"This report provides information for policymakers and system stakeholders to monitor the areas that have become drivers of the growth in medical costs after the impact of the prior reforms in 2002-2004, which have largely ended," says Ramona Tanabe, WCRI's Deputy Director and Counsel.

The study reported that use of medical services in California increased moderately starting in 2006, reflecting a potential combined impact of changes in regulations, practice patterns, and participant behavior after the effect of reforms largely ended.

For example, the percentage of claims that received more than 24 visits for physical medicine services increased gradually from 2006 to 2009. Since the reform limited physical medicine treatments to 24 visits for a claim unless additional treatments were authorized, the recent increase may indicate that more treatments were authorized. Another underlying factor might be the update of the Medical Treatment Utilization Schedule that allowed additional post-surgery physical medicine services outside of the 24-visit limit in the reform.

Other medical cost drivers included more frequent billing for complex office visits with higher prices, increases in the percentage of claims that received major radiology services, a rise in prices paid for office visits due to a large fee schedule increase, and increases in costs for hospital outpatient and/or ambulatory surgical center services due to regulation updates. Medical cost containment expenses and medical-legal expenses per claim also grew rapidly.