Floor Vote on Workers' Compensation Conference Committee Report Today

By Loretta Macktal, Executive Assistant to the Vice President, Government Relations

Capitol Update, Sept. 12, 2003 Share this on FacebookTweet thisEmail this to a friend

After several meetings, numerous language changes and faced with a legislative deadline to render a report, the workers’ compensation conference committee voted 4-0 along party lines on September 9 to move legislation containing substantial reforms.

The majority of the report is contained in SB 228 (Richard Alarcon, D-Sun Valley) and AB 227 (Juan Vargas, D-San Diego). The conference committee report analysis estimated the savings at $5.3 billion initially and up to $5.92 billion ongoing. The Workers’ Compensation Insurance Rating Bureau's (WCIRB) preliminary estimate of potential cost savings of the two bills is $4.1 billion in 2004 and $3.0-$4.6 billion ongoing. However, CMTA believes that both estimates are high.

Insurance Commissioner John Garamendi and some members of the conference committee believe the WCIRB estimate is too low and called for a meeting between the WCIRB, the commissioner and conference committee members and staff to see if all of the changes were properly considered and evaluated.

The most significant provisions are:

* Provides for 100% employer funding for the Division of Workers’ Compensation.
* Requires medical providers pay a $100 fee when they file a lien with the workers’ compensation appeals board. These fees will be used to offset user funding requirements imposed on employers.
* Mandates adoption of utilization guidelines and attaches a presumption of correctness to the utilization guidelines.
* Repeals the treater’s presumption of correctness for all dates of injury, except in cases where the employee has “pre-designated” his or her personal physician.
* Limits chiropractic treatment to 24 visits and physical therapy treatment to 24 visits for the life of the claim. Implements this limitation on injuries occurring on or after January 1, 2004.
* Requires all employers to adopt utilization review systems consistent with the utilization schedule/American College of Occupational and Environmental Medical Practice Guidelines. In cases involving spinal surgery, denials will go to expedited second opinion process. In all other cases, the existing Qualified Medical Examiner and Agreed Medical Examiner (QME/AME) process will continue to apply.
* Establishes procedure for employers to obtain a second opinion on recommendations for spinal surgery.
* Allows self-referral to outpatient surgery centers where the provider discloses the financial relationship to the employer and the employer pre-authorizes the treatment at the center.
* Repeals existing vocational rehabilitation statute as part of repeal of vocational rehabilitation mandate.
* Implements a new supplemental job displacement benefit for injuries occurring on or after January 1, 2004.
* Provides that employees who do not return to work for their employer within 60 days of the end of the temporary disability period will receive an additional lump-sum benefit of $4,000 for permanent partial disability of less that 15%; $6,000 for permanent partial disability between 15% and 25%; $8,000 for permanent partial disability between 26% and 49%; and $10,000 for permanent partial disability between 50% and 99%. The benefit must be used for retraining, skill enhancement, job placement assistance, or purchase of employment-related tools, in any combination.
* Provides that the employer will not be liable for the supplemental job displacement benefit if, within 30 days of the end of Temporary Disability, it offers, and the employee rejects, or fails to accept, an offer of modified or alternative work.
* Repeals the aerospace and timber industry carve-out (Alternative Dispute Resolution/ADR).
* Establishes a new carve-out program (ADR), in any industry, except construction. Unions only may initiate the process by petitioning the Administrative Director (AD). The AD will review and issue a letter allowing a one-year window for negotiations. The parties may request a one-year extension. Provides that carve-out agreements can not preclude an employee from right to counsel.
* Requires the Division Workers’ Compensation (DWC) to adopt the medical billing and provider fraud referral protocol within the Department of Insurance.
* Clarifies that all dispensers of workers’ compensation prescription drugs must dispense generic, unless a brand name has been specifically prescribed.
* Repeals existing pharmaceutical schedule language, and creates a new pharmaceutical fee schedule at 100% of Medical.
* Reduces time to pay medical bills from 60 to 45 working days from date of complete billing. Increases penalty for late payment from 10% to 15%. Provides for repayment by the defendant of the lien filing fee if any contested amount is determined payable by the Workers’ Compensation Appeals Board (WCAB).
* Requires AD to adopt regulations on electronic payment by January 1, 2005. All employers must accept electronic billing by July 1, 2006. If bills are sent electronically, and are within the fee schedule, payment must be made within 15 days of receipt.
* Repeals Official Medical Fee Schedule (OMFS) language.
* Provides for a 5% reduction to OMFS rates for physician services, to be implemented in the aggregate, but that no reduction shall be made to physician services currently below the Medicare fee schedule rate.
* Repeals the existing outpatient schedule provision.
* Creates a new outpatient facility fee schedule based on Medicare with a 120% conversion factor.
* Excludes the California Insurance Guarantee Association from attorney fee awards based upon actions of insolvent insurer.
* Requires insurer review of insured’s injury and illness prevention plan within four months of commencement of initial policy term.

The committee report is scheduled for a vote today, September 12th, and CMTA has taken a support position on the report. The committee report cannot be amended and can only be voted up or down. In CMTA's analysis; there is nothing in the report so bad that it would cause us to give up the highly favorable reforms and the considerable savings in the bill. CMTA believes that this is a good first step towards systemic reforms to bring the California's workers’ compensation system under control.

You can access the two major bills, SB 228 and AB 227 by going to www.leginfo.ca.gov/ and clicking on "legislation".
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