By most observations, 2022 will not be a year where the California Legislature entertains “major” workers’ compensation legislation. That is a term used by people to describe a process where labor and management sit on opposite sides of a table and discuss how to allocate hundreds of millions – if not billions – of dollars. It is also a paradigm that no longer makes sense.
To be sure, there are extraordinary sums of money being spent where it likely should not be. But how to change that is far easier said than done. For some cost drivers, we do not entirely understand why and how the money is being spent – as is the case with the Subsequent Injuries Benefit Trust Fund (SIBTF).
And while it appears the payer community is having a severe case of buyer’s remorse with the added costs in the Medical-Legal Fee Schedule (MLFS), simply ratcheting down the costs of record review will neither improve the quality nor timeliness of reports.
As we witnessed with the efforts to stop the creation of a State MPN in Assembly Bill 1465 (Reyes) last year, the use of networks is very, very important to claims administrators. We also saw bills dealing with various frustrations with claim denials – Senate Bill 335 (Cortese) – and a whole litany of alleged abuses in the medical management environment – Senate Bill 399 (Salas). These issues will return in 2022 and cannot be consigned to a second tier “we’ll get to it if we can” treatment while labor and management figure out whose ox is to be gored in exchange for more permanent disability benefits.
The way the workers’ compensation legislative debate is joined, as the past few years have demonstrated, has changed if for no other reason that labor and management now care quite a bit about the business of workers’ compensation. That had not always been the case.
Over the past several sessions, we have seen several chaptered bills requiring studies to allow policymakers the opportunity to understand better how the system should work. We have also seen numerous inquiries from legislators for system information to the Department of Industrial Relations and its Commission on Health and Safety and Workers’ Compensation (CHSWC).
These requests for more analysis and information include specific issues raised in Senate Bill 542 (Stern) relating to compensability of PTSD, and SB 335, which engendered letters from both policy committees asking for more information regarding claims denials and penalties.
Taking all this information and putting into a usable structure to guide workers’ compensation legislation in 2022 is a laudable goal. It can only be achieved, however, if studies enter the public domain after an adequate opportunity to review and comment. Such has not been the case recently. By year’s end, we were also supposed to receive a report from the Division of Workers’ Compensation regarding alternate payment methods for medical providers. This was mandated in Senate Bill 537 in 2019.
In the meantime, here is one number to think about when looking at whether the system needs repairing or a major overhaul. That number is $1.68. This represents the latest average pure premium rate for workers’ compensation insurance. It is the lowest it has been since before the 1993 reforms.
Note: The opinions expressed herein may or may not be those of Workers’ Comp Executive. Mark Webb is a former Arizona insurance regulator, insurance company chief compliance officer, and is an expert in corporate governance, risk and compliance. He is the owner of Prop 23 Advisors.