Amended in Assembly June 23, 2015

Amended in Assembly June 4, 2015

Amended in Senate April 6, 2015

Senate Bill No. 542

Introduced by Senator Mendoza

February 26, 2015

An act to amend begin delete Section end delete begin insert Sections 4616, 4616.2, 4616.4, 4616.5, and end insert 5307.8 of the Labor Code, relating to workers’ compensation.

LEGISLATIVE COUNSEL’S DIGEST

SB 542, as amended, Mendoza. Workers’ compensation: begin delete home health care services: end delete begin insert medical provider networks end insert fee schedules.

begin insert

(1) Existing law establishes a worker’s compensation system, administered by the Administrative Director of the Division of Workers’ Compensation, to compensate an employee for injuries sustained in the course of his or her employment. Existing law authorizes an insurer, employer, or entity that provides physician network services to establish or modify a medical provider network for the provision of medical treatment to injured employees, and requires the administrative director to contract with individual physicians or an independent medical review organization to perform independent medical reviews.

end insert begin insert

This bill would clarify that those independent medical reviews are medical provider network independent medical reviews. The bill would make conforming changes.

end insert begin insert

(2) Existing law requires every medical provider network to post, and update quarterly, a roster of treating physicians in the medical provider network on its Internet Web site.

end insert begin insert

This bill would require every medical provider network to post on its Internet Web site information about how to contact the medical provider network contact and medical access assistants, and also information about how to obtain a copy of the complete employee notification, as defined.

end insert begin insert

(3) Existing law requires an insurer, employer, or entity that provides physician network services to submit a plan for the medical provider network to the administrative director to be approved for a period of 4 years. Commencing January 1, 2014, existing approved plans are deemed approved for a period of 4 years from their most recent application or modification approval date.

end insert begin insert

This bill would provide that, commencing January 1, 2016, a modification that updates an entire medical provider network plan to bring the plan into full compliance with applicable laws would be deemed approved for a period of 4 years from the modification approval date. The bill would provide that the expiration of the medical provider network’s current 4-year approval period will not change if a modification does not update a medical provider network plan to bring the plan into full compliance with applicable laws.

end insert begin insert

(4) Existing law requires an insurer, employer, or entity that provides physician network services to file continuity of care policies. Existing law requires an insurer, employer, or entity that provides physician network services to provide completion of treatment by a terminated provider if at the time of the employer-employee contract’s termination, the injured employee was receiving services from that provider for various conditions, as specified.

end insert begin insert

This bill would instead require medical provider networks to file continuity of care policies. The bill would require an employer or its claims administrator to provide for the completion of treatment by a terminated provider under specified circumstances.

end insert begin insert

The bill would also define an “entity that provides physician network services” for the purposes described above to mean a medical network licensed by a designated government department or a legal entity that offers medical management and physician network services within California.

end insert begin delete

Existing law establishes a workers’ compensation system, administered by the Administrative Director of the Division of Workers’ Compensation, to compensate an employee for injuries sustained in the course of his or her employment. Existing

end delete

begin insert (5) end insert begin insert   end insert begin insert Existing end insert law requires the administrative director to adopt an official medical fee schedule that establishes reasonable maximum fees paid for specified medical services related to workers’ compensation. Existing law also requires the administrative director to adopt a schedule for payment of home health care services that are not covered by a Medicare fee schedule and are not otherwise covered by the official medical fee schedule. Existing law requires this fee schedule to be based on the maximum service hours and fees set forth in provisions of law governing in-home supportive services.

This bill would authorize, rather than require, the fee schedule to be based on either the maximum service hours and fees set forth in provisions of state law governing in-home supportive services or other state or federal home health care services fee schedules, as specified.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert Section 4616 of the end insert begin insert Labor Code end insert begin insert is amended to
read: end insert

4616.  

(a) (1) On or after January 1, 2005, an insurer, employer,
or entity that provides physician network services may establish
or modify a medical provider network for the provision of medical
treatment to injured employees. The network shall include
physicians primarily engaged in the treatment of occupational
injuries. The administrative director shall encourage the integration
of occupational and nonoccupational providers. The number of
physicians in the medical provider network shall be sufficient to
enable treatment for injuries or conditions to be provided in a
timely manner. The provider network shall include an adequate
number and type of physicians, as described in Section 3209.3, or
other providers, as described in Section 3209.5, to treat common
injuries experienced by injured employees based on the type of
occupation or industry in which the employee is engaged, and the
geographic area where the employees are employed.

