BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    SB 1160


                                                                    Page  1





          SENATE THIRD READING


          SB  
          1160 (Mendoza)


          As Amended  June 20, 2016


          Majority vote


          SENATE VOTE:  26-12


           ------------------------------------------------------------------ 
          |Committee       |Votes|Ayes                  |Noes                |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Insurance       |8-4  |Daly, Chu, Cooley,    |Melendez, Travis    |
          |                |     |Cooper, Dababneh,     |Allen, Bigelow,     |
          |                |     |Frazier, Gatto,       |Dahle               |
          |                |     |Rodriguez             |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Appropriations  |14-5 |Gonzalez, Bloom,      |Bigelow, Gallagher, |
          |                |     |Bonilla, Bonta,       |Jones, Obernolte,   |
          |                |     |Calderon, Daly,       |Wagner              |
          |                |     |Eggman, Eduardo       |                    |
          |                |     |Garcia, Holden,       |                    |
          |                |     |Quirk, Santiago,      |                    |
          |                |     |Weber, Wood, McCarty  |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
           ------------------------------------------------------------------ 









                                                                    SB 1160


                                                                    Page  2






          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 three 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  
            will provide the accreditation, 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  








                                                                    SB 1160


                                                                    Page  3





            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 $5,000 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 $8,000 in fines in successive years.


          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)Requires treatment to be evidence-based, as detailed in a  
            Medical Treatment Utilization Schedule adopted and maintained  
            by the 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.









                                                                    SB 1160


                                                                    Page  4






          5)Authorizes the AD to impose a fine of up to $5,000 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 Appropriations Committee, the  
          DWC indicated, with respect to a much broader version of this  
          bill, that it would incur first-year costs ranging from $950,000  
          to $1.8 million (special fund) to administer the bill, while  
          ongoing costs may be in the hundreds of thousands of dollars. 


          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 (TPA) who  








                                                                    SB 1160


                                                                    Page  5





            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 $5,000 fine and ignore filing requirements.  WCIS  
            is 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 this  
            bill proposes increased and, for ongoing recalcitrant  
            employers, stepped up penalties.  


           3)Physical medicine.  This 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.  This  
            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  








                                                                    SB 1160


                                                                    Page  6





            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.


          Analysis Prepared by:                                             
          Mark Rakich / INS. / (916) 319-2086  FN: 0004122