California’s worker’s compensation system has a long history of inefficiency, high-cost and high-conflict – dynamics that sent the system into crisis and harmed injured workers, private businesses and public agencies. Frequently, California is ranked as the most expensive in the nation for workers’ comp costs.
Through a series of legislative reforms during the past decade, California has stabilized the system, reduced its highest-in-nation costs, increased worker benefits, aligned medical treatment with evidence-based guidelines, reduced fraud, and sped up claim resolution.
By reducing “frictional” costs and stemming abuses, the reforms redirected system dollars to enhanced worker benefits.
It has been called a “golden era” and the most sustained period of reform in California’s history.
REFORM RESULTS
- Total reform savings are estimated at more than $2 billion annually.
- Average insurance rates have dropped by 40% and are the lowest in 50 years.
- Disability benefits have increased by $800 million.
- Medical benefits are being paid faster. The percentage of medical benefits paid at three years has increased 38% in 2012 to 47% in 2020.
- Claims are closing more quickly. Open claims that close within one year have increased from 26% to 36% in 2020.
- The frequency of claims per 1,000 workers has been largely stable for the past decade. Compared to 2003, the claim rate is down nearly 40%.
- Currently, 86% of workers’ compensation claims are accepted and accepted quickly (<30 days). Workers are guaranteed medical treatment while claims are reviewed, even if the claim is ultimately denied.
- Medical treatment requests are initially approved 92% of the time. Appeals are handled quickly through an independent review system to ensure the medical treatment is evidence-based.
- After years of significant annual inflation, medical costs per claim have been essentially flat since 2014, due to IMR, fee schedules, lien reforms and anti-fraud measures.
- More of the medical spending is going to front-line doctors who perform evaluation and management and physical medicine (increased from 33% to 47%).
- Pharmaceutical costs per claim are down 85% since 2012. Opioid use is down 94%.
- Hospitalizations since 2010 are down by 36%, led by the 53% decline in spinal surgeries, a significant area of criminal fraud and abuse.
- Lien filings are down by 70%.
More than 450 providers suspended from system for fraudulent activity.