(2) Medical treatment for injuries shall be readily available at
reasonable times to all employees. To the extent feasible, all
medical treatment for injuries shall be readily accessible to all
employees. With respect to availability and accessibility of
treatment, the administrative director shall consider the needs of
rural areas, specifically those in which health facilities are located
at least 30 miles apart and areas in which there is a health care
shortage.

(3) Commencing January 1, 2014, a treating physician shall be
included in the network only if, at the time of entering into or
renewing an agreement by which the physician would be in the
network, the physician, or an authorized employee of the physician
or the physician’s office, provides a separate written
acknowledgment in which the physician affirmatively elects to be
a member of the network. Copies of the written acknowledgment
shall be provided to the administrative director upon the
administrative director’s request. This paragraph shall not apply
to a physician who is a shareholder, partner, or employee of a
medical group that elects to be part of the network.

(4)  begin insert (A) end insert begin insert   end insert Commencing January 1, 2014, every medical provider
network shall post on its Internet Web site a roster of all treating
physicians in the medical provider network and shall update the
roster at least quarterly. Every network shall provide to the
administrative director the Internet Web site address of the network
and of its roster of treating physicians. The administrative director
shall post, on the division’s Internet Web site, the Internet Web
site address of every approved medical provider network.

begin insert

(B) Commencing January 1, 2016, every medical provider
network shall post on its Internet Web site information about how
to contact the medical provider network contact and medical access
assistants, and information about how to obtain a copy of the
complete employee notification.

end insert begin insert

(C) For purposes of this paragraph, an “complete employee
notification” shall have the same meaning as provided in Section
9767.12 of Title 8 of the California Code of Regulations.

end insert

(5) Commencing January 1, 2014, every medical provider
network shall provide one or more persons within the United States
to serve as medical access assistants to help an injured employee
find an available physician of the employee’s choice, and
subsequent physicians if necessary, under Section 4616.3. Medical
access assistants shall have a toll-free telephone number that
injured employees may use and shall be available at least from 7
a.m. to 8 p.m. Pacific Standard Time, Monday through Saturday,
inclusive, to respond to injured employees, contact physicians’
offices during regular business hours, and schedule appointments.
The administrative director shall promulgate regulations on or
before July 1, 2013, governing the provision of medical access
assistants.

(b) (1) An insurer, employer, or entity that provides physician
network services shall submit a plan for the medical provider
network to the administrative director for approval. The
administrative director shall approve the plan for a period of four
years if he or she determines that the plan meets the requirements
of this section. If the administrative director does not act on the
plan within 60 days of submitting the plan, it shall be deemed
approved. Commencing January 1, 2014, existing approved plans
shall be deemed approved for a period of four years from the
begin insert approval date of the end insert most recent application or modification
begin delete approval date. end delete begin insert submitted prior to 2014. end insert Plans for reapproval for
medical provider networks shall be submitted at least six months
before the expiration of the four-year approval period. begin insert Commencing
January 1, 2016, a modification that updates an entire medical
provider network plan to bring the plan into full compliance with
all current statutes and regulations shall be deemed approved for
a period of four years from the modification approval date. An
approved modification that does not update an entire medical
provider network plan to bring the plan into full compliance with
all current statutes and regulations shall not alter the expiration
of the medical provider network’s four-year approval period. end insert Upon
a showing that the medical provider network was approved or
deemed approved by the administrative director, there shall be a
conclusive presumption on the part of the appeals board that the
medical provider network was validly formed.

(2) Every medical provider network shall establish and follow
procedures to continuously review the quality of care, performance
of medical personnel, utilization of services and facilities, and
costs.

(3) Every medical provider network shall submit geocoding of
its network for reapproval to establish that the number and
geographic location of physicians in the network meets the required
access standards.

(4) The administrative director shall at any time have the
discretion to investigate complaints and to conduct random reviews
of approved medical provider networks.

