Independent medical evaluations (IMEs) are at the foundation of a workers’ compensation claim. A lawyer, insurance adjuster, or medical expert trying to support a payout amount or settle a dispute relies on the patient’s medical history. In order to prove a worker was impacted by an accident or injury, at least some evaluation of medical records needs to be made. Prior injuries, doctor visits, examinations, or bloodwork can all take up dozens – if not hundreds — of pages in a file. These pages offer the details on which a workers’ compensation case is made. 

In other words, medical-legal costs are here to stay. Medical records review is an essential part of a claim, and one not many claimants can avoid. Medical history becomes a problem only when the process is cost-prohibitive or leads to a long wait. This is already the case in some jurisdictions, like California, where medical legal fees for workers’ compensation claims have skyrocketed in recent years.

Why is California workers’ comp so expensive?

Rising IME costs in California are due in part to changes in the medical-legal fee schedule for workers’ compensation. In provisions set out by the Division of Workers’ Compensation (DWC), the new fee schedule came into place as of March of 2021. 

The IME fee schedule was intended to reduce abuses of hourly billing. The DWC had seen a 240% increase in these hourly fees over the previous decade, and the proposed solution was a schedule based flat fee for IMEs. The new fee schedule included both a flat fee and a per-page fee amounting to more than $2000 for 200 pages of evaluations. Pages processed by medical professionals above this amount are billed at $3 per page, plus additional fees for follow-up evaluations and provisions for missed appointments. 

The new workers’ comp costs have resulted in an average workers’ compensation settlement of around $35,000 in California. Each medical legal report makes up $2000, at minimum, of these costs: say a person in their 40s was exposed to a caustic cleaning product at work, leading to a severe chemical burn and PTSD. The defendant’s insurance now needs to pay $2000 for the dermatologist’s report, $2000 for the psychologist assessment, plus an extra $3 per page for any pages of medical review leading up to these evaluations. Since they are in their 40s, these extra pages within their medical history file can number into the thousands. 

This will quickly add up to massive costs for the defendant’s insurance company - which, ultimately, will lead to rising costs for workers’ comp. 

Medical records are at the center of skyrocketing costs

In the example above, the patient has thousands of pages of prior medical records, even before the accident happened – but what about duplicates? After the injury, the medical facility that refers the patient to both specialists uses an electronic medical record system (EMR). They send the patient’s medical records to the dermatologist, who has their own EMR. They do the same for the psychologist, who receives the medical records via physical mail and stores them in the filing cabinet. 

All 3 specialists send the records, at the lawyer’s request, to the IME for evaluation. Now this patient has 3 sets of records, 2 of which are electronic, plus any other medical documentation. They are almost certainly going to be charged over and above the $2000, at $3 per page, potentially by both a dermatology IME and a psychologist.

Records review is the solution to rising workers’ comp costs

Stakeholders at the California Workers’ Compensation Institute (CWCI) which represents 83% of workers’ compensation insurers in California, had already expressed concern about the changed legislation. In a letter sent 3 months before the new rules came into place, the CWCI argued the fee schedule also required a mandatory records organizer to control costs. 

The records organizer would serve to eliminate duplicate pages and ensure no party ends up paying duplicate costs “and ensure that a single, discrete set of chronologically sorted records would be presented to the provider.  That process would benefit all participants, including medical-legal providers, claims administrators, and injured workers.”

While the new fee schedule was intended to reduce hourly billing abuses, the result was skyrocketing costs for just about everyone involved. Paperwork is a known costly burden for claims professionals, but AI-powered technology can accomplish this record review in a fraction of the time. Records organization is a critical step in the claims process – and streamlining it can end up helping everyone involved.