Q3 – 2019 – October 18, 2019
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Research California Workers’ Compensation Inpatient Hospitalization Trends, 2010-2018. CWCI’s updated look at changes in the volume of inpatient hospitalizations in California workers’ compensation, Medicare, Medi-Cal and private plans from 2010-2018. The study shows the most common workers’ compensation inpatient diagnosis-related group codes (MS-DRGs) and the top 5 Major Diagnostic Categories (MDCs); and provides detailed data on other workers compensation inpatient trends, including changes in the volume of implant-eligible spinal surgeries and a listing of the top 10 hospitals based on injured workers as a percent of their total inpatient discharges. CWCI Research Update (9/27/19) (members only) Bulletin (9/27/19) (members only) Interactive Tool (9/27/19) (members only) News Release (9/27/19) (public) CWCI Documents the Declining Prevalence of Benzodiazepines in Calif WC. New IRIS data show that the use of benzodiazepines (“benzos”) in Calif WC has dropped over the past dozen years. Benzos are found in several therapeutic drug groups, including antianxiety agents (e.g., Xanax, Ativan, and Valium); hypnotics/sedatives (e.g., Restoril, ProSom); antipsychotics/antimanics (e.g., Zyprexa); and the anticonvulsant klonopin, which is sometimes used to treat severe panic attacks, and as with opioids, some physicians prescribe them for chronic conditions even though long-term use carries significant risk of addiction. The declining in Calif WC is good news as a National Institute on Drug Abuse study published linked overprescribing and co-prescribing of benzos to an increased in overdoses and drug-related deaths and a JOEM study documented large increases in total WC claim costs and delays in RTW associated with concurrent use of benzos, opioids, and antidepressants to treat chronic pain, depression, and/or anxiety. After controlling for claimant age, chronic pain, medical complexity, and claim development (years), JOEM also found that claims w/benzos had the lowest closure rate at the end of the 3-year study period, and that benzos had a greater impact on claim costs than any other drug class. Focusing on lost time claims, and breaking out the data by service year, CWCI’s initial review found that benzo use in Calif WC declined from 6.6% of AY 2005 indemnity claims at 60 months post injury to 3.9% of the AY 2013 claims at 60 months. Looking at the prevalence of benzos in indemnity claims at 12 months post injury, the IRIS data showed an even sharper decline, with 1st-year benzo use noted in 3.8% of the AY 2005 lost-time cases vs. just 0.8% of AY 2017 indemnity claims. Executive Briefing (8/21/19) (members only) CWCI Finalizes Project to Fine Tune WC Diagnostic Data. CWCI is finalizing a project that maps ICD-9 and ICD-10 codes into diagnostic (Dx) categories and maps subsets of codes into high-severity categories. The grouper also flags diagnoses that are comorbid conditions (i.e., diabetes, hypertension, substance abuse, etc.) and can be used to break out data on initial diagnoses, most recent diagnosis, and diagnoses w/in the life of the claim. Claims with codes from multiple Dx categories are assigned a primary category through a weighting system based on number of visits and facility stays, paid amount, severity, comorbidity, and pain diagnoses. The grouper includes a total of 56 diagnostic categories. Preliminary results for 2017 Calif WC claims based on Dx categories defined by services as of 12/31/18, note the top 10 diagnostic categories for 2017 indemnity claims, led by spine compression (13.5% of indemnity claims); non-vertebrae sprains (12.3%); and spine strains (9.1%). Together, the top 10 Dx categories accounted for nearly 3/4 of all 2017 lost-time claims. The initial data also show 8% of the sample had general pain diagnoses; less than 0.5% had complications. Senior Research Associate Stacy Jones is now finalizing the categorizations, which will become an integral component of future public policy research and member benchmark reports. Members who have an interest or questions may contact her at CWCI. Executive Briefing (7/31/19) (members only) Update on CY Loss & Expense Data. CWCI’s review of the latest data on CY 2018 WC Losses & Expenses reported by the WCIRB notes that insurers had total earned premium of $17.4B in CY 2018, $300M less than in 2017. Meanwhile paid losses, excluding benefits paid by CIGA totaled $8.3B, or 47% of earned premium; while paid losses including benefits paid by CIGA, totaled $8.4B, or 48% of earned premium. A breakdown of the loss & expense components shows marginal declines across the board from 2017 levels:
Medical losses represented 55% of total incurred benefits in 2018, while indemnity accounted for 45%. W/in the indemnity category, $1.8B was paid for TD and $1.5B was paid in PPD, w/PTD, life pensions, SJDB and death benefits accounting for the balance. Notably, among incurred expenses, total medical cost containment payments declined by 3.8% from $443M in 2017 to $426M in 2018. Total loss reserves fell by $600M in 2018, so total incurred losses last year were $7.7B, or 44% of earned premium, which combined w/the $6.6B in incurred expenses put total, incurred losses & expenses in CY ‘18 at $14.3B, or 82% of earned premium. WCIRB estimates policyholder dividends in 2018 amounted to 0.2% of earned premium, resulting in an underwriting profit of $3.1B, or 18% of premium. Executive Briefing (7/31/19) (members only)
