WC Package Awaits Gov. Signature

Insurance Commissioner John Garamendi said after the measure passed that "fully 20 percent, and as much as 30 percent, of the cost of workers' compensation will be eliminated by this reform." He added that the workers' comp system has grown exponentially over the last several years, with the major elements being in the medical cost arena, "which has had a 17.6 percent annual inflation rate." The legislation, he said, "goes directly at that problem."

He said the reforms should save between $5 billion and $6 billion annually beginning next year. In addition, he said, there will be more than $5 billion in one-time savings. The ongoing savings, he said, are in the pure premium rate?the cost of claims and of administering those claims.

Gov. Davis said the committee accepted recommendations to set outpatient surgery fee schedules, a reduced payment deadline from 60 to 45 days, and penalties for those who do not pay within that period of time.

The reforms, he said, will result in "$3.2 billion in one-time savings in outpatient surgery fees and $900 million in ongoing savings." They will reduce costs directly to employers by $400 million by creating a pharmaceutical fee schedule and the use of generic drugs, he added.

According to the Department of Insurance, some of the reforms of the proposed legislation include:

? Establishment of an official medical fee schedule for outpatient surgical centers, indexing it to 120 percent of Medicare.

? Mandatory adoption of interim utilization guidelines governing medical treatments.

? Limits on chiropractic and physical therapy treatments to no more than 24 per claim.

? Dispensation of generic drugs unless a brand name has been specifically prescribed.

? Repeal of the existing vocational rehabilitation statute, replacing it with a new supplemental job displacement benefit for injuries occurring on or after Jan. 1, 2004.

? Increasing the maximum fine for workers' comp fraud from $50,000 to $150,000.