DWC Announces CY 2023 PAR & FCA Audit Standards
State law (Labor Code §§129 and 129.5) requires the DWC Audit and Enforcement Unit to conduct profile audit reviews (PARs) of all workers’ compensation adjusting locations at least once every five years. Each year the Division calculates overall claim operation performance ratings based on composite scores for such measures as payment of accrued and undisputed indemnity; late first payment of temporary disability and first notice of salary continuation; late first payment of permanent disability and death benefits; late subsequent indemnity payments; and provision of notices with qualified medical evaluator and agreed medical evaluator advice. The Division then uses the ratings from the last three years to set standards for upcoming audits.
This week the DWC announced that the 2023 audit standards, based on 2019-2021 audit results. The PAR standard for 2023 will be 1.76323
What do these numbers mean to you?
1) Audited adjusting locations receiving a PAR rating of 1.76323 or lower must pay any unpaid compensation, but no penalties, while those with a PAR performance rating of 1.76324 or higher face a full compliance audit (FCA) and an additional sample of indemnity claims will be audited.
2) Full Compliance Audit subjects with an FCA performance rating of 2.00574 or less must pay any unpaid compensation plus penalties for all violations involving unpaid & late paid compensation. If an FCA subject’s FCA performance rating is 2.00575 or higher, an additional sample of denied claims and the expanded sample of indemnity claims will be audited. DWC will assess penalties for all violations per 8CCR §10111 – 10111.2.
The DWC also announced that the Severity Rate standard for 2023 is $129.35. This is the average unpaid indemnity per file divided by the average for the furthest three of the last four years audited and is used along with the frequency rate of violations for unpaid indemnity on randomly audited claims to calculate the PAR performance standard for the payment of accrued and undisputed indemnity.
The Audit Unit has posted more information on the 2023 PAR and FCA standards, as well as the 2021 Audit Unit Annual Report and the Ranking Report, on its web site, www.dir.ca.gov/dwc/audit.html.
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