Employers in California will be pleased to learn that thestate's total costs per workers' compensation claim with more thanseven days of lost time have remained stable after enactment ofSenate Bill (SB) 863 in 2013, according to a recently releasedstudy by the Workers Compensation Research Institute (WRCI).

"The total costs per California workers' compensation claim in2013 evaluated as of March 2016 changed little compared withinjuries in 2010 with 36 months of experience. This stability intotal costs per claim was a result of several offsetting trends,"said Ramona Tanabe, WCRI's executive vice president and counsel. "Adecrease in medical payments per claim likely reflected the impactof SB 863's provisions."

The law took effect in January 2013, and it:

  • Reduced the fee schedule rates for ambulatory surgerycenters;
  • Eliminated separate reimbursement for implantable medicaldevices, hardware and instruments for spinal surgeries; and
  • Began a multi-year transition to a professional services feeschedule based on the resource-based relative value scale.

"One of the other policy goals of SB 863 was to increasepermanent disability benefits for California's injured workers,"said Tanabe. "This explains in part why indemnity benefits perclaim grew 5 to 6 percent per year in 2014 and 2015, although anincrease in wages in multiple industries also contributed to thistrend."

Some key findings

A major component of SB863 was the creation of a new independentmedical review (IMR) process for handling medical treatmentdisputes. This provision of the law was expected to reducemedical-legal expenses for workers' comp claims, based on theassumption that less costly IMR reports would replace the moreexpensive qualified medical evaluator reports. According to WRCI,this anticipated decrease has not yet been observed.

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Rosalie Donlon

Rosalie Donlon is the editor in chief of ALM's insurance and tax publications, including NU Property & Casualty magazine and NU PropertyCasualty360.com. You can contact her at [email protected].