BILL ANALYSIS Ó
SENATE COMMITTEE ON LABOR AND INDUSTRIAL RELATIONS
Senator Tony Mendoza, Chair
2015 - 2016 Regular
Bill No: SB 563 Hearing Date: April 29,
2015
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|Author: |Pan |
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|Version: |April 13, 2015 |
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|Urgency: |No |Fiscal: |No |
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|Consultant:|Gideon Baum |
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Subject: Workers' compensation: utilization review
KEY ISSUE
Should the Legislature prohibit the use of Utilization Review
(UR) and Independent Medical Review (IMR) to review medical
treatment if the treatment is ongoing and there is no evidence
of changes in the circumstances or condition of the injured
worker?
Should the Legislature shift medical dispute resolution from UR
and IMR physicians to the Workers' Compensation Appeals Board
(WCAB)?
ANALYSIS
Existing law establishes a workers' compensation system that
provides benefits to an employee who suffers from an injury or
illness that arises out of and in the course of employment,
irrespective of fault. This system requires all employers to
secure payment of benefits by either securing the consent of the
Department of Industrial Relations to self-insure or by securing
insurance against liability from an insurance company duly
authorized by the state.
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Existing law provides that medical, surgical, chiropractic,
acupuncture, and hospital treatment, including nursing,
medicines, medical and surgical supplies, crutches, and
apparatuses, including orthotic and prosthetic devices and
services, that is reasonably required to cure or relieve the
injured worker from the effects of his or her injury shall be
provided by the employer.
(Labor Code §4600)
Existing law requires that all employers create a utilization
review process, which is a process that prospectively,
retrospectively, or concurrently review and approve, modify,
delay, or deny, based in whole or in part on medical necessity
to cure and relieve, treatment recommendations by physicians,
prior to, retrospectively, or concurrent with the provision of
medical treatment services. (Labor Code §4610)
Existing law requires that each utilization review process shall
be governed by written policies and that these policies and
procedures, and a description of the utilization process, must
be filed with the administrative director and shall be disclosed
by the employer to employees, physicians, and the public upon
request. (Labor Code §4610(c))
Existing law provides that, in the event over a dispute over a
utilization review decision on or after July 1, 2014, all
disputes must be submitted for Independent Medical Review (IMR).
The independent reviewer's information must be kept
confidential.
(Labor Code §§4610.5 and 4610.6)
Existing law requires that, in the absence of fraud, error, or
illegal conduct, the IMR decision is final and binding. (Labor
Code §4610.6)
This bill would prohibit the use of utilization review for a
treatment recommendation by a physician if all of the following
conditions are met:
1) The treatment is solely for the purpose of maintaining
an injured employee's current healthcare regimen for a
preexisting injury ;
2) A prior recommendation for the injured employee was
reviewed and approved or modified, in whole or in part on
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medical necessity and the injured worker's current
healthcare regimen is a result of that decision; and
3) There is no evidence of a change in the injured worker's
circumstances or condition showing that the services are no
longer reasonably required to cure and relieve the injured
worker from the effects of the industrial injury.
This bill would also require that the written policies and
procedures for a specific utilization review process include the
method of compensation and incentive payments contingent on the
approval, modification, or denial of a claim for an individual
or entity providing utilization review services.
COMMENTS
1. What is Utilization Review (UR)?
In California's workers' compensation system, an employer or
insurer cannot deny treatment. When an employer or insurer
receives a request for medical treatment, the employer or
insurer can either approve the treatment or, if the employer
or insurer believes that a physician's request for treatment
is medically unnecessary or harmful, the employer or insurer
must send the request to Utilization Review.
Utilization Review (UR) is the review process for medical
treatment recommendations by physicians to see if the request
for medical treatment is medically necessary . The full UR
process varies by vendor, but it generally involves initial
review by a non-physician, with higher level review(s) being
conducted by a physician or physicians. Only a licensed
physician who is competent to evaluate the specific clinical
issues involved in the medical treatment services may modify,
delay, or deny a request for medical treatment. If the UR
physician does modify, delay, or deny the medical treatment,
then the injured worker can appeal the decision to Independent
Medical Review (IMR), but without the UR decision there cannot
be an IMR decision.
