Amended in Assembly August 27, 2015

Amended in Assembly June 23, 2015

Amended in Assembly June 4, 2015

Amended in Senate April 6, 2015

Senate BillNo. 542


Introduced by Senator Mendoza

February 26, 2015


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

LEGISLATIVE COUNSEL’S DIGEST

SB 542, as amended, Mendoza. Workers’ compensation: medical providerbegin delete networksend deletebegin insert networks:end insert fee schedules.

(1) Existing law establishes abegin delete worker’send deletebegin insert workersend insertbegin insertend insert 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.

This bill would clarify that those independent medical reviews are medical provider network independent medical reviews. The bill would makebegin insert related andend insert conforming changes.

(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.

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 ofbegin delete the complete employee notification, as defined.end deletebegin insert any notification regarding the medical provider network that is required to be given to an employee by regulations adopted by the administrative director.end 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.

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.

(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.

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.

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.

(5) Existing 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:

P3    1

SECTION 1.  

Section 4616 of the Labor Code is amended to
2read:

3

4616.  

(a) (1) On or after January 1, 2005, an insurer, employer,
4or entity that provides physician network services may establish
5or modify a medical provider network for the provision of medical
6treatment to injured employees. The network shall include
7physicians primarily engaged in the treatment of occupational
8injuries. The administrative director shall encourage the integration
9of occupational and nonoccupational providers. The number of
10physicians in the medical provider network shall be sufficient to
11enable treatment for injuries or conditions to be provided in a
12timely manner. The provider network shall include an adequate
13number and type of physicians, as described in Section 3209.3, or
14other providers, as described in Section 3209.5, to treat common
15injuries experienced by injured employees based on the type of
16occupation or industry in which the employee is engaged, and the
17geographic area where the employees are employed.

18(2) Medical treatment for injuries shall be readily available at
19reasonable times to all employees. To the extent feasible, all
20medical treatment for injuries shall be readily accessible to all
21employees. With respect to availability and accessibility of
22treatment, the administrative director shall consider the needs of
23rural areas, specifically those in which health facilities are located
24at least 30 miles apart and areas in which there is a health care
25shortage.

P4    1(3) Commencing January 1, 2014, a treating physician shall be
2included in the network only if, at the time of entering into or
3renewing an agreement by which the physician would be in the
4network, the physician, or an authorized employee of the physician
5or the physician’s office, provides a separate written
6acknowledgment in which the physician affirmatively elects to be
7a member of the network. Copies of the written acknowledgment
8shall be provided to the administrative director upon the
9administrative director’s request. This paragraph shall not apply
10to a physician who is a shareholder, partner, or employee of a
11medical group that elects to be part of the network.

12(4) (A) Commencing January 1, 2014, every medical provider
13network shall post on its Internet Web site a roster of all treating
14physicians in the medical provider network and shall update the
15roster at least quarterly. Every network shall provide to the
16administrative director the Internet Web site address of the network
17and of its roster of treating physicians. The administrative director
18shall post, on the division’s Internet Web site, the Internet Web
19site address of every approved medical provider network.

20(B) Commencing January 1, 2016, every medical provider
21network shall post on its Internet Web site information about how
22to contact the medical provider network contact and medical access
23assistants, and information about how to obtain a copy ofbegin delete the
24complete employee notification.end delete
begin insert any notification regarding the
25medical provider network that is required to be given to an
26employee by regulations adopted by the administrative director.end insert

begin delete

27(C) For purposes of this paragraph, an “complete employee
28notification” shall have the same meaning as provided in Section
299767.12 of Title 8 of the California Code of Regulations.

end delete

30(5) Commencing January 1, 2014, every medical provider
31network shall provide one or more persons within the United States
32to serve as medical access assistants to help an injured employee
33find an available physician of the employee’s choice, and
34subsequent physicians if necessary, under Section 4616.3. Medical
35access assistants shall have a toll-free telephone number that
36injured employees may use and shall be available at least from 7
37a.m. to 8 p.m. Pacific Standard Time, Monday through Saturday,
38inclusive, to respond to injured employees, contact physicians’
39offices during regular business hours, and schedule appointments.
40The administrative director shall promulgate regulations on or
P5    1before July 1, 2013, governing the provision of medical access
2assistants.

