This article is a transcription of an episode of the RateFast podcast, which you can listen to by searching “RateFast” in iTunes or the iOS podcast store.
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The AMA Guides are the most commonly-used and influential workers’ compensation impairment calculation system in the United States, as well as in many other countries. In fact, they are the law when it comes to workers’ comp cases in California. Therefore, it is very important for anyone working in the workers’ comp field to have a copy on hand.
The Guides are especially important because they set a standard wherein different doctors observing the same symptoms can arrive at the same conclusions. The less confusion about impairment ratings overall, the faster cases can be processed and the more predictable insurance costs become.
AMA Guides (noun) – the American Medical Association Guides to the Evaluation of Permanent Impairment, which are the guides used in workers’ compensation cases to calculate impairment in workers and create accurate reports.
Goniometer (noun) – an instrument for the precise measurement of angles.
Impairment rating (noun) – a rating number that is used to assess the degree of damage that results from an employee’s work-related injury or occupational disease.
Radiculopathy (noun) – Any pathological condition of the nerve roots.
John: Hello, and welcome. My name is Dr. John Alchemy, and you’re listening to the California Work Comp Report. And today, it is my pleasure to have attorney Phil Walker join us today. And we’re gonna be talking about something near and dear to Phil’s heart, and my heart as well: The AMA Guides, 5th Edition. Phil, welcome.
Phil: Thank you, John. It’s very nice to be here.
John: Hey Phil, before we really get into the talk here, can you tell us about how you became one of the experts, and why you fell in love with the AMA Guides? It sounds crazy, but you know, you’re one of these individuals who is really driven to teach and to learn, and know everything between the covers of that book. Give us a little background.
Phil: That’s exactly right. And literally, it happened kind of through a fluke. It turns out that in America, there are now 44 states that use the AMA Guides to calculate permanent impairment in their workers’ comp systems. And in fact, the AMA Guides themselves, that is the most widely-used book in the world for calculating impairment. It’s used in all commonwealth countries – England, Australia, New Zealand. It’s used in many places outside workers’ comp, used in automobile accident cases in Canada, for instance. It’s used in other workers’ comp systems: the federal employees’ compensation system, it’s used in the Longshore and Harbor Workers’ Compensation Act, which covers people who work in harbors. And so, in 2004, California had reached an absolute crisis in workers’ comp. The premiums for our employers had gone up over 100 percent a year, for 4 years.
John: Wow. [laughs]
Phil: For four years in a row, they were going up a hundred percent. Think of that, and it turns out that over the course of this period, the amount our employers were paying for workers’ comp over a series of less than 10 years increased tenfold. The end result was, think of it this way: if your rent was $100 a month, 4 years later, your rent was $1,000 a month. And that’s exactly what happened in workers’ comp. Well, what would you do if your rent went up like that? You’ve move. And that’s what began happening in California. Employers began leaving in droves, because our workers’ compensation system was so ferociously expensive compared to every other state. And employers said, ‘If we can work in another place and pay less in workers’ comp, we’re going to go there.’ And this literally became what was called the Workers’ Comp Crisis. Well, a series of solutions were put together, trying to literally bring the cost of workers’ comp down. And one of the solutions that was brought to California was ‘Okay, California. Why don’t you do what over 40 other states do? Instead of having your own way, your own little book on how you measure impairment when people suffer injuries on the job, why don’t you adopt the AMA Guides?’ And ultimately, on April 19, 2004, California became the 43rd state in America to adopt the AMA Guides for its workers’ comp system. And the whole goal of adopting the Guides was so that different doctors, seeing the same problems in a patient, would come up with the same permanent impairment rating. Pretty simple.
John: Got it.
Phil: Really simple.
John: Sounds good.
Phil: Let me give you a classic example.
Phil: If an arm is fully amputated, under the AMA Guides, that is equal to 60 percent whole-person impairment.
Phil: Well, shouldn’t every single doctor be able to come up with that same result? And the answer is, yes.
Phil: Yes, absolutely. And so California wanted to adopt the system where all doctors could come up with the same permanent impairment ratings. And the reason California wanted this is, before the Guides were adopted, one of our big problems had been doctors would rate out impairments in all different ways. In Northern California, if you had a lumbar sprain, that would be rated as a 10 percent permanent disability. But in Southern California, it would be rated as a 25, up to 40 percent permanent disability. And the ratings were literally all over the board. And that was one of the reasons workers’ comp cost so much, is because you never knew how much it was going to cost. And insurance companies, as a result of that, charged whopping premiums, because they never knew how much was going to have to be paid on any case.
