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RAND Study: California UR Reform Did Not Cut WC Medical Costs

A RAND Corporation study released August 19, 2026 finds SB 1160 produced no statistically significant change in utilization review approval rates; California self-insured employers who built expected claim ratios on the assumption that UR was suppressing early medical costs are working with understated ECRs.

By Sam, EditorAugust 2026 · 3 min read

On August 19, 2026, the California Division of Workers’ Compensation released the RAND Corporation’s first empirical study of Senate Bill 1160, the 2016 law that removed prospective utilization review requirements for the first 30 days after a workplace injury. The central finding: UR approval rates exceeded 90% both before and after SB 1160 took effect, with no statistically significant change. The administrative bottleneck the law was designed to remove did not exist in the data.

What SB 1160 Actually Changed

RAND examined claims data from January 2017 through January 2024 using a difference-in-differences design, drawing on two large claims administrators, the Independent Medical Review database, and the Workers’ Compensation Information System. The law did produce a measurable improvement in care timing: among injured workers with diagnoses where physical therapy is indicated, the odds of receiving PT within 30 days rose 13%, and average wait time fell from 13.4 days to 11.9 days.

Those are real improvements. They are also cost increases, not savings. Faster delivery of already-approved services means medical expenditures arrive on claim files sooner and in greater volume. The UR gate that was removed was not blocking treatment. It was measuring it.

Who It Affects

California self-insured employers, public entity pools, and captive programs writing California WC exposure have spent the past decade building expected claim ratios (ECRs) through a period when the conventional narrative was that SB 1160 would contain early medical utilization. The RAND data retroactively falsifies that premise. Approval rates were near-universal before the law. Removing the UR requirement changed nothing about the volume of care authorized.

The RAND finding lands in an environment already signaling ECR pressure. The WCIRB filed a 10.4% pure premium rate indication for the September 1, 2026 benchmark, approved at 6.6%, a 3.8-point structural shortfall detailed in California WC: 127% Accident Year CR Traps Self-Insured ECRs. Cumulative trauma claim share has nearly doubled since 2018, extending tail factors on the same accident years (California CT Claims: From 1-in-11 to 1-in-6 in Seven Years). The RAND study adds a third layer: a UR cost-containment assumption that was never grounded in data.

The Reserve Mechanism

This is an ECR calibration problem. If your California WC model embedded any assumption that SB 1160’s removal of first-30-day UR requirements would hold down early medical spend, the RAND finding invalidates that assumption. The early IBNR development tail is also affected: PT now arrives roughly 1.5 days faster on average, so costs that previously settled into the 13-to-30-day window now land in the 12-to-28-day window. Completion factors calibrated to pre-2016 delivery timing will lag the current pattern.

The removal of the 30-day UR measurement point also reduces the number of data touchpoints actuaries have during the early development period, adding uncertainty to short-tail completion factors. That is worth flagging in the reserve opinion as a methodological limitation, not just as a question for the next RAND study.

For a structured approach to diagnosing ECR and development-factor assumptions in California WC programs, see Workers Compensation IBNR for Self-Insured Employers.

What This Means for Your Next Review

Ask your actuary two questions before the next reserve study or interim monitoring meeting.

First: does our California WC ECR model include any explicit or implicit assumption that SB 1160 reduced early medical utilization? If the ECR was anchored to industry data from 2017 through 2020 with a downward SB 1160 adjustment baked in, the RAND finding requires revisiting that adjustment.

Second: are our early-development IBNR completion factors calibrated to post-2016 PT delivery timing (11.9 days average) or pre-2016 timing (13.4 days)? The 1.5-day shift is modest in isolation, but in a program with high PT utilization across a large California workforce, the cumulative effect on 30-to-60-day IBNR can be material.

From reviewing California WC triangles for self-insured employers over the past five years, the ECR calibration consistently assumed UR would contain first-30-day medical spend. The RAND finding that approval rates were already at 90% before SB 1160 resets that entire modeling premise.

Sources

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