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. 









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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  








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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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