Department of Industrial Relations

Industrial Medical Council

Thursday, Nov. 15, 2001

Members present:

Site One: DWC at 455 Golden Gate Ave., 9th Fl., San Francisco, CA 94102

Robert Larsen, M.D. Richard Sommer, M.Phil., J.D.

Jonathan Ng, M.D., J.D Gayle Walsh, D.C.

Patricia Sinnott, PT, MPH Benjamin Yang, C.A. OMD

Site Two: WCAB at 6150 Van Nuys Blvd., Ste. 110, Van Nuys, CA 91401

Barry Halote, PhD. Glenn Ocker, DPM, MS

Maria Mayoral, M.D. Richard Pitts, D.O.

Ira Monosson, M.D. Lawrence Tain, D.C

Steven Nagelberg, M.D. Paul E. Wakim, D.O.

Members absent:

Marvin Lipton, M.D.

Michael Roback, M.D

1. The meeting was called to order by Co-Chair Dr. Richard Pitts. Dr. Gayle Walsh did a roll call for Council Members present. There was a quorum.

    1. Consent Agenda

a. Adoption of the Minutes and Notice of Actions: Dr. Pitts asked for a motion on the Draft Minutes and Notice of Action of the October 18, 2001 IMC meeting. There were no changes in the minutes so it stand as written.

Action: The Consent Agenda was approved unanimously.

b. Executive Medical Director's Report:

Dr. D. Allan MacKenzie indicated that his EMD report stands as written. He indicated that this current video conferenced format would be a constant in the future history for the IMC. The Department of Finance's guidelines asked that the IMC cancel as many meetings as possible and try to reconfigure the meeting format in the interest of decreasing costs. Mr. Larry Williams, IMC manager, calculated a saving of around $4,000.00 today over the usual cost of our travel plan. As time goes on we will figure out how to do this more efficiently and conveniently for all those concerned. He noted that we were advised in a Dept. of Finance (DOF) budget letter that we must

decrease our operating expenses (OE) by 10 percent for the remainder of this fiscal year. We were also advised that the dollar figure would be approximately $38,000.00. Staff is figuring out ways to meet and beat that figure.

c. DWC Report:

Mr. Richard Gannon, Administrative Director, DWC, reported that they are also looking at significant cutbacks this year to reduce their OE which is around $20,000,000 per fiscal year. DWC is already in the situation of not being able to purchase necessary equipment and will not be able to do things as quickly as they had in the past. Regarding the fee schedules, they are moving forward with the work on the interim changes. For reasons of economy they will wait for the Appeals Board to make changes in their rules and join them in one mass mailing, around the first of the year. DWC is anticipating having the changes in Section 9785 ready for the same mailing. The In-Patient Hospital Fee Schedule will be reported to the Commission in the December meeting. They would start revisions to that fee schedule after they get the final report. It would be limited to the changes in the In-Patient Hospital Fee Schedule as the OutPatient Fee Schedule would be difficult to do at this time. The other fee schedule issues will be included in that Fee Schedule Committee Report.

d. Legislative Report:

Mr. James Fisher has nothing to add to the report that was already submitted.

3. IMC Budget/Lease/Staffing Report:

Introduction: Dr. MacKenzie introduced Ms. Marisa Duek, Chief of Administration, Department of Industrial Relations. Last year, Ms. Duek was identified by Director Steve Smith to be the liaison person for the IMC. She has worked closely with the IMC during her tenure and probably knows our budget better than anyone else. Dr. MacKenzie said that the last EMD report was basically a blue print for the Council for the next several years. The question is whether we will be able to push forward and whether we will be able to access funds to complete these mandates, inspite of these economic times. Ms. Duek has graciously agreed to come and speak to us regarding these issues.

Ms. Duek stated there are several items from the EMD Report that she would like to discuss like pending contracts, further studies the IMC would like to do, purchases and hiring of staff. She said that the IMC has to determine what priorities they have.

