Workers Compensation Update

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Workers Compensation Update

• By
• Senator Charles Poochigian

2
OVERVIEW

• A Short History
• Medical Provider Networks
• PD Reform
• Where we are today

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The ProblemWorkers Compensation Costs by State
4
Workers Compensation Premium Rise
5
Characteristics of California Workers
Compensation System

• Excessive and costly medical utilization
  (Particularly chiropractic and physical therapy)
• Worst Return-To-Work Ratios in the nation.
• Excessive litigation
• System Delays

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2003 Reforms SB 228 AB 227

• Outpatient, Pharmaceutical and Physician Fee
  Schedule
• Cap on Chiropractor and Physical Therapy
• Treating Physicians Presumption Repeal
• Repeal of Vocational Rehabilitation
• Spinal Surgery Second Opinion
• Utilization Review ACOEM Guidelines

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Workers Compensation CostsPrior to Enactment of
SB 899

• Total system costs were expected to be 28.2
  billion by 2006.
• SB 749 mandated annual benefit increases.
• Cost of medical care trending higher.
• Average Indemnity payment increasing.
• (Source WCIRB)

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SB 899 (Poochigian)

• Medical Reform
• Employer/Insurer Control
• Immediate Medical Care
• Strengthened Standard of Care (ACOEM)
• Permanent Disability Reform
• Use of Objective Medical Standards
• Apportionment
• New PD Formula
• Temporary Disability Limitation
• Penalty Reform
• Repealed SB 796 (Dunn) Application

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Medical Provider Networks (MPNs)

• Released November 1, 2004
• MPNs Effective January 1, 2005

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Medical Provider NetworksMPNs

• Employer/Insurer Control
• Treatment must meet medical guidelines
• Employees first visit is to employers choice.
• Employee may change physicians within the MPN.
• ( Labor Code Section 4616)

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MPN - Out of Network Care

• If the employee objects to treatment, must seek 2
  additional opinions within the MPN
• If the employee is still unsatisfied --
  Independent Medical Review (IMR)
• If the IMR finds the treatment does not meet
  medical guidelines--employee may seek outside
  medical treatment for disputed treatment only.
• or
• No provider available within MPN.
• ( Labor Code Section 4616.4)

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MPN Requirements

• Must include 25 of physicians that are primarily
  engaged in non-occupational injuries.
• Must have an adequate number and type of
  physicians to insure
• Treatment in a timely manner
• Type of physicians necessary to treat common
  injuries
• Reasonable access (with exceptions for rural
  communities)
• (Labor Code Section 4616)

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Who Must Use MPN

• Employees injured after MPNs are approved unless
  they have pre-designated a personal physician.
• For employees injured prior to MPNs, employers
  may transfer employees into MPN in the following
  manner
• Acute Conditions Upon completion of
  treatment
• Serious Chronic Illnesses Completion of
  course of treatment
• Scheduled Surgery within 180 days of the
  MPNs establishment

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Permanent Disability Reform

• Objective Standards-Use of AMA guidelines
• New PD Schedule
• Benefit Increases/Decreases
• PD Apportionment
• Return-to-Work Incentives

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PD Apportionment

• Causation Applied To PD Indemnity Payments
  Employers are responsible for permanent
  disability that is directly related to the work
  injury. Pre-existing Conditions are not
  compensable.
• Any pre-existing permanent disability is
  conclusively presumed still present at the time
  of any new injury. (Davis v City of Sacramento 32
  CWCR 132)
• Injured workers are now required to disclose all
  previous permanent disabilities or physical
  impairments.
• Doctors must include an analysis of apportionment
  issues in their report.

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PD Indemnity Payments Return To Work
Incentives

• Within 60 days of injury becoming permanent
  stationary
• PD payment reduced by 15 if employer provides a
  return to work option
• Offer must be for regular, modified or alternate
  work
• Within a reasonable distance from the worksite
• Offered job must last at least one year
• PD payment increased 15 if the employer does not
  offer the injured employee a return to regular
  work, modified work, or alternate work
• Note Does not apply to employers with fewer than
  50 employees. Eligible for Return-to-Work
  Program (SB 749-Alarcon)

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• Where We Are Today

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Next Phase of Reform

• Implementation of MPN and PD changes
• Modernize the court system
• Improve Fraud System (SB 18 4X- Poochigian)
• Improve Opportunity for Group Self Insurance (SB
  11 4X-Poochigian)