Q3 – 2022 – October 6, 2022
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Research Regional Variations in Pre-Pandemic Indemnity Claim Experience. Institute analysts used updated data from CWCI’s Regional Scorecard Interactive Application to measure and compare statewide data on more than two dozen key aspects of AY 2015-AY 2019 workers’ compensation claims experience to results from the five most populous regions of the state: L.A. County; the Inland Empire/Orange County; the Central Valley; the San Francisco Bay Area; and San Diego County. The updated data highlighted differences between the 5 regions in terms of claimant demographics, claim characteristics, and average payments. Executive Briefing (9/28/22) (members only) Bulletin (9/26/22) (members only) COVID Claim Volume Declines. The update to CWCI’s COVID-19/non-COVID-19 Claims App with data on Calif WC claims reported to the DWC from March 2019 through Sept, 19, 2022 showed there had been 294,246 COVID claims reported to the DWC for the 32 months ending in August 2022 (1,510 of which were death claims). Since the pandemic was declared in March 2020, 1.87 million WC claims had been reported, 15.7% of which were COVID claims, but because of the record 54,869 COVID claims for January 2022, COVID accounted for 18.6% of all claims through the first 9 months of 2022 vs. 17.8% of all 2020 claims and 11.7% of all 2021 claims The summer surge in Omicron variant infections resulted in 9,411 reported COVID claims in June (9,882 projected), but after that claim volume leveled off, with 8,713 claims reported for July (9,846 projected), then fell sharply to 3,834 COVID claims in August, with 4,984 projected. Interactive Tool (9/26/22) (public) Executive Briefing (9/26/22) (members only) IMR Update Through Q2 2022. CWCI’s update on IMR activity and outcomes, based on nearly 1.2 million IMR determination letters issued between Jan 2015 and June 2022 showed the number of IMR decision letters and the number of medical service determinations in those letters continued to trend down in the first half of 2022, with IMR volume for this year on pace for a fourth consecutive annual decline. CWCI’s count of IMR decision letters found there were 62,859 IMR letters issued in the first six months of 2022 – down 7.6% from the 68,039 letters issued in the first half of 2021, while the latest full-year letter count noted 133,494 IMR decision letters in 2021, down 2.4% from 2020 and down 27.7% from the record 184,735 letters sent in 2018. While IMR volume has dropped, IMR physicians continue to uphold more than 90% of UR modifications or denials that go through IMR, with the overall uphold rate in the first half of 2022 coming in at 91.3%, nearly identical to the 91.2% uphold rate in the first half of 2021. Executive Briefing (9/28/22) (members only) Bulletin (9/14/22) (members only) News Release (9/15/22) (public) Detailed Statistics (9/14/22) (members only) Claims Monitoring Update. A CWCI Spotlight Report uses updated data from our Interactive Claims Monitoring Application to highlight industrywide loss development data and trends. The Application was recently updated with average paid indemnity and medical loss data on claims from AY 2009 through AY 2021 claims at nine levels of development, ranging from 3 to 72 months, with payments valued through December 2021. Indemnity cases accounted for 35% of all claims in the Application but 95% of the losses, so the Spotlight Report focused on results for indemnity claims. Results featured in the report include: Average total paid loss trends (medical + indemnity) from each of the 13 accident years at seven levels of development (6-,12-, 24-, 36-, 48-, 60-, and 72-months post injury); a comparison of average total benefits paid, average paid medical, and average paid indemnity at 36-months of development for claims from four key industry sectors (health care, agriculture, clerical, construction) as well as the averages for all industries statewide; the change in the distribution of 24-month medical payments among major cost components (medical treatment, pharmaceuticals, medical-legal, and “other medical”) for AY 2009 through AY 2019 claims; average payment trends for each of the five medical cost components for AY 2009 through AY 2021 claims at 6-, 12-, 24-, 36-, 48-, 60-, and 72-months post injury; and average indemnity payment trends for AY 2009 through AY 2021 claims at 6, 12, 24, 36, 48, 60, and 72 months of development. Executive Memo (9/8/22) (members only) Spotlight Report (9/8/22) (members only) High-Priced Topical Drug Kits Driving Up WC Rx Drug Costs. CWCI’s recent update to the pharmacy app, based on data through AY 2021 and posted