BILL ANALYSIS
Senate Committee on Labor and Industrial Relations
Mark DeSaulnier, Chair
Date of Hearing: June 23, 2010 2009-2010 Regular
Session
Consultant: Alma Perez Fiscal:Yes
Urgency: No
Bill No: AB 933
Author: Fong
Version: As amended June 14, 2010
SUBJECT
Workers' compensation: medical treatment.
KEY ISSUES
Should the authority to perform workers' compensation
utilization reviews of medical treatment be restricted to
California licensed physicians only?
Should an employer or insurer seeking approval of an MPN be
required to re-apply every three years?
Should the Legislature delete the option of referring to the
American College of Occupational Medicine's Occupational
Medicine Practice Guidelines for medical treatment now that the
Division of Workers Compensation (DWC) has an established
Medical Treatment Utilization Schedule (MTUS)?
PURPOSE
To prohibit workers' compensation medical treatment evaluations
by physicians not licensed in California. To establish
requirements for employers or insurers to follow when submitting
a plan for MPN approval. To restrict the use of the
Occupational Medicine's Occupational Medicine Practice
Guidelines when providing medical treatment.
ANALYSIS
Existing law establishes a workers' compensation system,
administered by the Administrative Director (AD) of the Division
of Workers' Compensation (DWC), to compensate an employee for
injuries that arise out of, or in the course of, employment.
Employers are required to secure the payment of workers'
compensation for injuries incurred by their employees.
Existing law requires every employer to secure the payment of
workers' compensation either by being insured against liability
by one or more insurers duly authorized to write compensation
insurance in this state or by securing a certificate of consent
to self-insure from the Director of Industrial Relations.
Existing law requires an insurer, with certain exceptions, to
discuss all elements of a workers' compensation claim file that
affect the employer's premium with the employer, and to supply
copies of the documents that affect the premium at the
employer's expense during reasonable business hours.
Existing law requires every employer to establish a medical
treatment utilization review (UR) process to determine whether
or not to approve medical treatment recommended by a physician
which must be based on the medical treatment guidelines. Under
existing law:
Every employer must establish a UR process, in
compliance with specified requirements, either directly or
through its insurer or an entity with which the employer or
insurer contracts for these services.
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 physician's 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.
Existing law authorizes an employer or insurer to establish or
modify a medical provider network (MPN) for the provision of
medical treatment to injured employees, and to submit a medical
provider network plan to the administrative director for
approval. An MPN is an entity or group health care providers
set up to treat workers injured on the job. Under state
regulations, each MPN must include a mix of doctors specializing
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in work-related injuries and doctors with expertise in general
areas of medicine. MPNs are required to meet access to care
standards for common occupational injuries and work-related
illnesses. The MPN program became effective January 1, 2005 and
employees can be covered by an MPN once a plan has been approved
by the DWC administrative director.
This Bill would modify workers' compensation requirements
pertaining to licensed physicians who conduct utilization review
and requirements for approval of a medical provider network.
Specifically, this bill would:
1. Require that a physician who is conducting utilization
review be licensed in California. In addition, this bill
would modify the definition for "psychologist" to require
that, for workers' compensation purposes, the psychologist
be licensed by California state law.
2. With respect to the requirement in law that an insurer
discuss all elements of the claim file that affect the
employer's workers' compensation premium, this bill would
expressly provide that "elements of the claim" includes a
loss adjustment expense paid as a result of medical cost
containment services.
3. Require an employer or insurer who seeks renewal of its
medical provider network (MPN) by submitting a plan for
approval with the administrative director of DIR to:
a. Seek re-approval of an MPN every 3 years;
b. Submit its plan at least 60 days prior to the
anniversary of the plan's three-year approval term;
c. Include in its plan information required to
determine eligibility, however, the employer or
insurer may submit a statement signed under penalty of
perjury if there have been no changes to the plan
since its last approval and the administrative can
approve the plan for a new three-year term;
d. Resubmit a plan for approval, if the plan was
approved before January 1, 2011, as specified;
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4. Require that treatment under an MPN be provided in
accordance with the medical treatment utilization schedule
established by the administrative director (Labor Code
5307.27) only, by deleting the section in law that
provides the option of using the American College of
Occupational Medicine's Occupational Medicine Practice
Guidelines as appropriate.
