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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You might not think that they could be related, but there are actually a lot of similarities between the topics of the price of chicken and the price of insurance claims in workers’ comp. For starters, if there is no standard that sets the value of the price for either, then that means the powers that be can charge what they want, with no rhyme or reason.
Who’s to say if you are being overcharged? Join Dr. Alchemy and Claire Williams in their discussion of fair pricing when it comes to both workers’ compensation injuries and fair prices at the supermarket.
MMI (noun) – maximum medical improvement. It occurs when an injured employee reaches a state where his or her condition cannot be improved any further or when a treatment plateau in a person’s healing process is reached.
WPI (noun) – whole person impairment. It is a final value that communicates to the reader what the final measurement loss is in the claim. 0% means that there’s no measurable loss, and 100% means that the individual is nearing requiring support for everything that they do.
Activities of daily living (noun) – (ADL) routine activities that people perform every day without assistance.
Diagnostic test (noun) – a procedure performed to confirm, or determine the presence of disease in an individual suspected of having the disease, usually following the report of symptoms, or based on the results of other medical tests.
Claire Williams: Today is December 3rd, and I’m here with Dr. John Alchemy. Hi, John.
Dr. John Alchemy: Hi, Claire.
Claire Williams: So, today we’re discussing an interesting article about the price of chicken. This article came out about three weeks ago, and it made the claim that chicken prices are perhaps quite inaccurate in the nation. John, can you explain a little bit more what happened?
Dr. John Alchemy: Yeah. So, the price of chicken that grocery stores pay is based on a particular index. And in this particular story, it talks about that index and how an entire industry basically follows it and decides and agrees to pay the price of chicken based on what this index says. So, the interesting thing about the article said that well, perhaps if we really look at the open market, or we look more specifically at the things that actually affect the price of chicken, this index may not be that accurate, which means that all of the stores that are dependent on following the index may be paying the wrong prices for their chicken.
Claire Williams: Right, which is problematic not only for the consumer, but for the stores as well. And just for the industry as a whole, because there’s no watermark of what the price really should be if that index is incorrect.
Dr. John Alchemy: That’s exactly right. And this Georgia chicken document is basically the industry standard, if you will, but when looked at more closely, maybe the industry standard may be wrong.
Claire Williams: So, as fascinating as this is, let’s address why are we discussing this on our California Workers’ Comp Report podcast? What are some of our implications of this concept for workers’ comp in California?
Dr. John Alchemy: Well, I think other than it’s always sort of fun to talk about chicken in general, —
Claire Williams: [laughs]
Dr. John Alchemy: [laughs] Let’s step back and take a look into the California work comp industry as a whole, and take a little bit of a closer look as to how we decide the pricing of work comp injuries, which is arguably one of the larger price tags on people getting hurt in California.
Claire Williams: Mhm.
Dr. John Alchemy: So, looking at the process and how it works, currently, someone gets hurt, they go to a doctor’s office, they get their treatment, and then when that case becomes maximally medically improved, or MMI, that injury needs to be priced out, if you will, using the AMA Guides, 5th Edition. Now, that’s a very complicated document if you read it, and it’s very much like a tax return on an injury. You have to know all the questions, all the measurements. They need to be calculated properly, they need to be combined properly and then ultimately brought to a single value, of what’s called a whole person impairment (WPI), and that’s a value between 0 and 100 percent. An idea between these numbers is that this is a functionally-driven number. It’s supposed to be a true reflection on how functional you are, not necessarily at work, but at life. So you’ve got 34 activities of daily living that you do, you do some specific nerve testing, you can do diagnostic testing, take measurements, et cetera. And if you’re a provider and you are not intimately familiar with it, you are going to be very easily overwhelmed, or you’re only going to operate from a very small portion of this document called the AMA Guides.
Claire Williams: Mhm.
Dr. John Alchemy: And basically, what happens over time is that you know, injuries, because it requires so much knowledge and so much detail to get the actual value of this injury to the stakeholders, the corners start to get cut, guesses start to get made, estimates start to get made, and pretty soon, providers are giving numbers to the stakeholders that may or may not be an accurate reflection of the injury. And that means that injuries are being paid too much, too little, or not at all, when they should be. So this is actually a pretty big deal, and I think it, for the most part, kind of goes unnoticed.
Claire Williams: Mhm.
Dr. John Alchemy: We really, as a consumer of workers’ comp, employers, injured workers, insurance companies and doctors, we really don’t know the quality of these impairment ratings. And what I’ve seen happen before is that people get into this complacency or they get into this system where they believe that a particular injury just has to have a certain value. And if that number is outside of that range of that value, “Why goodness, this is completely wrong and we need a second opinion.” And now it becomes litigated, it’s very expensive, and unfortunately, it just doesn’t have to be that way.
