California Workers Comp System Upcoming Changes
California has performed well in finding ways to control its runaway Workers Compensation system. As I predicted a few years ago, the California Workers Comp system would see the return of insurers once the environment stabilized enough that carriers would be able to underwrite Workers Comp policies at an anticipated profit.
The State Compensation Insurance Fund (SCIF) went from being the insurer of last resort to practically the only insurer of Workers Comp in California. That is not a good situation when one carrier is writing coverage similar to a monopolistic state fund.
As I mentioned two blog posts ago, the average premium paid per $100 of payroll for California employers was reduced by almost 70% from 2003 to 2009. Senate Bill 899 allowed employers and insurance carriers to exercise more control over Workers Compensation claims including the all-important medical provider networks (MPNs).
My opinion is that the Workers Compensation rates in CA will increase steadily over the coming years due to the medical costs associated with the claims. The rating bureau for CA – The WCIRB has said that the upcoming medical costs will rise 13% per year. I think there will be a loosening of the physical medicine guidelines such as physical/occupational therapy and chiropractic. I came to this conclusion in a study that I performed for a large physical medicine provider group late last year. I forecasted that the state of CA would allow more chiropractic and physical therapy visits per patient after examining all the data.
However, I do not think that the permanent disability rating system based on AMA guidelines will change. I do not think there will be an increase over the 104-week maximum for temporary total disability benefits.
Even if the premium rates grow a small amount each year, anything will be better for California employers than the incredible increases in Workers Comp rates from 1999 to 2003.
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