Cost impacts of 2012 Workers' Compensation reform
 Dec. 3, 2013

On September 18, 2012, the Governor signed Senate Bill 863 into law. It increased benefits effective January 1, 2013 and January 1, 2014 and provided for a number of structural changes to the California workers' compensation benefit delivery system.

The Workers' Compensation Insurance Rating Bureau (WCIRB) on October 28 released a report summarizing the WCIRB's initial retrospective evaluation of the cost impact of a number of SB 863 provisions based on data emerging through the third quarter of 2013.

On September 18, 2012, the Governor signed Senate Bill 863 into law. It increased benefits effective January 1, 2013 and January 1, 2014 and provided for a number of structural changes to the California workers' compensation benefit delivery system.

The Workers' Compensation Insurance Rating Bureau (WCIRB) on October 28 released a report summarizing the WCIRB's initial retrospective evaluation of the cost impact of a number of SB 863 provisions based on data emerging through the third quarter of 2013.

The WCIRB's principal findings based on early emerging post-SB 863 costs include the following:

    1. Indemnity claim frequency was projected to increase by one percent in 2013, in part due to SB 863 changes to indemnity benefits, while emerging frequency through June 30, 2013 indicates a 6.2 percent increase.

    2. The number of lien filings was projected to decrease by approximately 40 percent as a result of the SB 863 lien filing fee and statue of limitations, while filings through the third quarter of 2013 have decreased by approximately 60 percent when compared to 2011 levels.

    3. The SB 863 lien filing fee was projected to eliminate relatively smaller liens. WCIRB Lien Survey information indicates a much smaller proportion of liens under $500 active in 2013 when compared to liens active in 2012.

    4. SB 863's elimination of the duplicate payment for spinal surgical implants was estimated to save approximately $20,000 per procedure. Very preliminary estimates based on WCIRB Medical Data Call (MDC) data show a $15,000, or over 50 percent, reduction in the average cost of these procedures in 2013 when compared to pre-2013 levels.

    5. SB 863's reduction in maximum ambulatory surgical center facility fees was estimated to reduce those costs by 25 percent, which is consistent with the reductions observed based on preliminary WCIRB MDC estimates comparing 2013 reimbursements to pre-SB 863 levels.

    6. Early estimates of independent medical review (IMR) requests show that the frequency of IMRs in recent months is far above the levels initially projected. If the higher volume of August and September IMR requests are indicative of filing rates for subsequent months, the number of IMRs requested per year would be over three times greater than that projected in the WCIRB's prospective cost estimate potentially eliminating any savings in administrative costs due to IMR and also potentially negatively impacting medical treatments costs.

    7. Preliminary estimates of medical provider network usage in 2013 show that network utilization in the first six months of 2013 is fairly consistent with that for prior years.

    8. Although relatively few independent bill review (IBR) request have been filed when compared to IMR filings, early estimates of IBR decisions show 60 percent of decisions favoring the provider for amounts significantly less than the IBR filing fee.

CMTA was a supporter of SB 863, believing its requirements would reduce both medical and administrative costs associated with California's burdensome workers' compensation system. We are encouraged by the early results from its implementation and remain optimistic that it will achieve further reductions over time. We are optimistic the this will translate into a stabilization of workers' compensation rates and premiums for California's insured manufacturers.

See the entire report at:
http://www.wcirb.com/sites/default/files/documents/131028_db_ltr_to_ccarroll_on_2913_cost_monitoring_report-complete.pdf

Archive

Latest Articles
CompCheck Newsletter

Archive