(5) Approval of a plan may be denied, revoked, or suspended
if the medical provider network fails to meet the requirements of
this article. Any person contending that a medical provider network
is not validly constituted may petition the administrative director
to suspend or revoke the approval of the medical provider network.
The administrative director may adopt regulations establishing a
schedule of administrative penalties not to exceed five thousand
dollars ($5,000) per violation, or probation, or both, in lieu of
revocation or suspension for less severe violations of the
requirements of this article. Penalties, probation, suspension, or
revocation shall be ordered by the administrative director only
after notice and opportunity to be heard. Unless suspended or
revoked by the administrative director, the administrative director’s
approval of a medical provider network shall be binding on all
persons and all courts. A determination of the administrative
director may be reviewed only by an appeal of the determination
of the administrative director filed as an original proceeding before
the reconsideration unit of the workers’ compensation appeals
board on the same grounds and within the same time limits after
issuance of the determination as would be applicable to a petition
for reconsideration of a decision of a workers’ compensation
administrative law judge.

(c) Physician compensation may not be structured in order to
achieve the goal of reducing, delaying, or denying medical
treatment or restricting access to medical treatment.

(d) If the employer or insurer meets the requirements of this
section, the administrative director may not withhold approval or
disapprove an employer’s or insurer’s medical provider network
based solely on the selection of providers. In developing a medical
provider network, an employer or insurer shall have the exclusive
right to determine the members of their network.

(e) All treatment provided shall be provided in accordance with
the medical treatment utilization schedule established pursuant to
Section 5307.27.

(f) No person other than a licensed physician who is competent
to evaluate the specific clinical issues involved in the medical
treatment services, when these services are within the scope of the
physician’s practice, may modify, delay, or deny requests for
authorization of medical treatment.

(g) Commencing January 1, 2013, every contracting agent that
sells, leases, assigns, transfers, or conveys its medical provider
networks and their contracted reimbursement rates to an insurer,
employer, entity that provides physician network services, or
another contracting agent shall, upon entering or renewing a
provider contract, disclose to the provider whether the medical
provider network may be sold, leased, transferred, or conveyed to
other insurers, employers, entities that provide physician network
services, or another contracting agent, and specify whether those
insurers, employers, entities that provide physician network
services, or contracting agents include workers’ compensation
insurers.

(h) On or before November 1, 2004, the administrative director,
in consultation with the Department of Managed Health Care, shall
adopt regulations implementing this article. The administrative
director shall develop regulations that establish procedures for
purposes of making medical provider network modifications.

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 4616.2 of the end insert begin insert Labor Code end insert begin insert is amended to read: end insert

4616.2.  

(a)  begin delete An insurer, employer, or entity that provides
physician network services that arranges for care for injured
employees through a end delete begin insert A end insert medical provider network shall file a written
continuity of care policy with the administrative director.

(b) If approved by the administrative director, the provisions of
the written continuity of care policy shall replace all prior
continuity of care policies. begin delete The insurer, employer, or entity that
provides physician end delete begin insert A medical provider end insert network begin delete services end delete shall file
a revision of the continuity of care policy with the administrative
director if it makes a material change to the policy.

(c)  begin delete The insurer, employer, or entity that provides physician
network services shall provide to all end delete begin insert All end insert employees entering the
workers’ compensation system begin insert shall be provided end insert notice of begin delete its end delete begin insert the
medical provider network’s end insert written continuity of care policy and
information regarding the process for an employee to request a
review under the policy begin delete and shall provide, end delete begin insert and, end insert upon request, a
copy of the begin insert medical provider network’s end insert written begin delete policy to an
employee. end delete begin insert continuity of care policy. end insert

(d) (1)  begin delete An insurer, employer, or entity that provides physician
network services that offers a medical provider network shall, at end delete
begin insert At end insert the request of an injured employee, begin delete provide the end delete completion of
treatment begin insert shall be provided by a terminated provider end insert as set forth
in this begin delete section by a terminated provider. end delete begin insert section. end insert

(2) The completion of treatment shall be provided by a
terminated provider to an injured employee who, at the time of the
contract’s termination, was receiving services from that provider
for one of the conditions described in paragraph (3).

