Medical Fee Schedule Measure is Vital to Reforming Calif.’s WC, Says AIA

April 10, 2003

Legislation to overhaul California’s workers’ compensation medical billing system is crucial to controlling escalating medical costs and would be a big step towards reforming California’s troubled workers’ compensation system, the American Insurance Association (AIA) said. SB 228, authored by Sen. Richard Alarcon (D), would standardize how reimbursement levels for medical costs are developed through fee schedules.

“Senator Alarcon’s measure addresses one of the major challenges facing California’s workers’ compensation system – skyrocketing medical costs,” said Mark Sektnan, AIA assistant vice president, western region, in testimony before the Senate Labor and Industrial Relations Committee. “Everyone agrees that California’s workers’ compensation system is broken. This bill will curb the system’s skyrocketing medical costs and restore the predictability insurance carriers need to accurately price policies. SB 228 strikes a balance between the need for access to the system and the need to pay fair reimbursements for medical services with the need to limit unnecessary costs.”

The measure would adopt the Medi-Cal and Medicare fee schedules and apply them to the workers’ compensation system. Under SB 228, out-patient surgery centers and prescription drugs that are currently provided on a fee-for-service basis would operate under the standardized fee schedule.

“California’s workers’ compensation system has been functioning under inconsistent rules,” said Sektnan. “Some services such as doctor’s fees are controlled by a fee schedule and other services like facility fees at out-patient-surgery centers are not regulated at all. This has lead to a shift towards procedures being performed at the higher cost facilities.”

“Enactment of this bill would ensure proper treatment of injured workers while streamlining medical payment processing and reducing costly litigation that arises when providers and payers disagree over appropriate charges,” Sektnan said. “Basing workers’ compensation reimbursement rates on Medicare also allows the fee schedule to be revised on a regular basis, which means service providers will receive up-to-date fees that reflect advances in medical technology.”

SB 228 was heard in the Senate Labor and Industrial Relations Committee April 9.

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