in June, shows dermatologicals are now the 4th most prevalent drug category in WC (8.8% of 2021 prescriptions) and rank 2nd behind NSAIDs in total drug spend, representing 17.2% of 2021 Rx payments. The disproportionate share of dollars flowing to dermatologicals suggests that some of these meds are very expensive, and sure enough, a review of the app’s avg payment data for dermatologicals identifies a fairly new drug, Xyrilix, as another low-volume, very high-priced med that is now a major cost driver. Xyrilix, used to treat arthritis of the knee, is a kit containing a diclofenac sodium solution and adhesive sheets and is not FDA approved. It appears to be dispensed by a handful of small pharmacies. Xyrilix is not in the national Medicaid database and has no Federal Upper Limit to control the price, so it is reimbursed at 85% of the avg wholesale price. In 2021, the avg amount paid by WC claims administrators for Xyrilix was $4,126 per prescription (close to what was paid in each of the prior 3 years as it began to appear on the scene) so even though it only represented 0.3% of WC dermatological scripts, it consumed 6.8% of dermatological dollars. Other examples of kits containing topicals can be found in CWCI’s Rx Drug App, including Diclovix, which is a diclofenac sodium solution and a camphor-lidocaine-methyl salicylate patch (avg 2021 payment, $1,634); and Prilovix Ultralite Plus, which consists of a tube of lidocaine-prilocaine cream, an occlusive dressing and some scissors (avg 2021 payment, $3,845). Given the high cost associated with these kits, and the historical abuses involving Rx drugs in Calif WC, claims administrators and their PBMs should keep an eye out for drugs that are being dispensed in the form of a kit, just as they used to watch for compounds. Executive Briefing (8/30/22) (members only) Executive Memo (9/2/22) (members only) CWCI Data Shows Redistribution of Paid Medical Losses. New data from CWCI’s Claims Monitoring App shows changes in the distribution of medical payments among the 5 medical components at 24 months post injury for AY 2009–AY 2019 claims. Treatment has consistently represented the largest share of medical payments, and it continues to, but between AY 2009 and AY 2019, treatment expense fell from 65.8% to 52.9% of the paid medical at 24 months, with most of that decline occurring between AY 2009 and 2013. Meanwhile, “Other Medical” (a catch-all category including everything from interpreter and copy service fees to future medical) showed the largest increase, climbing from 21% in AY 2009 to 38.5% in AY 2019. The other 3 medical cost components all represent a much smaller share of the 24-month medical payments, and all 3 saw their share of paid medical losses decline after AY 2009. Pharmaceuticals’ share peaked at 4.4% in AY 2013, then fell to just 0.9% in AY 2019. Given the steady decline between 2015 and 2019, this was likely the combined effect of the adoption of evidence-based treatment standards enforced via UR and IMR, and the adoption of opioid & pain management guidelines in late 2017 and the formulary in 2018. Med-legal expenses’ share of the 2-year medical payments was fairly stable from 2009 to 2019, but they did climb from 4.1% in 2009 to 5.3% in 2015 before falling back to 4.3% in 2019. With implementation of the new MLFS in April 2021, that share may increase in AY 2021, as CWCI research has shown that the increase in total med-legal fees in the first 7 months after the schedule took effect far exceeded the 25% increase anticipated by the DWC. Medical-cost containment expenses rose from 5.5% of the medical payments at 24 months in AY 2009 to a peak of 6.3% in AY 2011, but have registered a fairly steady decline since then, falling to 3.4% in AY 2019 – the low point for the 11-year period. Executive Briefing (8/30/22) (members only) COVID-19 Claims Update. The 8/22/22 update to the CWCI’s COVID-19/non-COVID-19 Claims App included data on Calif WC claims reported to DWC from March 2019 through Aug 22, 2022. Among those claims were 289,113 COVID claims with injury dates from Jan 2020 through July 31, 2022 (1,494 of which were death claims). In the 28 months since the pandemic was declared, 1.68 million WC claims have been reported, 17.2% of which were COVID claims. The update showed that after surging from 1,324 claims in March to 9,221 claims in June, the monthly claim count was leveling off, with 7,956 claims reported for July. CWCI projections, which account for late reported claims, showed there would ultimately be 10,051 COVID claims from June and 10,025 COVID claims from July. Given the waves of COVID that have hit Calif, ongoing job growth, workers returning to