Qualified Medical Evaluators and the Medical-Legal Process in California Workers' Compensation

Background and Purpose

In California, Qualified Medical Evaluators (QMEs)—physicians who have been certified by the California Division of Workers' Compensation to assess and write reports on injured workers—play a critical role in resolving workers' compensation disputes. QMEs evaluate injured workers and write reports to address Medical-Legal (Med-Legal) questions to help resolve the cases. The California Division of Workers' Compensation in the Department of Industrial Relations (DIR) is responsible for the appointment and reappointment of QMEs and for administering the process through which QMEs are assigned to cases.

California DIR contracted with RAND to better understand whether the Med-Legal process is meeting its purpose, whether it is sustainable, and how it could be improved, with a focus on the role of QMEs in the Med-Legal process. Specifically, this study addresses ten high-level research questions:

1. Is there a mismatch between the supply and demand of QMEs across specialties and geographic areas?
2. What is the best way to recruit and retain QMEs?
3. How have recent changes to the QME reimbursement structure impacted overall costs to the workers' compensation system, and should additional changes be considered?
4. What have been the impacts of structural changes to QME selection, and should additional changes be considered?
5. How can medical record delivery to QMEs be improved?
6. How has the quality of Med-Legal reports changed since 2012, and what is the best way to ensure the quality of QME reports?
7. Are the time frames built into the QME process appropriate and being met?
8. Are remote telehealth/remote health evaluations being used appropriately, and should any changes regulating their use be considered?
9. How have litigation practices in the Med-Legal system changed since 2012?
10. What role have medical management companies (MMCs) played in the Med-Legal process?

Methods

To answer the above research questions, we used both qualitative and quantitative methods. Our qualitative analyses included a review of related policies from other states; interviews with applicants' attorneys, defense, employer, or insurance representatives; MMC representatives; injured workers; and representatives from other states' workers' compensation agencies. We also conducted focus groups with active and former QMEs. Our quantitative analyses included an analysis of data sources maintained by California DIR, including data on QMEs and panel assignments, all-payer workers' compensation claims data, and case status data.

Results

A summary of our review of state policies from 17 other states is shown in Table 1. This review focused on the role that independent medical examinations (IMEs) or similar types of Med-Legal evaluations play in resolving Med-Legal workers' compensation disputes in other states. Overall, we found substantial variation in the role that state workers' compensation agencies play in Med-Legal evaluations in their states. Of the states we reviewed, there were no other states that used the exact same system that California does. However, like California, some state workers' compensation agencies took a more active role in aspects of the Med-Legal process, such as evaluator selection, accreditation, discipline, and quality review. Also like California, some states set evaluation rates according to a state fee schedule and required employers or payers to pay for evaluations. We spoke with two of these states—Colorado and Texas—as part of our qualitative interviews.

Feature of IME and Related Processes	Applicable States
Requestor selects evaluator	FL, GA, HI, MD, NC, NV, NM, NY
Only defense can select evaluator	AZ, IL, MI, NJ, OH
State workers' compensation agency can select evaluator in some circumstances	CO, FL, GA, HI, NV, NM, NY, OH, PA, TX, WA
State-specific accreditation requirements for some types of evaluators	CO, FL, NM, NV, NY, OH, PA, TX, WA
State workers' compensation agency has role in evaluator discipline	CO, FL, NV, NY, OH, TX, WA
State workers' compensation agency has explicit role in reviewing and enforcing rating or report quality	CO, NV, OH, TX
Employer or payer must typically pay for evaluations (with limited exceptions)	AZ, FL, GA, MI, NC, NJ, NM, NV, OH, PA, TX, WA
Evaluation rates set by a state fee schedule (as opposed to agreed upon by parties)	CO, GA, HI, MD, NV, NY, OH, TX, WA

SOURCE: Authors' review of workers compensation policies from 17 states: AZ, CO, FL, GA, HI, IL, MD, MI, NC, NJ, NM, NV, NY, OH, PA, TX, WA.

Select themes from our qualitative interviews corresponding with key research questions are presented in Table 2. All themes were endorsed by multiple participants, although there was a considerable diversity of perspectives.

