A Summary of the CA Reform Package

Sunday, September 28, 2003 | 0

The following is a summary of the 8 legislative bills that are pending signature from Governor Gray Davis as of 9/28/03 (date of publication of this article) and which comprise the 2003 reform package:

SB 228

Rates

For 2004 every workers' compensation insurer shall use rates that are no higher than the rates that were in effect for that insurer on July 1, 2003. It would, however, permit those insurers to seek a rate adjustment if the rate would be in violation of the rating law.

User Funding

The Workers' Compensation Administration Revolving Fund will be 100% user funded, rather than the present 80/20 General Fund / employer surcharge.

IMC

The Industrial Medical Council would be eliminated and the responsibilities transferred to the Administrative Director.

Illegal Referrals

The bill would add outpatient surgery to the list of medical goods or services for which it is unlawful for a physician to refer a person.

Fraud

The Administrative Director, in coordination with specified entities, would be required to adopt specified protocols concerning medical billing and provider fraud. It would require certain parties to report claims believed to be fraudulent to the AD in accordance with these procedures. The maximum penalty for fraud would be increased to $150,000.

Collective Bargaining

The ability of organized labor and business to adjudicate workers' compensation disputes outside of the jurisdiction of the WCAB is expanded beyond the aerospace and timber industries and would authorize labor-management agreements meeting prescribed criteria for any employer or groups of employers that meet certain requirements.

Generic Rx & Supplies

Any person or entity that dispenses medicines and medical supplies to a worker to cure or relieve the effects of an injury covered by workers' compensation must provide the generic drug or medical supply equivalent, if available, unless the prescribing physician provides otherwise in writing.

Payment of Medical Bills

Labor Code section 4603.2 would be amended to provide that payment for medical services must be made within 45 working days as opposed to the present 60 calendar days, unless the employer is a public entity and the physician is either employee "selected" or employer "designated", then the payment period is 60 working days to pay. The penalty for late payment is increased from 10% to 15%.

Liens

A fee of $100 will be required for the initial filing of a lien for unpaid medical.

Voc Rehab

Vocational rehabilitation is repealed and replaced by a 'supplemental job displacement benefit' of $10,000 if the injured worker does not return to work within 60 days from the injury.

Electronic Bill Submission

Existing law requires the administrative director to adopt rules and regulations to, among other things, require acceptance by employers of electronic claims for payment of medical services. This bill would require that these rules and regulations relating to electronic claims for payment of medical services be adopted on or before January 1, 2005, and would also require that these rules and regulations require all employers to accept these electronic claims for payment on or before July 1, 2006. Payment for medical treatment provided or authorized by the treating physician selected by the employee or designated by the employer shall be made by the employer within 15 working days after electronic receipt of an itemized electronic billing for services at or below the maximum fees provided in the official medical fee schedule.

Spinal Surgery

Labor Code section 4062 would be repealed, and a new 4062 would take its place dealing specifically with disputes regarding an employee's spinal Surgery. The provisions would be effective until 1/1/07. The old 4062 is essentially replaced by a new section 4062.01, to be operative 1/1/07. The bill would also require the Commission on Health and Safety and Workers' Compensation to conduct a study of the spinal surgery second opinion procedure by June 30, 2006, and to issue a report on its findings.

PTP

The Primary Treating Physician presumption would be further modified to exist only if the physician were predesignated and there was a dispute requiring a an additional comprehensive medical evaluation under Labor Code Section 4061 or 4062. The law specifically states that this amendment shall not be good cause to reopen, modify, amend, etc. any award.

Medical Fee Schedule

This bill would require the AD to adopt and revise periodically a medical fee schedule for various services, drugs, fees, and goods. This bill would require that the rates or fees established by the medical fee schedule be adequate to ensure a "reasonable standard of services" and care for injured employees. Until that is done, fees will be 120% of Medicare, with pharmacy services subject to the same restriction. However, the AD has the ability to tweak various sectors regulated by the Medicare fee schedule so long as "estimated aggregate fees" don't exceed the 120% standard. The Commission on Health and Safety Workers' Compensation will be required to contract with an independent consulting Firm to perform an annual study of access to medical treatment for injured workers, and would authorize the commission to recommend to the AD appropriate adjustments to the official medical fee schedule.

