California: Employer advocates look toward full-on comp reform next year

California Gov. Jerry Brown is getting kudos from pro-business factions for his signing and vetoing of workers' comp legislation. But they warn of escalating costs unless broad-based reforms are forthcoming.

"He signed the bills we thought should be signed and vetoed what we thought should be vetoed," said Jason Schmelzer, a legislative advocate for the California Coalition on Workers' Compensation -- an employer organization. "The tendency was toward signing consensus bills that reined in costs and vetoing questionable legislation that would add costs."

Among those signed was A.B. 378, which "removes the financial incentive for physician provision of compound drugs and limits physician reimbursement for compound drugs," according to a statement from the American Insurance Association. The measure establishes guidelines for dispensing of compound drugs and to define when such drugs are reimbursable and the reimbursement amounts.

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Brown vetoed measures that "would have required that utilization review physicians and psychologists be licensed in California," "would have permitted the extension of the 104-week temporary disability cap," and "addressed apportionment in permanent disability cases," the AIA said. Two of them "would likely have led to increased litigation and system costs."

Not all sides are pleased with the governor's actions, however. In a blog posting, the former head of the Union of American Physicians and Dentists said Brown and Gov. Schwarzenegger before him ignored the opinion of the Medical Board of California, which said utilization review was an aspect of medical practice and that utilization review doctors whose decisions are used in California should be licensed in California.

Going forward, all sides will need to work together to address the myriad problems that still exist in the California workers' comp system, the pro-business advocates said. Some have said that the five-year trend for medical costs is up 40 percent and for cash benefits it is up 30 percent while temporary benefits are being paid longer at higher levels.

"The general consensus is that we need to look at benefit levels and make adjustments that are based on solid data and strong analysis, and those costs need to be offset through reductions in frictional costs," the CCWC's Schmelzer said. He listed several areas needing attention.

"We're paying a full third of the system just to operate the system. That's probably not a good use of our money," Schmelzer said. "Liens are clearly a problem in California . . . there's no reason why the simple process of submitting and paying bills should cost so much money. It's absolutely ridiculous."

Schmelzer believes the time will be ripe next year for a more broad-based reform. "There are portions in the Legislature that want to see benefits increase. There are portions that want to see a reduction in costs. Both can be accommodated in the same package," he said. "It takes everyone acting like adults."

Read more at the WorkersComp Forum homepage.

November 10, 2011

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