offices, and the potential for long COVID claims, COVID remains a significant WC risk, esp, in the public safety and health care sectors that have been the hardest hit. Executive Briefing (8/30/22) (members only) Private S-I Claim Frequency Hits a 14-Year High. CWCI’s annual review of 1st report data on claims reported to the Office of Self-Insurance Plans by private self-insured employers showed claim frequency among private self-insureds (claims/100 covered employees) rose nearly 6% last year compared to 2020, the net effect of a 9.6% jump in the incidence of M-O claims, and a 2.2% jump in indemnity claim frequency. Comparing 1st report data over the past 15 years CWCI found a slow, steady decline in total claim frequency among private self-insureds from 2007 through 2016, with most of that decline due to decreasing M-O claim frequency, as indemnity claim frequency showed only minor fluctuations. But, since bottoming out in 2016, overall claim frequency in the private self-insured sector has trended up, hitting a 14-year high in 2021, largely fueled by a sharp increase in the rate of indemnity claims/100 employees, which rose 37.5% from 1.36 in 2016 to a 15-year high of 1.87 last year. Meanwhile, M-O claim frequency has fluctuated both up and down since 2016, including a big decline in 2020 (the first year of the pandemic), but ended up climbing from 1.94 in 2016 to 2.05 in 2021, for a net 5-year increase of 5.7%. 1st report loss data on 2021 claims show that as of the end of last year, private S-I benefit payments totaled $314.8 million, 17.3% more than the comparable figure for 2020 claims, as total paid indemnity increased by 16.3% to $158.7 million and total paid medical increased 18.4% to $156.1 million. Incurred losses in the 2021 first reports totaled $839.8 million, up 13.1% from the initial incurred on 2020 claims. The breakdown by benefit type shows incurred indemnity was $342.6 million (up $36.8 million, or 12.0% from a year earlier); while incurred medical increased to $497.2 million (up $60.6 million, or 13.9%). Executive Briefing (7/28/22) (members only) Bulletin (7/22/22) (members only) News Release (7/25/22) (public) Underlying Issues and Outcomes in Reducing the Compensability Determination Timeline. In both 2021 and 2022, California legislators have debated proposals that would shorten the compensability determination timeline for California workers compensation claims. This CWCI Impact Analysis report helps bring the debate into focus by providing background information on the compensability determination process for litigated and non-litigated claims, reviewing existing statutory and regulatory timeframes for various steps within the process, and using data from nearly 460,000 non-COVID-19 claims and more than 17,000 COVID-19 claims to evaluate the need for and the potential impact of the proposals, including the unintended consequences. Executive Briefing (7/28/22) (members only) Impact Analysis Report (7/20/22) (members only) Bulletin (7/20/22) (members only) News Release (7/20/22) (public) COVID Subvariants Bring a Surge of Claims. As BA.4 and BA.5 COVID variants spread across California, workers’ comp COVID-19 claim volume continued to climb in May, as the monthly COVID claim count nearly tripled from the April level. CWCI’s COVID-19 Claim App shows that after COVID claim counts bottomed out in March the COVID claim distributions by region, industry, and claimant age all shifted. The update to CWCI’s app contains data on more than 2.38 million COVID and non-COVID claims with dates of injury from 1/1/19 through 5/30/22 reported to the DWC as of 6/27. The figures show that after hitting a 10-month low of 1,303 claims in March, the COVID claim tally jumped nearly 83% to 2,381 claims in April, then jumped 182% in May to 6,704 claims, producing a five-fold increase in COVID claim volume during the spring surge. Bulletin (7/20/22) (members only) Impact of the New Med-Legal Fee Schedule on the Utilization and Payment of Med-Legal Services. A CWCI study compares the utilization and reimbursement of med-legal services rendered before and after the new schedule’s April 1, 2021 effective date, using data from AY 2015 through 2021 claims, with service dates limited to January through October of each year to account for the timing of billing and payment. The results indicate that replacing the three levels of evaluations with a single comprehensive evaluation reimbursed at a flat fee of $2,015 likely had the biggest impact on average payments. Basic evaluations (previously billed under ML102) accounted for about 40% of the evaluations paid under the new ML201 comprehensive service code, and the new flat fee increased the payment for these services by 222%. More complex evaluations (previously billed under ML103) represented 18% of the new ML201 evaluations, and payments for these services increased by 115%. Overall, the findings show payments for med-legal services have risen sharply under the new fee schedule, with the increase in aggregate med-legal fees in the first seven months after the schedule took effect far exceeding the 25% increase anticipated by the DWC. Executive Briefing (6/23/22) (members only) Executive Briefing (4/28/22) (members only) Research Update Report (7/5/22) (members only) Bulletin (7/5/22) (members only) News Release (7/5/22) (public)
