Substantial workers-compensation rule changes inCalifornia are likely to affect the price and utilization ofmedical care to injured workers by most types of providers, says anew study.

The study by the Workers Compensation Research Institute ismeant to provide a baseline for monitoring the impact of Californiareforms in S.B. 863, passed last August on the last day of theCalifornia legislative session.

In general, the new legislation seeks to increase benefits toworkers, especially those on long-term disability, by 30 percent–paying for it by imposing certain reforms.

According to WCRI, the potential impact from the measure couldinclude, among other things, an increase in prices paid for primarycare and a decrease in prices paid for specialtyservices. Other possibilities include a decrease inpayments for ambulatory surgical care services, changes inutilization of different types of services, lower medical legalexpenses, faster dispute resolution, and more timely medicaltreatment.

The WCRI report examines the state medical reimbursement andtreatment prior to its reform legislation and compares the state to16 others.

Prices paid for most types of professional services—which coveroffice visits, physical medicine, major and minor radiology, andmajor surgeries—were less than the others studied, anywhere from 54to 14 percent lower. This was primarily due to lower fee schedulerates in California.

However, utilization of nonhospital services, such aschiropractors and physical therapists, was higher in California.Nonhospital office visits for a claim of more than seven days oflost time and 36 months of experience in 2008 averaged 13 per claimin California compared to 8 in the median state.

"Some system participants suggest that some providers might havebilled more complex office visits in order to compensate forsubstantially lower fee schedule rates," says the report.

The costs of medical care for injured workers in California grewrapidly from 2005 to 2010, WCRI reports. This growth followed adecrease of more than 30 percent from 2002 to 2004 due to theprevious round of regulatory changes in the California workers'compensation system.

The report says the growth in utilization of nonhospital careand hospital outpatient and/or ambulatory surgical center costs mayreflect the combined impact of changes in regulation andparticipant behaviors.

S.B. 863 was urgently pushed by Gov. JerryBrown because the cost of workers' compensation insurancehas risen from $14.8 billion to $19 billion for Californiabusinesses the past two years.

One of the factors driving the bill was the unintendedconsequence of 2004 reforms pushed by then-Gov. ArnoldSchwarzenegger. These reforms unexpectedly reduced benefits forpermanently injured workers.