This presentation describes mehtods of fraud detection, which can save a slef insured company an average of $1,654 per workers compensation claim, same quarter savings. It also describes techniques, using Internet based tests, developed by a team of doctors from Johns Hopkins Hospital, which improve diagnoses, resulting in increased return to work rate, a 90% reduction in the use of medication, and a 45% reduction in doctor visits, with documented cost savings of $20,000 to $175,000 for long test cases. See slideshare presentation http://www.slideshare.net/DiagnoseMyPain/patient-cost-savings-documented-with-letters for documentation.

1. Cost Savings for P & C, Work
Comp or Auto Claims
Using In-House
On –Line Case Management and
Resource Allocation Instruments
from MCD
www.MarylandClinicalDiagnostics.com

2. Value of MCD tests for a company
• On-line, easy to use, case management tool used in
house by the medical department of a company.
• Saves the insurance adjustor time and money
• Helps adjustor set proper reserve by providing
accurate diagnosis for the misdiagnosed claimants
• Helps adjuster allocate resources by providing an
objective basis for selecting claimant for fraud
evaluation. Saves money on fraud detection
• Improved return to work rates, with less expense for
medication and fewer doctor visits. Reset reserves.
• For open claims, get case closure

3. Reserves of “Bad (untreatable) Diagnoses” which convert to
“Good (treatable) Diagnoses” with proper medical evaluation,
using the MCD Diagnostic Paradigm
Wrong Diagnoses Correct Diagnoses
• Fibromyalgia - $90,000 • Lyme disease - $50,000
• Lumbar Strain - $150,000 • Disrupted Disc (IDD)- $60,000
• Cervical Strain -$120,000 • Facet syndrome -$20,000
• Lumbago – $80,000 • Anteriolysthesis – $35,000
• Failed Back Syndrome – • Post laminectomy syndrome –
$120,000 $80,000
• RSD (CRPS I) -$1,000,000 • Nerve entrapment –$50,000
• Causalgia – $450,000 • Thoracic outlet -$65,000
• Migraine Headache – $95,000 • C2-3 root - $45,000
Resettting reserves, based on accurate diagnosis results in immediate
cash improvement, since lower reserves mean increased income

4. Background of Authors of the Test Research
• Donlin Long, MD, Ph.D. former chairman of neurosurgery Johns
Hopkins Hospital, founder and Director of the Pain Clinic, Johns
Hopkins Hospital, professor of neurosurgery, Johns Hopkins University
School of Medicine
• James Campbell, MD –professor of neurosurgery, Johns Hopkins
University School of Medicine, past president, American Pain Society
• Reginald Davis, MD – former chief resident in neurosurgery, Johns
Hopkins Hospital, assistant professor of neurosurgery, Johns Hopkins
University School of Medicine, chief of neurosurgery, Greater
Baltimore Medical Center
• Nelson Hendler, MD, MS-former Assistant Professor Johns Hopkins
University School of Medicine, past president, American Academy of
Pain Management
• Matts Gronblad, MD, PhD –Professor of Rehabilitation Medicine,
Rehabilitation Institute, Turku, Finland
• John Rybock, MD, assistant professor of neurosurgery Johns Hopkins
University School of Medicine, assistant dean for academic affairs,
Johns Hopkins University School of Medicine.

5. What are the issues?
• Cost containment. How do you achieve this?
• You margins are shrinking, so you need to control
workers compensation costs with an in-house tool
• Current fraud detection methods are not cost
effective (Elaine Howe, State Auditor California)
• Proper diagnosis and treatment with good doctors*
• Proper treatment results in early case closure
• Using *these techniques, Johns Hopkins Hospital
cut their workers compensation costs in half, by
ruling that any of the 15,000 employees injured at
Johns Hopkins had to see Johns Hopkins doctors.