Budget Reduction: Ms. Duek said the budget issues involved three different fiscal years. Last year the IMC had reduction in positions without a commensurate reduction in funding. Five positions were removed: 0.5 associate medical director's position, 0.3 associate medical director position and clerical staff. For this reason, the impact of the budget reduction for the current year

does not feel as bad as it would be, which totaled for the IMC of $169,000. For this fiscal year 2001-2002, the Governor has issued Executive Orders for both an immediate hiring freeze and a 10% reduction in operating expenses.

The Department did submit a plan that would include not just operating expenses (OE) reduction but possibly acceleration plans for reductions in FY 2002/2003. Further reduction numbers for FY 2002/2003 are not known at this time.

Vacant Position: Ms. Duek said that for last nine years that she has been associated with DIR's budget, the IMC has been in a balancing act between filling the positions and using contracts to do special studies. When the IMC was originally established more contracts for studies were used because it required special expertise on a short-term basis. Currently, the IMC has approximately 13 vacancies. It is estimated minimum of three months is required to fill a position from the time it becomes vacant until you get through the hiring freeze process. It's a long process and at the same time a government code section change last year stated that if departments leave a position vacant for over six consecutive pay periods you lose the position.

We currently estimate the balance in the IMC budget to be about a little over $600,000 for FY 2001-2002. If IMC actually intends to fill those open positions, that would take $200,000 out of the $600,000. Because of the way the IMC works on the various mandates that needed to be done, you have to have some flexibility using the money for contracts but at the same time maintaining control of the positions so that we don't fall into the situation of having vacant positions for six months.

Contracts: The contract for the E&M studies by the Lewin Group (for $238,000) was already included in the estimate of costs for the current year. Contracts that were not included in the projections are at $355,000. This included the contract for CPS to do the search for the new Executive Medical Director at $35,000 to $40,000. There is also the Lewin Group Practice Expense Study, estimated at $270,000 and the final impact study at a $55,000 estimate. If all contracts were completed it would be in the range of $350,000.

Relocation Lease: There are a couple of issues that had came up resulting from the move discussions: one was the amount of square footage needed and the other was the location. Ms. Duek said that the current rent would probably go up by about a 25% in the area of $2.45 to $3.50 per sq. ft per month.

Dr. MacKenzie stated DIR Facilities already did the advertising requirement for 8,000 sq. ft. Ms. Duek agreed that we need to get enough space to facilitate future needs but not too much. The whole state process of acquiring space is so long and complicated that you really need to think towards the future.

Dr. MacKenzie added that DIR signed a one-year renewal lease with Oyster Point for $3.50 per sq. ft. starting Dec. 1, 2001. Any move to a renewal lease site would be somewhere between $3.25 to $3.50 per sq. ft. which would not be a significant incremental increase over what the IMC is presently paying.

Mr. Sommer asked why we are not housed in the location at the headquarters (455 Golden Gate Ave., SF). Dr. MacKenzie responded that we preferred to be on the Bart line outside of the city for the number of employees that we have who live in the Peninsula. In spite of the down turn in the commercial real estate market, we can do better in Daly City than we could in Downtown San Francisco.

Ms. Duek said that currently the State rate is $3.45 for the 455 Golden Gate building. She also stated that the State is in a different position than most private entities because the Dept. of General Services (DGS) negotiates for the whole state. DGS tends to be able to negotiate reasonable rates. Landlords won't give us the prime space but they will be willing to make room just like hotels do to give state rates for their non-premium rooms or rooms that they expect to be in excess.

Q&A: Ways & Means: Dr. Walsh asked how could the IMC utilize some of the Industrial Medicine Fund (IMF) instead of the general fund to spend for some of the projects that they are required to do.

Ms. Duek explained that IMC is still limited to the amount of the appropriation. The only way to get change is through the regular budget act or through Budget Change Proposal (BCP). The problem is the timing which is not good now because the regular budget process is almost done for the Governor's Budget release that comes out the 10th of January, which means another budget change proposal would be submitted next summer for the 2003-2004 fiscal year.

Dr. Susan McKenzie asked if the IMC could appropriate more for our expenditure out of the IMF and less from the general fund.

