BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 1160 (Mendoza) - Workers' compensation: utilization review
-----------------------------------------------------------------
| |
| |
| |
-----------------------------------------------------------------
|--------------------------------+--------------------------------|
| | |
|Version: April 6, 2016 |Policy Vote: L. & I.R. 4 - 1 |
| | |
|--------------------------------+--------------------------------|
| | |
|Urgency: No |Mandate: No |
| | |
|--------------------------------+--------------------------------|
| | |
|Hearing Date: April 25, 2016 |Consultant: Robert Ingenito |
| | |
-----------------------------------------------------------------
This bill meets the criteria for referral to the Suspense File.
Bill
Summary: SB 1160 would (1) increase administrative penalties for
employers who refuse to submit injury and medical data to the
Workers' Compensation Information System, (2) expand existing
guidelines on the provision of physical therapy and occupational
therapy, and (3) ensure that up-to-date evidence-based
guidelines are used in the provision of medical treatment.
Fiscal
Impact: The Department of Industrial Relations (DIR) indicates
that it would incur first-year costs ranging from $932,000 to
$1.8 million (special fund) to administer the bill. Ongoing
costs would likely range from $900,000 to $1.2 million annually.
Additionally, the bill would likely result in increased penalty
SB 1160 (Mendoza) Page 1 of
?
revenue, the magnitude of which is unknown.
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, then it must send
the request to Utilization Review.
Utilization Review (UR) is the review process for medical
treatment recommendations by physicians to determine whether 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
one or more 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 begins with the physician submitting a Request for
Authorization for Medical Treatment (RFA), which is a Division
of Workers' Compensation (DWC) form where the physician details
diagnosis and treatment. The physician 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.
Current law requires the administrative director of the Division
of Workers' Compensation to create a Medical Treatment
Utilization Schedule (MTUS), which is evidence-based, peer
reviewed, and addresses, at a minimum, the frequency, duration,
intensity, and appropriateness of all treatment procedures and
modalities commonly performed in workers' compensation cases.
The MTUS is presumed to be correct, unless rebutted by a
preponderance of evidence.
The Workers' Compensation Information System (WCIS) is a
SB 1160 (Mendoza) Page 2 of
?
database that is run by the DIR's Division of Workers'
Compensation (DWC) that serves as a warehouse of employer data
on workplace injuries and medical bills. DWC uses this data to
determine the effectiveness of the workers' compensation system.
Additionally, researchers use the WCIS to study the system in
order to better understand how laws and regulations impact
injured workers and employers. To the extent that information
reported into WCIS is erroneous or incomplete, its effectiveness
as a tool to evaluate the workers' compensation system is
reduced.
Proposed Law:
This bill would reform the penalty structure of failing to
comply with the data collection requirements of the WCIS.
Specifically, this bill would do all of the following:
Increase the minimum penalty from $5,000 to $10,000 for
failing to report workers' compensation data to WCIS.
Require the posting to DIR's internet site of a list of
claims administrators who are out of compliance with the
WCIS data reporting requirements.
Require, beginning January 1, 2019, DIR to assess
additional penalties of not less than $15,000 and not more
than $45,000 if (1) in the immediate previous year, the
claims adjuster was assessed a penalty of $8,000 or more,
and (2) in the current year, the claims adjuster will be
assessed a penalty of $8,000 or more.
Authorize, starting January 1, 2020, DIR to assess an
additional administrative penalty against a claims
administrator for a pattern or practice of failing to
comply with the data reporting requirements adopted
pursuant to this section of not less than $100,000 in any
single year.
Permit the director of DIR, if the administrative
SB 1160 (Mendoza) Page 3 of
?
director of DWC finds that an employer of claims
administrator engages in a pattern or practice of failing
to comply with the data reporting requirements, to issue
and serve a stop order on that employer prohibiting the use
of employee labor by the employer until the employer's
compliance with the date reporting requirements. The stop
order shall become effective immediately upon service.
Additionally, this bill would modify the operation of UR, IMR,
and the Medical Treatment Utilization Schedule. Specifically,
this bill would do all of the following:
Expand and recast the existing post-surgical guidelines
in the MTUS to cover physical medicine and rehabilitation
for both post-surgical treatment and return-to-work
treatment and require the DWC to adopt regulations to
effectuate this expansion on or before January 1, 2018.
Require that, for injuries covered by the MTUS, if a
specific clinical topic in the MTUS has not been updated in
five or more years, authorized medical treatment for
injured workers must be in accordance with other medical
treatment guidelines that are recognized generally by the
national medical community and scientifically based if the
guideline is five or less years old.
Require that, if an employer requires additional
information in order to make UR decision to approve,
modify, delay, or deny medical treatment, the employer must
provide a physician at least 72 hours to respond to any
request for medical treatment.
