BILL ANALYSIS Ó
SB 563
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Date of Hearing: June 22, 2016
ASSEMBLY COMMITTEE ON INSURANCE
Tom Daly, Chair
SB
563 (Pan) - As Amended June 15, 2016
SENATE VOTE: 38-0
SUBJECT: Workers' compensation: utilization review
SUMMARY: Increases regulation of utilization review
organizations. Specifically, this bill:
1)Prohibits an employer, or other entity conducting utilization
review on behalf of an employer, to offer or provide financial
incentives or other considerations to a reviewing physician
based on the number of modifications, delays or denials of
care.
2)Empowers the Administrative Director (AD) of the Division of
Workers' Compensation (DWC) to review contracts between
employers or utilization review organizations and their
physician reviewers.
3)Prohibits an insurer or third-party administrator from
referring a claim for review to a utilization review
organization in which it has a financial interest unless that
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interest is disclosed to the employer.
4)Provides that any information obtained by the AD relating to
these contracts is not subject to disclosure pursuant to the
Public Records Act, unless the AD determines that the
documents are otherwise in the public domain.
EXISTING LAW:
1)Establishes a comprehensive system to provide benefits,
including medical treatment, to employees who are injured or
suffer conditions that arise out of or in the course of
employment.
2)Provides that medical, surgical, chiropractic, acupuncture,
and hospital treatment (including nursing, medicines, medical
and surgical supplies, crutches) and apparatuses (including
orthotic and prosthetic devices and services) that is
reasonably required to cure or relieve the injured worker from
the effects of his or her injury shall be provided by the
employer.
3)Requires that all employers create a utilization review (UR)
process, which is a process that prospectively,
retrospectively, or concurrently reviews and approves,
modifies, delays, or denies treatment recommendations by
physicians.
4)Requires that each UR process be governed by written policies
and that these policies, and a description of the utilization
process, must be filed with the administrative director and
must be disclosed by the employer to employees, physicians,
and the public upon request.
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5)Provides that, in the event of a dispute over a UR decision on
or after July 1, 2014, all disputes must be submitted for
Independent Medical Review (IMR).
FISCAL EFFECT: According to the Senate Appropriations
Committee, the 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.
COMMENTS:
1)Purpose. According to the author, physicians have been
concerned that the utilization review process might actually
incentivize the delay or denial of appropriate treatment for
injured workers. The bill increases transparency and
accountability within the workers' compensation utilization
process to ensure persons involved in authorizing injured
worker medical care on behalf of the employer or payor are not
being inappropriately incentivized to delay, modify or deny
requests for medically necessary services.
2)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, send the request to UR.
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UR is the review process for medical treatment recommendations
by physicians to see if the request for medical treatment is
supported by evidence-based treatment guidelines. The full UR
process varies by vendor, but it generally involves initial
review by a non-physician (who can approve the request, but
not deny or modify it), 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 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 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.
3)Public Records Act. The bill authorizes the AD to review and
obtain proprietary contractual documents associated with
obtaining UR services. As a result, the bill contains a
provision that expressly protects this proprietary material
from disclosure pursuant to the Public Records Act (PRA).
This is a relatively common scenario - in order to ensure that
a regulator can review sensitive, proprietary documents of a
private party, protection against release of that private
information is provided.
4)Technical amendment. The bill currently contains a minor
qualifier in the PRA language. The author has agreed to
delete that language. The amendment on page 4 will delete
lines 6-7, and in line 8 delete the language prior to the
period.
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REGISTERED SUPPORT / OPPOSITION:
Support
California Medical Association
Medical Board of California (Board)
Opposition
None received
Analysis Prepared by:Mark Rakich / INS. / (916)
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319-2086