An Exploratory Analysis of Senate Bill 863
Chapter IV: Results
Several workers compensation reform bills have been passed in California in the last fifteen years. The aim of this research was to review, evaluate, and simplify the complexities of the California workers compensation reform bills SB 899 and SB 863. Data was gathered from a variety of sources and organized in order to develop a better understanding of the differences and similarities between the processes instituted. Relevant data was collected for the specific purpose of reviewing the systems in order to design a new system from the ground up; one that would avoiding the pitfalls of earlier reforms. Major changes in the processes initiated after an injury were instituted in CA SB 863. The main bills that instituted reforms are listed in Table 4-1.
Note that CA SB 899 came directly from the Assembly and was passed in the same form in the Senate as had been voted on in the Assembly. (Table 4-1) California has passed many workers compensation reform bills since 1913. After each new system was instituted, attachments to reform the reform bills were passed.
Chapter IV includes tables and charts with data to make plain the advantages and disadvantages of the processes. The systems instituted after SB 899 and SB 863 have been diagramed in parallel flow charts. The data has offered in an organized form to aid in evaluating the systems instituted after the two major health reform bills, CA SB 899 and CA SB 863.were passed in California. The changes were reviewed in terms of their influence on the major stakeholders, in particular injured workers and their physicians. According to the California Department of Industrial Relations, Division of Workers Compensation (CA DIR-DWC) (2014) each contemporary reform bill has promised to simplify the process to the advantage of the worker.
Outcomes of CA SB 899 and CA SB 863 Compared
CA SB 899 was passed in 2004; it was designed to meet some of the inconsistencies and problems that arose in the earlier statutes. In 2013, after prolonged negotiation and compromises between the legislators per their group of constituents, SB 863 was passed to enhance the reforms of SB 899 as well as stop the trend of rising workers compensation values (CA DIR-DWC, 2013, p. 68). A comparison of the general outcomes of SB 899 and SB 863 does demonstrate some striking differences. (See table 4-2) For example, the MPNs are strengthened or weakened, depending on the perspective, by changes in the regulations. Every four years, MPNs must be approved. Doctors cannot enter the MPNs without preapproval. And finally, MPNs are under no obligation to accept workers compensation patients.
The first main steps an injured worker must make are the same for both SB899 and SB 863. As soon as a worker realizes the condition that is negatively affecting his/her work abilities is related to the work environment, they must contact the employer and report the work-related injury. The types of injuries range from falling off a ladder and breaking a limb, to asthma from toxic fumes to carpal tunnel syndrome. The range is large because the types of industries covered by workers compensation in California are diverse. Injuries that happen under emergency conditions, like a fall from ladder, require immediate travel to an emergency room. Regardless of the reason for the injury the injured worker must pick up a claim form from their employer, fill it out, and hand it in to the employer. The major differences have been identified in Table 4-2.
After the steps each of the bills requires in common, the changes become obvious. Although, quantitative comparisons become difficult when attempting to compare many items due to the change in the injury and medical treatment ratings systems used. Not only have those challenges made qualitative comparisons necessary, some of the terminology like ‘disproportionately lower’ still needs to be defined by the legislators.
A random survey of 500 workers taken in 2012 by the Berkeley Research Center resulted in data that gives context for Table 4-2. The survey showed that the largest age group of workers was from 31 to 45 (47 percent of the total). (See table A-1) This amount reflects the general situation in California. The shoulder to finger area of the body was the most injured (50 percent of the time) due to muscle or joint injuries. (See table A-1) Out of the 500 workers surveyed 33 percent had needed 10 or more visits to their health practitioner to deal with the injury; that was the largest percentage in the survey category that gave choices from 1 to 10 or more visits. (See table A-2) Most workers(85 percent) made their visit to the physician on the same day of the injury or 1-3 days from the injury. (See table A-3)
Liens are listed on the Internet and are available to the participants who have been assigned a special password. In general, the tables list the type of benefit, such as a death benefit or benefit to dependents. Applications for adjudication are listed as well as requests for awards. All of these types of liens are listed with a column dedicated to whether or not no to the lien is bounded by law to 8 months. (See table A-5)
Review of quantitative data available to describe the influence of SB 899 and SB 863
Another challenge to reporting quantitative data that can easily be compared as outcome measurements between SB 899 and SB 863 are not available because of different measurement scales and different time frames. The following results have been gathered from several research studies, but the main resource for values is the WCIRB. The number of California workers peaked in July 2003 and by January 2011 the number of workers still had not reached peak levels. (See fig. 4-1)The following tables have been used in Chapter V, the discussion chapter to determine the influence of SB 899 and SB 863.