Ms. Duek responded that to a certain extent the IMC is limited to what it can charge to the IMF. The IMC can only code expenditures to the IMF if you find it appropriate.

Dr. BenjaminYang asked if it is possible for the state regulations to allow IMC to invest a property for office space instead of paying rent.

Ms. Duek responded that it is possible but it is a long process. State agencies can go through process like that through DGS in order to own properties.

Hiring Freeze–Exemption Requests: Dr. MacKenzie stated that the IMC has submitted request for exemptions for four positions. He asked Ms. Duek: (1) If IMC would be able to use IMF to fill those positions; (2) For those positions not exempted and left vacant, does the DOF

hiring freeze stop the clock. Ms. Duek response to the first question was yes. For the second question, she said it does not, there are only two specific reasons why it would be. How the process works is the State Controller will report on June 30, 2002, how many vacant positions every program in DIR has that have remained vacant for six consecutive months. They will abolish those positions automatically. The Controller performs a technical function in identifying the positions that fall within the provisions of the law and then eliminates them. Only the DOF has the authority to re-establish them.

Dr. MacKenzie asked if you lose the position do you lose the dollars backing the position and if it would be logical to ask for exemption for all the vacant positions. Ms. Duek responded that DOF goes in when you are developing the budget for the next fiscal year. She also said you could ask for exemptions for all but DOF would not give it.

Lastly, Dr. MacKenzie said that its been estimated roughly that the total cost of the move would be $200,000. If the relocation lease assumes that a lot of the tenant improvements are paid for by the new landlord, he asked whether the $200,000 figure is something that can be tapped out of the IMF. Ms. Duek responded that if depends what year we are talking about. If we are talking about the current year that ends June 30th, we have about $600,000 and it depends how we plan to spend that on staffing, contracts or the move.

4. Search Committee Report:

Dr. Walsh reported that since the last meeting when Dr. MacKenzie gave the notice of leaving IMC by the end of March, the Search Committee initiated a contract with Cooperative Personnel Services (CPS). This is a joint power agency, therefore, we do not need to go out for bidding on the contract; we can just do sole source contract. Ms. Karen Wong and Ms. Suzanne Marria had been contacted to assist us with the contract process to get it through DIR. We anticipate the contract to be $20,000 plus expenses for travel, brochure and advertising and because it is not too large we can probably do it by staying within DIR contract negotiation and not to go with the Dept. of Finance or some other department. The proposal is that CPS will deal with the candidates profile and recruitment strategy and will be sending out notices and recruitment brochures, screening candidates and doing the initial evaluation interview, assisting us with interviewing candidates and do reference checks and also assist us in developing an employment offer. We will not probably advertise in journals. We are going to do a different kind of recruitment, going to agencies and medical organizations. It is anticipated that we will have the contract in a couple of weeks. CPS may contact Council Members to get some input as to the candidate profiling.

5. Fee Schedule Committee Report:

Mr. Gannon reiterated their intention to move forward with the process as quickly as they can in adopting the RBRVS. He said that he is convinced that the DWC cannot continue to use the previous fee schedule. They have not been able to incorporate the new procedures in any rational basis. Nobody has come up with a methodology to fix the fee schedule yet, it hasn't been revised in a long time. DWC would like to do that and revise it in a manner that they could incorporate other public entity studies into the relative values to be used. He appreciated the work that the IMC has been doing and the difficulty in getting the studies done.

He said that the study and adoption of RBRVS would cover about one percent of the relative values based on Medicare schedules. For the remainder, DWC has to utilize the input from the Lewin Group's various additional studies. DWC will incorporate what they find out about the differences in physicians' work in workers' compensation as oppose to other aspects of medicine. They would analyze part of the practice expense study and then will report on how we would move this into the fee schedules. The plan is to give out information on a strategy for dealing with what appear to be inequities and then work on strategies to lessen the impact on the hardship cases. At this point DWC doesn't know what that process would be however, Mr. Gannon assured the audience that they have had some practice with the Hospital Fee Schedule. They became convinced that actions to the fee schedules could have an adverse impact on injured workers access to quality care. He noted that it is important that they do something to make sure that an access problem does not happen. Then they will start addressing the inequities before they put a final fee schedule into effect that will impact what physicians are actually paid. They would start working on solutions to the perceived inequities until they get a good sense of what it is.