3(b) (1) An insurer, employer, or entity that provides physician
4network services shall submit a plan for the medical provider
5network to the administrative director for approval. The
6administrative director shall approve the plan for a period of four
7years if he or she determines that the plan meets the requirements
8of this section. If the administrative director does not act on the
9plan within 60 days of submitting the plan, it shall be deemed
10approved. Commencing January 1, 2014, existing approved plans
11shall be deemed approved for a period of four years from the
12approval date of the most recent application or modification
13submitted prior to 2014. Plans for reapproval for medical provider
14networks shall be submitted at least six months before the
15expiration of the four-year approval period. Commencing January
161, 2016, a modification that updates an entire medical provider
17network plan to bring the plan into full compliance with all current
18statutes and regulations shall be deemed approved for a period of
19four years from the modification approval date. An approved
20modification that does not update an entire medical provider
21network plan to bring the plan into full compliance with all current
22statutes and regulations shall not alter the expiration of the medical
23provider network’s four-year approval period. Upon a showing
24that the medical provider network was approved or deemed
25approved by the administrative director, there shall be a conclusive
26presumption on the part of the appeals board that the medical
27provider network was validly formed.

28(2) Every medical provider network shall establish and follow
29procedures to continuously review the quality of care, performance
30of medical personnel, utilization of services and facilities, and
31costs.

32(3) Every medical provider network shall submit geocoding of
33its network for reapproval to establish that the number and
34geographic location of physicians in the network meets the required
35access standards.

36(4) The administrative director shall at any time have the
37discretion to investigate complaints and to conduct random reviews
38of approved medical provider networks.

39(5) Approval of a plan may be denied, revoked, or suspended
40if the medical provider network fails to meet the requirements of
P6    1this article. Any person contending that a medical provider network
2is not validly constituted may petition the administrative director
3to suspend or revoke the approval of the medical provider network.
4The administrative director may adopt regulations establishing a
5schedule of administrative penalties not to exceed five thousand
6dollars ($5,000) per violation, or probation, or both, in lieu of
7revocation or suspension for less severe violations of the
8requirements of this article. Penalties, probation, suspension, or
9revocation shall be ordered by the administrative director only
10after notice and opportunity to be heard. Unless suspended or
11revoked by the administrative director, the administrative director’s
12approval of a medical provider network shall be binding on all
13persons and all courts. A determination of the administrative
14director may be reviewed only by an appeal of the determination
15of the administrative director filed as an original proceeding before
16the reconsideration unit of the workers’ compensation appeals
17board on the same grounds and within the same time limits after
18issuance of the determination as would be applicable to a petition
19for reconsideration of a decision of a workers’ compensation
20administrative law judge.

21(c) Physician compensation may not be structured in order to
22achieve the goal of reducing, delaying, or denying medical
23treatment or restricting access to medical treatment.

24(d) If the employer or insurer meets the requirements of this
25 section, the administrative director may not withhold approval or
26disapprove an employer’s or insurer’s medical provider network
27based solely on the selection of providers. In developing a medical
28provider network, an employer or insurer shall have the exclusive
29right to determine the members of their network.

30(e) All treatment provided shall be provided in accordance with
31the medical treatment utilization schedule established pursuant to
32Section 5307.27.

33(f) No person other than a licensed physician who is competent
34to evaluate the specific clinical issues involved in the medical
35treatment services, when these services are within the scope of the
36physician’s practice, may modify, delay, or deny requests for
37authorization of medical treatment.

38(g) Commencing January 1, 2013, every contracting agent that
39sells, leases, assigns, transfers, or conveys its medical provider
40networks and their contracted reimbursement rates to an insurer,
P7    1employer, entity that provides physician network services, or
2another contracting agent shall, upon entering or renewing a
3provider contract, disclose to the provider whether the medical
4provider network may be sold, leased, transferred, or conveyed to
5other insurers, employers, entities that provide physician network
6services, or another contracting agent, and specify whether those
7insurers, employers, entities that provide physician network
8services, or contracting agents include workers’ compensation
9insurers.

10(h) On or before November 1, 2004, the administrative director,
11in consultation with the Department of Managed Health Care, shall
12adopt regulations implementing this article. The administrative
13director shall develop regulations that establish procedures for
14purposes of making medical provider network modifications.

15

SEC. 2.  

Section 4616.2 of the Labor Code is amended to read:

16

4616.2.  

