RateFast Podcast: Digitization of Workers’ Compensation

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.

If you’re a workers’ compensation provider, adjuster, or case manager check out RateFast Express: the service that writes your impairment reports for you!

Workers’ compensation doctors have to fill out a large amount of paperwork involving patient data and measurements. If filled out incorrectly, a claims adjuster will send the claim back for the doctor to fix. This is a waste of everybody’s time.

With digitization, doctors and adjusters alike can use computer software like RateFast to guide them through the process and set a standard so that no mistakes will make it into the finished product. This means no more wasted time and money sending paperwork back and forth to get it right.

Join Dr. Alchemy in his discussion of work comp digitization with Arun Croll and Claire Williams.



Digitization (noun) – the process of converting information into a digital (i.e. computer-readable) format.

Claims adjuster (noun) – an insurance agent who assesses the amount of compensation that should be paid after a person has made a claim on their insurance policy.


Interview Transcription


Narrator: Welcome to the California Work Comp Report, a podcast hosted by Arun Croll and Claire Williams, featuring Dr. John Alchemy.

Arun: Hello everybody, welcome to the California Work Comp Report. Today is Monday, March 23rd, 2015. My name is Arun Croll, and I’m here today with Claire Williams and Dr. John Alchemy. Claire, Dr. John Alchemy, hello.

Claire: Hello.

John: Hey guys.

Arun: So today, we are talking about the digitization of worker’s compensation, the digitization of the work comp process. Dr. Alchemy, what exactly do we mean by this? What is the digitization of work comp?

John: Well, the process of digitization is taking something in the real world and, at the work comp visit, for example, the doctor’s interview with the patient and the doctor’s exam of the patient and the reporting of that information, so it’s this process of taking the real world and overlaying it with a guidance in set of a digital environment or parameters that allows that information to now be put in to a system where very precise calculations can be made, very complete datasets can be prompted from the user, and that meaningful content can then be used to draw consistent conclusions across large numbers of users. So, that’s really what digitization in work comp has in store for us.

Arun: So electronic medical record systems have obviously been on the rise for a while now. To what extent has the worker’s compensation process in California specifically become digitized? Is it digitized at all, is it mostly done on paper, what’s the current state, generally speaking?

John: Well you know, there really isn’t, or hasn’t, been a concerted effort to digitize it by any one group or entity. About the closest that I can say is for example, there are some impairment reporting “software” out there that will basically give you the header of the section of the report, but the user is basically looking at a blinking cursor to ask their own questions and perform their own physical exams at their own direction and level of understanding. So in some ways, reminding someone of just the header of the subject is somewhat a digitization, but what we’re talking about here is going much more in detail, and actually guiding the patient and the medical provider through a very specific process to make sure that the reports are as compliant and complete with the law as possible.

Arun: Okay, so it sounds like the digitization of work comp such as we’re talking about here, basically means getting every part of the work comp process standardized using computer technology.

John: Yeah, I think that’s a pretty accurate assessment of it. And once we have a system that is able to get everyone on the same page, if you will, the claims are gonna move much faster, the consistency of the opinions are going to become much more accurate, and a lot of this wait and delay that is commonplace in work comp management, for every stakeholder in the system, can hopefully be reduced if not go away someday.

Claire: Since we’ve moved into why digitization of worker’s comp is important, is there any reason that you feel that now is the right time to move into this process and to really get it moving forward in the California statewide system as a whole?

John: Yeah, I mean, it’s probably something that would’ve been great to have started a couple of years ago. I think with the rise of cloud computing and centralized data repository, and some of the algorithms that we’re able to do now, the time is definitely now to start this process. And it’s going to be a long process, because this is a totally new notion for an entire industry and arm of government that is basically operating back in the 1960’s with our processing of reporting and communicating and so forth. So I do think now is the time, and part of it is going to be overcoming the cultural change for people, for which there’s always going to be those critics, but ultimately, the process will need to be digitized, much as other parts of businesses already happening.

Claire: And you mentioned that it would benefit the claims moving forward faster and really every stakeholder in the system, does that include the injured worker?