Claire Williams: Basically, people start to almost act as if there were an index for these injuries, when actually the data set needs to be created every time, and that creation takes a fair amount of work.
Dr. John Alchemy: That’s absolutely correct. And maybe another nice analogy is every time you go to the grocery store to get the same loaf of bread, you walk up to the same cash register, but you’re asked a different price for that bread every time you go through. And you’re gonna pay a different price on that bread than the person in front of you, and behind you, and no one really knows why, other than “Hey, this didn’t fall in with what we think it should be, let’s say between a 5 and a 7. This is a 19, no, it can’t be correct.” Or “This is a 0, hmm, that can’t be correct either, I don’t think.” But I don’t know, and hey, if they give me some price at checkout between 5 and 8 dollars, I’m just not going to ask any questions. I’m just going to go forward, ‘cause I just want to get on with things.
Claire Williams: Right.
Dr. John Alchemy: Yeah.
Claire Williams: And so, is there any way forward? How, ideally, should work injuries be priced? How should that price tag be developed for work injuries?
Dr. John Alchemy: Well, you know, these injuries are like anything else — there is a particular set of data that needs to be known about them. I think the real problem and disconnect we’ve had in the system is that no one really understands the completeness of the data when they look at an impairment rating. That’s one of the issues. The other issues are the quality and the measurements actually being performed, as opposed to estimated. So for instance, if I ask you to bend forward in the clinic and I kinda eyeball it and say “Yeah, Claire, it looks like when you bend forward, you’re maybe 30 degrees.”
Claire Williams: Mhm.
Dr. John Alchemy: As opposed to actually getting the tool, putting it on your back and finding out hey, you know, that was actually 62 degrees. And the difference between those two numbers could be thousands of dollars for the stakeholders, up or down, and that is a real problem that gets me about this issue and brings us back to the chicken index: We’re paying prices on things that we can know the price, but we’re either choosing to continue with the system, or a way of moving these prices through, that we’re either looking the other way because we don’t wanna know, or it’s just too much work to find out what the real price is. So there can be a couple of reasons why, but I think those are the two biggest issues.
Claire Williams: Yeah, it’s much easier, in a sense, to just accept the price of chicken and go home and barbecue or whatever, than to go and litigate or to go through that whole work of the data set to get an appropriate price.
Dr. John Alchemy: You know, that’s absolutely right. And unfortunately, sometimes when the stakeholders decide to litigate, they’re litigating, again, based on this blind intuition that “Well, I think that this injury has to be more than what’s been published,” or “My rating was too low” or “The rating’s too high,” and the insurance adjuster is looking at it. To be honest, insurance adjusters and the attorneys are not that much more sophisticated about finding the real injury, because they tend to just use the same tools that were used to create the first price.
Claire Williams: Mhm.
Dr. John Alchemy: “Maybe if we price it enough times, we’re gonna get a price that we want,” you know. And that is not what the system is about. The system should be about using the actual rules that we have provided for us, and applying them in a systematic way that we can understand that “Hey, when this five percent on this injury was delivered, the doctor only used 15 percent of the data set required for generating the injury price.” That’s what we really need to know, because once you know that, then the pricing becomes very easy and all these questions can go away.
Claire Williams: Right. And so, you’ve been working on a service called RateFast, which addresses some of these problems. Can you talk about how it provides a solution to this?
Dr. John Alchemy: So, RateFast was created exactly for this reason. There were a group of doctors that came to me, and they said “Hey, you do a lot of impairment rating, this is something that you like to do, it isn’t something that we like to do or that we want to really learn 100 percent, yet, we want to have access and the ability to write these reports, for the insurance companies and the stakeholders and the patients, and we want them to be accurate. What can you do for me that will put a tool in my hand that will guide me through this process so I don’t miss anything, I don’t make any manual calculations, and I can move the stakeholders forward to some resolution?” And that’s kind of the whole idea when RateFast was born.
We wanted to give everyone a tool, and this isn’t just doctors, but it started with doctors. We wanted to give everyone a tool so they could simply put in a body part, ask all of the essential questions without getting bogged down with all the possible questions that can come up about an injury, and give them a laser focus as to what needs to be measured, how it needs to be measured, and get that in and let the program platform basically detail, validate and publish this report in totality so we have a nice, clean answer that’s defensible.
