Audit Results
DWC Has Failed to Address Its QME Shortage
Even though DWC is responsible for overseeing QMEs and administering the QME selection process, it has not adequately ensured that it has enough QMEs to keep up with the demand for their services. Without an adequate number of QMEs, injured workers can experience unnecessary delays in the resolution of their disputes, which can postpone benefits for workers and increase costs for employers. State law requires DWC to appoint QMEs to evaluate the medical-legal issues in the workers’ compensation system; therefore, we expected DWC to ensure that it maintains enough QMEs to handle demand without significant delays. However, the number of QMEs has declined steadily from fiscal years 2013–14 through 2017–18, while requests for services have risen significantly. The subsequent QME unavailability means that the current number of QMEs is not meeting the demand.
As Figure 3 indicates, from fiscal years 2013–14 through 2017–18, the total number of QMEs decreased from 3,157 to 2,782, a 12 percent drop; during the same period, requests for QMEs rose from 105,732 to 145,093, an increase of 37 percent. However, the availability of some specialty QMEs dropped even further. For example, from fiscal year 2013–14 to fiscal year 2017–18, the number of QMEs in otolaryngology (head and neck surgeons) decreased by 32 percent—from 38 to 26 QMEs—while the number of requests in this specialty increased significantly, from 914 to 1,484—a 62 percent increase. Further, although the number of physical medicine and rehabilitation specialist QMEs decreased by 21 over this time period, from 132 to 111, the number of panel requests more than doubled from 3,810 to 7,939.
Figure 3
As Requests for QME Services Increased, the Number of QMEs Decreased
Fiscal Years 2013–14 Through 2017–18
Source: Analysis of the department’s QME database.
The decrease in the number of QMEs corresponds with a significant increase in replacement panels because, if the original QME is unavailable, another is generally selected, creating a delay in selecting a QME. As described in the Introduction, when an injured worker or employer requests a QME to help resolve a workers’ compensation dispute, DWC generates a panel of three from which one QME is selected to perform the evaluation. If the QME chosen from the original panel is not available within 60 days to conduct the evaluation, generally the injured worker can choose to wait for an appointment within 90 days, or either party can request a replacement panel. As Figure 4 shows, from fiscal years 2013–14 through 2017–18, the number of replacement panels that were requested because QMEs were not available within 60 days more than quadrupled—from about 4,600 replacement panels to nearly 19,000. In addition, in fiscal year 2017–18, 31 percent of all QME requests were for replacement panels—45,000 replacement panels out of 145,000 total requests. DWC’s data show that if a workers’ compensation case required one replacement panel because of an unavailable QME, the case was delayed by more than two months nearly half of the time.
Figure 4
The Number of Replacement Panels Is Increasing Because QMEs Are Not Available
Source: Analysis of the department’s QME database.
Note: Other reasons for replacement panels include, among other things, a workers’ compensation judge’s decision to change the panel, the QME has a conflict of interest, and the QME report is late.
Replacement panels may delay injured workers’ access to their workers’ compensation benefits and increase employer costs. If there is a question about whether an injury is work-related, claims administrators may not accept the workers’ compensation claim until a QME provides a medical-legal opinion on the injured worker’s entitlement to benefits, and employers are generally not liable for benefits to injured workers until a claim is accepted—when an injured worker is eligible to receive workers’ compensation benefits.Under California law, the employer is required to provide up to $10,000 of specified medical treatment to the injured worker until the acceptance or denial of the worker’s claim. Delays caused by the replacement panels because QMEs are unavailable can potentially delay injured workers’ access to benefits that they are entitled to for several months. According to the acting president of the California Applicants’ Attorneys Association, in some cases, workers postpone treatment until they make it through the initial QME process because of the uncertainty of eventual benefit payouts or reimbursements. We, therefore, are concerned that delays of medical treatment could lead to greater temporary and/or permanent disability for injured workers, and that this prolonged process may increase the overall costs to employers.
