Q1 – 2023 – April 14, 2023
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Research CWCI Examines High-Cost Dermatologicals… CWCI’s updated Rx Drug App shows that Dermatologicals have become the 2nd most expensive drug group in Calif WC, accounting for 17.3% of the total WC drug spend in 2021, even though they ranked 4th in terms of WC Rx volume w/9.3% of dispensed prescriptions. A review of the average payment data confirms that while much of the growth in the Dermatological drug spend has been due to increased utilization as the number of Dermatological prescriptions increased as Opioid use declined, at the same time the surge in Dermatological payments has coincided with a change in the mix of Dermatological drugs, most notably with the emergence of high-priced topical analgesics. A CWCI report scheduled for release in April spotlights 3 high-cost topical analgesics that now consume a disproportionate share of Dermatological payments relative to their share of the prescriptions: diclofenac sodium adhesive (Xyrilix), lidocaine/menthol (e.g., NuLido gel and Terocin patches) and diclofenac epolamine (e.g., Flector transdermal patches. Together these 3 meds accounted for only 3% of all Dermatologicals dispensed to Calif injured workers in 2021, so they may be flying under the radar, but due to their high avg payments ($4,126, $1,050, and $570 respectively) they accounted for 19.3% of the Dermatological drug spend, so PBMs and claims examiners should keep an eye out for them. Executive Briefing (3/28/23) (members only) COVID-19 Claims… Though COVID fears have subsided and on Feb. 28, the governor terminated Calif’s COVID-19 State of Emergency, the March 20 update to CWCI’s COVID-19 App, shows the number of COVID-19 claims reported to the DWC did surge this winter, though it paled in comparison to the increases noted in the prior 2 years. A review of monthly COVID claim counts from October through February shows that after falling to just 1,550 reported COVID claims in October (the second lowest total for all of 2022), the number of COVID claims jumped to 3,332 in November, then peaked at 4,620 in December, when COVID accounted for 9.8% of all reported WC claims. COVID claim volume then fell to 2,822 reported cases in January (3,132 projected) and 2,304 reported cases in February (3,110 projected). Claims for the winter months are still preliminary, but CWCI projects the total COVID claim tally for December 2022 will ultimately hit 4,860 cases, which compares favorably to the year-earlier figure, when there were 24,317 COVID claims reported, and from January 2022, when the spread of the Omicron variant pushed the COVID claim count to a record 55,909 claims (55.5% of all WC claims that month). CWCI’s App has data on nearly 2.1 million Calif WC claims from March 2020 through February 2023, of which 314,586 (15%) were COVID claims, including 1,597 death claims. Executive Briefing (3/28/23) (members only) NAIC Profit Data.The Nat’l Assn of Ins Commissioners (NAIC) annual report on Profitability by Line/by State documents insurers’ return on net worth for each of the past 10 years. The report on profitability through 2021, issued in February, shows the solid returns that Calif WC insurers have enjoyed over the last decade, with annual returns averaging from a low of 3.0% in 2013 to a high of 14.3% in 2018. The net return for the decade came down squarely in the middle at 8.8%. In comparison, the 10-year return was 6.0% for all lines of insurance in Calif; 9.2% for WC insurers nationwide; 7.0% for all lines nationwide; 6.1% for property & casualty insurers nationwide, and 14.2% for Fortune Magazine’s All Industry avg for Industrial & Service Sectors. In 2021, Calif WC insurers’ 9.7% return beat the 8.7% return for all lines in Calif; the 6.6% return for all lines nationwide, and the 6.1% return for P&C insurance nationwide but was slightly below the 10.1% return for WC insurers nationwide and the whopping 20.0% return for return for Fortune’s Industrial/Service Sector, which had a banner year as the nation rebounded from the pandemic. The complete 375-page NAIC Report on Profitability by Line by State in 2021 is available on the NAIC website, but CWCI has produced a table summarizing the return on net worth results for 2012 through 2021 for WC and other lines. Executive Briefing (3/28/23) (members only) Patterns in the Provision of Professional Medical Services in California Workers’ Compensation. CWCI research tracks changes in the prevalence and volume of professional medical services in the first 2 years of treatment for indemnity claims in which medical care began between 2014 and 2019. In addition, to examine the impact of the pandemic, the authors