Q2 – 2024 – July 16, 2024
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Research Increased Med-Legal Costs and Current QME Supply – Impact of the 2021 MLFS. A CWCI study uses payment data for med-legal evaluations and reports with dates of service from January 2015 through October 2023 to compare the utilization and reimbursement of med-legal services rendered before and after the new Med-Legal Fee Schedule’s April 1, 2021 effective date. The study analyzes changes in evaluation and report patterns and payments and uses DWC data from calendar years 2019 to 2023 to track changes in the number of registered QMEs and the number of QME panel assignments by medical specialty. Results show that payments for medical-legal evaluations and reports have increased more than expected since the new schedule took effect, with the average payment for a comprehensive exam up 52%, primarily due to new per-page fees for record review that are paid on top of flat fees for med-legal evaluations services. In addition, 2023 saw a 6% increase in Qualified Medical Evaluators (QMEs) compared with pre-pandemic levels, though that increase was somewhat offset by increased demand for QME panels. Executive Briefing (6/27/24) (members only) Research Update (6/27/24) (members only) Bulletin (6/27/24) (members only) News Release (6/27/24) (public) IMR Volume Up in 2023. The DIR announced in June that the number of eligible IMR applications in the Calif WC system increased 2.9% from 129,298 in 2022 to 133,093 in 2023 and that the percentage of UR denials overturned by IMR physicians increased from 8.2% in 2022 to 10.2% in 2023. UR denials of mental and behavioral health treatment and E&M service requests had the highest IMR overturn rates. UR modifications and denials of Rx drug requests continue to account for the largest share of the IMRs (31%), with requests for opioids representing just over a quarter of last year’s Rx drug IMRs. The results track closely w/ CWCI’s detailed IMR statistics, which are summarized in a series of exhibits on our website. Most of CWCI’s exhibits show not only the 2023 data, but also the long-term trends for the IMR metrics, with results broken out by year for CY 2015-2023. These include the number of IMR decision letters; the distribution of IMRs by medical service category; uphold rates by medical service category; the mix of Rx Drug IMRs and uphold rates by drug category; and the percent of service requests from high-volume providers. The IMR summary statistic exhibits are posted in the Independent Medical Review section under the Research tab on our home page (www.cwci.org). Executive Briefing (6/27/24) (members only) Impact Analysis: SB 1299. CWCI analyzes SB 1299 (Cortese), a bill that would give a presumption of compensability to farmworker heat-related injury claims if the employer is found to be out of compliance with Cal/OSHA’s outdoor heat illness prevention standard. The report examines the population of ag workers covered by the legislation, measures the percentage of WC claims filed by ag workers that involve heat-related injuries, and compares the percentage of heat-related claims in the ag sector to the percentage for non-ag workers covered by the high-heat procedures in the Cal/OSHA Outdoor Heat Illness Prevention Standard. In addition, the analysis considers the impact of the legislation on the California WC system. The report concludes that the proposal would likely create more challenges than it would solve, entail significant administrative friction costs, and is unlikely to have an appreciable impact on ag worker safety. Executive Briefing (6/27/24) (members only) Research Update (6/17/24) (members only) Bulletin (6/17/24) (members only) News Release (6/17/24) (public) CWCI Summary of NAIC’s 2023 Market Share Report. California workers’ comp insurers’ total DWP net of deductible credits rose for the third year in a row last year as ongoing wage growth more than offset a decline in insurers’ charged rates, driving aggregate premium up from $11.6 billion in 2022 to $11.8 billion in 2023 — the highest level since 2018. WCIRB’s recent report on insurer experience, valued through the end of 2023, showed that California workers’ compensation insurers’ avg charged rate per $100 of payroll fell to $1.60 in 2023, down 4.2 percent from $1.67 in 2022 and down nearly 50 percent from the post-SB 863 high of $3.19 in 2014, which was also the last year avg charged rates increased. Despite the ongoing decline in premium rates, the National Association of Insurance Commissioners (NAIC) 2023 Market Share Report, posted in June by the CDI, shows that growth in covered wages last year pushed total DWP up by more than $220 million, or 1.9 percent. The Institute’s review of the NAIC report also compared changes in DWP and in the rankings of the state’s 29 largest workers’ compensation insurers in 2023, each of which had at least a 1 percent market share. Bulletin (6/7/24) (members only) Insured Claims Experience Through 2023. WCIRB’s report on insured claims experience through 2023 shows Calif WC insurers’ total DWP gross of deductible credits rose 14% to $15.7 B in 2022 and another 2% to $15.9 B last year, matching the pre-pandemic level noted in 2019. Total DWP continued to climb as ongoing reductions in charged rates were more than offset by increases in covered payroll, spurred by growth in employee wages. The avg charged rate/$100 of payroll fell to $1.60, down 4.2% from $1.67 in 2022 and down nearly 50% from the post-SB 863 high of $3.19 in 2014 — also the last year avg charged rates increased. Other highlights:
