SAN FRANCISCO – The California Supreme Court refused to consider an appeal to the concept of independent medical reviews (IMR) as part of a 2013 workers’ compensation reform push. The issue is not dead, however, as two more legal challenges await hearings.

In California, an employer can request that an employee receiving medical treatment undergo what is called a utilization review to establish that the current diagnosis and treatment is appropriate. Sometimes the utilization review issues findings contrary to the employee’s wishes.

Before the 2013 reforms, such disputes ended up in court. These days, the next step is to have an IMR conducted by an anonymous physician working for the Reston, Va.-based contractor, Maximus Federal Services Inc., review both the original treatment plan and the findings of the utilization review.

The legitimacy of the IMR has been called into question by a suit recently declined by the California Supreme Court, Frances Stevens v. Workers’ Compensation Appeals Board et al. Stevens claimed she suffered a due process violation when a 2013 IMR denied a home health aide and painkillers for a broken foot she suffered in 1997.

The California Supreme Court denied her petition. The decision also included a refusal to “depublish” the California 1st District Court of Appeals October ruling that held the IMR process to be constitutional.

For now, independent medical reviews will remain part of the California workers’ compensation system, due in large part to perceived cost savings to both the legal and medical system. In fact, the California Workers’ Compensation Insurance Rating Bureau (WCIRB) is cautiously optimistic about the IMR effect on pure premium rate recommendations.

“In addition to an average 10 percent decrease (effective) July 1, 2015, the WCIRB recently filed for an additional 5 percent decrease to be effective July 1, 2016,” Dave Bellusci, executive vice president and chief actuary of the Oakland-based California Workers’ Compensation Insurance Rating Bureau, told the Northern California Record.

WCIRB filings cited favorable trends related to the workers’ compensation reform bill as a primary factor in the lower rates.

“While we are unable to precisely identify the specific provisions driving this favorable trend, the WCIRB believes that the IMR has been a significant factor leading to the favorable medical trends and the recent reduction in pure premium rates,” Bellusci said.

Independent medical reviews uphold utilization review findings 88.6 percent of the time, according to statistics released by WCIRB.

Even though some costs seem to have gone down, others continue to increase.

“While medical costs have declined following the introduction of IMR and the other medical provisions of S.B. 863, frictional costs have continued to increase,” Bellusci said. 

Senate Bill 863, signed into law by Gov. Jerry Brown on Sept. 18, 2012, implemented sweeping changes to the California workers' compensation system, including increased injured worker benefits and a host of cost-saving measures. 

The frictional costs referenced by Bellusci can be substantial. A frictional cost is one generated by the delivery of benefits to an injured worker, but does not directly contribute to his or her treatment and recovery. Some estimates put frictional costs at 40 percent in the workers’ compensation industry.

Attorneys’ fees, rent, utilities, marketing costs, etc. are all included in frictional costs.

Does the WCIRB have suggestions for further improvements to the California system of administering workers’ compensation claims?

“The WCIRB evaluates the cost impact of legislative or regulatory change or judicial action,” Bellusci said. “We don’t make policy recommendations.”

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