5. Require that a physician within an MPN who is involved
in the evaluation of specific clinical issues involving
medical treatment services be licensed by California state
law.
6. Require that, by April 1, 2011, the administrative
director require that procedures be established to ensure
that a list of the MPNs available for selection to provide
treatment to an injured employee is accurate and updated
semiannually.
COMMENTS
1. DWCs Medical Treatment Utilization Schedule (MTUS)
Doctors in California's workers' compensation system are
required to provide evidence-based medical treatment that
scientifically proves to cure or relieve work-related injuries
and illnesses. Existing law specifies that all treatment
provided shall be provided in accordance with the medical
treatment utilization schedule (MTUS) or the American College
of Occupational Medicine Practice Guidelines (ACOEM), as
appropriate.
The MTUS contains a set of guidelines that provide details on
which treatments are effective for certain injuries, as well
as how often the treatment should be given, the extent of the
treatment, and for how long, among other things. As of
January 1, 2004, the DWC administrative director was charged
with adopting an MTUS that would be presumed correct on the
issue of extent and scope of medical treatment, and made the
American College of Occupational and Environmental Medicine
Practice Guidelines, 2nd Edition, (ACOEM) the standard until
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the adoption of an MTUS by the administrative director. The
MTUS became effective on June 15, 2007 and among other things,
the MTUS regulations incorporated the ACOEM Practice
Guidelines and acupuncture guidelines. The MTUS regulations
have since been updated with changes taking effect July 18,
2009.
2. Background on Physicians practicing UR in California under
the Workers' Comp System:
According to the Medical Board, a decision to delay, modify or
deny a medical treatment constitutes the practice of medicine,
and the Board would have jurisdiction over this act. However,
the Business and Professions Code (Section 2220.05)
establishes an order of priority of the Board's resources, and
the five listed priorities do not include any language that
would refer to violations of professional standards in the
conduct of utilization review (UR).
Because the Medical Board deems the performance of UR to be
the practice of medicine, and because the treatment at issue
is to be provided (in most cases) to a California
resident, many people have argued that by operation of the
Medical Practice Act only a California-licensed physician can
lawfully perform the UR function. The administrative director
of the DWC, however, declined to adopt this interpretation of
the law when the regulations to implement the UR statute were
adopted. Because there is logic to this analysis, it must be
inferred that the AD concluded that the new Labor Code
provision constituted a statutory exception to the general
Medical Practice Act rule. That issue has never been
litigated, but many supporters believe there was no intent in
the 2004 workers' compensation reforms to modify the general
rules governing the practice of medicine. Thus, they argue
this bill is clarifying existing statutory law that has been
misconstrued.
3. Need for this bill?
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Physicians not licensed in California may be unfamiliar with
the specifics of California workers' compensation law and/or
the details of the requirements of utilization review here;
they may thus be more likely to fail to follow California work
comp law. Proponents of the bill believe that out-of-state
utilization review physicians are making inappropriate
decisions and that in addition, there is no regulatory
structure to hold them accountable. This bill would require
that a physician who is conducting utilization review be
licensed in California. The author argues that this would
ensure that there is a regulatory oversight body, the Medical
Board, which can discipline a utilization physician in the
event the physician violates practice standards.
Existing law requires that all medical treatment provided
under the workers' compensation system be provided in
accordance with the medical treatment utilization schedule
established pursuant to Labor Code 5307.27 (DWCs MTUS) or the
American College of Occupational Medicine's Occupational
Medicine Practice Guidelines, as appropriate. This bill would
delete the reference to the American College Practice
Guidelines, and thus would specify that all treatment be
provided in accordance with the MTUS. The author argues that
this would recognize that the MTUS is now established and
there is no longer any need to refer in statute to the ACOEM
Guidelines or any other specific treatment guideline by name.
*Note: The DWC administrative director adopts and incorporates
specific guidelines into the MTUS set forth from the ACOEM
Practice Guidelines.