Research Question	Summary of Select Themes
Is there a mismatch between the supply and demand of QMEs across specialties and geographic areas?	There are enough QMEs overall but not in certain specialties and geographic areas. The ten-office limit made QME selection fairer but may have decreased access.
What is the best way to recruit and retain QMEs?	QMEs appreciate the intellectual stimulation, extra income, and flexibility of the job. Reasons for leaving the QME system include time pressures, delays in payment, and frustrations with medical record delivery and prohibition on commenting on treatment.
How have recent changes to the QME reimbursement structure impacted overall costs to the workers' compensation system and should additional changes be considered?	Overall, 2021 fee schedule changes increased Med-Legal payments and attracted new QMEs. Participants prioritized adding a cost-of-living adjustment to the fee schedule. The simplification of the fee schedule was easier to navigate and reduced gaming but may also encourage poor work and be difficult for new QMEs who take longer to write reports.
What have been the impacts of structural changes to QME selection, and should additional changes be considered?	It is difficult to create a fair process for selecting a specialty. The removal of the neuropsychology specialty has led to difficulties. The current panel system has advantages over the “dueling QME system.”
How can medical record delivery to QMEs be improved?	Medical records should be available prior to the evaluation, but requiring this could cause further delays. Determining the relevance of medical records to deliver is complex; better organization and removal of duplicate records would be beneficial. A central electronic repository could improve record delivery, but privacy and logistical concerns remain.
How has the quality of Med-Legal reports changed since 2012, and what is the best way to ensure the quality of QME reports?	The Med-Legal system has not provided enough opportunities for feedback on QME reports, but this might be improved by recent changes. QMEs need more practical experience as part of their education. QMEs would appreciate more opportunities for mentorship.
Are the time frames built into the QME process appropriate and being met?	Requesting multiple panels adds to overall timeline. The time frames for QMEs to schedule appointments is too long. Extra time for writing reports with many medical records would be helpful.
Are remote telehealth or remote health evaluations being used appropriately, and should any changes regulating their use be considered?	Telehealth could be appropriate for psychiatry and other mental health evaluations. Telehealth offers flexibility when parties agree to use it.
How have litigation practices in the Med-Legal system changed since 2012?	Litigation has gotten more contentious in recent years. Use of multiple panels leads to additional litigation.
What role have MMCs played in the Med-Legal process?	MMCs are helpful with administrative tasks. Some MMCs provide mentorship and help recruit QMEs. The quality of MMCs is variable.

SOURCE: Authors' qualitative analysis of 27 interviews and 6 focus groups.

We conducted several quantitative analyses to understand how the demand for QME panel evaluations and the supply of QMEs have changed over time and differ by geographic region and specialty. We found that the number of panel assignments has increased steadily over time with the exception of 2013, when evaluations commenting on medical treatment were moved to a separate process, and in 2020–2021 during the coronavirus disease 2019 (COVID-19) public health emergency (Figure 1).

This is a line chart with dual y-axes spanning 2012 to 2024. The left axis shows total panel assignments increasing from 117,513 in 2012 to 176,379 in 2024 (with a range from approximately 80,000 to 176,000). Panel assignments show an overall upward trend with dips in 2013 and 2020–2021, recovering to peak at 176,379 in 2024. The right axis shows total QMEs with a steady decline from 3,244 in 2012 to the lowest point of 2,480 in 2020, followed by recovery to 2,968 in 2024, demonstrating an inverse relationship between panel assignments and available QMEs.

SOURCE: RAND analysis of QME data.

NOTE: N=1,752,557 assigned panels 2012–2024, N=36,922 total QME years active representing 5,034 QMEs. Year refers to the year that the panel was assigned or year during which a QME had an active office for at least part of the year.

To understand whether the supply of QMEs was keeping pace with the demand, we examined the number of QMEs and QME offices (currently, QMEs may have offices in up to ten locations in California) by specialty and geographic location. Overall, we found that the number of offices dropped sharply following the 2013 legislative change limiting QMEs to ten offices. The number of QMEs and offices began to increase gradually from 2013 to 2016, then gradually decreased from 2016 to 2020. Concerns about the decreasing supply of QMEs and increasing demand for panels contributed to a 2021 fee schedule change, designed in part to raise QME reimbursement rates and attract more QMEs to the system. We observed marked increases in the number of QMEs and QME offices following the 2021 fee schedule change, although we noted that these increases were seen primarily in metropolitan counties (Figure 2). We also noted that, even with the overall increase in QMEs, there were still not enough QMEs to field panels in certain subspecialties, such as oncology.

This line chart spanning 2012 to 2024 shows QME offices per 100 panel assignments. Metro counties start at 13.7 in 2012, decline to 8.7 in 2019, and rise to 11.8 in 2024. Rural counties start at 3.4 in 2012 and decline to 1.5 in 2024. The gap between metro and rural access widens over time, with metro counties consistently maintaining 6–10 times more QME office availability than rural counties.

SOURCE: RAND analysis of QME data.

We also conducted several analyses examining the timeliness of the Med-Legal process over time. In general, we noted modest improvements in the time to complete some types of processes, such as time from panel request to panel assignment and time from panel assignment to QME exam date, in recent years. For example, Table 3 shows the time from panel assignment to QME exam date. While there is a decrease in average time to exam date from 2016 to 2023 (in part because the amount of time for which we can observe cases decreases in later years), the time to exam date remains high: 118 days in 2023. The percentage of exam dates occurring within 90 days remains fairly consistent over time, although there is a small decrease in 2020. However, we observe improvements in the percentage of exams occurring in less than 365 days (from 39.0 percent in 2016 to 53.7 percent in 2023). For context, up until 2020, appointments were supposed to be scheduled within 60 to 90 days of panel assignment; otherwise, the party requesting the panel could request a replacement panel or the parties could agree to a timeline extension. In 2020, this time frame was changed to 90 to 120 days under an emergency COVID-19 regulation, and this change was made permanent in 2023.

