BILL ANALYSIS �
Senate Committee on Labor and Industrial Relations
Ted W. Lieu, Chair
Date of Hearing: June 8, 2011 20011-2012 Regular
Session
Consultant: Alma Perez Fiscal:No
Urgency: No
Bill No: AB 584
Author: Fong
Version: As amended April 6, 2011
SUBJECT
Workers' compensation: utilization review
KEY ISSUE
Should the authority to perform workers' compensation
utilization reviews of medical treatment be restricted to
California licensed physicians only?
PURPOSE
To prohibit workers' compensation medical treatment evaluations
by physicians not licensed in California.
ANALYSIS
Existing law establishes a workers' compensation system,
administered by the Administrative Director (AD) of the Division
of Workers' Compensation (DWC), to compensate an employee for
injuries that arise out of, or in the course of, employment.
Employers are required to secure the payment of workers'
compensation for injuries incurred by their employees.
Existing law requires every employer to establish a medical
treatment utilization review (UR) process, in compliance with
specified requirements, either directly or through its insurer
or an entity with which the employer or insurer contracts for
these services.
Under existing law:
UR means utilization review or utilization management
functions that prospectively, retrospectively, or
concurrently review and approve, modify, delay, or deny
treatment recommendations by physicians, based on medical
treatment guidelines, as specified.
"Physician" means physicians or surgeons holding an M.D.
or D.O. degree, psychologists, acupuncturists,
optometrists, dentists, podiatrists, and chiropractic
practitioners licensed by California state law and within
the scope of their practice as defined by California state
law.
� No person other than a licensed physician who is
competent to evaluate the specific clinical issues involved
in the medical treatment services (and where these services
are within the scope of the physician's practice) requested
by the physician may modify, delay, or deny requests for
authorization of medical treatment for reasons of medical
necessity to cure and relieve.
The existing Disability Insurance (DI) program, administered by
the Employment Development Department (EDD), provides partial
wage replacement to eligible workers who are unable to work
because of a disability. A claimant must establish medical
eligibility by filing a claim for disability benefits supported
by the certificate of a treating physician or practitioner that
establishes the sickness, injury, or pregnancy of the employee,
or the condition of the family member that warrants the care of
the employee. To establish eligibility and benefits, EDD depends
on the accuracy of medical providers and their diagnosis, while
also taking into consideration treatment and estimated recovery
dates.
Existing law, for DI purposes, allows individuals to obtain care
and treatment outside of this state as long as the claim for
disability is supported by a certificate of a treating physician
or practitioner duly licensed or certified by the state or
foreign country in which the claimant is receiving the care and
treatment.
Hearing Date: June 8, 2011 AB 584
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Senate Committee on Labor and Industrial Relations
This Bill would modify workers' compensation requirements
pertaining to licensed physicians who are authorized to conduct
utilization reviews in the state.
Specifically, this bill would:
1. Require that a "physician," for purposes of workers'
compensation, who is conducting utilization review of
proposed medical treatment for an injured worker, be
licensed in California.
2. Make a technical change in the definition of
"psychologist," for purposes of workers' compensation, to
make it consistent with the definition of "physician,"
which requires that psychologists be California licensed.
3. Re-define the term "physician" and "health
professional," for Disability Insurance purposes, in order
to allow EDD to continue to receive claims for disability
from a claimant who receives treatment from a physician or
practitioner that is duly licensed or certified by the
state or foreign country.
COMMENTS
1. Background on Physicians practicing UR in California under the
Workers' Comp System:
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
Hearing Date: June 8, 2011 AB 584
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Senate Committee on Labor and Industrial Relations
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 (UR).
Because the Medical Board deems the performance of UR 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 UR function. The administrative director
(AD) of the Division of Workers' Compensation, however,
declined to adopt this interpretation of the law when the
regulations to implement the UR statute were adopted. 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 this bill is clarifying
existing statutory law that has been misconstrued.
2. Need for this bill?
Physicians not licensed in California may be unfamiliar with
the specifics of California workers' compensation law and/or
the details of the requirements of utilization review; they
may thus, be more likely to fail to follow California work
comp law. 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. This bill would require
that a physician who is conducting utilization review be
licensed in California. The bill is intended to ensure that
there is a regulatory oversight body, the Medical Board, which
can discipline a utilization physician in the event the
physician violates practice standards.