compare the prevalence and volume of services in the first 6 months of treatment for claims in which treatment began in 2018 and 2019 to claims in which treatment began in 2020 and 2021. In both cases, results are broken out for claims with and without surgery. Executive Briefing (2/23/23) (members only) Research Update (3/20/23) (public) Bulletin (3/20/23) (members only) News Release (3/20/23) (public) Cost-Driver Medications in the Top California Workers’ Comp Drug Groups: Part 1, Anti-Inflammatories & Anticonvulsants. The first of a 3-part research series on workers’ compensation medications that represent a relatively small share of the dispensed prescriptions within their therapeutic drug group, but due to their high average reimbursements, account for a disproportionate share of the total drug spend within their group. Part I of the series focuses on Anti-Inflammatories and Anticonvulsants. Executive Briefing (1/31/23) (members only) Spotlight Report (2/27/23) (members only) Bulletin (2/27/23) (members only) News Release (1/4/23) (public) Trends in the Utilization of Inpatient Care in California Workers’ Compensation A Research Update report that continues CWCIs series of studies examining inpatient utilization trends using data compiled by the California Department of Health Care Access and Information. The analysis compares the volume and types of inpatient hospitalizations covered by workers compensation to those covered by Medicare, Medi-Cal, and private coverage. Research Update (1/4/23) (members only) Bulletin (1/4/23) (members only) News Release (1/4/23) (public) CWCI Claims Monitoring Interactive Tool. An interactive tool that shows average paid indemnity and medical losses on claims from AY 2009 through June of AY 2022 at nine levels of development (w/payments valued through June 2022). The tool provides results for indemnity claims or for all claims, allows data to be viewed for specific industries and regions, and segments the medical payment data into medical treatment, pharmacy & DME, medical-legal services & medical cost containment Interactive Tool (1/3/23) (members only) IRIS Regional Scorecard Interactive Tool. An interactive application based on updated IRIS data on AY 2008 through June 2022 claims from 7 different regions of the state that can be used to compare regional results to statewide data on key metrics, compare results between specific regions, and identify regional and statewide trends that have developed. Interactive Tool (1/3/23) (members only) Prescription Drug Interactive Tool. An online app for examining and comparing industrywide prescription drug data derived from prescriptions dispensed to injured workers between January 2007 and December 2019. This tool can be used to view statewide or regional prescription drug data either for all claims or for just indemnity claims, for open and/or closed claims; for specific drug groups; by opioid drug name; for generic and/or brand drugs; for specific industries; and for specific accident or service years. Interactive Tool (1/3/23) (members only) Medical Services Interactive Tool. An online application that allows CWCI members to track the utilization and payment trends for professional medical services in California workers’ compensation over time. The latest update includes data claims from 2012 through 2021 measured at 3 to 36 months from the date of initial medical service. Utilization is measured on a per visit, per day, or per line basis, depending on the medical service category. Measures include the percent of claims with a given type of service within each development period; the average paid per unit of measure within each development period; the average units of measure within each development period; and the average amount paid for claims with the given type of service within each development period. Interactive Tool (1/3/23) (members only) Inpatient Hospitalization Claim Interactive Tool. An interactive tool that offers detailed data on utilization trends, costs, and characteristics of Inpatient Hospitalization claims in California workers’ compensation, including comparative data on back surgery rates, average lengths of stay, and hospital charges for spinal fusions paid under Medicare, Medi-Cal and private coverage, regional variations, and hospital-specific data for 2012-2021 spinal fusion discharges. Interactive Tool (1/3/23) (members only)