6. www.MarylandClinicalDiagnostics.com
Internet Case Management and Resource Allocation System
Sprains and strains are self limiting diseases, lasting no
more than 2 months. Any “lumbar strain” or “cervical
sprain” more than 2 months old is, by definition,
misdiagnosed. Get the proper diagnosis & save money
Detect Fraud. Accurately Set Reserves. Close Long Term Catastrophic Cases
STEP 1) Administer the Pain Validity Test (PVT) for all claims. Find the fakers.
Fakers Real Pain
2) 6%-13% of claimants will be 2) 87%-94% of claimants do not need IMEs, FCEs
faking. The PVT finds them with or surveillance but 40%-67% are misdiagnosed
85%-95% accuracy. (Psychosomatics , 1993,1996). Reduce expenses
3) Use surveillance and MCDs on Strains last only 2 months. Get the correct
pin- pointed claimants. Conserve diagnosis and proper treatment
resources. 4)
Bring closure to the case 3) Administer the Diagnostic Paradigm ($800) to
5) Average of $1,654/case, same get an accurate diagnosis, and treatment plan.
quarter savings, by eliminating FCEs, Accurately set reserves.
MCDs, and surveillance in 87%-94% 4) Get proper treatment. Increase return to
of the cases (see Real Pain) work* 5) Bring closure to the case. Savings of
$90,000 to $2,500,000 (Harvard School and
*For claimants out of work for 2 years or more, return to work rates of 19.5% for Workers Compensation cases,of
Cybermedicine, 2001)
62.5% for auto accident cases. The insurance industry reports less than a 1% return to work rate in these cases.

7. Ease of Administration
MCD tests can be administered through WorkSTEPS, which is
the largest pre-employment testing company in the country,
with 900 affiliated locations around the country, and 4,000
corporate clients including: (over 100,000 tests/year)
Barnes Aerospace Knight Transportation
SYSCO Waste Management
COMAIR Kinetic Concepts, Inc.
Chevron Conoco Phillips
Nabors Drilling Trinity Industries
Borden Republic Services
Johnson Controls Embarq
Proctor & Gamble Missouri DOT
Chaparral Steel Southern California Edison

8. The MCD in-house case management tools for a carrier
Proctoring Location
A carrier Administrator
employee administers test to
(needs company administrator handbook)
claimant
(needs test proctoring handbook)
A carrier Administrator selects
Proctoring Location
insurance adjustors, in each office,
Administrator selects
who will determine which claimant
employees to administer
should get the MCD tests, and
the test (needs proctoring
monitor and direct the progress of the
administration handbook)
claimant
Insurance Adjustors selects the claimant
to take the MCD tests, & Claimant receives the letter.
selects Proctoring Location, where the Claimant then schedules his
claimant will take the own test with the testing
tests. Then the adjustor sends Proctoring Location,
the claimant a and goes there,
letter, with instructions. with photo ID
(Needs insurance adjustors handbook)
When tests results are returned, adjuster either does fraud investigation or uses

9. How the Adjuster Uses the MCD Tests
• The PVT test tells the adjuster if a claimant is faking
and exaggerating or has a valid complaint of pain
• When adjuster gets the results of the PVT, he (she)
notes, in-house, which claimants are identified as
exaggerating pain patients
• The adjuster uses surveillance, IMEs and FCE to
document the exaggerated claim, & deny payment
• For claimants identified as objective pain patients,
the adjuster requests a Diagnostic Paradigm for the
claimant, gets the results, then resets reserves, &
sends test results to the medical director or nurse
case manager for disposition and management

10. FRAUD DETECTION
The Action Plan For Using the MCD
Pain Validity Test

11. A carrier vs MCD methods of Finding Fraud
The Old Subjective Method The MCD Objective
• Claim is identified by Method
insurance adjustor as • All claims coming in
potentially fraudulent, receive the MCD Pain
based on subjective criteria, Validity Test, which
length of claim, past claim identifies potential fraud
record, etc with 85%-95% accuracy
• Adjustor determines if • Only the claims with a
claim goes to SIU, where high chance of fraud are
expense of surveillance, referred to SIU
nurse case managers, • Increased accuracy of
IMEs, or FCE is incurred. claim selection saves
What % hit rate? Costs? money for a carrier
• Costs $300/claim

