Calif Comp Law Waits On Rules

By Michael Ha and Daniel Hays

NU Online News Service, Oct. 6, 12:57 p.m. EDT?California officials at this point have no idea when they willfinish drawing up the regulations needed to implement the state'snew workers' compensation law after it takes effect Jan. 1, 2004,an official said.

"We're not talking about this [set of regulations] being readyto go three months from now, but we are busy at work starting theprocess, said Richard Stevens, spokesperson for the CaliforniaDivision of Workers' Compensation, which has the task of drawing uprules required by the new statute.

In the interim, "It will take considerable time for the bills'cost savings to be achieved," noted Sam Sorich, president of theAssociation of California Insurance companies. The bills'supporters estimate the measures will result in an annual costreduction of nearly $6 billion while the Workers' CompensationInsurance Rating Bureau figures the saving will be $4 billion.

Mr. Stevens said while the division has no timetable, it isdeveloping an implementation plan. He explained that, "generally,what we've done before we propose new regulations is to go out tothe community with an online form" of proposals.

Once the online scheme gets a reaction, he said, public hearingswill be held and after a process of public comment and revisions, apackage would go to the state's Office of Administrative law for upto 30 days of review.

The comp law reforms signed into law last week by Gov. GrayDavis seeks to reduce workers' comp-related costs with a variety ofrevisions including, establishing medical-fee schedules, limitingvisits to chiropractors and physical therapists and repealing avocational rehabilitation program for injured workers.

It also calls for a fee schedule for out-patient surgerycenters. A pharmaceutical fee schedule is established, thepresumption of correctness that was assigned to the treatingphysician's decisions is revoked and the California InsuranceGuaranty Association is authorized to issue bonds to assure thatworkers' compensation claims are paid.

Mr. Stevens said the new laws will slash doctors' fees by 5percent and then tie these fees to the federal Medicare schedule,plus 20 percent.

Other changes include placing a cap of 24 visits on chiropractorand physical-therapist services per claim; eliminating the systemthat offers up to $16,000 per year for retraining or up to $10,000cash payment with the aid of a physician, and replacing it with avoucher program offering education benefits; and adoptingexperience-and-training standards for those who handle claims forinsurers.

But industry representatives like Mr. Sorich, while welcomingthe changes, said policymakers should consider more reforms in2004. Mr. Sorich said they should address permanent partialdisability benefits, legal costs and administrative costs. Thedegree of savings from the latest changes "remains to be seen," hesaid.

Mark Sektnan, assistant vice president of state affairs atAmerican Insurance Association in Washington, D.C. said the reformsmay dampen premium increases, but predicted "they will not resultin widespread premium reductions."

Mr. Sektnan called for an independent review process forcontested medical treatment. He added that policymakers "shouldrevisit the problems on the indemnity side and look for ways toreform how permanent disability ratings are determined to bringmore predictability and fairness to the system."