BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 1160|
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THIRD READING
Bill No: SB 1160
Author: Mendoza (D)
Amended: 4/6/16
Vote: 21
SENATE LABOR & IND. REL. COMMITTEE: 4-1, 4/13/16
AYES: Mendoza, Jackson, Leno, Mitchell
NOES: Stone
SENATE APPROPRIATIONS COMMITTEE: 5-2, 5/27/16
AYES: Lara, Beall, Hill, McGuire, Mendoza
NOES: Bates, Nielsen
SUBJECT: Workers' compensation: utilization review
SOURCE: California Professional Firefighters
DIGEST: This bill increases administrative penalties for
employers who refuse to submit injury and medical data to the
Workers' Compensation Information System, expands existing
guidelines on the provision of physical therapy and occupational
therapy, and ensures that up-to-date evidence-based guidelines
are used in the provision of medical treatment.
ANALYSIS:
Existing law:
1) Establishes a workers' compensation system that provides
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benefits to an employee who suffers from an injury or illness
that arises out of and in the course of employment,
irrespective of fault. This system requires all employers to
secure payment of benefits by either securing the consent of
the Department of Industrial Relations (DIR) to self-insure
or by securing insurance against liability from an insurance
company duly authorized by the state.
2) Requires that, if an employer is found to be employing
individuals without workers' compensation coverage, the
director of DIR serves a stop order prohibiting the use of
employees until workers' compensation coverage is secured. An
employer may protest the stop order by making and filing with
the director a written request for a hearing within 20 days
after service of the stop order. The hearing shall be held
within five days from the date of filing the request. (Labor
Code §3710.1)
3) 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. (Labor Code §4600)
4) Requires the administrative director of the Division of
Workers' Compensation (DWC) 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. (Labor Code
§§5307.27 and 4604.5)
5) Limits injured workers to 24 chiropractic, 24 occupational
therapy, and 24 physical therapy visits per industrial
injury. Employers are not prohibited from granting additional
visits if necessary, however. (Labor Code §4604.5)
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6) Requires that all employers create a utilization review (UR)
process, which is a process that prospectively,
retrospectively, or concurrently review and approve, modify,
delay, or deny, based in whole or in part on medical
necessity to cure and relieve, treatment recommendations by
physicians, prior to, retrospectively, or concurrent with the
provision of medical treatment services. (Labor Code §4610)
7) Requires that each UR process shall be governed by written
policies and that these policies and procedures, and a
description of the utilization process, must be filed with
the administrative director and shall be disclosed by the
employer to employees, physicians, and the public upon
request. (Labor Code §4610(c))
8) Provides that, in the event over a dispute over a UR
decision on or after July 1, 2014, all disputes must be
submitted for Independent Medical Review (IMR). The
independent reviewer's information must be kept confidential.
(Labor Code §§4610.5 and 4610.6)
9) Requires that, in the absence of fraud, error, or illegal
conduct, the IMR decision is final and binding. (Labor Code
§4610.6)
10)Requires the administrative director to create and maintain
a Workers' Compensation Information System (WCIS), which is
used to assist DIR to manage the workers' compensation system
in an effective manner, as well as measuring how adequately
the system indemnifies injured workers and their dependents.
Penalties for failing to report data to the WCIS are capped
at $5,000 per year. (Labor Code §138.6)
This bill:
1)Reforms the penalty structure of failing to comply with the
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data collection requirements of the WCIS. Specifically, this
bill:
a) Increases the minimum penalty for failing to report
workers' compensation data to the WCIS from $5,000 to
$10,000.
b) Requires the posting of a list of claims administrators
who are out of compliance with the WCIS data reporting
requirements on the DIR Web site.
c) Provides that starting January 1, 2019, the
administrative director must assess an additional penalties
of not less than $15,000 and not more than $45,000 if the
following is true:
i) In the immediate previous year, the claims adjuster
was assessed a penalty of $8,000 or more.
ii) In the current year, the claims adjuster will be
assessed a penalty of $8,000 or more in the current year.
d) Provides that Starting January 1, 2020, the
administrative director may 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 bill of not
less than $100,000 in any single year.
e) Permits the director of DIR, if the administrative
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.
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2)Modifies the operation of UR, IMR, and the MTUS. Specifically,
this bill:
a) Expands and recasts 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.
b) Requires 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.
c) Requires 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.
d) Requires 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 UR decision, the scope of medical material used
in issuing a UR decision, and requiring a policy preventing
financial incentives to doctors and other providers based
on the UR decision. UR processes would need to be
re-accredited every three years, or more frequently as
required by the DWC.
e) Requires the DWC to adopt rules to implement the
selection of an independent, nonprofit organization for
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those certification purposes. The DWC may also adopt rules
to require additional specific criteria for measuring the
quality of a UR process for purposes of certification.
Comments
1)What is Utilization Review?
In California's workers' compensation system, an employer or
insurer cannot deny treatment. When an employer or insurer
receives a request for medical treatment, the employer or
insurer can either approve the treatment or, if the employer
or insurer believes that a physician's request for treatment
is medically unnecessary or harmful, the employer or insurer
must send the request to UR.
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 by vendor, but
it 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 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. (see State Compensation Insurance Fund v. WCAB
(Sandhagen), 44 CAL. 4TH 230 (2008)).
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2)Recent Research on UR
Recently, UR has come under some scrutiny by stakeholders,
many of whom argue that it is leading to a significant number
of injured workers being denied care. This claim, however, is
not currently supported by the data. As was discussed at the
Senate Labor and Industrial Relations Committee's March 25th
oversight hearing, a recent study by the California Workers'
Compensation Institute found that only approximately 25% of
medical treatment requests go through UR, with approximately
75% of the medical treatment requests approved. Once the
approvals from UR and IMR are included, more than 94% of
treatment is approved OVERALL in California's workers'
compensation system.
