By Melissa Starnes, CareReview
With 40% of the total Workers’ Compensation indemnity spend comprised of payments derived from physician’s impairment ratings, this topic is under the radar of many claims departments. The typical impairment rating error rate for these payments is between 4% and 35% with each percentage point worth between $1,400 to $2,000 in overpayment, driving a total per claim overpayment spread from $5,600 to $70,000 as noted by a Hartford Insurance study (WorkCompCentral; Faulty Impairment Ratings Create Substantial Costs for Carriers published August, 21st, 2012).
So how can this happen and how does the process work? A physician assigns an impairment rating when he/she believes the employee has reached maximum medical improvement. If at this time, the employee suffers any decrease in functional ability due to the injury, the physician will assign an impairment rating.
Seems simple enough, however like in every other aspect of Workers’ Compensation, the rules surrounding impairment ratings differ state by state as outlined below:
Who
Each state determines which particular physician may conduct an impairment rating. In some states, the treating doctor will be the one who assigns the impairment, while in other states it may be an Independent Medical Examiner. For example, in Texas, any doctor licensed in the state may provide an impairment rating, but only if he/she has gone through the appropriate TDI-DWC training and testing process. Other states require that physicians who are performing impairment ratings receive certification from the American Board of Medical Specialties.
How
Most states use the American Medical Association’s (AMA’s) book “Guides to the Evaluation of Permanent Impairment” to assess impairment. It is important to know which edition of this book your state uses (the 3rd, 3rd Revised, 4th, 5th or 6th edition), as the criteria for each level of permanent impairment has been modified slightly in each edition. The 6th edition is very different from prior editions and requires retraining of physicians performing impairment ratings. Although, many states have adopted the 6th edition, training has not yet been broadly available.
Eight states (Florida, Illinois, Minnesota, New York, North Carolina, Oregon, Utah and Wisconsin) provide their own state-specific guides for assigning an impairment rating. Still other states (Michigan, Missouri, Nebraska, New Jersey, South Carolina, and Virginia) do not specify a state guideline to use in evaluating permanent disability.
Some of the largest states use a hybrid system to rate permanent disability. For instance, California uses their own “Permanent Disability Rating Schedule,” an impairment rating system derived from the 5th edition of the AMA Guides. However, the schedule adjusts the ratings from the AMA guide to account for future earning capacity, occupational requirements, and the worker’s age. Some states use the AMA Guides for evaluation of certain disabilities, and their own statutory framework for evaluation of other disabilities.
And finally, the state WC rules are constantly changing and evolving, as is the American Medical Association Guide to the Evaluation of Permanent Impairment.
What Can Be Done?
Incorrect impairment ratings can be due to bias, inaccurate clinical assessment, incorrect maximum medical improvement determinations, use of unreliable data and lack of understanding of how to correctly utilize the “AMA Guides to the Evaluation of Permanent Impairment”.
Fortunately, in most states, you have the opportunity to have the original impairment rating reviewed for accuracy. This review is an analysis to determine the accuracy of the rating that has been rendered and should include:
- An accurate assessment of the injuries sustained as a result of the compensable event
- Review of treatment history, as in some cases the treatment or outcome of treatment may lead to impairment
- An explanation of why each impairment value was correct or incorrect, as well as provide the correct impairment value for any impairment that was incorrectly assigned and/or any impairment missed by the doctor that assigned the rating being reviewed
- An easy to follow analysis of the impairment rating for each body area
At CareReview, we ensure our impairment rating reviews are completed by board certified physicians who have received extensive training on the various editions of the “AMA Guides to the Evaluation of Permanent Impairment”. In addition, our physicians go through additional training modules on the various editions of the “AMA Guides to the Evaluation of Permanent Impairment” to ensure proficiency associated with each edition along with jurisdictional requirements. The physician reviewers also understand claims and causation issues that can often complicate the final impairment rating. Our reports are detailed with easy to follow format that can be used to negotiate, provide feedback to the original rating doctor and assist with case management.
The Result
Given the differing jurisdictional guidelines and nuanced ground rule application, it is understandable how each impairment rating may be in error. As noted in The Hartford study, and confirmed through our book of business analysis, almost 17% of all reviews are found to be in error, and each claim in error represents an average of $9,800 (after final negotiation).
We now look at how one of CareReview’s carrier partners added a level of rigor to this process to ensure each impairment is fair and accurate – and how their program has fared. This client initiated a process to send all impairment rating greater than 10% to an independent physician trained and certified to review for accuracy. For the calendar year 2014, their results are as follows (with the original “The Hartford” study results included for comparison):
| Sample Value Parameters: | Hartford Study | Client ABC |
| Ratings in error (%) | 15% | 17% |
| Average error spread (% pts) | 7 pts | 16 pts |
| Expected post negotiation | 7 pts | 8 pts |
| Per point overpayment | $1,400 | $2,100 |
| Total avg per claim savings | $9,800 | $16,800 |
This client has over 100 qualifying impairment ratings per month equating to a potential of more than $1.5 Million in monthly claim settlement overpayment – Isn’t it time you made sure your impairment ratings are accurate?
About Melissa Starnes
Melissa has over 17 years of experience in experience in the workers’ compensation industry overseeing regulatory compliance, quality assurance and doctor recruitment/training. Prior to joining CareReview, Melissa served as COO, Vice President and Director of Operations for Churchill Medical, Inc. In addition, Melissa also developed rehabilitation programs and assisted with care for cardiac patients, traumatic brain injury patients and patients with various musculoskeletal injuries in an outpatient rehabilitation environment. Melissa holds a Bachelor’s Degree in Kinesiology from Augustana College.
About CareReview
CareReview is a privately owned URAC accredited IRO company offering Physician Intervention Services on a national basis primarily for the Casualty and Disability Insurance market. Founded in 2011, we work with leading Carriers, Third Party Administrators, Managed Care Organizations, Pharmacy Benefit Managers and Medicare Set-Aside providers. We are focused on delivering evidence-based peer reviews that are credible, objective and timely that help nurses and adjusters in reaching the appropriate medical determination as part of the claims management process.
Disclosure:
CareReview is a WorkCompWire Ad Partner.
This is not a paid placement.