Despite the declining number of QMEs, the significant increase in requests for them, and the increase in replacement panels because of QME unavailability, DWC has not acknowledged that there is a shortage of QMEs. The administrative director of DWC told us that there is no independent study or data analysis showing that accessing QMEs is a problem. DWC’s chief of medical administrative services also referenced a 2017 study, which states that a high proportion of panels are assigned to the busiest 10 percent of QMEs. The study also notes that certain QMEs have up to 10 office locations while others have fewer. The chief of medical administrative services implied that QMEs with more office locations can be selected more often and therefore are more likely to be unavailable based on the increased workload. She suggested this could be a significant factor that drives the requests for replacement panels because of unavailability.
However, when we looked at the data on unavailable QMEs in fiscal year 2017–18, we found that QMEs operating out of fewer than six zip codes—which DWC uses for assigning panels—accounted for more than half of all panel replacements because of unavailable QMEs. Further, the study DWC cited concluded, from data through 2016, that the increase in QMEs being unavailable calls for close monitoring by DWC. As we discuss later in the report, DWC has data to identify its need for additional QMEs, but it has not acted on them. Consequently, DWC should not continue to ignore the indicators of its dwindling supply of QMEs.
DWC acknowledged that the number of QMEs is decreasing and identified three reasons why physicians may not be applying to become QMEs. First, fewer are joining the system because of a general shortage of physicians in California. Although we found that the number of licensed physicians and surgeons in the State has been increasing from 2014 through 2018, a 2017 report by the Healthforce Center at the University of California, San Francisco, concludes that the supply of primary care physicians in California is insufficient to meet the population’s needs. Second, DWC believes that many physicians are no longer going into private practices that would better facilitate them serving as a QME. Surveys conducted by the American Medical Association show that the percentage of physicians in private practice dropped from around 53 percent in 2012 to 46 percent in 2018. Third, DWC indicated that barriers exist for physicians who work in particular settings to become QMEs, such as managed care organizations. According to the administrative director, one managed care organization indicated that having its physicians involved in more lengthy QME evaluations would adversely affect the physicians’ availabilities to serve their regular patients.
Despite these warnings signs, DWC has not taken sufficient action to address its QME shortage. For example, it has not taken one key step that could help it attract and retain QMEs: updating the rates of its medical-legal fee schedule—the fee schedule QMEs use to charge for their services. This fee schedule’s rates have not been updated since 2006. However, state law requires DWC to adopt and revise the medical-legal fee schedule in tandem with its Official Medical Fee Schedule (OMFS), which establishes reasonable maximum fees paid for specific workers’ compensation medical services. Although DWC updated the OMFS multiple times from 2014 through 2018, it has not updated the rates in the medical-legal fee schedule for QMEs in 13 years. According to the administrative director, DWC has not done so because of limited resources. Consequently, QMEs are billing for their services at 2006 rates, which are much lower than what the rates would be if they had kept pace with inflation. We calculated that costs for professional medical services have increased by roughly 30 percent since 2006 because of inflation, which means that the current fee of $625 for a basic medical-legal evaluation without allowable adjustments would be $812 if adjusted for inflation.
DWC began the process to amend its medical-legal fee regulation in 2018. After it first released its proposed medical-legal fee schedule in May 2018, DWC held a public hearing and solicited fee schedule proposals. In July 2019, two assemblymembers took action to update DWC’s medical-legal fee schedule. The assemblymembers introduced legislation that would make the compensation rates 1.5 times higher than what is currently allowable—$937 for a basic medical-legal evaluation without allowable adjustments—and would require DWC to update the compensation rates quarterly, as necessary. As of October 2019, the bill is pending action in the Legislature. In August 2019, DWC released a new, updated proposal for the fee schedule for public comment. DWC’s new proposal creates a fixed fee schedule and includes potential adjustments to the fixed fee, such as if an interpreter is needed, or if the evaluation is performed in an underserved area. DWC anticipates it will have the updated medical-legal fee schedule in place sometime in 2020.
In addition, DWC does not have an established process for recruiting QMEs, despite facing a QME shortage. The executive medical director said that DWC representatives have informally encouraged physicians to become QMEs as opportunities arise, such as at educational and professional conferences. In addition, the administrative director said that in July 2019, DWC contacted a major medical group and asked it to consider allowing its physicians to participate as QMEs, but it was unsuccessful because, as we state earlier, the medical group asserted that more lengthy QME evaluations could impact the physicians’ availabilities to serve their regular patients. He further indicated that DWC intends to contact other medical groups to explore the possibility of recruiting more QMEs.
