Amended in Assembly June 14, 2016

Amended in Senate April 19, 2016

Senate Bill No. 1175

Introduced by Senator Mendoza

February 18, 2016

An act to amend Sections 4603.2, 4603.4, and 4625 of the Labor Code, relating to workers’ compensation.

LEGISLATIVE COUNSEL’S DIGEST

SB 1175, as amended, Mendoza. Workers’ compensation: requests for payment.

Existing law establishes a workers’ compensation system, administered by the Administrative Director of the Division of Workers’ Compensation, to compensate an employee for injuries sustained in the course of his or her employment. Existing law requires the employer to provide medical, surgical, chiropractic, acupuncture, and hospital treatment, as specified, that is reasonably required to cure or relieve the injured worker from the effects of his or her injury. Existing law requires a provider of those services to submit, among other documents, its request for payment with an itemization of services provided and the charge for each service. Existing law also requires the employer to reimburse the employee for his or her medical-legal expenses, as specified.

This bill would require, effective for services on or after January 1, 2017, that requests for payment with an itemization of services provided and the charge for each service be submitted to the employer within 12 months of the date of service or within 12 months of the date of discharge for inpatient facility services. The bill would also require, effective for services provided on or after January 1, 2017, that all bills for medical-legal evaluation or medical-legal expense be submitted to the employer within 12 months of the date of service in the manner prescribed by the administrative director. The bill would provide that requests for payment and bills for medical-legal charges are barred unless timely submitted. The bill would require the administrative director to adopt rules to implement the 12-month limitation period, as specified.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 4603.2 of the Labor Code is amended to
read:

4603.2.  

(a) (1) Upon selecting a physician pursuant to Section
4600, the employee or physician shall notify the employer of the
name and address, including the name of the medical group, if
applicable, of the physician. The physician shall submit a report
to the employer within five working days from the date of the
initial examination, as required by Section 6409, and shall submit
periodic reports at intervals that may be prescribed by rules and
regulations adopted by the administrative director.

(2) If the employer objects to the employee’s selection of the
physician on the grounds that the physician is not within the
medical provider network used by the employer, and there is a
final determination that the employee was entitled to select the
physician pursuant to Section 4600, the employee shall be entitled
to continue treatment with that physician at the employer’s expense
in accordance with this division, notwithstanding Section 4616.2.
The employer shall be required to pay from the date of the initial
examination if the physician’s report was submitted within five
working days of the initial examination. If the physician’s report
was submitted more than five working days after the initial
examination, the employer and the employee shall not be required
to pay for any services prior to the date the physician’s report was
submitted.

(3) If the employer objects to the employee’s selection of the
physician on the grounds that the physician is not within the
medical provider network used by the employer, and there is a
final determination that the employee was not entitled to select a
physician outside of the medical provider network, the employer
shall have no liability for treatment provided by or at the direction
of that physician or for any consequences of the treatment obtained
outside the network.

(b) (1) (A) A provider of services provided pursuant to Section
4600, including, but not limited to, physicians, hospitals,
pharmacies, interpreters, copy services, transportation services,
and home health care services, shall submit its request for payment
with an itemization of services provided and the charge for each
service, a copy of all reports showing the services performed, the
prescription or referral from the primary treating physician if the
services were performed by a person other than the primary treating
physician, and any evidence of authorization for the services that
may have been received. This section does not prohibit an
employer, insurer, or third-party claims administrator from
establishing, through written agreement, an alternative manual or
electronic request for payment with providers for services provided
pursuant to Section 4600.

(B) Effective for services provided on or after January 1, 2017,
the request for payment with an itemization of services provided
and the charge for each service shall be submitted to the employer
within 12 months of the date of service or within 12 months of the
date of discharge for inpatient facility services. The administrative
director shall adopt rules to implement the 12-month limitation
period. The rules shall define circumstances that constitute good
cause for an exception to the 12-month period, including provisions
to address the circumstances of a nonoccupational injury or illness
later found to be a compensable injury or illness. The request for
payment is barred unless timely submitted.

