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While it could take years to fully determine how California's 2012 workers compensation reforms have affected the state's comp system, the California Workers' Compensation Insurance Rating Bureau says early signs show some provisions — including independent medical and bill reviews — have helped reduce costs by $770 million a year.
S.B. 863 increased benefits for injured workers as of January 2013 and included several changes intended to reduce California's comp system costs. They included an independent review process for medical treatment and billing disputes, fee schedules for home health care, interpretation for non-native English speakers and fees for lien filings.
In a report released Monday, Oakland, California-based WCIRB noted that independent medical reviews have had a “significant impact” on reducing medical treatment levels and medical costs for California workers comp claims.
The $770 million in annual savings achieved so far compares with initial savings estimates of $300 million per year, according to a 2012 report from Fitch Ratings Ltd.
WCIRB said independent reviews of workers comp medical billings also appear to be reducing medical severity of claims, although “relatively few” bill requests have been submitted compared with the number of independent medical reviews.
The bureau expects roughly 3,100 independent bill reviews to be submitted for the entire year, compared with 65,875 independent medical review requests submitted just in the third quarter.
A WCIRB spokesman told Business Insurance Wednesday that independent bill reviews are paid by medical providers, which may explain why they are submitted less frequently than independent medical review requests, which are paid for by insurers or employers. Still, he said comp review procedures may be influencing medical treatment or billing practices in a way that's lowering overall comp costs for California.
“The WCIRB is not able to isolate the individual impact of (independent bill review), (independent medical review) and other S.B. 863 provisions on overall medical treatment levels, but overall medical severities … have declined after S.B. 863,” the spokesman said in a statement.
While WCIRB believes independent medical and bill reviews are benefitting California's comp system, Mark Sektnan, president of the Sacramento-based Association of California Insurance Cos., was skeptical about the efficiency of medical reviews in handling comp disputes.
The association finds “that some providers are gaming the (independent medical review) system. Almost 11% of the requests for review come from only 10 providers. For these providers, (independent medical reviewers) uphold the insurer's decision more than 90% of the time,” he said in a statement.
WCIRB's spokesman said it will take at least a couple years before the bureau can begin to get a complete picture of how comp reforms have played out for California. He noted that some fee schedules, such as one for copy services, have only recently been adopted, while other fee schedules for language interpretation and home health services have yet to be completed.
Further, he noted that S.B. 863 established a four-year phase-in period for a new medical payment fee schedule, and that California is in the second year of that implementation.
DANA POINT, Calif. — Too much money is spent on frictional costs such as bill review in the Los Angeles area, and it's taking money away from injured workers, panelists said during the 2015 California Workers' Compensation & Risk Conference in Dana Point, California, on Wednesday.