(a) A medical provider network shall file a written
17continuity of care policy with the administrative director.

18(b) If approved by the administrative director, the provisions of
19the written continuity of care policy shall replace all prior
20continuity of care policies. A medical provider network shall file
21a revision of the continuity of care policy with the administrative
22director if it makes a material change to the policy.

23(c) begin deleteAll end deletebegin insertThe medical provider network shall provide all end insert
24employees entering the workers’ compensation systembegin delete shall be
25providedend delete
notice of the medical provider network’s written
26continuity of care policy and information regarding the process
27for an employee to request a review under the policy and, upon
28request, a copy of the medical provider network’s written continuity
29of care policy.

30(d) (1) At the request of an injured employee, completion of
31treatment shall be provided by a terminated provider as set forth
32in this section.

33(2) The completion of treatment shall be provided by a
34terminated provider to an injured employee who, at the time of the
35contract’s termination, was receiving services from that provider
36for one of the conditions described in paragraph (3).

37(3) The employer or its claims administrator shall provide for
38the completion of treatment for the following conditions subject
39to coverage through the workers’ compensation system:

P8    1(A) An acute condition. An acute condition is a medical
2condition that involves a sudden onset of symptoms due to an
3illness, injury, or other medical problem that requires prompt
4medical attention and that has a limited duration. Completion of
5treatment shall be provided for the duration of the acute condition.

6(B) A serious chronic condition. A serious chronic condition is
7a medical condition due to a disease, illness, or other medical
8problem or medical disorder that is serious in nature and that
9persists without full cure or worsens over an extended period of
10time or requires ongoing treatment to maintain remission or prevent
11deterioration. Completion of treatment shall be provided for a
12period of time necessary to complete a course of treatment and to
13arrange for a safe transfer to another provider, as determined by
14the employer or its claims administrator in consultation with the
15injured employee and the terminated provider and consistent with
16good professional practice. Completion of treatment under this
17paragraph shall not exceed 12 months from the contract termination
18date.

19(C) A terminal illness. A terminal illness is an incurable or
20irreversible condition that has a high probability of causing death
21within one year or less. Completion of treatment shall be provided
22for the duration of a terminal illness.

23(D) Performance of a surgery or other procedure that is
24authorized by the employer or its claims administrator as part of
25a documented course of treatment and has been recommended and
26documented by the provider to occur within 180 days of the
27contract’s termination date.

28(4) (A) The employer or its claims administrator may require
29the terminated provider whose services are continued beyond the
30contract termination date pursuant to this section to agree in writing
31to be subject to the same contractual terms and conditions that
32were imposed upon the provider prior to termination. If the
33terminated provider does not agree to comply or does not comply
34with these contractual terms and conditions, the employer or its
35claims administrator is not required to continue the provider’s
36services beyond the contract termination date.

37(B) Unless otherwise agreed by the terminated provider and the
38employer or its claims administrator, the services rendered pursuant
39to this section shall be compensated at rates and methods of
40payment similar to those used by the medical provider network
P9    1for currently contracting providers providing similar services who
2are practicing in the same or a similar geographic area as the
3terminated provider. The employer or its claims administrator is
4not required to continue the services of a terminated provider if
5the provider does not accept the payment rates provided for in this
6paragraph.

7(5) An employer or its claims administrator shall ensure that
8the requirements of this section are met.

9(6) This section shall not require an employer or its claims
10administrator to provide for completion of treatment by a provider
11whose contract with the medical provider network has been
12terminated or not renewed for reasons relating to a medical
13disciplinary cause or reason, as defined in paragraph (6) of
14subdivision (a) of Section 805 of the Business andbegin delete Professionend delete
15begin insert Professionsend insert Code, or fraud or other criminal activity.

16(7) Nothing in this section shall preclude an employer or its
17claims administrator from providing continuity of care beyond the
18requirements of this section.

19

SEC. 3.  

Section 4616.4 of the Labor Code is amended to read:

20

4616.4.  

(a) (1) The administrative director shall contract with
21individual physicians, as described in paragraph (2), or an
22independent medical review organization to perform medical
23provider network (MPN) independent medical reviews pursuant
24to this section.

25(2) Only physicians licensed pursuant to Chapter 5 (commencing
26with Section 2000) of the Business and Professions Code may be
27begin insert MPNend insert independent medical reviewers.

