A new CWCI update report takes an look at California workers’ compensation medical and indemnity loss trends,comparing paid losses on claims from 2002 through 2014.
The data shows that between 2002 and 2013, the average amount paid on indemnity claims at 12 months post injury for medical benefits, excluding medical management/medical cost containment (MCC), increased by 30.3 percent (from $5,859 to $7,631). In 2011, the average medical payments on indemnity claims at the 12-month valuation registered a brief decline, falling 4.1 percent to $6,988, before climbing back up again over the next two years,
Given the timing of the implementation of the various SB 863 reforms and the reductions in average medical payments at the 3- and 6-month benchmarks between 2013 and 2014, the recent results suggest that key provisions of the SB 863 medical reforms (i.e., the phase-in of the RBRVS fee schedule beginning in January 2014; the reinstatement of lien filing fees, the reductions in ambulatory surgery center fees, and the adoption of the IMR dispute resolution process) did have an immediate effect on the cost of medical services rendered during the initial period following the injury. The ultimate impact of the 2012 reforms on longer term treatment costs remains to be seen.
However the medical management/medical cost containment (MCC) expenses triggered by reforms skyrocketed over this same time period. Measured at 24-months post injury, average MCC payments rose from $685 in 2002 to $1,003 in 2005 (+46.5 percent), then increased over the next 7 years to a record $2,333 in 2012 — a net increase of 240.7 percent from 2002.
There was an immediate decline in average TD payments that coincided with the implementation of the 104-week cap in April 2004. By 2005, however, average TD payments at 24 months had already started trending up again, and by 2006 average first-year payments were also up sharply. It was not until 2008 that the 24-month TD benefits surpassed the pre-reform 2004 level, and it was not until 2009 that average first-year payments exceeded the pre-SB 899 amount.
There was a net increase of 152 percent in the average amount paid for first-year med-legal reports between 2002 and 2013.