Q4 – 2025 – February 19, 2026
| Research
Psychotherapeutic & Neurological Drugs. Psychotherapeutic & Neurological Drugs have largely flown under the radar as they have never represented more than a marginal share of the WC prescriptions, reflecting the fact that these are highly specialized drugs used to treat unique risks such as head, cranial, and intracranial injuries that result in concussions and fractures, neurological conditions such as restless leg syndrome, or conditions such as PTSD. Detail from the IRIS database, however, indicate that in some cases they have been prescribed for off-label treatment of much more common work injuries such as diseases and disorders of the spine or joints. An upcoming CWCI study finds that despite its tiny share of WC Rxs, the Psychotherapeutic & Neurological Drugs group’s share of the total drug spend has increased more than sixfold from 0.6% in 2015 to 3.7% in 2024, and last year they moved onto the top 10 list of Calif WC drug groups in terms of total payments, ranking 9th, just below Opioids and Antidepressants. Data on the avg amount reimbursed/Rx underscores the reason for the growth in the Psychotherapeutic & Neurological Drugs’ share of the drug spend, as the avg payment for drugs in the group jumped from $411 in 2015 to $1,159 in 2024, w/much of that growth due to a shift toward single-source brand drugs, where avg payments in this group more than quadrupled from $455 in 2015 to $1,927 in 2024. The upcoming study flags 3 specific drugs as primary cost drivers: Gabapentin Enacarbil (Horizant); Once-Daily Gabapentin (Gralise); and Dextromethorphan HBr Quinidine Sulfate (Nuedexta). As the payment trends over the past decade suggest that Psychotherapeutic & Neurological drugs are emerging as a pharmaceutical cost driver, claims organizations, PBMs, and UR professionals should keep an eye out for them, esp. if they’re requested for off-label use. More background and data on these drugs will be included in an upcoming CWCI Spotlight report, Emerging Drug Classes in California Workers’ Comp: Psychotherapeutic and Neurological Drugs. In addition, updated utilization and payment data for the drug group and these specific drugs will be posted in CWCI’s Prescription Drug Interactive Application early next year. Executive Briefing (11/26/25) (members only) IMR Update Through Q3 2025. A series of 10 exhibits detailing CWCI’s latest update on the dispute resolution process in California workers’ compensation and IMR activity and outcomes from 2015 through the third quarter of 2025. The results show that after hitting a record low in 2022, then increasing 2.9% in 2023 and 8.2% in 2024, the number of IMR letters issued in the first three quarters of this year rose 8.1% compared to the same 9-month period of last year. The IMR outcomes data show that the overall uphold rate for UR denials and modifications in the first nine months of 2025 was 89.8%, which is within the same narrow range of 88.0 to 92.4% where it has been since 2015. Uphold rates continue to vary by type of medical service, ranging from 80.2% for E&M requests to 93.8% for Acupuncture requests. Increased uphold rates were seen across all service categories, w/the biggest increases noted in E&M, where the IMR uphold rate jumped from 74.9% in 2024 to 80.2 percent in the first 3 quarters of this year, and in Surgery where the uphold rate increased from 80.8% to 86.0%. Pharmaceutical requests fell to a record low 30.8% of the IMR decisions in the first three quarters of 2025 but still represented more IMR disputes than any other type of medical service, with more than twice the proportion noted for PT, which represented 13.9% of treatment disputes submitted for IMR in the first three quarters of this year. Injections ranked third with 12.8%; followed by DMEPOS which accounted for 9.4%; MRI/CT/PET scans which had 5.4%; Acupuncture which accounted for 5.1%; and Surgery which represented 3.6%. No other service category accounted for more than 3% of the IMRs in the first three quarters of 2025, though Diagnostic Testing, Chiropractic Manipulation, and E&M all saw their share of the IMRs increase slightly compared to 2024. Detailed Statistics (11/11/25) (members only) Executive Memo (11/13/25) (members only) Changes in the Distribution of Mental/Mental Stress Claims by Region and Industry. Updated data from CWCI’s Claim Characteristics and Trends App shows that over the past 7-1/2 years, there has been a shift in the