SB 563: Workers’ compensation: utilization review.
- Session Year: 2015-2016
- House: Senate
- Latest Version Date: 2016-06-23
Existing law requires every employer, for purposes of workers compensation, to establish a utilization review process to prospectively, retrospectively, or concurrently review requests by physicians for authorization to provide recommended medical treatment to injured employees. Existing law establishes timeframes for an employer to make a determination regarding a physicians request. Existing law requires the utilization review process to be governed by written policies and procedures, and requires that these policies and procedures be filed with the Administrative Director of the Division of Workers Compensation and disclosed by the employer to employees, physicians, and the public upon request.
This bill would prohibit the employer, or any entity conducting utilization review on behalf of the employer, from offering or providing any financial incentive or consideration to a physician based on the number of modifications, delays, or denials made by the physician. The bill would authorize the administrative director to review any compensation agreement, payment schedule, or contract between the employer, or any entity conducting utilization review on behalf of the employer, and the utilization review physician. The bill would make any information disclosed to the administrative director confidential and not subject to public disclosure, except as specified.
Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.
This bill would make legislative findings to that effect.
Existing law requires every employer, for purposes of workers compensation, to establish a utilization review process to prospectively, retrospectively, or concurrently review requests by physicians for authorization to provide recommended medical treatment to injured employees. Existing law establishes timeframes for an employer to make a determination regarding a physicians request. Existing law requires the utilization review process to be governed by written policies and procedures, and requires that these policies and procedures be filed with the Administrative Director of the Division of Workers Compensation and disclosed by the employer to employees, physicians, and the public upon request.
This bill would prohibit the employer, or any entity conducting utilization review on behalf of the employer, from offering or providing any financial incentive or consideration to a physician based on the number of modifications, delays, or denials made by the physician. The bill would grant authorize the administrative director authority pursuant to this provision to review any compensation agreement, payment schedule, or contract between the employer, or any entity conducting utilization review on behalf of the employer, and the utilization review physician. The bill would make any information disclosed to the administrative director confidential and not subject to public disclosure, except as specified.
Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.
This bill would make legislative findings to that effect.
Existing law requires every employer, for purposes of workers compensation, to establish a utilization review process to prospectively, retrospectively, or concurrently review requests by physicians for authorization to provide recommended medical treatment to injured employees. Existing law establishes timeframes for an employer to make a determination regarding a physicians request. Existing law requires the utilization review process to be governed by written policies and procedures, and requires that these policies and procedures be filed with the Administrative Director of the Division of Workers Compensation and disclosed by the employer to employees, physicians, and the public upon request.
This bill would require that the method of compensation, and any incentive payments contingent upon the approval, modification, or denial of a claim, for an individual or entity providing services pursuant to the utilization review process, as specified, be filed with the administrative director and disclosed by the employer to employees, physicians, and the public upon request. The bill would exempt a request for medical treatment by a physician to cure or relieve an injured worker from the effect of an industrial injury from these requirements if the request meets specified conditions, including that a final award of permanent disability made by the appeals board specifies the provision of future medical treatment and that the request for medical treatment is for medical treatment that is specified by the award. The bill would also include a statement of legislative intent. prohibit the employer, or any entity conducting utilization review on behalf of the employer, from offering or providing any financial incentive or consideration to a physician based on the number of modifications, delays, or denials made by the physician. The bill would grant the administrative director authority pursuant to this provision to review any compensation agreement, payment schedule, or contract between the employer, or any entity conducting utilization review on behalf of the employer, and the utilization review physician.
Existing law requires every employer, for purposes of workers compensation, to establish a utilization review process to prospectively, retrospectively, or concurrently review requests by physicians for authorization to provide recommended medical treatment to injured employees. Existing law establishes timeframes for an employer to make a determination regarding a physicians request. Existing law requires the utilization review process to be governed by written policies and procedures, and requires that these policies and procedures be filed with the Administrative Director of the Division of Workers Compensation and disclosed by the employer to employees, physicians, and the public upon request.
This bill would prohibit the use of the utilization review process for any treatment recommendations made by a physician if specified conditions are met, including that the treatment recommendation is solely for the purpose of maintaining an injured employees current health care regimen for a preexisting injury and there is no evidence of a change in the employees circumstances or condition showing that the services are no longer reasonably required to cure or relieve the injured worker from the effects of the industrial injury. The bill would require the written policies and procedures governing utilization review to conform to these requirements.
The
This bill would also specifically require that the method of compensation compensation, and any incentive payments contingent upon the approval, modification, or denial of a claim claim, for an individual or entity providing services pursuant to the utilization review process, as specified, be filed with the administrative director and disclosed by the employer to employees, physicians, and the public upon request. The bill would exempt a request for medical treatment by a physician to cure or relieve an injured worker from the effect of an industrial injury from these requirements if the request meets specified conditions, including that a final award of permanent disability made by the appeals board specifies the provision of future medical treatment and that the request for medical treatment is for medical treatment that is specified by the award. The bill would also include a statement of legislative intent.
Existing law requires every employer, for purposes of workers compensation, to establish a utilization review process to prospectively, retrospectively, or concurrently review requests by physicians for authorization to provide recommended medical treatment to injured employees. Existing law establishes timeframes for an employer to make a determination regarding a physicians request. Existing law requires the utilization review process to be governed by written policies and procedures, and requires that these policies and procedures be filed with the Administrative Director of the Division of Workers Compensation and disclosed by the employer to employees, physicians, and the public upon request.
This bill would require each employer, insurer, or other entity that is subject to the utilization review process to disclose the payment methodology for each person who is involved in the process of reviewing, approving, modifying, delaying, or denying requests by physicians for authorization prior to, retrospectively to, or concurrently with the provision of medical treatment services to injured workers by providing this information to employees, physicians, and the public upon request.
This bill would prohibit the use of the utilization review process for any treatment recommendations made by a physician if specified conditions are met, including that the treatment recommendation is solely for the purpose of maintaining an injured employees current health care regimen for a preexisting injury and there is no evidence of a change in the employees circumstances or condition showing that the services are no longer reasonably required to cure or relieve the injured worker from the effects of the industrial injury. The bill would require the written policies and procedures governing utilization review to conform to these requirements.
The bill would also specifically require that the method of compensation and any incentive payments contingent upon the approval, modification, or denial of a claim for an individual or entity providing services pursuant to the utilization review process, as specified, be filed with the administrative director and disclosed by the employer to employees, physicians, and the public upon request.
Existing law requires every employer, for purposes of workers compensation, to establish a utilization review process to prospectively, retrospectively, or concurrently review requests by physicians for authorization to provide recommended medical treatment to injured employees. Existing law establishes timeframes for an employer to make a determination regarding a physicians request. Existing law requires the utilization review process to be governed by written policies and procedures, and requires that these policies and procedures be disclosed to employees, physicians, and the public upon request.
This bill would require each employer, insurer, or other entity that is subject to the utilization review process to disclose the payment methodology for each person who is involved in the process of reviewing, approving, modifying, delaying, or denying requests by physicians for authorization prior to, retrospectively to, or concurrently with the provision of medical treatment services to injured workers by providing this information to employees, physicians, and the public upon request.
(a)For purposes of this section, utilization review means utilization review or utilization management functions that prospectively, retrospectively, or concurrently review and approve, modify, delay, or deny, based in whole or in part on medical necessity to cure and relieve, treatment recommendations by physicians, as defined in Section 3209.3, prior to, retrospectively, or concurrent with the provision of medical treatment services pursuant to Section 4600.
(b)Every employer shall establish a utilization review process in compliance with this section, either directly or through its insurer or an entity with which an employer or insurer contracts for these services.
(c)Each utilization review process shall be governed by written policies and procedures. These policies and procedures shall ensure that decisions based on the medical necessity to cure and relieve of proposed medical treatment services are consistent with the schedule for medical treatment utilization adopted pursuant to Section 5307.27. These policies and procedures, and a description of the utilization process, shall be filed with the administrative director and shall be disclosed by the employer to employees, physicians, and the public upon request.
(d)If an employer, insurer, or other entity subject to this section requests medical information from a physician in order to determine whether to approve, modify, delay, or deny requests for authorization, the employer shall request only the information reasonably necessary to make the determination. The employer, insurer, or other entity shall employ or designate a medical director who holds an unrestricted license to practice medicine in this state issued pursuant to Section 2050 or 2450 of the Business and Professions Code. The medical director shall ensure that the process by which the employer or other entity reviews and approves, modifies, delays, or denies requests by physicians prior to, retrospectively, or concurrent with the provision of medical treatment services, complies with the requirements of this section. Nothing in this section shall be construed as restricting the existing authority of the Medical Board of California.
(e)(1)No person other than a licensed physician who is competent to evaluate the specific clinical issues involved in the medical treatment services, and where these services are within the scope of the physicians practice, requested by the physician may modify, delay, or deny requests for authorization of medical treatment for reasons of medical necessity to cure and relieve.
(2)(A)The employer, or any entity conducting utilization review on behalf of the employer, shall neither offer nor provide any financial incentive or consideration to a physician based on the number of modifications, delays, or denials made by the physician under this section.
(B)An insurer or third-party administrator shall not refer utilization review services conducted on behalf of an employer under this section to an entity in which the insurer or third-party administrator has a financial interest as defined under Section 139.32. This prohibition does not apply if the insurer or third-party administrator provides the employer with prior written disclosure of both of the following:
(i)The entity conducting the utilization review services.
(ii)The insurer or third-party administrators financial interest in the entity.
(3)The administrative director has authority pursuant to this section to review any compensation agreement, payment schedule, or contract between the employer, or any entity conducting utilization review on behalf of the employer, and the utilization review physician. Any information disclosed to the administrative director pursuant to this paragraph shall be considered confidential information and not subject to disclosure pursuant to the California Public Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code) unless the division can demonstrate that the information was in the public domain at the time it was disclosed or has entered the public domain through no fault of the division. Code). Disclosure of the information to the administrative director pursuant to this subdivision shall not waive the provisions of the Evidence Code relating to privilege.
(f)The criteria or guidelines used in the utilization review process to determine whether to approve, modify, delay, or deny medical treatment services shall be all of the following:
(1)Developed with involvement from actively practicing physicians.
(2)Consistent with the schedule for medical treatment utilization adopted pursuant to Section 5307.27.
(3)Evaluated at least annually, and updated if necessary.
(4)Disclosed to the physician and the employee, if used as the basis of a decision to modify, delay, or deny services in a specified case under review.
(5)Available to the public upon request. An employer shall only be required to disclose the criteria or guidelines for the specific procedures or conditions requested. An employer may charge members of the public reasonable copying and postage expenses related to disclosing criteria or guidelines pursuant to this paragraph. Criteria or guidelines may also be made available through electronic means. No charge shall be required for an employee whose physicians request for medical treatment services is under review.
(g)In determining whether to approve, modify, delay, or deny requests by physicians prior to, retrospectively, or concurrent with the provisions of medical treatment services to employees all of the following requirements shall be met:
(1)Prospective or concurrent decisions shall be made in a timely fashion that is appropriate for the nature of the employees condition, not to exceed five working days from the receipt of the information reasonably necessary to make the determination, but in no event more than 14 days from the date of the medical treatment recommendation by the physician. In cases where the review is retrospective, a decision resulting in denial of all or part of the medical treatment service shall be communicated to the individual who received services, or to the individuals designee, within 30 days of receipt of information that is reasonably necessary to make this determination. If payment for a medical treatment service is made within the time prescribed by Section 4603.2, a retrospective decision to approve the service need not otherwise be communicated.
(2)When the employees condition is such that the employee faces an imminent and serious threat to his or her health, including, but not limited to, the potential loss of life, limb, or other major bodily function, or the normal timeframe for the decisionmaking process, as described in paragraph (1), would be detrimental to the employees life or health or could jeopardize the employees ability to regain maximum function, decisions to approve, modify, delay, or deny requests by physicians prior to, or concurrent with, the provision of medical treatment services to employees shall be made in a timely fashion that is appropriate for the nature of the employees condition, but not to exceed 72 hours after the receipt of the information reasonably necessary to make the determination.
(3)(A)Decisions to approve, modify, delay, or deny requests by physicians for authorization prior to, or concurrent with, the provision of medical treatment services to employees shall be communicated to the requesting physician within 24 hours of the decision. Decisions resulting in modification, delay, or denial of all or part of the requested health care service shall be communicated to physicians initially by telephone or facsimile, and to the physician and employee in writing within 24 hours for concurrent review, or within two business days of the decision for prospective review, as prescribed by the administrative director. If the request is not approved in full, disputes shall be resolved in accordance with Section 4610.5, if applicable, or otherwise in accordance with Section 4062.
(B)In the case of concurrent review, medical care shall not be discontinued until the employees physician has been notified of the decision and a care plan has been agreed upon by the physician that is appropriate for the medical needs of the employee. Medical care provided during a concurrent review shall be care that is medically necessary to cure and relieve, and an insurer or self-insured employer shall only be liable for those services determined medically necessary to cure and relieve. If the insurer or self-insured employer disputes whether or not one or more services offered concurrently with a utilization review were medically necessary to cure and relieve, the dispute shall be resolved pursuant to Section 4610.5, if applicable, or otherwise pursuant to Section 4062. Any compromise between the parties that an insurer or self-insured employer believes may result in payment for services that were not medically necessary to cure and relieve shall be reported by the insurer or the self-insured employer to the licensing board of the provider or providers who received the payments, in a manner set forth by the respective board and in such a way as to minimize reporting costs both to the board and to the insurer or self-insured employer, for evaluation as to possible violations of the statutes governing appropriate professional practices. No fees shall be levied upon insurers or self-insured employers making reports required by this section.
(4)Communications regarding decisions to approve requests by physicians shall specify the specific medical treatment service approved. Responses regarding decisions to modify, delay, or deny medical treatment services requested by physicians shall include a clear and concise explanation of the reasons for the employers decision, a description of the criteria or guidelines used, and the clinical reasons for the decisions regarding medical necessity. If a utilization review decision to deny or delay a medical service is due to incomplete or insufficient information, the decision shall specify the reason for the decision and specify the information that is needed.
