big changes for california’s workers’ compensation: initial … 863... · 2013-11-04 · says a...
TRANSCRIPT
Senate Bill 863 was passed by the California Legislature on August 31st, 2012 and signed into
law by Governor Jerry Brown shortly thereafter. The bill has been touted as a compromise between employers and employees to enact an increase in Permanent Disability benefits along with changes regarding medical treatment guidelines, disputes, and fee schedules. Below are pertinent points in the initial analysis of the bill, which will become law as of January 1, 2013. Note, the specific regulations have not been developed as of yet. Once in place, they will act as a guide to assist in implementation of the changes.
� The bill Increases permanent disability (PD) benefits by $700 million over two years by adjusting the formula used to calculate maximum awards. Age and occupation will be taken into account when calculating PD. The WPI from the AMA guides shall be modified by a factor of 1.4. Diminished future earning capacity has been eliminated.
� Creates a $120 million program designed to increase benefits for injured workers who suffer a disproportionate loss of earnings as the result of an industrial injury.
� Eliminates the 15% bump-up/bump-down that increases or decreases a permanent disability award based on whether an employer makes an offer of work within 60 days of the injured worker becoming permanent and stationary.
TRACEY BURDICK
Senior Vice PresidentTeam Leader, WC [email protected]
Big Changes for California’s Workers’ Compensation: Initial Analysis of Senate Bill 863
September 2012 • Lockton Insurance Brokers, LLC
L O C K T O N I N S U R A N C E B R O K E R S , L L C
TRACEY BURDICKSenior Vice President,
Team Leader, WC Claims 213.689.2318
On August 31, 2012, the California Legislature passed SB 863. This bill is currently pending Governor Jerry Brown’s signature but is expected to be signed shortly. The bill has been touted as a compromise between employers and employees to enact an increase in Permanent Disability benefits along with changes regarding medical treatment guidelines, disputes, and fee schedules. Below are pertinent points in the initial analysis of the bill, of which most aspects are expected to become law as of January 1, 2013. Note, the specific regulations have not been developed as of yet. Once in place, they will act as a guide to assist in implementation of the changes.
� Increase permanent disability (PD) benefits by $700 million over two years by adjusting the formula used to calculate maximum awards. Age and occupation will be taken into account when calculating PD. The WPI from the AMA guides shall be modified by a factor of 1.4. Diminished future earning capacity has been eliminated.
� Create a $120 million program designed to increase benefits for injured workers who suffer a disproportionate loss of earnings as the result of an industrial injury.
� Eliminate the 15% bump-up/bump-down that increases or decreases a permanent disability award based on whether an employer makes an offer of work within 60 days of the injured worker becoming permanent and stationary.
Big Changes for California’s Workers’ Compensation: Initial Analysis of Senate Bill 863
September 2012 • Lockton Insurance Brokers, LLC
L O C K T O N I N S U R A N C E B R O K E R S , L L C
TRACEY BURDICKSenior Vice President,
Team Leader, WC Claims 213.689.2318
On August 31, 2012, the California Legislature passed SB 863. This bill is currently pending Governor Jerry Brown’s signature but is expected to be signed shortly. The bill has been touted as a compromise between employers and employees to enact an increase in Permanent Disability benefits along with changes regarding medical treatment guidelines, disputes, and fee schedules. Below are pertinent points in the initial analysis of the bill, of which most aspects are expected to become law as of January 1, 2013. Note, the specific regulations have not been developed as of yet. Once in place, they will act as a guide to assist in implementation of the changes.
� Increase permanent disability (PD) benefits by $700 million over two years by adjusting the formula used to calculate maximum awards. Age and occupation will be taken into account when calculating PD. The WPI from the AMA guides shall be modified by a factor of 1.4. Diminished future earning capacity has been eliminated.
� Create a $120 million program designed to increase benefits for injured workers who suffer a disproportionate loss of earnings as the result of an industrial injury.
� Eliminate the 15% bump-up/bump-down that increases or decreases a permanent disability award based on whether an employer makes an offer of work within 60 days of the injured worker becoming permanent and stationary.