Executive Briefing (5/29/24) (members only) WCAC 2024 Data Call. In late May the CDI sent all WC insurers in the state a reminder of their 2024 WC adjuster certification & medical bill review data (WCAC-2024) reporting obligations mandated by IC §11761 and CCR Title 10, Ch 5, Subchapter 3, §§2592–2592.08. Insurers must email their WCAC-2024 Acknowledgement of Receipt Form back to the CDI by Friday, 6/7/24; while the WCAC-2024 Data Workbook is due by Friday 7/5/24. CWCI issued an Exec Memo to remind member insurers as the 7/5/24 deadline for the Data Workbook is the 4th of July week which many employees take off. CDI’s announcement gave only 2 weeks’ notice of the deadline for submitting the Acknowledgment of Receipt Form, and that deadline is firm, but companies were allowed to request a brief extension if they emailed the request to CDI by 6/21/24. A circular attached to the notice included details and instructions. CWCI posted the letter and a copy of the Acknowledgment of Receipt Form on our website. Executive Briefing (5/29/24) (members only) DWC Considers Sanctions for EAMS Abusers. The DWC announced it may begin to take action against electronic filers who repeatedly cause system errors that delay document processing in the WCAB’s Electronic Adjudication Management System (EAMS) – especially those who continue to file defective batches of documents after receiving repeated notices, and those who ignore the ongoing problem-solving training in the system’s unprocessed document queue (UDQ). In a Newsline issued May 14, DWC said that the most common e-filing include:
After flagging chronic abusers over a few months, DWC said its planned corrective actions will include, but will not be limited to, suspension or removal of e-filing privileges and/or sanctions aimed at users who disregard regulations, e-filing instructions, and document discrepancy notifications; but anyone notified of an impending suspension or removal of e-filing privileges will be given a chance to take corrective action before sanctions are imposed. Details on properly filing documents are here. Executive Briefing (5/29/24) (members only) PD Claims by Region & Industry. CWCI Regional Scorecard data show that nearly half of Calif WC indemnity claims from AY 2013–2022 resulted in PD payments, but regional differences were stark and the statewide percentage of PD claims was skewed by claims from L.A. and the Inland Emp/Orange Co., which accounted for 47.5% of all indemnity claims during the 10-year span. The share of indemnity claims from the Bay Area, the N Counties/Sierra, and the Central Valley w/PD was between 39.5% and 40%, while the share of indemnity claims w/PD was about 5 to 6 points higher on the Central Coast (45.9%) and San Diego (46.3%). In the same decade, PD remained most prevalent in the Inland Emp/Orange Co. (51.9% of indemnity claims) and L.A. Co. (56.6% of indemnity claims). As in the past, indemnity claims from L.A. Co. and the Inland Emp/Orange Co. also had higher levels of attorney involvement (63.8% and 58.3% respectively), and these were the only regions where the attorney involvement rate exceeded the 53.2% statewide rate. In contrast, attorney involvement on indemnity claims during this period was lowest in the N Counties /Sierra (40.4%); the Bay Area (43.4%); and the Central Valley (45.1%). The percentage of indemnity claims resulting in PD also varied by industry. Comparing results by industry for L.A. Co. and the Inland Emp/Orange Co. to statewide figures shows the disparate results for these 2 regions held true across 8 major industry sectors, but for L.A. Co. the difference was most pronounced in the Ag sector, where 73.2% of lost-time claims resulted in PD payments vs. 45.9% statewide. Other industries where the percentage of indemnity claims w/ PD was sharply higher in L.A. Co. than statewide were Food Service, where the differential was 11.7 points; Construction (11.5 points); Mfg (10.9 points); and Retail (10.0 points). Results for the Inland Emp/Orange Co. show the most pronounced difference was also in the Ag sector, where the spread was 11.3 percentage points, followed by the Transportation sector, where the spread was 5.7 points, and the Clerical and Construction sectors, where the differentials were was 5.3 and 5.2 points respectively. Executive Briefing (4/30/24) (members only) COVID Death Claims. A recent study published in Lancet found that COVID-19 cut life expectancy by 1.6 years worldwide, but that the leading causes of death have not changed since 1990 – except in 2020 and 2021 when the pandemic hit and COVID became the #2 cause of fatalities around the globe, ranking behind heart disease, and ahead of stroke, COPD, and lower respiratory infections – but w/the introduction of COVID vaccines in 2021, COVID deaths plummeted. The pattern is similar in Calif WC, where data compiled for CWCI’s COVID/Non-COVID Claim App shows COVID death claims peaked in 2020, when they were the #1 types of death claim, accounting for 1,113 claims, or half of the total that year. In 2021, COVID death claims fell 53.4% to 519, but that was still over 1/3 of all death claims that year. As the pandemic subsided, the downtrend continued, with 84 COVID death claims in 2022 (9% of the total); 8 COVID death claims in 2023 (1.3% of the total), and no COVID death claims in the first 2-1/2 months of this year. Bottomline: as noted in the table below, since the pandemic began, there have been 1,724 COVID death claims – just under 1/3 of all fatal work injury and illness claims reported in Calif WC. CWCI’s app shows 339,221 Calif WC COVID claims have been reported since 2020, so the 1,724 COVID death claims represent 0.51% of the reported COVID claims. Executive Briefing (4/30/24) (members only)