This process is triggered by the physician submitting a
Request for Authorization for Medical Treatment (RFA), which
is a Division of Workers' Compensation (DWC) form where the
physician details his or her diagnosis and treatment, and must
include an additional form which provides a narrative and
substantiates the need for treatment. As was discussed above,
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an employer or insurer cannot contest or in any way delay or
deny treatment without sending the RFA through UR. (see State
Compensation Insurance Fund v. WCAB (Sandhagen), 44 CAL. 4TH
230 (2008)).
SB 563 would prohibit an employer from applying the
utilization review process and Independent Medical Review to
cases where treatment had previously been approved or modified
and there is no evidence of a change in the injured worker's
circumstances or condition.
2. Recent Research on UR and Treatment Denials:
Recently, 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. As was discussed at the
Committee's March 25th oversight hearing, a recent study by
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 in California's workers' compensation system.
3. Amendments for SB 563:
This bill was initially heard on April 22nd. At that time,
the author and sponsor committed to working on amendments with
Committee staff. After significant communication between the
Committee, the author's office, and various stakeholders,
amendments were developed that would exempt future medical
awards from UR if the following conditions were met:
1) The physician's request for treatment was specified in
the request for medical treatment; and
2) The medical treatment is evidence based, as defined in
the Medical Treatment Utilization Schedule (MTUS) created
through regulation by the Division of Workers'
Compensation.
If the employer believes the treatment is not evidence based,
he or she can submit the treatment to expedited UR and
expedited IMR, but must continue to provide the treatment to
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the injured worker. Finally, if the treatment is found to not
follow evidence based requirements, the amendments would give
a limited process for the employer to have the injured worker
seen by a Qualified Medical Examiner (QME) in order for a new
evidence-based treatment to be stipulated to.
4. Proponent Arguments :
The California Medical Association (CMA), citing a survey from
its members, argues that California's workers' compensation
system is facing significant challenges and CMA is concerned
that IMR may incentivize and allow the denial of necessary
patient care. CMA also cites a recent ProPublica article on
workers' compensation as possible evidence that necessary home
healthcare is being denied to injured workers. CMA therefore
believes that SB 563 is necessary to clarify that previously
authorized care must be honored, unless there is a change in
condition, to limit this confusion in the future and make sure
these tragic stories being reported by physicians and injured
workers alike do not become the new normal in California's
workers' compensation system. CMA also notes that SB 563 will
increase transparency on how UR providers compensate
individuals or entities providing utilization review services.
5. Opponent Arguments :
The California Chamber of Commerce argues that SB 563
undermines the entire medical treatment review process in
California's workers' compensation system and exposes injured
workers to potentially inappropriate treatment. Opponents note
that both UR and IMR were designed to ensure that injured
workers receive the most necessary, efficacious, and
appropriate treatment and are regulated and audited by the
Division of Workers' Compensation. Opponents also note that
there is no data or research to support the idea that UR and
IMR are regularly delaying or denying necessary treatment and
point to the recent CWCI study which shows that the vast
majority of treatment is approved through the UR and IMR
processes. Finally, opponents note that SB 563 will trigger
significant system cost increases and subverting the recent
data-driven reform processes that were approved by the
Legislature.
6. Prior Legislation :
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SB 863 (DeLeon), Statutes of 2012, Chapter 363, was a holistic
reform of California's workers' compensation system that,
among other things, created the Independent Medical Review
(IMR) process.
SB 228 (Alarcon), Statutes of 2003, Chapter 639, was a part of
a larger reform of California's workers' compensation system
that, among other things, created the Utilization Review (UR)
process.
SUPPORT
California Medical Association (Sponsor)
California Labor Federation, AFL-CIO
California Orthopedic Association
The California Applicants' Attorneys Association
OPPOSITION
American Insurance Association
Associated General Contractors
Association of California Insurance Companies
California Association of Bed and Breakfast Inns
California Chamber of Commerce
California Coalition on Workers' Compensation
California Grocers Association
California Hotel and Lodging Association
California League of Food Processors
California Lodging Industry Association
California Manufacturers and Technology Association
California Professional Association of Specialty Contractors
California Retailers Association
California State Association of Counties
California Trucking Association
CSAC Excess Insurance Authority
Pacific Compensation Insurance Company
Western Growers Association
Zenith Insurance Company
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