Calif. comp reforms have reduced surgeries, drug spend per claim

California reforms over the past 20 years have had a significant impact on workers compensation in the state, leading to reductions in major surgery events, drug spend per claim and lien filing, according to a study released Tuesday by the California Workers Compensation Institute.

The Oakland, California-based institute researched changes in medical treatment utilization and claim payments for workers compensation in the state between 2000 and 2017 based on indemnity claims data using several different reforms in the state as a benchmark. The study focused on medical treatments provided during the first two years of treatment.

According to the study, California saw a sharp decline in the number of physical medicine for new claims filed in 2004 after the state enacted the 24-visit cap in 2004. Physical medicine, which accounted for 40% of total medical expenditures in 2001, declined to 15% after those 2004 reforms, though major surgery increased by 12% during that time.

The study also analyzed the impact of reforms between 2013 and 2017, which included the adoption of a new fee schedule, evidence-based medicine standards and mandatory utilization review and independent medical review, finding that physical medicine and evaluation and management visits accounted for 22% and 25% of total medical comp payments in 2017, while major surgery’s share of medical payments declined to 19% from a high of 25% in 2005.

The state also saw a rise and then fall of claims with clinical laboratory services — primarily drug testing — which increased from 24% to 36.5% between 2005 and 2011 before declining to 18.8% in 2017, and corresponding to declines in comp opioid prescribing.

Lien filings have also dropped substantially in the state after the passage of S.B. 863 in 2012, which imposed new requirements and limits on the assignment of liens. Lien figures dropped from 1.2 million in 2012 to 206,000 in 2013, though the number rose to 426,000 in 2016, according to the study.

The institute also found a 34% decline in opioid prescriptions between 2009 to 2017, which the study attributed to the enforcement of the Medical Treatment Utilization Schedule through independent medical review, which went into effect in 2018. The number of prescriptions per claim has also declined since that reform, from 13.4 scripts per claim in 2009 to a mean of 5.7 scripts per claim in 2017. Pharmacy payments for claim also dropped significantly, from an average of $1,200 in 2010 to $292 in 2017.