Report Year	Average Duration	% Within 90 Days	% Between 91-365 Days	% Over 1 Year	% With No QME Exam from Panel	N
2016	150	22.9%	16.1%	3.3%	57.7%	51,231
2017	138	25.2%	17.7%	2.8%	54.3%	58,922
2018	126	26.0%	18.7%	2.2%	53.2%	66,201
2019	132	25.3%	19.1%	2.5%	53.1%	70,008
2020	139	20.7%	27.3%	2.3%	49.8%	67,569
2021	131	23.4%	28.3%	2.3%	46.0%	63,063
2022	125	23.9%	28.2%	2.0%	45.9%	64,411
2023	118	22.4%	31.3%	0.9%	45.4%	67,747

SOURCE: RAND analysis of linked QME-Workers' Compensation Information System (WCIS) data.

NOTE: Durations reflect time elapsed between panel assignment and completed QME exam for panels issued from 2016 to 2023. N refers to the number of panels in each year. “No QME Exam from Panel” includes records where no matching QME identifier was found or where a match existed, but the exam occurred outside the panel assignment window (i.e., before the exam or after a subsequent panel assignment).

Figure 3 shows total Med-Legal payments by type of service from 2017 to 2023 to look at overall trends in payments, including following the 2021 fee schedule change that replaced time and complexity payments for QME evaluations with a flat fee, a two-time multiplier for psychiatric and psychologic evaluations, and a $3 per page fee for review of medical records over 200 pages. We found that the 2022–2023 Med-Legal payment average was 57 percent higher than the 2016–2020 average, more than double the 25-percent increase set as a target when the regulations were adopted.

Area chart displaying med-legal payment amounts across five service categories from 2017 to 2023. Comprehensive services remain the highest category, ranging from $234 million (2017) to $268 million (2023). Per-record review shows significant growth from $105 million (2017) to $161 million (2023). Supplemental services fluctuate between $54 and $76 million, peaking in 2020. Follow-up services increase notably from $17 million (2017) to $50 million (2023). Other services (deposition, no-show, sub rosa) represent the smallest category, growing from $4 million to $14 million. Total payments show upward trend across most categories.

SOURCE: RAND analysis of WCIS data.

Recommendations and Considerations

Based on our quantitative and qualitative analyses, we provide several high-level recommendations to improve the QME system (Table 4). Along with each high-level recommendation, we suggest specific actions that could be considered and note whether the action, if pursued, would require a legislative change, a regulatory change, or an administrative or other type of change. We also note some areas in which future data collection, analysis, or monitoring may be warranted.

High-Level Recommendation	Action for Consideration	Type of Change
Increase the number of QMEs with specific characteristics	Increase recruitment efforts from under-represented specialties and in rural areas	Administrative/Other
Increase the number of QMEs with specific characteristics	Include fee schedule modifiers for examinations in rural areas or for under-represented specialties	Regulatory
Increase the number of QMEs with specific characteristics	Allow some number of offices beyond the ten-office limit for offices in rural areas	Legislative
Increase flexibility in QME workload	Allow QMEs to set a maximum number of panels per month	Regulatory
Increase flexibility in QME workload	Add additional time for report writing for cases with large numbers of medical records	Legislative
Reduce time to payment for QME services	Increase enforcement of payment deadlines for QME services	Judicial
Improve record delivery	Require medical record delivery prior to QME evaluation	Regulatory
Improve record delivery	Investigate ways to improve record delivery, including use of a central electronic repository	Monitoring/Further Investigation
Allow reasonable use of telehealth	Maintain current telehealth flexibilities while monitoring report quality and disputes over use of telehealth	Monitoring/Further Investigation
Ensure adequate compensation to recruit and retain QMEs	Monitor average QME payments relative to the Medicare Economic Index and consider adding a cost-of-living adjustment to fee schedule	Monitoring/Further Investigation
Ensure adequate compensation to recruit and retain QMEs	Evaluate and reconsider modifiers for psychiatric and psychological evaluations	Monitoring/Further Investigation
Monitor changes in payment for Med-Legal reports	Monitor rates of supplemental and follow-up reports	Monitoring/Further Investigation
Provide more formal and informal mentorship opportunities	Pair new and experienced QMEs through a voluntary mentorship program	Administrative/Other
Emphasize practical experience in training courses	Evaluate and build upon recent regulatory changes, such as those that emphasize report writing or assessing example reports in training courses	Monitoring/Further Investigation
Provide earlier and more targeted feedback to QMEs	Evaluate the impacts of recent regulatory changes to increase review of Med-Legal reports for quality and consider expanding feedback on QMEs' first reports and to QMEs who are flagged as needing additional help using objective criteria	Administrative/Other
Reduce time-to-case resolution	Give unrepresented injured workers the option of requesting a panel online	Regulatory
Collect additional data to monitor and improve quality	Collect data on role of MMCs in the Med-Legal system	Administrative/Other or Legislative
Collect additional data to monitor and improve quality	Collect data on medical record delivery and completeness	Administrative/Other or Regulatory
Collect additional data to monitor and improve quality	Include additional information for linkage to WCIS/Electronic Adjudication Management System	Regulatory