BILL NUMBER: SB 563 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY JUNE 15, 2016
AMENDED IN SENATE JANUARY 4, 2016
AMENDED IN SENATE APRIL 30, 2015
AMENDED IN SENATE APRIL 13, 2015
INTRODUCED BY Senator Pan
FEBRUARY 26, 2015
An act to amend Section 4610 of 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 filed with the Administrative Director of the
Division of Workers' Compensation and disclosed by the employer to
employees, physicians, and the public upon request.
This bill would prohibit the employer, or any entity conducting
utilization review on behalf of the employer, from offering or
providing any financial incentive or consideration to a physician
based on the number of modifications, delays, or denials made by the
physician. The bill would grant authorize
the administrative director authority pursuant to this
provision to review any compensation agreement, payment
schedule, or contract between the employer, or any entity conducting
utilization review on behalf of the employer, and the utilization
review physician. The bill would make any information disclosed
to the administrative director confidential and not subject to public
disclosure, except as specified.
Existing constitutional provisions require that a statute that
limits the right of access to the meetings of public bodies or the
writings of public officials and agencies be adopted with findings
demonstrating the interest protected by the limitation and the need
for protecting that interest.
This bill would make legislative findings to that effect.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 4610 of the Labor Code is amended to read:
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) Every employer shall establish a utilization review process in
compliance with this section, either directly or through its insurer
or an entity with which an employer or insurer contracts for these
services.
(c) Each utilization review process shall be governed by written
policies and procedures. These policies and procedures shall ensure
that decisions based on the medical necessity to cure and relieve of
proposed medical treatment services are consistent with the schedule
for medical treatment utilization adopted pursuant to Section
5307.27. These policies and procedures, and a description of the
utilization process, shall be filed with the administrative director
and shall be disclosed by the employer to employees, physicians, and
the public upon request.
(d) If an employer, insurer, or other entity subject to this
section requests medical information from a physician in order to
determine whether to approve, modify, delay, or deny requests for
authorization, the employer shall request only the information
reasonably necessary to make the determination. The employer,
insurer, or other entity shall employ or designate a medical director
who holds an unrestricted license to practice medicine in this state
issued pursuant to Section 2050 or Section 2450
of the Business and Professions Code. The medical director shall
ensure that the process by which the employer or other entity reviews
and approves, modifies, delays, or denies requests by physicians
prior to, retrospectively, or concurrent with the provision of
medical treatment services, complies with the requirements of this
section. Nothing in this section shall be construed as restricting
the existing authority of the Medical Board of California.
(e) (1) No person other than a licensed
physician who is competent to evaluate the specific clinical issues
involved in the medical treatment services, and where these services
are within the scope of the 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. The
(2) (A) The
employer, or any entity conducting utilization review on behalf of
the employer, shall neither offer nor provide any financial incentive
or consideration to a physician based on the number of
modifications, delays, or denials made by the physician under this
section. The
(B) An insurer or third-party administrator shall not refer
utilization review services conducted on behalf of an employer under
this section to an entity in which the insurer or third-party
administrator has a financial interest as defined under Section
139.32. This prohibition does not apply if the insurer or third-party
administrator provides the employer with prior written disclosure of
both of the following:
(i) The entity conducting the utilization review services.
(ii) The insurer or third-party administrator's financial interest
in the entity.
(3) The administrative director
has authority pursuant to this section to review any compensation
agreement, payment schedule, or contract between the employer, or any
entity conducting utilization review on behalf of the employer, and
the utilization review physician. Any information disclosed to
the administrative director pursuant to this paragraph shall be
considered confidential information and not subject to disclosure
pursuant to the California Public Records Act (Chapter 3.5
(commencing with Section 6250) of Division 7 of Title 1
of the Government Code) unless the division can demonstrate that the
information was in the public domain at the time it was disclosed or
has entered the public domain through no fault of the division.
Disclosure of the information to the administrative director pursuant
to this subdivision shall not waive the provisions of the Evidence
Code relating to privilege.
(f) The criteria or guidelines used in the utilization review
process to determine whether to approve, modify, delay, or deny
medical treatment services shall be all of the following:
(1) Developed with involvement from actively practicing
physicians.
(2) Consistent with the schedule for medical treatment utilization
adopted pursuant to Section 5307.27.
(3) Evaluated at least annually, and updated if necessary.
(4) Disclosed to the physician and the employee, if used as the
basis of a decision to modify, delay, or deny services in a specified
case under review.
(5) Available to the public upon request. An employer shall only
be required to disclose the criteria or guidelines for the specific
procedures or conditions requested. An employer may charge members of
the public reasonable copying and postage expenses related to
disclosing criteria or guidelines pursuant to this paragraph.
Criteria or guidelines may also be made available through electronic
means. No charge shall be required for an employee whose 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.
SEC. 2. The Legislature finds and declares that
Section 1 of this act, which amends Section 4610 of the Labor Code,
imposes a limitation on the public's right of access to the meetings
of public bodies or the writings of public officials and agencies
within the meaning of Section 3 of Article I of the California
Constitution. Pursuant to that constitutional provision, the
Legislature makes the following findings to demonstrate the interest
protected by this limitation and the need for protecting that
interest:
The limitations on the people's rights of access set forth in this
act are necessary to protect the privacy and integrity of
information submitted to the Administrative Director of the Division
of Workers' Compensation pursuant to paragraph (3) of subdivision (e)
of Section 4610 of the Labor Code.