12. California Does a Poor Job of Combating
Worker’s Comp Fraud
(Workers Compensation Report, Vol 15, No. 11, p.206 May 17, 2004)
• State Auditor Elaine Howle says the $30,000,000 annual expense
in State of California to combat fraud may be wasted, because
they select the wrong claimants to investigate most of the MCD
• Insurance companies cannot measure the effectiveness of their
efforts using independent medical evaluations and surveillance.
• The companies are relying on anecdotal testimony from
stakeholders in the workers compensation community, unscientific
estimates, and description of local cases involving fraud.
• The fraud division publishes statistics showing the number of
investigations, arrests, convictions, and restitution, but cannot
show if anti-fraud efforts are cost-effective. Saves $6 for $30
spent
• The State may spend $5,000 a case investigating 6,000 cases
($30,000,000) and identify 600 cases of fraud (10 % accuracy)

13. Outcomes from “Standard Insurance
Practices”
• Is an independent medical evaluation cost effective? Do
they ever say patient is misdiagnosed?
• Is surveillance cost effective? In what percentage of
cases are they used? When they are used, what
percentage of the time do they find cheats?
• Is “cookie cutter” (everyone gets the same treatment)
chiropractic care or PT cost effective?
• Is delay in treatment cost effective? Evidence?
• Is a Functional Capacity Evaluation cost effective?
• Information cannot be based on anecdotal reports. Are
there references from the insurance literature to support
cost effectiveness of these techniques? Is there
evidence? Or is it “company policy”?

14. Average Cost Savings $1,654 Using Pain Validity Test
National Council on Compensation Insurance (NCCI)
published a report Assessing Pain, Real and
Imagined (11/29/98 www.NCCI.com/painreal.html)
Summary of the Report
The Johns Hopkins doctors reported that 13% of workers
compensation claimants are exaggerating or faking.
The MCD Pain Validity Test ($300) can identify fakers
with 85% accuracy, and valid complaints 95% of the MCD.
Average savings of $1,654/claim, same quarter savings, by
eliminating doctor exams, FCE, surveillance, and nurse case
reviewer in the claimants with valid complaints (87%), and
focusing the surveillance on the 13% of claimants who are
exaggerating pain patient. But which claimant should be investigated?
The PVT helps the adjuster decide which 13% gets surveillance

15. Scattergram of Computer Scored MCD Pain Validity Test.
On the left, 3* is a severe abnormality, 2 a moderate abnormality, 1 a mild abnormality,
and 0 is no abnormality on at least one objective medical test. At the bottom, 8-25
represent the score on the MCD Pain Validity Test. 17 or less is an Objective Pain
Patient, 21 point or higher is an Exaggerating Pain Patient
*3
65/69 = 95%
2 Exaggerating
Objective Pain Patient Pain Patient
1
11/13 = 85%
0
8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

16. COST SAVINGS USING THE PAIN VALIDITY TEST- SAVE $1,802,000 on 1,700 CLAIMS
Suspected Faker
Current Methods
Detectives $2,500 Pain $300
Independent Validity
Medical Test
Evaluation $1,700
Functional
Capacity
Evaluation $1,400
TOTAL $5,600 $300
Savings $5,300
Number of Insured Lifes 170,000
Number of Workers
Compensation Claims per Year-Lost MCD
Rate is 1% of all workers 1700
Number of
Workers Compensation
Cases/year lasting
more than three months
20% of all claims 340
Total cost of Pain Validity Test =$300 X 340 $102,000
Cost of old way $5,600 X 340 $1,904,000
Cost savings to evaluate these claims
using the Pain Validity Test $1,802,000

17. PROPER DIAGNOSIS
or what to do with the 87%-94%
of patients with a valid pain
complaint
Action Plan for the Use the MCD
Diagnostic Paradigm and Treatment
Algorithm

18. Failure of Chart Review Process
• Very often, doctors do not ask the questions they
need to determine if a patient’s complaint of pain
is valid.
• Most of the IME doctors do not ask the questions
they need to determine proper diagnosis
• Chart review is inaccurate because the diagnoses
are inaccurate 40%-67% of time
• Doctors order the wrong tests. MRI 30% false +.
• Therefore, “garbage in -- garbage out” or GIGO
• Company missed real cost savings due to bad data

