Health Law Advisory Bulletin
Medical Provider Networks: The Newest Model for
Treatment of Injured Employees?
By Thomas
E. Jeffry, Jr. and Robyn Todd
[November 2004]
As part of Workers’ Compensation reform enacted
earlier this year by the California legislature, emergency regulations
were adopted to allow insurance carriers and self-insured employers
to create networks of health care providers who will render diagnosis
and treatment to injured employees. Beginning January 1, employees
will have to choose providers who are listed in the network approved
in advance by the Director of Workers’ Compensation. This
is different than the current system (which still applies to employers
not offering medical provider networks), in which employees are
able to choose their own physicians after 30 days.
Although creation of such networks is voluntary,
most insurers and many self-insured employers are scrambling to
establish approved medical provider networks (MPN) in an attempt
to curb high health care costs. In order to satisfy access requirements
set forth in the regulations, networks will need to contract with
both occupational and non-occupational physicians who are located
within the general area where the covered employees work and live.
The networks will contract for both primary care and specialty physicians
and may include ancillary health care providers.
As an alternative, these insurers and employers can
contract with certain types of alternative networks such as HMOs
or workers’ compensation Health Care Organizations (HCOs)
that are already licensed or registered with their own network of
physicians and ancillary providers in place.
Those self-insured employers (or the third-party administrators
who act on their behalf) and insurers who decide to create their
own networks will need to identify groups of physicians in defined
geographic areas who will participate. These employer and insurers
may find it easier to enter into contracts with physician contracting
organizations such as IPAs or PPOs that have already contracted
with physicians and other providers for health care services. Such
arrangements could help simplify and expedite the approval of the
network to the extent such organizations have already credentialed
and contracted with physicians.
As health law attorneys experienced in provider contracts
and the creation of contracting networks, the lawyers at Davis Wright
Tremaine can assist in with the development of contracts as well
as the preparations and submission of applications to approve these
new networks.
MEDICAL PROVIDER NETWORKS
Legal background
Beginning Jan. 1, 2005, self-insured employers and
workers’ compensation insurers may voluntarily operate MPNs
to provide treatment to injured employees. MPNs were authorized
by the workers’ compensation reform bill enacted in April,
2004 (Senate Bill 899).
In accordance with a mandate under this new law, the
California Division of Workers’ Compensation (DWC) released
new regulations, effective Nov. 1, 2004, to implement the creation
of MPNs. Employers and insurers who use MPNs may require employees
to obtain treatment for work-related injuries only from providers
within the MPN, except in those instances where the employee can
show that out-of-network services are medically necessary.
As a result, physicians who want access to workers’
compensation patients may need to become part of one or more MPNs.
Although physicians cannot apply to DWC for approval of MPNs themselves,
they can facilitate the application of a self-insured employer or
insurer to establish an MPN. Existing physician contracting organizations
can proactively pre-package themselves into a network and approach
employers and insurers themselves. However, they first should understand
the specific requirements for an MPN as discussed below.
The basics
Employers and insurers are not required to establish
MPNs under the law and regulations; the creation and use of MPNs
is voluntary. However, it is likely that MPNs will become the preferable
way to arrange for the treatment of injured employees because of
the potential cost savings network organizations can offer.
Before the MPN may begin operating, one of four eligible
entities must obtain apply and obtain approval of the MPN by the
DWC through the application process described in § 9767.3 of
Title 8 of the California Code of Regulations CCR). DWC began accepting
applications on November 1. However, MPN operations may begin no
earlier than Jan. 1, 2005. The four entities eligible to apply for
MPN approval are (1) workers’ compensation insurers, (2) the
state, (3) a joint powers authority, and (4) self-insured employers.
Providers cannot independently apply to the DWC for approval of
an MPN, but they (and others, such as third-party administrators)
may assist in the preparation of an application. Ultimate responsibility
for the contents of the application rests with the applicant. An
officer or employee of the applicant – and only of the applicant
– must attest to the veracity of the application’s contents.
Some organizations are “deemed approved”
as part of an MPN as long as they offer the proper mix of physicians
required under the regulations (as more fully described below),
and as long as the entity’s network has not been modified
since its original certification by DWC. However, the employer or
insurer must still file abbreviated applications with the DWC under
8 CCR § 9767.3(e) or (f). The “deemed approved”
entities are HCOs certified under Labor Code § 4600.5, health
care service plans licensed pursuant to Health and Safety Code §
1340 et seq., group disability insurance policies as defined in
Insurance Code § 106(b), and a Taft-Hartley health and welfare
fund. Therefore, providers may become part of an MPN if they already
contract directly with a deemed entity.
The MPN application process – and subsequent
establishment and operation of MPNs – is quite comprehensive.
A complete application requires, among other things, a detailed
listing of every provider in the network, the identification of
the number of employees and geographical areas to be served by the
MPN, a continuity of care policy, a transfer of care policy, an
economic profiling policy, a detailed employee notification process,
a procedure for dealing with patient requests for second and third
opinions (as required under the law), a procedure for employees
to obtain treatment outside of the MPN, and the geographical maintenance
of providers according to certain time and distance standards. Each
MPN application must also include the name, address, specialty,
and tax identification number for each physician and other provider
in the network. The applicant must confirm that a contractual arrangement
exists between (1) the MPN applicant and the individual physicians
in the MPN, or (2) the MPN applicant and the provider organization
whose members or groups are in the MPN.