distribution of mental/mental these claims by region and by industry. Using the app, the Institute compiled a sample of mental-mental stress claims from AY 2018 – June of AY 2025, then grouped them by region and sector during 3 distinct periods: the pre-pandemic era (Jan 2018 – Feb 2020), the pandemic era (Mar 2020 – Feb 2023), and the post-pandemic era (Mar 2023 – June 2025. The results showed notable declines in the percentage coming from L.A. Co. and the Inland Emp/O.C. during the pandemic, and ongoing increases in the Central Valley and Bay Area. The distribution by industry showed that during the pandemic there was a huge increase in mental/mental stress claims among public safety officers and govt workers who went from about 1 out of 5 mental/mental stress claims prior to the pandemic to 1 out of 3 claims in the COVID era, with the trend continuing after the pandemic, when public administration workers’ share rose to 38.6%. Other sectors with notable shifts in their share of mental/mental stress claims included retail, which dropped from 13.8% of the claims prior to the pandemic to 12.9% in the COVID era and 8.2% since the pandemic ended; education, which fell from 12.6% pre-pandemic to 9.1% during the pandemic (as public schools were closed and the state shifted to remote learning for much of that period), then rebounded to 10.6% after the pandemic ended and schools reopened; and finance which dropped from 7.1% of the mental/mental stress claims before the pandemic to 3.9% as COVID spread throughout the state, then continued to decline, falling to 2.4% in the post-COVID period. Executive Briefing (10/27/25) (members only) Q2 2025 Insured Experience. WCIRB issued its Quarterly Experience Report based on statewide insurer experience valued as of 6/30/25 which the Institute summarized. Among the highlights:
Executive Briefing (10/27/25) (members only) Statutory/Regulatory California WC Medical Mileage Rate To Increase For Travel o/a 1/1/26. On Dec. 29 the IRS announced that the standard mileage rate for business miles will increase from 70.0 cents per mile to 72.5 cents per mile effective 1/1/26. As a result, the amount payable to California injured workers for travel related to medical treatment or evaluation of injuries also will increase to the new rate. WC claims administrators should apply the new rate for travel on or after January 1, 2026, regardless of the date of injury, but should continue to pay the current rate of 70.0 cents per mile for travel that occurred during calendar year 2025. The DWC is aware of the increase and is expected to issue a Newsline in early January. The mileage rate has been adjusted multiple times over the past decade, so the DWC also has downloadable mileage-expense forms in English and Spanish that show applicable rates by travel date under “Medical Forms” on its Forms page. Given the short lead time due to the holidays, CWCI recommended alerting claims staff and system programmers immediately of the mileage rate. Executive Memo (12/29/25) (members only) Bulletin (12/29/25) (members only) News Release (12/29/25) (public) Medicare Eliminates Inpatient Only Lists. Medicare has enacted a change in its Fee Schedule Rules, mandating a 3-year phaseout of the “Inpatient Only Lists” used to determine the appropriate setting for services paid under Medicare. Calif WC payment regs follow the Medicare fee schedules, so the elimination of the Inpatient Only lists will also impact where Calif WC surgeries take place in the future. In 2023 a CWCI study found a key reason for the decline in WC inpatient surgeries in recent years has been the growing number of spinal fusions and total joint replacements done on an outpatient basis, which expanded rapidly after Medicare began to remove instrumentation procedures from its Inpatient Only list and added them to its approved Ambulatory Surgery Center List in 2017. Specifically, it found that that the percentage of WC spinal fusions done at outpatient facilities jumped from 0.8% in 2014 to 13.3% in 2022, while the percentage of total major joint replacements or revisions performed on an outpatient basis increased from 0.8% to 25.9% — w/most of the growth in these outpatient surgeries beginning in 2018, when Medicare removed these procedures from its “Inpatient Only” list. While the number of WC inpatient spinal fusion and total joint replacement discharges has been declining, to some extent that decline has been offset by the increased use of outpatient