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: January 4, 2016 |Policy Vote: L. & I.R. 5 - 0 |
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|Urgency: No |Mandate: No |
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|Hearing Date: January 19, 2016 |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 (1) prohibit physician incentive contracts
and agreements on the basis of modifying or denying care, and
(2) give the Department of Industrial Relations (DIR) authority
to request physician compensation agreements in order to provide
related enforcement.
Fiscal
Impact: DIR indicates that it would incur first-year costs of
$600,000 and $575,000 ongoing (special fund) to implement the
provisions of the bill, a result of increased auditing and legal
workload.
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 (1)
approve the treatment, or (2) if it believes that a physician's
request for treatment is medically unnecessary or harmful, 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.
As was discussed in a Senate Labor and Industrial Relations
Committee oversight hearing in 2015, a recent study by the
California Workers' Compensation Institute (CWCI) found that
approximately 25 percent of medical treatment requests go
through UR, with approximately 75 percent of those requests
approved. Once the approvals from UR and Independent Medical
Review (IMR) are included, more than 94 percent of treatment is
approved in California's workers' compensation system.
Proposed Law:
This bill would prohibit an employer, or any entity conducting
UR on behalf of the employer, from offering or providing any
financial incentive or consideration to a physician based on the
number of UR modifications, delays, or denials made by the
physician. Additionally, the bill would provide DIR's Division
of Workers' Compensation (DWC) with the explicit authority 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.
SB 563 (Pan) Page 2 of
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Staff
Comments: This Committee heard SB 563 previously, in 2015. At
that time, the bill included language prohibiting the use of UR
and IMR in specified instances, and instead shifted medical
dispute resolution to DIR's Workers' Compensation Appeals Board
(WCAB). Due to the increase in WCAB workload, the bill's fiscal
impact was estimated to be about $14 million annually. That
version of the bill was ultimately held by this Committee.
As currently written, SB 563 would prohibit the use of financial
incentives to UR physicians on the basis of UR decisions. The
bill also would allow DWC to request compensation agreements to
ensure compliance with the law. The fiscal impact of the current
version of the bill is considerably smaller than when the bill
was previously considered by this Committee.
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