California Workers’ Comp Bureau Lowers Rate Filing with Eye on Bills

September 7, 2016 by

The governing committee of California’s Workers’ Compensation Insurance Rating Bureau on Wednesday approved an amended, and reduced, rate filing for Jan. 1, 2017 workers’ compensation rates.

It did so based on the hope that California Gov. Jerry Brown signs two bills into law, and that those bills end up producing a cost savings in the state’s massive workers’ comp system.

All bets are off if Brown doesn’t sign them.

“Nothing set in stone for sure unless the governor signs both of those bills,” said Jerry Azevedo with the Workers’ Compensation Action Network, a group that represents the interests of employers.

The committee on Wednesday recommended a 4.3 percent reduction. Last month, it had recommended a 2.6 percent reduction, which it sent to the California Department of Insurance.

The move by the WCIRB committee was surprising for some.

“I’m kind of surprised that the two new bills that are likely to be signed would work into any immediate savings,” said John Norwood, a lobbyist and managing partner of Sacramento-based Norwood and Associates.

The bills WCIRB is pinning its hopes on are Senate Bill 1160 and Assembly Bill 1244.

AB 1244 is designed remove from the workers’ comp system doctors found to have committed a felony or misdemeanor involving fraud or abuse of the Medi-Cal program, Medicare or the workers’ comp system itself. The bill would also keep those doctors from filing liens.

According to the Department of Workers’ Compensation, 10 percent of liens filed between 2011 and 2015 were filed by providers with fraud indictments or convictions.

The other bill, SB 1160, places limitations on the utilization review (UR) process, and also would stay any physician or provider lien upon the filing of criminal charges against them for specified offenses involving medical fraud.

Impact projections from the WCIRB shows an estimated reduction in UR costs from SB 1160 but an increase in medical costs.

Norwood noted that lien filings are already down to levels not seen in decades thanks a provision in 2012’s workers’ comp reform law SB 863 that created fees for filing liens.

Norwood said the bills could also be challenged in court, which often happens, or that the UR limitations in SB 1160 could actually end up costing more.

His point was that it’s too early to tell how the bills will impact costs in the workers’ comp system, so he said any rate change should be instead based on past experience.

“I think they’re both very positive bills, but nobody knows today what they’re going to mean in the pricing of workers’ comp,” Norwood said.

Azevedo agreed with Norwood that it’s too early to bank on the bills having a positive impact.

“Just because the Legislature enacts something doesn’t mean that’s how it always plays out in the system,” he said. “That the Legislature is coming back in a few years to address the lien problem again shows you how tenuous reforms can be.”

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