Workers’ Compensation Panel Approves Reform Measures
Late last night, a special six-member Assembly-Senate conference committee passed reform measures that are "widely expected" to pass both to pass both chambers and be signed by Gov. Gray Davis (D), the Los Angeles Times reports (Dickerson/Vogel, Los Angeles Times, 9/10). 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% (California Healthline, 9/8). According to the Times, the reform measures passed by the committee include:
- 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 30 chiropractic visits per claim -- currently, there is no cap on the number of chiropractic visits; and
- 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.
The measures, which were "cobbled together after months of political wrangling and intense lobbying by affected interests," are intended to create $5.3 billion in one-time savings and about the same amount in each successive year, the Times reports (Los Angeles Times, 9/10).
In letters sent Tuesday to state lawmakers, the Workers' Compensation Insurance Rating Bureau, a not-for-profit group that analyzes and proposes workers' compensation premiums, said that the reform measures would only save about $2.4 billion per year. That level of savings would "not do much more than" offset most of the 12% average increase in workers' compensation premiums expected in January and would not be enough to offset any of the workers' compensation increases from 2003, the Contra Costa Times reports. However, the workers' compensation bureau said that it did not have enough time to analyze every provision of the proposed legislation and that it is possible that additional savings could materialize. "Medical utilization is probably the biggest cost driver in the system," David Bellusci, senior vice president and chief actuary with the workers' compensation bureau, wrote, adding that "potential savings could be significant" if treatment for injured workers is similar to the treatment for injuries in group health care systems under the new reform package (Avalos, Contra Costa Times, 9/10).
"This is the biggest reform of workers' compensation in California's history," Assembly Speaker Herb Wesson (D-Culver City), a member of the committee, said, adding, "This is so significant that immediately the large companies and the big self-insured governmental entities will see a significant reduction" in workers' compensation costs (Los Angeles Times, 9/10). Sen. Richard Alarcon (D-Sun Valley), who chaired the committee, said, "These are comprehensive reforms. We're essentially changing a culture in the workers' compensation system to be 'cost conscious.'" However, Assembly member Ken Maddox (R-Dana Point), who sat on the committee and abstained from voting on the reform measures, said, "You can sprinkle fairy dust on it all you want, but you're not going to come up with $5 billion in savings" (Quach, Orange County Register, 9/9). Maddox and fellow Republican committee member Sen. Charles Poochigian (Fresno) had sought about $11 billion in cuts from the workers' compensation program (California Healthline, 9/5). Charles Bacchi, a lobbyist for the California Chamber of Commerce, said, "We were hoping for massive reforms to the system, but we don't appear to be getting those. Workers' comp will continue to be a drag on the economy ... a lot more work is needed." Businesses were seeking around $10 billion in savings from the reform measures, the Contra Costa Times reports. "The savings they're looking at are not enough," Jack Stewart, president of the California Manufacturers & Technology Association, said, adding, "The $2.5 billion they're talking about won't even make up for the inflation in the system next year" (Contra Costa Times, 9/10). NPR's "All Things Considered" yesterday reported on the negotiations. The segment includes comments from Joel Benoliel, senior vice president for legal and administration issues at Costco; Insurance Commissioner John Garamendi (D); Mitch Mitchell, vice president of public policy and communications at the San Diego Regional Chamber of Commerce; and Vincent Mudd, CEO of San Diego Office Interiors (Lewis, "All Things Considered," NPR, 9/9). The full segment is available online in RealPlayer.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.