John: Absolutely. And most importantly, the injured worker. These workers, they get caught in the system of inefficiencies and errors, and just drags these claims out so much longer than they have to and then the cases are kicked into the QME-AME [qualified medical evaluator and agreed medical evaluator] side of work comp, and to be honest, the ratings and conclusions are not necessarily any better there than with the primary treaters for the exact reason that I already cited. Everyone’s using what they believe is their own template and they’re doing parts of the exam that they either understand or using parts of the AMA [American Medical Association] Guides that they understand, but overlooking applying the rest of the rules and regulations. So the digitization really has that opportunity to get us all on the same page and make the system more usable and therefore more accurate.

Claire: Right. And you had mentioned sort of getting over the cultural shock, why would people resist the digitization of worker’s compensation?

John: From an accuracy standpoint, everyone has something to gain. It’s faster, it’s gonna be more accurate, there’s less argument about “I included this section of the AMA Guides and you should include it,” that can all improve and go away, but right now the problem is, there’s really no penalty for turning in wildly inaccurate reports or datasets on cases that are mostly incomplete. So I really see that as our biggest cultural barrier to get over. There’s no penalty for doing it wrong, and the system is so ingrained with the error that it doesn’t even realize that it’s there any more in some instances. But once we do digitize the process, the eyes are open. It’s like “Oh my gosh, how is it that we’ve been processing claims this grossly incomplete for this long?” And that’s what I’m really looking forward to, is having a system where people of varying levels of understanding, at a simple glance can see “Oh my gosh, this section is missing 75 percent of the information it should have.”

Arun: So, what we’re talking about here is taking a whole sector of business that is in government and taking these values that are being assigned to work injuries that are currently being eyeballed half the time, and using computer technology and digitization to come up with a completely accurate value for a claim. So, has this kind of, has this happened elsewhere, outside of the medical arena of work comp? If so, what were the results there?

John: Yeah, so the process has really been around for a long time. And like I said, my personal opinion is that California work comp is back in the dark ages. This system of digitization, even though there really weren’t computers around, actually has been going on in the auto industry since the early 1900’s. As soon as there were automobiles, the marketplace was challenged with trying to figure out the value of a car, both new and used–

Arun: Right.

John: And then, back in that time, a guy named Les Kelley showed up and started the Kelley Blue Book. Now, he didn’t have a computer, but he knew some very specific questions that could determine, with great accuracy, how much a car’s value was worth, and how much its resale value was worth, and within a couple of years he basically took over the entire industry all the way from finance to insurance to used car pricing. It’s a pretty impressive story. But it just kind of speaks to the fact that once an industry gets onto something that’s consistent, and everyone can apply evenly, it’s going to take off.

Arun: Definitely. Kelley Blue Book, it’s huge now. It’s a standard.

John: Yeah, it’s absolutely the standard. And the great thing about using the Kelley Blue Book is everyone can pick it up and figure out what their car is worth, because it prompts you for the questions and gives you the possible answers. And that’s one of the great things about digitization, is that you are given a set set of answers, so you’re not guessing, and the information is being properly collected and asked for in the proper format, so it can actually be usable.

Arun: Right.

Claire: Great. So John, how specifically would this model get applied to a work comp case?

John: So the greatest application for what we’re talking about here is ultimately the monetization of the work injury, which is impairment, the impairment report that’s at the end of the claim is MMI [maximum medical improvement]. So how does this look in work comp? We already talked briefly about cars, so for instance in the car digitization, you might get asked the question, “Well, what is the material of the seats?” And the answers are very clear, it’s either it’s leather or cloth. And so you’re not getting an answer like “Well, the seats are flat.” Or “The seats are made of brown material.” So you’re very guided in that process, again going back to the car analogy. So taking this to work comp, what does this look like in an impairment exam? Let me give you an example. A QME is doing a case, which happens to be a right shoulder injury. And the QME is aware enough of the AMA Guides that she actually took two measurements with the goniometer on all planes of motion, which is great.

Arun: Good for her.

John: Yeah, so this report gets submitted, and the report is digitized, meaning that someone takes the information, places it into a standardized format to basically confirm the opinion of the QME. And what the QME either forgot or wasn’t aware of, is that in upper extremities in unilateral injuries like a right shoulder injury, where the left does not hurt, and the left does not have any medical problems, the left side actually is supposed to be measured as well. So as soon as this report is digitized, it becomes apparent to everybody, and they don’t have to be familiar with the AMA Guides, that half of the functional measurement set is missing, okay? So that’s the value of digitizing, because now, a claims adjuster who may be on the first day on the job, or the 20th year on the job, both have the same knowledge set and can very quickly see “You know what? This needs to go back, because we cannot sell this claim, the data is grossly incomplete and here is what we’re missing from the data.” So that’s a good application in an example of how digitization could be used today for improving outcomes, accuracy and consistency in monetizing work injuries.