19. Action Plan -How do you achieve accurate
diagnoses and proper treatment ?
• Use automated history taking. A proper history gives a
more accurate diagnosis. The Internet questionnaire
never forgets to ask a question-Diagnostic Paradigm
• A single question may have 30 potential answers
• Since all doctors are not the same, the automated history
taking eliminates inter-rater (between doctor) differences
The Diagnostic Paradigm has 95% correlation with JHH.
• Computer scoring gives consistent quality interpretation
• Outcomes studies published in peer reviewed medical
journals prove this techniques works.
• Treatment Algorithm indicates proper tests to use

20. Missed Diagnoses-Neck and Back Pain
• The Johns Hopkins doctors did a study of 60 and 120
patients admitted to a pain clinic.* (180 total)
RESULTS
• Prior to admission, 40%-67% were misdiagnosed
with “lumbar strain, cervical strain, chronic pain
syndrome, or conversion reaction.”
• However, facet syndrome, thoracic outlet syndrome,
damaged discs, nerve entrapments, and radiculopathy,
were found in these patients, all of which were
confirmed by objective testing.
(*Overlooked Physical Diagnoses in Chronic Pain Patients Involved in
Litigation, Part I and Part II, Psychosomatics, ’93 and ‘96)

21. Reserves of “Bad (untreatable) Diagnoses” which convert to
“Good (treatable) Diagnoses” with proper medical evaluation,
using the MCD Diagnostic Paradigm
Wrong Diagnoses Correct Diagnoses
• Fibromyalgia - $90,000 • Lyme disease - $50,000
• Lumbar Strain - $150,000 • Disrupted Disc (IDD)- $60,000
• Cervical Strain -$120,000 • Facet syndrome -$20,000
• Lumbago – $80,000 • Anteriolysthesis – $35,000
• Failed Back Syndrome – • Post laminectomy syndrome –
$120,000 $80,000
• RSD (CRPS I) -$1,000,000 • Nerve entrapment –$50,000
• Causalgia – $450,000 • Thoracic outlet -$65,000
• Migraine Headache – $95,000 • C2-3 root - $45,000
Resettting reserves, based on accurate diagnosis results in immediate
cash improvement, since lower reserves mean increased income

22. Lumbar and Cervical Strain
•

23. When a Sprain or Strain Lasts More
than 6 weeks-What is it?
• If a ligament pulls off a bone, there is excessive motion
around a joint.
• This caused muscle spasm, because the muscles now
have to do the work of ligaments to hold the bones
together.
• When a disc is damaged, and there is a loss of disc space
height, then there is less tension on the ligaments that
hold vertebrae together, and there is excessive motion at
that vertebral segment. This results in an unstable spinal
segment.
• The patient needs discectomy and fusion.

24. Cost Containment for Sprains
• Diagnosis of lumbar
• Sprain cause an average of 7.5 sprain for 3 years
days restricted activity, 2 days of
bed disability, and 2.5 days work • Physical therapy
loss (Dept. Health & Human or chiropractic $15,000/yr
Services # PHS 87-1592, 1987). • Doctor visits for 3 years
• If a cervical or lumbar sprain last $2,500/yr
for more than 6 weeks, it must be • Medication for 3 years
something else. Malingering or $12,000/yr
real? Sprain or facet disease? 33 year old claimant- lost wage/yr
• How many cases of lumbar and
cervical sprain do you have that $18,000/yr
are 3 months old or older? Total for 3 years $142,500
• What is the reserve on these
cases? Look at the costs. Diagnostic Eval. Using MCD Lab
Studies, provocative disco
$21,000
Discectomy and fusion $41,000
Total $62,000

25. Action Plan to Prevent Unnecessary
Surgery or Get Surgery if Needed
• Using Treatment Algorithm, and do the proper
tests to determine is surgery is really necessary
• Prevent mioptic approach-relying on wrong tests
• If the only tool you have is a hammer, everything
looks like a nail. Use provocative discogram
• MRI has a false positive rate of 30% (Jensen, et al, New
Eng J. of Med, 1994),. Get surgery at wrong spot.
• MRI has false negative rate of 78%, (Sandhu, et al, J.
Spine Disorders, 2000) Patients don’t get surgery needed