(5)If the employer, insurer, or other entity cannot make a decision within the timeframes specified in paragraph (1) or (2) because the employer or other entity is not in receipt of all of the information reasonably necessary and requested, because the employer requires consultation by an expert reviewer, or because the employer has asked that an additional examination or test be performed upon the employee that is reasonable and consistent with good medical practice, the employer shall immediately notify the physician and the employee, in writing, that the employer cannot make a decision within the required timeframe, and specify the information requested but not received, the expert reviewer to be consulted, or the additional examinations or tests required. The employer shall also notify the physician and employee of the anticipated date on which a decision may be rendered. Upon receipt of all information reasonably necessary and requested by the employer, the employer shall approve, modify, or deny the request for authorization within the timeframes specified in paragraph (1) or (2).
(6)A utilization review decision to modify, delay, or deny a treatment recommendation shall remain effective for 12 months from the date of the decision without further action by the employer with regard to any further recommendation by the same physician for the same treatment unless the further recommendation is supported by a documented change in the facts material to the basis of the utilization review decision.
(7)Utilization review of a treatment recommendation shall not be required while the employer is disputing liability for injury or treatment of the condition for which treatment is recommended pursuant to Section 4062.
(8)If utilization review is deferred pursuant to paragraph (7), and it is finally determined that the employer is liable for treatment of the condition for which treatment is recommended, the time for the employer to conduct retrospective utilization review in accordance with paragraph (1) shall begin on the date the determination of the employers liability becomes final, and the time for the employer to conduct prospective utilization review shall commence from the date of the employers receipt of a treatment recommendation after the determination of the employers liability.
(h)Every employer, insurer, or other entity subject to this section shall maintain telephone access for physicians to request authorization for health care services.
(i)If the administrative director determines that the employer, insurer, or other entity subject to this section has failed to meet any of the timeframes in this section, or has failed to meet any other requirement of this section, the administrative director may assess, by order, administrative penalties for each failure. A proceeding for the issuance of an order assessing administrative penalties shall be subject to appropriate notice to, and an opportunity for a hearing with regard to, the person affected. The administrative penalties shall not be deemed to be an exclusive remedy for the administrative director. These penalties shall be deposited in the Workers Compensation Administration Revolving Fund.
SEC. 2.The Legislature finds and declares that Section 1 of this act, which amends Section 4610 of the Labor Code, imposes a limitation on the publics right of access to the meetings of public bodies or the writings of public officials and agencies within the meaning of Section 3 of Article I of the California Constitution. Pursuant to that constitutional provision, the Legislature makes the following findings to demonstrate the interest protected by this limitation and the need for protecting that interest:
The limitations on the peoples rights of access set forth in this act are necessary to protect the privacy and integrity of information submitted to the Administrative Director of the Division of Workers Compensation pursuant to paragraph (3) of subdivision (e) of Section 4610 of the Labor Code.
(a)For purposes of this section, utilization review means utilization review or utilization management functions that prospectively, retrospectively, or concurrently review and approve, modify, delay, or deny, based in whole or in part on medical necessity to cure and relieve, treatment recommendations by physicians, as defined in Section 3209.3, prior to, retrospectively, or concurrent with the provision of medical treatment services pursuant to Section 4600.
(b)Every employer shall establish a utilization review process in compliance with this section, either directly or through its insurer or an entity with which an employer or insurer contracts for these services.
(c)Each utilization review process shall be governed by written policies and procedures. These policies and procedures shall ensure that decisions based on the medical necessity to cure and relieve of proposed medical treatment services are consistent with the schedule for medical treatment utilization adopted pursuant to Section 5307.27. These policies and procedures, and a description of the utilization process, shall be filed with the administrative director and shall be disclosed by the employer to employees, physicians, and the public upon request.
(d)If an employer, insurer, or other entity subject to this section requests medical information from a physician in order to determine whether to approve, modify, delay, or deny requests for authorization, the employer shall request only the information reasonably necessary to make the determination. The employer, insurer, or other entity shall employ or designate a medical director who holds an unrestricted license to practice medicine in this state issued pursuant to Section 2050 or Section 2450 of the Business and Professions Code. The medical director shall ensure that the process by which the employer or other entity reviews and approves, modifies, delays, or denies requests by physicians prior to, retrospectively, or concurrent with the provision of medical treatment services, complies with the requirements of this section. Nothing in this section shall be construed as restricting the existing authority of the Medical Board of California.
(e)(1)No person other than a licensed physician who is competent to evaluate the specific clinical issues involved in the medical treatment services, and where these services are within the scope of the physicians practice, requested by the physician may modify, delay, or deny requests for authorization of medical treatment for reasons of medical necessity to cure and relieve. The
(2)(A)The employer, or any entity conducting utilization review on behalf of the employer, shall neither offer nor provide any financial incentive or consideration to a physician based on the number of modifications, delays, or denials made by the physician under this section. The
(B)An insurer or third-party administrator shall not refer utilization review services conducted on behalf of an employer under this section to an entity in which the insurer or third-party administrator has a financial interest as defined under Section 139.32. This prohibition does not apply if the insurer or third-party administrator provides the employer with prior written disclosure of both of the following:
(i)The entity conducting the utilization review services.
(ii)The insurer or third-party administrators financial interest in the entity.
(3)The administrative director has authority pursuant to this section to review any compensation agreement, payment schedule, or contract between the employer, or any entity conducting utilization review on behalf of the employer, and the utilization review physician. Any information disclosed to the administrative director pursuant to this paragraph shall be considered confidential information and not subject to disclosure pursuant to the California Public Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code) unless the division can demonstrate that the information was in the public domain at the time it was disclosed or has entered the public domain through no fault of the division. Disclosure of the information to the administrative director pursuant to this subdivision shall not waive the provisions of the Evidence Code relating to privilege.
(f)The criteria or guidelines used in the utilization review process to determine whether to approve, modify, delay, or deny medical treatment services shall be all of the following:
(1)Developed with involvement from actively practicing physicians.
(2)Consistent with the schedule for medical treatment utilization adopted pursuant to Section 5307.27.
(3)Evaluated at least annually, and updated if necessary.
(4)Disclosed to the physician and the employee, if used as the basis of a decision to modify, delay, or deny services in a specified case under review.
(5)Available to the public upon request. An employer shall only be required to disclose the criteria or guidelines for the specific procedures or conditions requested. An employer may charge members of the public reasonable copying and postage expenses related to disclosing criteria or guidelines pursuant to this paragraph. Criteria or guidelines may also be made available through electronic means. No charge shall be required for an employee whose physicians request for medical treatment services is under review.
(g)In determining whether to approve, modify, delay, or deny requests by physicians prior to, retrospectively, or concurrent with the provisions of medical treatment services to employees all of the following requirements shall be met:
(1)Prospective or concurrent decisions shall be made in a timely fashion that is appropriate for the nature of the employees condition, not to exceed five working days from the receipt of the information reasonably necessary to make the determination, but in no event more than 14 days from the date of the medical treatment recommendation by the physician. In cases where the review is retrospective, a decision resulting in denial of all or part of the medical treatment service shall be communicated to the individual who received services, or to the individuals designee, within 30 days of receipt of information that is reasonably necessary to make this determination. If payment for a medical treatment service is made within the time prescribed by Section 4603.2, a retrospective decision to approve the service need not otherwise be communicated.
(2)When the employees condition is such that the employee faces an imminent and serious threat to his or her health, including, but not limited to, the potential loss of life, limb, or other major bodily function, or the normal timeframe for the decisionmaking process, as described in paragraph (1), would be detrimental to the employees life or health or could jeopardize the employees ability to regain maximum function, decisions to approve, modify, delay, or deny requests by physicians prior to, or concurrent with, the provision of medical treatment services to employees shall be made in a timely fashion that is appropriate for the nature of the employees condition, but not to exceed 72 hours after the receipt of the information reasonably necessary to make the determination.
(3)(A)Decisions to approve, modify, delay, or deny requests by physicians for authorization prior to, or concurrent with, the provision of medical treatment services to employees shall be communicated to the requesting physician within 24 hours of the decision. Decisions resulting in modification, delay, or denial of all or part of the requested health care service shall be communicated to physicians initially by telephone or facsimile, and to the physician and employee in writing within 24 hours for concurrent review, or within two business days of the decision for prospective review, as prescribed by the administrative director. If the request is not approved in full, disputes shall be resolved in accordance with Section 4610.5, if applicable, or otherwise in accordance with Section 4062.
(B)In the case of concurrent review, medical care shall not be discontinued until the employees physician has been notified of the decision and a care plan has been agreed upon by the physician that is appropriate for the medical needs of the employee. Medical care provided during a concurrent review shall be care that is medically necessary to cure and relieve, and an insurer or self-insured employer shall only be liable for those services determined medically necessary to cure and relieve. If the insurer or self-insured employer disputes whether or not one or more services offered concurrently with a utilization review were medically necessary to cure and relieve, the dispute shall be resolved pursuant to Section 4610.5, if applicable, or otherwise pursuant to Section 4062. Any compromise between the parties that an insurer or self-insured employer believes may result in payment for services that were not medically necessary to cure and relieve shall be reported by the insurer or the self-insured employer to the licensing board of the provider or providers who received the payments, in a manner set forth by the respective board and in such a way as to minimize reporting costs both to the board and to the insurer or self-insured employer, for evaluation as to possible violations of the statutes governing appropriate professional practices. No fees shall be levied upon insurers or self-insured employers making reports required by this section.
(4)Communications regarding decisions to approve requests by physicians shall specify the specific medical treatment service approved. Responses regarding decisions to modify, delay, or deny medical treatment services requested by physicians shall include a clear and concise explanation of the reasons for the employers decision, a description of the criteria or guidelines used, and the clinical reasons for the decisions regarding medical necessity. If a utilization review decision to deny or delay a medical service is due to incomplete or insufficient information, the decision shall specify the reason for the decision and specify the information that is needed.
(5)If the employer, insurer, or other entity cannot make a decision within the timeframes specified in paragraph (1) or (2) because the employer or other entity is not in receipt of all of the information reasonably necessary and requested, because the employer requires consultation by an expert reviewer, or because the employer has asked that an additional examination or test be performed upon the employee that is reasonable and consistent with good medical practice, the employer shall immediately notify the physician and the employee, in writing, that the employer cannot make a decision within the required timeframe, and specify the information requested but not received, the expert reviewer to be consulted, or the additional examinations or tests required. The employer shall also notify the physician and employee of the anticipated date on which a decision may be rendered. Upon receipt of all information reasonably necessary and requested by the employer, the employer shall approve, modify, or deny the request for authorization within the timeframes specified in paragraph (1) or (2).
(6)A utilization review decision to modify, delay, or deny a treatment recommendation shall remain effective for 12 months from the date of the decision without further action by the employer with regard to any further recommendation by the same physician for the same treatment unless the further recommendation is supported by a documented change in the facts material to the basis of the utilization review decision.
(7)Utilization review of a treatment recommendation shall not be required while the employer is disputing liability for injury or treatment of the condition for which treatment is recommended pursuant to Section 4062.
(8)If utilization review is deferred pursuant to paragraph (7), and it is finally determined that the employer is liable for treatment of the condition for which treatment is recommended, the time for the employer to conduct retrospective utilization review in accordance with paragraph (1) shall begin on the date the determination of the employers liability becomes final, and the time for the employer to conduct prospective utilization review shall commence from the date of the employers receipt of a treatment recommendation after the determination of the employers liability.
(h)Every employer, insurer, or other entity subject to this section shall maintain telephone access for physicians to request authorization for health care services.
(i)If the administrative director determines that the employer, insurer, or other entity subject to this section has failed to meet any of the timeframes in this section, or has failed to meet any other requirement of this section, the administrative director may assess, by order, administrative penalties for each failure. A proceeding for the issuance of an order assessing administrative penalties shall be subject to appropriate notice to, and an opportunity for a hearing with regard to, the person affected. The administrative penalties shall not be deemed to be an exclusive remedy for the administrative director. These penalties shall be deposited in the Workers Compensation Administration Revolving Fund.
SEC. 2.The Legislature finds and declares that Section 1 of this act, which amends Section 4610 of the Labor Code, imposes a limitation on the publics right of access to the meetings of public bodies or the writings of public officials and agencies within the meaning of Section 3 of Article I of the California Constitution. Pursuant to that constitutional provision, the Legislature makes the following findings to demonstrate the interest protected by this limitation and the need for protecting that interest:
The limitations on the peoples rights of access set forth in this act are necessary to protect the privacy and integrity of information submitted to the Administrative Director of the Division of Workers Compensation pursuant to paragraph (3) of subdivision (e) of Section 4610 of the Labor Code.
(a)For purposes of this section, utilization review means utilization review or utilization management functions that prospectively, retrospectively, or concurrently review and approve, modify, delay, or deny, based in whole or in part on medical necessity to cure and relieve, treatment recommendations by physicians, as defined in Section 3209.3, prior to, retrospectively, or concurrent with the provision of medical treatment services pursuant to Section 4600.
(b)Every employer shall establish a utilization review process in compliance with this section, either directly or through its insurer or an entity with which an employer or insurer contracts for these services.
(c)Each utilization review process shall be governed by written policies and procedures. These policies and procedures shall ensure that decisions based on the medical necessity to cure and relieve of proposed medical treatment services are consistent with the schedule for medical treatment utilization adopted pursuant to Section 5307.27. These policies and procedures, and a description of the utilization process, shall be filed with the administrative director and shall be disclosed by the employer to employees, physicians, and the public upon request.
