Truncated health provider networks increase insurers’ control over doctors
(Steven Miller of NPRI) – Line up all the problems with Nevada’s workers’ comp system that injured workers will tell you about, and it’s easy to begin to wonder:
Is this system really on the level?
The question haunts the Nevada Legislature this session as lawmakers consider AB187. The bill would restore to injured workers the right to select their own treating physicians — a right lawmakers took away in 1993.
Overtly, the issue before legislators is whether reversing that old decision — made as bankruptcy loomed over the profligate state industrial insurance system of that era — would have the dire consequences for Nevada’s current work comp system that insurer lobbyists prophesy today.
More veiled, however, but definitely on the minds of legislators, is the question of whether that 1993 decision has, in retrospect, had the effect of fundamentally rupturing the so-called “grand bargain” that workers’ comp traditionally has been said to embody.
That so-called “bargain” — first imposed as state law in Prussian Germany in the 1880s — spread across Europe, the U.S. and about a century ago, into Nevada.
In exchange for depriving workers of their rights to sue employers for negligent actions that had led to their injuries, the laws promised workers prompt care for all work-related injuries, as well as modest but guaranteed and timely partial wage-replacement payments.
Employers, for their part, gained a state-imposed risk-management solution — one that replaced unpredictable and possibly ruinous damage lawsuits with an obligation to insure workers against all work-related injuries regardless of cause of injury.
In virtually every session of the Nevada Legislature for the past 20 years, however, injured workers and their attorneys have appeared before lawmakers, asserting that the “bargain” imposed on workers has, in important ways and for increasing numbers of injured workers, turned exploitive.
This 2015 session is no different, as testimony for AB187’s proposal to open insurer-run work-comp medical networks to participation by any willing medical provider spotlighted the inferior quality of much of the system’s “managed” medical care.
Only some 10 percent of Nevada’s roughly 3,500 doctors are even available on those insurer-run networks, said AB187’s lead sponsor, Brent Jones, R-Clark. Citing a survey produced by the state Division of Industrial Relations (DIR), he added that, for chiropractors, the number is below seven percent.
Current law “allows industrial insurers and employers to effectively narrow down or truncate their provider list to a very, very, very narrow list of doctors,” attorney Jason Mills told lawmakers. “In fact, [the] statute currently reads: As long as they have two or more doctors in a particular area, that is sufficient.”
With insurers able to so emphatically limit the doctors on their work-comp lists, said Mills, “the problem that of course arises is that these doctors can have undue influence placed on them, number one, and number two, it excludes other … doctors throughout the state to not participate inside the system.”
A co-sponsor of the bill is Assemblywoman Robin Titus, R-Churchill/Lyon, chief of staff at the South Lyon Community Hospital. She’s also Lyon County’s chief medical officer and a family-practice doctor.
The work-comp networks’ exclusion of many medical specialists, Titus told fellow lawmakers, actually raises overall costs:
When I see [injured workers] and I want to refer them to a specialist to get that extra test, or if I want to refer them to get their MRI, or even — wisely, before I order expensive tests — it’s a lot less expensive to refer them to specialists, who then can decide, “Do we really need to get the MRI or not?” We’re talking thousands of dollars versus hundreds of dollars for the visit.
It can literally take months to get patients in to see a specialist, she said.
Another Titus concern was the poor quality of some doctors on the work-comp lists — unacquainted, in some instances, with their actual responsibilities. Even employers need protection, on occasion, from the quality of doctors to whom their employees are being sent, she suggested:
I’ve seen this happen — [for an employee to] be literally out of work for an injured finger, for nine months. That has happened, and so I questioned the person that person saw: Did they really understand that there’s other things to do, within the realm of that employment, to get that individual back to work in a timely manner?
Titus had submitted amendments to make DIR keep its overall list of qualified doctors current and also to ensure that doctors serving injured workers actually were informed about the work-comp field.
Entrusted by their employers to insurers and third-party administrators (TPAs), injured workers are too frequently placed in a Catch-22 situation, said Dr. James Overland, Sr., current president of the Nevada Chiropractic Association:
Currently, many injured employees are directed to a certain physician, a specialist or a medical facility for their care from a very limited list of providers. Generally, they have no recourse other than to comply. If they do not comply, they are very often told that their case may be in jeopardy and even closed.
Overland — on the DIR panel for permanent partial disability evaluations for 13 years — recounted a case suggesting that inferior care for injured workers has often become routine under Nevada’s work comp system:
I recently provided an evaluation on an injured worker who, after he injured his shoulder, he was taken to one of the QuickCare centers. He spent eight hours with his employer before he was seen. He subsequently had five visits, and on those five visits he saw five different medical providers. Each and every time he had to tell his story in terms of what was happening.
It was even [entered] into the records that one of the proprietors indicated that he injured his shoulder while he was working in Texas, it was dislocated and now he was back in Las Vegas for follow-up care. He never had been in Texas.
