Medical Care Provided Under California's Workers' Compensation Program

Since 2004, significant changes have been made to the California workers' compensation (WC) system. The Commission on Health and Safety and Workers' Compensation (CHSWC) asked the RAND Corporation to examine the impact that these changes have on the medical care provided to injured workers. This monograph synthesizes findings from interviews and available information regarding the implementation of the changes affecting WC medical care and identifies areas in which additional changes might increase the quality and efficiency of care delivered under the WC system. To improve incentives for efficiently providing medically appropriate care, California should revise its fee schedule allowances for services provided by hospitals to inpatients, freestanding ambulatory surgery centers, and physicians, create nonmonetary incentives for providing medically appropriate care in the medical provider network (MPN) context through more-selective contracting with providers and reducing medical review requirements for high-performing physicians; reduce incentives for inappropriate prescribing practices by curtailing in-office physician dispensing; and implement pharmacy benefit network regulations. To increase accountability for performance, California should revise the MPN certification process to place accountability for meeting MPN standards on the entity contracting with the physician network; strengthen Division of Workers' Compensation (DWC) authorities to provide intermediate sanctions for failure to comply with MPN requirements; and modify the Labor Code to remove payers and MPNs from the definition of individually identifiable data so that performance on key measures can be publicly available. To facilitate monitoring and oversight, California should provide DWC with more flexibility to add needed data elements to medical data reporting and provide penalties for a claim administrator failing to comply with the data-reporting requirements; require that medical cost-containment expenses be reported by category of cost; compile information on the types of medical services that are subject to UR denials and expedited hearings; and expand ongoing monitoring of system performance. Finally, to increase administrative efficiency, California should use an external medical review organization to review medical-necessity determinations, and it should explore best practices of other WC programs and health programs in carrying out medical cost-containment activities.