Although it has data to identify its needs for additional QMEs, it has not yet acted on them. DWC has data on QME demographics, such as location and specialty, and demand statistics such as requests for QMEs and replacement panels overall, per specialty, and by claim. However, it has not used these data to better manage the QME supply and recruit more QMEs. Further, it does not have benchmarks for evaluating the capacity of its current supply, which could inform DWC of how many QMEs it needs to recruit to mitigate its shortage. Specifically, DWC should determine how many evaluations QMEs can perform on average to ensure that it maintains the necessary QME supply to meet demand.
Because QMEs have become more frequently unavailable, we believe changes to the panel selection process are also warranted. DWC previously had a process of “dueling QMEs” if the injured worker was represented by an attorney, in which each party obtained its own QME and generated separate medical-legal reports. However, this process made the system even more adversarial by producing potentially contradictory QME reports. The State abandoned this approach in 2004. Our proposal is to increase the size of certain panels. Data show that the rate of replacement panel requests for represented cases is three times higher than the rate of requests for unrepresented cases, partly because unrepresented workers generally can select from among a panel of three QMEs while represented workers generally have to use the remaining QME after each party strikes one from a panel of three. For represented workers, we believe that expanding the panel size to five QMEs, allowing each party to strike one, and then allowing the party that did not request the panel to select from the remaining three would better ensure availability and reduce the number of replacement panels needed. If the selected QME is unavailable, the parties would then select from among the remaining two QMEs until they find one that is available.
DWC’s Practices for Disciplining Some QMEs Raise Due Process Concerns
DWC did not discipline some QMEs for alleged overbilling violations until they came up for reappointment, a practice that we believe raises due process concerns. Rather than using its formal regulatory process to discipline QMEs before their terms expired, DWC denied the QMEs’ reappointments because of the alleged violations. When DWC denied those QMEs’ reappointments, the QMEs were prohibited by law from performing QME services until the allegations were resolved, a process that can take months. Further, this practice removes QMEs from the available supply without a final decision that the QMEs committed the alleged violations. Moreover, we found that DWC was slow to schedule hearings that QMEs requested after it denied their reappointment appeals, or it did not schedule requested hearings at all. Consequently, the QMEs had an incentive to settle with DWC so that they could resume providing QME services and earn income from those services. We found that DWC generally entered into settlement agreements with QMEs while they were unable to practice as QMEs, and that these settlement agreements required them to make restitution payments to insurance companies for alleged overbilling violations instead of proceeding with the disciplinary process outlined in the department’s regulations. We believe that DWC’s lack of sufficiently detailed, written policies and procedures for investigating and resolving complaints led to these concerns.
DWC has a regulatory process for imposing discipline on QMEs due to alleged violations of state law. As Figure 5 shows, DWC’s Investigations and Enforcement Section (investigations section) reviews complaints regarding QMEs and obtains evidence of statutory or regulatory violations. When evidence of a regulatory violation exists, DWC’s medical director submits the case to DWC’s administrative director. If DWC’s administrative director agrees, state law requires DWC to send the QME a statement of charges (accusation) that specifies the statutes and regulations the QME allegedly violated and to notify the QME of his or her right to a hearing before an administrative law judge or a DWC hearing officer to contest the alleged violations. If a hearing on the alleged violations is conducted, the administrative law judge or hearing officer files a statement of findings and proposed decision with the DWC’s administrative director. The administrative director has several options after receiving the proposed decision, including the authority to adopt the proposed decision or to reject it. The administrative director makes the final decision on disciplinary action, which can include probation, suspension, and termination of QME status. With the exception of specific circumstances described in state law, DWC cannot suspend or terminate a QME during his or her term without following this procedure.
In a separate regulatory process, again as Figure 5 shows, DWC considers applications for reappointment. According to state law, DWC shall reappoint a QME for a two-year term if the QME meets specific requirements. A QME must submit completed application forms and evidence of completed continuing education requirements and pay appropriate fees, among other requirements. However, DWC may deny a QME’s reappointment for a number of reasons, including if the QME was not in compliance with all applicable regulations and evaluation guidelines or because the administrative director took disciplinary action against the QME during his or her most recent term. Under the department’s regulations, a QME may submit a written response to DWC appealing its denial of his or her reappointment and request a hearing if DWC upholds the denial after reviewing the QME’s timely response. However, state law does not allow an individual to perform QME services after DWC denies his or her reappointment. Because such services may constitute up to two-thirds of a QME’s practice, such a denial can have a significant impact.