Statutory/Regulatory Indoor Heat Regs Approved But Exclude Prisons. Cal/OSHA’s Standards Board unanimously approved the long-delayed standard requiring most employers to reduce the risks of extreme heat for indoor workers, including those in warehouses, restaurant kitchens, mfg plants and other indoor worksites. The Board then urged OAL to fast-track its review so that the standard can take effect by August. Under the regs, most employers must cool their buildings w/fans, A/C, misters, or other methods to below 87 degrees when workers are present and to below 82 degrees where workers wear protective clothes or are exposed to radiant heat (i.e., furnaces). Companies unable to lower the temperature of an indoor worksite that hits 82 degrees will need to provide workers w/water, breaks, cool down areas, cooling vests, or employ shift changes or other means of keeping employees from overheating. Employers will also need to track and record temperatures and monitor employees on hot days. Employers may incorporate the provisions of their Heat Illness Prevention Plan into their written Injury and Illness Prevention Plan document or maintain it as a stand-alone document. At a minimum, it must contain: procedures for the provision of water; procedures for access to cool-down areas; procedures to measure the temperature and heat index and record whichever is greater; procedures to identify and evaluate all other environmental risk factors for heat illness and to implement control measures; and procedures to acclimate employees to high temperatures and to respond to respond to high-heat emergencies. Approval of the standard was delayed in March after the Dept of Finance estimated the standard would cost state agencies billions of dollars. After that, Cal/OSHA revised the regs to exempt state prisons and local detention and juvenile facilities, as implementation in those facilities would have imposed a major cost on the state and local governments. In addition to those exemptions, employees who telework from a location of their choice and emergency workers directly involved in the protection of life and property will also not be covered by the new rules. Executive Briefing (6/27/24) (members only) Executive Memo (6/21/24) (members only) Farmworker Heat Injury & Illness Presumption. In late May the state Senate passed SB 1299, a United Farmworker (UFW) Union-backed bill to create a rebuttable presumption of compensability for any heat-related injury, illness, or death that develops or manifests after a farmworker was working outdoors during or w/in the pay period in which an employee suffered a heat-related illness, injury or death if a WCAB judge finds that the employer failed to comply with Cal/OSHA’s heat illness prevention standards. The UFW’s testimony claimed that the number of farmworkers suffering heat-related injuries is increasing due to climate change, but opponents, including the Calif Farm Bureau, Calif Ag Council, and the Chamber of Commerce argued that heat-related claims among ag workers are rare and there is no evidence that they’re being denied in a way that suggests a presumption is needed. SB 1299 also calls for a 1-time transfer of $5 million from the employer-funded WC Administration Revolving Fund to create and fund the Farmworker Climate Change Heat Injury and Death Fund to cover the administrative costs of the presumption, though DIR noted that a 1-time transfer would be insufficient to cover those costs in the future. CWCI began preparing a Legislative Analysis Report, scheduled for release in June, to provide background and hard numbers on Ag worker heat-related injuries and illnesses, and to explore the implications of expanding presumptions beyond the public safety sector and into the agriculture sector. In the meantime, the bill was sent to the Assembly where it was pending referral to a committee for further review. Executive Briefing (5/29/24) (members only) Adjuster Certification. The California Department of Insurance (CDI) issued formal notice to all insurers admitted to transact workers’ comp insurance in the state advising them of their 2024 adjuster certification (WCAC-2024) reporting obligations. This annual report is required under Ins. Code §11761 and CCR, Title 10, Chapter 5, Subchapter 3, §§2592–2592.08. Insurers were required to return the WCAC-2024 Acknowledgement of Receipt Form no later than June 7, 2024, while the WCAC-2024 Data Workbook was due no later than Friday, July 5, 2024, but given the holiday schedules associated with the 4th of July week, insurers were advised to plan accordingly. If necessary, they were allowed to request an extension for submitting the Data Workbook if requested by June 21, 2024. The circular attached to the CDI notice had more details and instructions. CWCI posted the letterand the Acknowledgment of Receipt Form here. Executive Memo (5/22/24) (members only) WCIRB Rate Filing. Last week, after reviewing insured loss and loss adjustment experience through 12/31/23, WCIRB’s