The California Workers' Compensation Insurance Rating Bureau's latest annual report shows that the average medical benefit payment per claim in California remains almost double the national average.
Medical benefits accounted for about 40% of system costs – $6.6 billion in 2014 and $6.3 billion in 2013 – while indemnity benefits of $2.9 billion in 2014 and $2.6 billion in 2013 accounted for 17% of the total each year.
Average medical costs, meanwhile, have declined each year since 2011. Carriers paid an average of $43,750 in medical benefits per indemnity claim in 2014, compared to $47,817 in 2011.
Average medical severity in California dropped 2.6% in 2012, 3.7% in 2013 and 2.5% in 2014. In NCCI states, medical costs increased by 2.4% in 2012, 3.2% in 2013 and 4% in 2014 – about the same pace as overall medical inflation.
Regardless, California's average medical severity, based on 2011 policy year data, remains about 40% higher than the national median.
Okay - so medicine costs more, and always has, in California. We all know that.
No one tells us why.
Safety National's Mark Walls asked me the loaded question while on a panel before a national audience at the National Workers' Compensation and Disability Conference last year, "Dave, why is California workers' compensation so much more expensive than the rest of the nation?"
I quipped, "Mark, everything in California is more expensive than the rest of the nation; property, gasoline, service... You know why Mark? Because it's worth it."
That got a good laugh, but the truth is that we, in claims here in California, simply tolerate it as a fact, when there's no good reason, except that we tolerate it.
For instance, I was presented a vignette the other day of our incomparable tolerance for just nonsense.
"When I see one of the industry’s best and brightest doctors," an industry consultant wrote me, "sign the PR-2 on the initial visit with ‘Expected Duration’ as 14 days and then, 2 ½ year later, sign a PR-2 with ‘Expected Duration’ as 14 days – I know something is messed up."
He goes on to say, "This guy is one of us – ‘We’re the good guys!’ And this is what he does? We’re not treating injured workers – we’re maximizing billing!"
Perhaps. Maybe there's another reason, but honestly I can't think of one.
Someone remaining under physician supervision because the expected duration of their malady is 14 days, in perpetuity, defies common sense.
Just how many of these perpetual 2 week duration cases are there that comprise a medical severity figure that is twice the national average?
That physician isn't being held accountable for this exercise in absurdity.
We think we're holding the line on medical costs by incrementally squeezing all profit margin out of providers with fee schedules, guidelines and other chicanery.
But the bottom line is that if no one holds this doctor, "one of the industry's best and brightest," accountable for realistic case management, then we have only ourselves to blame.
If we want to make that $43,750 average medical cost per indemnity claim go down, then we need to tell those "best and brightest" doctors that putting 14 days of duration endlessly 129 consecutive times isn't acceptable.
It's not the doctors; it's us, because we tolerate such nonsense.