Figure 5
DWC Used the Reappointment Process to Discipline QMEs, a Practice We Find Inappropriate
Source: State law, the department’s regulations, and DWC.
Despite these separate regulatory processes, DWC used the reappointment process to discipline some QMEs for alleged overbilling violations without scheduling hearings, even though the QMEs requested hearings in some cases, a practice that raises due process concerns. Injured workers and insurance companies submitted some of the complaints alleging that certain QMEs overbilled for services. Although billing-related complaints made up a relatively small portion of all types of complaints—around 7 percent of complaints that DWC logged in its complaint database for 2017 and 2018—we focused on these complaints in light of one of our audit objectives—to determine whether DWC collected funds on behalf of the insurance industry from QMEs—and because QMEs can agree to pay restitution to insurance carriers to resolve allegations of overbilling. We reviewed 24 billing-related complaints DWC received from 2014 through 2018, 11 from 2014 through 2016, and 13 from 2017 through 2018. For six of the 11 billing-related complaints DWC received from 2014 through 2016, DWC denied the QME’s reappointment application based on alleged violations for overbilling. Although DWC’s acting chief legal counsel believes it is appropriate for DWC to deny QME reappointments when it has evidence that the QME violated the department’s regulations, we believe the alleged violations remain allegations until later in the disciplinary process, such as when an administrative law judge files a proposed decision with the administrative director after a hearing or the QME declines to participate in the hearing process. We found no evidence in DWC’s records that either of these circumstances had already occurred when DWC denied reappointment to these QMEs.
In these six cases, DWC in effect used the reappointment process to impose discipline on the QMEs without a hearing, which may have denied the QMEs due process. Additionally, by using the reappointment process to impose discipline, DWC delayed the QMEs’ reappointments. For two of the six cases, the individuals are no longer QMEs. One of these QMEs did not respond to DWC’s statement of issues, and we saw no evidence that the other resubmitted the required application and fees to be reappointed. For the other four of the six cases, DWC delayed the reappointments for about six to 15 months. As a result, these individuals could not perform QME evaluations and potentially lost income they could have earned as QMEs during this time. During the time they were unable to practice as QMEs, these physicians had an incentive to settle with DWC so that they could resume providing QME services and earning income from them. The QMEs in these four cases agreed to pay restitution to insurance companies for the alleged overpayments. DWC also agreed to reappoint them.
In one example, the individual would have been unable to perform QME services for about 15 months while he and DWC worked to resolve alleged overbilling violations. DWC received a complaint in May 2014 alleging that, among other issues, this QME billed for services that were not provided. After requesting evidence from the QME in June 2014 and February 2015 and reviewing it shortly thereafter, DWC waited until June 2016 to deny the QME’s reappointment, effective July 2016. The QME responded to the denial in July 2016, and DWC provided the QME with a statement of issues affirming the denial in August 2016. Within a week, the QME requested a hearing, but DWC never attempted to schedule one because it said settlement negotiations were ongoing. In October 2017, DWC and the QME resolved the alleged violations by reaching a settlement agreement that required the QME to pay more than $32,000 to nine insurance companies. The settlement also contained a stipulation and proposed order that DWC would reappoint the individual as a QME. The prolonged resolution period between the QME’s July 2016 reappointment denial and the October 2017 settlement resulted in a 15-month lapse in the individual’s ability to perform QME services. We believe DWC should have resolved the complaint solely through its disciplinary process rather than denying the QME’s reappointment based on allegations that had not yet been heard by an administrative law judge or department hearing officer.