Statutory/Regulatory Member Advisory: Annual Reports of Inventory Deadline… WC claims administrators must submit their Annual Report of Inventory (ARI), required by CCR §10104 by April 1. Failure to meet the deadline may result in penalties of up to $500 per adjusting location. Even if there were no claims reported in the prior year, or the claims administrator did not receive an ARI form from the DWC, the report must be completed and submitted unless the claims administrator has received a waiver from the AD, in which case they must file an annual report of adjusting locations by April 1 listing its adjusting locations as of Dec. 31, 2022. Changes in the ARI or Annual Report of Adjusting Locations must be filed w/in 45 days of the effective date of the change. Questions about the ARI or the Annual Report of Adjusting Locations should be directed to DWCAuditUnit@dir.ca.gov or (916) 928-3180. Executive Briefing (3/28/23) (members only) CWCI Comments on Proposed Amendments to the QME Regs. CWCI’s 45-day public comments on DWC’s proposed revisions to the regulations governing the eligibility and compliance of Qualified Medical Evaluators. 45-Day Public Comments (3/13/23) (public) WCIRB to File a New Rating Classification for Telecommuting Employees. WC claim frequency for remote clerical workers who telecommute at least 50% of the time (the 8871 class) is about a quarter of that of their office-based peers (the 8870 class), so the WCIRB plans to file a separate rating class for telecommuting employees in its Sept. 1 rate filing. The move tracks w/what many states have done in light of the sharp differential in the experience of home-based and in-office workers. But, the WCIRB says that when the new 8871 rate is introduced it will be limited to a 25% decrease from the 8870 rate of 22 cents/$100 of payroll that now applies to both office-based and remote clerical workers, regardless of what the actual loss experience for the remote workers indicates. The proposed reduction would drop the rate for workers in the 8871 class to 17 cents/$100 of payroll, though another reduction of up to 25% will be allowed the following year if merited by experience. The change could have a big impact on total WC DWP as an estimated 1 out of 6 Californians now work from home full time and 1 in 5 work in a hybrid situation. The Dept. of Insurance will hold a hearing on the proposal this spring. Executive Briefing (2/23/23) (members only) Bill Would Require UR Docs to Be Licensed in Calif. In mid-February Sen. Dave Cortese introduced SB 636 which would require that doctors who conduct WC utilization reviews on private sector claims be licensed in Calif. Currently licensed physicians who are competent to evaluate specific clinical issues involved in the requested medical service can determine if they meet the evidence-based standards, and then modify, delay, or deny a treatment request, but the reviewing physician, but they do not need to be licensed in Calif. The new requirement would slow the UR/IMR process as the supply of Calif-licensed UR physicians in specialties such as orthopedics is limited, and there are deadlines for claims administrators to respond to a treatment request. As of late February, SB 636 was awaiting assignment to the Senate Rules Committee. Executive Briefing (2/23/23) (members only) Presumption Bills Abound. Presumption bills have been repeatedly introduced in recent years, including last year’s SB 213, backed by the Calif Nurses’ Assn. SB 213 never got out of committee, but it would have given qualifying hospital workers presumptions for musculoskeletal injuries, infectious diseases, and PTSD, and opened the door to presumptions to private sector employees. This year’s version of the bill AB 1156 was introduced in February, but the 2023 push to expand WC presumptions kicked off earlier in the w/AB 579, which would expand the PTSD presumption granted to 1st responders to include EMTs, paramedics, firefighting members of the state Depts of Military, Developmental Services, State Hospitals & Veterans Affairs, and Justice Dept and state hospital security officers. In 2022 Gov. Newsom vetoed a similar bill, noting his reluctance to expand the PTSD presumption before any studies on its effectiveness had been completed. Also introduced in February: AB 699, which would extend presumptions given to firefighters and police officers for hernias, heart trouble, pneumonia, cancer, TB, bloodborne infectious diseases, MRSA, meningitis illnesses, skin cancer, PTSD, and exposure to biochemicals to full-time members of the San Diego Fire-Rescue Dept’s Boating Safety Unit. A similar bill 2 years ago was carried forward to 2022 but withdrawn by the author. Another presumption bill surfaced in February: AB 1107, which would extend the PTSD presumption to state correctional officers whose primary duties include investigating inmates or correctional workers and apprehending or transporting inmates. The PTSD presumption lawmakers passed in 2019 has a sunset provision that takes effect