Workers’ comp rate reduction pushed

SACRAMENTO —  California Insurance Commissioner Steve Poizner recommended Tuesday that insurers slash the rates they charge businesses for workers’ compensation coverage by 14.2%, topping the 8% cut proposed by the largest insurer.

Poizner also warned insurance companies that he would send in auditors to make sure they don’t delay or deny needed medical care for injured workers, citing complaints from advocates for injured workers.

In calling for the rate reduction, Poizner cited “historic, record-low” insurance company payouts. Although it’s only a recommendation, insurers have generally gone along with the rate cuts proposed by the insurance commissioner.

Things could be different this time, however.

The government-controlled State Compensation Insurance Fund, the California market leader, has filed for a much smaller reduction of 8% for its 230,000 customers. A fund spokesman declined to discuss the filing.

Poizner credited the 2003-04 workers’ compensation changes with helping employers cut their insurance payments by as much as 65%. But he voiced concern that insurers could be improperly using review procedures to block needed care.

At issue is a change in treatment protocols for injured workers known as utilization reviews.

The workers’ comp overhaul gave employers the right to send workers to company-contracted clinics for immediate care and longer-term treatment, including surgeries. Those treatment plans, however, can be second-guessed by specialized doctors.

Employers argue that the reviews, often by out-of-state doctors who never see the patient, use objective standards that lead to lower treatment costs. But advocates for injured workers -- and some of Gov. Arnold Schwarzenegger’s own regulators -- counter that the reviews have sometimes been used to deny needed care.

Indeed, a survey released by the California Division of Workers’ Compensation in March showed that 22% of injured workers said they were dissatisfied or highly dissatisfied with their care. In the same survey, 65% of medical providers said they believed that care for injured workers had declined since 2004.

“Quickly getting injured workers back on their feet and back on the job benefits employers and workers alike,” Poizner said. “Injured workers cannot afford delay in their treatment, and businesses must do a better job of improving workplace safety.”

Poizner said he planned to verify how insurers handle claims by sending Department of Insurance auditors to perform so-called market-conduct examinations.

Schwarzenegger’s top workers’ compensation regulator, Carrie Nevans, said she welcomed Poizner’s interest in medical treatment, noting that the commissioner has independent authority over some aspects of the workers’ compensation system.

Nevans, the interim administrative director of the Division of Workers’ Compensation, said that she too was troubled by complaints of delayed and denied care. “The whole reform is based on prompt, effective treatment. If that’s not happening, it’s wrong,” Nevans said.

Nonetheless, she stressed that most workers were happy with their treatment. Nevans said her agency was in the final phase of implementing new regulations that would hit insurers with stiff fines if they misused the utilization review process.

Labor unions and advocates for injured workers also supported Poizner’s promise to probe insurers’ treatment review practices, while employers’ groups cautioned the commissioner not to overreact.

“It’s important we don’t have a chilling effect on the use of utilization review,” said Vincent Sollitto, a spokesman for the California Chamber of Commerce.

In the Tuesday teleconference, Poizner also said he would push an insurance industry statistical service, the Workers’ Compensation Insurance Rating Bureau, to produce more accurate data on claims and rates. He also announced that he would escalate his department’s efforts to combat workers’ compensation insurance fraud.

marc.lifsher@latimes.com