DIR to Ratchet Up Pressure on Maximus

Published on 07/18/14 by WorkCompCentral, authored by Greg Jones  

The California Department of Industrial Relations so far has not imposed penalties − allowed by contract − against Maximus Federal Services for not issuing independent medical review decisions within regulatory timeframes, but that could change in September.

DIR Director Christine Baker said Thursday, during the California Coalition on Workers’ Compensation's annual conference, that as the agency gets its head above water after being inundated by a “tsunami” of IMR applications, it will start ratcheting up pressure on its contractor to issue timely decisions.

Regulations adopted by the department require regular IMR decisions to be issued within 45 days. Through April, however, it was taking Maximus an average of 81 days to issue decisions. While the contract with Maximus contains provisions allowing the department to impose penalties based on the percentage of untimely decisions, the DIR has not yet enforced those provisions.

Baker said both the department and Maximus were caught off-guard by the sudden surge in IMR requests last summer. The volume of applications has remained three to four times higher than expected since then.

Maximus received 4,410 IMR applications in July 2013, after the new administrative process to resolve medical treatment disputes was opened to all dates of injury.

Baker said that number was representative of the volume the agency was expecting. But last August, the number of IMR requests jumped to 15,731 and stayed around that level for the rest of the year.

Baker said approximately 45% of the 133,677 IMR applications received through April – about 60,155 – were ineligible for review, and the process of reviewing these applications to determine eligibility contributed to the delays in issuing decisions.

While IMR applications are sent directly to Reston, Virginia-based Maximus, the organization can accept only applications that are obviously eligible for review and has to forward requests where eligibility is at question to the DIR.

Baker said the department's slow response in reviewing the IMR applications that were forwarded to it contributed to the untimely decisions, so it hasn’t imposed any penalties.

“We can’t whack them for something we did,” she said.

The current contract with Maximus, which expires at the end of the year, authorizes penalties based on the percentage of late decisions issued each month. Maximus must pay into the Workers’ Compensation Administrative Revolving Fund 10% of all fees collected in any month in which fewer than 90% of decisions are timely issued. The company must pay 20% of fees from a month in which fewer than 80% of decisions were timely, and 30% of fees for a month in which fewer than 70% of decisions were timely.

Additionally, if a review of any three-month period finds fewer than 95% of decisions are timely, the contractor must pay into the revolving fund 10% of all fees collected in the third month of that period.

That same penalty language is in a proposed contract that the division has said it intends to award Maximus for IMR services through the end of 2018, with an option to extend the deal until the end of 2020. However, a competing vendor, Peer Review, has filed a protest to the department's decision to renew Maximus' contract. The Department of General Services has until the end of August to issue a decision on Peer Review's claims that DIR improperly scored its proposal for the contract.

Baker said injured workers and their advocates are also contributing to IMR delays by sending incomplete applications – for example, not including a copy of the UR decision as required by regulation. She said the department has had to send “drastic letters” to several adjusters who have not been submitting medical reports as required.

Baker also reported during Thursday's conference that nearly two-thirds of the IMR applications being sent to Maximus are for dates of injury prior to Jan. 1, 2013. But she dismissed the suggestion from Jim Butler, president of the California Applicants' Attorneys Association, and Alan Gurvey, managing partner of the applicant-oriented Law Firm of Rowen, Gurvey & Win, that carriers are using the process as a way to arbitrarily cut off care on old cases.

Both Butler and Gurvey said they are seeing an increase in the number of treatment disputes stemming from carriers using utilization review and IMR to deny care on cases that have already been settled.

In one of Gurvey’s cases, a client with a brain injury was cut off from psychotherapy sessions he had been receiving for three years. The UR vendor determined that the treatment would be appropriate, but said compensability for the head injury had not been established and reduced the number of therapy sessions from 24 per year to six. On review, Maximus determined the therapy was not necessary because the client’s injury prevented him from benefiting fully from the sessions.

On Monday, Workers’ Compensation Administrative Law Judge John C. Gutierrez in Van Nuys issued a decision invalidating the UR and IMR determinations and awarding care. Gurvey suggested that it’s financially advantageous for carriers to use UR and IMR to try to get out of paying for medical care.

Baker said she doesn’t agree that carriers are abusing the review processes. She said if anything, carriers are using IMR as a tool to “call a halt to overprescribing of medications.” The large majority of the disputes in the pre-2013 cases are for narcotic painkillers and compound drugs, she said.

“So we know that a number of ongoing prescriptions that were not evidence-based, not approved by FDA, compound drugs, are being cut off,” she said. “They’re being reviewed, and some are being approved. Those that are not evidence-based are not approved.”

Baker also touched on other provisions in SB 863 that she said appear to be working as intended.

The provision that lowered ambulatory surgery center fees to 80% of the hospital outpatient reimbursement rate was projected to cut costs by 25% and to date has reduced payments by 26%.

A provision that eliminated the pass-through on spinal implants for all but seven procedures in 2013 and for all procedures beginning in 2014 has reduced the average payment per spinal fusion by 56%, Baker said. In addition to the financial savings, Baker said the elimination of the pass-through protects injured workers with reimbursement for fusions that is sufficiently profitable to ensure treatment is available without creating a financial incentive to perform unnecessary procedures.

Baker also noted that the number of new liens entering the system dropped considerably since the implementation of the $150 filing fee at the start of 2013.

The Workers’ Compensation Insurance Rating Bureau reports that about 190,000 new liens were filed in 2013, 58% fewer than the 460,000 liens filed in 2011.

David Lanier, who represented the governors' office in the SB 863 negotiations and was appointed secretary of the Labor and Workforce Development Agency in November, also spoke Thursday morning.

Lanier said Gov. Jerry Brown is aware that SB 863 is "not perfect," and in an apparent nod to decisions, such as the one from Gutierrez in Van Nuys or Dubon, a case currently being reconsidered by the Workers' Compensation Appeals Board that allows judges to order medical care when a utilization review decision is invalid, added that "we're not going to be able to control every random judge that's out there."

But Lanier said Brown is interested in “maintaining the balance sought in 863” as evidenced by the May appointment of Kathy Zalewski to the Workers’ Compensation Appeals Board. Zalewski, who was general counsel for the DIR when SB 863 was being negotiated and implemented, “will bring a very balanced view” to her role as a commissioner, he said.

Lanier said Brown was very involved in the drafting of SB 863. The governor issued a statement urging lawmakers to pass the bill and assigned Lanier to help carry the bill through the Legislature in the closing days of the 2012 session. He said that level of involvement is unusual, but also shows the governor's office is fully “invested” in the reform bill.

“I have clear charge to go out and work with all of you and Christine to support implementation,” he said.

Lanier also said the governor is reluctant to approve any changes to the system until SB 863 is fully implemented.

"It’s premature to make changes to the system other than technical adjustments or adjustments for stakeholders who helped put the deal together,” he said.

The CCWC 12th annual Conference, Legislative and Political Forum at the Disney Grand Californian in Anaheim ends today.