Jan. 1, 2025 but AB 1107 would not alter that. Executive Briefing (2/23/23) (members only) CAAA-Backed Gender Equality Bill Introduced At the urging of CAAA, Sen. Dave Cortese introduced a bill calling for a “gender equity comparative analysis” in WC cases. SB 631 calls for a study to examine differences in WC benefits provided to employees of different genders, including differences between industries, denial rates, and differences in compensation paid. Such studies are usually the province of CHSWC, which contracts w/RAND or other research groups, but SB 631 specifies that the AD prepare the analysis in collaboration w/UC Berkeley, most likely through its Labor Occupational Health Program. The report would be due back to the Legislature by 1/1/25. Executive Briefing (2/23/23) (members only) 2023 Annual Adjustments to OSHA Civil Penalties. The Dept. of Labor announced that effective 1/17/23, the maximum OSHA penalty for serious and other-than-serious violations will jump from $14,502 to $15,625 per violation, and the maximum penalty for willful or repeat violations will increase from $145,027 to $156,259 per violation. The increases reflect “catch-up” rules included in 2015 federal legislation that adjust the level of civil monetary penalties and make subsequent annual adjustments for inflation each January. For more, visit the OSHA Penalties page and read the final rule. Executive Briefing (1/31/23) (members only) OSHA Injury Summary Posting Reminder. Calif law requires employers to complete and post the Annual Summary of Work-Related Injuries and Illnesses (Form 300A) for a 3-month period between Feb 1 and April 30, even if no work-related injuries or illnesses occurred during the year. There are exceptions for small employers and certain industries, which are noted on the Cal/OSHA website. Employers must record info about every work-related death, injury or illness, including those involving loss of consciousness, restricted work activity or job transfer; days away from work; or medical care beyond 1st aid, and report significant work-related injuries and illnesses diagnosed by a physician or licensed health-care professional. DIR notes that employers that are required to record job fatalities, injuries and illnesses should record work-related COVID-19 fatalities or illnesses like any other occupational illness. If a work-related COVID-19 case meets one of these criteria, then covered employers must record the case on their 300, 300A and 301 or equivalent forms, and display the summary in a conspicuous location where notices are posted, and copies must also be made available to current and former employees and their representatives upon request. At the end of the 3 months, the summary should be taken down and kept on file for 5 years. Executive Briefing (1/31/23) (members only) Another Minimum Wage Hike. In 2017, state lawmakers enacted SB 3 (Leno), that mandated a series of incremental increases to the state’s minimum wage. As of 1/1/23 those increases were supposed to push the state’s minimum up from the $10/hr level that was in effect in 2017 to $15/hr for all employers, but SB 3 also included a provision allowing an additional increase if inflation (measured by the CPI) is over 7%, which happened in 2022. Therefore, as of 1/1/23, Calif’s statewide minimum wage rose to $15.50/hr. In addition to the statewide increase, many local municipalities, esp. those in urban areas, have enacted their own minimum wages that exceed the state’s. For example, as of 1/1/23, San Diego’s minimum wage jumped to $16.30/hour while San Jose’s increased to $17/hr. Notably, SB 3 made no allowances for regional variations in economic conditions, so these increases have the greatest impact on employers in rural areas (esp. Imperial Co. & the Central Valley) which have a higher proportion of low-wage workers and the highest unemployment rates due to the high numbers of seasonal workers. Executive Briefing (1/31/23) (members only)
Legal CWCI’s 2023 Case Law Seminar. CWCI will conduct its 25th annual California Workers’ Compensation Case Law Seminar on Tuesday, May 23 from 9 a.m. to 3:30 p.m. The 2023 program will be held as an in-person session at the OCC Conference Center, 500 12th Street, Suite 105, Oakland CA 94607 and simultaneously presented as a live, online video broadcast. The Conference Center is adjacent to 12th Street BART, on the upper level of the Oakland City Center complex. To ensure adequate space for social distancing, the number of in-person seats is limited, and they are available on a first-come / first-served basis, so those wishing to attend in person should register early. Executive Memo (3/9/23) (members only) News Release (3/9/23) (public) Seminar Flyer (3/9/23) (public)