28(3) The administrative director shall ensure that thebegin insert MPNend insert
29 independent medical reviewers or those within the review
30organization shall do all of the following:

31(A) Be appropriately credentialed and privileged.

32(B) Ensure that the reviews provided by the medical
33professionals are timely, clear, and credible, and that reviews are
34monitored for quality on an ongoing basis.

35(C) Ensure that the method of selecting medical professionals
36for individual cases achieves a fair and impartial panel of medical
37professionals who are qualified to render recommendations
38regarding the clinical conditions consistent with the medical
39utilization schedule established pursuant to Sectionbegin delete 5307.27, or
P10   1the American College of Occupational and Environmental
2Medicine’s Occupational Medicine Practice Guidelines.end delete
begin insert 5307.27.end insert

3(D) Ensure that confidentiality of medical records and the review
4materials, consistent with the requirements of this section and
5applicable state and federal law.

6(E) Ensure the independence of the medical professionals
7retained to perform the reviews through conflict-of-interest policies
8and prohibitions, and ensure adequate screening for conflicts of
9interest.

10(4) Medical professionals selected by the administrative director
11or the independent medical reviewbegin delete organizationsend deletebegin insert organizationend insert to
12review medical treatment decisions shall be physicians, as specified
13in paragraph (2) of subdivision (a), who meet the following
14minimum requirements:

15(A) The medical professional shall be a clinician knowledgeable
16in the treatment of the employee’s medical condition,
17knowledgeable about the proposed treatment, and familiar with
18guidelines and protocols in the area of treatment under review.

19(B) Notwithstanding any otherbegin delete provision ofend delete law, the medical
20professional shall hold a nonrestricted license in any state of the
21United States, and for physicians, a current certification by a
22recognized American medical specialty board in the area or areas
23appropriate to the condition or treatment under review.

24(C) The medical professional shall have no history of
25disciplinary action or sanctions, including, but not limited to, loss
26 of staff privileges or participation restrictions taken or pending by
27any hospital, government, or regulatory body.

28(b) If, after the third physician’s opinion, the treatment or
29diagnostic service remains disputed, the injured employee may
30request MPN independent medical review regarding the disputed
31treatment or diagnostic service still in dispute after the third
32physician’s opinion in accordance with Section 4616.3. The
33standard to be utilized for MPN independent medical review is
34identical to that contained in the medical treatment utilization
35schedule established in Section 5307.27, or the American College
36of Occupational and Environmental Medicine’s Occupational
37Medicine Practice Guidelines, as appropriate.

38(c) Applications for MPN independent medical review shall be
39submitted to the administrative director on a one-page form
40provided by the administrative director entitled “MPN Independent
P11   1Medical Review Application.” The form shall contain a signed
2release from the injured employee, or a person authorized pursuant
3to law to act on behalf of the injured employee, authorizing the
4release of medical and treatment information. The injured employee
5may provide any relevant material or documentation with the
6application. The administrative director or the independent medical
7review organization shall assign thebegin insert MPNend insert independent medical
8reviewer.

9(d) Following receipt of the application for MPN independent
10medical review, the employer or insurer shall provide thebegin insert MPNend insert
11 independent medical reviewer, assigned pursuant to subdivision
12(c), with all information that was considered in relation to the
13disputed treatment or diagnostic service, including both of the
14following:

15(1) A copy of all correspondence from, and received by, any
16treating physician who provided a treatment or diagnostic service
17to the injured employee in connection with the injury.

18(2) A complete and legible copy of all medical records and other
19information used by the physicians in making a decision regarding
20the disputed treatment or diagnostic service.

21(e) Upon receipt of information and documents related to the
22application for MPN independent medical review, thebegin insert MPNend insert
23 independent medical reviewer shall conduct a physical examination
24of the injured employee at the employee’s discretion. Thebegin insert MPN
25independent medicalend insert
reviewer may order any diagnostic tests
26necessary to make his or her determination regarding medical
27treatment. Utilizing the medical treatment utilization schedule
28established pursuant to Section 5307.27, or the American College
29of Occupational and Environmental Medicine’s Occupational
30Medicine Practice Guidelines, as appropriate, and taking into
31account any reports and information provided, thebegin insert MPN
32independent medicalend insert
reviewer shall determine whether the disputed
33health care service was consistent with Section 5307.27 or the
34American College of Occupational and Environmental Medicine’s
35Occupational Medicine Practice Guidelines based on the specific
36medical needs of the injured employee.