Statutory/Regulatory 2022 Legislative Countdown. CWCI summarized several bills recently signed by the governor and several others presented to him but awaiting action. Bills signed in August included SB 1242 which modifies insurers’ fraud reporting requirements and sets new fraud training and reporting requirements for agents and brokers; AB 2148 which extends until 1/1/24 the authorization for insurers to use debit cards to pay indemnity benefits when approved by injured workers; and AB 2848 which extends the deadline for DWC to report on the effects of allowing MPN providers to render certain treatments to injured workers w/in the first 30 days of injury w/o prospective UR. Awaiting action: AB 1681 which would allow the CDI or county D.A.s to meet w/insurers or S-I employers to discuss fraud; AB 1751 which would extend the expiration date for Covid-19 outbreak and first responder presumptions to 1/1/24 and expand the firefighter presumption to include active firefighters in several state agencies; SB 284 which would extend the first responder PTSD presumption to state agency firefighters, security officers and emergency dispatchers; and SB 1127 which would reduce the investigation period for injuries presumed compensable under LC §§3212-3212.85 and §§3212.9-3213.2 from 90 to 75 days and create a penalty of up to $50K if the WCAB concludes an employer unreasonably denied a presumptive injury claim. Executive Briefing (9/28/22) (members only) Legislative Update. Several bills affecting WC remain alive as the Aug 31 adjournment of the Calif Legislature approaches. Their ultimate fate won’t be known until Sept 30 — the final date by which Gov. Newsom must sign or veto a bill or allow it to be enacted w/o being signed. Among the measures still alive at this point: SB 216 would require certain contractors to have WC insurance regardless of whether they have employees. SB 1127 would reduce the investigation time for injuries presumed compensable under LC §§3212-3212.85 and §§3212.9-3213.2 from 90 to 75 days and create a penalty of up to $50K if the WCAB concludes an employer unreasonably denied a presumptive injury claim, including COVID claims that are subject to presumptions. A CWCI report in July noted that reducing investigation periods would increase denials and litigation on complex cases and that recent proposals fail to recognize that claims administrators often have no control over factors that delay liability determinations beyond existing time frames. The bill also would require DWC to capture data on the date of liability determination if the Legislature appropriates funds to do so, and would allow first responders up to 240 weeks of TD for presumptive cancer claims, rather than the 104 weeks available to other workers. SB 1002 would require MPNs to include services of licensed clinical social workers. AB 1643 would create an advisory committee to report on the effects of heat on Calif workers and businesses by January 2026. Amendments allow the committee to investigate “some or all” of the issues listed in the bill. AB 1681 would allow the Ins. Commissioner and local DAs to meet w/ insurers and S-I’s about potential fraud. AB 1751 would extend the COVID-19 outbreak and first responder presumptions until 1/1/24 and expand the presumption to cover additional first responders including firefighters, active firefighting members and police officers at the state departments of State Hospitals, Developmental Services, Military and Veterans Affairs. CWCI will issue a summary of enacted bills after the Sept. 30 deadline for the governor to sign or veto bills. Executive Briefing (8/30/22) (members only) Cal/OSHA Workplace Pandemic Rules… Cal/OSHA’s revised COVID-19 emergency temporary standard (ETS) has been in effect since May but is set to expire at the end of t2022, so in late July Cal/OSHA’s Standards Board drafted language to extend the reg. Under the proposal employers would still need to provide COVID tests and notify employees after a COVID exposure, but it eliminates