More work to be done on Workers' Comp

By CMTA Staff

Capitol Update, Feb. 28, 2014 Share this on FacebookTweet thisEmail this to a friend

In 2012 California began to implement SB 863 (Chapter 363, Kevin de León, D-Los Angeles) to increase permanent disability (PD) benefits for injured workers and to stem abuses and improve performance in the workers’ compensation system. Since then, eight of the 14 regulatory reforms to take effect by January 1, 2014 have been completed. Employers continue to press for full implementation to ensure the PD benefit increase is “paid for” by savings from the offsetting reforms. It is too soon to tell whether this goal will be met, but we have been experiencing headwinds to a full realization of all expected savings:

The projected cost of the PD benefit increase was based on a one percent increase in claims frequency, but the actual frequency increase for 2013 was five percent which will increase the total cost of these benefits.

The transition to new medical fee schedules rather than being cost-neutral will actually cost $300 million. Lawsuits have blocked full implementation of the new lien filing rules, and the number of employee appeals through the new medical review process is three times higher than appeals under the prior system. We have achieved expected savings in spinal hardware and ambulatory surgical center fees.

Key reform provisions counted on to increase efficiency and cost predictability have yet to be implemented, such as fee schedules for copy services and home health and interpreter services.

Also still hanging is the question of how the state plans to administer the $120 million fund to make supplemental payments to workers whose PD benefits are disproportionately low in comparison to their earnings loss.

With the full PD benefit increase now in place and potentially costing more than expected due to increasing claims, there is added urgency to finish the reform job and realize more savings. Despite efforts to reduce costs, California remains one of the most expensive workers’ compensation systems in the nation.  

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