Even though DWC resolved some complaints more quickly during 2017 and 2018, we found further instances in those years where DWC denied QMEs’ reappointments based on alleged overbilling violations. We reviewed 13 billing-related complaints DWC received during 2017 and 2018 and found that for nine of them, DWC issued a warning to the QME or settled the complaint before the QME was due for reappointment or soon thereafter. DWC did not pursue discipline for the remaining four complaints because the individuals were no longer active or DWC had resolved the allegation in a previous settlement. Under the process described in the department’s regulations for disciplining QMEs, DWC must issue an accusation and notify the QME of his or her right to a hearing before taking disciplinary action except in specific circumstances. In four of the nine instances from 2017 and 2018, instead of issuing accusations and notifying QMEs of their right to a hearing, DWC sent letters stating that it had identified billing violations, listing the amounts of the billing violations, and informing the individuals that they could contact DWC if they wanted to discuss a resolution to the matter. DWC’s records indicate that those four QMEs made restitution payments to insurance companies or entered settlement agreements to make payments. We also identified four additional instances from 2017 and 2018 when DWC denied the QMEs’ reappointments based on alleged overbilling violations, which did not adhere to its regulatory process for disciplining QMEs.
Although DWC’s administrative director does not agree with our characterization that DWC has used the reappointment process for discipline, he indicated that, due to staffing shortages, it was possible that DWC did not inform some QMEs of complaints or did not initiate discipline for violations before denying their reappointments. He also stated that, with increased staffing levels now, it is less likely to happen; DWC filled the last of its four special investigator positions in February 2017 and hired an additional attorney in August 2017.
We also believe that DWC’s lack of sufficiently detailed, written policies and procedures for investigating and resolving complaints contributed to the concerns we identified. Although DWC’s administrative director indicated that the investigations section has policies and procedures in the form of a high-level flowchart of key investigation steps, we believe that a one-page flowchart is insufficient to provide adequate guidance to staff. We would expect the section to have procedures that, at a minimum, provide sufficiently detailed instructions for staff to follow, a list of expected deliverables, and internal timelines for completing each phase of the investigation process.
While examining DWC’s reappointment denials, we identified an additional concern with the reappointment process: DWC was slow to request the Office of Administrative Hearings to schedule hearing dates after the QMEs requested hearings following DWC’s reappointment denials in two instances, and we saw no evidence that it requested hearings in two other instances. State law requires DWC to notify a QME of the right to a hearing when it sends a statement of issues. We reviewed 10 cases for which the QMEs appealed DWC’s reappointment denials from 2016 through 2018 where the QME could have requested a hearing. The statements of issues we reviewed for each of these cases included the hearing notification, and four of the QMEs requested a hearing. For two of those four, we saw no evidence that DWC attempted to schedule hearings with the Office of Administrative Hearings. DWC attempted to schedule hearings for the remaining two hearing requests, but it scheduled a hearing in only one of these instances while settling the other case five months after the hearing request. DWC scheduled this hearing for one year after the QME made the request. In all four cases, including the one for which it had scheduled a hearing, DWC resolved the alleged violations by entering into settlement agreements.
Although DWC can submit requests for scheduling a hearing, it has not always done so. DWC’s acting chief legal counsel told us that an applicant submitting a “Request for Hearing” form to DWC does not automatically indicate that the applicant is seeking a hearing. She indicated that DWC will attempt to reach an amicable settlement of the discipline issues with the applicant or his or her legal representative. She further stated that the mutual decision to schedule a hearing might be delayed by this process. However, given the negative financial consequences for a QME who DWC does not reappoint, we are concerned that prolonged delays in reappointing QMEs may unnecessarily make them more inclined to settle than they might otherwise be.
DWC Has Failed to Comply With State Law to Ensure That QMEs Produce High-Quality Reports
DWC has not continuously reviewed medical-legal reports for quality and has not tracked when workers’ compensation judges have rejected medical-legal reports that failed to meet minimum standards. As we describe in the Introduction, these reports must provide medical evidence that can help judges resolve disputes related to workers’ compensation claims. The quality of these reports is especially important because reports that are inaccurate or incomplete can potentially delay resolution of disputes and workers’ receipt of benefits, and they can increase costs for employers involved in the disputes. Because DWC did not perform these reviews or track rejected reports, DWC lacks the data to identify whether report quality is a systemic problem or whether individual QMEs are producing low-quality reports.
