BILL ANALYSIS Ó
SB 1160
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Date of Hearing: June 22, 2016
ASSEMBLY COMMITTEE ON INSURANCE
Tom Daly, Chair
SB
1160 (Mendoza) - As Amended June 20, 2016
SENATE VOTE: 26-12
SUBJECT: Workers' compensation: utilization review
SUMMARY: Requires utilization review entities to be certified;
increases penalties for the failure to comply with data filing
requirements; and modifies a statutory treatment guideline.
Specifically, this bill:
1)Requires a utilization review (UR) entity to be accredited by
July 1, 2018, and every 3 years thereafter.
2)Authorizes the Administrative Director (AD) of the Division of
Workers' Compensation (DWC) to require more frequent
re-accreditation if he or she deems it necessary.
3)Specifies criteria that the accrediting organization will use
to evaluate UR processes.
4)Requires the AD to adopt rules governing the organization that
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will provide the acreditation, and authorizes the AD to expand
the criteria that the organization will apply.
5)Modifies the 24-visit cap on chiropractic, physical therapy
and occupational therapy visits, by specifying that in cases
involving physical medicine rehabilitative services to the
extent the cap is inconsistent with evidence-based treatment
guidelines to be adopted by the AD, the guideline adopted by
the AD prevails.
6)Requires the AD to adopt regulations designed to create a more
efficient workers' compensation claim information system,
including specifying the data elements to be collected.
7)Requires the AD to publicly post the identities of those who
fail to submit the claims data as required by law.
8)Establishes enhanced penalties for the failure to comply with
workers' compensation claim data filing requirements, as
follows:
a) Increases the basic fine for failure to file appropriate
data from up to $5000 to up to $10,000.
b) Establishes enhanced penalties of between $15,000 and
$45,000 for mandated data filers that have incurred more
than $8000 in fines in successive years.
EXISTING LAW:
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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)Requires treatment to be evidence-based, as detailed in a
Medical Treatment Utilization Schedule adopted and maintained
by the Administrative Director AD.
3)Limits the number of chiropractic, physical therapy, or
occupational therapy visits to no more than 24.
4)Provides for a Workers' Compensation Information System
(WCIS), and mandates that specified claims data be filed by
entities that pay workers' compensation claims.
5)Authorizes the AD to impose a fine of up to $5000 per year for
a failure of a required filer to comply with the law.
6)Requires every employer or insurer to maintain a UR process,
which is the mechanism for the employer or insurer to review,
delay, modify or deny treatment requested by a treating
medical provider.
FISCAL EFFECT: According to the Senate Appropriations
Committee, the DWC indicated, with respect to a much broader
version of this bill, 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 revenue, the magnitude of
which is unknown.
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COMMENTS:
1)Purpose. According to the author, 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. The California Workers' Compensation Institute
(CWCI) 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
Independent Medical Review (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 who also
had an in-house UR process approved treatment at the initial
claims adjuster level only 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.
2)WCIS. It has recently become apparent that some entities that
are required to submit data to WCIS have simply decided to pay
the annual $5000 fine and ignore filing requirements. WCIS is
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an important data base because it allows researchers to sort
and analyze claim data in the ongoing effort to improve
efficiency the workers' compensation system, ensure better
care for injured workers, and control costs for employers.
The failure to submit the required data can create a
substantial impediment to that ongoing work. This is why the
bill proposes increased and, for ongoing recalcitrant
employers, stepped up penalties.
3)Physical medicine. The bill proposes a change to the 24-visit
cap on physical medicine. There is already an exception to
the cap for post-surgical care. In that case, the AD has
adopted specific treatment guidelines that control over the
hard caps in cases where the guidelines apply. The bill
proposes a similar approach for a broader scope of
rehabilitation treatment. The caps would remain in place, but
be supplanted only to the extent that an evidence-based
treatment guideline adopted by the AD is applicable.
4)Opposition. The bill has substantial opposition. In
response, the author has recently made substantial amendments
to the bill, deleting several provisions of the greatest
concern to the opposition. While it may not be true for every
opponent, a number of the opposing organizations have
indicated that even though they cannot change their position,
they are comfortable working with the author as the bill moves
to the Assembly Floor.
REGISTERED SUPPORT / OPPOSITION:
Support
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California Labor Federation
California Professional Firefighters (CPF)
Small Business California
Opposition
California Chamber of Commerce
Acclamation Insurance Management Services
Allied Managed Care
ALPHA Fund
American Insurance Fund
Association of California Healthcare Districts
Association of California Insurance Companies
California Asian Pacific Chamber of Commerce
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California Association of Joint Powers Authorities
California Coalition on Workers' Compensation
California Farm Bureau Federation
California Grocers Association
California League of Food Processors
California Manufacturer and Technology Association
California Professional Association of Specialty Contractors
California Restaurant Association
California Retailers Association
California State Association of Counties
California Chamber of Commerce
Desert Hot Springs Chamber of Commerce
El Dorado County Chamber of Commerce
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Employers Group
Greater Conejo Valley Chamber of Commerce
Greater Fresno Area Chamber of Commerce
Grimmway Enterprises
League of California Cities
Metro Risk Management
National Association of Mutual Insurance Companies
National Federation of Independent Business
North Orange County Chamber of Commerce
Safeway, Inc. (Albertsons Companies)
Santa Maria Chamber of Commerce Visitor & Convention Bureau
Schools Insurance Authority
Sedgwick Claims Management Services, Inc.
Southwest California Legislative Council
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The Chamber of the Santa Barbara Region
The Cheesecake Factory
UPS
Valley Industry & Commerce Association
Analysis Prepared by:Mark Rakich / INS. / (916)
319-2086