Employers, Labor Leaders to Testify on Alarcón’s WC Bill

April 8, 2003

In a rare move, employers and labor leaders will both go before the Senate Labor and Industrial Relations Committee in support of SB 228-authored by Senator Richard Alarcón (D) Van Nuys. SB 228 will be heard on April 9, 2003.

SB 228 is designed to reduce workers’ compensation insurance premiums by lowering medical costs. Senator Alarcón, who chairs the Labor Committee, will hear testimony from several SB 228 supporters, including Allen Zaremberg from the California Chamber of Commerce, Willie Washington of the California Manufacturers and Technology Association, Jill Dulich of the California Self Insureds Association, Tom Rankin of the California Labor Federation, and Lorie Kammerer from the California Coalition on Workers’ Compensation.

Employers all across the state have been concerned about high worker’s compensation insurance premiums, which they say, are eating away at already slim profit margins and choking the state’s economy. Research shows that skyrocketing medical costs are causing the increase in premiums.

Medical costs in workers’ compensation are high for several reasons. The current medical billing system, which is based on fee schedules, is complex and difficult to administer.

* The fee schedules, which do exist, are outdated and often do not
cover new services and procedures.
* Providers often feel it necessary to game the system to achieve
higher reimbursement rates than those allowed for under the schedules.
* No fee schedules exist for the use of out-patient surgical facilities.
* No fee schedules exist for the purchase and sale of prescription
* Out-patient surgical centers comprise about 60% of the Workers’
Compensation System’s “hospital costs. ” And because there are no fee schedules in this area, these centers function with no guidance as to appropriate charges. Moreover, employers are paying 40-45 percent more for pharmaceuticals in the workers’ comp system than in other payment systems.

SB 228 is designed to cut the costs of workers’ compensation health care by as much as $1 billion annually, with an additional $150 million saved by the state each year.

SB 228 will achieve those savings by:
* Implementing workers’ compensation medical billing fee schedules in
those areas that have none. The creation of fee schedules will reduce costs by providing appropriate charging guidance where there currently is none.
* Requiring the automatic updating of those schedules, which currently exist. Automatic updating will decrease systemic gaming.

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