facilities. CWCI estimates that between 2017 (when Medicare relaxed its rules to allow more spinal fusions on an outpatient basis) and 2022, the number of injured workers undergoing a spinal fusion on an inpatient basis fell 30% but after accounting for the growing number of fusions performed on an outpatient basis, the decline was 23%. Under the Hospital Outpatient Prospective Payment System final rule for 2026 published in the Federal Register on 12/1/25, a 3-year phaseout of the Inpatient Only List will begin in 2026. Executive Briefing (12/22/25) (members only) Impact of Reclassifying Marijuana on Calif WC. In mid-December President Trump signed an executive order directing federal agencies to reclassify marijuana from a Schedule I to a Schedule III drug, meaning it will now be regarded as having accepted medical uses and lower potential for abuse than in the past. The move, which is expected to expand medical research into marijuana, ease some regulatory burdens and reduce tax and banking barriers for cannabis businesses, was applauded by marijuana advocates, but cannabis will remain a controlled substance under federal law, and the rescheduling must still go through months of DEA rulemaking before becoming final. Notably the order does not require insurers to cover marijuana, so coverage decisions in Calif WC and other systems will continue to be subject to state and federal laws, including those related to workplace safety and drug testing for safety sensitive jobs, which remain enforceable. From a practical standpoint, reclassification should lead to more medical research and clinical evidence on the efficacy of medical marijuana as a treatment for various conditions, which could open the door to broader acceptance of cannabis as a medical option, but it is unlikely to lead to any immediate changes to WC coverage or employer obligations. Executive Briefing (12/22/25) (members only) 2024 Work Injury Data Delayed. The Survey of Occupational Injuries and Illnesses (SOII) is a joint Federal/State program that collects employers’ annual injury report data from 200,000 private and public employers, which is then processed by state agencies in cooperation w/the U.S. Bureau of Labor Statistics (BLS). Summary data from employers’ OSHA 300 work injury and illness logs is reported on the survey document, along w/the number of employee hours worked (used to calculate incidence rates) and annual avg employment (used to verify the size of each employment class). In 2025, however, the data tables, were delayed due to the lapse in federal funding in the fall. According to the DIR Director’s Office, Calif-specific data for 2024 will be posted on DIR’s website on 1/22/26, after BLS releases the national data. In the meantime, in early December CWCI updated its Claim Characteristics and Trends Interactive App with data on all reported claims from AY 2018 through 11/18/25, and overall trends and claim distributions by region, industry, and injury characteristics. Rather than using OSHA data, the CWCI app is based on insured and self-insured data on all WC claims reported to the WCIS. The app is only available to CWCI members, and allows users to track the number of reported and projected claims by year, by quarter and year, or by month and year. Filters can be used to view results for combinations of insured and self-insured claims, by claim type, industry, region, injury description, reporting timeliness, and COVID-19 status. The updated Claim Characteristics and Trends App can be found under the Research tab on our website. Executive Briefing (12/22/25) (members only) 2026 Minimum Wage Increase. In December the Calif Labor Commissioner issued a reminder that the state minimum wage will increase from $16.50 to $16.90 per hour effective 1/1/26. The minimum applies to hourly employees and salaried employees who make less than $70,304 (twice the state minimum wage for full-time employment). As w/the WC posting notice, employers must post the statewide Minimum Wage Order and the industry-specific Wage Order applicable to their workplace in an area accessible to employees (the wage orders can be downloaded and printed from DIR’s workplace postings page). In addition, employers must include the wage rate on employees’ pay stubs; and ensure that employees are paid at least the minimum wage, even when compensated on a piece-rate basis. Many cities and counties in California have a local minimum wage that is higher than the