California Workers’ Comp Doctors Take Aim at State Fund Contract

By | July 11, 2011

A controversy in the California workers’ compensation market over a revised provider contract threatens to erupt into an all-out legal brawl as doctors for injured workers and applicants’ attorneys take aim at the state’s largest carrier.

The nonprofit State Compensation Insurance Fund, California’s carrier of last resort, has drawn intense criticism over its newly implemented medical provider network (MPN) contract.

State Fund, as the carrier is known, has stood by the recent changes, saying patients will benefit from the contract revisions, all of which it says were made following state law.

However, the California Society of Industrial Medicine and Surgery (CSIMS) and the California Applicants’ Attorneys Association (CAAA) decry the contract as fraught with legal deficiencies and ethical issues that pose harm to employees at workplaces operated by State Fund’s roughly 180,000 policyholders.

CSIMS, which represents doctors who treat workers’ compensation patients, described the State Fund MPN contract as a “heavy-handed” attempt at contract medicine.

In expressing the organization’s “grave concerns,” CSIMS Executive Vice President Carlyle Brakensiek said the contract compels doctors to restrict injured workers’ right to treatment.

The contract, formally called the SCIF MPN General Provisions and Criteria, the contract could compromise patient care and place providers at increased exposure for medical malpractice claims, Brakensiek told Insurance Journal.

Prescribing Limits

Among its controversial provisions, the State Fund MPN contract imposes limits on physicians’ prescribing abilities. The contract, for instance, requires physicians to limit prescriptions for opioid medications to 60-day supplies unless they can show cause for a prolonged regimen.

CSIMS charged that such limitations potentially run roughshod over tenets of California’s statutory Pain Patient’s Bill of Rights.

In establishing the legitimacy of opiates in the treatment of pain, California Health and Safety Code section 124960 allows physicians to prescribe opiates in a dosage deemed medically necessary, the group noted.

Physicians can be removed from the State Fund MPN for flouting the rules, the contract notes.

MPNs Target Costs

Employers and workers’ compensation carriers are allowed to create MPNs to provide all medical care for workers injured on the job, under legislation aimed at reducing workers’ compensation costs. The legislation was signed into law in 2004 by Republican Gov. Arnold Schwarzenegger (Chapter 34, Statutes of 2004).

“This is the biggest and most controversial change that we have seen since medical provider networks were authorized in the 2004 legislation,” Brakensiek said in an interview.

In mid-June, State Fund sent the contracts to doctors in its network. Under threat of expulsion, signed provider contracts were due by June 30, affording physicians about two weeks to make a decision, he said.

“We were frankly surprised that the State Fund did not give doctors more advanced notice of these revisions to their contract,” Brakensiek said. “Basically, it was a take-it-or-leave-it letter they received.”

Considering Options

The groups said they are considering administrative, legislative, and judicial remedies that might be available.

“Our Executive Committee is exploring a number of different options,” Brakensiek said, declining to elaborate on specific possible actions by CSIMS. “I am not at liberty to discuss all of their options, at this point.”

For its part, CAAA has called on the state Department of Industrial Relations, Division of Workers’ Compensation (DWC), to quash the contract revision, under their network oversight powers in Title 8, California Code of Regulations, sections 9767.1 et seq.

The CAAA has charged that the MPN contract modifications were made outside the required public rulemaking process outlined in the California Code of Regulations (8 Cal. Code Regs. § 9767.8).

State Fund Defends Contract

The workers’ compensation insurer met July 7 with state officials to discuss the insurer’s provider network, State Fund Communications Director Gina Simons said.

“Our MPN is, in fact, still in place with DWC approval,” Simons told Insurance Journal.

The contract revisions, she said, incorporated treatment guidelines from the American College of Occupational and Environmental Medicine (ACOEM) and the DWC-promulgated Medical Treatment Utilization Schedule (MTUS.)

“We also worked closely with our MPN provider partners throughout the development of those changes to the contract,” Simons noted.

San Francisco-based State Fund has generally defended the MPN contract, saying the document will “help further improve patient outcomes and ensure that injured workers receive optimal treatment,” according to Simons.

Negotiations Sought

Hoping to avoid a possible protracted battle in court or the state Legislature, CSIMS has requested a meeting with State Fund’s medical director, Dr. Bernyce Peplowski, to discuss the contract revision.

Peplowski “has expressed a willingness to meet with us,” Brakensiek said, noting that the medical director has conveyed to them that before meeting, she needs approval by the State Fund legal department.

Simons said she was aware of a possible meeting, but did not know where the matter stood with State Fund counsel.

CSIMS Letter

CSIMS outlined its objections to the contract in a June 20 letter to Peplowski and State Fund Executive Vice President Julie Jenkinson.

Signed by Brakensiek and CSIMS Director of Government Relations Stephen Cattolica, the letter said the contract threatens to impose an “improper restraint” on physicians’ obligations to provide care based on medical necessity rather than through contractual obligation.

“SCIF MPN physicians will experience unnecessary and potentially dangerous interference with the doctor-patient relationship,” Brakensiek and Cattolica wrote.

Contract Provisions

In addition to restrictions on opioid medications, the contract limits use of compound drugs and curbs doctors’ in-office dispensing of medications.

Under the contract, use of compounded drugs, including analgesic salves customized to a patient’s needs, prior-approval is required. Additionally, in-office dispensing of a medication is limited to providing a patient with no more than a 72-hour supply.

“Although SCIF has the right to establish contracts governing its MPN, it cannot adopt contractual provisions that restrict the injured worker’s right to treatment that is reasonably required to cure or relieve from the effects of the injury,” CAAA President Barry Harris Hinden wrote in a June 28 letter to DWC Chief legal Counsel Destie Overpeck.

Procedural Complaints

In outlining CAAA’s procedural complaints, Hinden said the contract changes required the filing of a Notice of MPN Plan Modification, prior to enactment.

“If SCIF has not filed a Notice of MPN Plan Modification, we urge the Division to immediately order SCIF to withdraw this material until such time as proper Notice is filed and approval is secured,” wrote Hinden, a named partner at the Law Offices of Hinden & Breslavsky in Los Angeles.

In the June 28 letter, Hinden wrote that the looming June 30 deadline for signed contracts could be problematic.

That’s because, he said, even if a small number of providers refused to sign or missed the deadline, thereby forfeiting their MPN membership, a provider change in the network greater than 10 percent would likely result, triggering a separate requirement that State Fund file a Notice of MPN Plan Modification (Cal. Code Regs. § 9767.8(a)(1)).

Topics California Legislation Workers' Compensation

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