California Workers’ Comp Changes Helping System, Division Chief Says

California’s workers’ compensation system has undergone numerous changes since the implementation of the sweeping reforms that started in 2013 with Senate Bill 863.

In the last few years medical provider fraud has been addressed by subsequent new laws, a plague of liens that burdened the system are being addressed, and there’s even a new drug formulary.

Not everyone likes the changes. One has no further to look than public comments on new rulemaking proposals by the Division of Workers’ Compensation, which some providers have called unfair and overly burdensome, as well as a concerning shortage of qualified medical examiners – who are an essential backbone of how workers’ comp medical reviews are dealt with in the system.

But for George Parisotto, administrative director of the DWC, the changes, the complaints, and the positives, are all part of the job. He spoke about the system and the changes with Insurance Journal. This has been edited for brevity and clarity.

Insurance Journal: I understand the division has a new pharmacy and therapeutics advisory committee that was established under a new law. Can you tell us why this committee is needed and what do you see it doing going forward?

Parisotto: Assembly Bill 1124, which was signed by the governor a couple of years ago, instructed the division to create a workers’ compensation drug formulary. Something that was new to our system. Our formulary, which went into effect at the beginning of this year, is based on our treatment guidelines that are in our medical treatment utilization schedule. These are treatment guidelines that we’ve taken from the American College of Occupational and Environmental Medicine, ACOEM that’s generally referred to, and they’re linked.

What we want to make sure is that our drug formulary is up to date and reflects the best evidence based medicine that is there. The legislation, which is in the labor code, also mandates that we have a pharmacy and therapeutics committee that will give us advice as to what is going on of evidence-based medicine, new drugs, how they are used. We at the division don’t have that type of expertise. We don’t have a lot of pharmacists on staff. We don’t have many physicians on staff to make sure that what we have is updated. We have to rely on people on the outside and I think this committee will do that. They’re going to meet. They will give us advice as to the use of medications, how they’re being used, whether or not these medications require utilization review, a whole range of different topics involving the use of pharmaceuticals in workers’ compensation.

IJ: In the last several years, there’s been some major changes to the state’s workers’ compensation system brought in by new laws like SB 863 as well as more recent laws addressing provider fraud, liens, so on and so forth. What impact is all this having on the system?

Parisotto: I think we’re making positive strides. What we want to do is make our system more efficient. We had, I think, a very cumbersome adversarial system over the last few decades. When you think about it, we always talk about California being a big system. What do we have now, the biggest economy in the world? When we have a system like this, and I assume our workers’ compensation system is also correspondingly large, to make changes it’s almost like turning a cruise ship. It takes a lot of time, and it takes a lot of effort, and it takes a lot of understanding on the part of people.

863 we introduced independent medical review. The lien system, we’ve had a filing fee, we’re now requiring a declaration to make sure that liens that are filed are valid. We’re working on provider fraud to make sure that that gets out of our system and is not clogging up our lien system also. Utilization review through (SB) 1160 and the 30 day fast-pass, or fast-track depending on where you’re at I think there’s a difference in the state. Again, we’re trying to eliminate system friction and we’re making progress there.

IJ: Can you talk about the rule making changes within the medical treatment utilization schedule? What’s going on with them? Where are you at? And why are these changes needed?

Parisotto: Again, we want to have our system reflect the best evidence make based medicine out there. SB 899, let’s turn the clock back to 2004, required us to have an MTUS, required us to have treatment guidelines. We put treatment guidelines from ACOEM into place back then and they were not changed that often. We added a chronic pain guideline, we added an opioid guideline in that last few years. What we needed to do was essentially update all of our treatment guidelines and also provide a mechanism that will allow us to update it in a much faster way.

We had rule-making at the end of last year which updated all of our treatment guidelines to the current chapters that are used by ACOEM. Also what SB 1160 did was add a provision that provided a faster route to adopt newer guidelines so we don’t have to go through the regular rulemaking process. What we have now is we have a process where, if there’s a new guideline … we send out a notice, we provide a 30-day period for written comments, we have a public hearing. We have to respond to those comments. That’s important. One thing I wanted to say is that this expedited process that we’re using now, we certainly allow public input and public comment into it. Once we have our hearing, we respond to the comments, and we can adopt those chapters. Again, we want to have a process that makes our treatment guidelines more living documents, something that can be changed just to reflect what’s going on out there.

Our new treatment guidelines went into effect in November and people need to be using that because you refer to the guidelines, you see what treatment’s recommended. That’s what makes getting treatment to injured workers faster. That’s our goal is that the treating physicians know what it is, they use it, and it goes through utilization review, and treatment can be rendered.

IJ: Some physicians have raised issues with proposed changes to billing practices. Some of these changes include limits on time, time spent doing certain functions, so on and so forth. What are you doing to address those issues?

Parisotto: We’re taking a really hard look. I believe you’re talking about our medical legal fee schedule that’s used by qualified medical evaluators (QME). We’ve been taking a really good look at that system over the past few years and saw that a lot of the provisions that we had were somewhat open to a wide interpretation and abuse in various cases. Where certain exams were being billed for various, complexity factors. It is somewhat complicated. Some people were, as I say, abusing the system. We’re taking in various interpretations. We were taking something of a hard-line interpretations. We were getting objections to that. So we want to make sure that we go back and look at that fee schedule, and make all of the terms are clear, to make sure what people know, what they should bill for, and what they should not bill for. We’re in the process of doing that.

We started an informal process. We posted new rules on our website and I believe we got more comments on that than any other informal rule making that we ever had before. Probably, I think, there were over 500 or so. We look at these comments. We take it seriously.

It raises the question to us whether we need to completely overhaul that system or not and that’s kind of where we’re at at this point. We’re taking a look to see whether we need to actually take a step back and say, “You know what, our fee schedule really needs to be overhauled, and we need to talk to more people about what will make it work and what will not make it work.” We can address issues about how do you deal with body parts, how do you deal with medical record review, what’s the appropriate way to bill for that. We’re considering our options at this point and I think maybe, more than likely, we’ll be reaching out to various stakeholders in the system to see what their suggestions are and see if we can reach a meeting of the minds as to how to move forward.

IJ: There’s been a reported drop in the state’s QME population. What’s going on, and what effect could this have, and what are you guys doing about it?

Parisotto: We want to look at how to see how we can step up our recruitment efforts. Generally we just post a notice, as a matter of fact I think we did that today, about our new exam that’s coming up. We want to reach out to various associations to help, to see what they can do to recruit. Then again, we want to look and see what will make our system easier, what will make our system better. Some QMEs told me they were leaving the system because it became too complicated. Now on the other hand, I look at records, I look at billing data that we get, and I see that some QMEs are doing exceptionally well in our system, shockingly well. If some people can make a million dollars off our system, how complicated can it be? Again, I think there’s a lot of wide ranging reasons why we’re getting a decrease in QMEs. One thing to look at is the practice of medicine in general.

One person who runs a very large medical group told me that their business model doesn’t allow for them to do QME exams. They only want their physicians to see patients for a certain amount of time and QME exams can take hours, depending on record review, on research, and what have you. I think there’s a few reasons. I’m sure our interpretation of the rules, what should and should not be billed, might have an effect. Practice of medicine and how that’s changed, I’m sure that has an effect. Workers’ compensation, some physicians do shy away from that, that has an effect.

I think it all kind of comes back into what we need to do, what can we consider to make our system better, to make it more efficient. I think once we move in that direction, I think we’ll see how our QME system is at that point. Whether it’s sustainable.