Claire: Great.

Arun: Yeah, definitely.

Claire: It really clarifies the value. I’m curious about, do you have any estimate of how many of these impairment reports could be assisted by this system?

John: Well, that’s a really good question. What is the financial impact, or how far off-base is this system right now? There was a study done back in 2006 that looked at low back injuries in California work comp in regards to consistency and accuracy for the AMA Guides, and I believe that report actually found as much as 79 percent of the reviewed reports for low back were incorrect. So that’s a pretty big number. And personally in the business I’ve done, I think that number’s actually higher, and that was just looking at low back, but I think the number hovers well into the 90’s. If you’re really going to look at applying the same level of details and application of the rules to every case, we unfortunately have a long way to go. The good news is that we do have a solution and we are hopefully going to be moving in the right direction.

Claire: Great, good to hear.

Arun: What would you say are some of the biggest roadblocks preventing the whole system from moving in this direction to having a digitized, standardized way of collecting this information?

John: Well, I think the largest roadblock right now is going to be some of the culture, because I think that there’s a fear out there from stakeholders who believe that once we start collecting full datasets, that the impairment ratings are gonna go sky-high. They’re gonna go out of control, they’re gonna be higher than what we’re paying now, and that’s a bad thing. And I have to respectfully disagree with those people, because if we back up, the whole issue isn’t if an impairment rating is high or low. The issue is if the impairment rating is correct or not correct.

Arun: Right.

John: And there are a lot of things when these reports get digitized that basically adjust whether or not a piece of the data that’s in that clinical dataset can actually be used or validated for a rating. But again, I think that’s gonna be part of the biggest cultural change, is all the stakeholders are going to say “Oh my god, now that this system’s really transparent, how is this going to affect my bottom line?” And that’s whether you are an injured worker wondering if your value is correct or the insurance company paying on a claim, or an employer who has to pay the premium each year on their work comp insurance.

Arun: We talked a little bit [about this] on the show before, but it seems like there’s nothing for any of the stakeholders to fear from a laser-accurate value that’s been assigned to an injury, because that means less shuffling of papers, fewer phone calls, all the back-and-forth and the drama that can currently associate itself with a work injury claim due to inaccuracy. If it’s accurate enough, then nobody really has grounds to be unhappy about it, to request another examination, or call in a QME. Ultimately it’s saving time to have the most accurate ratings, even if it’s higher than the insurance company wants or lower than the injured worker wants.

John: Yeah, I mean, if everyone can agree that getting the correct value the first time in the claim and not on the third or fourth medical opinion is of value, then you basically have to agree with the concept that digitizing the process is the right thing to do. Unless a stakeholder for some reason would have a value or a positive benefit from reports being delayed, or spending a lot of money on getting the correct or accurate number that may actually never come to light in the current process, digitization is just the obvious thing in front of us that needs to, and will, happen. Again, it’s just a matter of when the stakeholders will wake up and when the technology all comes into place to start moving this forward rapidly.

Arun: Definitely. So, any closing thoughts or closing questions on the subject?

John: I guess for listeners, the only thing I would say is that as we get into the digitization process of work comp, which is not a matter of “if,” it’s just a matter of “when,” when looking at this process, I think it’s very important that before one is too quickly to jump in and criticize it for its incompleteness or its accuracy, we really have to compare it with where we’re at right now and put it into perspective. Secondly, I think it’s a great opportunity for people to take a more active role in really understanding what pieces of a clinical history or a physical exam are important and required for monetizing these cases. So hopefully it can be a positive experience and it can be a learning experience for everyone.

Claire: That sounds settled.

Arun: Alright. Claire Williams, Dr. John Alchemy, thank you for coming on the show today, once again it is Monday, March 23rd, 2015, and you’ve been listening to the California work comp report.


Narrator: Thank you for joining us for 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 worker’s compensation story to share? Find us on Twitter at @ratefast or at rate-fast.com.

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