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Study examines the efficacy of California's work comp reforms

In workers' compensation defense news, a recently released study has finally shed some light on the ongoing debate as to whether the historic work comp reforms enacted from 2002-2004 have been effective in cutting costs.

According to the California Workers' Compensation Institute (CWCI), while the cost of medical expenditures associated with state work comp claims declined dramatically after the reforms initially became law, the effect was only temporary.

In fact, the CWCI study shows that the costs of state work comp claims began to slowly increase year after year, and are now back to being well above their pre-reform levels.

The CWCI arrived at this conclusion by carefully examining data from over 500,000 work comp indemnity claims ranging from January 2002 to March 2010. Specifically, the examiners looked at the policy, claim and medical services provided and, using this information, determined the average amount of medical payments at various points in time.

Researchers discovered that average first-year medical payments on indemnity claims initially dropped 14.1 percent from a high of $6,381 in 2002 to a low of $5,480 in 2005. However, the average first-year medical payments on indemnity claims subsequently increased 63.4 percent, reaching a new high of $8,956 in 2009.

The CWCI researchers also revealed the following trends:

  • Since the immediate post-reform lows, the average amount paid per work comp claim for medical treatment has risen 48.9 percent
  • Since the immediate post-reform lows, the average amount paid per work comp claim for drugs and durable medical equipment has risen 106.5 percent
  • Since the immediate post-reform lows, the average amount paid per work comp claim for medical management/cost containment has risen 142.6 percent

Stay tuned for further developments in this story and other areas of workers' compensation defense law ...

This post was provided for informational purposes only and is not to be construed as legal advice.

Related Resources:

Study: Calif. Workers' comp reforms eroded (Insurance Journal)

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