Calif. Workers’ Comp Reforms Working Better than Expected

October 12, 2007

Reforms to California’s worker’s compensation system enacted since 2002 “have had a substantial impact on system costs,” according to a new report by the state Workers’ Compensation Insurance Rating Bureau.

In its “2007 Legislative Cost Monitoring Report” issued Oct. 9, WCIRB found that reductions in physician fees, chiropractic utilization and physical therapy use, among other changes, have led to savings of approximately 70 percent, or $14.5 billion, to insured employers. WCIRB indicated total reform savings were expected to be 49 percent, or $10.1 billion, as estimated after the enactment of reform legislation.

WCIRB’s report noted that physician fees have been reduced by approximately 4 percent, inpatient facility fees reduced by 4 percent, outpatient facility fees reduced by 39 percent and pharmaceutical fees reduced by 13 percent following enactment of SB 228, which changed the medical fee schedule.

Permanent disability benefit costs have been reduced by approximately 14 percent due to changes in the number of weeks of benefits per rating point of disability, and reduced by about 5 percent due to SB 899 apportionment provisions. “Permanent disability benefit costs have been reduced by as much as 60 percent, due to the SB 899 changes to the permanent disability schedule,” WCIRB stated in the report.

Significantly, chiropractic use has been reduced by approximately 82 percent, and physical therapy utilization dropped by approximately 66 percent, WCIRB indicated.

Meanwhile, services provided through medical networks increased from 33 percent in 2002 to 62 percent in 2005.

The report is the fourth in a series of annual reports summarizing the WCIRB’s evaluation of the key cost components that were impacted by recent reforms, based on post-reform costs that have emerged through the middle of 2007. For more information, visit

Source: WCIRB

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