California’s Workers’ Compensation Insurance Rating Bureau (WCIRB) altered how it quantifies medical services utilization, leading to a major shift in its narrative around claim costs.

Since changing its formula, the WCIRB now reports that provider utilization of more expensive treatments accounted for a bigger share of rising costs than it previously understood. While the WCIRB’s previous formula supported a narrative of generally rising treatment prices, its “new math” paints a picture of providers increasingly furnishing higher-ticket treatments.

In other words, intentionally or otherwise, the WCIRB’s new approach continues the organization’s trend of scapegoating providers for all of workers’ comp’s woes.

Instead of studying the out-of-control legal and administrative costs of California claims, which the WCIRB reports are double the national median, the WCIRB continues to deploy its insurer-derived, unverified data to drive narratives around the cost of medical treatment, fixating on items like Cumulative Trauma (CT) claims and services like Functional Restoration Programs.

With rare exception, state leadership accepts WCIRB reports with little challenge to or criticism of the underlying data and methodology. Now, the WCIRB has developed a new accounting method that may significantly affect state leaders’ perceptions of claim costs. 

Sadly for California employers, the WCIRB is the only game in town. For roughly a decade, the California Division of Workers’ Compensation (CA DWC) has ignored California law requiring all payers to report all workers’ comp claims data to a statewide database, and to establish a reporting system specifically for Utilization Review (UR) documents.

Without verifiable data and more objective reporting, providers, injured workers, and employers bear the consequences of the state’s reliance on the WCIRB.

The WCIRB’s New Math

The WCIRB breaks down workers’ comp claims into two buckets: price (the dollar amounts paid for services) and utilization (the quantity of services rendered).

Under the WCIRB’s previous system, “price” referred to the amounts insurers paid for each “transaction” (i.e., billed line item), while “utilization” referred to the raw number of transactions per claim. Now, according to A New Measure of Medical Service Utilization, which the WCIRB released last month, “utilization” will be calculated based on Medicare Relative Value Units (RVUs).

As the WCIRB put it, this new approach allows their reporting to account for more “resource intensive” (i.e., higher-paying) treatments (emphases ours):

“This study introduces a resource-based utilization measure of Physician and Non-Physician Practitioner Services (Physician Services) that incorporates relative value units (RVUs) that account for differences in resource intensity. The study compares it with the WCIRB’s existing utilization measure that is generally transaction-based and uses it to identify the factors driving utilization and cost trends from 2014 through 2025.”

Accordingly, the WCIRB’s new math shifted its analysis of rising costs.

In this new reality, “prices” climbed much more moderately over the last several years, while “utilization” shot up, as illustrated in the WCIRB’s charts below. As WorkCompCentral points out, this new approach took the WCIRB from seeing a 5% drop in utilization from 2020 to 2025 to seeing an 8% increase, a 13-point reversal.

Crucially, as the New Measure study acknowledges, the divergence in utilization rates between the WCIRB’s old and new methods of calculation most drastically widens after 2021, when Medicare increased RVUs for Evaluation and Management (E/M) services (California’s comp fee schedule adopted these changes, along with new, streamlined coding rules).

As the WCIRB notes, E/M services were “primary drivers” of the utilization growth that the study spotlights. But providers didn’t move to more expensive E/M services; Medicare and the fee schedule simply assigned higher reimbursements to those same services.

The WCIRB’s Opaque, So-Called Data

The WCIRB does not make the underlying data it receives from its insurer members available to the public, even in anonymized form, and no independent third party verifies those data.

As the disclaimer on the New Measure study reminds us (emphases ours):

“The information presented reflects a compilation of individual insurer submissions of information to the WCIRB. While the individual insurer data submissions are regularly checked for consistency and comparability with other data submitted by the insurer as well as with data submitted by other insurers, the WCIRB can make no warranty with respect to the information provided by third parties.”

We invite stakeholders to take a closer look at the WCIRB’s role, methods, and data sources, and draw their own conclusions.

Moreover, we again remind readers that the California legislature recognized the need for publicly maintained, comprehensive sources on claim data and utilization many years ago. Those mandates remain unfulfilled, as there is no UR reporting system, and the CA DWC declared reporting to the Workers’ Compensation Information System “voluntary” for payers.

It’s beyond time California stopped putting blind faith in an insurer group to inform workers’ comp policy.

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