NU Online News Service, Oct. 17, 12:13 p.m.EDT
|California workers' compensation insurers, which have been hurtby increasing underwriting losses over the past three years, shouldbenefit from two bills signed into law recently, and fromseveral bills opposed by the industry that were not signed,according to Moody's.
|In its Weekly Credit Outlook, Moody's says AB 378, one of thetwo bills signed, represents the “biggest positive effect forinsurers,” as it establishes a fee schedule for compound drugs. “Until now,”says Moody's, “the state's workers' compensation fee schedulesexcluded these drugs, whose usage and costs increased at a muchhigher rate than other pharmaceuticals…and essentially created abilling loophole.”
|Moody's notes that prescription drugs make up approximately 20percent of total workers' comp medical costs, “so cost containmenton this front is important for the industry.”
|Another bill, SB 684, limits the ability to move workers' compdisputes outside the state, but Moody's says the bill has “littlecredit implication for the industry.”
|However, the rating agency says four bills vetoed by GovernorJerry Brown “would have significantly increased costs on insurers,so their veto is a boon.”
|The bills included a new licensing requirement for physiciansconducting workers' comp reviews, a requirement to provide vouchersfor work training, an extension of temporary disability paymentsand new anti-discrimination rules, Moody's says.
|The rating agency says of the bills, “These generally positiveoutcomes for the insurance industry are particularly important inthe context of the industry's currently very poor workers'compensation results, especially in California, which makes up 11percent of the workers' compensation market.”
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