Q4 – 2019 – January 7, 2020
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Research Public S-I Experience… CWCI’s review of FY 18/19 OSIP data on public self-insured experience notes 115,517 new claims last year, just 363 (0.3%) fewer than in the FY 17/18 initial report, but this was the 2nd year in a row that the initial report claim count showed a marginal decline. However, because of the growth in public sector employment, overall claim frequency (claims/100 ees) fell from 5.6 to 5.5 claims/100 ees, which was entirely due to a slight drop in med-only claim frequency. Med-only claims accounted for just under half of the FY 18/19 claims (2.7 claims /100 ees) while indemnity claims accounted for just over half (2.8 claims/100 ees). Initial benefit payment data on the FY 18/19 public S-I claims show total paid benefits were up 1.5% from the prior year as the minor drop in claim frequency and a 0.3% drop in avg paid medical were more than offset by a 3.7% increase the avg paid indemnity/claim. The 1st report avg paid medical/claim was $1,639 for FY 18/19 claims, while avg paid indemnity was $1,934, for a net increase of 1.8% in public self-insured’s avg paid benefits overall. Public self-insured’s avg incurred losses at 1st report jumped 3.3% to $11,850, (+3.4% medical, +3.2% indemnity) producing the 7th consecutive year-to-year increase since incurred losses bottomed out in FY 12/13, immediately following the enactment of the 2012 reforms. Bulletin (12/19/19) (members only) Executive Briefing (12/16/19) (members only) IMR Update. Preliminary data on IMR experience through 3Q 2019 shows 125,641 IMR decision letters were issued during the 9-month period – down 9.9% from the first 9 months of 2018. IMR physicians upheld UR modifications or denials 88.3% of the time, nearly matching the 88.6% uphold rate from 2018 (but down from the 91.0% in 2017). Pharmacy decisions, as a percent of all IMR decisions, have declined slowly since 2015, but showed a fairly sharp drop in 2019, accounting for 41.2% of all decisions from the first three quarters of 2019, down from 46.4% in 2018. Opioids’ share of the pharmaceutical IMR decisions has been fairly stable since 2015, with the latest data showing a slight decline from 32.2% of the Rx drug decisions in 2018 to 31.1% in 2019. Requests for PT, injections, and DME ranked behind pharmaceuticals in terms of IMR volume, comprising about 1/3 of the 2019 decisions. Notably, the percentage of decisions involving acupuncture requests has increased slowly but steadily in recent years, climbing from 2.2% of 2015 determinations to 3.7% in 2019. Executive Briefing (12/16/19) (members only) Treatment Patterns of Indicted WC Medical Providers…. AB 1244, which took effect 1/1/17, requires that DWC suspend any medical provider convicted of WC, Medi-Cal or Medicare fraud from participating in WC, while SB 1160 (also effective 1/1/7) places an automatic stay on lien claims filed by medical providers who have been charged w/fraud. New WCIRB data show the results have been dramatic. As of August 2019, DIR had indicted or suspended more than 500 medical providers from participating in the WC system. Among the additional findings:
Executive Briefing (12/16/19) (members only) Nationwide Data on WC Benefits, Coverage & Costs. NASI’s report on 2017 WC Benefits, Coverage & Costs used data from all 50 states to compare 2017 WC benefits w/those from 20 years ago. Over that period, WC benefits/$100 of covered wages fell 31.6% from $1.17 in 1997 to 80¢ in 2017. Nationwide WC benefit payments in 2017 totaled $62 billion, but over the past 5 years have trended down, with total paid medical down 20% from 2013 through 2017, and indemnity down 17%. Employee coverage increased fairly steadily over the 20 year span, but employer costs/$100 of covered wages fell 17% from just over $1.50 in 1997 to $1.25 in 2017. Calif data show robust growth in the state’s economy, as covered employment grew 4.5% from 16.05 million jobs in 2015 to 16.78 million jobs in 2017, outpacing nationwide employment growth of 3.2%. Covered wages also rose 11.6% from $986 billion in 2015 to $1.1 trillion in 2017, ahead of the 8% growth in covered wages nationwide. WC benefits paid by insured and S-I employers in Calif totaled $12.1 billion in 2017, more than 1 out of 5 dollars paid by non-federal WC programs that year. Medical benefits comprised $6.5 billion (53.6%) of Calif benefits and 21.9% of all medical benefits paid by non-federal WC programs in the U.S. in 2017. Even with the growth in jobs and payroll, total paid benefits in Calif WC increased only 1.0% from 2015 to 2017, and only 0.3% from 2013 to 2017. With growth in Calif covered wages far outpacing growth in medical and indemnity payments over that 5-year span, medical benefits paid/$100 of covered wages fell 27.5% from 81¢ in 2013 to 59¢ in 2017 and indemnity payments/$100 of covered wages fell from 59¢ to 51¢. Likewise, Calif employer costs (premiums & deductibles paid by insured employers + benefit payments and admin costs of S-I employers)/$100 of covered wages fell by 7.1% from 2013 to 2017, but that was less than the 10% decline nationwide. Executive Briefing (11/27/19) (members only) The Impact of Declining Opioid Use on Lost-Time Claim Development and Outcomes in California Workers’ Compensation. A 30-page CWCI report detailing CWCI research that quantifies the declining prevalence of opioids in California workers’ compensation lost-time claims over the past decade; measures the impact on average benefit payments and average days away from work; and in light of the opioid trends, estimates projected costs for 2010-2017 claims at 10 years of development. CWCI Report to the Industry (11/12/19) (public) Bulletin (11/12/19) (members only) Executive Briefing (11/27/19) (members only) News Release (11/12/19) (public) Post-Reform Medical Service Approval Rates in California Workers’ Comp. CWCI research that measures medical service approval, modification, and denial rates overall and by service category in the first 10 months following the 2018 implementation of changes that altered the UR process adopted over a decade ago and the IMR process that took effect in 2013. Those changes include adoption of a Rx drug formulary based on evidence-based guidelines (authorized by AB 1124), which exempts certain drugs from prospective UR; as well as changes mandated by SB 1160 that allow UR exemptions for most medical services provided within 30 days of injury, basic services performed by MPN providers that meet evidence-based guidelines, and emergency services. Results show that overall, 94.1% of medical services performed or requested for California injured workers were either approved (92.5%) or approved with modifications (1.6%), though results varied significantly by medical service category. CWCI Research Update (10/29/19) (public) Bulletin (10/29/19) (members only) Executive Briefing (10/30/19) (members only) News Release (10/29/19) (public)
Statutory/Regulatory Mistake in Dept. of Labor Data Table Causes SAWW/TD Rate Confusion. An online update to the U.S. Dept. of Labor (DOL) Unemployment Insurance (UI) Database incorrectly revised California’s State Average Weekly Wage (SAWW) for the first quarter of 2019. The SAWW is used to calculate increases in TD rates and other benefits, so the DWC was preparing to announce a second revision to the TD rates for injuries that take effect on or after 1/1/20. In checking the UI database, CWCI found that the SAWW for the Q1 2019, which had been listed as $1,325 in the UI database when DWC announced the 2020 TD rates in September, was now shown as $1,360, which would require a significant bump in TD rates, COLAs and other benefits. Closer inspection, however, revealed that the total wage data in the UI database (used in the SAWW calculation) had gone down since September, which seemed odd, and the revision date of the table showing the SAWW at $1,360 was May 22 – four months before the table that DWC used to determine the SAWW increase in September. Because of these discrepancies, we suspected the “updated” SAWW of $1,360 was incorrect. CWCI alerted the DWC and the AD agreed to hold off on announcing another increase to the 2020 TD rates until the issues were sorted out. The Institute then calculated the 2019 SAWW using the formula and the wage and employment data that DOL has posted on the UI database and found that the SAWW for Q1 2019 was, in fact, $1,325, as DOL originally announced in September, and not $1,360. This was confirmed in an email to CWCI from Thomas Stengle of DOL who promised to review and correct the posted information. Advised of this, the DWC suspended its plan to issue a Newsline announcing an additional increase in benefits tied to the SAWW for 2020. CWCI members were advised that if anyone has been using the UI database to verify changes in benefits that take effect 1/1/20, that they should double check to make sure they used the correct SAWW figure, which for the first quarter of 2019 should be $1,325. Executive Memo (12/20/19) (members only) Another Minimum Wage Hike on 1/1/20. Two years ago, Gov. Brown signed SB 3 (Leno), mandating a series of increases in the Calif minimum wage that will push the state’s minimum up from the $10/hr level that was in effect in 2017 to $15/hr for “large” employers (those w/26 or more employees) by 2022, and to $15/hr for all employers in 2023. Thereafter, the minimum will be adjusted annually under a specified formula. The increase scheduled for 1/1/20 will bump the minimum for “small employers” from the current $11/hr rate to $12/hr, while the minimum for large employers will rise from $12/hr to $13/hr, which in turn will boost salaried employees’ wages because to qualify as “exempt” employees in Calif they must meet the salary-basis test — which is 2 times the monthly minimum wage — as well as the duties test that is not impacted by the wage hike. Although SB 3 allowed the Governor to suspend scheduled minimum wage increases if he determines it is necessary, it 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 in the state, as these employers will have a tougher time absorbing a sharp increase in their labor costs. In the meantime, many local municipalities in the state, esp. those in urban areas, have enacted their own minimum wages that exceed the state’s minimum. For