Figure 4- 1 Millions of California workers from 1983 to 201-1 (Compiled from values in Table A-1)
Workers compensation reported as $100 per payroll values have the same shape of the above figure but the time frame available for the data is only from 1983 to January 2010. (See fig. 4-2) The peak value for the graph of workers compensation benefits in USD located at January 2003. The amount is approximately $6.20 per $100 payroll.
Figure 4- 2Workers Compensation graphed as $100/payroll
The value of fee rates for workers compensation that was paid to insurers was available from 1983 to January 2010. The peak value for the fee rates falls between January 2003 and January 2004. The amount is approximately$ 6.20 paid into the system by employers.
Figure 4- 3 Workers Compensation per payments to insurers (fee rates) (Compiled from values in Table A-2)
The number of QME panels steadily increased from 2002 to 2010. (See table-4-4) In 2002 the number was 31.6 and by 2010 the number was 96.9. Between 2003 and 20004 was the largest increase from 31.4 to 51.9; 2004 was the year SB 899 was passed.
The amount of medical benefits paid for slip and fall injures was about $39,860 in 2010. (See table 4-5) Back injuries accounted for somewhat less, $31,254. (See table 4-5) Carpal tunnel and injuries from performing repetitive tasks was approximately 22,936 (about the same as other cumulative energies). (See table 4-5) Mental health claims under Medical was about 15,600. (See table 4-5) Including the indemnity costs with the medical, slip & fall injuries cost the most, followed by back injuries, and the other injuries in the same order. The indemnity costs were less than the medical in all categories except for psychiatric and mental stress. (See table 4-5)
Slip & fall injuries and back injuries amounted to 45 percent of the reported losses for those paying out claims. (See table 4-6)
In 2011, twenty nine percent of the liens were over disputes concerning the treatment authorized; 37 percent were over the use of an unauthorized provider. (See table 4-7)
The total medical losses paid in 2011 were about $4.4 billion and about $4.8 billion was paid in 2012. The largest amount that was catagorized in reference to stakeholders instead of for ‘other’ was to physicians; $1.6 billion paid in 2011 and $1.7 billion paid in 2012. The injured workers also faced losses of over a billion dollars $1.1 billion in 2011 and $1.3 billion in 2012. Hospitals paid $877 million in losses for 2011 and $878 billion in 2012. Pharmacies were rated next in terms of total losses, after pharmacies, the containment program, and then the Medicare set-aside account related payments, and lastly, reimbursements to Medicare. (See table 4-8)
The WCIRB reported the figures for the amounts paid to physicians in 2011 and 2012 based on the specialty. General practitioners and family doctors received the largest amount, 22.8 percent for 2011 and 20.9 percent for 2012. (See table 4-9) Next were clinics at 12.9 percent for 2011 and 13.6 percent for 2012. (See table 4-9) The third and fourth highest were orthopedics and physical therapists. (See table 4-9)
The pre-injury earnings (USD) in relationship to disability ratings and post injury earnings (USD and percent) were evaluated by Seabury and Scherer (2013, p. 21). When the pre-injury earnings were assumed to be $45,853 per year, the amount of post-injury earnings consistently decreased as the injury rating changed from 1-4, the best rating, to 95-99, the worst rating. In other words, the worse the injury, the less the injured person earned. (See table-4-10)
WCRIB reported that the largest amounts of medical costs are those made to physicians, 36 percent. (See table 4-11)
Orthopedics was found to generate the highest number of legal medical reports. (See 4-12)
The largest number of medical-legal costs was also experienced by the orthopedic health care category, 54 percent. (See table 4-14) Next was psychiatry at 26 percent. (See table 4-13)
WCRIB reported for 2012 the paid indemnity benefits for injured workers with the temporary disability status were 48 percent of the total. (See table 4-14) Next, the amount for total permanent partial disability amounted to 41 percent of the total. (See table 4-14) Permanent total disability only accounted for 5 percent of the paid indemnity benefits.
SB 899 and SB 863 reviewed as effective (+) or ineffective for injured workers (-)
SB 899 Reform bill of 2004
The change characteristics of the California reform bills SB 899 and SB 863 have been coded in the following terms. The stakeholder who was considered at the center of this evaluation was the injured worker. When the characteristic only refers to the physician, the rating is considered in terms of the physician. The symbol (+) indicates that the characteristic changed to a positive effect for the stakeholder. The symbol (-) indicates that the characteristic changed negatively for the stakeholder. The symbol (=) means that the changes were the same as the previous reform bill. The symbol (Unclear) means that the impacts on the stakeholder were mixed, and have been discussed further in Chapter 5.