Out of these five providers, two of them were physician’s assistants, and in the course of those five visits, he was prescribed, from three of the providers, six different medications — notwithstanding the other medications he was already taking. It took approximately 38 days from the injury — and he went to QuickCare the same day he was injured — 38 days until an MRI was finally ordered. He subsequently underwent shoulder surgery for the significant tear he had. And that was an additional two months. So that took a total of almost three-and-a-half months before this individual was seen for his injury. (Emphasis added.)
Nevada’s workers’ comp system, said Overland, operates with indifference to medicine’s continuity-of-care preference. For the individual in the case he examined, he argues, the care “could have been taken care of a lot quicker” and more humanely if only a single doctor had been managing the case.
Also “wholeheartedly” supporting the bill was the Nevada State Medical Association, said its executive director, Stacy Woodbury.
Weighing in to oppose the bill was Robert Ostrovsky, lobbyist for Employers Insurance and — a client he did not mention — the Nevada Resort Association.
Allowing more doctors into the work-comp marketplace to compete, he argued, would actually increase insurer costs and so necessitate higher premiums charged by insurers to employers.
The reason, he said, was that the current set of work-comp doctors benefit from the monopolistic or cartel status that insurers guarantee them:
So if we open our networks to any willing provider — and let’s get the language on the table — that’s what this bill asks for, if we do that, it means any doctor who is not in our network, who wants to provide services can do it for the same fee, means the doctors who are in that network will no longer want to be in that network.
Those doctors, said Ostrovsky, give insurers low rates in exchange for being assured of a relatively high volume of injured-worker patients. Allow injured workers to choose their own doctors, he suggested, and many will not patronize the insurance companies’ preferred, volume-oriented providers.
“So then you revert back to the fee schedule,” he told lawmakers, and “you get a substantial increase in the costs we’re paying for that medical care, [and] that then translates into higher rates for employers.”
The AB187 legislation, however, does not “revert back” to the DIR fee schedule, which lists price caps potentially higher than those that insurers can negotiate with doctors.
Instead, it says:
…a self-insured employer, an association of self-insured public or private employers or a private carrier shall not refuse to enter into a contract with any physician or chiropractor who is listed on the panel established by the Administrator pursuant to subsection 1 of NRS 616C.090 and who is willing to accept the terms of a contract that is compliant with all applicable federal, state and local laws and substantially similar to contracts into which the employer, association or carrier, as applicable, has entered with other similarly situated physicians or chiropractors. (Emphasis added.)
Assembly Commerce & Labor Committee Chair Randy Kirner, R-Washoe, before whom Ostrovsky was testifying, brought up statements to the committee made earlier by an angry injured worker who’s been litigating his workers’ comp claims for 20-plus years. Kirner concluded by asking, “Is our system adequate or is it not adequate?”
The lobbyist, with his credibility on the line, declined to directly answer the question. Instead he opined: “I believe you can get testimony from the DIR that it is adequate.”
Ostrovsky then tried another tack: “We have to have ‘adequate’ networks that provide choice, by the standard found in [NRS] 616B.5273,” he said, after which he proceeded to read the statute aloud.
But rather than stating any standard of adequacy, the statute itself merely uses the concept repeatedly — stating that injured employees should be assured of “adequate treatment,” that injured workers should be provided “an adequate choice of providers,” and that DIR may adopt regulations to ensure “the adequacy” of an insurer’s panel of health care providers.
A check of the Nevada Administrative Code‘s industrial insurance regulations also reveals that the state specifies no definition or standard for “adequacy.”
For multiple injured workers who submitted statements to the 2015 Legislature — speaking from their own first-hand experience — Nevada’s workers’ comp system is manifestly less than adequate.
Brandon Fordin, who’d been working for UPS in Elko, reports that it took “ten months of workers compensation insurance game-playing” after a 2004 accident before “I was able to have surgery to repair my lower spine.”
But due to the indifference, he says, of the third-party administrator managing his claim — CCMSI — he has permanent and “extreme” nerve damage and must be in a pain-management program, without which he goes into back and leg spasms and is “unable to function or even sleep.”
CCMSI, he writes,
… would not approve any doctor in Elko and made me pick one of theirs in Reno. I did this and they set up the appointment. Upon arriving to my appointment the doctor told me he is not even a pain management doctor, but he could set me up with one. So after driving to Reno to their doctor I still did not have anyone to treat me. I went back to Elko to a doctor that he recommended and am currently being treated by him with me paying for this…
The extra stress that Nevada’s narrow networks impose on injured workers in the rural areas of the state was a constant theme in the AB187 testimony.
Sgt. Donald Pepper, an Elko city bike patrol officer hit by a drunk driver, wrote lawmakers that he had been informed by the TPA under contract to the city, Alternative Service Concepts:
…that I could seek treatment for my industrial injury with Dr. J.K. Meyers of Alpine Sports Medicine in Elko. I attended an appointment with Dr. Meyers and he ordered an MRI. The MRI was denied by ASC and the reason for the denial was that I was not allowed to see Dr. Meyers for treatment of my industrial injury.