(3) The begin delete insurer, employer, end delete begin insert employer end insert or begin delete entity that provides
physician network services end delete begin insert its claims administrator end insert shall provide
for the completion of treatment for the following conditions subject
to coverage through the workers’ compensation system:

(A) An acute condition. An acute condition is a medical
condition that involves a sudden onset of symptoms due to an
illness, injury, or other medical problem that requires prompt
medical attention and that has a limited duration. Completion of
treatment shall be provided for the duration of the acute condition.

(B) A serious chronic condition. A serious chronic condition is
a medical condition due to a disease, illness, or other medical
problem or medical disorder that is serious in nature and that
persists without full cure or worsens over an extended period of
time or requires ongoing treatment to maintain remission or prevent
deterioration. Completion of treatment shall be provided for a
period of time necessary to complete a course of treatment and to
arrange for a safe transfer to another provider, as determined by
the begin delete insurer, employer, end delete begin insert employer end insert or begin delete entity that provides physician
network services, end delete begin insert its claims administrator end insert in consultation with the
injured employee and the terminated provider and consistent with
good professional practice. Completion of treatment under this
paragraph shall not exceed 12 months from the contract termination
date.

(C) A terminal illness. A terminal illness is an incurable or
irreversible condition that has a high probability of causing death
within one year or less. Completion of treatment shall be provided
for the duration of a terminal illness.

(D) Performance of a surgery or other procedure that is
authorized by the begin delete insurer, employer, end delete begin insert employer end insert or begin delete entity that
provides physician network services end delete begin insert its claims administrator end insert as
part of a documented course of treatment and has been
recommended and documented by the provider to occur within
180 days of the contract’s termination date.

(4) (A) The begin delete insurer, employer, end delete begin insert employer end insert or begin delete entity that provides
physician network services end delete begin insert its claims administrator end insert may require
the terminated provider whose services are continued beyond the
contract termination date pursuant to this section to agree in writing
to be subject to the same contractual terms and conditions that
were imposed upon the provider prior to termination. If the
terminated provider does not agree to comply or does not comply
with these contractual terms and conditions, the begin delete insurer, employer, end delete
begin insert employer end insert or begin delete entity that provides physician network services end delete begin insert its
claims administrator end insert is not required to continue the provider’s
services beyond the contract termination date.

(B) Unless otherwise agreed by the terminated provider and the
begin delete insurer, employer, end delete begin insert employer end insert or begin delete entity that provides physician
network services, end delete begin insert its claims administrator, end insert the services rendered
pursuant to this section shall be compensated at rates and methods
of payment similar to those used by the begin delete insurer, employer, or entity
that provides physician end delete begin insert medical provider end insert network begin delete services end delete for
currently contracting providers providing similar services who are
practicing in the same or a similar geographic area as the terminated
provider. The begin delete insurer, employer, end delete begin insert employer end insert or begin delete entity that provides
physician network services end delete begin insert its claims administrator end insert is not required
to continue the services of a terminated provider if the provider
does not accept the payment rates provided for in this paragraph.

(5) An begin delete insurer end delete begin insert employer end insert or begin delete employer end delete begin insert its claims administrator end insert
shall ensure that the requirements of this section are met.

(6) This section shall not require an begin delete insurer, employer, end delete begin insert employer end insert
or begin delete entity that provides physician network services end delete begin insert its claims
administrator end insert to provide for completion of treatment by a provider
whose contract with the begin delete insurer, employer, or entity that provides
physician end delete begin insert medical provider end insert network begin delete services end delete has been terminated
or not renewed for reasons relating to a medical disciplinary cause
or reason, as defined in paragraph (6) of subdivision (a) of Section
805 of the Business and Profession Code, or fraud or other criminal
activity.

(7) Nothing in this section shall preclude an begin delete insurer, employer, end delete
begin insert employer end insert or begin delete entity that provides physician network services end delete begin insert its
claims administrator end insert from providing continuity of care beyond
the requirements of this section.

begin delete end delete begin delete

(e) The insurer, employer, or entity that provides physician
network services may require the terminated provider whose
services are continued beyond the contract termination date
pursuant to this section to agree in writing to be subject to the same
contractual terms and conditions that were imposed upon the
provider prior to termination. If the terminated provider does not
agree to comply or does not comply with these contractual terms
and conditions, the insurer, employer, or entity that provides
physician network services is not required to continue the
provider’s services beyond the contract termination date.

end delete begin delete end delete

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 4616.4 of the end insert begin insert Labor Code end insert begin insert is amended to read: end insert

4616.4.  

