Bill Amendments Would Prohibit Financial Incentives for UR Physicians

Published on 01/07/2016 by WorkComp Central, authored by Greg Jones

California employers and carriers would be prohibited from offering financial incentives to physicians performing utilization review based on the number of treatment requests that are delayed, modified or denied, under a bill that could be called for a committee hearing as early as Jan. 13.

New language in SB 563 that Sen. Richard Pan, D-Sacramento, submitted Monday would also give the administrative director of the Division of Workers' Compensation authority to review UR contracts to ensure they do not include provisions that base payments on the reviewing doctor's decision to approve or deny a requested treatment.

The amendments have reduced opposition to the measure that contributed to the Senate Appropriations Committee's decision to hold the bill last May. Employers who fought the bill last year said on Wednesday they are not opposed to the concept behind the new language in the measure.

At the same time, some providers and attorneys who backed the bill last year are questioning what Pan's amendments will accomplish.

The measure that was introduced in 2015 would have prohibited performing utilization review on treatment requests that were stipulated to or ordered in a final award of permanent disability when there is no change in the worker's condition. If the employer believed the treatment request was not evidence-based, the bill would have allowed UR, but prohibited modifying, delaying or denying the treatment while review is pending. And if UR determines the requested treatment is not medically necessary and that decision was affirmed by independent medical review, the employer would have to stipulate to an alternative treatment before denying the requested care, under the previous versions of the bill. 

A fiscal analysis prepared for the Senate Appropriations Committee last year estimated the bill would have a one-time cost of $13 million and ongoing annual costs of $12 million. The California Chamber of Commerce labeled the measure a "job killer."

Pan eliminated those provisions from the bill on the first day of the 2016 session. The amended bill would add to Labor Code Section 4610 two sentences saying: "The employer, or any entity conducting utilization review on behalf of the employer, shall neither offer nor provide any financial incentive or consideration to a physician based on the number of modifications, delays or denials made by the physician under this section. The administrative director has authority pursuant to this section to review any compensation agreement, payment schedule or contract between the employer, or any entity conducting utilization review on behalf of the employer, and the utilization review physician."

Pan's office did not return calls for comment on Wednesday. 

The California Medical Association, which is sponsoring the measure, did not answer emailed questions on Wednesday. Spokeswoman Molly Weedn said only that CMA is finalizing a fact sheet for the amended bill, which should be completed soon.

The California Chamber of Commerce hasn't officially changed its position on SB 563, which it opposed last year, according to lobbyist Jeremy Merz. However, he said the CalChamber is "OK" with the concept of the bill.

The primary issue right now is making sure that the contracts the administrative director is allowed to view remain confidential, he said.

The California Coalition on Workers' Compensation has also not taken an official position on the amendments, lobbyist Jason Schmelzer said on Wednesday. He, too, said he would like language guaranteeing any UR contracts examined by the DWC not be released for public review.

Schmelzer said he doesn't think UR contracts should provide incentives for physicians to deny or modify treatment requests, and he's not aware of any contracts that contain such an inducement.

"There's no evidence it's a problem," he said. "That said, it doesn't mean there's nothing to be gained by calling this out in the Labor Code and giving the administrative director authority to look into it."

The California Applicants' Attorneys Association continues to support the bill, according to a statement from Bernardo de la Torre, chairman of CAAA's Legislative Committee. He said the bill promotes transparency regarding financial incentives for utilization review companies "to conduct the business of denying medical care."

However, other attorneys who represent injured workers and doctors have tempered their support for the measure in light of the amendments.

Dr. Robert Weinmann, a neurologist in San Jose, said the amendment might prohibit "careless bribes" being offered to UR doctors. But he also said he thinks financial considerations already factor into the utilization review decision of some providers.

"In general, a job is a job and pleasing the employer is the best way to stay employed," he said. "UR doctors don't need inducements beyond the incentive of continued employment."

Weinmann said legislation is needed to prohibit using utilization review to delay or deny care that was stipulated in a final award, or those awards become nothing more than "mere suggestions." 

The California Society of Industrial Medicine and Surgery supported the intent of the original bill to stop "capricious and unwarranted denials, modifications or delays" of requests for treatments that were stipulated in final awards absent a change in the injured worker's condition, according to Steve Cattolica, director of government relations for CSIMS.

With Pan removing that language from SB 563, "the basic purpose and benefit of the bill was completely lost," he said.

Alan Gurvey, managing partner of applicants' firm Rowen, Gurvey & Win in Sherman Oaks, said he doesn't think the proposed language will have any significant effect on contracts between UR providers and physicians. He said the problem is that vendors analyze UR decisions and drop the providers who agree with the treating physician too often.

"The real issue is that UR doctors, I believe, maintain a very conservative posture with respect to certifying treatment by treating doctors because they are trained to do so, and definitely want to continue to get the business from the carrier," he said. "Just like (medical provider network) doctors live in fear every day of being kicked off the MPN and losing significant compensation, the UR doctors, perhaps in their own limited way, rely on this business as well to pay their bills."

Gurvey said the Labor Code section covering utilization review should provide a framework that limits the control employers and insurance companies have over physicians reviewing treatment requests to at least strip them of the freedom to drop those doctors without cause.

The Senate Labor and Industrial Relations Committee is expected to vote on Senate Bill 563 when it meets Jan. 13. The bill is not currently on the agenda for the meeting, but the deadline for the committee to pass the bill is Jan. 15 because the bill was carried over from last year.

The deadline for the full Senate to pass the measure is Jan. 31. If the upper chamber doesn't pass the bill by that day, Pan will need approval from Senate leadership to continue pursuing SB 563 this year.