In addition, the law governing disability determinations by
EDD for purposes of the Disability Insurance program requires
the applicant to establish disability with evidence from a
medical practitioner. The scope of who may perform this
Hearing Date: June 8, 2011 AB 584
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Senate Committee on Labor and Industrial Relations
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.
3. Proponent Arguments :
Proponents believe that decisions to modify, delay or deny
medical treatment must be done by healthcare providers that
know and understand California's rules and regulations with
regard to utilization review. Proponents argue that if an
out-of-state physician makes errors or otherwise requires
discipline; neither the Division of Workers' Compensation nor
the Medical Board of California has any jurisdiction to remedy
the situation. Therefore, out-of-state physicians have no
accountability for medical malpractice.
According to proponents, this bill clarifies current law and
protects California workers by providing that physicians
performing workers' compensation services in the State are
held accountable for wrongful denials of medical treatment, by
requiring the physician to possess a California license.
Proponents also believe that having reviewing physicians
regulated by the Medical Board will provide appropriate
oversight and quality control that is not available for
non-California licensed physicians. 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 point out that many utilization
review companies already employ only California-licensed
physicians, and assert that there is no shortage of these
physicians.
Lastly, proponents argue that California is not alone in
recognizing the need to regulate physicians who perform
utilization review on its citizens. In 2007, the State of
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Senate Committee on Labor and Industrial Relations
Texas enacted legislation similar to this bill that requires a
Texas license to perform utilization review in Texas workers'
compensation cases. Subsequently, the Tennessee Division of
Workers' Compensation adopted similar rules administratively.
4. Opponent Arguments :
Opponents argue that there is no evidence that requiring that
only California licensed physicians conduct utilization review
will improve care to injured workers. Opponents argue that
California workers' compensation law already contains strict
requirements for physicians and all decisions are required to
be based on the medical treatment utilization review schedule
that has been adopted by the administrative director for the
Division of Workers' Compensation. They argue that if
treatment varies from that schedule it must be based on
evidence-based, peer reviewed, nationally recognized
standards. According to opponents, because the utilization
review standards are nationally based, there is no scenario in
which a California physician would be more qualified to make a
utilization review decision.
Further, opponent 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, thereby creating a logjam of cases that need to be
reviewed. Additionally, the limitation to physicians licensed
in CA would likely drive up the cost of UR services because
the demand for those services would increase relative to the
number of providers who are legally able to perform them.
5. Prior Legislation :
AB 933 (Fong) of 2010: Vetoed by the Governor
AB 933 would have required a physician conducting utilization
review in the workers' compensation system to be licensed in
California. In his veto message the Governor stated that,
"Such a requirement would be inconsistent with how utilization
review is conducted in other areas of medicine and not in line
with best practices nationwide. The proponents of this
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Senate Committee on Labor and Industrial Relations
measure have not demonstrated a need for this disparity in
treatment."
AB 2969 (Lieber) of 2008: Vetoed by the Governor
AB 2629 proposed the same rule being proposed by this bill,
that only a California licensed physician would be authorized
to conduct workers' compensation utilization reviews.
SUPPORT
American Federation of State, County and Municipal Employees,
AFL-CIO - Co-sponsor
California Society of Industrial Medicine and Surgery (CSIMS) -
Co-Sponsor
California Society of Physical Medicine and Rehabilitation
(CSPMR) - Co-Sponsor
Union of American Physicians and Dentists - Co-Sponsor
Association for Los Angeles Deputy Sheriffs
California Applicants' Attorneys Association
California Chiropractic Association
California Medical Association
California Nurses Association
California Physical Therapy Association
International Chiropractors Association of California
Peace Officers Research Association of California (PORAC)
Pfizer
1-individual
OPPOSITION
Acclamation Insurance Management Services (AIMS)
Allied Managed Care (AMC)
Alpha Fund
American Insurance Association
Association of California Insurance Companies (ACIC)
Association of California Water Agencies (ACWA)
California Association of Joint Powers Authority (CAJPA)
California Coalition on Workers Compensation
California Special Districts Association (CSDA)
California State Association of Counties (CSAC)
CSAC-Excess Insurance Authority (CSAC-EIA)
Hearing Date: June 8, 2011 AB 584
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Senate Committee on Labor and Industrial Relations
League of California Cities (LCC)
Liberty Mutual Group
Regional Council of Rural Counties (RCRC)
Hearing Date: June 8, 2011 AB 584
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Senate Committee on Labor and Industrial Relations