Lastly, this bill would establish a procedure by which an
employer or insurer seeking to continue operating a Medical
Provider Network (MPN) plan would have to re-apply for
approval from the administrative director of the DWC every
three years. The author argues that this is intended to
assure that each MPN plan meets state requirements by means of
recertification every three years.
4. Proponent Arguments :
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According to proponents, an out-of-state UR entity may
understand the application of the ACOEM guidelines, but it is
not always familiar with all the aspects of California
workers' compensation system that are necessary. Proponents
argue that effective and fair utilization review rests upon a
physician knowledgeable of the laws and regulations that
govern that particular state's workers' compensation system.
Proponents argue that requiring a California license will make
it easier for the reviewing doctor and treating doctor to
communicate, thereby enhancing the chances of a re-evaluation
of any decision to deny or modify treatment requests. Many
treating physicians have complained about the difficulty of
communicating with reviewers three time zones away, and
proponents believe this bill will improve the situation
(although it should be noted that an East Coast-based
physician can hold a California license). Proponents also
believe that having reviewing physicians regulated by the
Medical Board will provide appropriate oversight and quality
control that is not available for non-California licensed
physicians. Supporters also point out that many utilization
review companies already employ only California-licensed
physicians, and assert that there is no shortage of these
physicians.
5. Opponent Arguments :
According to opponents, utilization review was one of the most
important provisions for employers in the 2004 workers'
compensation reform. They believe that this bill undermines
their ability to effectively conduct utilization review by
causing delays and increasing costs. They argue that the
medical treatment issues are not unique to California in law
or practice as the ACOEM Guidelines have been used in many
states for far longer than they have been used in California.
Opponents argue that there is no specific knowledge that is
unique to California-licensed physicians, and to limit
utilization reviews to these physicians would only have the
effect of limiting the number of available reviewing
physicians, which would drive up the cost.
Additionally, with regard to the new requirements for
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re-certification of a Medical Provider Network, opponents
argue that MPN certification filings are quite complex and it
is unreasonable to require a signature under penalty of
perjury because simple mistakes could lead to criminal
prosecution. Opponents argue that these new requirements will
only increase the cost of administering an MPN without
offering any additional value to injured workers.
6. Prior Legislation :
AB 2969 (Lieber) of 2008: Vetoed by the Governor
This bill would have prohibited utilization reviews by
physicians not licensed in California in order to ensure
compliance with California workers' compensation law. In his
veto the Governor stated that, "This bill would require a
physician conducting utilization review in the workers'
compensation system to be licensed in California. Such a
requirement would be inconsistent with how utilization review
is conducted in other areas of medicine in and not in line
with best practices nationwide. The proponents of this
measure have not demonstrated a need for this disparity in
treatment."
SUPPORT
American Federation of State, County and Municipal Employees,
AFL-CIO Sponsor
Union of American Physicians and Dentists UAPD/AFSCME -
Co-sponsor
California Society of Industrial Medicine and Surgery -
Co-sponsor
California Society of Physical Medicine and Rehabilitation -
Co-sponsor
15 letters from individual doctors
Association for Los Angeles Deputy Sheriffs
California Applicants' Attorneys Association
California Chiropractic Association
California Labor Federation
California Medical Association
California Nurses Association/National Nurses Organizing
Committee
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Senate Committee on Labor and Industrial Relations
California Orthopaedic Association
California School Employees Association
California State Employees Association
International Chiropractors Association of California
Los Angeles Police Protective League
Los Angeles Probation Officers Union, Local 685
Medical Board of California
Parthenia Medical Group, Inc.
Peace Officers Research Association of California
Riverside Sheriffs' Association
U.S. Healthworks
Western Occupational and Environmental Medical Association
OPPOSITION
Alpha Fund
Association of California Insurance Companies - ACIC
Association of California Water Agencies
California Association of Joint Powers Authorities
California Chamber of Commerce
California Coalition on Workers' Compensation
California Special Districts Association
California State Association of Counties
CSAC EXCESS Insurance Authority [a Joint Powers Authority].
Department of Industrial Relations
League of California Cities
Regional Council of Rural Counties
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Senate Committee on Labor and Industrial Relations