example, on 7/1/20, the minimum wage in L.A. County will increase to $14.25/hr for small employers and $15/hr for large employers; while in San Francisco the minimum is already $15.59/hr and was indexed to inflation on 7/1/19. Executive Briefing (12/16/19) (members only) 2020 User Funding Assessment Rates. The Department of Industrial Relations mailed memos to WC insurers and self-insured employers announcing the 2020 assessment and surcharge rates for user funding (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, which CWCI provided to members, subscribers and to the public. Initial payments from insurers and self-insured employers are due 1/1/20, so the Institute provided the rates to members, subscribers and the trade press. Bulletin (12/2/19) (members only) Executive Memo (12/2/19) (members only) News Release (12/2/19) (public) Ban on No-Rehire Provisions. AB 749, signed by Gov. Newsom in October, prohibits agreements that settle employment disputes from containing provisions that prevent or restrict a settling party who is “an aggrieved person” from seeking future employment with the employer against whom they filed a claim, or any parent company, subsidiary, division, affiliate, or contractor of the employer. AB 749, which takes effect 1/1/20, does not specifically reference WC, but given that it includes any matter involving an “aggrieved person” who files a claim against their employer “before an administrative agency,” its ban on “no rehire” provisions has implications for WC C&R agreements which often include a resignation letter to protect the employer from having the claimant pocket funds for future medical then return to work and file a claim for a new injury to the same body part. Until now, these letters often included an agreement not to seek rehire in order to preclude the injured worker from coming back to work for the employer a few months after being let go and repeating the process in order to receive a second round of future medical. AB 749 does allow parties to end a current employment relationship, but its ban on “no rehire” provisions in settlement agreements means that language should no longer be included in C&Rs as any agreement signed after 1/1/20 that includes such a provision will be considered void as a matter of law and public policy. Executive Briefing (11/27/19) (members only) Heads up on Benefit Notices for 2020. WC claims administrators and fulfillment houses that are compiling claims kits for 2020 renewals may continue to use current versions of the new hire pamphlets (CCR §9880); WC posting notices (CCR §§9881 – 9881.1); DWC-1 claim form/Notice of Potential Eligibility (CCR §10139). None of the statutory changes enacted this year require revisions to the posting notices, new hire pamphlets or claim forms, which were last changed when benefit notice regs were updated in 2015. CWCI has state-approved versions of these materials in stock, so anyone who needs to reorder may obtain them from the Institute’s online store or by calling the Institute. Executive Briefing (11/27/19) (members only) Claim Audit Standards for 2020. DWC announced that 2020 audit standards, based on 2016-18 audit results, will be tighter than in 2019. The 2020 PAR standard will be 1.32020; the full compliance audit (FCA) standard will be 1.60183. Thus audited adjusting locations w/PAR ratings of 1.32020 or lower will pay unpaid compensation, but no penalties; those w/PAR ratings of 1.32021 or higher will face an FCA + an audit of an additional indemnity claim sample. FCA subjects w/a rating of 1.60183 or less will pay unpaid compensation + penalties for violations involving unpaid & late paid compensation. If their FCA rating is 1.60184 or higher, an add’l sample of denied claims & the expanded sample of indemnity claims will be audited. Penalties will be assessed for all violations per 8CCR §10111.2. Executive Memo (11/21/19) (members only) Executive Briefing (11/27/19) (members only) Member Reminder: Annual Report of Inventory Due 4/1/19. The state’s electronic data reporting regulations require workers’ compensation claims administrators who do not have a current waiver to file their 2020 Annual Report of Inventory (ARI) for Claims Reported During Calendar Year 2019 by Wednesday, April 1, 2020. Executive Memo (11/18/19) (members only) CWCI’s Summary of 2019 Enacted Legislation. Governor Newsom signed 870 bills passed by state lawmakers in 2019. The Institute’s annual summary of enacted legislation spotlights 20 of those bills (many of which will take effect 1/1/20) that may be of interest or have implications for workers’ compensation community. Bulletin (10/21/19) (members only)