26. Flaws with Just Anatomical Tests
MRI- Jensen et. al. (N. Eng J. Med, ’94), 92 patients
with no back pain, but 27 had protruding disc
(30% false positive rate).
MRI with Modic (vertebral end plate
changes)-21/23 patients had + provocative
discograms. BUT- in 90 patients with positive
provocative discograms, only 23% had Modic
changes, and 77% no changes in MRI.
(Braithwaite, et al, Eur. Spine J. ’98). Therefore a 77%
false negative rate for MRI
Flipping a coin would give more accurate
results about which disc is damaged

27. Review of a Bus Company Charts
• All cases are 6 months old or older
• Of the 260 case cost summaries sent for
evaluation, 126 were sprains or strains = 48%
of cases
• A sprain or strain is a self-limiting disease,
and can’t, by definition, last longer than 7-10
days. Therefore at least 48% misdiagnosed.
• The oldest 15 cases cost $3,733,882.35 with
an average cost of $248,925.50.

28. Summary – 260 Bus Company Cases –sprain or strain N =126
433,879.03 STRAINED BODY PART 433,879.03 1
345,039.70 SPRAINED BODY PART 345,039.70 2
266,597.24 TRAUMA
584,651.42 BRUISE/CONTUSION/ABRASION
408,122.16 BRUISE/CONTUSION/ABRASION
210,270.67 SPRAINED BODY PART 210,270.67 3
265,364.19 STRAINED BODY PART 265,364.19 4
353,206.62 BRUISE/CONTUSION/ABRASION
281,088.92 BRUISE/CONTUSION/ABRASION
424,372.35 UNKNOWN
194,757.01 STRAINED BODY PART 194,757.01 5
196,225.58 SPRAINED BODY PART 196,225.58 6
300,392.27 BRUISE/CONTUSION/ABRASION
342,407.24 FOREIGN BODY
281,495.90 STRAINED BODY PART 281,495.90 7
154,293.92 STRAINED BODY PART 154,293.92 8
97,616.18 HEART ATTACK
215,260.65 BROKEN/FRACTURED BODY PART
219,690.79 STRAINED BODY PART 219,690.79 9
183,503.02 SPRAINED BODY PART 183,503.02 10
156,277.06 STRAINED BODY PART 156,277.06 11
241,706.34 STRAINED BODY PART 241,706.34 12
292,068.65 SPRAINED BODY PART 292,068.65 13
304,889.28 STRAINED BODY PART 304,889.28 14
254,421.21 STRAINED BODY PART 254,421.21 15
126 cases cost $12,365,366 with $98,137.82 = average.

29. Cost Containment for RSD (CRPS)
• Johns Hopkins doctors report that • Misdiagnosis of RSD-3 yrs
80% of all RSD cases are really • Sympathetic Blocks
nerve entrapments. (Dellon, 2006) 20 X $2,500 $50,000
• Nerve entrapments cost $50,000 • Physical therapy
to treat. or chiropractic $15,000/yr
• How many RSD (CRPS) cases do • Doctor visits for 3 years
you have. $2,500/yr
• What is the reserve on these • Medication for 3 years
cases? Most companies have $12,000/yr
$1,000,000 reserves for RSD case 33 year old claimant- lost wage
• If your company settles the case
for less than the reserve the $18,000/yr
difference comes to the bottom Total for 3 years $192,500
line.
• $1,000,000 -$50,000 = $950,000 Diagnostic Eval. Using MCD Tests
income for at 80 % of your RSD Treatment Algorithm $21,000
cases Nerve decompression $29,000
• On the right, note cost savings on Total $50,000
treatment basis, not reserve
reduction basis
Savings $142,500

30. Diagnosis of RSD vs Nerve Entrapment
Stanton-Hicks, Baron, Boas, Gorddh, Harden, et al, Complex Regional Pain
Syndrome : Guidelines for Therapy, Clin. J. of Pain, 1998
RSD or CRPS Nerve Entrapment
• Pain all around a limb • Pain in nerve distribution
• Good response to • No response to
sympathetic blocks sympathetic blocks
• No response to blocks of • Good response to blocks
peripheral nerve of peripheral nerve
• Thermal allodynia (a • No Thermal Allodynia
painful response to a (no pain in response to
normally not painful alcohol drop on the
stimulus) painful limb)
• Abnormal bone scan • Normal bone scan

