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California WC Public Self-Insured Med-Only Claims Drop, Paid & Incurred Indemnity Increase

Oakland, CA - Initial data on fiscal year (FY) 2019/2020 public self-insured claims experience in the California workers’ compensation system show claim volume fell 6.4% compared to the prior year, but medical-only claims accounted for nearly all of that decline.  Meanwhile, average indemnity payments per claim rose 16.9%, more than offsetting a 3.7% decline in average medical payments, so even though there were fewer claims, total paid benefits increased for the sixth year in a row, edging up by $2.2 million to a record $414.9 million for the fiscal year ending June 30. 

     The annual summary of public self-insured data issued on December 6 by the Office of Self-Insurance Plans (OSIP) offers the first look at the workers' comp experience of cities, counties, and other public self-insured entities for the 12 months ending June 30 of this year, including the first 6 months of the pandemic.  The summary includes the number of medical-only and indemnity claims filed, as well as total payments and incurred losses on those claims.  Compared to the initial summary from FY 2018/2019, the new report shows California's public self-insured work force declined by 1 percent to 2.09 million workers last year, with wages and salaries for those workers totaling $137.2 billion.  The public self-insured employers reported 108,080 claims last year, 7,437 fewer than in the FY 2018/2019 initial report, which was by far the biggest decline in the past decade.

     The breakdown of the $414.9 million in aggregate payments on the FY 2019/2020 public self-insured claims at first report shows indemnity payments accounted for $244.3 million, $21.0 million (9.4%) more than in the prior year, while medical payments accounted for $170.6 million, $18.8 million (9.9%) less than in FY 2018/2019.  That translates to an average benefit payment of $3,838 for the FY 2019/2020 claims, up 7.4% from the comparable figure from FY 2018/2019.  The breakdown of the average payment shows public self-insureds averaged $2,260 in indemnity payments on FY 2019/20 claims, up 16.9% from the first report for the prior year, at least some of which may be tied to longer temporary disability durations due to treatment delays and reduced levels of medical care during the pandemic, while average medical payments fell to $1,578, down 3.7% from FY 2018/2019.

     The first report data on incurred losses (paid amounts plus reserves for future payments) show a somewhat different pattern for public self-insured claim costs.  Aggregate incurred losses on the FY 2019/2020 claims totaled $1.33 billion, 2.8% less than the first report total from the prior year.  The 6.4% decline in public self-insured claim volume in the initial report accounted for much of the one-year decline in total incurred, while a 1.8% decline in average incurred medical also contributed a small amount, though it did not offset the 11.0% increase in average incurred indemnity, which led to a 3.9% increase in the average incurred loss per claim, which hit a record $12,309. 

     OSIP also compiles private self-insured claims data, which is reported on a calendar year basis rather than on a fiscal year basis, so the private self-insured data, which was posted in June, now lags the private self-insured data by 6 months.  The next report on private self-insured experience should be released next summer.  In the meantime, CWCI has issued a Bulletin that includes a table and additional details on the most recent public self-insurer paid and incurred losses, including comparative results from the past decade.  Institute members and subscribers may access the bulletin by logging in at www.cwci.org.  OSIP's annual summaries for private and public self-insured employers from the past dozen years are posted online at http://www.dir.ca.gov/SIP/StatewideTotals.html

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