be one such alternative.