The WCIRB has released its Senate Bill No. 863 WCIRB Cost Monitoring Report – 2015 Retrospective Evaluation which is part of a multi-year cost monitoring plan developed by the WCIRB following the signing of SB 863 by the California Governor on September 18, 2012.
This Report includes an updated retrospective evaluation of the cost impact of a number of SB 863 provisions based on data emerging through the third quarter of 2015. Based on the most current information, the WCIRB estimates the impact of SB 863 is an annual net savings of $770 million, or 4.1%, of total system costs.
The measure sought to change the long-standing practice in workers’ compensation cases of charging unregulated medical fees for care by tying fees to other publicly financed health care programs. The medical care portions of the bill appear to be having the desired effect. SB 863’s elimination of the duplicate payment for spinal surgical implants was estimated to save approximately $20,000 per procedure, while WCIRB Medical Data Call (MDC) data shows an over $25,000, or 28%, reduction in the average cost of these procedures since 2013.
The changes to PD related to FEC were estimated to eliminate any increases to PD for the Ogilvie decision and included significant savings to frictional costs resulting from the elimination of Ogilvie. However, since the implementation of SB 863, average allocated loss adjustment expense (ALAE) costs per claim have not declined and, in fact, have increased significantly, suggesting no savings to ALAE from the elimination of Ogilvie are emerging.
Expedited hearings related to medical treatment disputes were expected to be substantially eliminated by the new IMR process, while approximately 5,500 more expedited hearings have been held per year since the implementation of SB 863.
The number of lien filings was projected to decrease by approximately 41% as a result of the SB 863 lien filing fee and statute of limitations. Although filings in 2013 and 2014 decreased by approximately 60% annually when compared to 2011 levels, the number of liens filed increased significantly in 2015 and are projected to be only 20% lower than 2011 levels. However, some of this increase may be a result of temporary increases in lien filings due to the transition of the statute of limitations on filing liens from three years to eighteen months for dates of service on or after July 1, 2013. As a result, at this time it is not clear whether the SB 863 lien provisions will produce saving more or less than originally projected.