Big Changes for California’sWorkers’ Compensation:Initial Analysis of Senate Bill 863
November 2012 • Lockton Insurance Brokers, LLC
September 2012 • Lockton Insurance Brokers, LLC
www.lockton.com© 2012 Lockton, Inc. All rights reserved. Images © 2012 Thinkstock. All rights reserved.
� $6,000 supplemental job displacement benefit that can be used for vocational rehabilitation which expires 2 years from the date the voucher is furnished or 5 years from the date of injury. The voucher cannot be settled.
� Prohibit add-ons for psychological conditions, sexual disorder and sleep dysfunction in permanent disability awards. An injured worker who is a victim or witness to a violent act or who suffers a catastrophic injury could still increase his award if he suffered a psychological condition as a result of the injury. Treatment will be provided if indicated by the treating physican.
� Requires disputes over utilization review denials be resolved through an independent medical review (IMR) process. IMR would take the place of the existing requirement that an injured worker obtain a second opinion for spinal surgery. IMR is presumed correct.
� Says a report by a doctor outside of a medical provider network (MPN) can’t be the sole basis of an award for compensation.
� Prohibit professional employer organizations and temporary staffing agencies from becoming self-insured. Existing self-insured approval will expire 1-1-15.
� Prohibits a chiropractor from serving as the primary treating physician after 24 visits.
� Provide the failure to post notice of an MPN is not a sufficient reason for an injured worker to treat outside of the network.
� Eliminates the AME/QME dance. If a panel is not assigned within 20 days, the employee can choose any QME within a reasonable geographic area.
� Establish a $150 lien filing fee and a $100 activation fee for liens that have already been filed. Liens must be filed with 3 years. Liens must be filed within 18 months after 7-1-13.
� Require the Official Medical Fee Schedule transition to Medicare’s Resource-Based Relative Value Scale (RBRVS).
� Reduce reimbursement for outpatient surgery centers to 80% of the hospital rate.
� Burial benefit has increased to $10K.
� Fee schedules to be developed for home healthcare services, vocations experts, interpreters.
So, what will this mean for the rates that employers pay for Workers’ Compensation?
An initial analysis by WCIRB California indicates that these changes “In total, by the 2014 injury year, the currently quantifiable provisions of the proposed legislation, including the impact on claim frequency (utilization), is estimated to decrease total system costs by 1.4%, or $0.3 billion, annually”.
However, our preliminary conversations with carriers indicate that there is no immediate rush to lower Workers’ Comp rates in California. Most plan to take a “wait and see” approach to gauge the actual impact of Senate Bill 863 before changing premiums. For employers, a continued emphasis on safety, loss prevention, and claims cost control measures will be the best way to mitigate the ongoing rise of Workers’ Comp costs in the state.
Please contact your Lockton team for further assistance.
Diminished future earning capacity has been eliminated.
September 2012 • Lockton Insurance Brokers, LLC
www.lockton.com© 2012 Lockton, Inc. All rights reserved. Images © 2012 Thinkstock. All rights reserved.
� $6,000 supplemental job displacement benefit that can be used for vocational rehabilitation which expires 2 years from the date the voucher is furnished or 5 years from the date of injury. The voucher cannot be settled.
� Prohibit add-ons for psychological conditions, sexual disorder and sleep dysfunction in permanent disability awards. An injured worker who is a victim or witness to a violent act or who suffers a catastrophic injury could still increase his award if he suffered a psychological condition as a result of the injury. Treatment will be provided if indicated by the treating physican.
� Requires disputes over utilization review denials be resolved through an independent medical review (IMR) process. IMR would take the place of the existing requirement that an injured worker obtain a second opinion for spinal surgery. IMR is presumed correct.
� Says a report by a doctor outside of a medical provider network (MPN) can’t be the sole basis of an award for compensation.
� Prohibit professional employer organizations and temporary staffing agencies from becoming self-insured. Existing self-insured approval will expire 1-1-15.
