Physician Reporting Requirements for Injured Workers in California

A Review of Reporting Processes and Payment Policies

by Denise D. Quigley, Molly Waymouth, Barbara O. Wynn

This Article

RAND Health Quarterly, 2018; 7(4):5

Abstract

California's workers' compensation (WC) program provides medical care and wage-replacement benefits to workers who suffer on-the-job injuries and illnesses. Individuals who are injured on the job are entitled to receive the medical care they need to relieve the effects of their injury with no deductibles or copayments. Physicians who treat and provide care to injured workers are required to file reports with the WC payer that address the worker's treatment, medical progress, and work-related issues. California's Division of Workers' Compensation (DWC) asked the RAND Corporation to review the reporting process and pricing structure of the WC-required reports to ensure that the policies are consistent with efficient program administration. This study provides a framework for understanding the current processes for filing WC-required reports in California and establishes a baseline for comparison with other state systems. The objective of this study is to provide an assessment of WC-required reports, including the structure and content, level of effort, and allowances, and to compare the elements and processes with other systems to inform potential improvements and further refinements to California's reporting requirements and policies. The study should be of general interest to stakeholders in California's WC system and in other WC programs.

For more information, see RAND RR-1406-DIR at https://www.rand.org/pubs/research_reports/RR1406.html

Full Text

California's workers' compensation (WC) program provides medical care and wage-replacement benefits to workers who suffer on-the-job injuries and illnesses. Injured workers are entitled to receive all medical care reasonably required to cure or relieve the effects of their injury with no deductibles or copayments. Physicians caring for injured workers are required to file reports with the WC payer (insurer or self-insured employer) that address the employee's treatment, medical progress, and work-related issues. California's Division of Workers' Compensation (DWC) asked RAND to review the reporting process and the pricing structure of the WC-required reports to ensure that the policies are consistent with efficient program administration.

Project Objectives and Methods

Our review and assessment of WC-required reports had several objectives:

  • To characterize the current processes for filing WC-required reports in California. This included the level of effort involved, timelines, and allowances for the various reports.
  • To compare the reporting requirements and processes in California to those of other populous states. This part of the study was designed to analyze how California's required reports differ from those of other states and assess whether other state systems could inform potential improvements to California's reporting requirements and payment policies.
  • To identify attributes of high-quality reports, as perceived by physicians and users of WC-required reports. Characteristics of quality reporting could help to identify needs for further refinement and circumstances under which reporting can be most effective.
  • To identify reporting and payment issues and explore potential opportunities for improvement in policies related to WC-required reports.

The research team conducted three main tasks to evaluate the California WC-required reports. We first conducted an environmental scan of the 20 most populous states' WC-required reports (other than California) and compared them to California's along several dimensions: intended purpose, reporting requirements (by whom, when, and to whom), filing processes (format, mode, and deadlines), data elements, and fee schedule policy. The environmental scan included informal interviews with WC agency staff in other states to confirm our findings. Second, we conducted exploratory semistructured interviews with physicians and users of WC reports in California to validate the gathered information on the processing and filing of reports, to uncover any inconsistencies or areas of confusion, and to understand the issues with each of the WC-required reports. We followed our exploratory interviews with a set of discussions with physicians and users to review and better understand what we had learned about each of the reports and discussed potential options for improvement. Third, we compared the allowances for the WC-required reports under the Official Medical Fee Schedule (OMFS) with the allowances for other services that require comparable physician activities and estimated the impact of any changes in the fee schedule allowances on medical expenditures.

Our research was completed prior to the enactment of Senate Bill (SB) 1160 (Mendoza) on September 30, 2016. This legislation amended the Labor Code to require that the Doctor's First Report of Occupational Injury or Illness (DFR) be filed electronically with DWC. In addition, the Labor Code was revised to require DWC to develop a system for electronic reporting by employers of documents related to utilization review.

Overview of Reporting Requirements

Table 1 provides an overview of California's current reporting requirements and any fee schedule allowances that have been established for each report. The reporting forms and time frames are applicable unless the payer and provider mutually agree to an alternative format or time frame. Similarly, the fee schedule allowances apply unless the payer and provider contractually agree to a different amount.

Table 1. Summary of California Reporting Requirements, Frequency, and Fee Schedule Amount

Report Name Timeline Frequency 2016 Allowance
Doctor's First Report of Occupational Injury or Illness (DFR) Required within 5 days after initial examination of the injured worker One-time requirement No separate allowance
Primary Treating Physician's Progress Report (PR-2) Required every 45 days or more frequently Multiple; every 45 days or more frequently when warranted Separate allowance of $12.14 per report
Request for Authorization (RFA) Required with each request for treatment Multiple; required with each request for treatment No separate allowance
Permanent and Stationary (P&S) Report (PR-3 or PR-4) Required once the injured worker's condition has become permanent and stationary One-time requirement The PR-3 and PR-4 are separately payable with a maximum allowable amount of $39.42 for the first page, and $24.25 for each additional page. The PR-3 and PR-4 are limited to six and seven pages, respectively, unless the payer and provider agree to a longer report.
Physician's Return-to-Work (RTW) and Voucher Report Required once the injured worker's condition has become permanent and stationary, and due within 20 days of patient's last examination One-time requirement No separate allowance

Potential Improvements in Physician Reporting Requirements

The reports required from physicians treating injured workers are intended to facilitate claims management in both managing the patient's medical care and monitoring the patient's progression toward maximal medical improvement and return to work. Within this overall framework, the reporting requirements should be designed to provide information needed for claims management and care coordination while imposing minimal administrative burden on treating physicians. The reporting cycle and data elements should be evaluated based on whether they add value to the claims management process. The fee schedule should account for reporting burden that is not otherwise incorporated into the allowance for the related medical care, and any separate allowances should be designed to encourage high-quality reporting in a timely manner.