the exclusion pay provision that requires employers to give employees who refuse to be tested after close contact during an outbreak a week off with pay, which employers say incentivizes workers to not get tested. Cal/OSHA has posted its proposal here. Comments are due by the 9/15 Standards Board Meeting. Executive Briefing (8/30/22) (members only) No Change in Pure Premium Advisory Rate. In April, WCIRB’s Governing Committee submitted a mid-year rate filing for policies incepting or renewing o/a Sept. 1. The filing recommended that Ins. Commissioner Lara increase the WC avg. pure premium rate to $1.55/$100 of premium, with an add-on for COVID-19 claims. At the same time, however, the public representative on the Committee recommended Lara cut the rate. In mid-July, Lara issued his decision, splitting the difference by approving an advisory rate of $1.45 per $100 of payroll, the same rate he approved in 2021, and about 18% below the avg pure premium rate of $1.77 filed by WC insurers as of January 1, 2022. Despite a recommendation from CDI counsel, the approved advisory rate did not include an adjustment factor for COVID-19 claims, the impact of which the Commissioner said he is continuing to study. Executive Briefing (7/28/22) (members only) DWC Extends Emergency Rules for Telehealth Med-Legal Evals. On July 7 the DWC issued a notice of intent to readopt emergency regulation CCR §46.3 to extend the temporary telemedicine regulation that was set to expire July 18. The reg was first enacted in 2020 as a pandemic safety measure to address the ongoing need for telehealth med-legal evals and office location flexibility in light of various state and local public health safety measures related to COVID-19. The Division says that extending it will help move WC claims forward and avoid undue delays. The notice of intent to readopt the emergency reg, and the associated materials were filed w/OAL on July 8. OAL approved the extension on July 19 and filed it with the Secretary of State, so the reg is effective for an additional 90 days. During that time, the DWC plans to initiate rulemaking to make the reg permanent, though the Division can request a second 90-day extension if needed. Executive Briefing (7/28/22) (members only)
Other Claims and Medical Care Committee Minutes. Ms. David began the meeting with a discussion of research issues including the use of employment data in CWCI’s COVID-19 Interactive app; the new Medical Services app, which allows CWCI members to view the average amounts paid for treatment by visit or unit, the average visits per claim at different development periods, and to drill down by various types of service; and the upcoming CT study (data collection is complete). Mr. Swedlow then led a discussion on the 2023 research agenda noting that proposed reforms to UR/IMR and MPNs may require research in those areas, along with the upcoming CT study. Ms. Widener-Brightwell provided updates on regulatory activity, including proposed DEU regs that would require all DEU documents to be stored in EAMS, and draft QME regs that would increase QME training requirements and make changes to the QME assignment process. A hearing on the MTUS guidelines was delayed pending ACOEM COVID-19 guidelines, while emergency telehealth regs were readopted and will likely be made permanent, and the QME electronic service regs were made permanent in April. Revised copy service fee schedule regs took effect July 15 but DWC has not yet taken formal action on the interpreter fee schedule, the home health care fee schedule, the electronic Doctor’s First Report, or UR regs. In the Research segment of the meeting Ms. Jones reviewed changes in the MLFS, including removal of complexity factors and the collapse of ML102, 103, and 104 into the new ML201, noting that CWCI research found that ML payments are up 48%. Future research plans include additional study of more mature data, more analysis of supplemental reports, and timing and frequency of various ML services. Mr. Swedlow discussed the latest IMR research which shows IMR has fell 8% in the first half of 2022 for a 3-year decline of 40%. The uphold rate held steady at 91.3%, with no major change year to year. Pharmacy services still are the #1 IMR dispute, but have decreased significantly since implementation of the formulary. The committee discussed why peer-to-peer review does not occur more frequently when UR is disputed, and what the DWC may be able to do regulatorily to encourage that practice. Ms. David reviewed the latest COVID claims data, noting a shift in the mix by industry and that COVID represented 18% of all claims in the last year. Ms. Widner-Brightwell gave a legal