(a) (1) The administrative director shall contract with
individual physicians, as described in paragraph (2), or an
independent medical review organization to perform begin insert medical
provider network (MPN) end insert independent medical reviews pursuant
to this section.

(2) Only physicians licensed pursuant to Chapter 5 (commencing
with Section 2000) of the Business and Professions Code may be
independent medical reviewers.

(3) The administrative director shall ensure that the independent
medical reviewers or those within the review organization shall
do all of the following:

(A) Be appropriately credentialed and privileged.

(B) Ensure that the reviews provided by the medical
professionals are timely, clear, and credible, and that reviews are
monitored for quality on an ongoing basis.

(C) Ensure that the method of selecting medical professionals
for individual cases achieves a fair and impartial panel of medical
professionals who are qualified to render recommendations
regarding the clinical conditions consistent with the medical
utilization schedule established pursuant to Section 5307.27, or
the American College of Occupational and Environmental
Medicine’s Occupational Medicine Practice Guidelines.

(D) Ensure that confidentiality of medical records and the review
materials, consistent with the requirements of this section and
applicable state and federal law.

(E) Ensure the independence of the medical professionals
retained to perform the reviews through conflict-of-interest policies
and prohibitions, and ensure adequate screening for conflicts of
interest.

(4) Medical professionals selected by the administrative director
or the independent medical review organizations to review medical
treatment decisions shall be physicians, as specified in paragraph
(2) of subdivision (a), who meet the following minimum
requirements:

(A) The medical professional shall be a clinician knowledgeable
in the treatment of the employee’s medical condition,
knowledgeable about the proposed treatment, and familiar with
guidelines and protocols in the area of treatment under review.

(B) Notwithstanding any other provision of law, the medical
professional shall hold a nonrestricted license in any state of the
United States, and for physicians, a current certification by a
recognized American medical specialty board in the area or areas
appropriate to the condition or treatment under review.

(C) The medical professional shall have no history of
disciplinary action or sanctions, including, but not limited to, loss
of staff privileges or participation restrictions taken or pending by
any hospital, government, or regulatory body.

(b) If, after the third physician’s opinion, the treatment or
diagnostic service remains disputed, the injured employee may
request begin insert MPN end insert independent medical review regarding the disputed
treatment or diagnostic service still in dispute after the third
physician’s opinion in accordance with Section 4616.3. The
standard to be utilized for begin insert MPN end insert independent medical review is
identical to that contained in the medical treatment utilization
schedule established in Section 5307.27, or the American College
of Occupational and Environmental Medicine’s Occupational
Medicine Practice Guidelines, as appropriate.

(c) Applications for begin insert MPN end insert independent medical review shall be
submitted to the administrative director on a one-page form
provided by the administrative director entitled begin delete “Independent end delete
begin insert “MPN Independent end insert Medical Review Application.” The form shall
contain a signed release from the injured employee, or a person
authorized pursuant to law to act on behalf of the injured employee,
authorizing the release of medical and treatment information. The
injured employee may provide any relevant material or
documentation with the application. The administrative director
or the independent medical review organization shall assign the
independent medical reviewer.

(d) Following receipt of the application for begin insert MPN end insert independent
medical review, the employer or insurer shall provide the
independent medical reviewer, assigned pursuant to subdivision
(c), with all information that was considered in relation to the
disputed treatment or diagnostic service, including both of the
following:

(1) A copy of all correspondence from, and received by, any
treating physician who provided a treatment or diagnostic service
to the injured employee in connection with the injury.

(2) A complete and legible copy of all medical records and other
information used by the physicians in making a decision regarding
the disputed treatment or diagnostic service.

(e) Upon receipt of information and documents related to the
application for begin insert MPN end insert independent medical review, the independent
medical reviewer shall conduct a physical examination of the
injured employee at the employee’s discretion. The reviewer may
order any diagnostic tests necessary to make his or her
determination regarding medical treatment. Utilizing the medical
treatment utilization schedule established pursuant to Section
5307.27, or the American College of Occupational and
Environmental Medicine’s Occupational Medicine Practice
Guidelines, as appropriate, and taking into account any reports
and information provided, the reviewer shall determine whether
the disputed health care service was consistent with Section
5307.27 or the American College of Occupational and
Environmental Medicine’s Occupational Medicine Practice
Guidelines based on the specific medical needs of the injured
employee.