(C) Notwithstanding the requirements of this paragraph, a copy
of the prescription shall not be required with a request for payment
for pharmacy services, unless the provider of services has entered
into a written agreement, as provided in this paragraph, that
requires a copy of a prescription for a pharmacy service.

(D) This section does not preclude an employer, insurer,
pharmacy benefits manager, or third-party claims administrator
from requesting a copy of the prescription during a review of any
records of prescription drugs that were dispensed by a pharmacy.

(2) Except as provided in subdivision (d) of Section 4603.4, or
under contracts authorized under Section 5307.11, payment for
medical treatment provided or prescribed by the treating physician
selected by the employee or designated by the employer shall be
made at reasonable maximum amounts in the official medical fee
schedule, pursuant to Section 5307.1, in effect on the date of
service. Payments shall be made by the employer with an
explanation of review pursuant to Section 4603.3 within 45 days
after receipt of each separate, itemization of medical services
provided, together with any required reports and any written
authorization for services that may have been received by the
physician. If the itemization or a portion thereof is contested,
denied, or considered incomplete, the physician shall be notified,
in the explanation of review, that the itemization is contested,
denied, or considered incomplete, within 30 days after receipt of
the itemization by the employer. An explanation of review that
states an itemization is incomplete shall also state all additional
information required to make a decision. A properly documented
list of services provided and not paid at the rates then in effect
under Section 5307.1 within the 45-day period shall be paid at the
rates then in effect and increased by 15 percent, together with
interest at the same rate as judgments in civil actions retroactive
to the date of receipt of the itemization, unless the employer does
both of the following:

(A) Pays the provider at the rates in effect within the 45-day
period.

(B) Advises, in an explanation of review pursuant to Section
4603.3, the physician, or another provider of the items being
contested, the reasons for contesting these items, and the remedies
available to the physician or the other provider if he or she
disagrees. In the case of an itemization that includes services
provided by a hospital, outpatient surgery center, or independent
diagnostic facility, advice that a request has been made for an audit
of the itemization shall satisfy the requirements of this paragraph.

An employer’s liability to a physician or another provider under
this section for delayed payments shall not affect its liability to an
employee under Section 5814 or any other provision of this
division.

(3) Notwithstanding paragraph (1), if the employer is a
governmental entity, payment for medical treatment provided or
prescribed by the treating physician selected by the employee or
designated by the employer shall be made within 60 days after
receipt of each separate itemization, together with any required
reports and any written authorization for services that may have
been received by the physician.

(4) Duplicate submissions of medical services itemizations, for
which an explanation of review was previously provided, shall
require no further or additional notification or objection by the
employer to the medical provider and shall not subject the employer
to any additional penalties or interest pursuant to this section for
failing to respond to the duplicate submission. This paragraph shall
apply only to duplicate submissions and does not apply to any
other penalties or interest that may be applicable to the original
submission.

(c)  begin delete An interest end delete begin insert Interest end insert or begin insert an end insert increase in compensation paid by
an insurer pursuant to this section shall be treated in the same
manner as an increase in compensation under subdivision (d) of
Section 4650 for the purposes of any classification of risks and
premium rates, and any system of merit rating approved or issued
pursuant to Article 2 (commencing with Section 11730) of Chapter
3 of Part 3 of Division 2 of the Insurance Code.

(d) (1) Whenever an employer or insurer employs an individual
or contracts with an entity to conduct a review of an itemization
submitted by a physician or medical provider, the employer or
insurer shall make available to that individual or entity all
documentation submitted together with that itemization by the
physician or medical provider. When an individual or entity
conducting an itemization review determines that additional
information or documentation is necessary to review the
itemization, the individual or entity shall contact the claims
administrator or insurer to obtain the necessary information or
documentation that was submitted by the physician or medical
provider pursuant to subdivision (b).

