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The WCIRB has now submitted the 2013 SB 863 Cost Monitoring Report, which was prepared in conformance with the monitoring plan submitted to the California Department of Insurance earlier this year The WCIRB’s plan to retrospectively monitor the cost impact of SB 863 based on emerging post-reform costs was published on March 27, 2013. Pursuant to this plan, this report summarizes the WCIRB’s initial retrospective evaluation of the cost impact of a number of SB 863 provisions based on data emerging through the third quarter of 2013..

Indemnity claim frequency for the first six months of 2013 is 6.2% above the comparable 2012 frequency, which is significantly above the projected levels. It is not yet clear the extent to which the higher than expected claim frequency in 2013 is attributable to a greater than projected impact of SB 863 permanent disability benefit increases. Nevertheless, the sharp increase in claim frequency is concerning .

Early indications on lien filings based on Division of Workers’ Compensation (DWC) data through September 30, 2013 suggest that there may be a greater reduction than the 40% reduction projected by the WCIRB in 2012. Also, as projected, WCIRB lien survey data suggests that the greatest level of reduction is in liens for relatively small amounts.

In 2012, based on a California Workers’ Compensation Institute analysis, the WCIRB estimated an approximate $20,000 per claim reduction on claims involving spinal implant hardware due to the SB 863 provisions related to duplicate reimbursement for spinal implant hardware. Preliminary WCIRB data suggests savings of more than $15,000 per claim on affected spinal surgery claims in 2013.

SB 863’s reduction in maximum ambulatory surgical center faci lity fees was estimated to reduce those costs by 25%, which is consistent with the reductions observed based on preliminary WCIRB MDC estimates comparing 2013 reimbursements to pre-SB 863 levels.

A relatively small number of IMRs were filed during the first half of 2013. However, once IMR became effective for all injuries regardless of the accident date starting on July 1, 2013, IMR requests have increased significantly. If the higher volume of August (15,731) and September (14,990) IMR requests are indicative of filing rates for subsequent months, the number of IMRs requested per year would be over three times greater than that projected in the WCIRB’s prospective cost estimate, potentially eliminating any savings in administrative costs due to IMR and also potentially negatively impacting medical treatment costs. Based on DWC information on early IMR decisions, approximately 75% of decisions have upheld the initial utilization review determination.

Although relatively few independent bill review (IBR) requests have been filed when compared to IMR filings, early estimates of IBR decisions show 60% of decisions favoring the provider for amounts significantly less than the IBR filing fee.

Preliminary estimates of medical provider network usage in 2013 show that network utilization in the first six months of 2013 is fairly consistent with that for prior years.