Legislature Passes Workers’ Compensation Package
The Legislature on Friday passed a "sweeping overhaul" of the state's workers' compensation program designed to reduce the program's medical costs by 20% to 30%, the Los Angeles Times reports (Vogel et al., Los Angeles Times, 9/13). Democrats called the reforms a "big first step" toward fixing the program by giving "badly needed financial stability to a system plagued by runaway costs," the Sacramento Bee reports. However, Republican lawmakers "lambasted" the reform package, contending that it "does not go far enough," and questioned the $5 billion to $6 billion in predicted savings, according to the Bee (Chan, Sacramento Bee, 9/13). The legislation calls for:
- Fee schedules for outpatient surgery centers, which would pay 120% of Medicare reimbursement rates.
- Fee schedules for prescription drugs, which would be tied to the Medi-Cal reimbursement rate.
- A cap of 24 visits per claim for both chiropractors and physical therapists.
- Required utilization reviews using American College of Occupational and Environmental Medicine standards guidelines for how much care is appropriate for a particular injury.
- The repeal of the vocational rehabilitation program, which gives injured workers as much as $16,000 for counseling, retraining and living expenses. Workers instead would receive a voucher based on the extent of their injury.
- The repeal of physicians' presumption of correctness for claims filed prior to Jan. 1, 2003.
- All procedures for which doctors now receive more than the Medicare reimbursement rate to be reduced 5% overall. Annual savings are estimated to be $100 million.
- Required second opinions on spinal operations.
- Increased penalties for employer fraud from $50,000 to $150,000. The reforms also call for agencies to be allowed to share information in investigations (California Healthline, 9/11).
- Required use of generic drugs in workers' compensation cases unless a brand-name drug is specified by the treating physician.
- Required payment of workers' compensation medical bills in 45 working days instead of 60 working days from the date of complete billing and increased fines for late payments.
- Employers to completely fund the Division of Workers' Compensation.
- The insurance commissioner to maintain an online workers' compensation insurance guide that lists rates charged by the 50 largest insurers.
- The Department of Insurance to adopt minimum qualifications for workers' compensation insurance claims adjusters, as well as require workers' compensation insurers to ensure that their adjusters meet those qualifications (Lawrence, AP/ San Diego Union-Tribune, 9/12).
The legislation also allows more unionized companies to establish their own "workers' comp-type programs" and extend the rights of employees and employers to seek second opinions and to object to medical evaluations, the Bee reports (Sacramento Bee, 9/13). Gov. Gray Davis (D) said that he would sign the reform measures; he has until Oct. 12 to do so, the AP/Santa Rosa Press Democrat reports.
"This is a big step in the right direction," Assembly member Paul Koretz (D-West Hollywood) said (Lawrence, AP/Santa Rosa Press Democrat, 9/13). Sen. Richard Alarcon (D-Sun Valley) said, "This is the best package we could have put together this year. We did not undercut the treatment of injured workers." Insurance Commissioner John Garamendi (D) said that the reforms would result in enough savings to eliminate the need for a 12% increase in workers' compensation premiums scheduled to take effect in 2004, as well as reduce current premiums by 7%, the Bee reports. However, Senate Republican leader Jim Brulte (Rancho Cucamonga) said that the reform measures are only "tinkering with the system" and that the bill "doesn't go anywhere far enough to get savings for California businesses" (Sacramento Bee, 9/13). Assembly member Keith Richman (R-Chatsworth) said workers' compensation insurance rates would likely increase because of the "modest nature" of the reforms (AP/Santa Rosa Press Democrat, 9/13). In a town-hall meeting in San Diego Friday, Republican gubernatorial candidate Arnold Schwarzenegger called the reforms "bogus," saying that they did not meet his goal of reducing premiums by half, the San Diego Union-Tribune reports (Marelius/LaVelle, San Diego Union-Tribune, 9/13). Republicans said that Davis should call a special legislative session to pass further reforms, including measures for litigation and indemnity costs, the Bee reports (Sacramento Bee, 9/13).
The San Diego Union-Tribune yesterday examined the continuing debate over the amount of money the workers' compensation reform measures will actually save. According to the Union-Tribune, "at best, it's going to take about a year for the savings to work their way through the system and show up on employers' bills," and "[a]t worst, the reforms won't save nearly the amount legislators who drafted them promised -- and would fail to provide substantial relief from current rates." Jack Hannan, a spokesperson for the Workers Compensation Insurance Rating Bureau, which determines the rates insurers must charge in order to cover claims, said that the bureau will "work frantically" to determine the amount of savings generated by the reform package and recommend new premium rates by the end of the month (Laing, San Diego Union-Tribune, 9/14).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.