Providers within MPNs are required to provide treatment
according to a medical treatment utilization schedule adopted by
the DWC or, prior to its adoption, the American College of Occupational
and Environmental Medicine’s (ACOEM) Occupational Medicine
Practice Guidelines. For injuries not covered by the ACOEM Guidelines
or the DWC’s schedule, treatment must be in accordance with
“other evidence based medical treatment guidelines generally
recognized by the national medical community and that are scientifically
based.”
Providers and MPNs
Providers who wish to become part of an MPN
can do one of two things: (1) join an existing network either individually
or through a deemed approved network, or (2) create a group that
will contract to participate in MPNs. Providers proactively creating
new networks can then approach an insurer or self-insured employer
with their pre-packaged network of qualified providers and offer
to enter into a contract to provide services to employees covered
by the insurer or employer.
Providers who plan to self-organize and approach
potential MPN applicants should be prepared to offer the following
information to the applicant, all of which is required to be included
in the application:
| 1. |
The geographic area(s)
to be served by the proposed network. The DWC wants to have
an understanding of the exact areas in California to be served
by the MPN, which can be described by, for example, zip codes,
counties, cities, regions, or a combination of these. |
| 2. |
The following information about each
network “physician” or “provider”
providing occupational medicine services (defined
as the diagnosis or treatment of any injury or disease arising
out of and in the course of employment): |
- Individual’s name (not a clinic or
practice group name);
- Individual’s state license number;
- Individual’s taxpayer identification
number, or, if individual does not have one and operates under
a medical group’s number, the medical group’s taxpayer
identification number;
- Individual’s specialty;
- Individual’s location; and
- If the physician is part of a medical group
practice, the name and taxpayer identification number of the medical
group.
“Physician” and “provider”
are defined as those physicians and providers described in Labor
Code §§ 3209.3 and 3209.5. Therefore, “physicians”
and “providers” include physicians and surgeons
holding an M.D. or D.O. degree, psychologists, acupuncturists,
optometrists, dentists, podiatrists, chiropractors, and physical
therapists.
| 3. |
For ancillary service
providers providing medical services not covered
under the “physician” and “provider”
definitions, the same information required about “physicians”
and “providers” above, except that the individual’s
specialty or type of service must be identified. |
| 4. |
A description of how the network arranges
to provide ancillary services to employees,
and which ancillary services will be covered by providers in
the network. |
| 5. |
A description of the proportion
of physicians primarily engaged in the treatment of occupational
injuries and those primarily engaged in the treatment of non-occupational
injuries. The MPN must consist of at least 25 percent
of physicians primarily engaged in the treatment of non-occupational
injuries, which means they must spend more than 50percent of
their practice time providing non-occupational medical services. |
| 6. |
A description of the types of
physicians and providers in the network, sufficient
to to demonstrate that the MPN includes an “adequate number
and type” of physicians or other providers to “treat
common injuries experienced by injured employees based on the
type of occupation or industry in which the employee is engaged.” |
| 7. |
A description of the accessibility
and availability of the providers, sufficient to
to meet the following standards:
- The MPN must have a primary care physician
and a hospital for emergency health care services within
30 minutes or 15 miles of each employee’s residence
or workplace. If emergency health care services are separate
from the hospital, the MPN must have a provider of all emergency
health services that satisfies this standard.
- The MPN must have providers of occupational
health services and specialists within 60 minutes or 30
miles of an employee’s residence or workplace.For
non-emergency services, an appointment for initial treatment
must be available within 3 business days of the applicant’s
receipt of a request for treatment within the MPN.
- For non-emergency specialist services
to treat common injuries experienced by employees based
on the type of occupation or industry in which the employee
is engaged, an appointment for treatment must be available
within 20 business days of the applicant’s receipt
of a referral to a specialist within the MPN.
|
Based on the broad requirements for various types of physicians, and
availability and accessibility standards, physicians self-organizing
into networks that will contract with MPNs would be wise to include
a broad range of specialists in addition to primary care physicians,
as well as a sufficient number of physicians to be available and accessible
to employees as required.
For further information, please contact:
Robert
G. Homchick, Seattle, (206) 622-3150, roberthomchick@dwt.com
Paul
T. Smith, San Francisco, (415) 276-6500, paulsmith@dwt.com
Kent
B. (Bernie) Thurber, Portland, (503) 241-2300, berniethurber@dwt.com
This Advisory is a publication of the
Health Law Department of Davis Wright Tremaine LLP. Our purpose
in publishing this Advisory is to inform our clients and friends
of recent developments in health law. It is not intended, nor should
it be used, as a substitute for specific legal advice as legal counsel
may only be given in response to inquiries regarding particular
situations.
Copyright © 2004, Davis Wright Tremaine
LLP.
|