(f) The independent medical reviewer shall issue a report to the
administrative director, in writing, and in layperson’s terms to the
maximum extent practicable, containing his or her analysis and
determination whether the disputed health care service was
consistent with the medical treatment utilization schedule
established pursuant to Section 5307.27, or the American College
of Occupational and Environmental Medicine’s Occupational
Medicine Practice Guidelines, as appropriate, within 30 days of
the examination of the injured employee, or within less time as
prescribed by the administrative director. If the disputed health
care service has not been provided and the independent medical
reviewer certifies in writing that an imminent and serious threat
to the health of the injured employee may exist, including, but not
limited to, serious pain, the potential loss of life, limb, or major
bodily function, or the immediate and serious deterioration of the
injured employee, the report shall be expedited and rendered within
three days of the examination by the independent medical reviewer.
Subject to the approval of the administrative director, the deadlines
for analyses and determinations involving both regular and
expedited reviews may be extended by the administrative director
for up to three days in extraordinary circumstances or for good
cause.

(g) The independent medical reviewer’s analysis shall cite the
injured employee’s medical condition, the relevant documents in
the record, and the relevant findings associated with the documents
or any other information submitted to the reviewer in order to
support the determination.

(h) The administrative director shall immediately adopt the
determination of the independent medical reviewer, and shall
promptly issue a written decision to the parties.

(i) If the determination of the independent medical reviewer
finds that the disputed treatment or diagnostic service is consistent
with Section 5307.27 or the American College of Occupational
and Environmental Medicine’s Occupational Medicine Practice
Guidelines, the injured employee may seek the disputed treatment
or diagnostic service from a physician of his or her choice from
within or outside the medical provider network. Treatment outside
the medical provider network shall be provided consistent with
Section 5307.27 or the American College of Occupational and
Environmental Medicine’s Occupational Practice Guidelines. The
employer shall be liable for the cost of any approved medical
treatment in accordance with Section 5307.1 or 5307.11.

begin insert

begin insert SEC. 4. end insert   

end insert

begin insert Section 4616.5 of the end insert begin insert Labor Code end insert begin insert is amended to read: end insert

4616.5.  

begin insert (a) end insert begin insert   end insert For purposes of this article, “employer” means a
self-insured employer, joint powers authority, or the state.

begin insert

(b) For purposes of this article, “entity that provides physician
network services” means a medical network licensed by the
Department of Insurance or Department of Managed Health Care,
or a third-party claims adjusting organization licensed by the
Department of Insurance or the certified by the Office of Self
Insurance Plans, or a legal entity that offers medical management
and physician network services within California.

end insert

begin delete SECTION 1. end delete
begin insert SEC. 5. end insert   

Section 5307.8 of the Labor Code is amended to read:

5307.8.  

(a) Notwithstanding Section 5307.1, the administrative
director shall adopt, after public hearings, a schedule for payment
of home health care services provided in accordance with Section
4600 that are not covered by a Medicare fee schedule and are not
otherwise covered by the official medical fee schedule adopted
pursuant to Section 5307.1. The schedule shall set forth fees and
requirements for service providers, and may be based upon, but is
not limited to, being based upon, either of the following:

(1)  The maximum service hours and fees as set forth in
regulations adopted pursuant to Article 7 (commencing with
Section 12300) of Chapter 3 of Part 3 of Division 9 of the Welfare
and Institutions Code.

(2) A state or federal home health care services fee schedule
other than the schedule described in paragraph (1), including a fee
schedule authorized for purposes of the Medi-Cal program or a
fee schedule administered by the federal Office of Workers’
Compensation Programs.

(b) Fees shall not be provided for any services, including any
services provided by a member of the employee’s household, to
the extent the services had been regularly performed in the same
manner and to the same degree prior to the date of injury. If
appropriate, attorney’s fees for recovery of home health care
services fees under this section may be awarded in accordance
with Section 4906 and any applicable rules or regulations.