On July 2, 2012, Ms. Nozu of ASC issued a letter stating that she had only authorized treatment with Dr. Meyers as a one-time courtesy as Dr. Meyers is not a “contracted provider.”
Pepper relates that ASC — itself ignorant of the itinerary taken by a traveling physician under contract to it — then misinformed the injured Pepper about that itinerary and thus left him with no treating physician.
“The bottom line,” he writes,
…is that we have a majority of the health care providers that one could ever need, right here in Elko, but the comp system doesn’t usually allow for injured workers to treat with the local physicians. This puts an undue burden, both financially and physically, on none other than the injured worker themselves.
Dr. Michael A. Glick, a 30-year osteopath, testified that he’d seen AB187 argued against on the grounds that “it decreases an insurance company’s control of doctor performance.”
“That,” he said, he didn’t really understand — “other than I’ve always felt that a doctor’s performance should be under his own control, not mandated by an insurance company or someone that thinks they have more knowledge in taking care of that specific employee.”
Nevertheless, the ability of insurers to pressure doctors regarding their diagnoses — threatening them with exclusion from the network, for example — would obviously allow work comp insurers to deny both medical care and replacement of wages to injured workers, saving themselves millions of dollars in a single case.
In the Reeves case currently before the Nevada Supreme Court, the TPA for Caesar’s Entertainment feared that five years of temporary total-disability (TTD) make-up payments could be required by the December 2003 decision of a state appeals officer. The sum involved would have exceeded the amount which Caesar’s, as a self-insured company, is responsible to have available under Nevada law, leading CCMSI to inform Security National, Caesar’s provider of excess insurance, about the appeals officers’ decision, according to documents seen by Nevada Journal.
At least two important facets of Nevada work-comp law make the TPAs’ truncated doctor networks in the state even more problematic for injured workers.
One is that, ever since 1995, Nevada insurers and third-party administrators have had statutory protection from any lawsuits against them for acting in bad faith — that is, violating basic standards of honest dealing. The statute in question, NRS 616D.030, makes fines levied by the Division of Industrial Relations “the exclusive remedies for any violation of” any of the four chapters of state law governing workers’ comp: NRS 616A, 616B, 616C or 617.
Given that injured workers’ only relief in such cases of bad faith remains, still today, to hope that the state Division of Industrial Relations might take umbrage at outrageous behavior and levy upon the offender a “benefit penalty” payable to the injured-worker victim, how well on that front is DIR doing?
No one outside the agency really knows. Although state lawmakers in 2005 passed AB58, a bill requiring DIR to annually report on enforcement of the laws governing industrial insurance and the adjudication of claims for benefits, the division has never done so.
When Nevada Journal filed public-records requests with DIR for such reports last October, its officers candidly explained that the agency had never produced any such reports:
Nevada Journal: I just wanted to get a copy of that report that you guys are directed by law to make every year to the legislature.
DIR administrator: I wish we could give that to you. We’re unable to make the report.
DIR: Simple and short answer.
NJ: Why is that?
DIR: Well, it has to do with the fact that we have a system, in which all our data resides, that will not and cannot produce it.
NJ: I think that rule requiring the report came in, in 2005. Have you guys not got a system that would handle it yet?
DIR: We’ve got a request in to the budget, for the next session of the Legislature, to get a system which will provide what needs to be provided.
The information that DIR was asked to report, beginning in 2005, was of critical importance if lawmakers and executive-branch administrators genuinely wanted to monitor workers’ comp administration in the state of Nevada:
The Administrator [stated AB58, as signed into law] shall prepare an annual report concerning the enforcement of the provisions of chapters 616A to 617, inclusive, of NRS through the imposition of fines and benefit penalties against insurers, organizations for managed care, health care providers, third-party administrators and employers.
The annual report must include, without limitation:
(a) The total number of complaints filed with the Administrator involving alleged conduct that is sanctionable by a fine or benefit penalty;
(b) The total number of investigations conducted by the Administrator involving alleged conduct that is sanctionable by a fine or benefit penalty;
(c) The disposition of each such complaint and investigation, including, without limitation, whether the Administrator imposed or refused to impose a fine or benefit penalty and, if the Administrator imposed a fine or benefit penalty, the amount of the fine or benefit penalty; and
(d) The disposition of any administrative appeal or action for judicial review involving the decision of the Administrator to impose or refuse to impose a fine or benefit penalty.
Interestingly, the first version of AB58 would have required the licensing of the claim adjusters employed by insurers and third-party administrators.
The final version of the bill represented a legislative compromise with opponents: a monitoring process to keep state lawmakers and others informed regarding the actual particulars of Nevada workers’ comp.
But that process — entirely coincidentally, no doubt — ended up interred in bureaucratic permafrost for the last decade.
A version of this column is also published in Nevada Journal.
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