BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 584 (Fong)
Hearing Date: 7/11/2011 Amended: 4/6/2011
Consultant: Bob Franzoia Policy Vote: L&IR 4-1
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BILL SUMMARY: AB 584 would do the following:
- Require psychologists, for purposes of workers' compensation,
to be licensed by California law.
- Require physicians who authorize medical treatment, for
purposes of workers' compensation utilization review (UR), to be
licensed by California law.
- Revise the Unemployment Insurance Code in order to provide
that medical eligibility for state disability insurance (SDI)
benefits administered by the Employment Development Department
(EDD) may also be supported by a certificate of a health
professional.
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Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
Restriction on administration Unknown, likely minor costs
annually General/
of workers' compensation Various
program Special
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STAFF COMMENTS: This bill may meet the criteria for referral to
the Suspense File.
Utilization review is the process used by employers or claims
administrators to review treatment to determine if it is
medically necessary. All employers or their workers'
compensation claims administrators are required by law to have a
utilization review program. This program is used to decide
whether or not to approve medical treatment recommended by a
physician who must be based on the medical treatment guidelines.
To the extent URs are conducted in-state (by California licensed
physicians), this bill would not result in new costs to the
state. To the extent URs are conducted out-of-state, and those
AB 584 (Fong)
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URs are less expensive than services provided in-state, this
bill would result in new workers' compensation costs to the
General Fund and various special funds.
State employee workers' compensation costs in 2009-19 were
approximately $530 million. This represents an increase of 9.2
percent from 2008-09. These costs are split an estimated 55
percent General Funds and 45 percent Special Funds.
The degree to which a contractor for UR services understands
that some percentage of URs may be conducted by out-of-state
licensed physicians is unknown. The contractor may be unaware
of where URs are being conducted or is doing it in the interest
of cost savings. Preliminary information suggests that nearly
all State Compensation Insurance Fund (SCIF) funded URs are
performed by California licensed physicians. Additionally,
while a UR may be performed out-of-state, not all URs are
performed by physicians.
For example, a 2001 study by the Division of Workers'
Compensation within the Department of Industrial Relations found
that 81 percent (75 percent?) of claims administrators (18 of 24
plans/claims administrators who processed more than 10,000 URs
in 1999; 4 did not participate) indicated that initial review
can be conducted only by a registered nurse (RN); one plan
requires initial review by an RN or physical therapist, while
three (14 percent?) allow RNs or licensed registered nurses to
do initial review. All plans state that second level review must
be conducted by a physician.
For the purposes of providing the committee a cost reference,
assuming the cost of a UR ranges from $100 to $500 and in-state
UR costs may be ten percent more ($10.00 to $50.00) compared to
out-of-state review, more than 1,000 to 5,000 reviews would have
to be done out-of-state to result in a cost of $50,000 to any
fund. Again, information on costs or total number of URs
performed annually, and the split between URs for state and
non-state employees, has not been identified at this time.
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 which is being amended by this
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bill to retain the authority for out-of-state physicians,
defined by the bill as health professional, to continue to
perform that function. Preliminary information suggests up to
ten percent of SDI UR is done out-of-state.
Staff notes a decision to delay, modify or deny a medical
treatment constitutes the practice of medicine, and the Medical
Board of California (board) would have jurisdiction over this
act. However, the Business and Professions Code 2220.05
establishes an order of priority for the use of the MBC's
resources, and the five listed priorities do not include any
language that would refer to violations of professional
standards in the conduct of UR. Because the MBC deems the
performance of UR to be the practice of medicine, and because
the treatment is to be provided (in most cases) to a California
resident, it may be argued that pursuant to the Medical Practice
Act only a California-licensed physician can lawfully perform
the UR function. However, the Administrative Director of the
Division of Workers' Compensation had not adopted this
interpretation of the law when the regulations to implement the
UR statute were adopted.