State law provides at least two ways for DWC to help ensure that QMEs produce high-quality reports. First, state law requires the DWC’s medical director to continuously review the quality and timeliness of QMEs’ reports by reviewing a random selection of reports as well as reports alleged to be incomplete or inaccurate. This state law further requires the medical director to submit an annual report to DWC’s administrative director that summarizes the results of those reviews and recommends improvements to the QME system. Second, when DWC reappoints a QME, state law requires DWC to reappoint only those QMEs that meet certain criteria, including not having more than five reports rejected by a workers’ compensation judge. The rejections are based on the report’s failure to prove or disprove a contested issue or failure to comply with relevant guidelines. State law also requires a workers’ compensation judge or the Workers’ Compensation Appeals Board (Appeals Board) to inform DWC of QME reports that have been rejected for failing to meet minimum standards.
DWC has not complied with these state laws. Other than one effort in 2015, the executive medical director could neither provide the required annual reports nor demonstrate that DWC has continuously performed a review of report quality since 2007. According to an email from the associate medical director to DWC management, he began reviewing a selection of 100 reports for quality in 2015, but he discontinued that effort in 2016 after reviewing 69 reports. The associate medical director told us that he found that approximately 85 percent of those reports were substandard in one or more ways. However, DWC did not follow up on his findings. The executive medical director does not recall why DWC took no action on the findings identified in the 2015 effort.
Although DWC provided several reasons for why it has not complied with the law requiring continuous reviews of medical-legal reports for quality, we found its reasons insufficient. First, although the executive medical director asserted that DWC needs additional medical and legal resources, he could not demonstrate that DWC has made a good-faith effort to identify the additional resources it needs to comply with state law or that it has attempted to obtain those resources. For instance, according to the chief of medical administrative services, DWC has had a vacant associate medical director position since 2016. Based on its duty statement, the position would be appropriate for reviewing and reporting on QME report quality and timeliness. However, this does not explain why DWC did not produce the required annual reports for at least nine years before 2016. The executive medical director also stated that DWC has trouble attracting candidates for these positions because it is located in an area with a high cost of living, and DWC does not offer the most competitive compensation. However, the chief of programmatic services at DWC indicated that DWC has not conducted a salary survey to justify raising the compensation through the California Department of Human Resources, but would consider it. Alternatively, the executive medical director indicated that DWC can allocate existing resources to give QME report review a higher priority. Ultimately, to meet its legal obligation, we believe DWC has a responsibility to use existing resources or seek additional resources to help ensure the quality and timeliness of QME reports, which injured workers and their employers rely on to resolve disputes.
Not tracking rejected reports also inhibits DWC’s ability to identify poor QME reports. The compliance manager of the DWC medical unit (compliance manager) informed us that DWC assigned staff to start tracking reports rejected by judges or the Appeals Board in May 2019, which was after the start of our audit. Without such tracking, DWC misses the opportunity to improve QME report quality, to educate QMEs, and to resolve less serious regulatory violations as described in DWC’s sanction guidelines. Although DWC’s chief judge could not provide us with documentation for how many reports the presiding judges in her jurisdiction had rejected, she polled her presiding judges to provide this information. Based on the poll, DWC’s chief judge told us that the workers’ compensation judges rejected about 70 QME reports over the last year alone because they did not provide substantial medical evidence. However, DWC could only provide us with one report rejected by a workers’ compensation judge or the Appeals Board within the last five years. After we inquired about this, DWC’s chief judge stated that she intends to work with the presiding judges to help establish a process for reporting to DWC when the judges reject QME reports for not meeting minimum standards, as state law requires.
In part because DWC has not complied with these state laws, it lacks data regarding the quality of QME reports and whether this is a systemic problem. We spoke with multiple interest groups about the scope and prevalence of low-quality reports, and some stakeholders expressed concerns. Lawyers from both an applicant attorneys’ association (representing injured workers) and a defense attorneys’ firm (representing insurance companies or employers) told us that QME report quality is sometimes an issue. For example, the reports may not contain all required medical evidence or do not contain the needed level of complexity. The manager of DWC’s Disability Evaluation Unit—the unit responsible for reviewing QME reports to rate an injured worker’s level of permanent disability—told us that while he does not think it is a widespread problem, he has concerns that certain QMEs are not producing high-quality reports for the purpose of rating disability. For example, he indicated that one QME did not base his medical-legal evaluations on the guidelines DWC adopted. Another QME failed to evaluate impairment in his report, which is necessary to determine potential permanent disability.