Legal Colamonico v. Secure Transportation. In an en banc ruling, the Appeals Board held that a lien claimant has the initial burden to prove all elements necessary to establish entitlement to payment for a med-legal service, and only after having done so may they proceed to address the reasonable value of those services pursuant to the framework under LC §4622. Defendant’s failure to issue an Explanation of Review in response to a med-legal billing does not constitute a waiver of objections under LC §§4620 and 4621. Significant Decision Summary (11/15/19) (members only) 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. The 2nd DCA granted the Request for Publication in October. Letter Requesting for Publication (9/27/19) (members only) Executive Briefing (10/30/19) (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. On 9/16, the DCA granted the Request for Publication. Letter Requesting for Publication (9/16/19) (members only) Executive Briefing (11/27/19) (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 Medical Mileage Rate Drops to 57.5 Cents Per Mile in 2020. The IRS issued a New Year’s Eve news release announcing that the standard mileage rate for business miles will drop to 57.5 cents per mile as of 1/1/20, down a half cent from the 2019 rate of 58.0 cents per mile. As a result, the California workers’ comp medical mileage rate will also drop to 57.5 cents per mile for travel on or after January 1, 2020. Bulletin (12/31/19) (members only) Executive Memo (12/31/19) (members only) News Release (12/31/19) (public) ACOEM Warns Congress About the Impact of Legalized Marijuana on Workplace Safety. The ACOEM Task Force on Marijuana and sent every member of Congress a 2-page memo 2 weeks ago to express its concern that legalization of marijuana has huge implications for public and workplace health & safety, and to urge federal lawmakers to proceed cautiously before enacting any measures to legalize marijuana at the federal level. ACOEM president Stephen Frangos, MD noted, “While there is much not known about marijuana, what is known is that marijuana can cause impairment which will interfere with safe and acceptable performance in the workplace.” Dr. Frangos advised that “this is particularly concerning for those individuals working in safety-sensitive positions where impairment can affect the health and safety of other workers, customers, the general public, or others.” Underscoring the liability for employers, Frangos reminded federal lawmakers that under fed-OSHA’s general duty clause, employers have a legal responsibility to protect workers from occupational illnesses or injuries, and an ethical responsibility to prevent impaired workers from exposing themselves, their co-workers, and/or the general public to risk of harm. In conclusion, ACOEM noted that regardless of marijuana’s legal status in a jurisdiction, the organization strongly supports legislative proposals that allow employers to prohibit those in safety-sensitive positions from working while under the influence of marijuana. Executive Briefing (12/16/19) (members only) CWCI’s 2020 Annual Meeting. Save the date: Our 56th Annual Mtg is scheduled for Tues., 3/17/20 at the Oakland Marriott. The theme for the mtg is “The Future Ain’t What It Used to Be.” More details on topics, speakers and formal invitations will be issued soon, but in the meantime mark your calendars. Executive Briefing (11/27/19) (members only) Minutes from the Legal Committee Meeting. The Nov. 14 meeting was held at the CWCI office. The agenda included an update on CWCI amicus participation (Mastache, Justice, Morales, Wilson v. CalFire I & II); a status report on recent case law approved for amicus participation (Kloeckner v. WCAB, Sturdevant Farms v. WCAB); case law updates on Vazquez v. Jan-Pro, Pa’u v. Dept. of Forestry, and Skelton. Mr. Allweiss reported that CalChamber has no new amicus activity. Committee members received a status reports on regulatory activity in regard to the MTUS and the Formulary, SIU, CCPA, copy service and M-L regs. Ms. Langille gave an update on legislation enacted in 2019. The review of the litigation environment and general discussion noted the joint legislative audits in regard to workers’ comp: medical treatment delivery; the QME appointment process; and the ability of state agencies to manage reserves. The committee also reviewed recent trends in the volume of case filings and Petitions for Reconsideration at the WCAB, and noted regional differences in those trends. Ms. Langille referred members to a recent article on Kite that may prove useful, and closed the meeting by providing an update on recent changes at the DWC and WCAB personnel changes. Meeting Minutes (11/14/19) (members only) Minutes from the Claims and Medical Care Committees Meeting. The meeting was held October 17 at the OCC Conference Center. Discussions included a review of regulatory activity in regard to the regs in formal review (SIU, WCAB Rules of Practice & Procedure, CCPA) and draft regs out for informal feedback (Copy Service Fee Schedule, Med-Legal Fee Schedule). Members were given updates on research (Inpatient Hospital Trends, IMR through June 2019, and the 2020 research agenda). Gideon Baum, Principal Consultant for the Senate Labor and Industrial Relations Committee provided a guest presentation on the current political environment in Sacramento and the prospects for workers’ comp legislation in 2020. CWCI’s general counsel reported on recent amicus activity (Mastache, Morales, Pa’u,), a case law update (Skelton) and a review of enacted and vetoed legislation from the 2019 session. Meeting Minutes (10/17/19) (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. |