We identified three overarching refinement objectives during our evaluation of the individual WC-required reports: reduce administrative burden, facilitate care coordination, and align fee schedule policies with reporting objectives. We found opportunities for improvement in each area. After reviewing potential options, we recommend that DWC consider the following policy refinements to further these objectives:

To reduce administrative burden:

  • Require a DFR only from the first primary treating physician and, if applicable, the first physician who examines the worker following a work-related incident who will not continue to treat the patient (e.g., a physician providing first aid or an emergency room physician). Eliminate the requirement that a new primary treating physician file a DFR. We found that additional DFRs did not add value to the claims management process.
  • Combine the PR-2 and the RFA into a single form that clearly indicates when treatment authorization is being requested. There are redundancies and duplication of effort that could be eliminated with a single form.
  • Eliminate the redundancies between the P&S report and the RTW and Voucher report. The reports are filed together but contain overlapping information on the worker's functional status.
  • Investigate whether to require electronic reporting for all WC-required reports and related documentation. This recommendation expands on the SB 1160 provisions because it would include all medical reports that the physician is required to submit to the claims administrator. Electronic transmission should improve the efficiency of the utilization review and claims management processes and provide opportunities for enhanced care coordination between primary and secondary treating physicians.1

To facilitate care coordination:

  • Clarify that secondary treating physicians should submit RFAs for proposed treatment related to their services but that the primary treating physician should be copied on the requests. With electronic submissions, this could be done without additional administrative burden.
  • Develop an abbreviated, combined PR-2/RFA for secondary physicians to use when requesting or modifying treatment that would be filed directly with the claims administrator with a copy to the primary treating physician. This would enable the primary treating physician to engage with the secondary physician as needed and reduce the burden on the primary treating physician in compiling progress reports.

To align fee schedule policies with reporting objectives:

  • Pay for a fully completed DFR filed timely by the first primary treating physician at the same rate as the PR-2. The estimated impact on annual medical expenditures at 2017 PR-2 allowances would be $8.2 million, but if the PR-2 allowance were increased, the impact would be proportionately higher. The DFR is a WC-specific report that requires at least as much effort as the PR-2, which is separately payable.
  • Increase the allowance for a fully completed PR-2 filed by a primary treating physician to be comparable with resource-based relative value system (RBRVS) allowances for similar services (approximately $30 per report). Full compliance with the reporting requirements would increase annual expenditures for the PR-2 by approximately $40 million. The actual impact depends on the completeness of current reports, the rate of improvement in report completeness, and the administrative savings from receiving timely and complete progress reports.
  • Consider restructuring the allowance for a P&S report:
    • Establish a combined allowance for the P&S evaluation, any related prolonged services, and the report that accounts for differences in case complexity. The evaluation and report are integrally related, and some activities, such as extensive medical record review and determination of the impairment level, could be performed either as part of the evaluation or in completing the report. Because there is ambiguity concerning how much record review is already accounted for in the OMFS allowances for the evaluation and report, the separate allowance for prolonged services creates the potential for duplicate payments.
    • After the medical-legal fee schedule has been evaluated for reasonableness in relation to RBRVS allowances, use the findings to determine a reasonable allowance for the primary treating physician's impairment evaluation and report. The combined allowances for the P&S evaluation and report are undervalued in relation to similar services paid under the RBRVS and substantially lower than the allowances under the medical-legal fee schedule.
    • Give the primary treating physician the option of not evaluating the impairment level and completing the P&S report. Incomplete or inaccurate reports submitted by a physician who either has little experience with the American Medical Association (AMA) guides or little inclination to prepare a high-quality report do not add value and slow claim closure, and the requirement for the P&S report may deter physicians from becoming primary treating physicians for injured workers.
  • Use the allowance for the DFR and any increases in the allowances for other reports to incentivize timely electronic submissions of high-quality WC-required reports.

If implemented, our recommendations will result in substantial increases in expenditures for WC-required reports. However, if the allowance for the DFR and any increases in the allowances for other reports are used to incentivize the timely filing of high-quality WC-required reports, there will be savings from greater efficiencies in the claims management process. In addition, eliminating unnecessary administrative burden on providers, providing a choice regarding the completion of the P&S report, and establishing reasonable allowances that recognize the effort involved in filing the WC-required reports may encourage more physicians to treat California's injured workers.

References

California Senate Bill 1160 (Mendoza), Workers' Compensation, 2016. As of February 1, 2017:
http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201520160SB1160

Note

  • 1 For the purposes of this study, electronic submissions include any of the following modes: online reporting system submission, uploaded PDF submission, and printed, scanned, or emailed submission. Consistent with the Health Insurance Portability and Accountability Act of 1996 (HIPAA) definition of electronic transmissions, it does not include transmission of a paper form via facsimile.

The research described in this article was prepared for the Department of Industrial Relations and conducted by the Justice Policy Program within RAND Justice, Infrastructure, and Environment.

RAND Health Quarterly is produced by the RAND Corporation. ISSN 2162-8254.