However, there appear to be discrepancies between payors at
the rate they approve, modify, delay, or deny treatment
through UR. For example, in a recent RAND presentation before
the Commission on Health and Safety and Workers' Compensation,
a sample of payor data showed that a public self-insured
employer with an in-house UR process approved treatment at the
initial claims adjuster level about 90% of the time, while a
Third Party Administrator (TPA) who also had an in-house UR
process approved treatment at the initial claims adjuster
level about 50% of the time. While that same TPA eventually
approved a similar level of treatment, it is unclear why the
TPA would send more treatment through the full UR process.
While the RAND study is preliminary and the numbers above may
change as the study is finalized, these numbers suggest that
the UR process discrepancies between payors may explain
stakeholder concerns surrounding the UR process, and require
exploration to explain.
3)The Goals of SB 1160:
SB 1160 is an evolving reform bill that seeks to address
stakeholder concerns with varies components of the workers'
compensation system. These components will be discussed in
detail below.
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WCIS penalties. WCIS is a database that is run by DWC that is
populated by employer data on workplace injuries and medical
bills. Through this data, the DWC is able to monitor and
measure how well the workers' compensation system is
operating. Additionally, researchers use the WCIS to study the
system in order to better understand how laws and regulations
impact injured workers and employers. Without this system, the
DWC is reduced to educated guesses and anecdotes in regulating
and improving the workers' compensation system.
Unfortunately, according to several stakeholders, compliance
and data quality remain an issue with the WCIS. While
significant improvements have occurred in the past few years,
the system may still have holes in its data collection,
particularly among public entities. This creates blind spots
in our data that disproportionately impact public sector
employees, such as police officers, fire fighters, and other
first responders.
Under current law, the maximum penalty for not providing data
to the WCIS is $5,000 per year. Compared to other states, this
penalty amount is quite low. In Texas, for example, the
penalties are $25,000 per day. It is likely that the higher
penalty amounts have assisted Texas in the development of
their database. SB 1160 seeks to strike a balance by doubling
the penalty to $10,000 per year, which is still far lower than
Texas, but then create a gradually increasing penalty schedule
designed to encourage non-compliant employers to comply with
the data requirements. In order to reach maximum penalties
allowed under SB 1160, 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.
UR/IMR process reforms and MTUS enhancement. In talking to
medical stakeholders throughout California, one common area of
friction between physicians and payors that generally led to
UR and IMR is physical therapy/occupational therapy, and one
common area of friction after medical treatment was elevated
to UR was a lack of peer-to-peer communication and unclear
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policies and procedures. SB 1160 seeks to address these
challenges in three ways.
First, SB 1160 expands an existing chapter within the MTUS on
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, SB
1160 would provide additional guidance to employers and
medical providers on appropriate physical/occupational therapy
treatments. Further, by placing this guideline in the MTUS and
excluding the physical medicine guidelines from the 24 visit
caps, SB 1160 provides the DWC with the opportunity to craft
regulations that would specify the application of UR to this
new physical medicine guideline.
Second, SB 1160 requires 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 complement of injured workers each 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, SB 1160 will hopefully encourage
peer-to-peer communication among medical providers and speed
up high quality medical care for injured workers.
Finally, this bill requires 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.
Additionally, SB 1160 requires that, for injuries covered by
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the MTUS, if a specific clinical topic in the MTUS has not
been updated in five or more years, medical treatment needs to
be in accordance with other, more current medical treatment
guidelines that are recognized generally by the national
medical community and scientifically based. 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 granted the imprimatur of being presumed
correct.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
According to the Senate Appropriations Committee, DIR indicates
that it would incur first-year costs ranging from $932,000 to
$1.8 million (special fund) to administer this bill. Ongoing
costs would likely range from $900,000 to $1.2 million annually.
Additionally, this bill would likely result in increased penalty
revenue, the magnitude of which is unknown.
SUPPORT: (Verified5/27/16)
California Professional Firefighters (source)
California Labor Federation, AFL-CIO
Orange County Professional Firefighters Association, Local 3631
OPPOSITION: (Verified5/27/16)
American College of Occupational and Environmental Medicine
Reed Group LTD
ARGUMENTS IN SUPPORT: Proponents argue that SB 1160 will
help ensure timely and appropriate care for injured workers.
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Specifically, proponents argue that SB 1160 will improve
compliance with the WCIS through higher penalties, allowing for
reliable data to improve efforts to prevent workplace injuries.
Proponents also note that SB 1160 will help improve the
provision of medical care for injured workers by ensuring that
only up-to-date medical guidelines are used in the treatment of
injured workers. Finally, proponents note that SB 1160 will
create a physical medicine guideline, which will hopefully
reduce medical disputes and ensure that injured workers receive
the occupational therapy and physical therapy they require to
return to work.
ARGUMENTS IN OPPOSITION: The American College of
Occupational and Environmental Medicine (ACOEM) has a
oppose-unless-amended position to SB 1160, raising concerns
about provisions of this bill that address out-of-date medical
guidelines. Specifically, ACOEM notes that, once the MTUS is
five or more years out of date, doctors and claims adjusters may
use different medical guidelines, leading to confusion in what
is and is not appropriate care. ACOEM argues that, rather than
deviating from MTUS if the guidelines are five years old or
older, SB 1160 should instead require that the MTUS be
automatically updated in order to avoid out-of-date medical
guidelines being used in the workers' compensation system.
Prepared by:Gideon L. Baum / L. & I.R. / (916) 651-1556
5/28/16 16:57:32
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