Title: Lobbyist, California Coalition on Workers’ Compensation
Resume: Prior to joining the firm, Schmelzer served as a lobbyist for four years, most recently for the California Chamber of Commerce. Prior to this, Schmelzer served as legislative director for the California Manufacturers and Technology Association. Preceding his experience in the legislative realm, Schmelzer spent five years administering workers' comp claims for both public and private sector entities. This experience gives him a unique perspective of the human resources and insurance issues that face public and private entities.
Schools: Bachelor of arts in government, California State University, Sacramento.
A former claims adjuster, Schmelzer has been on the front lines presenting the employer perspective and defending their interests in Sacramento. He served as the lobbyist for the California Manufacturers and Technology Association and then moved over to the California Chamber of Commerce in 2007, where he advocated against bills that threatened to roll back the workers’ comp reforms. Now Jason is representing the interests of this 250-member employer group that includes both private and public employers.
What are the top three issues in California workers’ comp today?
The governor’s race. First and foremost, the preservation of SB 899 and the reforms of 2004—depending on who is elected, what happens to workers’ compensation law can change dramatically. Second, the rise in medical costs. The cost per claim is going up substantially, and has been for a long time. Despite the 2004 reforms, it has continued to climb—it leveled off following the reforms but is heading back up. As always, getting quality care to injured workers is important.
Are we headed for a hard market, and if so, when will it come? How long should we expect it to last? What are the repercussions?
I think the answer is yes. Unfortunately, the biggest impact from an employer’s perspective is a lack of choice as insurers leave the market. People tend to get out of the market in a hard market, and less competition almost always equals more cost.
It’s no longer a question of if but when we enter a hard market, so what is in the future of State Compensation Insurance Fund? Will its market share climb back to historic levels? Do you think that further reforms are needed for the governance of State Fund, for example, does it make sense to have Senate confirmation for board members?
I don’t think they’ll get as high as they used to be, it would take something substantial for them to reach that market share again. If we get to the point where we have a new governor, the laws change, and costs are going up so that insurers are turned off from the California market, as they were earlier in the decade, SCIF will see a resurgence.
Are medical provider networks a help or a hindrance? How should they be improved?
Medical provider networks (MPNs) are a great tool for self-insured employers. Large companies can set up boutique MPNs that do a great job getting the right care to the injured worker with less utilization review and less conflict between employer and doctor. In the insurers’ market there is less of a benefit—there is a benefit, but it’s not the same as for self-insured employers. The way to improve is to somehow reform the MPN laws so that insured employers have the ability to set up boutique MPNs—right now they take off-the-shelf MPNs that include every doctor under the sun. They would benefit from a system like that of self-insured employers.
How should utilization review be improved?
There’s a lot of controversy over the use of utilization review (UR). I always remind people that it’s the only way that an employer can ensure that treatment is consistent with the schedule. The success of UR is a little bit tied to medical provider networks—when you improve MPNs to look like the self-insured boutiques, you take away the need for broad utilization review. When you have larger networks that include all manner of doctors, you don’t have the same close relationships with the doctors, and no trust.
What needs to be done to improve return-to-work?
Almost nothing that we’ve done historically has worked. We need to streamline the process. Large companies have the staff and expertise to navigate the gauntlet, but the legal requirements need to be blended into one process, especially for smaller companies. Also, doctors need to be more willing to bring injured workers back to modified duty early in the claim, and employers need to be more willing to offer modified duty instead of temporary disability.
What do you see, other than medical, as the next big cost driver?
It really depends—we’re at such an interesting point with the political change. It could very well be permanent disability (PD), not in all cases, but some—particularly the high-dollar cases. PD drives a lot of the costs in claims, especially litigation and medical expense. It can have an impact on many different levels of claims costs.
Is it realistic to deal for more cost-cutting reforms in exchange for increasing PD benefits?
Absolutely it’s realistic. Employers have said for a long time that to the extent you can take extra costs from the system—administrative, drug repackaging and drug compounding costs—it frees up money to spend on permanent disability. It’s reasonable for us as employers to sit down with labor and work out a deal. It’s a useful exercise that will hopefully yield results.
Where do you see applicant attorneys focusing litigation in the future?
You never can tell. It’s situational, especially with the political situation and the governor’s election. If there’s no change in the status quo, they’ll keep going after PD in litigation.
Now that the federal health care bill has become law, what impact, if any, do you see that having on workers’ compensation and do you have any concerns?
I haven’t heard of much and I’m not an expert in the federal health care law. As far as I know, workers’ compensation will continue to be an independent system in California, so we shouldn’t see much change.