Monday, September 28, 2009, 08:32 PM - Understanding the CA WC systemOne large problem in California workers' comp has been the inability of the WCIRB to accurately assess workers' comp cost trends.
The WCIRB (Workers Compensation Insurance Rating Bureau) collects data from insurers and makes recommendations on rates to California's Insurance Commissioner who, in turn, makes a recommendation to the industry. With the industry deregulated, none of this is binding on individual insurance carriers. But it has political and symbolic effect.
Concerned over the WCIRB's less than stellar track record over the past decade, current Insurance Commissioner Poizner made a set of recommendations to the WCIRB in 2008.
In 2007, Poizner charged that from 1995 to 2000, WCIRB forecasts underestimated costs by 20 to 60%, while post 2004 reform forecasts by the WCIRB overestimated costs by by 30 to 50%.
Among the recommendations was for the WCIRB to change the way it assesses medical costs as part of its "Uniform Statistical Reporting Plan".
The WCIRB has now submitted a plan to revise the way it assesses costs.
Utilization review and medical bill review are to be handled differently.
The cost of medical cost containment programs will be moved from the medical loss column to the allocated loss adjustment expense category.
This will, over time, provide more transparency as to what the system costs really are.
Utilization review, nurse case management, and bill review and some other loss control schemes have become costly line items in and of themselves (and profit centers for many of the companies). Medical costs have risen, but cost containment expenses have also reisen dramatically.
As premium dollar volume has declined in California workers' comp, allocated and unallocated medical costs have loomed larger in relation to benefits actually paid out to disabled workers.
I have to credit Insurance Commissioner Poizner on this one. His recommendation to the WCIRB has come to fruition. Over the long run we may have a better system as a result.
To see the recommended changes in the WCIRB's reporting, you can click here (it's part of their amended rate filing):
Tuesday, August 18, 2009, 10:02 PM - Understanding the CA WC systemIf you're in the comp community, please complete the EAMS opinion survey.
EAMS was initially unpopular with most folks in the comp community with whom I spoke. Since the 2008 rollout, many of us have become more familiar with the system, as it's become a more routine part of our professional lives.
How do we perceive it now? This is your chance to make yourself heard.
Here's a link to the EAMS site, which contains a link to the "EAMS implementation and training tools survey":
On another note, the WCAB has denied reconsideration of its en banc decision in Lawrence Weiner vs Ralph's Company. The decision is here:
http://www.dir.ca.gov/wcab/EnBancdecisi ... 347040.pdf
The WCAB determined that Weiner had no vested right to voc rehab before the 1/1/09 expiration of the voc rehab benefit.
In case you missed it, here's a link to my blog piece on the initial Weiner en banc decision, titled "Sayonara":
http://workerscompzone.com/index.php?en ... 611-215416
Stay tuned. I'll be continuing to reflect on the national healthcare debate, which has important overtones for workers comp.
Tuesday, August 4, 2009, 10:52 PM - Understanding the CA WC systemWorkers who lose their jobs due to a disability share something in common with workers who are laid off. Their long term earnings are often severely diminished.
Much ado has been made about wage loss studies in the California workers' comp system. The RAND Corporation performed a series of studies which looked a wage losses several years after an injury. Those studies also focused on the proportionality of wage losses for injuries to different body parts. Debate over the meaning and proper use of those studies is still at the heart of disputes over revision of California's permanent disability rating system.
Disabled workers who must change jobs are in a similar situation to workers who are laid off. Here is a link to a April 2009 significant study (co authored by Till von Wachter of Columbia University, Jae Song of the Social Security Administration, and Joyce Manchester of the Congressional Budget Office); the study details the long term earnings losses due to mass layoffs during the 1982 recession:
http://www.columbia.edu/~vw2112/papers/ ... s_1982.pdf
The study concludes that 1980s layoffs led to "large and persistent earnings losses that last over 20 years". Earnings losses were said to be 21-27% even after 20 years.
This seems to confirm what most folks know anecdotally and intuitively.
After a layoff (or a disabling injury), it's often hard to get an equivalent job. Many workers must start again at a lower level, at a much lower wage. And in the new job they are more likely to be laid off or displaced, since they lack seniority with the new employer.
CHWSC, RAND and the DWC should take a look at some of this data. Although the study was of layoffs, not injured workers, I suspect the study can tell us a great deal. At a minimum, California's comp system deserves a look at a longer data stream than RAND previously considered. Long term wage losses are not adequately compensated in California's comp system.
Monday, April 27, 2009, 10:35 PM - Understanding the CA WC systemTuesday (tomorrow) April 28 the Department of Insurance holds a hearing on workers' comp rates.
Injured workers and labor activists are welcome to attend the meeting.
