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CWCI Study Tracks Post-Reform Shifts in California Workers' Comp Medical Service Trends

Oakland, CA – The average number of visits for Evaluation and Management (E&M) and Physical Medicine services in the California workers’ compensation system has continued to edge down since the enactment of SB 863 in 2012, but with the adoption of the RBRVS fee schedule, evidence-based medicine standards, mandatory Utilization Review and Independent Medical Review, and other reforms, E&M and Physical Medicine payments have increased from 33 percent to 47 percent of the total medical reimbursements in the system. 

The finding is one of the results of a new California Workers’ Compensation Institute (CWCI) study that  measures changes in the volume and reimbursement of different types of medical services provided to injured workers in the wake of incremental reforms to the California workers’ compensation system enacted over the past 20 years.  The study, based on indemnity claims data from CWCI’s IRIS database, tracks medical service utilization (percent of claims with a given service and the number of visits per claim) and total amounts paid per claim for medical services delivered within the first 24 months of treatment, with results broken out by medical service category (e.g., physical medicine, major surgery, mental health, pharmaceuticals, and clinical lab services which consist primarily of drug testing).  California has enacted multiple legislative and regulatory reforms affecting workers’ comp medical benefit delivery over the past two decades, so the study examines and compares data from claims with initial treatment dates within an 18-year span (2000 through 2017).  Because the study focuses on medical services in the first 24 months of treatment, there were years in which the results were influenced by reforms from multiple periods, so the report highlights changes in medical treatment utilization and payments for claims in which the initial service was rendered during  three distinct non-transitional periods: 2000 to 2001 (Pre-2004 reforms); 2004 to 2010 (Post-SB 228 and SB 899); and 2013 to 2017 (Post-SB 863, AB 1244, and AB 1124).

The study also provides data on regional variations in medical services over time, including changes in the average number of E&M services and physical medicine visits, and in the proportion of claims that involved physical medicine.  Focusing on the most recent post-reform period, the authors also analyzed four claim characteristics that impact medical service utilization:  opioid use; major surgery; the injured worker’s age; and the industry in which they were employed at the time of injury. Here, for example, the study found that the average age of a California injured worker has increased from 38.9 years in 2000 to 43.9 years in 2017, a notable finding given that the likelihood of having major surgery within the first 24 months of treatment increases with age, and the study shows workers over 40 also have significantly higher E&M and Physical Medicine utilization rates.  

The full study has been released in a CWCI Research Note, “Changes in Medical Treatment Trends After 20 Years of Incremental Workers’ Compensation Reform,” which includes background on the reforms enacted over the past two decades, plus exhibits and analyses summarizing the results.  Appendices to the report include tables showing the changes in the percentage of indemnity claims that involved services from 12 different medical service categories at 24 months; the mean, median and 95^th percentile service counts for the service categories; and the mean, median, and 95^th percentile payment amounts for those services.  CWCI members and subscribers can access the report under the Research tab at www.cwci.org; others can purchase a copy at www.cwci.org/store.html.