CA Reform Interests Other States

Speculation in the California workers' compensation system is that the anticipated proposed reform bill will be formally released and introduced into the Legislature today with just 10 days to go in the legislative session.

Regardless of whether you are for or against the bill, this is certainly a time of very intense political interest for everyone in the industry, including those whom I talk with here in Orlando, Florida at the 67th Annual Workers' Compensation Educational Conference.

For those of you who do not make the annual pilgrimage in August to Orlando, I honestly think it is the single most important event in our industry exceeding any other conference by a large number the amount of people that attend, the quantity and breadth of educational programs and the huge networking opportunities.

But I'm always surprised by how much California can dominate the conversations and discussions.

One attendee told me that California holds intense interest to, at least, Florida because "what happens in California tends to show up in Florida about two years later."

So what are the items in the California reform proposal that may migrate East? For sure the proposals for controlling medical costs have great interest outside of the Golden State.

With medical cost inflation continuing to be an issue in nearly every state, the California's experiment holds a lot of interest for other states.

There are two ways to control medical costs: the amount billed and the resources used. In workers' compensation parlance we call these two items severity and utilization.

Utilization is controlled under the proposed law with an Independent Medical Review (IMR) system.

The proposed California IMR process puts medical disputes into another agency within the Division of Workers' Compensation (albeit the DWC may contract out for this service) and creates a near binding decision process for those disputes. Disputes can not be appealed out of the IMR system unless there is an allegation of fraud.

The IMR process is required to strictly adhere to the Medical Treatment Utilization Schedule (MTUS), which has been growing since the 2004 reforms mandated the creation of the MTUS, while the American College of Occupational and Environmental Medicine (ACOEM) treatment guidelines were the key reference source.

Severity will be controlled by shifting to Medicare's Relative Value Based Resource System (RVRBS). This system has been criticized because it reduces, dramatically, reimbursements to specialists and increases compensation to generalists. Specialists of course cost more than generalists.

Whether the services of a specialist are necessary in many cases is open to debate. If the shift of services to a general practitioner does not detrimentally affect the quality of care that an injured worker receives will be watched closely.

Like it or not, if the proposed reform for California makes law the state will be the subject of close study by the rest of the industry ... again.