AB 863: Workers' Compensation Reform Bill

On Friday, August 31, both houses of the Legislature passed SB 863, and the bill is currently on the governor’s desk awaiting signature. In the weeks prior to the adjournment of the Legislature for the year, CMA became directly and heavily engaged in the negotiations surrounding the draft workers' compensation reform bill. CMA first received the 300-page-long draft bill exactly three weeks prior to adjournment.

There was tremendous momentum behind moving this bill through in short order. In the early morning hours of the final day of session, Governor Brown called stakeholders — including CMA — into his office to express his strong desire to see SB 863 move through the Legislature and down to his desk before adjournment. At this point both the California Labor Federation – AFL-CIO and the Chamber of Commerce were actively supporting the measure. The pressure behind the bill was also evident in the overwhelming votes in support of it in both houses, with the Assembly voting first at 72-5, and the Senate second at 34-4 in favor. CMA ended up taking a support position on the bill after obtaining a number of crucial amendments. Our successes on this legislation are detailed below, by subject area.

FEE SCHEDULE:

• Funding was added to medical services expenditures under the overhaul in order to ensure payment for services that Medicare doesn’t cover, such as consultations and interpreters, without taking it away from other treatments.
• The new RBRVS-based Official Medical Fee Schedule (OMFS) will allow payment for evaluation and management services during global surgery periods (not currently paid). This is a huge win, since surgeons do more preoperative and postoperative visits in comp than they do in Medicare. This is a huge issue for specialist physicians treating injured workers, providing increasing funding for extra work and visits that are not typical of Medicare patients but are commonplace for injured workers.
• Secured a reliable baseline for reimbursement levels through the use of the Medicare fee schedule at a specific point in time: July 1, 2012.
• Requires the Division of Workers Compensation (DWC) to modify the various Medicare billing rules (or "ground rules") for the California workers compensation system prior to adopting RBRVS for use as the OMFS.
• Requires workers' compensation insurers to annually update their billing and coding procedures to adopt the most recent changes made to CPT, ICD, etc.

MEDICAL PROVIDER NETWORKS (MPNs):

• Physicians will now receive an initial disclosure that an MPN may be sold, and subsequent disclosures every time it is sold. This will help physicians avoid “silent PPO” type activity and manage their practices.
• Medical provider networks will now have to be recertified every four years (Under current law, MPNs are certified once and then never checked again)
• Medical provider networks will now have to give physicians a stand-alone acknowledgement to be included in the network.

AMBULATORY SURGERY CENTERS:

• SB 863 clarifies that physicians can have an ownership stake in an ASC..
• SB 863 creates a path for ASCs to receive facility fee payments for DRGs for which they do not receive them under Medicare.

OTHER STATUTORY CHANGES:

• Requires Independent Medical Review (IMR) and Independent Bill Review (IBR) companies the state contracts with to employ a Medical Director who is licensed within the state of California, and also contains a preference that IMR companies utilize California-licensed physicians to do these reviews.
• Ensures that physicians and patients may go to court after finishing the IMR and IBR processes in the event of negligence or misuse of fact by insurers.
• The bill requires the use of an expanded hierarchy of evidence for medical necessity reviews. This principle will provide physicians with greater flexibility in securing approval and reimbursement for the treatments they provide to injured workers.