California Workers’ Comp Increase Questioned

California Insurance Commissioner Steve Poizner is indicating that he may not support the state Workers’ Compensation Insurance Rating Bureau’s (WCIRB) request to increase costs by 22.8 percent.

Poizner said that small businesses cannot tolerate such an increase in this economy, and he offeerd suggestions for controlling the costs.

The WCIRB asked for the 22.8 percent hike in August. The organization has said the hike is necessary primarily because of rising medical costs, and those costs account for 16 percent of the requested increase. The rest is necessary because of two appeals board decisions this year regarding permanent disability.

If Poizner approves the hike, it goes into effect in January 2010. Proposed increases are sent to the commissioner. The benchmark is advisory for insurers; the state does not set rates.

Poizner held a hearing on medical costs and workers’ compensation in early June. He said he came away from that meeting convinced that insurers had not exhausted the options for greater frugality

Poizner said insurers should implement pharmacy networks with or without regulations based upon the example set by Safeway. He called for more prescribing of generic drug equivalents, more rigorous utilization review and strict fee schedules.

In October 2008, Poizner rejected WCIRB’s request for a 16 percent increase in costs and instead granted a 5 percent increase.

California’s benchmark has fallen 63.4 percent since its high in 2003.

Topics California Workers' Compensation