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Workers’ Compensation Reforms Pass Committee

SACRAMENTO, CA, Aug. 25, 2016 -- SB 1160 by Senator Tony Mendoza (D-Artesia) passed the Assembly Insurance Committee with a unanimous vote.  The bill, newly amended in this committee, reforms utilization review (UR) and contains a provision governing liens.  A broad array of workers’ compensation stakeholders have been meeting with the Department of Workers’ Compensation (DWC).  Many groups who were opposed to the bill removed their opposition during the committee hearing.

The utilization review changes include adding a provision in the Labor Code that prohibits, subject to exceptions, prospective UR in the first 30 days of a claim if the treatment is being provided by an employer-directed provider, or a pre-designated physician.  The exceptions include surgery, medications not covered by the soon to be implemented workers’ compensation formulary, psychological treatment, imaging (other than x-ray), durable medical equipment exceeding $250, and home health care services.

Any treatment provided within those first 30 days must be reported by the provider to the employer or claims administrator, and a failure to do so constitutes grounds to revoke the “no UR” rule from that provider.  Retrospective UR is allowed for the purposes of ensuring that the provider is complying with evidence-based medicine standards, and if a pattern or practice of failing to do so is discovered there would be grounds to remove the provider from the medical provider network (MPN).

This bill also requires UR organizations to obtain accreditation, requires prospective UR decisions relating to formulary drugs after the first 30 days of a claim be conducted within 5 days after the claims administrator receives the request, and requires the Administrative Director of the Department of Workers’ Compensation to develop a mandatory electronic system for sharing documents necessary to conduct UR.

SB 1160 also requires a lien filer to specify in a lien the basis upon which the lien is authorized, adds specific data requirements that must be included in any lien filed, and provides that in the event a lien filer is charged with workers’ compensation fraud, all liens are stayed pending resolution of the charges. 

These lien provisions will improve anti-fraud efforts within the workers’ compensation system.  $600 million in liens have been filed by indicted or convicted providers in the workers’ compensation system.  This bill will stay those liens that are filed by physicians or providers who are criminally charged with workers’ compensation, insurance or medical fraud, and clarify the prohibition on the assignment of liens as accounts receivables. 

This bill also clarifies the existing rule that liens are not assignable by a provider.  Since 2012, when the last reforms were passed, there has been a growing problem of providers looking to financiers who will pay them now in exchange for assigning the lien rights to the financiers.  This bill establishes a clear barrier to this practice through clarification of current law.

Another bill, AB 1244 by Assembly Member Adam Gray (D-Merced) passed unanimously in the Assembly Insurance Committee.  This bill requires the administrative director to suspend a medical service provider if he or she is convicted of workers’ compensation fraud. 

Currently, there is no suspension process for medical providers in the workers’ compensation system beyond removal from the Qualified Medical Examiner list.  This bill follows the lead of Medi-Cal and requires the suspension of a medical provider if that provider is convicted of a felony, a misdemeanor connected to fraud, a misdemeanor connected to patient or privilege abuse, or the medical provider’s license is suspended or revoked. 

Both bills will need to be heard on the Assembly Floor and SB 1160 will need to go back to the Senate for concurrence on the amendments taken in committee.  Then both will likely go to the Governor for his consideration.