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Friday, September 09, 2005

FLASH REPORT!


Bureau Takes More Than Twice Off Original Recommendation

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The Workers’ Compensation Insurance Rating Bureau is recommending a 15.9 percent decrease in the pure premium rate for policies renewing or incepting January 1, 2006. But the recommendation might have been lower but for doctors dispensing drugs out of their offices.

After recommending a 5.2 percent decrease in January rates back in July, the Bureau’s Governing Committee approved an additional three percent reduction based on the June experience and an eight percent reduction based on the latest study of the new Permanent Disability Rating Schedule for at total of 15.9 percent.

According to chief actuary Dave Bellusci, the medical experience continues to emerge favorably because of the workers’ compensation reforms, but savings in pharmaceuticals have been disappointing. Bellusci says that savings in pharmaceutical costs from the free schedules, was originally estimated by the Bureau at 37 percent, but the savings results so far are only 8 or 9 percent. Bureau actuaries hypothesize that doctors dispensing out their offices, thus avoiding the fee schedule may be the reason.

“We didn’t anticipate that,” says the Bureau’s Bob Mike.

A bill to close this loophole was tabled by the legislative leadership.

A study of the new PDRS study done by Dr. Frank Neuhauser shows a reduction in PD ratings of 38 percent, indicating at least from the early data, that the new schedule is reducing costs and frequency. But the data is still green and challenges and possibly changes to the new PDRS remain on the horizon.

If approved by the California Insurance Commissioner Garamendi, the rate decrease will represent a total of 47 percent in pure premium rate reductions since July 2003. Never one to agree with the Bureau, Mr. Garamendi may reduce the rate even more next week.

 

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Flash Reports cover time sensitive stories and other items of interest. Go to our home page at www.wcexec.com to order the print version of The Workers' Comp Executive.

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