Workers’ Comp Study: California Reforms Lowered Medical Payments Per Claim

A study from the Workers Compensation Research Institute indicates some benefits were had from California’s workers’ compensation reform bill.

This WCRI 15th edition of the CompScope’ Benchmarks study tracks the provisions of Senate Bill 863, which sent into effect Jan. 1, 2013. The study describes some early impact of several of the reform provisions.

This study also compares the performance of the California workers’ comp system with 10 other states, based on 2011 injuries with experience through March 2014. This group of claims represents an average 30 months of maturity and three to 15 months of experience under various reform provisions—mainly pre-SB 863 results.

The major findings for California are as follows:

• Medical payments per claim in California decreased 5 percent in 2013 (for claims with 12 months of experience), which may reflect the early impact of SB 863.
• Indemnity benefits per claim in California grew moderately in 2012 and 2013, partly from small increases in wages and temporary disability duration. The percentage of claims with weekly permanent partial disability benefit payments decreased noticeably, which may indicate behavior chances related to SB 863.
• Higher benefit delivery expenses per claim in California were driven by all components for 2011 claims with 36 months of experience. These results may reflect system features. For 2013 claims with 12 months of experience, the expense measures in California experienced moderate growth; the anticipated decrease from SB 863 has not been observed yet.

Medical payments per claim in California fell 5 percent in 2013 for claims with seven days of lost time and experience through March 2014, while many other study states experienced growth in this measure for claims with an average 12 months of experience, according to the study.

This decrease followed a period of moderate growth between 2010 and 2012. Before 2010, medical payments per claim in California rose rapidly from 2006 to 2009, which may reflect the combined impact of changes in regulations, practice patterns, and participant behavior after the effect of the earlier reforms subsided, and from 2002 to 2005, medical payments per claim in California fell 29 percent following the 2002 to 2004 reform, the study states.