update reviewing presentations from the recent CAAA conference where the topics included remote work injuries and the 104-week TD cap. The speakers noted they have not seen many remote work injuries but discussed the many potential wage and hour violations that can occur in a remote work setting. The meeting concluded with a review of pending legislation, SB 1127 (liability determination period and penalties), AB 1751 (extension of COVID-19 presumptions) SB 213 (hospital worker presumptions), AB 1681(fraud), AB 2848 (UR study), SB 1458 (gender disparity), AB 399 (MPN), and AB 404 (MLFS). Meeting Minutes (8/15/22) (members only) Legal Committee Minutes. The August 11 meeting was held via Zoom. Ms. Widner-Brightwell updated the committee on the status of the following cases: Manuel v. Superior Court (Brightview Landscape): a wrongful termination case involving contradiction of federal immigration law and California law in which CAAA has filed an amicus brief, with oral arguments set for Aug 11; Earley et al. v. WCAB in which a group of injured workers has filed a petition for mandate at the Court of Appeal, challenging the “grant and study” orders issued by the WCAB. The consensus of the committee was that the “grant and study” process was likely not supported by statute or regulation and if so hundreds of pending reconsiderations will be denied by operation of law. Ms. Widener-Brightwell noted that in April the state Supreme Court denied the petition for review in See’s Candies v. Superior Court (Ek) in regard to the issues of derivative COVID-19 claims while in Kuciemba v. Victory Woodworks, another case involving derivative COVID-19 claims, the Ninth Circuit certified COVID-19 specific questions to the state Supreme Court. The questions are (1) whether derivative injury rule bars claim, and (2) whether employer owes duty of ordinary care to members of employee’s household. The Committee then discussed CWCI’s participation in the joint amicus effort and the cost involved. In the Regulatory Update, Ms. Widner-Brightwell reviewed the Copy Service Fee Schedule regs that took effect 7/15/22 and noted the increases in M-Ll fees under the revised MLFS, as documented in CWCI research. She noted that the emergency telehealth regs have been extended, and that DWC plans to make them permanent. The discussion of pending legislation included SB1127 (Liability determination period), AB1751 (COVID-19 presumptions), SB213 (Hospital worker presumptions), AB1681 (Fraud meetings), AB2848 (SB1160 study), SB1458 (AWW gender disparity), AB399 (MPN), and AB404 (MLFS). The committee discussed that although SB213 did not proceed this year it is a recurring issue. The general discussion covered Judge Sussman’s recent appointment to the WCAB where he will assist with mediation in cases that are pending on reconsideration. The group discussed the return to in-person walk-throughs, expressing disappointment that the option for Life Size walkthroughs was not retained. In-person trials continue to be limited, as the parties agree to hold trials remotely. The Committee noted San Francisco PJ Francie Lehmer is retiring in September. The recent fraud conviction of an applicant’s attorney in Southern California was also discussed. Meeting Minutes (8/1/22) (members only) CWCI Interactive Applications Updated Through AY 2021. Updates to the CWCI Claims Monitoring, Prescription Drug, MTUS Formulary, and Regional Scorecard interactive applications, featuring IRIS data on California workers’ compensation claims through AY 2021 are posted under the Research tab on our website. The applications listed below offer detailed data that can be used to examine and compare industry data on key metrics and are available exclusively to CWCI members who use their registered email and password to log on to www.cwci.org. Executive Memo (8/2/22) (members only) CWCI Webinar on the Impact of the New MLFS. CWCI Senior Research Associate Stacy Jones, who authored the Institute’s report on the effects of the 2021 revisions to the Med-Legal Fee Schedule (MLFS) on med-legal utilization and costs, and CWCI General Counsel Sara Widener-Brightwell, conducted a live, half-hour webinar in which they reviewed those changes and discussed the results of the study. The program was followed by an in-depth Q&A session. The Institute recorded the session, and offered it free to CWCI members as an on-demand webinar in order to provide remote and in-office staff a short refresher course on the Med-Legal Fee Schedule changes and insights into the impact of those changes. Executive Briefing (7/28/22) (members only) News Release (7/5/22) (public) 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. |