Governing Comm. authorized a 9/1/24 Pure Premium Rate Filing recommending an avg 0.9% rate increase over the avg approved 9/1/23 advisory pure premium rates. The proposed rates reflect increased medical loss development and higher LAE, which were only partially offset by lower-than-expected losses on AY 2023 claims. The Rating Bureau submitted the filing in late April and posted it here. The proposed increase differs significantly from the Public Actuary’s proposed 3.3% rate decrease. WCIRB will hold a webinar to review the filing from 10–11 a.m. on 5/16/24. Executive Briefing (4/30/24) (members only) New OT Exemption Rules. In April the U.S. Dept. of Labor announced changes that will increase payroll for many employers a/o 7/1/24. The Fair Labor Standards Act exempts employees from minimum wage and overtime protections if they work in a bona fide executive, administrative, or professional (EAP) capacity, as defined in 29 CFR part 541. To fall w/in the EAP exemption, an employee generally must: 1) be paid a salary (i.e., be paid a predetermined, fixed amount not subject to reduction because of variations in the quality or quantity of work performed); 2) be paid at least a specified weekly salary level; and 3) primarily perform EAP duties, as defined by the regs. The regs also provide an alternative test for some “highly compensated employees” who are paid a salary, earn above a higher total annual compensation level, and satisfy a minimal duties test. A DOL news release noted that while the EAP job duties tests under current regs will not change, a/o 7/1/24, the standard salary threshold for exempting salaried workers from federal OT requirements will increase from $684/wk (equivalent to $35,568/yr) to $844/wk (equivalent to $43,888/yr), and effective 1/1/25, the threshold will increase to $1,128/wk (equivalent to $58,656/yr). DOL noted that a/o July 2027, the salary threshold will be updated every 3 years to reflect current earnings data. DOL estimates that 1 million workers nationwide will be affected by the 7/1/24 increase, w/another 3 million affected by the 1/1/25 increase. For details, click here. In addition to the increases in the standard salary level, DOL noted the “highly compensated employee” annual compensation threshold will go from $107,432 (including at least $684/wk on a salary or fee basis) to $132,964 (including at least $844/wk on a salary or fee basis) on 7/1/24; then to $151,164 (including at least $1,128 /wk on a salary or fee basis on 1/1/25. A 2016 attempt by DOL to increase the salary threshold for highly compensated employees was struck down by a federal court, so a court challenge to this rule may be coming. Executive Briefing (4/30/24) (members only)
Other CWCI 2024 Case Law Update Program Now Available On-Demand. On May 9, CWCI presented our 26th Annual Calif WC Case Law Seminar as a live and on-line event which was recorded and is now available to CWCI members as an on-demand webinar so they can view the 5-hour program at their convenience any time w/in the next 2 months. Tuition for CWCI member employees is $299. CWCI has received certification to offer 5.0 hours of WC specialization MCLE credits from the State Bar for this program, and also will provide registrants w/certificates of attendance upon completion of the program which may be submitted to the Assn of Hearing Reps of Calif and for verification of hours to apply toward the CDI WC claims adjuster certification requirements. Log-in info will be emailed to registrants after they sign up. Executive Briefing (5/29/24) (members only) Executive Memo (5/30/24) (members only) News Release (5/30/24) (public) Annual Mtg Redux. Anyone who missed CWCI’s 60th Annual Mtg in March or who would like their staff to view the program, it’s available as a free webinar that member employees can view either in part or in total at their convenience. The theme of the mtg was “An Altered State: The Shifting Role of Calif WC, 1964–2024.” The webinar is broken into 4 sessions featuring presentations on the Calif economy; current and upcoming CWCI research; legislative activity; and a discussion of how Calif’s unique political and business environment, as well as cultural and demographic influences, have led to differences between the Calif WC system and other WC programs. All CWCI member employees who register will be sent log-in instructions for the webinar. Executive Briefing (4/30/24) (members only) Executive Memo (4/12/24) (members only) 2024 Case Law Seminar. Registration is open for CWCI’s 26th Annual Case Law Seminar, which will be presented May 9 as both an in-person event and as a live, online broadcast. The live program will be held at the OCC Conference Center (adjacent to 12th St. BART), but in-person registrations are limited. CWCI has been certified to offer 5.0 hours of MCLE credits (including 5.0 hours of specialization credits in WC) from the State Bar for this program, and upon completion of the program, attendees will receive certificates of attendance for submission to the Assn of Hearing Reps of Calif and for verification of hours toward Dept of Ins. WC claims adjuster certification requirements. Attendees must be fully registered at least two days prior to the session to receive MCLE / CE credits and participation will be tracked electronically for compliance. To register go to our website or call CWCI. Executive Briefing (4/30/24) (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. |