Original article can be found on Work Comp Wire.
California’s experience with workers’ compensation costs and Utilization Review had been a long road, one marked by legislative attempts to control costs, and legal challenges to the evolving system.
After the early years of stability, the Golden State’s costs associated with workers’ compensation began to soar in the mid-1980s, and tripled in the decade between 1993 and 2003. What had cost, on average, $8,876 climbed to $27,197. Utilization Review (UR) had been introduced previously, but costs kept rising and legal challenges kept mounting.
Finally, in 2004, Gov. Arnold Schwarzenegger vowed to reform the state’s workers’ compensation system as part of a larger effort to make California more business-friendly.
Several changes took effect that improved the system:
- UR became a mandatory process, rather than a voluntary initiative.
- The standard for decision-making was changed from one based on the treating physician’s presumption of correctness to evidence-based, clinical guidelines.
- The UR process must be completed on a tighter schedule – within 5 days – or fines can be levied.
The new guidelines, along with caps on payouts for physical therapy and the application of evidence when reviewing treatment, had a dramatic effect on costs. But still, those costs are rising again. There has been significant improvement to the system in the past 30 years, but some pain points remain:
- Although UR is mandatory, the procedure used is not consistent
- The adoption of evidence-based guidelines was a key development in the process, and continue to be refined as new treatments come under review.
- Because providers can request approval for any treatment, and every request must be tracked against the UR process, costs are still high and non-medical personnel are still making medical decisions.
California still must grapple with issues of growing costs and high approval rates, but its experience with UR is still a valuable guide to processes that other states can study and implement.
For more thinking on the California experience, please see my article on workcompwire.com