Statutory/Regulatory WCAB Rules of Practice and Procedure. CWCI’s comments on Proposed Amendments to WCAB Rules of Practice and Procedure. Public Hearing Testimony (9/24/19) (public) California Workers’ Comp Benefits to Increase in 2020. The DWC issued a corrected version of its Newsline confirming that California’s State Average Weekly Wage (SAWW) rose just 3.84013 percent in the 12 months ending March 31, 2019, far less than the 6.61581 percent increase that the Division initially reported the prior week. As a result, the minimum TD rates effective January 1, 2020 will be $194.91 per week, $5.22 less than the Division previously announced, and the maximum TD rates will be $1,299.43 per week, nearly $35 less than previously announced. Bulletin (9/17/19) (members only) Executive Memo (9/17/19) (members only) News Release (9/17/19) (public) Member Advisory: DWC Overstates SAWW Increase, Required Benefit Increases for 2020. An alert to CWCI members that the DWC miscalculated the annual increase in the State Average Weekly Wage by calculating the change over 6 quarters rather than over 4 quarters, a glitch that occurred after the Department of Labor changed the way they report wage data. After identifying the source of the problem, the Institute advised the Division of the error, and they are expected to issue a correction. In the meantime, claims administrators were advised not to adjust their systems or make any plans based on the 2020 benefit increases initially quoted in the DWC Newsline. Executive Memo (9/13/19) (members only) Medical Treatment Utilization Schedule. CWCI’s 30-day public comments on the proposed MTUS guideline updates. 30-Day Public Comments (8/26/19) (public) Medical-Legal Fee Schedule Regulations. CWCI’s 2nd Forum comments on the DWC’s draft revisions to the Med-Legal Fee Schedule. 2nd Forum Comment (8/23/10) (public) WCIRB Recommends 5.4 Percent Pure Premium Rate Reduction Effective 1/1/20. WCIRB’s Governing Committee voted on August 7 to recommend that Insurance Commissioner Lara reduce the advisory pure premium rate for new and renewal policies incepting o/a 1/1/20 to an avg of $1.54/$100 of payroll – a 5.4% cut that would be the 9th rate reduction since Jan 2015 and would translate to a cumulative 44% reduction over the past 6 years. The recommendation comes in the wake of several favorable trends:
Executive Briefing (8/21/19) (members only) Member Advisory: Cal OSHA Adopts Emergency Regs on Occupational Exposure to Wildfire Smoke. The Office of Administrative Law approved a Cal/OSHA emergency reg requiring employers in the state to protect workers from hazards associated w/wildfire smoke. The reg applies to workplaces where the Air Quality Index (AQI) for airborne particulate matter (PM 2.5) rises to 151 or greater and where employers should reasonably anticipate that employees could be exposed to wildfire smoke, in which case employers must:
The emergency reg took effect immediately, and will remain in effect through 1/28/20, though two 90-day extensions could be granted. Executive Briefing (8/21/19) (members only) DWC Releases Revised Med-Legal Fee Schedule for Forum Comment. In August, DWC released a proposed revision to the Med-Legal Fee Schedule for forum comments. The update to the schedule is a work in progress as the current draft would provide med-legal doctors less than what they want, while payers have a number of concerns, including the need for more clarity on how fees charged above the schedule, which must be “reasonable and justified by extraordinary circumstances,” will be determined.. The draft released for forum comment called for:
In addition to changes made in response to forum comments, DWC may also revise the regs to address issues raised in an upcoming report from the State Auditor. CWCI is compiling member input and preparing Forum comments. Executive Briefing (8/21/19) (members only) Fed-OSHA Issues Reminder to Employers on OSHA 300A Submission Requirements. On August 9, Fed OSHA issued a reminder to employers that 2018 OSHA Form 300A (Summary of Work-Related Injuries and Illnesses) should have been submitted by July 1. Firms w/250 or more employees and those in high hazard industries that have 20 to 249 employees are required to keep OSHA injury and illness records and submit a Form 300A summary annually. The forms can be submitted electronically through Fed OSHA’s online portal. Employers that have questions about the submission requirements can complete a Help Request Form also posted on Fed OSHA’s website. Executive Briefing (8/21/19) (members only) Audit of WC Medical Backfires on System Critics. In 2018, the Joint Legislative Audit Committee, at the urging of the Calif Applicant Attys’ Assn, approved a request from Assemblywoman Blanca Rubio to have the State Auditor compare medical care provided to inmates who are injured on work details to the care provided to correctional officers who file WC claims. At the time CAAA’s president testified at a legislative hearing that “Our belief is inmates are likely receiving faster medical care than correctional officers,” noting that SB 863 increased injured workers’ PD benefits, cut employer costs, and produced “record profits” for insurers, but also caused treatment delays, concluding that “It seems problematic to have 2 different standards of care, and I hope the auditor can uncover if that’s the case.” Rubio herself said that given concerns that the WC system doesn’t provide sufficient medical care, her goal was to collect information about the efficiency of the system, proclaiming that lawmakers need independent data to determine if there’s a problem and, if so, to guide policy discussions. In an email sent by CAAA, Rubio tipped her hand as to what she expected the audit to find: “Sadly, I believe we’ll find that prisoners are receiving faster