October 25, 2024 | Sacramento, CA — MedLegalNews.com — Med-legal costs for evaluations and reports used to resolve medical disputes in California work injury claims have increased more than expected since a new Med-Legal Fee Schedule (MLFS) took effect in April 2021, according to a new CWCI study. The average payment for a comprehensive exam is up 52%, primarily due to new per-page fees for record review that are paid on top of flat fees for med-legal evaluation services.
In addition, 2023 saw a 6 percent increase in Qualified Medical Evaluators (QMEs) compared with pre-pandemic levels.
Implementation of the updated MLFS for the California workers’ compensation system three years ago led to a comprehensive overhaul of the payment formulas for med-legal evaluations and reports. The new fee schedule replaced complexity and time-based payments from 2006 with flat fees and added payments for record reviews exceeding certain page thresholds.
When the Division of Workers’ Compensation (DWC) adopted the new schedule, it anticipated it would result in a 25% increase in payment levels to adequately compensate med-legal evaluators.
CWCI’s study, which updates a preliminary analysis from 2021, uses payment data for med-legal evaluations and reports with dates of service from January 2015 through October 2023, valued as of December 2023, to compare the utilization and reimbursement of med-legal services rendered before and after the new schedule’s April 1, 2021, effective date. The study analyzed changes in evaluation and report patterns and payments.
One goal of the new MLFS was to attract and retain Qualified Medical Evaluators (QMEs) to conduct medical-legal evaluations to better meet demand. CWCI used DWC data from calendar years 2019 to 2023 to track changes in the number of registered QMEs and the number of QME panel assignments by medical specialty.
A review of med-legal services from April 2021 to 2023 showed a significant shift toward follow-up exams. This shift was expected, as the new MLFS extends follow-up evaluation code usage to 18 months after the last comprehensive exam, up from 9 months under the 2006 schedule.
Other key findings include:
- There has been a 52% increase in the average reimbursement for comprehensive evaluations, and a 29% increase for supplemental reports since the new MLFS took effect.
- Charges for excess record reviews appeared on 43.3% of comprehensive evaluations, 24.9% of follow-up evaluations, and 30.8% of supplemental reports. For comprehensive evaluations, the new per-page record review fee added an average of $1,817 to the $2,015 flat fee payment for services with page review. These page-review payments drove nearly three-quarters of the increase in comprehensive evaluation payments under the new schedule, making them one of the biggest contributors to rising med-legal costs. In addition, the per-page record review payments added an average of $1,338 to the flat fee for follow-up evaluations with excess page review and $1,335 to the flat fee for supplemental reports with excess page review.
- The number of certified QMEs has increased 5.9% from 2,561 in 2019 to 2,712 in 2023. However, a 2.9% increase in panel assignments over the same period has slightly offset that improvement, limiting the impact on managing rising med-legal costs and leaving only a net gain of about 3%.
- Physicians specializing in orthopedic surgery provided 44% of the med-legal services in 2023, followed by chiropractors at 11%, making these specialties a key driver of overall med-legal costs in the California system.
CWCI has published its study in a Research Update Report, “Increased Medical-Legal Costs and Current QME Supply – Impact of the 2021 Medical-Legal Fee Schedule.”
KEYPOINTS
- Rising med-legal costs: Comprehensive exam reimbursements have jumped 52% since the 2021 Medical-Legal Fee Schedule (MLFS) took effect, with per-page record-review fees driving most of the increase.
- Impact of record reviews: Page-review charges added an average of $1,817 to comprehensive exam payments, significantly contributing to higher med-legal costs.
- QME availability: The number of Qualified Medical Evaluators (QMEs) rose nearly 6% from 2019 to 2023, but increased panel assignments offset some of that gain.
- Shift in evaluation patterns: Follow-up exams became more common after the MLFS expanded the timeframe from 9 months to 18 months.
- Specialties leading evaluations: Orthopedic surgeons performed 44% of evaluations in 2023, followed by chiropractors at 11%.
The report is available to CWCI members and subscribers who log on to the Research section at www.cwci.org. Others may purchase the report from CWCI’s online store, here.
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FAQs: California med-legal costs
What drove the increase in California med-legal costs?
The 2021 Medical-Legal Fee Schedule introduced per-page record-review payments on top of flat evaluation fees, and those page-review charges explain most of the reimbursement increase.
How much did comprehensive exam reimbursements change?
Comprehensive exam payments rose about 52% under the new schedule, with excess record-review fees appearing on a large share of claims and accounting for most of the rise.
Has QME supply improved as med-legal costs changed?
Certified QME counts rose roughly 5.9% from 2019 to 2023, but a modest rise in panel assignments limited the net availability to about a 3% gain.
What steps can employers and payors take to manage rising med-legal costs?
Consider tighter record-review validation, earlier case management to limit unnecessary supplemental reports, and targeted discussions with frequent providers about documentation overlap and page-review billing practices.