BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 563 (Pan) - Workers' compensation: utilization review.
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|Version: April 30, 2015 |Policy Vote: L. & I.R. 4 - 1 |
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|Urgency: No |Mandate: No |
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|Hearing Date: May 18, 2015 |Consultant: Robert Ingenito |
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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
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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
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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
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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.
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