(2) An individual or entity reviewing an itemization of service
submitted by a physician or medical provider shall not alter the
procedure codes listed or recommend reduction of the amount of
the payment unless the documentation submitted by the physician
or medical provider with the itemization of service has been
reviewed by that individual or entity. If the reviewer does not
recommend payment for services as itemized by the physician or
medical provider, the explanation of review shall provide the
physician or medical provider with a specific explanation as to
why the reviewer altered the procedure code or changed other parts
of the itemization and the specific deficiency in the itemization or
documentation that caused the reviewer to conclude that the altered
procedure code or amount recommended for payment more
accurately represents the service performed.

(e) (1) If the provider disputes the amount paid, the provider
may request a second review within 90 days of service of the
explanation of review or an order of the appeals board resolving
the threshold issue as stated in the explanation of review pursuant
to paragraph (5) of subdivision (a) of Section 4603.3. The request
for a second review shall be submitted to the employer on a form
prescribed by the administrative director and shall include all of
the following:

(A) The date of the explanation of review and the claim number
or other unique identifying number provided on the explanation
of review.

(B) The item and amount in dispute.

(C) The additional payment requested and the reason therefor.

(D) The additional information provided in response to a request
in the first explanation of review or any other additional
information provided in support of the additional payment
requested.

(2) If the only dispute is the amount of payment and the provider
does not request a second review within 90 days, the bill shall be
deemed satisfied and neither the employer nor the employee shall
be liable for any further payment.

(3) Within 14 days of a request for second review, the employer
shall respond with a final written determination on each of the
items or amounts in dispute. Payment of any balance not in dispute
shall be made within 21 days of receipt of the request for second
review. This time limit may be extended by mutual written
agreement.

(4) If the provider contests the amount paid, after receipt of the
second review, the provider shall request an independent bill review
as provided for in Section 4603.6.

(f) Except as provided in paragraph (4) of subdivision (e), the
appeals board shall have jurisdiction over disputes arising out of
this subdivision pursuant to Section 5304.

SEC. 2.  

Section 4603.4 of the Labor Code is amended to read:

4603.4.  

(a) The administrative director shall adopt rules and
regulations to do all of the following:

(1) Ensure that all health care providers and facilities submit
medical bills for payment on standardized forms.

(2) Require acceptance by employers of electronic claims for
payment of medical services.

(3) Ensure confidentiality of medical information submitted on
electronic claims for payment of medical services.

(4) Require the timely submission of paper or electronic bills
in conformity with subparagraph (B) of paragraph (1) of
subdivision (b) of Section 4603.2.

(b) To the extent feasible, standards adopted pursuant to
subdivision (a) shall be consistent with existing standards under
the federal Health Insurance Portability and Accountability Act
of 1996.

(c) Require all employers to accept electronic claims for
payment of medical services.

(d) Payment for medical treatment provided or prescribed by
the treating physician selected by the employee or designated by
the employer shall be made with an explanation of review by the
employer within 15 working days after electronic receipt of an
itemized electronic billing for services at or below the maximum
fees provided in the official medical fee schedule adopted pursuant
to Section 5307.1. If the billing is contested, denied, or incomplete,
payment shall be made with an explanation of review of any
uncontested amounts within 15 working days after electronic
receipt of the billing, and payment of the balance shall be made
in accordance with Section 4603.2.

SEC. 3.  

Section 4625 of the Labor Code is amended to read:

4625.  

(a) Effective for services provided on or after January
1, 2017, all bills for medical-legal evaluation or medical-legal
expense shall be submitted to the employer within 12 months of
the date of service in the manner prescribed by the administrative
director. The administrative director shall adopt rules to define
circumstances that constitute good cause for an exception to the
12-month period. Bills for medical-legal charges are barred unless
timely submitted.

(b) Notwithstanding subdivision (d) of Section 4628, all charges
for medical-legal expenses for which the employer is liable that
are not in excess of those set forth in the official medical-legal fee
schedule adopted pursuant to Section 5307.6 shall be paid promptly
pursuant to Section 4622.

(c) If the employer contests the reasonableness of the charges
it has paid, the employer may file a petition with the appeals board
to obtain reimbursement of the charges from the physician that are
considered to be unreasonable.