Costs are rising across the United States. Recently, Bloomberg News reported that the national inflation rate hit a 40-year high. The medical and legal costs of workers’ compensation in California are rising sharply as well. On June 5, 2022, the Insurance Journal reported that costs for resolving workers’ compensation disputes are rising even faster than the 25% increase that was expected by state regulators. Here, our Sacramento workers’ compensation defense lawyer discusses the latest report on the rising med-legal workers’ compensation costs in California.

What is a Medical-Legal Evaluation in California?

In the context of a California workers’ compensation claim, a medical-legal evaluation (med-legal evaluation or legal evaluation) is used to help resolve disputes. If there are questions about the nature or severity of a worker’s injuries, a med-legal evaluation may be requested. In effect, a medical-legal evaluation is an independent physician who can assess the employee’s condition. There are a few types of medical-legal evaluations, including Qualified Medical Evaluation (QMEs) and Agreed Medical Evaluations (AMEs).

Background: A New Medical-Legal Fee Schedule Took Effect Last Year in California

In 2021, a new medical-legal fee schedule took effect in California. The new schedule, which was approved by state officials, altered the payment formula used to calculate the cost of medical-legal workers’ compensation evaluations for the first time in more than 15 years.

One of the primary changes is that the old medical-legal fee system had different payment structures for “basic” and “complex” cases. However, that is no longer true in California. The new medical-legal fee structure has a single flat-fee code.

It was broadly accepted that the revised medical-legal fee schedule would result in an increase in costs. Indeed, the Division of Workers’ Compensation (DWC) anticipated a 25% increase med-legal costs.

The Increase in Med-Legal Costs is Sharper Than Expected by State Officials

As noted, California state regulators expected the new medical-legal fee schedule to result in a rise in costs. However, the actual rise for the first seven months that the schedule had been in place was significantly higher than the 25% increase that was anticipated.

According to a comprehensive report from the California Workers’ Compensation Institute (CWCI), there has been a sharp increase in the costs. The CWCI states that the increase is likely driven mainly by the elimination of the “basic” billing code. Indeed, the organization finds that the new flat-fee medical-legal billing structure has resulted in a 222% increase in fees for certain types of medical evaluation that could have previously fallen under the “basic” billing code.

Notably, one of the goals of the new billing structure was a possible reduction in the number of supplemental reports. Regulators believed that this could lead to some cost savings. However, the preliminary data from the CWCI finds that supplemental reports have actually risen since the new fee structure was put into place.

Call Our Workers’ Compensation Defense Law Firm for Legal Guidance

At Yrulegui & Roberts, our California workers’ compensation defense lawyers are standing, ready to help. Our firm provides solutions-driven, cost-effective services to employers, insurance companies, and claim administrators. Contact our law firm today to schedule a strictly private case review. We provide workers’ compensation defense representation in Sacramento and throughout the region.