CA Exports Innovation; Perhaps in Work Comp Too?

The data was clear, according to the statisticians.

A full cycle had been completed, almost perfectly on time.

And sometimes I am amazed at the accuracy of my predictions...

The basic message yesterday at the 48th annual California Workers' Compensation Institute's (CWCI) meeting was that the natural cycle of workers' compensation costs and call for "reform" had occurred, that "reform" was in the air, and that any increase in permanent disability benefits would come out of the medical component.

Mr. Bigg's plight caused me to say that two days ago and, no, I wasn't privy to CWCI's data.

The California workers' compensation system is again up for grabs, and the governor's office is ready to tackle the issues.

That is why the Department of Industrial Relations (DIR) has scheduled eight public forums, being hosted by DIR Director Christine Baker and Division of Workers' Compensation (DWC) Administrative Director Rosa Moran, starting next month where state regulators will hear public input on ways to improve the system.

Baker made it clear to the attendees that changes are going to be made, that the Brown Administration is looking for long term correction to workers' compensation to satisfy the needs of business and labor (notably excluding all other system participants!), and that interest in the public forums has been huge with some 400 people signed up to speak at some of the scheduled forums forcing her agency to add a seventh and eighth forum to the six it had originally planned on holding.

CWCI Research Director Alex Swedlow said medical costs on indemnity claims, measured nine months after injury, have increased 84% since 2004, when the Legislature passed Senate Bill 899 and instituted cost controls, including medical provider networks, medical treatment guidelines and utilization review. He said institute research shows "continuing evidence that things are becoming more expensive and less consistent from claim to claim."

Liens entered the picture for Swedlow and though he used the term generically, it was apparent from the presentation that he was talking about liens for medical services.

The number of payment disputes appears to be driving an increase in what insurers spend on medical cost containment. Preliminary research by CWCI shows cost-containment measures such as utilization review and bill review made up 6.7% of medical costs on claims one year after injury in 2004, but comprised 16.1% in 2010.

After Swedlow set up the audience with the basis of his presentation, Los Angeles County Risk Management Chief Alex Rossi took the podium and gave the public entity perspective noting that complications from co-morbidities often drive up the cost of claims. And sometimes new ailments inexplicably arrive on scene.

"I think an epidemiologist would have a field day with our workers' compensation program because until a couple of years ago we never saw sexual dysfunction and sleep apnea in the county," he said.

Dr. David C. Deitz, national medical director for Liberty Mutual, provided further statistical evidence about the nation's extraordinary cost of care and relative failure at delivering a healthy population. He also noted that around the country more and more states are in the process of adopting treatment guidelines.

And Swedlow followed that up quipping that research has shown that patients who are most satisfied with their physicians receive the most treatment and have the highest morbidity rates. Clearly the system needs to drive down patient satisfaction if it wishes to contain costs...

R. Sean Randolph, PhD, President & CEO of the Bay Area Council Economic Institute told the lunch time audience that everything is going to be alright in California and that the economy of the state is still one of the largest in the world, by itself, and moving in a positive direction again. Of course construction and housing are down, and won't recover any time soon, but the state's leading export, innovation, continues to thrive and is driving the economic recovery for the state.

So there you have it - the cycle is near complete, we should see major changes in the California system proposed this legislative session (though 2013 may actually be the year of action), and the California economy is poised to once again lead the nation, this time in the right direction.

And perhaps California will have some work comp innovation to export to the rest of the country too.