The hearing, slated to start at 10 am in the 22nd Floor Department of Insurance hearing room at 45 Fremont St. in San Francisco, is in response to the WCIRB's recommendation of a large price increase for comp insurance. The recommended increase is now a whopping 23.7%.
With his gubernatorial campaign sputtering (low in the early polls and lots of campaign staff turnover), the comp pricing issue is a high profile assignment for Insurance Commissioner Steve Poizner. Comp costs have been an ongoing concern in the business community, particularly in a tight economy. Politically the issue is a hot potato; how that is handled could prove to be an opportunity or a liability for Poizner. You can see my recent blog on that, "Inside Poizner's Head") by clicking here:
http://workerscompzone.com/index.php?en ... 318-224325
The Insurance Commissioner has no ultimate control over comp pricing.
He can accept the WCIRB recommendations or reject them and propose other price targets, but these are not mandatory. But the WCIRB/Department of Insurance rate filing process has great significance politically.
Poizner has criticized WCIRB forecasting in the past. And he's been willing to reject WCIRB recommendations.
In any event, it's pretty much all show. The pure premium rate that is set by Poizner is not binding on carriers Some will price their comp business below the pure premium rate and some may price it higher.
But the PR symbolism is important.
If Poizner accepts the large rate increase recommended by the WCIRB, the signal is that all is not well in comp. Injured workers' and their advocates know that, but employers and the public have been led to believe that the 2003/2004 reforms "fixed" the system.
Given the size of the WCIRB recommended rate increase, the press and the business community will demand to know what has occurred. Were the reforms oversold? Did the reforms result in artificial savings? Should employers accept that higher comp costs are simply inevitable? Is it possible to inocculate the comp system against medical inflation which is ravaging our healthcare system generally?
I don't expect any mind-bending epiphany tomorrow on the issue of why medical costs appear to be rising. That's complicated and probably demands more study data than the WCIRB has developed. Nor do I expect anything much on employer profits and broker fees. Poizner has shown no willingness to take on the broker community or carrier profits.
Recent past hearings have been notable for concern over the rising portion of comp premiums spent on loss adjustment expenses, i.e. insurer overhead expenses.
But it's clear that Poizner's department can blame permanent disability for only a small portion of any projected increase in costs. Even if the Almaraz/Guzman decisions went into effect, the WCIRB's figures project these to be responsible for only around 1/4 of the recommended premium increase.
Wednesday, April 1, 2009, 08:05 PM - Understanding the CA WC system"Meatball justice". A "MASH unit". A "subbasement of the legal world".
"Forget about personal. They don't think of you as a person. They think of you as a file with a dollar sign on it. They don't care if you can't put food on the table or put braces on your daughter. You're thinking of this logically. I stopped thinking that way a long time ago. This is comp."
Sounds like a day at the Los Angeles WCAB or one of many other California Workers' Compensation Appeals Board district offices?
Could be. But these quotes are from this week's New York Times 3-part series on the state of New York's workers' comp system (links to the articles are at the bottom of this blog post)
Written by N.R. Kleinfield and Steven Greenhouse, the series highlights a workers' comp system in great disarray.
Delays are said to be rampant. Fines against insurers for infractions are small, and many insurers ignore fines for years. Doctors shy away from treating comp cases. "Trials" where the worker barely gets a chance to speak. Hack doctors who tailor their opinions to please the hand that feeds them. Workers whose lives are upended by the economic and social fallout from their injuries. Claims of fraud which are hard to quantify.
Recognize any of these as themes in the California workers' comp system?
But as bad as aspects of the system are here in California, the series paints a picture of an even more decrepit New York system. At least here in California we have what is-for the most part- a very able and concientious applicant attorney bar that seeks to advance the interests of disabled workers.
Read the series and compare the systems for yourself.
For years New York has had a system that was among the most expensive for business and yet stingiest for workers. Some changes were enacted under Elliot Spitzer before his call-girl debacle. But New York has a long way to go.
Thanks to the Times for doing such an in-depth investigation. Unfortunately, with newsroom staffs shrinking and the survival of many newspapers in doubt, this is the kind of piece that we may be seeing less and less of.
As a blogger, I strive to be fair and accurate (readers are invited to kick my butt if I get it wrong), but the blogosphere will never be able to do the kind of sustained muckraking that is evident in these articles:
"For Injured Workers, A Costly Legal Swamp"
http://www.nytimes.com/2009/03/31/nyreg ... &scp=4
"Exams of Injured Workers Fuel Mutual Mistrust"
http://www.nytimes.com/2009/04/01/nyreg ... amp;st=cse
"System to resolve Workplace Injury Leaves Ill Will On All Sides"
http://www.nytimes.com/2009/04/02/nyreg ... p.html?hpw
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