Report: 2012 Reforms Appear To Have Lowered Workers’ Comp Costs
A 2012 state law (SB 863) aimed at reforming California's workers' compensation system appears to have successfully reduced medical payments under the program, according to a report by the Workers' Compensation Insurance Rating Bureau, the Sacramento Bee's "Capitol Alert" reports (Walters, "Capitol Alert," Sacramento Bee, 11/16).
Background on Law
In September 2012, Gov. Jerry Brown (D) signed SB 863, which aimed to lower medical costs through tighter treatment oversight.
The law -- by state Sen. Kevin de León (D-Los Angeles) and former Assembly member Jose Solorio (D-Anaheim) -- changed the formula used to calculate benefits for injured workers, increasing their compensation by an average of 29%.
It also eliminated benefits for certain health conditions that often are subject to lawsuits, such as psychiatric problems, sexual dysfunction and sleep loss.
The State Compensation Insurance Fund predicted that employers would pay less for workers' compensation insurance under the law (California Healthline, 7/30).
According to the report, the law has reduced overall payments to medical providers and "shifted the total share of medical payments from specialists to primary care providers."
Specifically, the report found a provision that limited medical fees to 120% of those allowable under Medicare lowered payments affected by the fee schedule from $496.9 million in the first six months of 2013 to $452.2 million in the first six months of 2014.
However, the report found that an "upsurge in utilization" has increased medical costs slightly so far this year ("Capitol Alert," Sacramento Bee, 11/16).
Meanwhile, the share of payments to primary care providers increased by 9.4% from the first half of 2013 to the first half of 2015 (WCIRB report, 11/13).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.