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California comp reforms said to save $770 million a year

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California workers compensation reforms passed in 2012 have reduced the state’s comp system costs by 4.1%, or $770 million annually, according to the California Workers’ Compensation Insurance Rating Bureau.

S.B. 863, passed by California legislators in September 2012, increased benefits for injured workers as of January 2013 and included a number of changes intended to reduce California comp system costs. Those included an independent review process for medical treatment and billing disputes, fee schedules for home health care, language interpretation and other comp-related services and fees for lien filings.

Medical claim severity for California workers comp claims decreased in 2013 and 2014, Oakland, California-based WCIRB said in a report released Monday. The rating bureau tentatively connected that decrease to certain S.B. 863 provisions, such as independent medical reviews, independent bill reviews and medical provider networks.

“While it is very difficult to attribute changes in medical treatment levels to specific components of S.B. 863, the WCIRB estimates the S.B. 863 changes have resulted in an overall 5% decline in medical treatment costs,” the report reads.

The number of lien filings against comp claim payers, either insurers or self-insured employers, in the state in 2013 and 2014 was 60% lower than 2011, which was likely connected with a $150 lien filing fee and lien filing deadlines that were implemented in S.B. 863, WCIRB said. However, WCIRB noted that lien filings have “increased significantly in each quarter” of 2015, and that the state has seen an 87% year-over-year uptick in lien filings for the first nine months of this year.

Some “of this increase may be a result of temporary increases in lien filings due to the transition of the statute of limitations on filing liens from three years to 18 months for dates of service on or after July 1, 2013,” the report reads. “As a result, it is not clear at this time whether the S.B. 863 lien provisions will produce (savings) more or less than originally projected.”