Special Assembly-Senate Conference Committee Drafting Workers’ Compensation Reforms
A special six-member Assembly-Senate conference committee currently is drafting workers' compensation reform legislation that will center on reducing the increasing cost of medical services, the Sacramento Bee reports. However, the "sheer complexity of the issue" along with a "flurry of last-minute lobbying" from interest groups has "created an ever-changing work in progress," according to the Bee (Chan, Sacramento Bee, 9/5). The Los Angeles Times reports that chiropractors, lawyers, doctors, physical therapists and other special interest groups are "vying to protect the profits they pull from the system," but employers statewide "have beseeched the Legislature to find a way to halt soaring premiums." The overall cost of the state workers' compensation system has grown from $9 billion in 1995 to an estimated $29 billion this year; the average medical cost per California workers' compensation claim increased 125% between 1997 and 2002, while medical costs nationwide increased an average of 22% (Vogel, Los Angeles Times, 9/5). Although no specific legislative details of the reform package have been released, people close to the negotiations say that the committee will call for several proposals to reduce workers' compensation costs, the Bee reports. The proposals, which are expected to save about $5 billion, are summarized below.
- The committee will call for the creation of a fee schedule for outpatient surgery centers, under which reimbursements would be based on a percentage of Medicare rates. Proposals have varied between 120% and 250% of the Medicare rates, the Bee reports.
- The committee will also call for the reduction of doctor and hospital medical fees. Negotiations have centered on an approximately 5% across-the-board cut of existing fees, according to the Bee.
- The committee also may limit the number of chiropractic and physical therapy visits. The cap is expected to be around 30 visits, the Bee reports.
- The committee will also call for the establishment of a process to review medical treatments based on standards used by various specialties.
The committee is considering granting the state insurance commissioner expanded oversight over insurance rates (Sacramento Bee, 9/5). However, Insurance Commissioner John Garamendi (D) is "strongly resisting" regulating insurance rates, saying it could force more insurers into bankruptcy, the Orange County Register reports (Quach, Orange County Register, 9/5). The committee also is considering a new system of vocational rehabilitation that would help injured workers find new careers, the Contra Costa Times reports (Avalos, Contra Costa Times, 9/5). According to the Bee, the committee will continue work on the workers' compensation proposal today and vote on a reform package Monday. The legislative session ends Sept. 12.
Lawmakers are seeking assurances from insurers that premium rates will decrease should reforms pass, but insurance companies, who also oppose rate regulation, contend that they are not recouping their costs, the Bee reports (Sacramento Bee, 9/5). However, Sen. Richard Alarcon (D-Van Nuys), who chairs the workers' compensation committee, said that the proposed cuts would remove the need for a proposed 12% increase in workers' compensation premiums beginning in January. Two Republicans on the committee -- Sen. Charles Poochigian (Fresno) and Rep. Ken Maddox (Costa Mesa) -- say that the $5.2 billion in potential cuts are not enough, adding that they had hoped that about $11 billion could be cut from the program. "The system is in serious disrepair, and California's system is the worst in the nation," Poochigian said, adding, "It is an insidious problem that will only get worse the longer we put off real reform" (Contra Costa Times, 9/5). Maddox said, "There's been an incredible amount of lobbying activity from stakeholders. Each of which has been quick to point out how the other guy's at fault. These groups have slowed the process of getting real savings." However, Alarcon said that the process is complicated, adding, "You move one dot, and you change the whole picture" (Orange County Register, 9/5).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.