Now What? New Managed Care Constructs for Workers Compensation

Now What?

New Managed Care Constructs for

Workers’ Compensation

Presented by Richard B. Spohn Nossaman Guthner Knox & Elliott LLP

www.nossaman.com

CA WC System high in costs, low in actual worker benefits; Medical costs doubled in last five years

Intense legislative negotiations between stakeholders, under threat of initiative, lead to SB 899 (Poochigian)

Signed by Governor April 19th_{, most provisions took effect}

immediately

Estimates of savings of $ billions

Earlier attempts to structure managed care into comp less than successful

This time, payor/provider-driven

The New Managed Care

Opportunities and Responsibilities

Medical Provider Networks: a self-insured employer or a comp insurer may establish a provider network, or contract with an existing provider aggregation or medical group, health plan, health/disability insurer, HCO or others to be the network, from which an employee must receive care for a work-related injury, for the life of the claim. (effective 1/1/05)

Integrated Care: management and labor can “negotiate any aspect of the delivery of [work-related] medical benefits and the delivery of disability compensation to employees” who are eligible for non-occupational group health benefits through the employer. (effective 4/19/04)

The New Managed Care

Opportunities and Responsibilities

Pre-designation: an employee can pre-designate for work-related care his or her personal physician in a health plan or insurer network offered by the

employer for non-occupational care. (effective 4/19/04)

“Occupational Medicine”

“Occupational Medicine” means the diagnosis and treatment of any injury or disease arising out of and in the course of employment (from MPN regs)

Also should entail:

Determining if condition was work-caused Assessing patient’s work capabilities

Suggesting measure to prevent re-injury

Recommending ways to enable worker to return to work safely and productively

Creating an MPN

medical provider network

- med group/aggregation hcsp

Health or disability insurer hco

Taft-Hartley Fund ( = “deemed”)

K

APP

Medical Provider Networks

(new Article 2.3 of Labor Code)

Closed panel from which injured worker must be treated for life of the claim

No longer only 30-day employer treatment control

Employer or wc insurer may set up or contract for an MPN Hcsp, health/disability insurer, hco, Taft-Hartley Fund can be “deemed” MPN mpn

Medical groups or aggregations could contract to be an MPN mpn

DWC regulatory jurisdiction: regs in place 11/1; (see

<www.dir.ca.gov/dwc/dwcpropregs/mpnreg.htm> and FAQ site mid-November)

Some Key MPN Requirements

DWC approval or “deem”: see regs for details Ratios of “occ-med” to “non-occ-med” providers; sufficiency and accessibility, “reasonable” occ-med/25% non-occ-med

File economic profiling, continuity of care, completion of treatment standards

Treatment in accord with ACOEM guidelines or pending DWC schedule

Provider compensation: no inducements to reduce, delay or deny care or access

Some Injured Worker MPN Rights

and IMR

E-er arranges immediate medical evaluation,

employee chooses provider from MPN after first visit If diagnosis or treatment dispute between e-ee and provider, e-ee can seek two more in-network opinions

If no resolution, e-ee can appeal to an IMR panel assembled by DWC (detailed requirements); if e-ee prevails, can go outside MPN for the disputed treatment

Disputes between e-ee and e-er remain under “QME” procedures

Some MPN Regulatory

Considerations

The Capitation Issue for hcsp’s: Labor Code Section 4614(2)(a)

Adequacy of Network

MPN IMR process, ACOEM guidelines

In regulated systems, status of injured worker, MPN employer contract

Transfer of injured workers-in-treatment? Continuity of care, coming in and later out?

“Pre-designation “ out of MPN? “Pre-designation” of MPN? (see current 8 CCR §9780(h))

25% non-occ-med physicians Guidelines from DMHC or DOI?

How will regulatory agencies communicate and coordinate respective regulatory oversight?

Some MPN Operational

Considerations

How project utilization, actuarially evaluate, price? How demo cost savings?

Expand administrative infrastructure to manage How integrate WC requirements and procedures, occ-med practices and cultures?

Occ-med/non-occ-med practitioner requirements

Operational relationships with employer/comp insurer Contracting and marketing

Development of “24-hour” coverage package products

“Integrated Care”

(see amended Labor Code Section

3201.5 et seq.)

In effect

See “24-hour care” or “carve-out”

IF (1) an underlying collective bargaining agreement and (2) employees eligible for group health benefits/non-occ-med disability benefits through the employer, THEN

Labor and management can “negotiate any aspect of the

delivery of [work-related] medical benefits and the delivery of disability compensation to employees”

Different structural pre-conditions by construction or non-construction industries

Some “Integrated Care”

Regulatory Considerations

No regs likely: what does it mean? How

broad/narrow interpretation from regulators?

To what extent supercede existing requirements? What regulatory guidance will be forthcoming?

How will DMHC, DOI and DWC coordinate? See other issues raised above under MPN

Some “Integrated Care”

Operational Considerations

Since this could be “whole cloth”, who knows? See above under MPN for some

Could group/“entity” make input into the negotiations? If negotiations do produce integrated, “24-hour” care, a host of implementation issues relating to provision of occ-med and non-occ-med care

“Pre-Designation”

(see amended Labor Code Section 4600)

In effect

A restriction of previous “pre-designation” option, now favoring managed care structures

IF (1) employer offers non-occ-med group coverage and (2) employee pre-designates before an injury occurs, THEN

Employee can “pre-designate” personal primary care physician in the managed care network as provider of occ-med care

Requirements re physician, who must agree

If in an hcsp, all access, UR, medical treatment issues and dispute resolution under KK; if health or disability insurer, Insurance Code controls

Some “Pre-designation”

Regulatory Considerations

No regs required, will there be guidelines? DMHC/DOI/DWC coordination?

What features of WC law must be adhered to? Ok if primary care physician is not an occ-med provider?

Can enrollee pre-designate contracting medical group? (see current 8 CCR § 9780(h))

What DMHC/DOI filings required to respond to this enrollee option?

Some “Pre-designation”

Operational Considerations

What provider, systems and infrastructure needs? How actuarially evaluate, project utilization, price? Impact of no co-payments/deductibles

How many occ-med providers required by networks? Should plan/insurer promote this option for enrollees? How deal with (1) 7% statewide “cap” and (2)

In Sum…..

MPN applications now being received, could start

January 2, 2005 (assuming DWC approval or default) Hcsp’s and health/disability insurers today are at risk for “pre-designation” and negotiated “integrated care” “Time is Here Today”