John: Got it.
Phil: So, how did I get involved? Well, when California adopted the AMA Guides, they needed some people to teach them how to use them. And I had worked in another area of law, the Longshore (and Harbor Workers’ Compensation) Act, which covers people who are injured on vessels and in harbors and on bridges, and I had been working with the AMA Guides for well over 20 years. So suddenly when California adopted this, people said ‘Oh, we need somebody who knows California workers’ comp and who knows the AMA Guides.’ And suddenly people said ‘Well, there’s this guy, Phil Walker, and he does both, he does Longshore and California workers’ comp, so he’ll know ‘em both.’ And literally, my phone began to ring off the hook. And I spent over two years traveling all over the state of California, training people on how to use the Guides. And that was a really wonderful, wonderful experience of getting to meet so many great people in the workers’ comp business. So that is how, that’s how I came to it, and I have been working with the AMA Guides in California now, since 2004, April 19, 2004, so we’ve now had them about a little over 11 years. And I’m still working, helping doctors, claims examiners, employers, all kinds of attorneys, anyone who wants to learn how to use the Guides and how to do correct calculations, that’s what I help them do.
John: So Phil, you know, you and I both know there’s no silver bullet, and the whole idea here was “The AMA Guides is going to standardize somewhat the opinions, make it so everyone’s got the same yardstick,” which sounds great, but – after it went into play, what kind of challenges did you see arise from the AMA Guides?
Phil: [laughs] Well, the AMA Guides, bottom line, are in many ways measurement or physical finding-oriented. And what I mean by that is, if a shoulder has lost range of motion, they calculate the impairment in that shoulder based on how much motion is lost. There are other ratings that are based on physical findings – is there muscle spasm? Is there muscle guarding? Are there absent reflexes consistent with radiculopathy? Is there unilateral atrophy consistent with radiculopathy? What’s the patients’ blood pressure? Is the blood pressure hypertensive, state 1, 2, and 3? Even on medication? If so, is there evidence of left ventricular hypertrophy, or copper wire, and – You see, everything I’m listing is something you can see, touch, or measure.
Phil: And so, this is what the whole AMA Guides is based on, is let us use things that we can see, touch and measure, and from that, calculate the impairment. And you can understand, John, that theoretically, if a patient is at a stable point, three different doctors examining him at that point should be able to see and measure the same things. And as a result, they should be able to come out with the same rating. So the challenge is, which doctors had, the three challenges were first: What data do I need to have in order to do this rating?
Phil: I’ll use a very simple example: If they’re measuring a shoulder, what motion measurements do I need? And in a shoulder, we would need flexion, extension, abduction, adduction, internal rotation, external rotation. But there’s more: How many of those measurements do we need? We need a minimum of two. How close do they have to be to each other to be considered valid? Within 10 percent of each other. Of the two, which do I use, if they fall within 10 percent? You use the higher to calculate impairment. So the doctors had to first learn what data needed to be gathered, and then they needed to learn what the rules were for the use of that data, basically. And then, they needed to learn how to go to the various charts in the AMA Guides, and put that data on the chart, and from that, get a conclusion. A conclusion that would say ‘This is 5 percent whole-person impairment,’ for instance. And the three challenges that immediately became clear were, and the doctors will appreciate this: There are 18 chapters in the AMA Guides. Each chapter was written by a different committee. The committees didn’t talk to each other. And so, the chapters often had different rules, or different kinds of charts. They weren’t consistent. Often, the rule or guidance you needed was hidden somewhere in the text. And quite candidly, the index to the 5th Edition is probably one of the worst indexes you’ve ever seen in your entire life, because it doesn’t have anything in it.
Phil: And the reason for that is because so many of the chapters were handed in literally within about 48 hours of when the book was going to press, and the editor didn’t have time to create a thorough index. So the end result of all of this is that suddenly doctors were presented with a book that was 600 pages long, nobody had given them guidance on what data they needed to gather, what rules governed how they used that, how to place it on charts, and how to combine all that to measure permanent impairment, basically. And so I, along with many others, became the guide, basically. The guide through the Guides. The person who would say “Doctors, here’s a 600-page book, but I’m going to distill it down to 40 pages for you, and here are the 40 pages that you need to know.” And I actually created what became the CliffsNotes of the AMA Guides to help people through it. And so those were the challenges that the doctors faced.
