Report: California Workers’ Comp Medical Payment Trends Fell in 2018

NAPEO is right around the corner!  While in Austin, there’s certain to be quite a bit of discussion around claims trends throughout the country.  That said, I found the some interesting news out of California from the Insurance Journal regarding the continued decline of medical payments, number of claims and paid medical transactions.

See you in Austin!

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Medical payments in California’s workers’ compensation system continued to decline in 2018 as the medical payments per claim decreased, according to a report from the Workers’ Compensation Insurance Rating Bureau of California.

The WCIRB released its California Workers’ Compensation Aggregate Medical Payment Trends report comparing medical payment information from 2016 to 2018.

The report also includes an analysis on utilization and cost of opioid prescriptions over time and by region.

Other findings in the report include:

  • The medical payments for pharmaceuticals and to pharmaceutical providers declined sharply.
  • Physical therapy services experienced the largest increase in the share of medical payments driven by increases in both service utilization and paid per service.
  • Physical medicine and rehabilitation procedures continued to grow the fastest within all physician services and use of anticonvulsants increased more significantly than any other therapeutic groups.
  • Opioid prescriptions and costs declined significantly, mostly driven by fewer claims involving opioid prescriptions. In addition, average doses of opioids prescribed dropped sharply as did the concurrent use of opioids and sedatives.
  • Fresno, Bakersfield and Tulare areas had the highest share of claims involving opioid prescriptions, while the Silicon Valley area and the Los Angeles Basin had the lowest share.

Another WCIRB report issued this week showed a new drug formulary put into effect by the California Division of Workers’ Compensation over a year ago may be working as intended.

California Adopts 16.5% Workers’ Compensation Rate Drop for 7.1

From the Insurance Journal…

http://www.insurancejournal.com/news/west/2017/05/22/451841.htm

California chose to adopt the Workers’ Compensation Insurance Rating Bureau’s (“WCIRB”) recommendation of a -16.5% drop in pure premium rates.  It should be noted that these rates are advisory only and so what to watch next is who adopts the pricing decrease and who does not.  With over 30% of all US workers’ compensation premiums generated out of California, this will provide an intriguing battleground and opportunity for those carriers that buy into WCIRB’s numbers in regard to lower medical loss development, decreasing indemnity claim frequency, and lower than projected loss adjustment expenses.

– Paul R. Hughes

 

New York Workers’ Compensation Rates Expected to Fall 4.5%

Mr. Cuomo has committed to a workers’ compensation “business process reengineering” aimed at increased efficiencies in the overall system.  This from the Insurance Journal today.

At the same time, improvements in medical delivery is also part of the budget in areas such as:

  • Expanding the safety net for seriously injured workers, so more are eligible to apply for reconsideration for lifetime benefits when their benefit caps are set to expire.
  • Ensuring injured workers who are out-of-work and not receiving benefits will get a hearing within 45 days.
  • Providing relief for first responders exposed to extraordinary stress in emergency situations.
  • Strengthening the administrative tools available to the Board in its efforts to provide swift and appropriate delivery of benefits to injured workers.

If the recommendation from the New York Compensation Insurance Rating Board is approved (which is likely), the new rates will take effect on 10.1.17.

  • Paul R. Hughes

New York Board Proposes 4.5% Workers’ Compensation Rate Decrease

New York businesses could soon see some slight relief in workers’ compensation premiums, according to an announcement from Gov. Andrew M. Cuomo.

The governor’s office released a statement Monday saying that the New York Compensation Insurance Rating Board, a non-governmental rate service organization, has submitted an overall workers’ compensation rate decrease of approximately 4.5 percent for rates beginning Oct. 1, 2017. If approved, the premium decrease equates to a savings New York employers about $400 million this year in workers’ compensation premiums.

In its rate filing, CIRB attributed the reduction in premium rates to certain cost savings measures passed as part of the 2018 budget and general system savings spearheaded by the New York State Workers’ Compensation Board, according to the governor’s statement.

“The reforms to the Workers’ Compensation system in this year’s budget will help New York businesses cut costs – enabling them to further reinvest, grow and create more jobs across the state,” Cuomo said. “With this rate decrease, New York is providing real savings to businesses helping to make them more competitive while strengthening protections for injured workers at companies across the state.”

The rate submission must still be reviewed and approved by the Department of Financial Services. If approved it would become effective October 1, 2017.

New York Senate Majority Leader John J. Flanagan said workers’ compensation reforms were part of the budget negotiations earlier this year.

Workers’ compensation premium rates are determined on an annual basis and take into account recent claims experience as well as implementation of any new policies and procedures. The 2018 New York Budget specifically addresses cost by applying limits to temporary disability payments prior to a permanency award, while providing an exemption process for the most seriously injured.

“Governor Cuomo and the Legislature have successfully managed to rebalance the workers’ compensation system to provide better protections for injured workers and provide much needed relief to New York’s businesses,” said Kenneth J. Munnelly, chair of the Workers’ Compensation Board.

The budget also includes better protections for injured workers by:

  • Expanding the safety net for seriously injured workers, so more are eligible to apply for reconsideration for lifetime benefits when their benefit caps are set to expire.
  • Ensuring injured workers who are out-of-work and not receiving benefits will get a hearing within 45 days.
  • Providing relief for first responders exposed to extraordinary stress in emergency situations.
  • Strengthening the administrative tools available to the Board in its efforts to provide swift and appropriate delivery of benefits to injured workers.

The budget requires the Workers’ Compensation Board to publicize new permanent impairment guidelines to reflect advances in modern medicine that result in better outcomes. Additionally, to ensure that injured workers receive high quality, cost effective medications, the board will establish a prescription drug formulary.

According to the governor’s office, the reforms build on his continued commitment to improve New York’s workers’ compensation system to more effectively serve the needs of injured workers and employers.

Signed by the Cuomo as part of the 2013-14 budget, the Business Relief Act provided hundreds of millions in savings for New York businesses by fundamentally restructuring the way that workers’ compensation assessments were made.

Cuomo also launched a comprehensive “business process re-engineering” to re-imagine the workers’ compensation system. As part of that effort, the Workers’ Compensation Board is close to launching virtual hearings, which will modernize and virtualize the Board’s present hearing environment and allow injured workers to participate in a hearing at a location that is most convenient for them, even their home, the statement said.

In addition, the Workers’ Compensation Board has developed new processes to ensure benefits are delivered more timely by utilizing alternative means to resolve disputes. This allows the board to preserve hearing time for more complex cases with legal disputes. The board has also generated a dramatic decline in inventory of pending workers’ compensation appeals and the length of time it takes for those appeals to be resolved. The prompt processing of appealed claims aids both workers and employers, by making benefits and treatments available more quickly and lowers litigation costs.

Source: New York Office of the Governor

LA Business Journal – “11 Percent Hike Recommended for Workers’ Comp”

Double digit hikes possible in California?

http://www.labusinessjournal.com/news/2014/aug/13/11-percent-hike-recommended-workers-comp/

My guess is competition and the political environment will both at least cut the impact of this in half, but still an important prognostication for the state that now represents nearly 25% of the private US workers compensation market in 2014. Much of this is trend on indemnity claims due to medical and longer durations expected —