(d)If an employer, insurer, or other entity subject to this section requests medical information from a physician in order to determine whether to approve, modify, delay, or deny requests for authorization, the employer shall request only the information reasonably necessary to make the determination. The employer, insurer, or other entity shall employ or designate a medical director who holds an unrestricted license to practice medicine in this state issued pursuant to Section 2050 or Section 2450 of the Business and Professions Code. The medical director shall ensure that the process by which the employer or other entity reviews and approves, modifies, delays, or denies requests by physicians prior to, retrospectively, or concurrent with the provision of medical treatment services, complies with the requirements of this section. Nothing in this section shall be construed as restricting the existing authority of the Medical Board of California.
(e)No person other than a licensed physician who is competent to evaluate the specific clinical issues involved in the medical treatment services, and where these services are within the scope of the physicians practice, requested by the physician may modify, delay, or deny requests for authorization of medical treatment for reasons of medical necessity to cure and relieve. The employer, or any entity conducting utilization review on behalf of the employer, shall neither offer nor provide any financial incentive or consideration to a physician based on the number of modifications, delays, or denials made by the physician under this section. The administrative director has authority pursuant to this section to review any compensation agreement, payment schedule, or contract between the employer, or any entity conducting utilization review on behalf of the employer, and the utilization review physician.
(f)The criteria or guidelines used in the utilization review process to determine whether to approve, modify, delay, or deny medical treatment services shall be all of the following:
(1)Developed with involvement from actively practicing physicians.
(2)Consistent with the schedule for medical treatment utilization adopted pursuant to Section 5307.27.
(3)Evaluated at least annually, and updated if necessary.
(4)Disclosed to the physician and the employee, if used as the basis of a decision to modify, delay, or deny services in a specified case under review.
(5)Available to the public upon request. An employer shall only be required to disclose the criteria or guidelines for the specific procedures or conditions requested. An employer may charge members of the public reasonable copying and postage expenses related to disclosing criteria or guidelines pursuant to this paragraph. Criteria or guidelines may also be made available through electronic means. No charge shall be required for an employee whose physicians request for medical treatment services is under review.
(g)In determining whether to approve, modify, delay, or deny requests by physicians prior to, retrospectively, or concurrent with the provisions of medical treatment services to employees all of the following requirements shall be met:
(1)Prospective or concurrent decisions shall be made in a timely fashion that is appropriate for the nature of the employees condition, not to exceed five working days from the receipt of the information reasonably necessary to make the determination, but in no event more than 14 days from the date of the medical treatment recommendation by the physician. In cases where the review is retrospective, a decision resulting in denial of all or part of the medical treatment service shall be communicated to the individual who received services, or to the individuals designee, within 30 days of receipt of information that is reasonably necessary to make this determination. If payment for a medical treatment service is made within the time prescribed by Section 4603.2, a retrospective decision to approve the service need not otherwise be communicated.
(2)When the employees condition is such that the employee faces an imminent and serious threat to his or her health, including, but not limited to, the potential loss of life, limb, or other major bodily function, or the normal timeframe for the decisionmaking process, as described in paragraph (1), would be detrimental to the employees life or health or could jeopardize the employees ability to regain maximum function, decisions to approve, modify, delay, or deny requests by physicians prior to, or concurrent with, the provision of medical treatment services to employees shall be made in a timely fashion that is appropriate for the nature of the employees condition, but not to exceed 72 hours after the receipt of the information reasonably necessary to make the determination.
(3)(A)Decisions to approve, modify, delay, or deny requests by physicians for authorization prior to, or concurrent with, the provision of medical treatment services to employees shall be communicated to the requesting physician within 24 hours of the decision. Decisions resulting in modification, delay, or denial of all or part of the requested health care service shall be communicated to physicians initially by telephone or facsimile, and to the physician and employee in writing within 24 hours for concurrent review, or within two business days of the decision for prospective review, as prescribed by the administrative director. If the request is not approved in full, disputes shall be resolved in accordance with Section 4610.5, if applicable, or otherwise in accordance with Section 4062.
(B)In the case of concurrent review, medical care shall not be discontinued until the employees physician has been notified of the decision and a care plan has been agreed upon by the physician that is appropriate for the medical needs of the employee. Medical care provided during a concurrent review shall be care that is medically necessary to cure and relieve, and an insurer or self-insured employer shall only be liable for those services determined medically necessary to cure and relieve. If the insurer or self-insured employer disputes whether or not one or more services offered concurrently with a utilization review were medically necessary to cure and relieve, the dispute shall be resolved pursuant to Section 4610.5, if applicable, or otherwise pursuant to Section 4062. Any compromise between the parties that an insurer or self-insured employer believes may result in payment for services that were not medically necessary to cure and relieve shall be reported by the insurer or the self-insured employer to the licensing board of the provider or providers who received the payments, in a manner set forth by the respective board and in such a way as to minimize reporting costs both to the board and to the insurer or self-insured employer, for evaluation as to possible violations of the statutes governing appropriate professional practices. No fees shall be levied upon insurers or self-insured employers making reports required by this section.
(4)Communications regarding decisions to approve requests by physicians shall specify the specific medical treatment service approved. Responses regarding decisions to modify, delay, or deny medical treatment services requested by physicians shall include a clear and concise explanation of the reasons for the employers decision, a description of the criteria or guidelines used, and the clinical reasons for the decisions regarding medical necessity. If a utilization review decision to deny or delay a medical service is due to incomplete or insufficient information, the decision shall specify the reason for the decision and specify the information that is needed.
(5)If the employer, insurer, or other entity cannot make a decision within the timeframes specified in paragraph (1) or (2) because the employer or other entity is not in receipt of all of the information reasonably necessary and requested, because the employer requires consultation by an expert reviewer, or because the employer has asked that an additional examination or test be performed upon the employee that is reasonable and consistent with good medical practice, the employer shall immediately notify the physician and the employee, in writing, that the employer cannot make a decision within the required timeframe, and specify the information requested but not received, the expert reviewer to be consulted, or the additional examinations or tests required. The employer shall also notify the physician and employee of the anticipated date on which a decision may be rendered. Upon receipt of all information reasonably necessary and requested by the employer, the employer shall approve, modify, or deny the request for authorization within the timeframes specified in paragraph (1) or (2).
(6)A utilization review decision to modify, delay, or deny a treatment recommendation shall remain effective for 12 months from the date of the decision without further action by the employer with regard to any further recommendation by the same physician for the same treatment unless the further recommendation is supported by a documented change in the facts material to the basis of the utilization review decision.
(7)Utilization review of a treatment recommendation shall not be required while the employer is disputing liability for injury or treatment of the condition for which treatment is recommended pursuant to Section 4062.
(8)If utilization review is deferred pursuant to paragraph (7), and it is finally determined that the employer is liable for treatment of the condition for which treatment is recommended, the time for the employer to conduct retrospective utilization review in accordance with paragraph (1) shall begin on the date the determination of the employers liability becomes final, and the time for the employer to conduct prospective utilization review shall commence from the date of the employers receipt of a treatment recommendation after the determination of the employers liability.
(h)Every employer, insurer, or other entity subject to this section shall maintain telephone access for physicians to request authorization for health care services.
(i)If the administrative director determines that the employer, insurer, or other entity subject to this section has failed to meet any of the timeframes in this section, or has failed to meet any other requirement of this section, the administrative director may assess, by order, administrative penalties for each failure. A proceeding for the issuance of an order assessing administrative penalties shall be subject to appropriate notice to, and an opportunity for a hearing with regard to, the person affected. The administrative penalties shall not be deemed to be an exclusive remedy for the administrative director. These penalties shall be deposited in the Workers Compensation Administration Revolving Fund.
All matter omitted in this version of the bill appears in the bill as amended in the Senate, April 30, 2015. (JR11)(a)For purposes of this section, utilization review means utilization review or utilization management functions that prospectively, retrospectively, or concurrently review and approve, modify, delay, or deny, based in whole or in part on medical necessity to cure and relieve, treatment recommendations by physicians, as defined in Section 3209.3, prior to, retrospectively, or concurrent with the provision of medical treatment services pursuant to Section 4600.
(b)(1)Every employer shall establish a utilization review process in compliance with this section, either directly or through its insurer or an entity with which an employer or insurer contracts for these services.
(2)The utilization review process shall not be used for any treatment recommendations made by a physician if all of the following conditions are met:
(A)The treatment recommendation is solely for the purpose of maintaining an injured employees current health care regimen for a preexisting injury.
(B)A prior treatment recommendation for the injured employee was either prospectively, retrospectively, or concurrently reviewed and approved, or modified, based in whole or in part on medical necessity and the injured employees current health care regimen is a result of that decision.
(C)There is no evidence of a change in the employees circumstances or condition showing that the services are no longer reasonably required to cure or relieve the injured worker from the effects of the industrial injury.
(c)(1)Each utilization review process shall be governed by written policies and procedures. These policies and procedures shall ensure that decisions based on the medical necessity to cure and relieve of proposed medical treatment services are consistent with the schedule for medical treatment utilization adopted pursuant to Section 5307.27. These policies and procedures, and a description of the utilization review process, including, but not limited to, the method of compensation compensation, and any incentive payments contingent upon the approval, modification, or denial of a claim claim, for an individual or entity providing services under this section, shall be filed with the administrative director and shall be disclosed by the employer to employees, physicians, and the public upon request.
(2)The written policies and procedures shall conform to the requirements of paragraph (2) of subdivision (b).
(d)If an employer, insurer, or other entity subject to this section requests medical information from a physician in order to determine whether to approve, modify, delay, or deny requests for authorization, the employer shall request only the information reasonably necessary to make the determination. The employer, insurer, or other entity shall employ or designate a medical director who holds an unrestricted license to practice medicine in this state issued pursuant to Section 2050 or Section 2450 of the Business and Professions Code. The medical director shall ensure that the process by which the employer or other entity reviews and approves, modifies, delays, or denies requests by physicians prior to, retrospectively, or concurrent with the provision of medical treatment services, complies with the requirements of this section. Nothing in this section shall be construed as restricting the existing authority of the Medical Board of California.
(e)No person other than a licensed physician who is competent to evaluate the specific clinical issues involved in the medical treatment services, and where these services are within the scope of the physicians practice, requested by the physician may modify, delay, or deny requests for authorization of medical treatment for reasons of medical necessity to cure and relieve.
(f)The criteria or guidelines used in the utilization review process to determine whether to approve, modify, delay, or deny medical treatment services shall be all of the following:
(1)Developed with involvement from actively practicing physicians.
(2)Consistent with the schedule for medical treatment utilization adopted pursuant to Section 5307.27.
(3)Evaluated at least annually, and updated if necessary.
(4)Disclosed to the physician and the employee, if used as the basis of a decision to modify, delay, or deny services in a specified case under review.
(5)Available to the public upon request. An employer shall only be required to disclose the criteria or guidelines for the specific procedures or conditions requested. An employer may charge members of the public reasonable copying and postage expenses related to disclosing criteria or guidelines pursuant to this paragraph. Criteria or guidelines may also be made available through electronic means. No charge shall be required for an employee whose physicians request for medical treatment services is under review.
(g)In determining whether to approve, modify, delay, or deny requests by physicians prior to, retrospectively, or concurrent with the provisions of medical treatment services to employees all of the following requirements shall be met:
(1)Prospective or concurrent decisions shall be made in a timely fashion that is appropriate for the nature of the employees condition, not to exceed five working days from the receipt of the information reasonably necessary to make the determination, but in no event more than 14 days from the date of the medical treatment recommendation by the physician. In cases where the review is retrospective, a decision resulting in denial of all or part of the medical treatment service shall be communicated to the individual who received services, or to the individuals designee, within 30 days of receipt of information that is reasonably necessary to make this determination. If payment for a medical treatment service is made within the time prescribed by Section 4603.2, a retrospective decision to approve the service need not otherwise be communicated.
(2)When the employees condition is such that the employee faces an imminent and serious threat to his or her health, including, but not limited to, the potential loss of life, limb, or other major bodily function, or the normal timeframe for the decisionmaking process, as described in paragraph (1), would be detrimental to the employees life or health or could jeopardize the employees ability to regain maximum function, decisions to approve, modify, delay, or deny requests by physicians prior to, or concurrent with, the provision of medical treatment services to employees shall be made in a timely fashion that is appropriate for the nature of the employees condition, but not to exceed 72 hours after the receipt of the information reasonably necessary to make the determination.
(3)(A)Decisions to approve, modify, delay, or deny requests by physicians for authorization prior to, or concurrent with, the provision of medical treatment services to employees shall be communicated to the requesting physician within 24 hours of the decision. Decisions resulting in modification, delay, or denial of all or part of the requested health care service shall be communicated to physicians initially by telephone or facsimile, and to the physician and employee in writing within 24 hours for concurrent review, or within two business days of the decision for prospective review, as prescribed by the administrative director. If the request is not approved in full, disputes shall be resolved in accordance with Section 4610.5, if applicable, or otherwise in accordance with Section 4062.
(B)In the case of concurrent review, medical care shall not be discontinued until the employees physician has been notified of the decision and a care plan has been agreed upon by the physician that is appropriate for the medical needs of the employee. Medical care provided during a concurrent review shall be care that is medically necessary to cure and relieve, and an insurer or self-insured employer shall only be liable for those services determined medically necessary to cure and relieve. If the insurer or self-insured employer disputes whether or not one or more services offered concurrently with a utilization review were medically necessary to cure and relieve, the dispute shall be resolved pursuant to Section 4610.5, if applicable, or otherwise pursuant to Section 4062. Any compromise between the parties that an insurer or self-insured employer believes may result in payment for services that were not medically necessary to cure and relieve shall be reported by the insurer or the self-insured employer to the licensing board of the provider or providers who received the payments, in a manner set forth by the respective board and in such a way as to minimize reporting costs both to the board and to the insurer or self-insured employer, for evaluation as to possible violations of the statutes governing appropriate professional practices. No fees shall be levied upon insurers or self-insured employers making reports required by this section.
