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California SB 863 Webinar – Thumbs Up To Presenters


Thumbs Up – California SB 863 Webinar

According to sponsors, the SB 863 Webinar turnout was massive.  That is to be expected with such a confusing subject.  The reforms were extensive.  They presenters had to cover a large amount of info in 75 minutes.

Emoticons Color Yellow Smiley SB 863 Webinar Thumbs Up
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The three sponsoring organization were:

WCAN (Workers Comp Action Network)

CA Chamber of Commerce

California WC Coalition

The groups align well with our outlook as they are basing their info from the viewpoint of an employer for the most part.

The general overview was:

Need for Reform

Understanding SB 863 details

What employers should know

Where we go from here

Five year trend for medical costs +40%

Five year trend for cash benefits +35%

Volume of claims increased +9.1%

Insurers paying 36% more than they collected in premiums – ouch!!!

Insurers were paying over 35% of the claims dollars to administer the claims.  That is a surprisingly high figure.

Close up of hand jigsaw SB 863 Webinar Puzzle
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SB 863 goals were the same as any reform, reduce costs and increase efficiency  especially medical care for injured workers.  Reducing litigation costs was also an expected goal.

SB 863 wanted to strengthen Medical Provider Networks (MPN’s) also known as Workers Comp PPO’s.   Limiting out-of-network  treatment was a goal.  I think that was a great idea.   I have written  a large numbers of posts on medical control.

There must now be an assistance staff that helps  the employee find proper in-network care.  That was a good idea.

Independent  Medical Review (IMR) will be established and will have all jurisdiction over an employee dispute about medical treatment   Division of Workers Compensation (DWC) will contract this duty to an approved third party reviewer.

Utilization Review (UR) will fit in the IMR process.   Employee initiates IMR process by filing a form with the DWC within 30 days of treatment.   My response is great, another form.  I am not sure if adding another process on top of the other processes is that efficient.   As the presenters pointed out, it is a work in process.   The treating physician can also initiate the IMR process.   I wonder if that could be abused in some way.

The handling of medical bill payments was also a big issue.   The doctors have to provide better info such as the applicable treatment notes.   Only the original treating doctor can approve any other services.  This is basically what already happens in states that allow medical control. 

The carrier/TPA must pay medical bills within 45 days.   The Explanation of Review must have all the info for medical provider to understand the payment received from the payer.

If there is Independent Bill Review (IBR) over charges, the medical provider must pay the DWC a fee if there are no additional charges.  If the carrier or TPA owes an additional amount, they will pay the DWC a fee.   This functions as an incentive to pay the bill properly in the first place.

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IBR will cut down the length of time on medical bills disputes and not allow them to linger for years.  If the provider did not use the IBR process, there is no lien applicable.   This is a good development for the CA WC system.

Medical legal reforms required that chiropractors pass the same qualified medical examiner  (QME) tests as other medical providers.  QME’s are limited to a maximum of 10 locations.

The reforms limited spine surgeons receiving a rebate for a medical implantable device from the manufacturer and then receiving full payment by the carrier/TPA.

Fee schedules will be now based on Medicaid/Medicare fee schedules.   This is the same as most states have been doing for many years.

Permanent disability (PD) payments are going to increase.   The law that allowed this was legislated  in 2009, but it was never enacted or enforced.

As with the SB 899 reforms, expect a large amount of litigation on SB 863 along with legislative attacks to dilute the reforms.

The presenters said the advisory rates recommended by the WCIRB (CA Rating Bureau) will be unchanged with no increases.   However,  the word on the street is that some of the major carriers are asking for 21+% increases.   As I pointed out  a few weeks ago, the advisory rates are nefarious figures if they carriers deviate heavily from the advisory rates.

Overall, heavy kudos should be given to the presenters and their organizations.  They did a good job in presenting a concise overview of a very large reform.Even if you are not a CA employer, some of these reforms and concerns will be coming to states in which you operate your business.  

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James J Moore - Workers Comp Expert

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Management 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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