At the 2017 WCRI Annual Issues and Research Conference, Alex Swedlow from the California Workers’ Compensation Institute discussed the impact of California’s workers’ compensation reforms.
- The SB 863 reforms in California have resulted in declines in medical costs and overall claims costs for California employers. Average medical costs per claim at 24 months post-injury have been relatively flat the last three years.
- A large factor in these savings is the revised fee schedule based on RBRVS.
- Removal of duplicate payment for surgical hardware has showed a very significant savings for these procedures. Changing this reimbursement rule resulted in a 30% decrease in spinal surgeries. There has also been significant investigations into fraud associated with spinal surgeries in California which has resulted in many indictments.
- For prescriptions, 25% of prescriptions are for opioids. These have been declining for the last three years but still are a significant issue.
- The average number of opioid prescriptions peaked in 2009 and have declined since that time.
- The has been a 26% decrease in the morphine equivalent dose of opioids since 2008.
- From 1990-2012 California saw a 412% increase in average medical costs per claim. This was driven by a state Supreme Court decision which said the recommendations of the treating physicians were presumed appropriate.
- From 2013-2015 there was a 8% decrease in medical costs but these decreases seem to be flattening.
- Even with the savings, California remains the most expensive state for workers compensation based on rate and duration of disability.
- California loss adjustment expenses are 38% higher than any other state, they have the highest medical management costs, and the second highest rate of attorney representation.
- There is a new state drug formulary that is targeted for implementation in July 2017. A 2014 study showed that adopting the formulary would results in significant savings. They have been looking at Texas and Washington as examples of successful formularies.
- Medical liens are something that is unique to California workers’ compensation. SB863 added filing fees for liens which resulted in a very sizeable reduction of these filings. However, last year a slight uptick was seen vs the prior year.
- Research shows under the new medical dispute guidelines only 4% of treatment is ultimately modified or denied after going through the dispute resolution process. This is contrary to some media reports of widespread denials of care.
- 91% of the time the IMR process is upholding the denial of care by utilization review. This rate is even higher for medications which make up the largest component of medical disputes.
- The top 10% of medical providers make up 85% of all IMR disputes. This means a small percentage of physicians are driving all the disputes.
- There is a case “King vs CompPartners” that bears watching. This has to do with whether a UR physician has a physician/patient responsibility. Lower courts ruled those physicians have a duty to the injured worker which has significant implications on things like malpractice suits. This case is before the California Supreme Court right now.
- Another aspect quite unique to California is cumulative trauma claims. These are a significant cost driver in the system. California sees significant geographic variation on these CT claims with the Los Angeles basin driving the vast majority of these claims.