California HR, Uncategorized

Provider Fraud, Treatment Delays Targeted in New California Workers’ Comp Laws

In California, a worker can seek treatment for a work-related illness or injury that’s expected to be covered under the employer’s workers’ compensation policy. To be paid for services performed for claims that aren’t yet finalized, the healthcare provider can file a lien (a claim for payment) against the employee’s workers’ compensation benefits claim. Unfortunately, many such liens are filed by providers that have committed fraud under workers’ compensation or other programs.

In August 2015, the Division of Industrial Relations (DIR) announced that fully 17% of all liens filed between 2011 and 2015 against injured employees’ claims for workers’ compensation benefits—that’s $600 million worth of liens—were filed by parties already convicted or under indictment for fraud under the workers’ compensation system, Medi-Cal, or Medicare.

Payments of lien claims are allowed only by order of the Worker’s Compensation Appeals Board (WCAB), and claims found to be illegitimate by the WCAB must be reviewed and denied. Denied claims, delayed payment, and system backlogs often result in delays in treatment for ill or injured workers and increased costs for employers.

The California Legislature has been working for several years on legislation intended to reduce treatment delays for workers and to address issues of provider fraud and illegitimate liens. In late 2016, two new bills were enacted in an attempt to address these issues.

Ongoing Reforms

Healthcare providers in California can file lien claims for reasonable expenses incurred by or on behalf of an injured employee for reasonable medical treatment, except in the case of medical treatment disputes subject to independent medical review or independent bill review.

In 2012, the legislature took one step toward reducing the number of such lien claims and resulting lien claims litigation when it passed SB 863. That bill required providers filing liens for reasonable medical expenses incurred by the injured employee to pay a filing fee of $150, beginning with claims filed on or after January 1, 2013.

One of the new bills signed late last year, AB 1244, is designed to further reduce illegitimate lien claims by disqualifying fraudulent providers. It requires medical providers that are found to have committed a misdemeanor or felony involving fraud or abuse of the workers’ compensation system, Medi-Cal, or Medicare to be suspended from further participation in the workers’ compensation program.

Under current law, medical providers can be removed from the qualified medical examiner list, but no other suspension process exists. As a result, some medical providers with fraud convictions under Medi-Cal and Medicare were still able to pursue reimbursement of medical bills and liens under the workers’ compensation program.

The second bill, SB 1160, is far more extensive. It’s intended to expedite treatment for workers in the first 30 days following a work-related injury by reforming the utilization review process that’s used to contest care for injured workers.

Among other provisions, SB 1160:

  • Sets forth the medical treatment services that would be subject to prospective utilization review;
  • Authorizes retrospective utilization review for treatment provided under these provisions under limited circumstances;
  • Establishes procedures for prospective and retrospective utilization reviews; and
  • Sets forth provisions for removal of a physician or provider.

It also mandates electronic reporting of utilization review data by claims administrators to the Division of Workers’ Compensation (DWC), which is intended to enable the Division to monitor claim processes and address problems.

To reduce fraud, SB 1160 includes requirements intended to ensure that:

  • Liens are legitimate;
  • Liens are filed only by the lien holder; and
  • Liens owned by providers that have been indicted or charged with crimes are stayed until criminal proceedings are complete.

Beginning January 1, 2017, lien filers will be required to file a declaration affirming eligibility under penalty of perjury. Liens filed without the declaration will be dismissed. The DWC will modify its Electronic Adjudication Management System (EAMS)—which requires lien filers to pay a fee—to disallow any liens not meeting requirements.

The remaining provisions of SB 1160 will apply to injuries occurring after January 1, 2018.

Provider Concerns

Healthcare providers have expressed concerns about the new laws, in part because they’re not happy with some aspects of existing utilization review and independent medical review that aren’t reformed under the new law. Between the utilization review and independent medical review requirements and the new restrictions on liens, providers argue that it may simply become too difficult for them to be paid for care under the workers’ compensation system.

If they have no reasonable expectation of timely payment for services, providers argue, they’ll simply stop providing care to injured workers—which will increase treatment delays, rather than reducing them as the legislation claims it is intended to do. Whether their concerns are valid, only time will tell.