INDUSTRY JOURNAL PREDICTS $300 MILLION INCREASE IN WORKERS' COMP COSTS

$300 million -- that's what the Insurance Journal says will be the increased costs if SB 863 passes into law. That was the IJ headline on 8/27/12.

But in an article that was originally published in Labor's Edge and that got reprinted on 8/28/12 in California Progress Report,  Author Angie Wei, Legislative Director of the California Labor Federation, concluded that "there is no other path to getting $740 million back in benefits to injured workers. The Legislature must pass SB 863." But Angie isn't the only person who has fought for increased benefits to injured workers. Stan, who replied to her CPR piece, disagreed vehemently. I also disagree. Here's why:

1) The proposed legislation cuts costs by $1.4 billion, but only about 50% of that goes into Permanent Disability (PD). Who gets the rest?

2) The proposed legislation actually cuts several benefits that injured workers currently receive. For instance, we all know that Utilization Review (UR) as it's currently conducted is unfair to injured workers; however, UR decisions can be challenged under the current system. Under SB 863 the current UR system will be replaced by an Independent Medical Review (IMR) system which will be even more protected from challenges by injured workers who feel they were wrongly treated. This change will save $90 million in costs, costs that previously benefitted injured workers.

3) Outpatient surgery centers will have their reimbursement rate reduced to 80% of the hospital rate even when their services are superior. That'll save another $110 million. How does that benefit injured workers? The point is that the change to an IMR system when combined with the reduced reimbursement to outpatient surgery centers will cut costs by $200 million taken right out of the hearts and souls -- and bones -- of injured workers.

4) SB 863 will replace the antiquated but already low paying Official Medical Fee Schedule with an even lower paying Medicare RBRVS schedule which will apply mostly to specialists. Reducing access to specialty care does not help injured workers regain their ability to compete in the open market place.

5) SB 863 will eliminate sleep impairments (dyssomnia) caused by injuries that have caused chronic pain. The claim is that this change will save $40 million in benefits that won't be paid to injured workers.

6) SB 863 will eliminate sexual dysfunction even when caused by spinal injuries, a change that reportedly might save another $10 million. The savings for this category is lower because many injured workers are too embarrassed to assert this claim. These changes alone amount to $250 million in savings that'll be ripped from the guts of injured workers.  There are also other reductions.

7) LatinoComp stated the following in its own statement on SB 863: "All Injury Claims by State Employees Will Be Removed From The Workers Compensation System." This change amounts to a slap in the face with a simultaneous kick in the butt to injured workers.  The California Labor Federation and affiliated unions such as the American Federation of State, County and Municipal Employees (AFSCME) should be in staunch opposition to this plank.

So what's behind this  bill that Angie Wei reports "is not perfect?" We agree only that "the Schwarzenegger 'reform' has failed both employers and workers." Her piece says that one of the faults of SB 899 is that "medical treatment is delayed." That's true. But SB 863 makes sure that medical treatment will be delayed even more and more often denied than currently. Angie Wei's real beef appears to be "opposition from vendors (italics added) who profit from the status quo."  Vendors? Does that remark include the lawyers who represent injured workers and the doctors who care for them? If it does, we need to renegotiate. Come to think of it, comprehensive negotiations  including small employers and other stakeholders have been absent from the negotiating table from the beginning.  The answer is a special session after this legislative year. The special session should include all stakeholders, not just a selected few.