Amended in Senate April 13, 2015

Senate Bill No. 563

Introduced by Senator Pan

February 26, 2015

An act to begin delete add Section 4610.2 to end delete begin insert amend Section 4610 of end insert the Labor Code, relating to workers’ compensation.

LEGISLATIVE COUNSEL’S DIGEST

SB 563, as amended, Pan. Workers’ compensation: utilization review.

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 physician’s request. Existing law requires the utilization review process to be governed by written policies and procedures, and requires that these policies and procedures be begin insert filed with the Administrative Director of the Division of Workers’ Compensation and end insert disclosed begin insert by the employer end insert to employees, physicians, and the public upon request.

begin delete

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.

end delete begin insert

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 employee’s current health care regimen for a preexisting injury and there is no evidence of a change in the employee’s 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.

end insert begin insert

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.

end insert

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

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

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begin insert SECTION 1. end insert   

end insert

begin insert Section 4610 of the end insert begin insert Labor Code end insert begin insert is amended to
read: end insert

4610.  

(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)  begin insert (1) end insert begin insert   end insert 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.

begin insert

(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:

end insert begin insert

(A) The treatment recommendation is solely for the purpose of
maintaining an injured employee’s current health care regimen
for a preexisting injury.

end insert begin insert

(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 employee’s current health care regimen
is a result of that decision.

end insert begin insert

(C) There is no evidence of a change in the employee’s
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.

end insert

(c)  begin insert (1) end insert begin insert   end insert 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, begin insert 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, end insert shall be
filed with the administrative director and shall be disclosed by the
employer to employees, physicians, and the public upon request.

begin insert

(2) The written policies and procedures shall conform to the
requirements of paragraph (2) of subdivision (b).

end insert

(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 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.

(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 physician’s 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 employee’s
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 individual’s 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 employee’s 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
employee’s life or health or could jeopardize the employee’s 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
employee’s 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 employee’s 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 employer’s
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 employer’s liability becomes final, and the
time for the employer to conduct prospective utilization review
shall commence from the date of the employer’s receipt of a
treatment recommendation after the determination of the
employer’s 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.

begin delete

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.

end delete