� Prohibits a chiropractor from serving as the primary treating physician after 24 visits.
� Provide the failure to post notice of an MPN is not a sufficient reason for an injured worker to treat outside of the network.
� Eliminates the AME/QME dance. If a panel is not assigned within 20 days, the employee can choose any QME within a reasonable geographic area.
� Establish a $150 lien filing fee and a $100 activation fee for liens that have already been filed. Liens must be filed with 3 years. Liens must be filed within 18 months after 7-1-13.
� Require the Official Medical Fee Schedule transition to Medicare’s Resource-Based Relative Value Scale (RBRVS).
� Reduce reimbursement for outpatient surgery centers to 80% of the hospital rate.
� Burial benefit has increased to $10K.
� Fee schedules to be developed for home healthcare services, vocations experts, interpreters.
So, what will this mean for the rates that employers pay for Workers’ Compensation?
An initial analysis by WCIRB California indicates that these changes “In total, by the 2014 injury year, the currently quantifiable provisions of the proposed legislation, including the impact on claim frequency (utilization), is estimated to decrease total system costs by 1.4%, or $0.3 billion, annually”.
However, our preliminary conversations with carriers indicate that there is no immediate rush to lower Workers’ Comp rates in California. Most plan to take a “wait and see” approach to gauge the actual impact of Senate Bill 863 before changing premiums. For employers, a continued emphasis on safety, loss prevention, and claims cost control measures will be the best way to mitigate the ongoing rise of Workers’ Comp costs in the state.
Please contact your Lockton team for further assistance.
Diminished future earning capacity has been eliminated.
� $6,000 supplemental job displacement benefit that can be used for vocational rehabilitation which expires 2 years from the date the voucher is furnished or 5 years from the date of injury. The voucher cannot be settled.
� Prohibits add-ons for psychological conditions, sexual disorder and sleep dysfunction in permanent disability awards. An injured worker who is a victim or witness to a violent act or who suffers a catastrophic injury could still increase his award if he suffered a psychological condition as a result of the injury. Treatment will be provided if indicated by the treating physician.
� Requires disputes over utilization review denials be resolved through an independent medical review (IMR) process. IMR would take the place of the existing requirement that an injured worker obtain a second opinion for spinal surgery. IMR is presumed correct.
� Says a report by a doctor outside of a medical provider network (MPN) can’t be the sole basis of an award for compensation.
� Prohibits professional employer organizations and temporary staffing agencies from becoming self-insured. Existing self-insured approval will expire 1-1-15.
� Prohibits a chiropractor from serving as the primary treating physician after 24 visits.
� Provides that the failure to post notice of an MPN is not a sufficient reason for an injured worker to treat outside of the network.
� Eliminates the AME/QME dance. If a panel is not assigned within 20 days, the employee can choose any QME within a reasonable geographic area.
� Establishes a $150 lien filing fee and a $100 activation fee for liens that have already been filed. Liens must be filed with 3 years. Liens must be filed within 18 months after 7-1-13.
� Requires the Official Medical Fee Schedule transition to Medicare’s Resource-Based Relative Value Scale (RBRVS).
� Reduces reimbursement for outpatient surgery centers to 80% of the hospital rate.
� Increases burial benefit to $10K.
� Fee schedules to be developed for home healthcare services, vocations experts, interpreters.
So, what will this mean for the rates that employers pay for Workers’ Compensation?
An initial analysis by WCIRB California indicates that these changes will reduce overall system costs: “In total, by the 2014 injury year, the currently quantifiable provisions of the proposed legislation, including the impact on claim frequency (utilization), is estimated to decrease total system costs by 1.4%, or $0.3 billion, annually”. However, our preliminary conversations with carriers indicate that there is no immediate rush to lower Workers’ Comp rates in California. Most plan to take a “wait and see” approach to gauge the actual impact of Senate Bill 863 before changing premiums. For employers, a continued emphasis on safety, loss prevention, and claims cost control measures will be the best way to mitigate the ongoing rise of Workers’ Comp costs in the state.
Please contact your Lockton team for further assistance.