Mr. Richard Sommer reminded everybody that he had been working on this problem since 1993. by trying to come up with an objective system for compensation and a system that is acceptable to all the various parties. The problem he sees today is that we've got a system that is severely broken and continues to develop inequities every day that passes. We have problems with the present system and we probably can't fix them.

Mr. Sommer said that Dr. Susan McKenzie's job is to understand the technicalities of the fee schedule as it affects the many concerns. She is the appropriate person whom information should be sent. She was given full instruction to deal with things that are not coming to a resolution and to have discussions between the interest groups. If people do not use her as point of contact then it is hard to know what are the concerns.

Mr. Sommer wanted to emphasize that the goal is to have an open system as much as we possibly can. We are trying to develop policies on access and information with these. In terms of

the system, the underlying progress that we have made today is that we can solve the 80 percent of the problems.

Lastly, Mr. Sommer wanted to talk about the hardship cases and how to resolve these issues. We hope the parties will work with us to develop a process to handle these key principles, especially since we are going to change the systems and reducing access would be a very serious problem.

Dr. McKenzie said that they asked for two proposals for the Lewin Group: the first is the amendment to the RBRVS study. This amendment would pull everything together so that we can understand what we are looking at. We would do essentially four things: we would pull in the data from the calendar year 2000 from CWCI data base we collected after September when the Lewin Group collected the data from CWCI study. We finished and enlarged the database on the insured claims Lewin had which made the study more solid. Secondly, CWCI is now in possession of data from self-insured industries. A large number of claims were broadly represented. What we propose is for the Lewin Group to take that data and analyze it to see if in fact it is broadly representative. If it is sound data and is represented by a number of industries, that don't use certain fixed procedures codes, then we would like to incorporate this into the study as well. Thirdly, we would need a final impact analysis that would incorporate the RBRVS, the findings of the study that we are going to bill the E&M study, re-incorporate any changes to the ground rules and would come up with the final impact analysis to the rule making. Then finally, they would model a couple of transition strategies for using different conversion factors. It would enable us to hand a very complete package over to DWC. Dr. McKenzie thinks this amendment is smaller in terms of dollars but it is large in terms of importance.

Mr. Sommer: Motion: To adopt the RBRVS Amendments to the Lewin Group's proposal.

It was seconded. Roll call votes were taken. Council Members voted with one abstention.

Action: Motion passes.

Mr. Sommer also talked about the second set of studies that evaluate the work component in workers' comp. versus the non-workers' comp. payment system. This is the first time this study is being done in the USA. Some people in the public thought that we should also take a look at practice expense at the same time. This is another study that has never been done before. We are now on the third study, first the RBRVS that we are finishing and have the amendments; the second study is the work component study and the third is the study that Dr. McKenzie is proposing that we adopt today.

Dr. McKenzie stated that this is the Practice Expense proposal that we had approval from DGS to do as a sole source contract with Lewin. Dr. McKenzie is requesting moving this proposal forward and working within our funding constraint to fund the Practice Expense Study. The Study is basically quite different from the Physician Work-study. It involves going into practices, overhead expenses, clinical staff expenses and others, and then makes a determination about whether or not there are differences in the workers' comp or non workers' comp. setting. And the site visits that you followed by surveys which to suspend the response to what we get for the data.

Mr. Sommer: Motion: To adopt that support for the third study of Practice Expense Study

It was seconded.

Discussion ensued. Roll call votes were taken. Council voted with one abstention.

Action: Motion passes.

6. Urinary Incontinence Work Group Report:

Dr. MacKenzie, on behalf of Dr. Ann Searcy, said that there were some typos that were corrected on the last two pages of the draft document. (There were very few alterations to the document.) She also asked for some input from the Committee. The remaining question was how the document should be titled? We did not want to call this a treatment guidelines or a policy statement. Basically it was an epistle to the DEU. Dr. Wakim said that this is meant to be an educational piece and not as a guideline, e.g. Urinary Incontinence-An Educational Document.

