Substantial workers-compensation rule changes in California are likely to affect the price and utilization of medical care to injured workers by most types of providers, says a new study.

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

In general, the new legislation seeks to increase benefits to workers, 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 could include, among other things, an increase in prices paid for primary care and a decrease in prices paid for specialty services. Other possibilities include a decrease in payments for ambulatory surgical care services, changes in utilization of different types of services, lower medical legal expenses, faster dispute resolution, and more timely medical treatment.

The WCRI report examines the state medical reimbursement and treatment prior to its reform legislation and compares the state to 16 others.

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

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

“Some system participants suggest that some providers might have billed more complex office visits in order to compensate for substantially lower fee schedule rates,” says the report.

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

The report says the growth in utilization of nonhospital care and hospital outpatient and/or ambulatory surgical center costs may reflect the combined impact of changes in regulation and participant behaviors.

S.B. 863 was urgently pushed by Gov. Jerry Brown because the cost of workers' compensation insurance has risen from $14.8 billion to $19 billion for California businesses the past two years.

One of the factors driving the bill was the unintended consequence of 2004 reforms pushed by then-Gov. Arnold Schwarzenegger. These reforms unexpectedly reduced benefits for permanently injured workers.

Special Reports /

WCRI: California Reforms to Affect Price, Use of Medical Care

Related Stories

Recommended For You