BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session SB 563 (Pan) - Workers' compensation: utilization review. ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: April 30, 2015 |Policy Vote: L. & I.R. 4 - 1 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: May 18, 2015 |Consultant: Robert Ingenito | | | | ----------------------------------------------------------------- This bill meets the criteria for referral to the Suspense File. Bill Summary: With respect to the State's workers' compensation system, SB 563 would restrict the utilization review process when future medical care is awarded in the final award by the Workers' Compensation Appeals Board (WCAB), the request for medical treatment is specified on the final award, and the medical treatment is evidence based. Fiscal Impact: The Department of Industrial Relations indicates that it would incur first-year costs of $13.2 million and annual ongoing costs of $12.3 million to implement the provisions of the bill. SB 563 (Pan) Page 1 of ? Background: In California's workers' compensation system, an employer or insurer cannot deny treatment. When an employer or insurer receives a request for medical treatment, it can either approve the treatment or, if it believes that a physician's request for treatment is medically unnecessary or harmful, the it must send the request to Utilization Review. Utilization Review (UR) is the review process for medical treatment recommendations by physicians to see if the request for medical treatment is medically necessary. The full UR process varies, but generally involves initial review by a non-physician, with higher level review(s) being conducted by a physician or physicians. Only a licensed physician who is competent to evaluate the specific clinical issues involved in the medical treatment services may modify, delay, or deny a request for medical treatment. If the UR physician does modify, delay, or deny the medical treatment, then the injured worker can appeal the decision to Independent Medical Review (IMR), but without the UR decision there cannot be an IMR decision. This process is triggered by the physician submitting a Request for Authorization for Medical Treatment (RFA), which is a Division of Workers' Compensation (DWC) form where the physician details his or her diagnosis and treatment, and must include an additional form which provides a narrative and substantiates the need for treatment. As was discussed above, an employer or insurer cannot contest or in any way delay or deny treatment without sending the RFA through UR. Proposed Law: This bill would prohibit the use of UR for a treatment recommendation by a physician if (1) a final award of permanent disability made by the appeals board specifies the provision of future medical treatment, and (2) the request for medical treatment is for medical treatment that is specified by the award. This bill would require that the written policies and procedures for a specific utilization review process include the method of SB 563 (Pan) Page 2 of ? compensation and incentive payments contingent on the approval, modification, or denial of a claim for an individual or entity providing utilization review services. This bill would specify that the intent of the Legislature that the changes made to law by this act shall not have an impact on or alter in any way the decision of the court in Patterson v. Oaks Farm (2014) WL 3952788. Staff Comments: The Office of the Legislative Counsel has keyed this bill "non-fiscal." However, the purview of this Committee, pursuant to Joint Rule 10.5, is to review and analyze bills that would, among other things, result in a substantial expenditure of state money. Thus, even though SB 563 was keyed "non-fiscal," the Committee requested the bill to examine the extent to which it might potentially increase state costs. As noted earlier, under current law, when an employee is injured on the job, an employer can approve the treatment prescribed by the employee's physician or it must refer the claim to UR, where a third party administrator responsible for determining if the requested medical treatment is effective and safe based on evidence based medical guidelines established by the State. Generally, UR involves an initial review by a non-physician with higher-level reviews conducted by a physician or team of physicians. Only the UR physician can modify, delay, or deny a request for medical treatment; in these cases, the employee can contest the decision by requesting an Independent Medical Review (IMR) from the State. The UR and IMR are established in existing law and are subject to performance audit by the State and penalties for noncompliance. SB 563 would change the existing process for medical treatment requests on cases where an award for future medical care for the effects of the injury has been included by WCAB in a final award for permanent disability. In such cases, SB 563 would stipulate that UR/IMR can only be used when the requested treatment may not be evidence based medicine or may not be related to the effects of the injury. Additionally, the bill would require an additional medical examination following an IMR to confirm the SB 563 (Pan) Page 3 of ? IMR determination and subject the findings of that examination to litigation before WCAB. DIR anticipates that this bill could generate up to 40,000 additional hearings at WCAB every year, resulting in increased annual workload-related costs of $12 million ongoing. -- END --