- Up to one year for medical reviews (-)
- A California registered Qualified Medical Examiner made decisions on rating of injuries and treatment. (+)
- For spinal cases the second opinion of a spinal surgeon was allowed. (+)
- A ban on bias for Permanent Disability compensation was passed by the California Senate Labor and Industrial Relation Committee July 6, 2011. (CAAA, 2011) The ban protects older workers, ethnic minorities, and women. (CAAA, 2011) (+)
- The trend of increasing amounts in benefit payments from insurers to workers was stopped. An average rate of $4.81/$100 of payroll decreased to $2.59/$100 of payroll (a 46 percent decrease). These values are based on the three year time frame from July 1, 2003 to January 1, 2006. The values are adjusted from the values available of payroll per industry. (BRS, 2006, p. 3) (-)
- The cost savings for insurers from 2003 to 2006 were $8.1 billion. (BRS, 2006, p. 4) If the reforms had not been put into place by the legislator the insurers would have paid $15 billion. Savings for permanent disability were 40 percent, for evidence based medical fees 27 percent, for voucher system were 12 percent, for medical fees 13 percent, and for the cap of 24 medical visits the savings was 8 percent.(BRS, 2006, p. 4) (-)
- PPD savings on lost time due to conflicts over claims to bring CA more in-line with other states by developing a PD system based on “the nature of the physical injury or disfigurement, the occupation of the injured employee, and his or her age at the time of such injury, consideration being given to an employee’s diminished future earning capacity.”(DWC, 2004, p.8) (unclear)
- PDRS replaced subjective medical condition assessments with objective AMA schedules. Instituted wage loss data from experimental evaluations as opposed to subjective values. (-)
- Developed consistent PD ratings so workers with the same injuries receive the same compensation. (+)
- Disabilities from work related injuries are evaluated by AMA guidelines with consideration of the personal characteristics of (a) decreased future earning capacity, (b) occupation, and (c) age for necessary adaptations. (DWC, p. 8) (+)
- The IMR is administered by MRO selected by the DWC. (-)
- IMR physicians are certified and screened by the IMRO (-)
- IMR determines conflicts over the medical treatments (DWC) (-)
- MPNs are better (DWC) (unclear)
- The amounts for medical fees are updated and published in the Official Medical Fee Schedule (DWC) (+)
- In-home health care and the peripheral services interpreters, copy services, and vocational experts have fee schedules (DWC) (+)
- IBR decides the solutions to arguments about the bill payments (DWC) (-)
- The voucher system for job displacement is simplified (DWC) (-)
- Fee payments are required for lien activations or filing fees (DWC) (-)
- QMEs must apply to the IMRO if they want to be part of the IMR (-)
- QME cannot comment on ‘specific medical treatment disputes. (-)
- Independent qualified physicians are allowed to give treatment with predestination. (unclear)
- Ability of gaining a second opinion from a spinal surgeon was discontinued. (-)
- Increases permanent disability amounts (DWC) (unclear)
- The PD rating has been made more simple (DWC) (unclear)
- Forty days are allowed for resolving injury rating and treatment decisions. (-)
- The Request for Authorization (RFA) is submitted by the treating physician.(=/-)
The effects on the stakeholders will be discussed with reference to the tables, graphs and determinations offered in Chapter IV and the literature review offered in Chapter III. The following questions will be answered. (a) What positive effects did SB 899 have on injured workers? (b) What positive effects does SB 863 have on injured workers? Recommendations for a new workers compensation system design will also be discussed. A new system has been discussed in chapter 5; one that would avoid the pitfalls of the earlier reforms
1. What positive effects did SB 899 have on injured workers?
2. What positive effects did SB 863 have on injured workers?
3. What would an effective, fair workers compensation process look like, if the opportunity arose to build a new system from the ground up?
Chapter IV reviewed available data on SB 899 and SB 863 in order to determine which of the reform laws work better for injured workers. A table was developed to compare the changes from SB 899 to SB 863. Graphs were offered that demonstrated the relationship between number of workers, fee rates and earning per $100 of payroll. The time frames were different but the graphs all produced a similar shape with the peak in the region of mid-2003. And then, many tables from various sources were placed in the chapter to better understand the influence of injured workers. The data offered included data about several of the major stakeholders with links to the injured workers. The changes from SB899 to SB 863 and the changes instituted by SB 863 were listed and determined as positive (+), (-), or (unclear) for California injured workers. The results have been discussed in Chapter V.
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Table A- 6 The Insurance Rate from 1983 to (January 2011, in USD