California Workers’ Comp Report Examines Functional Restoration Programs

A new study from the California Workers’ Compensation Institute (CWCI) provides a detailed look at Functional Restoration Programs (FRPs) used to treat injured workers whose conditions do not respond to traditional therapies. FRPs are multi-disciplinary programs designed to address chronic pain and improve patient function.

Key Findings and Claim Characteristics

CWCI analyzed 635 indemnity claims involving FRPs from the utilization review systems of six California workers’ comp insurers. These were compared with 270,165 non-FRP indemnity claims and a matched sample of 2,361 non-FRP claims with similar characteristics.

• Geographic concentration: Nearly half of FRP claims were in the Bay Area, and more than a quarter were in the Central Valley.
• Attorney involvement: FRP claims involved attorney representation at a much higher rate (94.0%) than other indemnity claims (50.8%).
• Chronic pain diagnosis: Only 42.8% of FRP claims included a chronic pain diagnosis, even though Medical Treatment Utilization Schedule (MTUS) guidelines recommend FRPs for chronic pain cases.

Treatment Timing and Program Details

The study shows FRPs typically began after long periods of conventional treatment:

• Average delay: 792 days from the first medical service date to the start of FRP services.
• Conventional visits before FRP: Injured workers averaged 37 physical medicine visits.
• Program duration: Median of 8 weeks, exceeding MTUS’s 4–6 week recommendation but aligning with utilization review approvals.
• Treatment intensity: Workers averaged 3.8 treatment days per week, below the MTUS recommendation of at least 5 days for tertiary rehab programs.
• Service days: Participants averaged 29.1 FRP treatment days, typically 20 to 40 days overall.

A review of 2,896 FRP-related utilization review decisions across 1,059 claims found a 25.3% denial rate and 4.8% modification rate — significantly higher than the 7.7% denial/modification rate for non-FRP medical services in prior CWCI research.

Cost Comparisons and Coding Issues

The analysis revealed higher costs across the board for FRP claims compared to matched non-FRP claims:

• Overall costs: FRP claims averaged $234,003 — 59.3% more than non-FRP claims.
• Medical costs: FRP medical costs averaged $127,816, about twice the $64,062 for non-FRP claims. FRP medical services alone averaged $59,106, or 72.6% of total outpatient payments.
• Indemnity costs: $87,855 for FRP claims versus $68,533 for non-FRP claims.

A significant factor in the higher outpatient costs was billing: a third of the procedure codes for FRP services were not listed in the Official Medical Fee Schedule. Payments linked to these unlisted codes accounted for 84.3% of total treatment costs, averaging $1,751 per code — about $350 per hour of treatment.

Claim Duration and Temporary Disability

FRP claims lasted longer than non-FRP claims:

• Temporary disability (TD): FRP claims averaged 520 TD days, 25.2% more than the 415-day average for matched non-FRP claims.
• Total claim duration: From first medical service to claim closure, FRP claims averaged 1,287 days, 27.0% longer than matched non-FRP claims.

Report Access

CWCI’s full analysis is available in its Report to the Industry. Members and research subscribers can access the report under the Research tab at www.cwci.org. Others may purchase a copy through CWCI’s online store.