Require that, on or before July 1, 2018, all UR
processes must be accredited by an independent, nonprofit
organization to certify the UR process meets specified
criteria, including, but not limited to, timeliness in
issuing a utilization review decision, the scope of medical
material used in issuing a utilization review decision, and
requiring a policy preventing financial incentives to
SB 1160 (Mendoza) Page 4 of
?
doctors and other providers based on the utilization review
decision. UR processes would need to be re-accredited every
three years, or more frequently as required by the DWC.
Require DWC to adopt rules to implement the selection of
an independent, nonprofit organization for those
certification purposes. The DWC may also adopt rules to
require additional specific criteria for measuring the
quality of a utilization review process for purposes of
certification.
Related
Legislation: SB 228 (Alarcon), Chapter 639, Statutes of 2003,
required employers to implement a utilization review process, as
well as required the administrative director to create the MTUS.
Staff
Comments: Under current law, as noted previously, the maximum
penalty for not providing data to WCIS is $5,000 per year. This
penalty is low compared to that of other states. Texas, for
example, assesses penalties at $25,000 per day, which is likely
a contributing factor behind that state's robust database. This
bill would double the current law penalty to $10,000 per year,
but then create a gradually progressive penalty schedule
designed to incentivize non-compliant employers to comply with
the data requirements. An employer would need to be
significantly out of compliance for at least three years and not
showing any improvement in a pattern or practice of refusing to
provide data to the WCIS in order to reach maximum penalties
allowed under the bill.
This bill seeks to address two general areas of current
conflict: (1) friction between physicians and payors related to
physical /occupational therapy, and (2) lack of peer-to-peer
communication and unclear policies and procedures after medical
treatment is elevated to UR. It would address these challenges
SB 1160 (Mendoza) Page 5 of
?
as follows:
The bill would expand an existing chapter within the
MTUS related to post-surgical physical medicine, which
provides specific physical/occupational therapy duration
guidelines for recovering from surgeries. By expanding this
guideline to include pre-surgical and return-to-work
physical medicine, the bill would provide additional
guidance to employers and medical providers on appropriate
physical/occupational therapy treatments. Additionally, it
would provide DIR with the opportunity to craft regulations
that would specify the application of UR to this new
physical medicine guideline.
The bill would require that, if a UR process needs
additional information in order to approve or deny a
treatment, the medical provider must be given at least 72
hours to respond to the request for additional information.
Currently, a medical provider can be given as little as 24
or 48 hours to respond to a voicemail asking for additional
information, which can be difficult for a medical provider
seeing a full schedule of injured workers on a given day.
Without the information in question, a UR vendor could deny
treatment, leading to delays in medical treatment for
injured workers. By requiring 72 hours, the bill attempts
to encourage peer-to-peer communication among medical
providers and hasten high quality medical care for injured
workers.
Finally, this bill would require all UR processes to be
accredited by an independent, nonprofit entity to certify
that the UR process meets specified criteria. SB 1160
explicitly includes both timeliness in issuing UR decisions
and policies preventing financial incentives to doctors
based on medical decisions as criteria for review. One
existing accreditation entity, URAC, currently measures UR
processes against those criteria, as well as more than 70
other components.
SB 1160 (Mendoza) Page 6 of
?
Additionally, as noted previously, the bill would require that,
for injuries covered by the MTUS, if a specific clinical topic
has not been updated in five or more years, medical treatment
needs to be in accordance with other, more current guidelines
that are both scientifically based and recognized generally by
the national medical community. This will ensure that medical
treatment is based on the latest in medical research, as well as
ensure that out-of-date medical treatment guidelines are not
presumed to be correct.
DIR notes that additional staff would be necessary to implement
the WCIS penalty structure proposed by the bill, reflecting the
assumption that each claims administrator in the system will be
assessed the maximum amount of penalties suggested by SB 1160
each year. To the extent that the proportion of claims adjusters
currently paying the maximum penalty is less than 100 percent,
DIR staffing needs would be lower.
Implement a new physical medicine and rehabilitation treatment
guideline would require DIR to obtain external expertise to
either develop new guidelines from current research and/or
extract evidence-based guidelines from existing national
guidelines, including the necessary economic analysis that would
accompany the regulatory rulemaking process. These guidelines
would require continual review and updating to ensure the most
recent research is considered. Outreach and education would
also be necessary to ensure medical professionals and others
involved in the prescribing process have adequate notice and
information.
DIR pegs the additional staffing and contracting costs as
follows: first-year costs ranging from $932,000 to $1.8 million
(special fund), and ongoing costs would likely range from
$900,000 to $1.2 million annually.
It is unclear why the creation of physical medicine guideline
would require any additional outreach or education relative to
other changes to the MTUS or fee schedules for medical
SB 1160 (Mendoza) Page 7 of
?
providers. These regulatory changes are generally communicated
through public forums and emails, as well as the regulatory
process itself. Consequently, such outreach could be done in
concert with the outreach and education for other changes to the
MTUS.
-- END --