California Workers’ Comp Med-Legal Costs up Sharply Under New Fee Schedule

Payments for medical-legal evaluations and reports used to resolve medical disputes in California worker injury claims rose more than expected since a new Med-Legal Fee Schedule (MLFS) took effect in 2021, according to a new study.

The study by the California Workers’ Compensation Institute shows the average payment for a comprehensive exam was up 52%, primarily due to new per-page fees for record review that are paid on top of flat fees for med-legal evaluations services.

Additionally, 2023 saw a 6% increase in Qualified Medical Evaluators compared with pre-pandemic levels.

Implementation of the updated MLFS for the California workers’ comp system three years ago led to a comprehensive overhaul of the payment formulas for med-legal evaluations and reports, according to CWCI.

Complexity and time-based payments in effect since 2006 were replaced with flat fees and payments for record reviews exceeding specific page thresholds were added. When the Division of Workers’ Compensation adopted the new schedule, it anticipated it would result in a 25% increase in payment levels to adequately compensate med-legal evaluators, the study shows.

CWCI’s study analyzed changes in evaluation and report patterns and payments. 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 the mix of med-legal services found a big shift between April 2021 and 2023 in the use of follow-up exams, which was anticipated as the new MLFS calls for the follow-up evaluation code to be used for 18 months after the preceding comprehensive exam, versus 9 months under the 2006 schedule.

Other findings in the study 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.
• Additional charges for excess record review were found on 43.3% of the comprehensive evaluations, 24.9% of the follow-up evaluations and 30.8% of the 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.
• The number of certified QMEs rose 5.9% from 2,561 in 2019 to 2,712 in 2023. That improvement, however, has been offset somewhat by a 2.9% increase in the number of panel assignments over the same period, resulting in a net gain of about 3 percent.
• Physicians specializing in orthopedic surgery provided 44% of the med-legal services in 2023, followed by chiropractors who provided 11% of the services.

The report, “Increased Medical-Legal Costs and Current QME Supply – Impact of the 2021 Medical-Legal Fee Schedule,” is available to members and subscribers for purchase at the group’s website.