Commission on Health and Safety and Workers' Compensation
Information Bulletin

April 17, 2003 Christine Baker
(415) 703-4220

CHSWC Submits report on Workers’ Compensation
Medical Payment Systems to Senator Alarcón

SAN FRANCISCO – The Commission on Health and Safety and Workers' Compensation (CHSWC) has voted to submit a report "Workers’ Compensation Medical Payment Systems: A Proposal for Simplification and Administrative Efficiency".

In January, after his hearings on medical billing practices at Tenet Healthcare, Senator Richard Alarcón, Chair of the Senate Committee on Labor and Industrial Relations, formally requested that CHSWC conduct an in-depth study on problems endemic to and potential cost savings within the workers’ compensation medical billing system.

CHSWC developed this independent report and analysis working with RAND and the University of California at Berkeley. Information was also provided by the California Workers’ Compensation Institute, the Workers’ Compensation Insurance Rating Bureau and the State Compensation Insurance Fund.

The CHSWC study has shown that the current system for workers’ compensation medical care reimbursements in California is unnecessarily complex, costly, difficult to administer, and, in some cases, either outdated or non-existent.

The study determined that medical costs in workers’ compensation are increasing significantly. The lack of fee schedules regarding certain medical services and the delays in updating existing fee schedules create administrative inefficiencies and therefore higher costs in California workers’ compensation. groupHigh administrative costs and lack of up-to-date and comprehensive fee schedules causeincrease system vulnerability and unpredictability.

The CHSWC report suggests that California may wish to consider a change to the Labor Code which would establish new fee schedules and automatically update the California workers' compensation medical fee schedules whenever the corresponding Medicare fee schedules are changed, without the need for going through the regulatory process. For pharmaceutical reimbursements, workers’ compensation payments would be linked to Medi-Cal’s fee schedule.

The only component that would require regulatory action is the multiplier or adjustment that the Division of Workers’ Compensation Administrative Director (DWC AD) would apply to the Medicare/Medi-Cal reimbursements. California fee schedules and payment systems would be automatically updated whenever Medicare changes are published or the Medi-Cal fee schedule for pharmaceuticals changes.

CHSWC is charged with overseeing the health and safety and workers' compensation systems in California and recommending administrative or legislative modifications to improve their operation. CHSWC was established to conduct a continuing examination of the workers' compensation system and of the state's activities to prevent industrial injuries and occupational diseases and to examine those programs in other states.

For any questions regarding this bulletin, please contact:
Commission on Health and Safety and Workers' Compensation (CHSWC)
455 Golden Gate Avenue, 10th Floor, San Francisco,  CA  94102
Email:     Phone:  (415) 703-4220    Fax:  (415) 703-4234     Contact Person:  Christine Baker