Other On-Demand Annual Meeting. CWCI recorded our 59th Annual Meeting and is making it available as a free, on-demand program. Presenters included Sarah Bohn, VP of Research & Sr. Fellow at the Public Policy Institute of Calif, who discussed the impact of the evolving Calif economy and demographic shifts on the state’s industries and workforce; Dave Bellusci, WCIRB Chief Actuary on the intersection of the Calif economy and WC rates; Legislative Advocate Jason Schmelzer and CWCI General Counsel Sara Widener-Brightwell on the political environment and key players in 2023 reform efforts; and CWCI Sr. VP of Research & Operations Rena David and President Alex Swedlow who reviewed research on issues that are likely reform targets in 2023. An Exec Memo to members has further details. Executive Briefing (3/28/23) (members only) CWCI Elects Board for 2023-2024. Sharon Thaler, National Director of WC Field Underwriting Operations at AF Group/CompWest has been reelected as Chair of the CWCI Board of Directors for 2023. Ms. Thaler was first elected to CWCI’s Board in 2017 and has been a member of the Executive Committee since 2020, serving as Chair for the past year. Joining Ms. Thaler on CWCI’s Executive Committee will be Vice-Chair Eric Hansen, Preferred Employers; Matthew Zender, AmTrust North America; Kris Mathis, CopperPoint Insurance Companies; Vernon Steiner, SCIF; Eric Belk, Travelers; and Martin Brady of Schools Insurance Authority, an associate member. Also elected to serve on CWCI’s 2023 Board of Directors were Ira Feurlicht, AIG; Paul Ziegler, Allianz Global Corporate & Specialty; Andrew Linkhart, Berkshire Hathaway; Jeff Rush, California Joint Powers Insurance Authority, an associate member; Mary Beth Pittinger, CHUBB; Christopher M. Thurman, CNA Insurance; Dwight Robertson, Employers; Tim Roberts, Everest Insurance; Carmen Sharp, The Hanover Insurance Group; Nicholas Nardini, The Hartford; Amanda Granger, ICW Group; Mary Capelli-Schellpfeffer, Liberty Mutual Insurance; Justin Smith, North American Casualty Company; Jim Hurley, Republic Indemnity; Scott Lange, Sentry Insurance; Michele Halstenrud, WCF Insurance; Michael Cunningham, Zenith Insurance Company; and Neil DeBlock, Zürich North America. News Release (3/10/23) (public) California Exodus. Since peaking in Jan 2020, Calif’s population has declined steadily. Census data show the state’s population fell by more than 500,000 people between April 2020 and July 2022, w/700,000 more residents leaving the state than moved in. The cost of housing is the primary reason cited for the exodus, but the decline has also been fueled by an increase in deaths (primarily due to COVID according to the CDC), a decline in foreign immigration, and a decline in the state’s birth rate, which the Public Policy Institute of Calif reports is at its lowest level in more than 100 years. The State Dept. of Finance notes that from July 2021 – July 2022, Calif lost 211,000 residents, w/more than half – 113,048 – coming from L.A. County, which also lost 160,000 people in the prior 12 months. Nearly all of the population loss in L.A. during the height of the pandemic was driven by domestic migration as people exited the urban core where the risk of COVID was perceived to be higher. Executive Briefing (2/23/23) (members only) CWCI’s New Office. CWCI has moved to a new office at 1999 Harrison St., Suite 2100, Oakland, CA 94612, adjacent to Lake Merritt in uptown Oakland. The office is 3 blocks east of 19th St. BART and across 20th St. from the Kaiser Center, w/easy access to I-580, I-880, CA-24, I-80, and I-980. From BART, walk up 20th St. toward the lake and turn right at Harrison to 1999 Harrison (Lake Merritt Plaza). CWCI is on the 21st floor. Our phone number, web address and emails are unchanged. Executive Briefing (2/23/23) (members only) Executive Briefing (1/31/23) (members only) News Release (1/31/23) (public) CWCI’s 59th Annual Meeting was scheduled for March 8 in Walnut Creek. The program featured a comprehensive agenda on the intersections between the California economy, demographics, potential reform activity, system dynamics and outcomes. The meeting was free to members. Executive Briefing (2/23/23) (members only) Executive Briefing (1/31/23) (members only) CWCI Quarterly Summary. Quarterly listings of all CWCI publications, including publication dates, brief summaries of each topic and the various formats in which the information is available (e.g., research report, Bulletin, Executive Briefing, news release), so users can choose the level of detail they want to view. Listings include live links so users can click into the CWCI website to access specific documents quickly and easily. |