(4)Communications regarding decisions to approve requests by physicians shall specify the specific medical treatment service approved. Responses regarding decisions to modify, delay, or deny medical treatment services requested by physicians shall include a clear and concise explanation of the reasons for the employers decision, a description of the criteria or guidelines used, and the clinical reasons for the decisions regarding medical necessity. If a utilization review decision to deny or delay a medical service is due to incomplete or insufficient information, the decision shall specify the reason for the decision and specify the information that is needed.
(5)If the employer, insurer, or other entity cannot make a decision within the timeframes specified in paragraph (1) or (2) because the employer or other entity is not in receipt of all of the information reasonably necessary and requested, because the employer requires consultation by an expert reviewer, or because the employer has asked that an additional examination or test be performed upon the employee that is reasonable and consistent with good medical practice, the employer shall immediately notify the physician and the employee, in writing, that the employer cannot make a decision within the required timeframe, and specify the information requested but not received, the expert reviewer to be consulted, or the additional examinations or tests required. The employer shall also notify the physician and employee of the anticipated date on which a decision may be rendered. Upon receipt of all information reasonably necessary and requested by the employer, the employer shall approve, modify, or deny the request for authorization within the timeframes specified in paragraph (1) or (2).
(6)A utilization review decision to modify, delay, or deny a treatment recommendation shall remain effective for 12 months from the date of the decision without further action by the employer with regard to any further recommendation by the same physician for the same treatment unless the further recommendation is supported by a documented change in the facts material to the basis of the utilization review decision.
(7)Utilization review of a treatment recommendation shall not be required while the employer is disputing liability for injury or treatment of the condition for which treatment is recommended pursuant to Section 4062.
(8)If utilization review is deferred pursuant to paragraph (7), and it is finally determined that the employer is liable for treatment of the condition for which treatment is recommended, the time for the employer to conduct retrospective utilization review in accordance with paragraph (1) shall begin on the date the determination of the employers liability becomes final, and the time for the employer to conduct prospective utilization review shall commence from the date of the employers receipt of a treatment recommendation after the determination of the employers liability.
(h)Every employer, insurer, or other entity subject to this section shall maintain telephone access for physicians to request authorization for health care services.
(i)If the administrative director determines that the employer, insurer, or other entity subject to this section has failed to meet any of the timeframes in this section, or has failed to meet any other requirement of this section, the administrative director may assess, by order, administrative penalties for each failure. A proceeding for the issuance of an order assessing administrative penalties shall be subject to appropriate notice to, and an opportunity for a hearing with regard to, the person affected. The administrative penalties shall not be deemed to be an exclusive remedy for the administrative director. These penalties shall be deposited in the Workers Compensation Administration Revolving Fund.
SEC. 2.Section 4610.2 is added to the Labor Code, to read:4610.2.(a)A request for medical treatment by a physician to cure or relieve an injured worker from the effect of an industrial injury is not subject to Section 4610 if all of the following conditions are met:
(1)A final award of permanent disability made by the appeals board specifies the provision of future medical treatment.
(2)The request is for medical treatment that is specified by the final award described in paragraph (1).
(3)The request is for medical treatment that is evidence based.
(b)(1)If an employer believes that a request for medical treatment is not evidence based, the employer may conduct an expedited review as provided in paragraph (1) of subdivision (g) of Section 4610 and subdivision (d) of Section 4610.6. The employer shall not modify, delay, or deny the request for medical treatment during the review.
(2)If, after conducting the review specified in paragraph (1), the utilization review decision to modify, delay or deny is upheld by independent medical review, the employer may request a medical evaluation under Section 4062.1 to stipulate to the need for a different or additional treatment. The treatment shall only be stipulated to if it is evidence based and at least as efficacious as the prior stipulated medical treatment. The employer shall not modify, delay, or deny the request for medical treatment prior to stipulation on the new medical treatment.
(3)For purposes of this subdivision, the term evidence based has the same meaning as the term evidence-based as used in Section 5307.27 with respect to the medical treatment utilization schedule.
SEC. 3.It is the intent of the Legislature that the changes made to law by this act shall not have an impact on or alter in any way the decision of the court in Patterson v. Oaks Farm (2014) WL 3952788.
(a)For purposes of this section, utilization review means utilization review or utilization management functions that prospectively, retrospectively, or concurrently review and approve, modify, delay, or deny, based in whole or in part on medical necessity to cure and relieve, treatment recommendations by physicians, as defined in Section 3209.3, prior to, retrospectively, or concurrent with the provision of medical treatment services pursuant to Section 4600.
(b)(1)Every employer shall establish a utilization review process in compliance with this section, either directly or through its insurer or an entity with which an employer or insurer contracts for these services.
(2)The utilization review process shall not be used for any treatment recommendations made by a physician if all of the following conditions are met:
(A)The treatment recommendation is solely for the purpose of maintaining an injured employees current health care regimen for a preexisting injury.
(B)A prior treatment recommendation for the injured employee was either prospectively, retrospectively, or concurrently reviewed and approved, or modified, based in whole or in part on medical necessity and the injured employees current health care regimen is a result of that decision.
(C)There is no evidence of a change in the employees circumstances or condition showing that the services are no longer reasonably required to cure or relieve the injured worker from the effects of the industrial injury.
(c)(1)Each utilization review process shall be governed by written policies and procedures. These policies and procedures shall ensure that decisions based on the medical necessity to cure and relieve of proposed medical treatment services are consistent with the schedule for medical treatment utilization adopted pursuant to Section 5307.27. These policies and procedures, and a description of the utilization process, including, but not limited to, the method of compensation and any incentive payments contingent upon the approval, modification, or denial of a claim for an individual or entity providing services under this section, shall be filed with the administrative director and shall be disclosed by the employer to employees, physicians, and the public upon request.
(2)The written policies and procedures shall conform to the requirements of paragraph (2) of subdivision (b).
(d)If an employer, insurer, or other entity subject to this section requests medical information from a physician in order to determine whether to approve, modify, delay, or deny requests for authorization, the employer shall request only the information reasonably necessary to make the determination. The employer, insurer, or other entity shall employ or designate a medical director who holds an unrestricted license to practice medicine in this state issued pursuant to Section 2050 or Section 2450 of the Business and Professions Code. The medical director shall ensure that the process by which the employer or other entity reviews and approves, modifies, delays, or denies requests by physicians prior to, retrospectively, or concurrent with the provision of medical treatment services, complies with the requirements of this section. Nothing in this section shall be construed as restricting the existing authority of the Medical Board of California.
(e)No person other than a licensed physician who is competent to evaluate the specific clinical issues involved in the medical treatment services, and where these services are within the scope of the physicians practice, requested by the physician may modify, delay, or deny requests for authorization of medical treatment for reasons of medical necessity to cure and relieve.
(f)The criteria or guidelines used in the utilization review process to determine whether to approve, modify, delay, or deny medical treatment services shall be all of the following:
(1)Developed with involvement from actively practicing physicians.
(2)Consistent with the schedule for medical treatment utilization adopted pursuant to Section 5307.27.
(3)Evaluated at least annually, and updated if necessary.
(4)Disclosed to the physician and the employee, if used as the basis of a decision to modify, delay, or deny services in a specified case under review.
(5)Available to the public upon request. An employer shall only be required to disclose the criteria or guidelines for the specific procedures or conditions requested. An employer may charge members of the public reasonable copying and postage expenses related to disclosing criteria or guidelines pursuant to this paragraph. Criteria or guidelines may also be made available through electronic means. No charge shall be required for an employee whose physicians request for medical treatment services is under review.
(g)In determining whether to approve, modify, delay, or deny requests by physicians prior to, retrospectively, or concurrent with the provisions of medical treatment services to employees all of the following requirements shall be met:
(1)Prospective or concurrent decisions shall be made in a timely fashion that is appropriate for the nature of the employees condition, not to exceed five working days from the receipt of the information reasonably necessary to make the determination, but in no event more than 14 days from the date of the medical treatment recommendation by the physician. In cases where the review is retrospective, a decision resulting in denial of all or part of the medical treatment service shall be communicated to the individual who received services, or to the individuals designee, within 30 days of receipt of information that is reasonably necessary to make this determination. If payment for a medical treatment service is made within the time prescribed by Section 4603.2, a retrospective decision to approve the service need not otherwise be communicated.
(2)When the employees condition is such that the employee faces an imminent and serious threat to his or her health, including, but not limited to, the potential loss of life, limb, or other major bodily function, or the normal timeframe for the decisionmaking process, as described in paragraph (1), would be detrimental to the employees life or health or could jeopardize the employees ability to regain maximum function, decisions to approve, modify, delay, or deny requests by physicians prior to, or concurrent with, the provision of medical treatment services to employees shall be made in a timely fashion that is appropriate for the nature of the employees condition, but not to exceed 72 hours after the receipt of the information reasonably necessary to make the determination.
(3)(A)Decisions to approve, modify, delay, or deny requests by physicians for authorization prior to, or concurrent with, the provision of medical treatment services to employees shall be communicated to the requesting physician within 24 hours of the decision. Decisions resulting in modification, delay, or denial of all or part of the requested health care service shall be communicated to physicians initially by telephone or facsimile, and to the physician and employee in writing within 24 hours for concurrent review, or within two business days of the decision for prospective review, as prescribed by the administrative director. If the request is not approved in full, disputes shall be resolved in accordance with Section 4610.5, if applicable, or otherwise in accordance with Section 4062.
(B)In the case of concurrent review, medical care shall not be discontinued until the employees physician has been notified of the decision and a care plan has been agreed upon by the physician that is appropriate for the medical needs of the employee. Medical care provided during a concurrent review shall be care that is medically necessary to cure and relieve, and an insurer or self-insured employer shall only be liable for those services determined medically necessary to cure and relieve. If the insurer or self-insured employer disputes whether or not one or more services offered concurrently with a utilization review were medically necessary to cure and relieve, the dispute shall be resolved pursuant to Section 4610.5, if applicable, or otherwise pursuant to Section 4062. Any compromise between the parties that an insurer or self-insured employer believes may result in payment for services that were not medically necessary to cure and relieve shall be reported by the insurer or the self-insured employer to the licensing board of the provider or providers who received the payments, in a manner set forth by the respective board and in such a way as to minimize reporting costs both to the board and to the insurer or self-insured employer, for evaluation as to possible violations of the statutes governing appropriate professional practices. No fees shall be levied upon insurers or self-insured employers making reports required by this section.
(4)Communications regarding decisions to approve requests by physicians shall specify the specific medical treatment service approved. Responses regarding decisions to modify, delay, or deny medical treatment services requested by physicians shall include a clear and concise explanation of the reasons for the employers decision, a description of the criteria or guidelines used, and the clinical reasons for the decisions regarding medical necessity. If a utilization review decision to deny or delay a medical service is due to incomplete or insufficient information, the decision shall specify the reason for the decision and specify the information that is needed.
(5)If the employer, insurer, or other entity cannot make a decision within the timeframes specified in paragraph (1) or (2) because the employer or other entity is not in receipt of all of the information reasonably necessary and requested, because the employer requires consultation by an expert reviewer, or because the employer has asked that an additional examination or test be performed upon the employee that is reasonable and consistent with good medical practice, the employer shall immediately notify the physician and the employee, in writing, that the employer cannot make a decision within the required timeframe, and specify the information requested but not received, the expert reviewer to be consulted, or the additional examinations or tests required. The employer shall also notify the physician and employee of the anticipated date on which a decision may be rendered. Upon receipt of all information reasonably necessary and requested by the employer, the employer shall approve, modify, or deny the request for authorization within the timeframes specified in paragraph (1) or (2).
(6)A utilization review decision to modify, delay, or deny a treatment recommendation shall remain effective for 12 months from the date of the decision without further action by the employer with regard to any further recommendation by the same physician for the same treatment unless the further recommendation is supported by a documented change in the facts material to the basis of the utilization review decision.
(7)Utilization review of a treatment recommendation shall not be required while the employer is disputing liability for injury or treatment of the condition for which treatment is recommended pursuant to Section 4062.
(8)If utilization review is deferred pursuant to paragraph (7), and it is finally determined that the employer is liable for treatment of the condition for which treatment is recommended, the time for the employer to conduct retrospective utilization review in accordance with paragraph (1) shall begin on the date the determination of the employers liability becomes final, and the time for the employer to conduct prospective utilization review shall commence from the date of the employers receipt of a treatment recommendation after the determination of the employers liability.
(h)Every employer, insurer, or other entity subject to this section shall maintain telephone access for physicians to request authorization for health care services.
(i)If the administrative director determines that the employer, insurer, or other entity subject to this section has failed to meet any of the timeframes in this section, or has failed to meet any other requirement of this section, the administrative director may assess, by order, administrative penalties for each failure. A proceeding for the issuance of an order assessing administrative penalties shall be subject to appropriate notice to, and an opportunity for a hearing with regard to, the person affected. The administrative penalties shall not be deemed to be an exclusive remedy for the administrative director. These penalties shall be deposited in the Workers Compensation Administration Revolving Fund.
SECTION 1.Section 4610.2 is added to the Labor Code, to read:4610.2.Each employer, insurer, or other entity that is subject to Section 4610 shall disclose the payment methodology for each person who is involved in the process of reviewing, approving, modifying, delaying, or denying requests by physicians for authorization prior to, retrospectively to, or concurrently with the provision of medical treatment services to injured workers by providing this information to employees, physicians, and the public upon request.