state rate, so those rates will apply in those jurisdictions. Employers who fail to meet the minimum wage requirements may be required to pay back wages and penalties, including liquidated damages. Executive Briefing (12/22/25) (members only) User Funding Rates for 2026. The DIR announced the 2026 user funding assessment rates for 6 funds that state lawmakers have determined should be paid by employers (the Workers’ Compensation Administration Revolving Fund), the Uninsured Employers Benefits Trust (UEBT) Fund, the Subsequent Injuries Benefits Trust (SIBT) Fund, the Occupational Safety and Health Fund, the Labor Enforcement & Compliance Fund, and the Workers’ Compensation Fraud Account. WC insurers must apply the rates against their insureds’ estimated annual assessable premium for policies incepting January 1, 2026 through December 31, 2026. The first installment is due from insurers and self-insured employers by January 1, 2026, the second installment is due by April 1, 2026. Bulletin (11/26/25) (members only) News Release (11/26/25) (public) Executive Memo (11/26/25) (members only) Executive Briefing (12/22/25) (members only) TD Rates to Increase Nearly 5% in 2026. The U.S. Dept. of Labor (DOL) notified the DWC that Calif’s State Avg Weekly Wage (SAWW) increased nearly 5% for the 12-month period ending 3/31/25, so WC claims administrators will need to increase TTD and PTD rates for AY 2026 claims, with the minimum weekly rate increasing from $252.03 to $264.61, and the maximum weekly rate increasing from $1,680.29 to $1,764.11. The DOL has still not posted the SAWW figure for Q1 2025 on its website, which it blamed on the recent federal government shutdown, but when it contacted the Division, it noted that the SAWW from Q1 2025 was $1,789, which is up 4.98826% from the Q1 2024 figure of $1,704. Calif law ties minimum weekly TTD/PTD rates to SAWW increases, so those minimums will rise effective 1/1/26 for claims with 2026 injury dates. Claims administrators will also need to adjust TTD paid two years or more after injury, life pension and PTD payments for injuries on or after 1/1/03, and installment payments on death claims, all of which will be going up due to the SAWW increase. The Institute issued an Exec Memo advising your claims and legal staff of the upcoming increases, along with a Bulletin and news release to alert the community, and the DWC subsequently issued a Newsline confirming the increase. Bulletin (11/21/25) (members only) News Release (11/21/25) (public) Executive Memo (11/21/25) (members only) Executive Briefing (11/26/25) (members only) Year-end Reminder: Posting Notices & New Hire Notices. In 2024, Gov. Newsom signed AB 1870, amending LC §3550 to require the addition of information on an employee’s right to consult an attorney to the DWC 7 posting notice. In Oct 2024, DWC revised the DWC 7 and posted it here. Failure to post the current notice can result in penalties, a tolling of the statute of limitations for filing claims, and loss of employer medical control, so in preparing claim kits for 2026 renewals, insurers should instruct policyholders to fill out and post the 10/24 version of the DWC 7. The DWC 7 change also impacted the new hire notices, as LC §3551 requires employers to give every new employee at the time of hire or by the end of the first pay period written notice of the information in LC §3550 (which details the form and content of the posting notice) so CWCI added the attorney consultation info to our Facts About Workers’ Comp new hire notice so it meets the new requirement. Our notice is available in English and Spanish and approved by the DWC, as required by law. The new hire notice, the 5-part DWC-1 Claim Form/NOPE, and CWCI’s Facts For Injured Workers pamphlet (which is not mandatory, but is often used early in the life of a claim to remind injured workers of their rights and obligations) are all available in sets of 100 at www.cwci.org/store.html. CWCI members are eligible for a 15% discount if their subtotal is $1,000 or more. For questions call CWCI at (510) 251-9470. Executive Briefing (11/26/25) (members only) _________________________________________________________________________________________ CWCI Comments on Proposed Modifications to the Electronic Adjudication Management System (EAMS) Regulations. CWCI’s 15-day public comments on the DWC’s proposed modifications to the text of rules related to the Electronic Adjudication Management System (EAMS) regulations. 