Treatment Utilization

The Department of Industrial Relations, Commission on Health and Safety and Workers' Compensation will be required to conduct a survey and evaluation by 7/01/04 of nationally recognized standards of care, including existing medical treatment utilization standards, including independent medical review, as used in other states, at the national level, and in other medical benefit systems, and to issue a report of its findings and recommendations to the Administrative Director of the Division of Workers' Compensation, on or before October 1, 2004, for purposes of the adoption of a medical treatment utilization schedule. This bill would also require the AD, on or before December 1, 2004, to adopt, after public hearings, the official utilization schedule. The adopted utilization schedule would have a rebuttable presumption of correctness on the issue of the extent and scope of medical treatment of a worker's injuries. It would also provide that on and after July 1, 2004, and continuing until the effective date of a medical treatment utilization schedule, specified guidelines shall be presumptively correct on the issue of the extent and scope of medical treatment. Every employer would be required to establish a utilization review process, either directly or through its insurer/TPA, and specific time deadlines and procedures for the appeal of denial of treatment are set forth. The time line provisions don't apply if the employer grants in writing authorization for treatment in excess of the guidelines. Until a utilization schedule is adopted, however, treatment protocols published by medical specialty societies shall be considered as evidence in contested hearings by the appeals board so long as specific evidentiary burdens are met.

Chiropractic, Physical Therapy

The number of chiropractic and physical therapy visits by an employee per industrial injury is limited to 24 (but the bill doesn't say that a chiropractor is limited to providing only chiropractic services...).

CIGA

This bill would prohibit any award for workers' compensation benefits or attorneys' fees from being made against the California Insurance Guarantee Association for unreasonable delay or refusal of compensation by an insolvent insurer.

SCIF

SCIF comes under the microscope of the DOI who is to report to the legislature the financial condition, underwriting practices, and rate structure of the State Compensation Insurance Fund and report to the Legislature and the Governor on the potential of reducing rates by July 1, 2004, and every July 1 thereafter.

Legislative Tie

This bill would declare that its provisions would become operative only if AB 227 of the 2003-04 Regular Session is enacted and becomes operative.

SB 228 can be downloaded here (228kb).

AB 227

CIGA

CIGA will be authorized to issue up to $1.5 billion in bonds by 1/1/07, and establish a separate Workers' Comp Bond Fund for this purpose. CIGA will be allowed to levy upon member insurers special bond assessments in the amount necessary to pay the principal and interest on the bonds.

Rate Publication

The Insurance Commissioner, on or before July 1, 2004, will be required to establish and maintain, on the DOI Web site an online rate comparison guide showing workers' compensation insurance rates for the 50 insurance companies writing the highest volume of business in this line during the 2 preceding years.

Savings Study

The bill would require the rating organization designated by the commissioner as his or her statistical agent to determine the cost savings achieved in the 2003 workers' compensation reform legislation, and would require each insurer to certify that its rates reflect those cost savings. It would require that the certifications be made available on the department's Web site.

SCIF

The State Compensation Insurance Fund would be exempt from any hiring freezes and staff cutbacks otherwise required by law.

Minimum Rates Study

The bill would require the Commission on Health Safety and Workers' Compensation to study and report to the Legislature the feasibility of reinstating a minimum rate regulatory structure for the workers' compensation insurance market, to be phased in over a 5-year period.

Voc Rehab

The bill includes language similar to SB 228 regarding the "supplemental job displacement benefit."

A copy of AB 227 can be downloaded here (141kb).

SB 1007 expands the definition of "common trade or business" to include specified types of manufacturing facilities as classified by the North American Industry Classification System.

AB 149 applies the asbestos exposure death benefit to firefighters.

AB 1099 includes the Employment Development Department in a list of agencies authorized to request and receive information regarding workers' compensation fraud.

AB 1262 requires the Insurance Commissioner to adopt regulations for the minimum standards of training, experience and skill that workers' compensation claims adjusters must possess and requires each insurer to certify that their adjusters meet this requirement.