and better care than those who are employed to watch over them.” In July, Rubio got a surprise when the Auditor’s report found, “there are no notable, systemic negative effects or areas for the process to become more efficient” and that State Fund, which administers Dept. of Corrections’ claims, completed most liability decisions w/in required time frames and that the few delayed or late liability decisions did not hinder injured worker access to care. Also, despite different processes and time requirements, many officers & inmates were treated immediately, and treatment authorizations for both populations were received w/in required time frames so both officers and inmates were treated promptly. Half the officers returned to work w/in 30 days of injury (vs. 78% of inmates), but the report said this disparity likely reflects correctional facilities’ “inability to accommodate physical work restrictions for employees in certain job roles,” as Dept. of Corrections policy limits facilities from accommodating work restrictions that would affect the safety & security of the facility. As a result, the report did not recommend any changes in how treatment is rendered to inmates or correctional officers. The report w/a summary and fact sheet are on the State Auditor’s website. Executive Briefing (7/31/19) (members only)
Legal Travelers v. Workers’ Compensation Appeals Board (Mastache). CWCI’s Request for Publication of the Court of Appeal’s decision which found that the parties to a staffing agreement had validly contracted to eliminate the obligation for a counter-signature on a policy endorsement related to coverage of special employees. The court held that the solvent carrier thus did not represent “other insurance” and that CIGA was fully liable. Letter Requesting for Publication (9/27/19) (members only) Skelton v. Workers’ Compensation Appeals Board. CWCI’s Request for Publication of the 6th DCA ruling clarifying the California Supreme Court’s decision in Dept. of Rehabilitation v. WCAB (Lauher) (2003) 30 Cal.4th 1281. In its ruling, the Court confirmed that an injured employee’s entitlement to temporary disability indemnity ends when the employee has returned to work even if the employee is not yet permanent and stationary. Letter Requesting for Publication (9/16/19) (members only) Puni Pa’u v. Department of Forestry. Relying on the benefit of hindsight, the WCAB reversed course and ruled that Saturdays are not “working days” for purposes of determining the timeliness of a UR decision under LC section 4610. Instead, “working days” are defined as days other than Saturdays, Sunday, or state holidays. This decision has been designated by the Board as a Significant Panel Decision. Significant Decision Summary (9/12/19) (members only) Catastrophic Injury Reporting: Denial of Defense Appeal in Wilson v. State of California Department of Forestry and Fire Protection. The WCAB ruled on July 15 that it will not revisit its prior en banc ruling that a determination of whether a worker suffered a catastrophic injury involves a fact-driven inquiry focused on the nature of the accident. The term “catastrophic injury” is not defined by statute, but in May the WCAB issued a decision in Wilson v. State of Calif that outlined five non-exhaustive factors a judge can consider:
Under the analysis, the Board found Wilson suffered a catastrophic injury. The defendant sought reconsideration, arguing that catastrophic injury in LC 4660.1(c)(2)(B) refers to the mechanism of injury and that catastrophic refers to the condition immediately after the injury occurs, but the Board said its prior decision had rejected the mechanism of injury argument; that LC 4660.1(c)(2)(B) contains no temporal limitations; and rejected the defense argument that its 5-factor analysis was not supported by the legislative history for LC 4660.1(c)(2)(B) and was an improper adoption of a rule or regulation. Significant Decision Summary (7/16/19) (members only) Executive Briefing (7/31/19) (members only)
Other FDA Approves Generic Versions of Pregabalin. In July, the FDA approved 9 applications for generic versions of pregabalin (Lyrica), Pfizer’s high-priced, brand-name anticonvulsant that CWCI data shows has been increasingly prescribed as an off-label, non-opioid alternative to treat neuropathic pain. This is good news for WC payers as IRIS Rx drug data (valued as of December 2018) show pregabalin jumped from 0.5% of Calif WC prescriptions dispensed in 2005 to 1.7% last year, while at the same time it rose from 1% to 12% of the total drug spend, making it the #1 WC Rx drug in terms of total payments in 2018. In the wake of the FDA announcement, some drug manufacturer that received approvals started shipping their generic versions of the drug, so it would be available at pharmacies by August, at a fraction of the cost of Lyrica. One price comparison showed 60 capsules of generic pregabalin (75 mg) will cost $130 vs. $460 for the same quantity and strength of Lyrica, while IRIS data show that in 2018, the avg paid per prescription for pregabalin in Calif WC was $539. With 9 new generic versions competing for market share, the availability of generic pregabalin should help reduce Rx costs as long as there is no major shift toward extended release Lyrica (Lyrica CR), which Pfizer introduced 2 years ago, and is still under patent. Notably, pregabalin is listed as a non-exempt drug in the MTUS formulary, so it is subject to prospective UR. CWCI continues to monitor the volume and cost of pregabalin, and will post updated results on our Pharmacy Interactive Tool. Executive Briefing (7/31/19) (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. |