One of the things that was really interesting is once we got RateFast up and running, we weren’t getting any letters any more about the claim value. They just went away overnight. And our clients and the doctors, they weren’t getting letters back from insurance carriers or attorneys saying “We think this is too high,” “We think this is too low,” and really what happened is of the letters that did return, they were letters about education, okay? Or “Why did you take three measurements?” And that’s a very easy one, because we can be very specific. “Well, that’s on Page 375, Column 2, that’s why we took three measurements.” Or I had another adjuster call in the other day, saying “Hey, you know, there was a rating here on a hernia, and they got three percent. There’s no hernia, the guy’s not having any pain, why is this?” And the discussion we had was “Well that was based on the skin. The guy got a permanent scar, it has some symptoms with it, it’s got a symptom, here are the ADL’s that it impaired, and that’s why the number came up this way.” And she said “Oh great, thank you very much,” and hung up the phone. So when you have a tool that is transparent about the pricing, the data collection, and the conclusion, now we’re working in a collaborative environment about education and helping get those measurements that are most accurate and complete for the rating, as opposed to fighting about “I want this to be lower” for whatever reason,or “I want this claim to be higher,” and that can really go away.
And it’s not just theory, it’s really what happens when people start looking and reading and writing reports using the RateFast platform. So I’m really excited about it, not only because I work on the platform, but because of the transformation that I have seen in the segment of injured workers and employers, attorneys and adjusters, that are now having access to much, much more accurate reports. And reports that are reflective, conclusive, and they’re unique to the injured worker, and not just a standardized rubber stamp value, which is how most of the pricing on work comp injuries has been, and is, still, in California.
Claire Williams: Right, yeah, acting as if there was that index, again, and it’s interesting to me that this new story about the chicken pricing came out, it got published and disseminated in a couple of big places around the nation, and this is a very established industry, but it is, in the end, still dealing with chicken. And here we have human lives at stake, and a million dollar industry, and this trend has been going on for a long time. And so it seems like the time is right for a solution like RateFast to come in and to really change how things are done.
Dr. John Alchemy: You know, I agree with that, Claire. California work comp is a multi-billion dollar industry, annually, and the thing that was interesting, I think, about the chicken pricing index is how it actually directly affects us and the prices that we pay at the grocery store for chicken. That’s why I think when articles like this come out, they tend to be interesting and engaging, because it’s something we can all identify with. “Am I paying too much? Why am I paying this for chicken?” And so it helps us stop and ask this question about what do we really base value on, and I think the bigger takeaway from this whole podcast here is going to be “What about the quality of pricing?” Not just pricing, but the quality of pricing that we look at that determine that price each time we pay it. That’s what I really would like our listeners to think about in workers’ comp, is “When this injury gets priced, why am I paying it, and is it the right value?”
Claire Williams: Definitely, and you know, even, for all Californians, as taxpayers, we are all of, have a stake in this system, and it is sort of as dire as the chicken situation.
Dr. John Alchemy: [laughs] Unfortunately, it kind of is when you get a total view on what’s going on here, and anyone who works in California, anyone who knows someone who got hurt at work, or anyone who is dependent on someone who got hurt at work.
Claire Williams: Right.
Dr. John Alchemy: There are millions of lives that are affected and there’s over half a million new injuries a year in California. This is big business, and it’s big stuff, and it addresses everyone from the huge corporation who has to pay for pricing and pay work comp premiums, down to the injured worker who has to live with the results of the price they’re given for their injury.
Claire Williams: Definitely. Well, we’ll look forward to bringing some more content about RateFast and data sets forward in the next couple of weeks as we go on to speak with a couple of other medical providers, but do you have any closing thoughts for today’s podcast, John?
Dr. John Alchemy: Well, I think when we leave this discussion here, if people listening to the podcast could think about the next time they look at an impairment value, or the price of a work comp injury or the cost of a work comp injury, or even consider and think about how a permanent injury is valued.
Claire Williams: Mhm.
Dr. John Alchemy: I mean, that price has to go on for the rest of that injured workers’ life, and that number needs to be accurate. I also want everyone to think about the delay and the confusion and the additional costs when there’s fighting over the actual price of an injury, and how intensive that is for resources and time, and additional costs in order to try to bring conflict to resolution. And I just want people to leave and know that there is a solution, and that RateFast is definitely one of those solutions that works tirelessly to get the results in front of the stakeholders and make sure that the injury that is priced, and/or the chicken that you’re paying for in the grocery store [laughs] is accurate and the right price for everyone.
Claire Williams: Definitely, great. Well, thanks so much, this has been a fascinating topic, and we’ll look forward to next time.
Dr. John Alchemy: Any time, thank you, bye-bye, Claire.
Claire Williams: Bye.
Narrator: Thank you for joining us for this episode of the California Workers’ Comp Report. You can follow RateFast on Twitter at @ratefast, or visit www.rate-fast.com to learn more.