Employers in California pay more for workers' comp coverage than in almost every other state, and the gap is widening.

In our view, the reason isn't provider or injured worker fraud or inflated medical bills. It's a lengthy, bureaucratic treatment authorization process that delays necessary care. Self-insured employers absorb these costs directly on every claim; insured employers pay them indirectly through experience mod adjustments and rising premiums at renewal.

Either way, California employers pay.

In California, a physician cannot simply treat an injured worker according to their own medical judgment. To render any care, from a splint to an X-ray to a specialist referral, the doctor must first submit a Request for Authorization (RFA) on the mandatory form and wait for the payer’s Utilization Review (UR) decision. The injured worker goes home without treatment, and the clock starts on the employer’s disability costs.

Under California Labor Code Section 4610, a claims administrator has up to 14 days to respond to an RFA. Factor in fax submissions (yes, fax), peer-to-peer calls, and administrative back-and-forth, and the worker's next appointment could be 45 days out, all while they're off work, their condition worsens, and their employer's costs mount.

To understand what the RFA/UR processes actually cost employers, consider a single common procedure: carpal tunnel surgery. In Los Angeles County, the combined surgeon and facility fee for carpal tunnel surgery runs $5,638 under the workers' comp fee schedule. The authorization process, allegedly designed to control that cost, can generate multiples of that number in disability payments before the surgery ever happens.

None of this is optional; no matter how minor or obviously appropriate the care, when the provider eventually submits a bill, they must include proof of UR authorization with every bill or forfeit payment.

The result: While premiums steadily decline across most of the nation, California employers are pouring premium dollars into an inefficient system that takes twice as long and costs twice as much to resolve claims as the national median.

The mandatory RFA and UR processes are central to California’s dysfunction.

The Hidden Cost: Disability While Waiting for Treatment

The stated purpose of RFA and UR is medical cost control. In practice, the processes incur a separate, largely invisible cost: accumulated disability payments that grow every week the injured worker waits for treatment authorization.

Temporary Total Disability (TTD) costs employers between $451 and $1,764 per week, depending on the worker's wages. For the average California worker, that's $915 per week, a check a self-insured employer writes directly, and a claims cost that follows an insured employer to their next renewal.

A single 45-day RFA/UR cycle adds approximately six weeks of disability costs to a claim. For a worker earning California's average weekly wage of $1,373, that's roughly $5,490 in TTD before a provider renders a single treatment.

That figure alone is already 97% of the total cost of carpal tunnel surgery, for example. Over three RFA/UR cycles at the same wage, disability costs can exceed $16,000, nearly three times the $5,638 cost of carpal tunnel surgery.

For workers who return to modified duty at reduced wages, the clock runs on Temporary Partial Disability (TPD) payments, which pay two-thirds of the wage loss (the difference between pre- and post-injury earnings). For a worker earning California's average weekly wage of $1,373 who returns at 50% capacity, that's $458 per week.

A single 45-day RFA/UR cycle can cost the employer roughly $2,748 in TPD. Across three cycles, that figure exceeds $8,200.

UR: A Cost Control Mirage

The figures above cover disability payments alone. They don't include a single dollar of the UR process itself or the Medical-Legal costs that accumulate when a frustrated worker turns to an applicant attorney to get their treatment authorized.

Once an attorney enters the picture, the employer's exposure expands significantly. The claim now requires Qualified Medical Evaluator (QME) or Agreed Medical Evaluator (AME) reports, each costing thousands of dollars, along with defense attorney fees, deposition costs, and hearing time. The cost of a single Medical-Legal evaluation can exceed that of carpal tunnel surgery; multiple evaluations across a disputed claim can dwarf it.

Add that overhead to disability payments that can be over $16,000 over three RFA/UR cycles, and the combined cost of the authorization process (disability benefits, UR administration, and Medical-Legal litigation) almost certainly exceeds the $5,638 cost of a physician-recommended surgery that the system was designed to over-scrutinize.

The injured worker is no closer to treatment. The employer is thousands of dollars deeper into a dispute that timely authorization would have prevented. California's "cost control" mechanism may be the most expensive line item on the claim.

The Real Cost of “Cost Control”

California's RFA and UR system was designed, in theory, to keep medical costs in check. Instead, it has built a parallel cost structure that operates largely out of sight, accumulating on employers' balance sheets as disability payments, UR overhead, and Medical-Legal litigation, while the underlying injury goes untreated.

When injured workers can't access timely care, claims stay open longer, disability payments compound, and litigation risk rises. All of this feeds directly into the experience mod calculations that determine what every insured California employer pays at renewal. The costs are invisible on any single invoice, but unmistakable at the end of every policy year.

Every day the RFA/UR process runs its course is another day employers fund a system that costs more than the care it was built to deliver. While employers in nearly every other state benefit from steadily declining workers' comp premiums, California employers will continue to pay more.

Until California reforms its authorization process, the math will keep working against the employers and injured workers it was designed to protect.

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