Each employer, insurer, or other entity that is subject to Section 4610 shall disclose the payment methodology for each person who is involved in the process of reviewing, approving, modifying, delaying, or denying requests by physicians for authorization prior to, retrospectively to, or concurrently with the provision of medical treatment services to injured workers by providing this information to employees, physicians, and the public upon request.
|
Date
|
Status
|
|---|---|
| Jan 26, 2016 | Read third time. Passed. (Ayes 38. Noes 0. Page 2953.) Ordered to the Assembly. |
| Jan 6, 2016 | Re-referred to Com. on L. & I.R. |
| Jan 8, 2016 | Set for hearing January 13. |
| Jan 13, 2016 | From committee: Do pass and re-refer to Com. on APPR. with recommendation: To consent calendar. (Ayes 5. Noes 0. Page 2896.) (January 13). Re-referred to Com. on APPR. |
| Jan 14, 2016 | Set for hearing January 19. |
| Jan 19, 2016 | January 19 hearing: Placed on APPR. suspense file. |
| Jan 20, 2016 | Set for hearing January 21. |
| Jan 21, 2016 | From committee: Do pass. (Ayes 7. Noes 0. Page 2934.) (January 21). |
| Jan 25, 2016 | Read second time. Ordered to third reading. |
| Jan 26, 2016 | In Assembly. Read first time. Held at Desk. |
| Jan 4, 2016 | Withdrawn from committee. |
| Apr 28, 2016 | Referred to Com. on INS. |
| Jun 15, 2016 | From committee with author's amendments. Read second time and amended. Re-referred to Com. on INS. |
| Jun 22, 2016 | From committee: Do pass as amended and re-refer to Com. on APPR. with recommendation: To consent calendar. (Ayes 13. Noes 0.) (June 22). |
| Jun 23, 2016 | Read second time and amended. Re-referred to Com. on APPR. |
| Aug 3, 2016 | August 3 set for first hearing. Placed on APPR. suspense file. |
| Aug 12, 2016 | From committee: Do pass. (Ayes 20. Noes 0.) (August 11). |
| Aug 15, 2016 | Read second time. Ordered to third reading. |
| Aug 31, 2016 | Ordered to inactive file on request of Assembly Member Calderon. |
| Apr 30, 2015 | Read second time and amended. Re-referred to Com. on RLS. |
| Feb 27, 2015 | From printer. May be acted upon on or after March 29. |
| Mar 12, 2015 | Referred to Com. on L. & I.R. |
| Mar 27, 2015 | Set for hearing April 22. |
| Apr 13, 2015 | From committee with author's amendments. Read second time and amended. Re-referred to Com. on L. & I.R. |
| Apr 22, 2015 | April 22 set for first hearing. Testimony taken. Further hearing to be set. |
| Apr 24, 2015 | Set for hearing April 29. |
| Apr 29, 2015 | From committee: Do pass as amended and re-refer to Com. on RLS. (Ayes 4. Noes 1. Page 820.) (April 29). |
| Apr 29, 2015 | From committee: Do pass as amended and re-refer to Com. on RLS. (Ayes 4. Noes 1.) (April 29). |
| Feb 26, 2015 | Introduced. Read first time. To Com. on RLS. for assignment. To print. |
| May 4, 2015 | Re-referred to Com. on APPR. |
| May 4, 2015 | Withdrawn from committee. |
| May 8, 2015 | Set for hearing May 18. |
| May 18, 2015 | May 18 hearing: Placed on APPR. suspense file. |
| May 23, 2015 | Set for hearing May 28. |
| May 28, 2015 | May 28 hearing: Held in committee and under submission. |
| Jan 4, 2016 | From committee with author's amendments. Read second time and amended. Re-referred to Com. on APPR. |
| Jan 4, 2016 | Re-referred to Com. on RLS. |
|
Date
|
Description
|
Location
|
Votes
|
|
|---|---|---|---|---|
| Aug 11, 2016 | Do pass. | Assembly Standing Committee on Appropriations |
Passed |
|
| Jun 22, 2016 | Do pass as amended, and be re-referred to the Committee on [Appropriations] with recommendation: To Consent Calendar | Assembly Standing Committee on Insurance |
Passed |
|
| Jan 26, 2016 | Senate 3rd Reading SB563 Pan | Senate Floor |
Passed |
|
| Jan 21, 2016 | Do pass | Senate Standing Committee on Appropriations |
Passed |
|
| Jan 19, 2016 | Placed on suspense file | Senate Standing Committee on Appropriations |
Passed |
|
| Jan 13, 2016 | Do pass, but first be re-referred to the Committee on [Appropriations] with the recommendation: To Consent Calendar | Senate Standing Committee on Labor and Industrial Relations |
Passed |
|
| May 18, 2015 | Placed on suspense file | Senate Standing Committee on Appropriations |
Passed |
|
| Apr 29, 2015 | Do pass as amended, but first amend, and re-refer to the Committee on [Rules] | Senate Standing Committee on Labor and Industrial Relations |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
|
Organization
|
Position
|
Date
|
|---|---|---|
| American Insurance Association | ** Against | Jan 19, 2016 |
| Associated General Contractors | ** Against | Jan 19, 2016 |
| Association Of California Insurance Companies | ** Against | Jan 19, 2016 |
| California Association of Bed and Breakfast Inns | ** Against | Jan 19, 2016 |
| California Chamber Of Commerce | ** Against | Jan 19, 2016 |
| California Grocers Association | ** Against | Jan 19, 2016 |
| California Hotel and Lodging Association | ** Against | Jan 19, 2016 |
| California Labor Federation, Afl-Cio | ** Support | Jan 26, 2016 |
| California League of Food Processors | ** Against | Jan 19, 2016 |
| California Lodging Industry Association | ** Against | Jan 19, 2016 |
| California Manufacturers And Technology Association | ** Against | Jan 19, 2016 |
| California Medical Association, Inc. | ** Support | Jan 26, 2016 |
| California Orthopedic Association | ** Support | Jan 26, 2016 |
| California Professional Association Of Specialty Contractors | ** Against | Jan 19, 2016 |
| California Professional Firefighters | * Support | Jan 19, 2016 |
| California Retailers Association | ** Against | Jan 19, 2016 |
| California State Association Of Counties | ** Against | Jan 19, 2016 |
| California Trucking Association | ** Against | Jan 19, 2016 |
| Csac Excess Insurance Authority | ** Against | Jan 19, 2016 |
| Pacific Compensation Insurance Company | ** Against | Jan 19, 2016 |
| Western Growers Association | ** Against | Jan 19, 2016 |
| Zenith Insurance Company | ** Against | Jan 19, 2016 |
SENATE THIRD READING
STR Bill Id:SB 563
Author:(Pan)
As Amended Ver:June 23, 2016
Majority vote
SENATE VOTE: 38-0
Committee | Votes | Ayes | Noes |
Insurance | 13-0 | Daly, Melendez, Travis Allen, Bigelow, Calderon, Chu, Cooley, Cooper, Dababneh, Dahle, Frazier, Gatto, Rodriguez | |
Appropriations | 20-0 | Gonzalez, Bigelow, Bloom, Bonilla, Bonta, Calderon, Chang, Daly, Eggman, Gallagher, Eduardo Garcia, Holden, Jones, Obernolte, Quirk, Santiago, Wagner, Weber, Wood, McCarty |
|
SUMMARY: Increases regulation of utilization review organizations. Specifically, this bill:
- Prohibits an employer, or other entity conducting utilization review on behalf of an employer, to offer or provide financial incentives or other considerations to a reviewing physician based on the number of modifications, delays or denials of care.
- Empowers the Administrative Director (AD) of the Division of Workers' Compensation (DWC) to review contracts between employers or utilization review organizations and their physician reviewers.
- Prohibits an insurer or third-party administrator from referring a claim for review to a utilization review organization in which it has a financial interest unless that interest is disclosed to the employer.
- Provides that any information obtained by the AD relating to these contracts is not subject to disclosure pursuant to the Public Records Act.
EXISTING LAW:
- Establishes a comprehensive system to provide benefits, including medical treatment, to employees who are injured or suffer conditions that arise out of or in the course of employment.
- Provides that medical, surgical, chiropractic, acupuncture, and hospital treatment (including nursing, medicines, medical and surgical supplies, crutches) and apparatuses (including orthotic and prosthetic devices and services) that is reasonably required to cure or relieve the injured worker from the effects of his or her injury shall be provided by the employer.
- Requires that all employers create a utilization review (UR) process, which is a process that prospectively, retrospectively, or concurrently reviews and approves, modifies, delays, or denies treatment recommendations by physicians.
- Requires that each UR process be governed by written policies and that these policies, and a description of the utilization process, must be filed with the administrative director and must be disclosed by the employer to employees, physicians, and the public upon request.
- Provides that, in the event of a dispute over a UR decision on or after July 1, 2014, all disputes must be submitted for Independent Medical Review (IMR).
FISCAL EFFECT: According to the Appropriations Committee, the DIR indicates that it would incur first-year costs of $600,000 and $575,000 ongoing (special fund) to implement the provisions of the bill, a result of increased auditing and legal workload.
COMMENTS:
- Purpose. According to the author, physicians have been concerned that the utilization review process might actually incentivize the delay or denial of appropriate treatment for injured workers. This bill increases transparency and accountability within the workers' compensation utilization process to ensure persons involved in authorizing injured worker medical care on behalf of the employer or payor are not being inappropriately incentivized to delay, modify or deny requests for medically necessary services.
- Background. In California's workers' compensation system, an employer or insurer cannot deny treatment. When an employer or insurer receives a request for medical treatment, it can either approve the treatment or, if it believes that a physician's request for treatment is medically unnecessary or harmful, send the request to UR.
UR is the review process for medical treatment recommendations by physicians to see if the request for medical treatment is supported by evidence-based treatment guidelines. The full UR process varies by vendor, but it generally involves initial review by a non-physician (who can approve the request, but not deny or modify it), with higher level review(s) being conducted by a physician or physicians. Only a licensed physician who is competent to evaluate the specific clinical issues involved in the medical treatment services may modify, delay, or deny a request for medical treatment. If the UR physician does modify, delay, or deny the medical treatment, then the injured worker can appeal the decision to IMR, but without the UR decision there cannot be an IMR decision.
This process is triggered by the physician submitting a Request for Authorization for Medical Treatment (RFA), which is a DWC form where the physician details his or her diagnosis and treatment, and must include an additional form which provides a narrative and substantiates the need for treatment. As was discussed above, an employer or insurer cannot contest or in any way delay or deny treatment without sending the RFA through UR.
- Public Records Act (PRA). The bill authorizes the AD to review and obtain proprietary contractual documents associated with obtaining UR services. As a result, this bill contains a provision that expressly protects this proprietary material from disclosure pursuant to the PRA. This is a relatively common scenario – in order to ensure that a regulator can review sensitive, proprietary documents of a private party, protection against release of that private information is provided.
Analysis Prepared by: Mark Rakich / INS. / (916) 319-2086 FN: 0004121
Date of Hearing: August 3, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
SBPCA Bill Id:SB 563
Author:(Pan) – As Amended Ver:June 23, 2016
Policy Committee: | Insurance | Vote: | 13 - 0 |
Urgency: No State Mandated Local Program: No Reimbursable: No
SUMMARY:
This bill increases oversight of utilization review (UR) organizations in the workers' compensation system and strengthens conflict-of-interest provisions. Specifically, this bill:
- Prohibits financial incentives or considerations to UR physicians for denying or modifying care.
- Prohibits UR referrals to entities in which an insurer or third-party administrator has a financial interest, with specified exceptions.
- Authorizes the Department of Industrial Relations (DIR) to review contracts or other agreements between the employer, or any entity conducting utilization review on behalf of the employer, and the utilization review physician. It also makes information disclosed to the administrative director confidential and not subject to public disclosure, except as specified
FISCAL EFFECT:
First-year costs to DIR of $600,000, as well as $575,000 ongoing, to implement the provisions of the bill, a result of increased auditing and legal workload (Workers' Compensation Administration Revolving Fund).
COMMENTS:
- Purpose. According to the author, physicians have been concerned that the utilization review process might actually incentivize the delay or denial of appropriate treatment for injured workers. The bill seeks to ensure persons involved in authorizing injured worker medical care on behalf of the employer or payor are not being inappropriately incentivized to delay, modify or deny requests for medically necessary services.
- Background. In California’s workers’ compensation system, when an employer or insurer receives a request for medical treatment, it can either approve the treatment or, if it believes that a physician’s request for treatment is medically unnecessary or harmful, send the request to UR. UR is a process through which a UR physician can modify, delay, or deny treatment recommendations by physicians. This bill addresses contracts and potential financial conflicts of interest with respect to the physician making UR decisions, which can sometimes result in the modification or denial of requested treatment.
- Support. The California Medical Association and the Medical Board of California support this bill, and it has no opposition.
- Related Legislation. SB 1160 (Mendoza), also being heard today, requires UR entities to become accredited by independent third-party entities.
Analysis Prepared by: Lisa Murawski / APPR. / (916) 319-2081
Date of Hearing: June 22, 2016
ASSEMBLY COMMITTEE ON INSURANCE
Tom Daly, Chair
SBPCA Bill Id:SB 563
Author:(Pan) – As Amended Ver:June 15, 2016
SENATE VOTE: 38-0
SUBJECT: Workers’ compensation: utilization review
SUMMARY: Increases regulation of utilization review organizations. Specifically, this bill:
- Prohibits an employer, or other entity conducting utilization review on behalf of an employer, to offer or provide financial incentives or other considerations to a reviewing physician based on the number of modifications, delays or denials of care.
- Empowers the Administrative Director (AD) of the Division of Workers’ Compensation (DWC) to review contracts between employers or utilization review organizations and their physician reviewers.
- Prohibits an insurer or third-party administrator from referring a claim for review to a utilization review organization in which it has a financial interest unless that interest is disclosed to the employer.
- Provides that any information obtained by the AD relating to these contracts is not subject to disclosure pursuant to the Public Records Act, unless the AD determines that the documents are otherwise in the public domain.
EXISTING LAW:
- Establishes a comprehensive system to provide benefits, including medical treatment, to employees who are injured or suffer conditions that arise out of or in the course of employment.
- Provides that medical, surgical, chiropractic, acupuncture, and hospital treatment (including nursing, medicines, medical and surgical supplies, crutches) and apparatuses (including orthotic and prosthetic devices and services) that is reasonably required to cure or relieve the injured worker from the effects of his or her injury shall be provided by the employer.