31. COST SAVINGS USING THE DIAGNOSTIC PARADIGM = $13.000.000 for 170,000 insured workers with
lumbar/cervical strain cases
Current Methods over a three year period of MCD for "Lumbar Strain"
Physical Maryland Clinical Diagnostics
Therapy $45,000 Diagnostic Paradigm $800
Doctor Visits $7,500 and Treatment Algorithm
Medication $36,000 Diagnostic Studies
Lost Wage $54,000 Recommend by $20,200
TOTAL $142,500 DP&TA
Fusion Surgery Recommended $41,000
Total Expense
Using DP&TA $62,000
Savings $80,500
Number of Insured Workers 170,000
Number of Lost MCD Workers
Compensation Claims per Year
Rate is 1% of all workers 1,700
Number of
Workers Compensation
Cases/year lasting
more than three months which are sprains/strain
10% of all claims 170
Total cost of DP&TA $800 X 170 $136,000
Cost of recommendations of DP&TA, including DP&TA $62,000 X 170 $10,540,000
Cost using old techniques $142,500 X 170 $24,225,000
Cost savings to evaluate these claims

32. Does your current system work?
• How do you measure if a methodology works?
• Do you ask a patient if they hurt less? No value.
• The most objective measures are
1) return to work rates –(what are yours?)
2) number of doctor visits/month
3) use of medication
4) published outcome studies

33. Published Outcome Studies-for Litigants*- out of work
for more than 2 years from a clinic using the MCD tests
Clinical Neurosurgery, ‘89
Before After
# of Patients Working
• Return to Work-Auto 3/19 10/19 (62.5%)*
• Return to Work -Work Comp 0/41 8/41 (19.5%)*
• Doctor visits/month (WC/auto) 2.78 1.51 (46% reduction)*
• Averg. Narcotic pills/month 105 10.8 (89% reduction)*
• Averg. Hours out of bed 11.9 15
• Trouble falling asleep- /m 22.8 16.1
• Pts. with relief (5%-100%) 0 31/60 (51%)
• * 6 months after treatment
*literature search shows insurance carriers report less than a 1%
return to work rate for claimants out of work for 2 years or more
on a workers compensation claim.

34. Advantages of the Tests for Adjusters
• Simplifies the decision making process
• Saves the adjuster MCD and money, since all
new claims would get the Pain Validity Test
• Based on results of Pain Validity Test, the
adjuster decides who gets surveillance, or MCD
or FCE. No guess work, no wasted resources, by
putting detectives on pin-pointed valid claim.
• For the misdiagnosed objective pain patients, get
the Diagnostic Paradigm, and have the company
doctor review the results and decide what to do

35. PVT-Saves $1,654/case
• The current methods of assessing fraud are not cost
effective, as documented by the State of California
• The Pain Validity Test (PVT) saves at least $1,654/case
when compared to current methods of fraud detection
• Misdiagnosed patients cost insurance companies much
more than fraudulent cases. The PVT identifies both
• There are at least 4 times as many misdiagnosed cases
as there are fraud cases
• There are reliable methods for detecting fraud = PVT
• Insurance carriers should demand Evidence Based
Medicine proof of efficacy of treatment.

36. Diagnostic Paradigm –Saves $80,000
• 40%-71% of litigants with chronic pain problems are
misdiagnosed. Just “sprains” alone account for 48%.
• Misdiagnosed claimants cost the insurance industry
millions in wasted medical treatment &delay of proper
treatment. Proper diagnosis & treatment can save money.
• Internet administered (automated) history taking is
reliable, and produces proper diagnosis and treatment
(www.MarylandClinicalDiagnostics.com ).
• Using this technique, one pain clinic was able to obtain
far higher return to work rates, and claimants had fewer
doctor visits, and used less medication, all of which result
in cost savings, averaging $80,000 a case.
• http://www.slideshare.net/DiagnoseMyPain/patient-cost-
savings-documented-with-letters

37. CONTACT INFORMATION
• www.MarylandClinicalDiagnostics.com
• Mailing address
440 South El Cielo Rd suite #3660
Palm Springs, CA, 92264
• 24 Hour HELP line- 443-277-0306
• Email JamesRichMCD@aol.com