California Senate Bill (SB) 863 (DeLeón) requires that the administrative director (AD) of the California Division of Workers’ Compensation (DWC) implement a resource-based relative value scale (RBRVS) fee schedule to establish maximum allowable amounts (MAAs) for physician and other practitioner services under the California workers’ compensation (WC) system. This report summarizes the results from our modeling of the impact of the proposed policies and selected alternative policies.

DWC maintains an Official Medical Fee Schedule (OMFS) for medical services provided under California’s WC program. The OMFS establishes the MAA for services unless the payer and provider contract for a different payment...

The primary data source for the impact analysis is the WC information system (WCIS) database maintained by DWC. The WCIS uses electronic data interchange to collect comprehensive information from claim administrators 9 to help the Department of Industrial Relations oversee the state’s WC system. Historically, the data were collected in paper form, but, starting in 2000, electronic transmission of first reports of injury (FROIs) were required. In 2006, the WCIS was expanded to include medical transmissions. Data are transmitted to DWC within 90 calendar days of the bill payment or the date of final determination that payment for billed medical...

This chapter describes our methods for cross-walking the OMFS code and related service volume and payments to CPT 2013 codes, estimating payments under the OMFS and the RBRVS, and calculating budget-neutral conversion factors.

To model the impact of moving from the current OMFS to the RBRVS fee schedule, we needed to reconcile CPT codes in both fee schedules. As we have discussed, the OMFS codes are based primarily on the 1997 CPT codes (1994 codes for physical medicine), some of which have been deleted, modified, or otherwise updated. We therefore needed to “cross-walk” the outdated OMFS CPT codes to their...

In this chapter, we provide summary descriptions of services and payments under the OMFS and how they would be priced under the RBRVS. The baseline impact analysis is presented in Chapter Five.

Our analysis file included 14 million services (exclusive of anesthesia services) provided by physicians and other practitioners in 2011 that have paid amounts greater than $0. Total payments for these and anesthesia services were $798.5 million (Figure 4.1). Services with RVUs in the OMFS for physician services account for 91.5 percent of payments, including $1.3 million billed by hospitals for professional services. Another 7.3 percent were priced as...

This chapter summarizes the impact of RBRVS implementation based on the policies in the AD’s notice of modifications to the proposed rulemaking issued August 2, 2013 (DWC, 2013b). This notice proposes to use a single statewide locality for GPCI values. Other than this policy and policies for certain WC-related reports and services, we assumed that Medicare ground rules would apply. In Chapter Six, we discuss alternative policies that might be considered in lieu of the Medicare ground rules.

Using the formula provided in Chapter Four to model allowances, we estimated the sum of the MAAs that would be payable for...

The impact analysis in Chapter Five is consistent with policies that DWC proposes to adopt (DWC, 2013b). When there are differences between the OMFS ground rules and the Medicare ground rules, the proposed policies follow the Medicare rules. Labor Code §5307.1(a)(2) provides that the OMFS shall include payment ground rules that differ from Medicare payment ground rules “including, as appropriate, consultation codes and payment for E&M services provided during a global period of surgery.” This chapter contains an analysis of potential alternative policies to the Medicare ground rules. The topics that we examine were drawn from public comments received during...

In this chapter, we discuss fee-schedule issues that are not directly related to how the prices are determined under the RBRVS. The issues include allowances for PADs, allowances for nonprofessional services provided by hospitals and ASCs that are currently covered by the OMFS for physician services, guidelines and edits for correct coding and documentation, and opportunities to introduce pay-for-performance (P4P) incentives into the fee schedule.

California WC pays for outpatient pharmaceuticals dispensed to patients, as well as pharmaceuticals administered directly to patients by physicians. PADs are injected or infused in the office setting and include low-cost generic drugs, high-cost specialty...

SB 863 requires that DWC implement an RBRVS fee schedule to establish maximum allowances for physician and other-practitioner services. The RBRVS would address major shortcomings in the current system:

The OMFS uses outdated procedure codes to describe medical services. This poses an administrative burden on providers, who must maintain a separate coding system for WC patients and increases fee disputes between providers and payers over services that are not described in the OMFS. The RBRVS would replace 983 outdated codes. The percentage of payments that would be using fee-schedule rates (rather than BR) would increase from 90 percent to...