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Oct. 21 California's Regulatory Landscape -- GETTING IT RIGHT
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Please call or fax a letter to the Governor "Adding another $2-$3 billion ($4 billion with utilization)on a system that has already doubled in recent years makes all business in California less competitive at a time when you are counting on a revitalized economy to help balance his budget and stem growing unemployment." "Changes in the delivery of medical benefits as well as providing objectivity in rating permanent partial disabilities must be part of any workers compensation benefit bill you sign." Governor Gray Davis State Capitol Sacramento, CA 95814 phone: 916-4452841 fax: 916-445-4633 Download legislative contact list (right-click this link then choose "Save target as...") |
Bill that passed on Monday Jan. 4 does not provide systemic changes to offset its $4 billion cost increase.
Governor Davis Needs to Hear from Business Community Before He Signs Legislation.
   
  
& Releases Sac Bee Article: Senate Passes Bill Raising Payments to Thousands of Injured Workers - Feb. 4 LA Times Article: Davis Works Out Workers' Comp Benefits Hike - Feb. 1 San Gabriel Tribune Article: Workers' Comp Reform Likely Sac Bee Article: Davis, Under Union Pressure, Changes Statnce on Workers Comp Boost Press Release: Business Groups Oppose Work Comp Bill Report: Labor backed Workers' Compensation iniatives would result in $6 billion in increases |
While CMTA supports a modest to significant benefit increase to injured workers, it must also tighten medical cost controls, encourage return to work programs, modify restrictions on confidentiality of medical records imposed by AB 435, and make other systemic changes to help offset the cost to employers.
Quotemarks:
"California workers and their employers are the nation's finest. And there's no reason why
they should have to suffer from the nation's worst workers' compensation
system. We desperately need reform that not only will deliver an important benefit increase to seriously injured workers, but will provide a fair cost structure to employers and safeguard against widespread fraud and abuse that hurts employers and employees equally."- Assemblyman Keith Richman
Current Status:
The following factors have contributed to the current situation:
1. The Governor committed to the California Labor Federation that he would sign a workers' compensation benefit bill in 2002.
2. Senate President Pro Tempore John Burton has taken a hard line negotiating position on the workers' compensation issue, thus making it very difficult for the Governor to request further cost saving changes that will be approved by the Legislature.
3. Two workers compensation benefit initiatives (one statutory and the other constitutional) have been filed by labor and are slated for the November 2002 ballot. These initiatives substantially increase benefits with no offsetting costs and place additional pressure on the Governor to deliver a benefit bill this year to avoid having a contentious workers' compensation proposition on the ballot. Labor must begin collecting signatures by the end of January to meet the deadlines for placing their initiatives on the November ballot.
4. In the absence of a strong and clear message from the employer community that signing a multi-billion dollar benefit bill will further hurt the state's economy, the Governor and his advisors appear to have determined that there are few downside risks in signing a bill.
The Hard Facts:
1. The cost of worker's compensation to the employer community has almost doubled in California over the last seven years while injury rates have gone down. According to the Workers Compensation Insurance Rating Bureau, the total cost of the system was just under $8 billion in 1996 and they estimate costs will increase to more than $15 billion by next year -- even without a benefit increase. At the same time, the rate of worker injuries has been cut in half -- from 3.8 injuries per 100 workers to 1.9 injuries per 100 workers.
2. The system is clearly broken.
3. The only way to achieve real savings is to manage medical costs and remove the subjectivity of determining the nature and extent of an injured employee's permanent partial disability.
Helpful Work Comp Information
The preliminary evaluation of Senate Bill 1156 (Burton) by the Workers’ Compensation Insurance Rating Bureau (WCIRB), indicated the bill would increase benefit costs by $2.9 billion annually when fully implemented in 2006 compared to the $2.5 estimate by legislative staff. The revised language in AB 749 is estimated to cost $2.4 billion annually through 2006. The cost to employers would go to $4.2 billion and $3.5 billion respectively annually if utilization cost is included.
Utilization Cost
Utilization cost is the additional cost effect that higher benefits have on the frequency of use and the length of time workers stay in the system. Studies nationwide has shown that when the benefit level replaces the vast majority of earnings, many employees who would not otherwise take time off work because of the economic impact, would now take time off and stay off for a longer period for a number of reasons. Hence, more claims and for longer periods away from work.
Major Cost Drivers
Lack of medical control. Currently, employers have 30 days of medical control during which they can direct injured workers to industrial medical doctors. After 30 days, the injured worker can choose a doctor of their choice who may be a family doctor and unfamiliar with workers’ compensation, or if the workers is represented by an attorney, steered to a doctor with strong leanings toward maximizing the severity of injury and disability rating.
Employers want 180 days of medical control. This would allow employers to resolve a substantial number of minor claims (permanent partial disability ratings of 1- 25 percent) earlier that would reduce medical and litigation cost substantially.
Subjective Medical Findings. California permit employees to receive permanent disability awards based on subjective complaints of pain. For example, an injured worker with a soft tissue injury to the neck or back with no objective medical findings (muscle tear, damaged disk etc.) who indicates to the doctor that they experience pain when standing, bending, walking, reaching etc., may still receive a substantial monetary award based on the complaint of pain that cannot be confirmed medically. All other states require “objective medical findings” be demonstrated through a medical examination as criteria to receive a monetary award.
Employers recommend that physicians follow the American Medical Association (AMA) Guides to the Evaluation of Permanent Impairment as a tool to rate disability, which is used in 38 states or a combination of the AMA Guides.
Medical Treatment Abuse. California has the most liberal treatment protocols in the nation. It also has one of the most difficult and lengthy procedure employers must follow to challenge medical treatment protocols. When the Legislature implemented a medical fee schedule in the 1993 to limit the amount physicians could charge for procedures, chiropractic and physical therapist in particular, countered by increasing the number or treatments provided. As a result, medical treatment cost has continued to rise even though the medical fee schedule has remained stable.
Employers recommend that medical treatment protocols be more definitive and that deviations be justified and approve by the payer.
Work Comp carry-over bills from 2001
AB 1109 - Allows insurers to provide certain medical information to 3rd party administrators (CMTA position: Support)