Discussion ensued on what to call the document.

Finally, Dr. Pitts said that the issue would be taken up at the December meeting for a vote.

7. Education Committee Report:

Dr. Walsh reported that the Committee recommended approval for renewal of two providers for continuing education: (1) Northern California Neuropsychology Forum and (2) California Applicant's Attorney Association.

Dr. Walsh: Motion: To approve the renewals of the two providers for continuing education.

It was seconded. Roll call votes were taken. Council Members voted with one abstention

Action: Motion passes.

Dr. Walsh discussed audits and said that since the last meeting they started work on the audit process. Mr. Fisher prepared a Draft IMC Audit Policy that was distributed to all Council Members. The Committee is still working on the auditing procedures and will be reviewing the postcards that were sent back to the IMC from the QMEs during the continuing education courses, trying to find out what courses have returned the cards and analyze the information received from the attendees, also review current providers' application and course materials that are actually used

in their courses, develop a form for use during audits. The form will be used to evaluate certain courses and comment on aspects of the course. Dr. Walsh requested Council Members to review the draft and give comment on audit procedures. This will be discussed at the next meeting.

On the IMC Regulations, Dr. Walsh reported that there were some proposal changes submitted by the Staff and there still some couple of areas that need additional work like information exchange and the regulation on retired, teaching and disabled physicians. The Committee will hopefully have a draft available in the next few months.

On the last meeting there was discussion about the QME examination and the analysis of the test and people taking the test and why the failure rate seemed to be going up.

Dr. MacKenzie reported on the concerns of the Council regarding the perception that there was decrease performance on the QME exam. from the candidates during the course of the last one-year. He noted that we wanted an interpretation as to why this was happening. CPS are prepared to do this and the tasks are somewhat easier since the IMC Staff along with CPS has broken the exam down into its elements so that we can study the integral parts and pinpoint where the difficulties are. Dr. Halote suggested that we simply look at those people who were writing for the first time and not be confounded by repeat takers who have a decreased likelihood of passing the exam and can be skewing the results. This is of great concern and CPS is working on it. CPS is sensitive to the problem and hopefully we will have a report in the next two or three months as to what is happening.

The Education Committee congratulated Dr. Glenn Ocker on his work on the guidelines for the foot and ankle regulations.

8 Announcements:

Dr. Susan McKenzie said the Lewin Group is coming in December to present a final presentation on the RBRVS study and to do the proctored fashion the panels for the physician's work-study.

Dr. MacKenzie announced that Mr. David Kizer has completed the third edition of the Physician's Guide. It is ready for Director Steve Smith's signature, then will go to the printer. The final version would probably be out for mailing four to five weeks from now.

Dr. Pitts announced that the next meeting would be a live one on December 13, 2001, in Los Angeles.

Meeting adjourned at 12:00 p.m.

Thursday, November 15, 2001

IMC Staff presents:

Lety Buenviaje Allan MacKenzie, M.D., Exec.Med.Dir.

Milagros Diadula Susan McKenzie, M.D.

James Fisher, Esq. Anne Searcy, M.D

David Kizer, Esq Rainier Arenas

DIR/DWC Staff present:

Marisa Duek, Chief of Administration, DIR

Richard Gannon, Adm. Director, DWC

Members of the public present:

Site One: DWC at 455 Golden Gate Ave., 9th Fl., San Francisco, CA 94102

Linda Coltrin, Calif. Chiro. Assoc.

Philipp M. Lippe, CANS

David W. Crotty, DO, OPSC

Carl Brekensiek, CSIMS

Sheri Nolen, HNC Software

David Willat, Calif. Chiro. Assoc.

Site Two: WCAB at 6150 Van Nuys Blvd., Ste. 110, Van Nuys, CA 91401

Benita Gagne, InterCommunity Medical

Dough Hikawa, Priority Compnet

Vern Goldschmid, CAAA

Brenda Manson, Corvel