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California may have finally figured out how to fix workers’ compensation

By Kathy Robertson, 

Workers’ compensation costs have dropped for employers since reforms took effect in 2013 — and payments to injured workers have increased, a new report by state regulators concludes.

In May, the Department of Insurance adopted advisory premium rates that are 10.2 percent less than the average approved in January, according to a report released last week by the Department of Industrial Relations and its Division of Workers’ Compensation.

At the same time, benefits for injured workers with permanent disabilities now range from a minimum weekly benefit of $160 to a maximum of $290. That’s up from a minimum of $130 and maximum of $270 before Senate Bill 863 became law in 2013.

The reform legislation — approved in 2012 as SB 863 — made a number of changes to the state workers’ comp system. They include use of evidence-based medicine to guide treatment decisions, treatment dispute settlements by independent medical reviewers and better worker access to network doctors.

So far, it’s working. Medical costs dropped 3.3 percent from 2013 to 2014, the study concluded.

“This report confirms that the reforms are on track,” Labor and Workforce Development Secretary David Lanier said in a news release. “Employer costs are under control and injured worker benefits are increasing. While there is ongoing work to reduce delays and improve the system — overall the progress is impressive.”

Business and labor officials generally agree.

The changes were able to increase permanent disability benefits to workers by lowering costs, not raising rates, said Jerry Azevedo, a spokesman for the Workers’ Compensation Action Network. The group is a coalition of employer and insurer trade groups and others.

“We generally agree with the DIR assessment and see it as a positive for California’s workers’ comp system — although here are always challenges,” Azevedo said. The independent medical review system is still bogged down a little from requests, he added.

Angie Wei, a lobbyist for the California Labor Federation, had a similar appraisal.

“The data show benefits for permanently disabled workers are up and return-to-work (supplemental support) is putting more dollars in workers’ pockets,” she said.

The return-to-work supplemental program took effect in April 2015. It provides a one-time $5,000 supplemental benefit to eligible injured workers. As of June, DIR has issued 370 checks totaling nearly $2 million.

The full report (pdf) is available here.

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