- Requires that all employers create a utilization review (UR) process, which is a process that prospectively, retrospectively, or concurrently reviews and approves, modifies, delays, or denies treatment recommendations by physicians.
- Requires that each UR process be governed by written policies and that these policies, and a description of the utilization process, must be filed with the administrative director and must be disclosed by the employer to employees, physicians, and the public upon request.
- Provides that, in the event of a dispute over a UR decision on or after July 1, 2014, all disputes must be submitted for Independent Medical Review (IMR).
FISCAL EFFECT: According to the Senate Appropriations Committee, the DIR indicates that it would incur first-year costs of $600,000 and $575,000 ongoing (special fund) to implement the provisions of the bill, a result of increased auditing and legal workload.
COMMENTS:
- Purpose. According to the author, physicians have been concerned that the utilization review process might actually incentivize the delay or denial of appropriate treatment for injured workers. The bill increases transparency and accountability within the workers’ compensation utilization process to ensure persons involved in authorizing injured worker medical care on behalf of the employer or payor are not being inappropriately incentivized to delay, modify or deny requests for medically necessary services.
- Background. In California’s workers’ compensation system, an employer or insurer cannot deny treatment. When an employer or insurer receives a request for medical treatment, it can either approve the treatment or, if it believes that a physician’s request for treatment is medically unnecessary or harmful, send the request to UR.
UR is the review process for medical treatment recommendations by physicians to see if the request for medical treatment is supported by evidence-based treatment guidelines. The full UR process varies by vendor, but it generally involves initial review by a non-physician (who can approve the request, but not deny or modify it), with higher level review(s) being conducted by a physician or physicians. Only a licensed physician who is competent to evaluate the specific clinical issues involved in the medical treatment services may modify, delay, or deny a request for medical treatment. If the UR physician does modify, delay, or deny the medical treatment, then the injured worker can appeal the decision to IMR, but without the UR decision there cannot be an IMR decision.
This process is triggered by the physician submitting a Request for Authorization for Medical Treatment (RFA), which is a DWC form where the physician details his or her diagnosis and treatment, and must include an additional form which provides a narrative and substantiates the need for treatment. As was discussed above, an employer or insurer cannot contest or in any way delay or deny treatment without sending the RFA through UR. - Public Records Act. The bill authorizes the AD to review and obtain proprietary contractual documents associated with obtaining UR services. As a result, the bill contains a provision that expressly protects this proprietary material from disclosure pursuant to the Public Records Act (PRA). This is a relatively common scenario – in order to ensure that a regulator can review sensitive, proprietary documents of a private party, protection against release of that private information is provided.
- Technical amendment. The bill currently contains a minor qualifier in the PRA language. The author has agreed to delete that language. The amendment on page 4 will delete lines 6-7, and in line 8 delete the language prior to the period.
REGISTERED SUPPORT / OPPOSITION:
Support
California Medical Association
Medical Board of California (Board)
Opposition
None received
Analysis Prepared by: Mark Rakich / INS. / (916) 319-2086
Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | SB 563 |
THIRD READING
Bill No: SB 563
Amended: 1/4/16
SENATE LABOR AND IND. REL. COMMITTEE: 4-1, 4/29/15
AYES: Mendoza, Jackson, Leno, Mitchell
NOES: Stone
SENATE LABOR AND IND. REL. COMMITTEE: 5-0, 1/13/16
AYES: Mendoza, Stone, Jackson, Leno, Mitchell
SENATE APPROPRIATIONS COMMITTEE: 7-0, 1/21/16
AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen
SUBJECT: Workers’ compensation: utilization review
SOURCE: California Medical Association
DIGEST: This bill prohibits physician incentive contracts and agreements on the basis of modifying or denying care in the California workers’ compensation system.
Existing law:
- Establishes a workers’ compensation system that provides benefits to an employee who suffers from an injury or illness that arises out of and in the course of employment, irrespective of fault. This system requires all employers to secure payment of benefits by either securing the consent of the Department of Industrial Relations to self-insure or by securing insurance against liability from an insurance company duly authorized by the state.
- Provides that medical, surgical, chiropractic, acupuncture, and hospital treatment, including nursing, medicines, medical and surgical supplies, crutches, and apparatuses, including orthotic and prosthetic devices and services, that is reasonably required to cure or relieve the injured worker from the effects of his or her injury shall be provided by the employer. (Labor Code §4600)
- Requires that all employers create a utilization review (UR) process, which is a process that prospectively, retrospectively, or concurrently reviews and approves, modifies, delays, or denies, based in whole or in part on medical necessity to cure and relieve, treatment recommendations by physicians. (Labor Code §4610)
- Requires that each UR process be governed by written policies and that these policies and procedures, and a description of the utilization process, must be filed with the administrative director and must be disclosed by the employer to employees, physicians, and the public upon request. (Labor Code §4610(c))
- Provides that, in the event of a dispute over a UR decision on or after July 1, 2014, all disputes must be submitted for Independent Medical Review (IMR). The independent reviewer’s information must be kept confidential. (Labor Code §§4610.5 and 4610.6)
- Requires that, in the absence of fraud, error, or illegal conduct, the IMR decision is final and binding. (Labor Code §4610.6)
This bill:
- Prohibits the employer, or any entity conducting UR on behalf of the employer, from offering or providing any financial incentive or consideration to a physician based on the number of UR modifications, delays, or denials made by the physician.
- Provides the Division of Workers’ Compensation (DWC) with the explicit authority to review any compensation agreement, payment schedule, or contract between the employer, or any entity conducting UR on behalf of the employer, and the UR physician.
Background
Utilization review. In California’s workers’ compensation system, an employer or insurer cannot deny treatment. When an employer or insurer receives a request for medical treatment, the employer or insurer can either approve the treatment or, if the employer or insurer believes that a physician’s request for treatment is medically unnecessary or harmful, the employer or insurer must send the request to UR.
UR is the review process for medical treatment recommendations by physicians to see if the request for medical treatment is medically necessary. The full UR process varies by vendor, but it generally involves initial review by a non-physician, with higher level review(s) being conducted by a physician or physicians. Only a licensed physician who is competent to evaluate the specific clinical issues involved in the medical treatment services may modify, delay, or deny a request for medical treatment. If the UR physician does modify, delay, or deny the medical treatment, then the injured worker can appeal the decision to IMR, but without the UR decision there cannot be an IMR decision.
This process is triggered by the physician submitting a Request for Authorization for Medical Treatment (RFA), which is a DWC form where the physician details his or her diagnosis and treatment, and must include an additional form which provides a narrative and substantiates the need for treatment. As was discussed above, an employer or insurer cannot contest or in any way delay or deny treatment without sending the RFA through UR. (see State Compensation Insurance Fund v. WCAB (Sandhagen), 44 CAL. 4TH 230 (2008)).
FISCAL EFFECT: Appropriation: Fiscal Com.: Local:
According to the Senate Appropriations Committee, the Department of Industrial Relations indicates that it would incur first-year costs of $600,000 and $575,000 ongoing (special fund) to implement the provisions of this bill, a result of increased auditing and legal workload.
California Medical Association (source)
California Labor Federation, AFL-CIO
California Orthopedic Association
OPPOSITION: (Verified 1/21/16)
None received
ARGUMENTS IN SUPPORT: The California Medical Association (CMA) argues that SB 563 will increase transparency and accountability within the workers’ compensation UR process to ensure persons involved in authorizing injured worker medical care on behalf of the employer are not being inappropriately incentivized to modify, delay, or deny requests for medically necessary services. CMA notes that, while there is agreement among most that such an incentive is unacceptable, there currently is no explicit prohibition in statute ensuring it does not occur. By making such a prohibition explicit and giving the DWC the explicit authority to ensure inappropriate incentives are not used, CMA argues that SB 563 is a necessary reform to California’s workers’ compensation system and brings California into line with other states that prohibit inappropriate UR incentives.
1/25/16 16:16:48
1/25/16 16:16:48
**** END ****
SENATE COMMITTEE ON
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 563 (Pan) - Workers’ compensation: utilization review
Version: | Policy Vote: |
Urgency: | Mandate: |
Hearing Date: January 19, 2016 | Consultant: |
This bill meets the criteria for referral to the Suspense File.
Bill Summary:
With respect to the State’s workers’ compensation system, SB 563 would (1) prohibit physician incentive contracts and agreements on the basis of modifying or denying care, and (2) give the Department of Industrial Relations (DIR) authority to request physician compensation agreements in order to provide related enforcement.
Fiscal Impact:
DIR indicates that it would incur first-year costs of $600,000 and $575,000 ongoing (special fund) to implement the provisions of the bill, a result of increased auditing and legal workload.
Background:
In California’s workers’ compensation system, an employer or insurer cannot deny treatment. When an employer or insurer receives a request for medical treatment, it can either (1) approve the treatment, or (2) if it believes that a physician’s request for treatment is medically unnecessary or harmful, it must send the request to Utilization Review.
Utilization Review (UR) is the review process for medical treatment recommendations by physicians to see if the request for medical treatment is medically necessary. The full UR process varies, but generally involves initial review by a non-physician, with higher level review(s) being conducted by a physician or physicians. Only a licensed physician who is competent to evaluate the specific clinical issues involved in the medical treatment services may modify, delay, or deny a request for medical treatment. If the UR physician does modify, delay, or deny the medical treatment, then the injured worker can appeal the decision to Independent Medical Review (IMR), but without the UR decision there cannot be an IMR decision.
As was discussed in a Senate Labor and Industrial Relations Committee oversight hearing in 2015, a recent study by the California Workers’ Compensation Institute (CWCI) found that approximately 25 percent of medical treatment requests go through UR, with approximately 75 percent of those requests approved. Once the approvals from UR and Independent Medical Review (IMR) are included, more than 94 percent of treatment is approved in California’s workers’ compensation system.
Proposed Law:
This bill would prohibit an employer, or any entity conducting UR on behalf of the employer, from offering or providing any financial incentive or consideration to a physician based on the number of UR modifications, delays, or denials made by the physician. Additionally, the bill would provide DIR’s Division of Workers’ Compensation (DWC) with the explicit authority to review any compensation agreement, payment schedule, or contract between the employer, or any entity conducting utilization review on behalf of the employer, and the utilization review physician.
Staff Comments:
This Committee heard SB 563 previously, in 2015. At that time, the bill included language prohibiting the use of UR and IMR in specified instances, and instead shifted medical dispute resolution to DIR’s Workers’ Compensation Appeals Board (WCAB). Due to the increase in WCAB workload, the bill’s fiscal impact was estimated to be about $14 million annually. That version of the bill was ultimately held by this Committee.
As currently written, SB 563 would prohibit the use of financial incentives to UR physicians on the basis of UR decisions. The bill also would allow DWC to request compensation agreements to ensure compliance with the law. The fiscal impact of the current version of the bill is considerably smaller than when the bill was previously considered by this Committee.
-- END --
SENATE COMMITTEE ON LABOR AND INDUSTRIAL RELATIONS
Senator Tony Mendoza, Chair
2015 - 2016 Regular
Bill No: SB 563 Hearing Date: January 13, 2016
Author: | Pan | ||
Version: | January 4, 2016 | ||
Urgency: | No | Fiscal: | Yes |
Consultant: | Gideon L. Baum | ||
Subject: Workers’ compensation: utilization review
KEY ISSUES
Should the Legislature prohibit physician incentive contracts and agreements on the basis of modifying or denying care in the California workers’ compensation system?
Should the Legislature give the Division of Workers’ Compensation the authority to request physician compensation agreements in order to enforce the above-described prohibition?
ANALYSIS
Existing law:
- Establishes a workers’ compensation system that provides benefits to an employee who suffers from an injury or illness that arises out of and in the course of employment, irrespective of fault. This system requires all employers to secure payment of benefits by either securing the consent of the Department of Industrial Relations to self-insure or by securing insurance against liability from an insurance company duly authorized by the state.
- Provides that medical, surgical, chiropractic, acupuncture, and hospital treatment, including nursing, medicines, medical and surgical supplies, crutches, and apparatuses, including orthotic and prosthetic devices and services, that is reasonably required to cure or relieve the injured worker from the effects of his or her injury shall be provided by the employer. (Labor Code §4600)
- Requires that all employers create a utilization review process, which is a process that prospectively, retrospectively, or concurrently review and approve, modify, delay, or deny, based in whole or in part on medical necessity to cure and relieve, treatment recommendations by physicians, prior to, retrospectively, or concurrent with the provision of medical treatment services. (Labor Code §4610)
- Requires that each utilization review (UR) process shall be governed by written policies and that these policies and procedures, and a description of the utilization process, must be filed with the administrative director and shall be disclosed by the employer to employees, physicians, and the public upon request. (Labor Code §4610(c))
- Provides that, in the event over a dispute over a utilization review decision on or after July 1, 2014, all disputes must be submitted for Independent Medical Review (IMR). The independent reviewer’s information must be kept confidential. (Labor Code §§4610.5 and 4610.6)
- Requires that, in the absence of fraud, error, or illegal conduct, the IMR decision is final and binding. (Labor Code §4610.6)
This bill would:
- Prohibit the employer, or any entity conducting utilization review on behalf of the employer, from offering or providing any financial incentive or consideration to a physician based on the number of UR modifications, delays, or denials made by the physician.
- Provide the Division of Workers’ Compensation (DWC) with the explicit authority to review any compensation agreement, payment schedule, or contract between the employer, or any entity conducting utilization review on behalf of the employer, and the utilization review physician.
COMMENTS
1. Staff Comments on the Recent Amendments to SB 563:
The Committee last heard SB 563 on April 29, 2015. At that time, SB 563 included language prohibited the use of UR and IMR in certain circumstances and shifted medical dispute resolution from the IMR process to the Workers’ Compensation Appeals Board (WCAB). Due to the increase in WCAB workload, the fiscal impact of the language was estimated to be at least $12 million annually, leading to the 2015 version of SB 563 being held by the Senate Appropriations Committee.
