Value of Workers’ Compensation Reform Package Disputed
Some critics are disputing the projected $5 billion to $6 billion in savings from a package of workers' compensation reforms that came from a special six-member Assembly-Senate conference committee because they say the language of the reform bills is "virtually identical" to earlier legislation that were estimated to save half the projected amount, the Los Angeles Times reports (Dickerson et al., Los Angeles Times, 9/11). The Workers' Compensation Insurance Rating Bureau, a not-for-profit group that analyzes and proposes workers' compensation premiums, on Tuesday wrote to state lawmakers that the reform measures being worked on by the committee would save only about $2.4 billion per year (California Healthline, 9/10). According to the Times, the reform measures are expected to "speed though" the Assembly and the Senate. The legislation calls for:
- Fee schedules for outpatient surgery centers, which would pay 120% of Medicare reimbursement rates. Annual savings are estimated to be $932 million.
- Fee schedules for prescription drugs, which would be tied to the Medi-Cal reimbursement rate. Annual savings are estimated to be $407 million.
- A cap of 24 visits per claim for both chiropractors and physical therapists. According to the Times, injured workers can receive more than 24 visits if they are approved by the insurer. Combined annual savings are estimated to be $1.1 billion.
- Required utilization reviews using the American College of Occupational and Environmental Medicine standards, which would create guidelines for how much care is appropriate for a particular injury. Annual savings are estimated to be between $1 billion and $2 billion.
- The repeal of the vocational rehabilitation program, which gives injured workers as much as $16,000 for counseling, retraining and living expenses. Workers would now receive a voucher based on the extent of their injury. Annual savings are estimated to be $1.2 billion.
- The repeal of physician's presumption of correctness for claims filed prior to Jan. 1, 2003. The physician's presumption of correctness made it "virtually impossible" for insurers and employers to successfully contest the treatment of an injured worker's primary care physician, according to the Times. One-time savings are estimated to be $2.2 billion.
- 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. Annual savings are estimated to be $141 million.
- 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. There are no estimated annual savings on this measure, the Times reports.
Insurance Commissioner John Garamendi (D) said that the savings cited by the committee is based on "intelligence, hard analytical observation" and the work of credible sources -- including the Workers' Compensation Insurance Rating Bureau, the Commission on Health and Safety and Workers' Compensation and the Department of Insurance -- as well as data from large self-insured companies (Los Angeles Times, 9/11). He added that the savings from the reforms would eliminate a 12% increase in workers' compensation premiums scheduled to take effect in 2004, as well as repeal a 7% increase that went into effect earlier this year, the San Francisco Chronicle reports (Gledhill, San Francisco Chronicle, 9/11).
"We are very disappointed with this cap on chiropractic care," Wayne Whalen, former president of the California Chiropractic Association, said, adding, "We are very concerned for the thousands of injured workers who cannot tolerate medication and are not surgical candidates [and] who rely on chiropractic care to keep them on the job." Bill Bradley, a spokesperson for the California Pharmacists Association, said that the association was "disappointed" with the prescription drug fee schedules, adding that the association believes that 65% of independent pharmacies would not be able to fill prescriptions under the new fee schedules (Los Angeles Times, 9/11). Arthur Casey, president-elect of the California Ambulatory Surgery Association, said that the fee schedules for outpatient clinics would not cover the costs of many services and cause outpatient facilities to stop accepting workers' compensation cases, the Sacramento Bee reports (Chan, Sacramento Bee, 9/11). Ingrid Quinonez, president-elect of the Organization of Bilingual Rehabilitation Association, said that the vocational rehabilitation vouchers would be useless to injured workers without the help of counselors, the Times reports (Los Angeles Times, 9/11).
The workers' compensation reforms have been put into two bills (SB 228 and AB 227) that are expected to be approved as early as today, the Chronicle reports (San Francisco Chronicle, 9/11). Gov. Gray Davis (D) said yesterday that he would sign the reform measure if it passed both houses. "I'm confident these reforms will keep jobs in California," Davis said, adding, "Employers will take a new attitude. The savings ... will encourage more hiring" (Sacramento Bee, 9/11). However, Assembly member Juan Vargas (D-San Diego), a member of the conference committee, said, "There is a lot of work yet to be done. ... We didn't get into this mess in one year and we're not going to get out of it in one year." Robert Hartwig, chief economist with the Insurance Information Institute, added, "There were clearly some sacred cows that didn't get touched. I would say it's going to take another round of reform for insurers to be convinced that this is going to work" (Los Angeles Times, 9/11).
The following broadcast programs reported on the workers' compensation reform measures:
Capital Public Radio: The segment includes comments from Davis (Montgomery, Capital Public Radio, 9/10). The full segment is available online in RealPlayer.
- KCRW's "Which Way, L.A.?": The segment includes comments from Davis, Garamendi and San Jose Mercury News reporter Deborah Lohse (Olney, "Which Way, L.A.?," KCRW, 9/10). The full segment is available online in RealPlayer.
- KQED's "California Report": The segment reports on Davis' plan to sign the reform measures (Musiker, "California Report," KQED, 9/11). The full segment will be available online in RealPlayer after the broadcast.