California WC Statute Helpful to Reduce WCMSA Allocations
Heather Sanderson
May 15, 2015

SB 863 launched Independent Medical Review (IMR) for California Workers’ Compensation claims. This important shift in how medical treatment is managed in a workers’ compensation claim would inevitably lead to adjustments for workers’ compensation Medicare-Set Aside allocations (WCMSAs). In a recent decision, Caldera v. The Insurance Company of the State of Pennsylvania, 2013 U.S. App. LEXIS 9706, the 5th Circuit Court of Appeals reinforced that Employers (and their insurers) may only be responsible under the MSP to the extent responsibility is demonstrated. It was inevitable that following the Caldera decision, under SB 863 which states that IMR decisions are final and binding, that Medicare would have to provide the ultimate deferral to these IMR decisions, even where CMS policy states that deference should always be provided to the treating physician’s opinion.

When IMR is used properly in California, medical treatment that was previously authorized by the claimant’s treating physician can be challenged in an expedited manner. This challenge occurs close in time to the disputed treatment, and a change can be implemented through the IMR process within weeks. Because the decisions are clear, when certain treatment is disputed as unrelated to the workers’ compensation claim, the medical record is also clear for presentation when preparing the WCMSA and submitting it for approval.

Clinical tools by themselves cannot produce a favorable allocation. Legal analysis is also required to explain SB 863 – how it works, and more importantly the way the law is applied to particular claim subject to the allocation. Without the legal component, the typical vendor allocation cannot know what to look for, and the result is unnecessarily higher allocations.

Recently, we submitted a California jurisdiction workers’ compensation Medicare Set-Aside Allocation (WCMSA) reconsideration request to the Centers for Medicare & Medicaid Services (CMS) wherein our assertion was that a spinal cord stimulator should not be included in the WCMSA allocation due to the fact that the Independent Medical Reviewer (IMR) had opined that the treatment was not medically necessary or warranted. Pursuant to CMS’ WCMSA review process and policies traditionally, the treating physician’s opinion holds more weight than any other doctors. Therefore, typically CMS would not provide deference to an IMR opinion, as was evidenced by this particular case wherein CMS initially included the spinal cord stimulator despite the IMR’s opinion that it was not medically necessary.

We argued that the IMR opinion should be upheld in this case and the spinal cord stimulator removed. In California, pursuant to California Labor Code §3610.6(h) (Senate Bill 863), the decision by an IMR is presumed to be correct, final and legally binding (unless contradicted by clear evidence to the contrary). We further asserted that CMS cannot hold a carrier responsible for injuries/treatment where the carrier would not be responsible under state law.

In its response to our reconsideration request, CMS removed the spinal cord stimulator, saving the client over $143,000. We are pleased to see that CMS revised its WCMSA determination based upon the binding IMR opinion which held this employer/carrier not responsible for the spinal cord stimulator under California state law. This success story demonstrates the importance of utilizing a state workers’ compensation laws and treatment guidelines when submitting a WCMSA to CMS. California is one example, but other states are moving quickly to limit medical treatment. See for example, the recent change in Georgia law on non-catastrophic workers’ compensation injuries which caps the claimant’s medical treatment to 400 weeks.

This area of the law changes often due to legislative and judicial action. MSP compliance requires the support of a team with a strong legal foundation to stay on top of these changes and rapidly implement what the law requires. As your compliance authority, Franco Signor’s counsel continuously monitors MSP case law and legislation and provides this blog as a resource for the current status of the law.


Heather Schwartz Sanderson, Esq., MSCC, CHPE, CLMP, CMSP