SB 563 was amended on January 4th of this year to narrow to address fiscal costs. As currently written, SB 563 would clearly and explicitly prohibit the use of financial incentives to UR physicians on the basis of UR decisions. SB 563 would also allow the DWC to request compensation agreements to ensure compliance with the law. This request would almost certainly occur within the confines of Labor Code §129. However, this may need to be made explicit in order to simplify the implementation of this bill. Senator Pan’s office has committed to working with stakeholders to develop language to address this concern.
2. What is Utilization Review (UR)?
In California’s workers’ compensation system, an employer or insurer cannot deny treatment. When an employer or insurer receives a request for medical treatment, the employer or insurer can either approve the treatment or, if the employer or insurer believes that a physician’s request for treatment is medically unnecessary or harmful, the employer or insurer must send the request to Utilization Review.
Utilization Review (UR) is the review process for medical treatment recommendations by physicians to see if the request for medical treatment is medically necessary. The full UR process varies by vendor, but it generally involves initial review by a non-physician, with higher level review(s) being conducted by a physician or physicians. Only a licensed physician who is competent to evaluate the specific clinical issues involved in the medical treatment services may modify, delay, or deny a request for medical treatment. If the UR physician does modify, delay, or deny the medical treatment, then the injured worker can appeal the decision to Independent Medical Review (IMR), but without the UR decision there cannot be an IMR decision.
This process is triggered by the physician submitting a Request for Authorization for Medical Treatment (RFA), which is a Division of Workers’ Compensation (DWC) form where the physician details his or her diagnosis and treatment, and must include an additional form which provides a narrative and substantiates the need for treatment. As was discussed above, an employer or insurer cannot contest or in any way delay or deny treatment without sending the RFA through UR. (see State Compensation Insurance Fund v. WCAB (Sandhagen), 44 CAL. 4TH 230 (2008)).
3. Recent Research on UR and Treatment Denials:
Recently, UR has come under some scrutiny by stakeholders, many of whom argue that it is leading to a significant number of injured workers being denied care. This claim, however, is not currently supported by the data. As was discussed at the Committee’s March 25th oversight hearing, a recent study by the California Workers’ Compensation Institute (CWCI) found that only approximately 25% of medical treatment requests go through UR, with approximately 75% of the medical treatment requests approved. Once the approvals from UR and Independent Medical Review (IMR) are included, more than 94% of treatment is approved in California’s workers’ compensation system.
4. Proponent Arguments:
The California Medical Association (CMA) argues that SB 563 will increase transparency and accountability within the workers’ compensation utilization review process to ensure persons involved in authorizing injured worker medical care on behalf of the employer are not being inappropriately incentivized to modify, delay, or deny requests for medically necessary services. CMA notes that, while there is agreement among most that such an incentive is unacceptable, there currently is no explicit prohibition in statute ensuring it does not occur. By making such a prohibition explicit and giving the Division of Workers’ Compensation the explicit authority to ensure inappropriate incentives are not used, CMA argues that SB 563 is a necessary reform to California’s workers’ compensation system and brings California into line with other states that prohibit inappropriate UR incentives.
5. Prior Legislation:
SB 863 (DeLeon), Statutes of 2012, Chapter 363, was a holistic reform of California’s workers’ compensation system that, among other things, created the Independent Medical Review (IMR) process.
SB 228 (Alarcon), Statutes of 2003, Chapter 639, was a part of a larger reform of California’s workers’ compensation system that, among other things, created the Utilization Review (UR) process.
SUPPORT
California Medical Association (Sponsor)
California Labor Federation, AFL-CIO
California Orthopedic Association
OPPOSITION
None on file.
-- END --
SB 563 (Pan) Page 2 of 2
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 563 (Pan) - Workers’ compensation: utilization review.
|
|
Version: April 30, 2015 |
Policy Vote: L. & I.R. 4 - 1 |
Urgency: No |
Mandate: No |
Hearing Date: May 18, 2015 |
Consultant: Robert Ingenito |
This bill meets the criteria for referral to the Suspense File.
Bill Summary:
With respect to the State’s workers’ compensation system, SB 563 would restrict the utilization review process when future medical care is awarded in the final award by the Workers’ Compensation Appeals Board (WCAB), the request for medical treatment is specified on the final award, and the medical treatment is evidence based.
Fiscal Impact:
The Department of Industrial Relations indicates that it would incur first-year costs of $13.2 million and annual ongoing costs of $12.3 million to implement the provisions of the bill.
Background:
In California’s workers’ compensation system, an employer or insurer cannot deny treatment. When an employer or insurer receives a request for medical treatment, it can either approve the treatment or, if it believes that a physician’s request for treatment is medically unnecessary or harmful, the it must send the request to Utilization Review.
Utilization Review (UR) is the review process for medical treatment recommendations by physicians to see if the request for medical treatment is medically necessary. The full UR process varies, but generally involves initial review by a non-physician, with higher level review(s) being conducted by a physician or physicians. Only a licensed physician who is competent to evaluate the specific clinical issues involved in the medical treatment services may modify, delay, or deny a request for medical treatment. If the UR physician does modify, delay, or deny the medical treatment, then the injured worker can appeal the decision to Independent Medical Review (IMR), but without the UR decision there cannot be an IMR decision.
This process is triggered by the physician submitting a Request for Authorization for Medical Treatment (RFA), which is a Division of Workers’ Compensation (DWC) form where the physician details his or her diagnosis and treatment, and must include an additional form which provides a narrative and substantiates the need for treatment. As was discussed above, an employer or insurer cannot contest or in any way delay or deny treatment without sending the RFA through UR.
Proposed Law:
This bill would prohibit the use of UR for a treatment recommendation by a physician if (1) a final award of permanent disability made by the appeals board specifies the provision of future medical treatment, and (2) the request for medical treatment is for medical treatment that is specified by the award.
This bill would require that the written policies and procedures for a specific utilization review process include the method of compensation and incentive payments contingent on the approval, modification, or denial of a claim for an individual or entity providing utilization review services.
This bill would specify that the intent of the Legislature that the changes made to law by this act shall not have an impact on or alter in any way the decision of the court in Patterson v. Oaks Farm (2014) WL 3952788.
Staff Comments:
The Office of the Legislative Counsel has keyed this bill “non-fiscal.” However, the purview of this Committee, pursuant to Joint Rule 10.5, is to review and analyze bills that would, among other things, result in a substantial expenditure of state money. Thus, even though SB 563 was keyed “non-fiscal,” the Committee requested the bill to examine the extent to which it might potentially increase state costs.
As noted earlier, under current law, when an employee is injured on the job, an employer can approve the treatment prescribed by the employee’s physician or it must refer the claim to UR, where a third party administrator responsible for determining if the requested medical treatment is effective and safe based on evidence based medical guidelines established by the State. Generally, UR involves an initial review by a non-physician with higher-level reviews conducted by a physician or team of physicians. Only the UR physician can modify, delay, or deny a request for medical treatment; in these cases, the employee can contest the decision by requesting an Independent Medical Review (IMR) from the State. The UR and IMR are established in existing law and are subject to performance audit by the State and penalties for noncompliance.
SB 563 would change the existing process for medical treatment requests on cases where an award for future medical care for the effects of the injury has been included by WCAB in a final award for permanent disability. In such cases, SB 563 would stipulate that UR/IMR can only be used when the requested treatment may not be evidence based medicine or may not be related to the effects of the injury. Additionally, the bill would require an additional medical examination following an IMR to confirm the IMR determination and subject the findings of that examination to litigation before WCAB.
DIR anticipates that this bill could generate up to 40,000 additional hearings at WCAB every year, resulting in increased annual workload-related costs of $12 million ongoing.
-- END --
SB 563 (Pan) Page 5 of 5
SENATE COMMITTEE ON LABOR AND INDUSTRIAL RELATIONS
Senator Tony Mendoza, Chair
2015 - 2016 Regular
Bill No: SB 563 Hearing Date: April 29, 2015
Author: |
Pan |
||
Version: |
April 13, 2015 |
||
Urgency: |
No |
Fiscal: |
No |
Consultant: |
Gideon Baum |
||
Subject: Workers’ compensation: utilization review
KEY ISSUE
Should the Legislature prohibit the use of Utilization Review (UR) and Independent Medical Review (IMR) to review medical treatment if the treatment is ongoing and there is no evidence of changes in the circumstances or condition of the injured worker?
Should the Legislature shift medical dispute resolution from UR and IMR physicians to the Workers’ Compensation Appeals Board (WCAB)?
ANALYSIS
Existing law establishes a workers’ compensation system that provides benefits to an employee who suffers from an injury or illness that arises out of and in the course of employment, irrespective of fault. This system requires all employers to secure payment of benefits by either securing the consent of the Department of Industrial Relations to self-insure or by securing insurance against liability from an insurance company duly authorized by the state.
Existing law provides that medical, surgical, chiropractic, acupuncture, and hospital treatment, including nursing, medicines, medical and surgical supplies, crutches, and apparatuses, including orthotic and prosthetic devices and services, that is reasonably required to cure or relieve the injured worker from the effects of his or her injury shall be provided by the employer.
(Labor Code §4600)
Existing law requires that all employers create a utilization review process, which is a process that prospectively, retrospectively, or concurrently review and approve, modify, delay, or deny, based in whole or in part on medical necessity to cure and relieve, treatment recommendations by physicians, prior to, retrospectively, or concurrent with the provision of medical treatment services. (Labor Code §4610)
Existing law requires that each utilization review process shall be governed by written policies and that these policies and procedures, and a description of the utilization process, must be filed with the administrative director and shall be disclosed by the employer to employees, physicians, and the public upon request. (Labor Code §4610(c))
Existing law provides that, in the event over a dispute over a utilization review decision on or after July 1, 2014, all disputes must be submitted for Independent Medical Review (IMR). The independent reviewer’s information must be kept confidential.
(Labor Code §§4610.5 and 4610.6)
Existing law requires that, in the absence of fraud, error, or illegal conduct, the IMR decision is final and binding. (Labor Code §4610.6)
This bill would prohibit the use of utilization review for a treatment recommendation by a physician if all of the following conditions are met:
The treatment is solely for the purpose of maintaining an injured employee’s current healthcare regimen for a preexisting injury;
A prior recommendation for the injured employee was reviewed and approved or modified, in whole or in part on medical necessity and the injured worker’s current healthcare regimen is a result of that decision; and
There is no evidence of a change in the injured worker’s circumstances or condition showing that the services are no longer reasonably required to cure and relieve the injured worker from the effects of the industrial injury.
This bill would also require that the written policies and procedures for a specific utilization review process include the method of compensation and incentive payments contingent on the approval, modification, or denial of a claim for an individual or entity providing utilization review services.
COMMENTS
1. What is Utilization Review (UR)?
In California’s workers’ compensation system, an employer or insurer cannot deny treatment. When an employer or insurer receives a request for medical treatment, the employer or insurer can either approve the treatment or, if the employer or insurer believes that a physician’s request for treatment is medically unnecessary or harmful, the employer or insurer must send the request to Utilization Review.
Utilization Review (UR) is the review process for medical treatment recommendations by physicians to see if the request for medical treatment is medically necessary. The full UR process varies by vendor, but it generally involves initial review by a non-physician, with higher level review(s) being conducted by a physician or physicians. Only a licensed physician who is competent to evaluate the specific clinical issues involved in the medical treatment services may modify, delay, or deny a request for medical treatment. If the UR physician does modify, delay, or deny the medical treatment, then the injured worker can appeal the decision to Independent Medical Review (IMR), but without the UR decision there cannot be an IMR decision.
This process is triggered by the physician submitting a Request for Authorization for Medical Treatment (RFA), which is a Division of Workers’ Compensation (DWC) form where the physician details his or her diagnosis and treatment, and must include an additional form which provides a narrative and substantiates the need for treatment. As was discussed above, an employer or insurer cannot contest or in any way delay or deny treatment without sending the RFA through UR. (see State Compensation Insurance Fund v. WCAB (Sandhagen), 44 CAL. 4TH 230 (2008)).
SB 563 would prohibit an employer from applying the utilization review process and Independent Medical Review to cases where treatment had previously been approved or modified and there is no evidence of a change in the injured worker’s circumstances or condition.
2. Recent Research on UR and Treatment Denials:
Recently, UR has come under some scrutiny by stakeholders, many of whom argue that it is leading to a significant number of injured workers being denied care. This claim, however, is not currently supported by the data. As was discussed at the Committee’s March 25th oversight hearing, a recent study by the California Workers’ Compensation Institute (CWCI) found that only approximately 25% of medical treatment requests go through UR, with approximately 75% of the medical treatment requests approved. Once the approvals from UR and Independent Medical Review (IMR) are included, more than 94% of treatment is approved in California’s workers’ compensation system.
3. Amendments for SB 563:
This bill was initially heard on April 22nd. At that time, the author and sponsor committed to working on amendments with Committee staff. After significant communication between the Committee, the author’s office, and various stakeholders, amendments were developed that would exempt future medical awards from UR if the following conditions were met:
The physician’s request for treatment was specified in the request for medical treatment; and
The medical treatment is evidence based, as defined in the Medical Treatment Utilization Schedule (MTUS) created through regulation by the Division of Workers’ Compensation.
If the employer believes the treatment is not evidence based, he or she can submit the treatment to expedited UR and expedited IMR, but must continue to provide the treatment to the injured worker. Finally, if the treatment is found to not follow evidence based requirements, the amendments would give a limited process for the employer to have the injured worker seen by a Qualified Medical Examiner (QME) in order for a new evidence-based treatment to be stipulated to.
