California Adopts Workers' Comp Reform Measure
In one of his last official acts, former California Gov. Gray Davis signed a workers’ compensation package intended to save employers more than $4 billion.  California Department of Insurance Commissioner John Garamendi worked with the governor in crafting the reform package, which provides relief to employers by decreasing litigation, containing medical costs, curbing fraud and supporting return-to-work programs.

In response, the California Workers' Compensation Insurance Rating Bureau (WCIRB)  recommended a 2.9% decrease in pure premiums — reversing a 12% rate increase the bureau recommended before the legislation was signed.  Commissioner Garamendi has promised to push for even more sizeable rate reductions.

The legislation:

• Implements HMO-like utilization management tools
• Prohibits doctors from referring patients to outpatient surgery clinics in which the doctors have financial interests
• Sets an outpatient surgery facility fee schedule based on the Medicare fee plus 20%
• Sets a pharmaceutical fee schedule based on 100% of the Medi-Cal fee and requires greater use of generic drugs
• Increases from 10%-15% the penalty for insurance companies that make late payments to health-care providers
• Reduces fraud through increased penalties, information sharing among state programs, consistent medical billing and fraud referral protocols
• Expands alternative workers’ compensation dispute resolution processes to other unionized industries besides construction
• Requires listing insurance companies and their rates on the Internet
• Caps the number of chiropractic and physical therapist visits at 24 for the life of each claim, unless authorized by the insurance carrier

The late September bill signing came one week before Davis was recalled from office. [ return to top ]