1st Forum Comments (11/12/25) (public) ________________________________________________________________________________ CWCI Comments on the Proposed Amendments to the Utilization Review Regulations. CWCI’s 3rd 15-day comments on the DWC’s proposed modifications to the text of rules related to Utilization Review regulations. 3rd 15-Day Comments (10/17/25) (public) __________________________________________________________________________________________ CWCI Comments on Proposed Modifications to the Supplemental Job Displacement Benefits and Return to Work Regulations. CWCI’s 15-day public comments on the DWC’s proposed modifications to the text of rules related to the Supplemental Job Displacement Benefits and Return to Work regulations. 2nd Forum Comments (11/3/25) (members only) __________________________________________________________________________________________ Newsom Vetoes AB 1329, Calls on DWC to Devise SIBTF Reforms. In July, the Legislative Analyst’s Office issued a report on the Subsequent Injuries Benefit Trust Fund (SIBTF), which was originally set up as a narrowly focused program to offset employers’ WC costs for veterans and other workers w/serious pre-existing disabilities that made new work injuries more disabling and costly. Since its inception, however, the standards to qualify for SIBTF benefits have loosened, so now rather than being limited to a few cases involving serious conditions, most SIBTF recipients qualify for the program by citing common ailments such as sleep apnea, hypertension, arthritis, allergies, and acid reflux, with some receiving the maximum disability benefit of $1,700 per week for life. As a result, SIBTF program costs, paid through annual employer assessments, are projected to hit $1.5 billion w/in 5 years, with wait times for workers to receive benefits projected to be up to 10 years due to processing delays. One closely watched WC bill this year was AB 1329, which would have made changes to the SIBTF, including requiring substantial evidence of a prior PPD causing a loss of earnings or an inability to perform activities of daily living; eliminating sleep apnea, acid reflux, diabetes or sexual dysfunction as qualifying preexisting conditions; requiring injured workers to file claims w/in 5 years of the date of their second injury or w/in a year of the WCAB determining the level of PD from the second injury, whichever is later; and applying med-legal processes and fee schedules for regular WC claims to SIBTF claims. On Oct. 10, Gov. Newsom vetoed AB 1329, arguing that it “does not contain the comprehensive reforms necessary” to save the program” and noting that while the proposed statute of limitations and changes to the med-legal processes are important, other changes would exacerbate the situation: “For example, including the impact on the ‘activities of daily living’ in the determination of a prior disability contradicts the concept that the prior disability must be labor-disabling” and would “increase SIBTF claims and liabilities.” Conceding the need to overhaul the program, Newsom said “This situation is dire, and the state must act immediately,” ordering the DWC to prepare a reform plan for the SIBTF program for inclusion in the 2026 state budget. Executive Briefing (10/27/25) (members only) ____________________________________________________________________________________________ Claim Audit Standards. DWC announced that the 2026 Profile Audit Review (PAR) standard will be 1.58582 and the full compliance audit (FCA) standard will be 1.81845. This means audited adjusting locations w/PAR ratings of 1.58582 or lower will pay unpaid compensation, but no penalties, and those with PAR ratings of 1.58583 or higher face an FCA and an audit of an additional indemnity claim sample. Those with an FCA rating of 1.81845 or less must pay any unpaid compensation + penalties for all unpaid & late paid compensation violations. If an FCA subject’s FCA rating is 1.81846 or higher, an additional sample of denied claims and the expanded sample of indemnity claims will be audited for all claims handling violations with penalties assessed for all violations per 8CCR §10111.2. DWC has more on the audit standards on its website. Executive Memo (10/21/25) (members only) Executive Briefing (10/27/25) (members only) ____________________________________________________________________________________________ Workplace Know Your Rights Act. In response to recent ICE activities, Governor