37(f) Thebegin insert MPNend insert independent medical reviewer shall issue a report
38to the administrative director, in writing, and in layperson’s terms
39to the maximum extent practicable, containing his or her analysis
40and determination whether the disputed health care service was
P12   1consistent with the medical treatment utilization schedule
2established pursuant to Section 5307.27, or the American College
3of Occupational and Environmental Medicine’s Occupational
4Medicine Practice Guidelines, as appropriate, within 30 days of
5the examination of the injured employee, or within less time as
6prescribed by the administrative director. If the disputed health
7care service has not been provided and thebegin insert MPNend insert independent
8medical reviewer certifies in writing that an imminent and serious
9threat to the health of the injured employee may exist, including,
10but not limited to, serious pain, the potential loss of life, limb, or
11major bodily function, or the immediate and serious deterioration
12of the injured employee, the report shall be expedited and rendered
13within three days of the examination by thebegin insert MPNend insert independent
14medical reviewer. Subject to the approval of the administrative
15director, the deadlines for analyses and determinations involving
16both regular and expedited reviews may be extended by the
17administrative director for up to three days in extraordinary
18circumstances or for good cause.

19(g) Thebegin insert MPNend insert independent medical reviewer’s analysis shall
20cite the injured employee’s medical condition, the relevant
21documents in the record, and the relevant findings associated with
22the documents or any other information submitted to thebegin insert MPN
23independent medicalend insert
reviewer in order to support the determination.

24(h) The administrative director shall immediately adopt the
25determination of thebegin insert MPNend insert independent medical reviewer, and shall
26promptly issue a written decision to the parties.

27(i) If the determination of thebegin insert MPNend insert independent medical
28reviewer finds that the disputed treatment or diagnostic service is
29consistent with Section 5307.27 or the American College of
30Occupational and Environmental Medicine’s Occupational
31Medicine Practice Guidelines, the injured employee may seek the
32disputed treatment or diagnostic service from a physician of his
33or her choice from within or outside the medical provider network.
34Treatment outside the medical provider network shall be provided
35consistent with Section 5307.27 or the American College of
36Occupational and Environmental Medicine’s Occupational Practice
37Guidelines. The employer shall be liable for the cost of any
38approved medical treatment in accordance with Section 5307.1 or
395307.11.

40

SEC. 4.  

Section 4616.5 of the Labor Code is amended to read:

P13   1

4616.5.  

(a) For purposes of this article, “employer” means a
2self-insured employer, joint powers authority, or the state.

3(b) For purposes of this article, “entity that provides physician
4network services” means a medical network licensed by the
5Department of Insurance or Department of Managed Health Care,
6or a third-party claims adjusting organization licensed by the
7Department of Insurance orbegin delete theend delete certified by the Office of Self
8Insurance Plans, or a legal entity that offers medical management
9and physician network services within California.

10

SEC. 5.  

Section 5307.8 of the Labor Code is amended to read:

11

5307.8.  

(a) Notwithstanding Section 5307.1, the administrative
12director shall adopt, after public hearings, a schedule for payment
13of home health care services provided in accordance with Section
144600 that are not covered by a Medicare fee schedule and are not
15otherwise covered by the official medical fee schedule adopted
16pursuant to Section 5307.1. The schedule shall set forth fees and
17requirements for service providers, and may be based upon, but is
18not limited to, being based upon, either of the following:

19(1) The maximum service hours and fees as set forth in
20regulations adopted pursuant to Article 7 (commencing with
21Section 12300) of Chapter 3 of Part 3 of Division 9 of the Welfare
22and Institutions Code.

23(2) A state or federal home health care services fee schedule
24other than the schedule described in paragraph (1), including a fee
25schedule authorized for purposes of the Medi-Cal program or a
26fee schedule administered by the federal Office of Workers’
27Compensation Programs.

28(b) Fees shall not be provided for any services, including any
29services provided by a member of the employee’s household, to
30the extent the services had been regularly performed in the same
31manner and to the same degree prior to the date of injury. If
32appropriate, attorney’s fees for recovery of home health care
33services fees under this section may be awarded in accordance
34with Section 4906 and any applicable rules or regulations.



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