DIR Gets Ball Rolling on California Workers’ Comp Reform

January 4, 2013

The Department of Industrial Relations on Friday announced its new regulations implementing provisions of California’s workers’ compensation reform law.

The law, Senate Bill 863, will take effect in several stages, and DIR was tasked with forming regulations to give the teeth to the new law, signed last year by Gov. Jerry Brown. The law took effect Jan. 1. The new regulations launch a rulemaking process, with public hearings scheduled to take place by March, according to DIR.

“We are on track to implement the wide-ranging reform which was the result of extensive input by workers and employers,” DIR Director Christine Baker said in a statement. “These reforms are engineered to reduce unnecessary costs while redirecting some of the savings to increase benefits for disabled workers.”

Components the new law include a 30 percent increase in permanent disability indemnity rates for workers phased in over two years, cost reductions for businesses.

The new regulations were approved on an interim basis by the Office of Administrative Law. Among the changes they create an independent medical panel to review injuries, they address billing disputes and the states lien process.

Details of these new regulations include:

Utilization Review, Independent Medical Review
For injuries on or after Jan. 1 and effective July 1 for all dates of injury, medical treatment disputes will be resolved by physicians through an independent medical review process. If utilization review denies, delays or modifies a treating physician’s request for a specific course of treatment for the reason that the treatment is not medically necessary, injured employees can request a review of that decision by IMR conducted by a physician. The physician review is designed to be expeditious and based upon evidence-based standards.

Qualified Medical Evaluator Regulations and PDRS
The regulations amend existing rules to clarify that IMR is the sole process for resolving disputes regarding ongoing medical treatment issues, and limit the number of offices from which a Qualified Medical Evaluator may conduct evaluations. They also streamline the application process for chiropractors, allow for factual corrections of a comprehensive medical-legal report from a QME panel; and amend a number of forms.

Independent Bill Review
Medical service billing disputes for dates of service on or after Jan. 1 will be resolved through a non-judicial process of independent bill review. The IBR applies to any medical service bill where the fee is determined by a fee schedule adopted by the DWC. Medical providers who disagree with the amount paid by a claims administrator following a second review can request an IBR. This regulation will eliminate unnecessary, costly litigation.

Electronic document filing and lien filing fee
Any lien for reasonable medical expenses incurred by or on behalf of the injured employee, except disputes subject to IMR or IBR and filed on or after Jan. 1, are subject to a lien filing fee of $150. For liens filed before Jan. 1, there will be a $100 activation fee which must be paid prior to Jan. 1, 2014, or the lien will be subject to dismissal.

Self-Insurance and Annual Actuarial Reports
The new regulations will implement SB 863’s requirement for all private self-insured employers and groups to obtain an actuarial report to more accurately establish the organization’s California workers’ compensation liability exposure. The regulations will also define new methods in how the Office of Self Insured Plans establishes security deposit collateral requirements based on this additional information.

Interpreter Services
The law amended the state’s labor code so injured workers are entitled to qualified interpreters at medical appointments. The regulations define what a qualified interpreter is.

Supplemental Job Displacement Benefits
Makes modifications reflecting regulatory changes regarding offers of work, notifications and vouchers for retraining workers injured on the job.

Hospital outpatient departments and ambulatory surgical centers fee schedule
The statute also amended the official medical fee schedule for hospital outpatient departments and ambulatory surgical centers, reducing the facility fee for ambulatory surgical center services to 80 percent of what Medicare bills for the same services in a hospital outpatient.

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