Newsom signed SB 294, The Workplace Know Your Rights Act (Reyes) which starting 2/1/26 will require a new stand-alone, written notice be given annually to all California employees advising them of their specific Constitutional rights when interacting with law enforcement at work, and starting 3/30/26 California employers must give current employees a chance to designate a person that their employer may contact if the employee is arrested or detained at work, while employees hired after 3/30/26 must be given the opportunity to designate their contact at the time of hire. SB 294 directs the Labor Commissioner to create and make available a notice template by 1/1/26. We expect it will be posted on the Division of Labor Standards Enforcement Home Page by then. Finally, SB 294 requires the Labor Commissioner to enforce the Workplace Know Your Rights Act and alternatively authorizes enforcement by a public prosecutor. Employers that violate the notice requirement may be penalized up to $500 per employee for each violation; while those who violate the emergency contact provisions will be subject to penalties of up to $500 per employee for each day the violation occurs, up to a maximum of $10,000 per employee. While SB 294 mandates that the new notice include a description of the employee’s right to WC benefits, including disability pay and medical care for work-related injuries or illness, as well as DWC contact information [LC 1553 (a)(1)], this requirement is in addition to existing WC notice requirements, so the current WC posting notice, new hire pamphlet, Notice of Potential Eligibility, and notice letters do not need to be changed. Executive Memo (10/15/25) (members only) _____________________________________________________________________________________________ CWCI’s Annual Summary of Enacted Legislation for 2025. Though there was no major workers’ compensation reform legislation in 2025, and the Gov. Newsom vetoed a couple of controversial measures dealing with the Second Injuries Benefit Trust Fund and a heat injury presumption for farm workers, CWCI did identify 22 bills of interest to the WC community that were enacted during the 2025 legislative session. Our annual summary provides summarizes the legislation that was enacted and provides links to the final bills. Bulletin (10/14/25) (members only) ___________________________________________________________________________________ Legal CWCI filed an amicus brief in Redwood Fire and Casualty v. WCAB (Toscano), a case in which the applicant sustained a head injury and was diagnosed with a non-traumatic closed subdural hematoma. The Center for Neuro Skills (CNS) submitted an RFA for a day treatment program on 12/13/23 which UR certified. On 2/16/24 UR certified a 30-day inpatient residential treatment program with 24-hr/day assistance, supervision, and training. The inpatient treatment continued at CNS until 5/24/24. An RFA to transition the applicant back to a day treatment program for 30 days was certified on 5/15/24 and 7/22/24. UR timely non-certified the continued day treatment program on 9/13/24 and 10/31/24. The applicant did not pursue IMR. The WCJ found that the WCAB had jurisdiction to decide the treatment dispute and that the defendant did not have a basis to cease to provide the day treatment program because there was no change of circumstances to warrant stopping it, noting that the UR reviewer had said that while the program was on hold the patient was more distracted and forgetful, suggesting that his condition had worsened. The defendant filed a Petition for Reconsideration on 6/20/25. The WCAB denied Recon following the reasoning in Patterson, holding that the defendant did not meet its burden to show a change of circumstances since CNS’s treatment program was found to be reasonable and necessary on 7/22/24. Commissioner Razo dissented. A Writ was filed on 10/14/25. CWCI’s amicus brief in support of the defendant’s position was filed by the Court on 12/8/25. Amicus Brief (12/8/25) (members only) __________________________________________________________________________________________________ Other CWCI’s 62nd Annual Mtg… Our 2026 Annual Mtg will be held March 26 at the Sofia Tsakopoulos Ctr in Sacramento – the same venue as last year. The meeting will offer an update on CWCI research, guest presentations, Continental breakfast, and a luncheon. Details will be forthcoming, but save the date. Executive Briefing (10/27/25) (members only) |