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Despite significant savings generated by California's 2012 workers compensation reforms, recent payment trend increases warrant “continued scrutiny,” according to a study by the Workers' Compensation Insurance Rating Bureau.
The average cost of medical services per claim dropped 8% from the second half of 2012 to the first half of 2015 largely due to S.B. 863, which increased benefits for injured workers in California as of January 2013 and included several changes intended to reduce the state's comp system costs, Oakland, California-based WCIRB said in “Impact of S.B. 863 on California Workers Compensation Medical Costs through June 30, 2015,” released Thursday.
“These cumulative savings were primarily driven by physician fee schedule and pharmacy services, which collectively represent approximately 61% of all medical service payments,” WCIRB said in the study.
However, the fact that the average amount paid for medical services per claim increased 4% in the first half of 2015 compared with the second half of 2014 merits “continued scrutiny,” the study says.
“Although the immediate impact on S.B. 863 in reducing medical costs is significant and measurable, past experience warrants caution in concluding that these trends will be sustained over the long-term,” WCRIB said in the study, noting that an “erosion” of savings followed the full implementation of workers comp reforms enacted in 2003 and 2004 in the state.
To estimate the overall impact of S.B. 863 on workers comp medical costs in California, WCIRB said it analyzed medical transaction data covering services from July 2012 through June 2015 for claims from all accident years. It estimates that S.B. 863 has reduced statewide medical costs by about $0.9 billion annually.
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.