4. Proponent Arguments:
The California Medical Association (CMA), citing a survey from its members, argues that California’s workers’ compensation system is facing significant challenges and CMA is concerned that IMR may incentivize and allow the denial of necessary patient care. CMA also cites a recent ProPublica article on workers’ compensation as possible evidence that necessary home healthcare is being denied to injured workers. CMA therefore believes that SB 563 is necessary to clarify that previously authorized care must be honored, unless there is a change in condition, to limit this confusion in the future and make sure these tragic stories being reported by physicians and injured workers alike do not become the new normal in California’s workers’ compensation system. CMA also notes that SB 563 will increase transparency on how UR providers compensate individuals or entities providing utilization review services.
5. Opponent Arguments:
The California Chamber of Commerce argues that SB 563 undermines the entire medical treatment review process in California’s workers’ compensation system and exposes injured workers to potentially inappropriate treatment. Opponents note that both UR and IMR were designed to ensure that injured workers receive the most necessary, efficacious, and appropriate treatment and are regulated and audited by the Division of Workers’ Compensation. Opponents also note that there is no data or research to support the idea that UR and IMR are regularly delaying or denying necessary treatment and point to the recent CWCI study which shows that the vast majority of treatment is approved through the UR and IMR processes. Finally, opponents note that SB 563 will trigger significant system cost increases and subverting the recent data-driven reform processes that were approved by the Legislature.
6. Prior Legislation:
SB 863 (DeLeon), Statutes of 2012, Chapter 363, was a holistic reform of California’s workers’ compensation system that, among other things, created the Independent Medical Review (IMR) process.
SB 228 (Alarcon), Statutes of 2003, Chapter 639, was a part of a larger reform of California’s workers’ compensation system that, among other things, created the Utilization Review (UR) process.
SUPPORT
California Medical Association (Sponsor)
California Labor Federation, AFL-CIO
California Orthopedic Association
The California Applicants’ Attorneys Association
OPPOSITION
American Insurance Association
Associated General Contractors
Association of California Insurance Companies
California Association of Bed and Breakfast Inns
California Chamber of Commerce
California Coalition on Workers’ Compensation
California Grocers Association
California Hotel and Lodging Association
California League of Food Processors
California Lodging Industry Association
California Manufacturers and Technology Association
California Professional Association of Specialty Contractors
California Retailers Association
California State Association of Counties
California Trucking Association
CSAC Excess Insurance Authority
Pacific Compensation Insurance Company
Western Growers Association
Zenith Insurance Company
-- END --
SB 563 (Pan) Page 6 of 6
SENATE COMMITTEE ON LABOR AND INDUSTRIAL RELATIONS
Senator Tony Mendoza, Chair
2015 - 2016 Regular
Bill No: SB 563 Hearing Date: April 22, 2015
Author: |
Pan |
||
Version: |
April 13, 2015 |
||
Urgency: |
No |
Fiscal: |
No |
Consultant: |
Gideon Baum |
||
Subject: Workers’ compensation: utilization review
KEY ISSUE
Should the Legislature prohibit the use of Utilization Review (UR) and Independent Medical Review (IMR) to review medical treatment if the treatment is ongoing and there is no evidence of changes in the circumstances or condition of the injured worker?
Should the Legislature shift medical dispute resolution from UR and IMR physicians to the Workers’ Compensation Appeals Board (WCAB)?
ANALYSIS
Existing law establishes a workers’ compensation system that provides benefits to an employee who suffers from an injury or illness that arises out of and in the course of employment, irrespective of fault. This system requires all employers to secure payment of benefits by either securing the consent of the Department of Industrial Relations to self-insure or by securing insurance against liability from an insurance company duly authorized by the state.
Existing law provides that medical, surgical, chiropractic, acupuncture, and hospital treatment, including nursing, medicines, medical and surgical supplies, crutches, and apparatuses, including orthotic and prosthetic devices and services, that is reasonably required to cure or relieve the injured worker from the effects of his or her injury shall be provided by the employer.
(Labor Code §4600)
Existing law requires that all employers create a utilization review process, which is a process that prospectively, retrospectively, or concurrently review and approve, modify, delay, or deny, based in whole or in part on medical necessity to cure and relieve, treatment recommendations by physicians, prior to, retrospectively, or concurrent with the provision of medical treatment services. (Labor Code §4610)
Existing law requires that each utilization review process shall be governed by written policies and that these policies and procedures, and a description of the utilization process, must be filed with the administrative director and shall be disclosed by the employer to employees, physicians, and the public upon request. (Labor Code §4610(c))
Existing law provides that, in the event over a dispute over a utilization review decision on or after July 1, 2014, all disputes must be submitted for Independent Medical Review (IMR). The independent reviewer’s information must be kept confidential.
(Labor Code §§4610.5 and 4610.6)
Existing law requires that, in the absence of fraud, error, or illegal conduct, the IMR decision is final and binding. (Labor Code §4610.6)
This bill would prohibit the use of utilization review for a treatment recommendation by a physician if all of the following conditions are met:
The treatment is solely for the purpose of maintaining an injured employee’s current healthcare regimen for a preexisting injury;
A prior recommendation for the injured employee was reviewed and approved or modified, in whole or in part on medical necessity and the injured worker’s current healthcare regimen is a result of that decision; and
There is no evidence of a change in the injured worker’s circumstances or condition showing that the services are no longer reasonably required to cure and relieve the injured worker from the effects of the industrial injury.
This bill would also require that the written policies and procedures for a specific utilization review process include the method of compensation and incentive payments contingent on the approval, modification, or denial of a claim for an individual or entity providing utilization review services.
COMMENTS
1. What is Utilization Review (UR)?
In California’s workers’ compensation system, an employer or insurer cannot deny treatment. When an employer or insurer receives a request for medical treatment, the employer or insurer can either approve the treatment or, if the employer or insurer believes that a physician’s request for treatment is medically unnecessary or harmful, the employer or insurer must send the request to Utilization Review.
Utilization Review (UR) is the review process for medical treatment recommendations by physicians to see if the request for medical treatment is medically necessary. The full UR process varies by vendor, but it generally involves initial review by a non-physician, with higher level review(s) being conducted by a physician or physicians. Only a licensed physician who is competent to evaluate the specific clinical issues involved in the medical treatment services may modify, delay, or deny a request for medical treatment. If the UR physician does modify, delay, or deny the medical treatment, then the injured worker can appeal the decision to Independent Medical Review (IMR), but without the UR decision there cannot be an IMR decision.
This process is triggered by the physician submitting a Request for Authorization for Medical Treatment (RFA), which is a Division of Workers’ Compensation (DWC) form where the physician details his or her diagnosis and treatment, and must include an additional form which provides a narrative and substantiates the need for treatment. As was discussed above, an employer or insurer cannot contest or in any way delay or deny treatment without sending the RFA through UR. (see State Compensation Insurance Fund v. WCAB (Sandhagen), 44 CAL. 4TH 230 (2008)).
SB 563 would prohibit an employer from applying the utilization review process and Independent Medical Review to cases where treatment had previously been approved or modified and there is no evidence of a change in the injured worker’s circumstances or condition.
2. Recent Research on UR and Treatment Denials:
Recently, UR has come under some scrutiny by stakeholders, many of whom argue that it is leading to a significant number of injured workers being denied care. This claim, however, is not currently supported by the data. As was discussed at the Committee’s March 25th oversight hearing, a recent study by the California Workers’ Compensation Institute (CWCI) found that only approximately 25% of medical treatment requests go through UR, with approximately 75% of the medical treatment requests approved. Once the approvals from UR and Independent Medical Review (IMR) are included, more than 94% of treatment is approved in California’s workers’ compensation system.
3. Several Key Questions Regarding SB 563:
It would be very difficult to predict the full impact of SB 563 on California’s workers’ compensation system. Noting that the Utilization Review process has been required since 2004, SB 563 would upend and nullify more than a decade of case law and industry practice. As such, SB 563 raises many important questions, several of which will be discussed below.
Medical Dispute Resolution under SB 563:
Currently, when an employer disputes a medical treatment recommendation, the dispute is settled by doctors. As was noted above, only a licensed physician can deny or delay treatment through UR. If a UR physician does deny or delay treatment, the injured worker can then request that their request for treatment goes through Independent Medical Review (IMR). Again, IMR is done by physicians, who are independent and experts in their relevant area.
Under SB 563, it is unclear how such disputes would be resolved, as the bill language is unclear. It is probable, however, that the dispute resolution would instead shift to the Workers’ Compensation Appeals Board (WCAB). This would place Administrative Law Judges (ALJs) in the position of deciding such threshold issues such as if the injured worker’s condition had not changed, possibly as well as if the medical treatment is appropriate. In short, SB 563 would probably shift the resolution of medical disputes from doctors to WCAB Administrative Law Judges who lack medical expertise, as well as lengthen the amount of time required to resolve medical disputes. The Committee may wish to consider the policy implications of such a change to existing law.
Opioids under SB 563:
As has been discussed in prior legislative and oversight hearings by this Committee, the use of opioids in the management of chronic pain remains a vexing challenge in California’s workers’ compensation system. While all stakeholders agree that the management of chronic pain is a necessary component of California’s workers’ compensation system, studies conducted by CWCI suggest significant misuse and abuse of exceptional strong Schedule II opioids, such as fentanyl. According to the CDC, fentanyl is hundreds of times more potent than heroin and is a drug of abuse.
Under SB 563, it would be nearly impossible to control the utilization of opioids by injured workers. If opioids were approved, then such an approval would essentially be open-ended, which is an outcome that was recently rejected by the WCAB (see McCool v. Monterey Bay Medicar, ADJ2086501 (2014)). Noting that SB 563 also includes modified UR decisions, it would also be nearly impossible to taper opioids if abuse was likely. The Committee may wish to consider if such a change to existing law could increase the likelihood of opioid abuse in California’s workers’ compensation system.
SB 563 and Administrative Complexity
Beyond the issues discussed above, SB 563 poses two additional unique challenges for employers administrating workers’ compensation claims. The first issue is that the provisions of SB 563 are not self-administrating, and the responsibilities for employers and medical providers are not clear. Would the medical provider still need to submit an RFA? Would the RFA need to be changed? What would happen if a medical treatment which fell under SB 563 was still put through UR? All of these questions likely entail additional litigation and administrative costs for employers.
The second issue is possible system challenges in shifting the role of UR in California’s workers’ compensation system. As was noted above, denials of medical treatment are currently infrequent in California’s workers’ compensation system. If, however, approving or modifying a claim through UR will prevent further medical outcome-based review either through UR or IMR, SB 563 may incentivize medical treatment denials in order to ensure that treatment requests can continue to be reviewed through IMR. If this occurred, SB 563 would delay the provision of medical care and increase administrative costs throughout California’s workers’ compensation system.
4. Technical Issues with SB 563:
Beyond the policy issues delineated above, SB 563 also has several technical issues which will require additional work should the bill continue to progress through the legislative process. These include:
Clarifying the medical dispute process: A strict reading of SB 563 would suggest that an employer would be completely unable to contest any treatment once it had been initially approved. This is likely unconstitutional. The author may wish to clarify the ability of an employer to contest treatment to avoid unnecessary litigation.
Use of the term “preexisting condition”: While preexisting condition is a well-known term in group health, this term isn’t used in California’s workers’ compensation system, and it may open the door to non-industrial injuries and illnesses being required to be treated in California’s workers’ compensation system. Again, this is likely unconstitutional. The author may wish to strike this terminology from the bill.
5. Proponent Arguments:
The California Medical Association (CMA), citing a survey from its members, argues that California’s workers’ compensation system is facing significant challenges and CMA is concerned that IMR may incentivize and allow the denial of necessary patient care. CMA also cites a recent ProPublica article on workers’ compensation as possible evidence that necessary home healthcare is being denied to injured workers. CMA therefore believes that SB 563 is necessary to clarify that previously authorized care must be honored, unless there is a change in condition, to limit this confusion in the future and make sure these tragic stories being reported by physicians and injured workers alike do not become the new normal in California’s workers’ compensation system. CMA also notes that SB 563 will increase transparency on how UR providers compensate individuals or entities providing utilization review services.
6. Opponent Arguments:
The California Chamber of Commerce argues that SB 563 undermines the entire medical treatment review process in California’s workers’ compensation system and exposes injured workers to potentially inappropriate treatment. Opponents note that both UR and IMR were designed to ensure that injured workers receive the most necessary, efficacious, and appropriate treatment and are regulated and audited by the Division of Workers’ Compensation. Opponents also note that there is no data or research to support the idea that UR and IMR are regularly delaying or denying necessary treatment and point to the recent CWCI study which shows that the vast majority of treatment is approved through the UR and IMR processes. Finally, opponents note that SB 563 will trigger significant system cost increases and subverting the recent data-driven reform processes that were approved by the Legislature.
7. Prior Legislation:
SB 863 (DeLeon), Statutes of 2012, Chapter 363, was a holistic reform of California’s workers’ compensation system that, among other things, created the Independent Medical Review (IMR) process.
SB 228 (Alarcon), Statutes of 2003, Chapter 639, was a part of a larger reform of California’s workers’ compensation system that, among other things, created the Utilization Review (UR) process.
SUPPORT
California Medical Association (Sponsor)
California Labor Federation, AFL-CIO
California Orthopedic Association
The California Applicants’ Attorneys Association
OPPOSITION
American Insurance Association
Associated General Contractors
Association of California Insurance Companies
California Association of Bed and Breakfast Inns
California Chamber of Commerce
California Coalition on Workers’ Compensation
California Grocers Association
California Hotel and Lodging Association
California League of Food Processors
California Lodging Industry Association
California Manufacturers and Technology Association
California Professional Association of Specialty Contractors
California Retailers Association
California State Association of Counties
California Trucking Association
CSAC Excess Insurance Authority
Pacific Compensation Insurance Company
Western Growers Association
Zenith Insurance Company
-- END --
Discussed in Hearing
3MIN
Senate Floor
21SEC
Senate Standing Committee on Appropriations
4MIN
Senate Standing Committee on Appropriations
Bill Author
Bill Co-Author(s):