BILL ANALYSIS �
AB 584
Page 1
Date of Hearing: April 13, 2011
ASSEMBLY COMMITTEE ON INSURANCE
Jose Solorio, Chair
AB 584 (Fong) - As Amended: April 6, 2011
SUBJECT : Workers' compensation: utilization review
SUMMARY : Requires that a physician who is conducting
utilization review be licensed in California. Specifically,
this bill:
1)Requires that a "physician," as defined in the workers'
compensation law, who is conducting utilization review of the
proposed treatment for an injured worker, be licensed in
California.
2)Makes a technical change in the definition of "psychologist"
for purposes of the workers compensation law.
3)Conforms the law that governs disability determinations by the
Employment Development Department (EDD) for purposes of the
State Disability Insurance Program (SDI) to the changes being
made to the workers' compensation law.
EXISTING LAW :
1)Provides for a comprehensive system of workers' compensation
benefits for workers injured on the job, including medical
benefits.
2)Requires medical treatment to be provided in most cases
consistent with the American College of Occupational and
Environmental Medicine (ACOEM) Guidelines, subject to certain
exceptions.
3)Authorizes employers or insurers to conduct "utilization
review" of proposed medical treatment in order to determine
the appropriateness of that treatment and its compliance with
the applicable guidelines.
4)Specifies that "�n]o person other than a licensed physician
who is competent to evaluate the specific clinical issues
involved . . . may modify, delay or deny requests" for medical
treatment. By regulation, this has been interpreted to mean a
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physician licensed in any state.
FISCAL EFFECT : Undetermined.
COMMENTS :
1)Purpose: Proponents of the bill believe that out-of-state
utilization review physicians are making inappropriate
decisions at least in part because there is no regulatory
structure to hold them accountable. The bill is intended to
ensure that there is a regulatory oversight body - the Medical
Board - that can discipline a utilization physician in the
event the physician violates practice standards.
2)Support: Supporters offer several arguments in favor of the
bill. First, some argue that requiring a California license
will make it easier for the reviewing doctor and treating
doctor to communicate, thereby enhancing the chances of a
re-evaluation of any decision to deny or modify treatment
requests. Many treating physicians have complained about the
difficulty of communicating with reviewers three time zones
away, and supporters believe this bill will improve the
situation (although it should be noted that an East
Coast-based physician can hold a California license).
Supporters also believe that having reviewing physicians
regulated by the California Medical Board will provide
appropriate oversight and quality control that is not
available for non-California licensed physicians. Supporters
also point out that many utilization review companies already
employ only California-licensed physicians, and assert that
there is no shortage of these physicians.
3)Medical Board Authority and Priorities: According to the
Medical Board, a decision to delay, modify or deny a medical
treatment constitutes the practice of medicine, and the Board
would have jurisdiction over this act. However, the Business
and Professions Code (Section 2220.05) establishes an order of
priority for the use of the Board's resources, and the five
listed priorities do not include any language that would refer
to violations of professional standards in the conduct of
utilization review. In addition, the Board's enforcement
capacity, according to public interest groups that monitor the
Board, is less than ideal. The Board suffers an inability to
retain its investigators on a long-term basis, and thus it
struggles to handle even priority cases. As a result, the
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bill's premise that an in-state license ensures regulatory
oversight may face practical impediments.
4)Do Current Regulations Violate California Statute? Because
the Medical Board deems the performance of utilization review
to be the practice of medicine, and because the treatment at
issue is to be provided (in most cases) to a California
resident, many people have argued that by operation of the
Medical Practice Act only a California-licensed physician can
lawfully perform the utilization review function. The
Administrative Director (AD) of the Division of Workers'
Compensation declined to adopt this interpretation of the law
when she adopted the regulations to implement the utilization
review statute. Because there is logic to this analysis, it
must be inferred that the AD concluded that the new Labor Code
provision constituted a statutory exception to the general
Medical Practice Act rule. That issue has never been
litigated, but many supporters believe there was no intent in
the 2004 workers' compensation reforms to modify the general
rules governing the practice of medicine. In this light, they
argue that this bill is clarifying existing statutory law that
has been misconstrued by a regulation.
5)Opposition: Opponents point out that utilization review was
one of the most important provisions for employers in the 2004
workers' compensation reform. They believe that this bill
undermines their ability to effectively conduct utilization
review, by causing delays and increasing costs. They argue
that the medical treatment issues are not unique to California
in law or practice, as the ACOEM Guidelines have been used in
many states for far longer than they have been used in
California. Thus, there is no reason to think that
non-California physicians are less able to review California
treatment, and some reason to expect out of state physicians
may be more experienced with the ACOEM Guidelines.
Opponents further argue that the requirement that the physician
be competent to evaluate the specific clinical issues involved
in the case is sufficient. They argue that there is no
specific knowledge that is unique to California-licensed
physicians, and to limit utilization reviews to these
physicians would only have the effect of limiting the number
of available reviewing physicians, which would drive up the
cost.
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6)SDI disability determinations . The law governing disability
determinations by EDD for the SDI program requires the
applicant to establish disability with evidence from a medical
practitioner. The scope of who may perform this function is
defined by a cross reference to the workers' compensation
provision being amended by this bill. Because the "must be
licensed in California" requirement does not work for EDD's
purposes, that law is being amended to retain the authority
for out of state "physicians" to continue to perform that
function.
7)Prior legislation. AB 2969 of 2008 and AB 993 of 2010
proposed the same rule being proposed by this bill. Each bill
was passed by the Legislature, but vetoed by the Governor.
The veto message for AB 2969 follows:
"I am returning Assembly Bill 2969 without my signature.
This bill would require a physician conducting utilization
review in the workers' compensation system to be licensed
in California. Such a requirement would be inconsistent
with how utilization review is conducted in other areas of
medicine in and not in line with best practices nationwide.
The proponents of this measure have not demonstrated a need
for this disparity in treatment."
REGISTERED SUPPORT / OPPOSITION :
Support
American Federation of State, County and Municipal Employees
(AFSCME), AFL-CIO
California Nurses Association (CNA)
California Society of Industrial Medicine and Surgery (CSIMS)
California Society of Physical Medicine and Rehabilitation
(CSPMR)
Pfizer
Union of American Physicians and Dentists (UAPD)/AFSCME Local
206
Western Occupational and Environmental Medical Association
Opposition
Acclamation Insurance Management Services (AIMS)
Allied Managed Care (AMC)
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Alpha Fund
American Insurance Association (AIA)
Association of California Insurance Companies (ACIC)
Association of California Water Agencies (ACWA)
California Association of Joint Powers Authorities (CAJPA)
California Chamber of Commerce
California Coalition on Workers' Compensation (CCWC)
California Special Districts Association (CSDA)
California State Association of Counties (CSAC)
CSAC Excess Insurance Authority (CSAC-EIA)
Insurance Brokers & Agents of the West (IBA West)
League of California Cities (LCC)
Liberty Mutual Insurance Group
Regional Council of Rural Counties (RCRC)
Analysis Prepared by : Mark Rakich / INS. / (916) 319-2086