John: So Phil, let me go out on a limb, and I look at a few doctor’s impairment reports as well — [sigh] You know a lot of them just do not contain the essential data to correctly calculate a report. So what happened, and why does this still occur, and what needs to happen to fix this? We have a ways to go.
Phil: Yeah. So, what happened? Often, the Guides required more precision than doctors were used to using in their practices. For instance, when the three shoulder measurements are, when you make measurements of flexion in the shoulder, it must be done using a goniometer, not just eyeballing it. Second, it has to be to the exact degree. Many doctors were used to just saying 130, 140, 150, whatever.
Phil: And so the Guides required a little more precision than they had been using in their practices.
Phil: So, what would end up happening? When the doctor had not followed the rules of the Guides, in terms of how many measurements had to be done, how close, within what percentage did they have to be, using a goniometer, going to the exact degree, using the highest of the two measurements, okay? Then his report could be attacked and thrown out of court, basically.
Phil: Because it wasn’t consistent with the Guides.
Phil: And so what ended up happening is, either doctors got deposed by attorneys to question them on the information that wasn’t there, often they would get letters back from claims examiners, saying “You haven’t provided this information that I need and payment to you is gonna be delayed until I get that,” and then there were lots of challenges in court. “This doctor didn’t do the rating the way he’s supposed to, under the AMA Guides, and therefore his report should be thrown out.” And literally, these battles still go on to this very day. I spend probably three days per week reviewing medical reports to determine if they are correct under the AMA Guides or not. And I render an expert opinion on that, and if they’re not, that doctor’s report is often challenged in court. It’s just that simple. And, and – a lot of this came because doctors were trying to teach themselves this 600-page book, and that’s pretty hard to do, I’ve gotta tell you. You can do it, there’s no question, but it can sure take a lot of time. And unfortunately, because the book was written by committees, it’s not organized in a very coherent or consistent way.
John: And I’m gonna jump in here, Phil, and say, another piece of collateral damage from this that I’ve seen, are a lot of doctors in practice, they’re happy to see the patient, they’re happy to treat them, but when it comes time for the rating, say “No thanks, I’m not gonna do the rating.”
Phil: Well, this is absolutely right. And I can kind of understand why.
Phil: Because the doctor looks at this 600-page book and kind of says to himself, “Well this is kind of like I have to learn to speak French.”
Phil: “Before I can write this report.” And it literally appears overwhelming to him. And he thinks, “If I don’t do it right then I’m gonna have a deposition and some lawyer is gonna rip me to shreds and I don’t want to go through with that,” and you know. And he thinks it’s not worth it. And so in my experience, and so really what was happening there, was the doctor was saying “I don’t have the time, and I don’t have the time really to become the expert in the AMA Guides that I wanna be, and that I am in the rest of my medical practice, and so I’m just not gonna do it,” basically.
Phil: And what I have been literally blown away by is the RateFast program that was put together, which essentially is a computer program that tells the doctor what data he needs to gather. And then if it applies, the rules from the Guides on how that data is to be utilized. It then takes that data and applies it to the charts that calculate impairment, and it literally does the calculations for you. And so what it does, that’s astonishing to me is, it can take a doctor who has no background in the AMA Guides whatsoever, and literally turn him into an expert, the first rating he does. And it tells him exactly what to do. And if you simply follow, you provide the data that it requests and you put that data in, out will pop a perfect rating, 100 percent of the time.
John: Yeah, I think that that’s something to talk about, what kind of tools are now available that this doesn’t have to happen any more, and doctors don’t have to struggle and get letters back and feel like they’re spending 8 hours and getting paid for 20 minutes. That kind of situation.
Phil: Yeah. And, remember that if the doctor is, so – two things that come directly from my practice and what I do.
Phil: I teach all over the state of California to claims departments, employers, personnel departments, attorneys, I teach all the — a lot of the big law firms in California, and I help their attorneys and claims people on AMA Guides ratings. And the number one question that claims examiners ask me is, which doctors do correct ratings?
Phil: And I say very simply, doctors who use the RateFast program.
Phil: It’s pretty simple. And the rest of my practice, other than teaching, is, I review reports to see if doctors have done them correctly. And to be blunt, out of the reports that I see, 90 percent of them are incorrect. And so what do I do? I help by preparing letters that are going to go to the doctor, trying to get him to apply the correct pages, I help lawyers put their questions together for depositions to the doctor, and I even testify in court as an expert on why the doctor’s report is wrong under the AMA Guides. And none of this is a matter of opinion, it’s simply “The Guides say X, and here’s where it says it, I’ll read you the quote, Your Honor. And here’s the deal: The doctor didn’t follow that, so he didn’t follow the Guides.” There’s nothing super complicated about it.