Low-quality QME reports can delay injured workers’ receipt of benefits and add expenses for employers involved in disputes. A workers’ compensation judge can reject a report or ask the QME to develop it further if the report fails to meet minimum standards; in such cases, the judge may order a supplemental report from the QME, a deposition of the QME, or a new panel from DWC. All of these scenarios—a supplemental report, a deposition, or a new panel—add time and expense to the resolution of the claim. As we explain in the first section, generating a new panel can cause delays, postpone workers’ receipt of any applicable benefits, and increase costs for employers.
In addition, DWC has not reported on the timeliness of QME reports for reasons similar to its reasons for not performing the continuous reviews of report quality. However, it has collected data on complaints of late reports and in some instances, it has taken action to deny QMEs’ reappointments based on late reports. State regulations require QMEs to provide written medical-legal reports within 30 days of the face-to-face evaluation of the injured worker. If a QME does not comply with this time frame, either the injured worker or the employer can object in a timely manner and request a replacement panel, which can result in a new evaluation and a new report. According to DWC’s complaint data for 2017 and 2018, late reports are the most common reason for complaints against QMEs. For 19 of the 20 reappointment denials we reviewed from 2018 and 2019, DWC denied the reappointment of QMEs who had three or more late reports in a calendar year, as the department’s regulations authorize. DWC later granted the appeals of all 19 QMEs, and approved their reappointments.
Recommendations
Legislature
To ensure that DWC maintains a sufficient supply of QMEs and appropriately compensates these individuals, the Legislature should amend state law to specify that DWC review and, if necessary, update the medical-legal fee schedule at least every two years based on inflation. DWC’s review of the medical-legal fee schedule should be separate from its review of the Official Medical Fee Schedule.
To reduce the delays that replacement panels cause in resolving workers’ compensation claims, the Legislature should revise state law to increase the number of QMEs on the panels DWC provides. Specifically, unrepresented employees should continue to choose from a panel of three QMEs, and represented employees should be provided with a panel of five QMEs, of whom the employee and the employer can each strike one, leaving both parties with the same number of QMEs to choose from as unrepresented employees. The party—the worker or the employer—that did not request the panel would select the final QME. If the selected QME is unavailable, the parties would then select from among the two remaining QMEs until they find one that is available.
DWC
To ensure that DWC appoints enough QMEs to keep up with the demand for QME services, it should, by April 2020, develop and implement a plan to increase the number of QMEs commensurate with demand. The plan should describe how DWC will actively recruit for and increase the pool of QMEs, prioritizing specialties with the greatest shortages relative to demand. It should also use QME data trends to project the necessary QME supply to meet demand. The plan should include continuing negotiation with medical groups to allow their physicians to become QMEs, as well as establishing goals for recruiting new QMEs in specific specialties.
To ensure consistency and transparency in overseeing QMEs, DWC should, by April 2020, take the following actions:
- Develop and implement written policies and procedures that define and specify its internal processes for disciplining QMEs, including timelines for taking disciplinary action and for scheduling hearings or responding to settlement proposals.
- Develop and implement written policies and procedures that define its internal process for reappointing QMEs and how that process should proceed if any disciplinary investigations are pending.
To ensure that DWC monitors and reviews QME report quality and timeliness and to ensure the efficient resolution of workers’ compensation claims, DWC should, by April 2020, take the following actions:
- Create and implement a plan to continuously review the quality and timeliness of QME reports, including time frames for review, methodology for selecting reports to review, and the minimum number of reports to be reviewed annually.
- Develop and implement a process for annually reporting to DWC’s administrative director its findings on the quality and timeliness of QME reports and recommended improvements to the QME system.
- Create written policies and implement a consistent process for ensuring that workers’ compensation judges and the Appeals Board inform DWC of QME reports they rejected for not meeting minimum standards.
- Create written policies and implement a process for tracking QME reports rejected by workers’ compensation judges and the Appeals Board for not meeting minimum standards. DWC should consider and include these reports in its annual review of report quality and recommend improvements to the QME system.
We conducted this audit under the authority vested in the California State Auditor by Government Code 8543 et seq. and according to generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives specified in the Scope and Methodology section of the report. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.
Respectfully submitted,
ELAINE M. HOWLE, CPA
California State Auditor
November 19, 2019