BILL ANALYSIS Ó
SB 563
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Date of Hearing: August 3, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
SB 563
(Pan) - As Amended June 23, 2016
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|Policy |Insurance |Vote:|13 - 0 |
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill increases oversight of utilization review (UR)
organizations in the workers' compensation system and
strengthens conflict-of-interest provisions. Specifically, this
bill:
1)Prohibits financial incentives or considerations to UR
physicians for denying or modifying care.
2)Prohibits UR referrals to entities in which an insurer or
third-party administrator has a financial interest, with
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specified exceptions.
3)Authorizes the Department of Industrial Relations (DIR) to
review contracts or other agreements between the employer, or
any entity conducting utilization review on behalf of the
employer, and the utilization review physician. It also makes
information disclosed to the administrative director
confidential and not subject to public disclosure, except as
specified
FISCAL EFFECT:
First-year costs to DIR of $600,000, as well as $575,000
ongoing, to implement the provisions of the bill, a result of
increased auditing and legal workload (Workers' Compensation
Administration Revolving Fund).
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 seeks 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, 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. UR is a
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process through which a UR physician can modify, delay, or
deny treatment recommendations by physicians. This bill
addresses contracts and potential financial conflicts of
interest with respect to the physician making UR decisions,
which can sometimes result in the modification or denial of
requested treatment.
3)Support. The California Medical Association and the Medical
Board of California support this bill, and it has no
opposition.
4)Related Legislation. SB 1160 (Mendoza), also being heard
today, requires UR entities to become accredited by
independent third-party entities.
Analysis Prepared by:Lisa Murawski / APPR. / (916)
319-2081