John: Yeah, and something else I’m gonna add here, for our listeners, as well, is: You know, I use RateFast, obviously. I helped design it and build it and put it together, and I thought it would be interesting: what kind of error rate would I have if I didn’t have a structured system to go see the patient? So here’s what I did – I did two weeks of impairment ratings without having RateFast in the room, okay? And I wrote everything down, just like I did before RateFast existed. Before I left the room, I opened up the software, it’s iPad, easy. I looked at it. I made mistakes, omissions, leaving things out 30 to 60 percent of the time, and I do a lot of ratings. Now if I’m making that kind of error, what chance does a doc have of doing a good report if they’re only doing two and three a week?
Phil: Yeah, it’s very, very low.
Phil: Very low.
John: Yeah, it is. So, the AMA, I think, set the bar in a different way, but without this Guide in the room to follow, it’s very, very challenging for a doc to be on task and be at the top of the game every time. Very hard.
Phil: Yes, it’s very difficult, especially if you’re not just doing ratings, you know, 8 hours a day, basically.
Phil: If you’ve got other parts of your medical practice, it’s like anything — if you do it all the time, you gain familiarity, but when you’re not doing it all the time, you forget things and you lose them.
John: Yeah. And one other thing, Phil – and I’m interested to get your take on this – I often hear, and I’ve gotten letters before from both sides of the fence: Why is the rating so high? Why is the rating so low? And the letter that I write back, that never really gets answered, is that ‘Ratings are not high or low, they are correct or incorrect. What is your question?’ And I think people have this preconceived issue that’s sort of left over from the old system that “A back should never be more than 10.” Or you know, “It has to be 15.” Those kind of habits are hard to die.
Phil: That’s, that’s exactly right. That’s exactly right. And what a rating is trying to capture, in truth, is kind of what percentage of the things that a normal, completely healthy person can do, is this patient unable to do because of the problem he’s got? Fundamentally, that’s really what it is. But you’re absolutely right, John, is these concepts of “Is the rating too high? Is the rating too low?”, the essential question is, “Is the rating consistent with the instructions given in the Guides, or not?” Okay? Because the Guides are the law of California. And so the final, and, one of the, I’m sure all the doctors know the term from the famous Escobedo decision, a report must be substantial medical evidence. While there are eight things that comprise substantial medical evidence, the 8th one is that the doctor must correctly apply the law of California for a judge to use his report. And the AMA Guides were incorporated into the California Labor Code. Therefore, if the rating is not correct, under Escobedo, the workers’ comp judge may not rely on the report in rendering his decision.
John: Simple as that.
Phil: Simple as that.
John: Great, so let me wrap up. Doctors in California need to follow the AMA Guides if they’re going to be doing impairment ratings.
John: Many impairment ratings are incorrect, because the data set collected is incomplete.
John: If doctors, adjusters, attorneys and stakeholders have a system that helps them systematically understand what needs to be in a report, that is the easiest way to understand if a rating is complete and correct.
Phil: That’s exactly right.
John: And if I’m a doctor, and I’m doing correct, complete reports, I’m not only going to get less letters, I’m going to get more business, I’m gonna have patients who need less attorneys, and stakeholders and insurance companies who can settle claims quickly and get people the benefits they need.
John: Phil, it has been a pleasure talking with you today. I really appreciate it. Will you please tell our listeners, if they have any questions, or would like to learn more, how to get a hold of you?
Phil: Sure. The easiest way to reach me is by email, at firstname.lastname@example.org. Just send me the email — it usually takes me about 48 hours to get back to you, and I always tell people I’m happy to help and happy to provide what information I can, and it is free. And when was the last time a lawyer gave you something for free?
Phil: So hopefully people will always remember that.
John: Alright, well you’ve been listening to the California Workers’ Compensation Report, I am Dr. John Alchemy, I was joined today by Phil Walker. To learn more about California impairment rating, and correct and accurate reports, please come join us at rate-fast.com, click on our blog, and purview our educational section. Thank you.
Narrator: Thank you for joining us on this episode of the California Work Comp Report. We look forward to next week in continuing our discussion of work comp claims in California. Questions or comments? Got a great workers’ compensation story to share? Find us on Twitter at @ratefast or at rate-fast.com.