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California – Medical Utilization In Workers Comp Rears Its Ugly Head

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Medical Utilization In Workers Comp – California

California Medical Utilization  for Workers Comp hit the radar screen this week.   I often post concerning the Workers Compensation situation in California. I do this to specifically point out what the future will look like for your company’s jurisdictions. California seems to be the bellwether for upcoming Workers Comp trends. What happens there will be coming to a jurisdiction near you very soon.

Picture Of Doctor Medical Utilization Talking To Patient
StockUnlimited

Approximately five years ago, I consulted with an investment company to perform a study on Workers Comp costs associated with physical therapy in various states. The one astounding statistic that I discovered was that the reduction in any state’s fee schedule for unit costs (costs per visit) was offset by an almost directly proportional increase in visits.

In other words, if the fee schedule for each visit by an injured employee was decreased by 25%, the number of treatment visits increased by 25%. I am not inferring that any medical provider was overcharging for their services. I have performed similar studies since then for various companies that basically drew the same conclusion.

California’s insurance commissioner basically said the same thing in a memo approving an increase in Workers Comp rates of almost 9%. His exact quote was:

Doctor Medical Utilization Consults With Patient
Wikimedia Commons – Bill Branson

The primary increase in California’s Workers Compensation costs is with medical costs. Here, it is important to explain that medical costs are not only per unit medical costs, but medical utilization and cost containment. Per unit medical costs do not seem to be increasing much, but medical utilization appears to be the main cost driver of overall costs increases.  

Commissioner Jones then goes on to say the WCIRB will be looking into the overall cost drivers. I think they already know the reason for the spiraling medical costs.

There may also be other reasons for the rate increases in CA. I will cover those in the next post.

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James Moore

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications

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