Delay Penalties and Utilization Review
AB 1557 provides that an employee isn’t entitled to the usual 10 percent increase in workers’ compensation benefits for an unreasonable delay in providing medical treatment if the delay was necessary to complete the new utilization review process required of employers by the workers’ comp reform legislation (see below).
Notification of Classification Change
Under SB 176, the Workers’ Compensation Insurance Rating Bureau (WCIRB) must notify policyholders in writing when it changes the policyholder’s classification assignment. The notice must be provided at the same time the WCIRB gives notice of the change to the insurer.
Qualification Standards for Claims Adjusters
AB 1262 requires the insurance commissioner to set minimum standards of training, experience, and skill for workers’ compensation claims adjusters. Every insurer will have to certify to the commissioner their workers’ comp claims adjusters, or adjusters employed by any medical billing entity with which the insurer contracts, meet the commissioner’s standards.
Join us this fall in San Francisco for the California Employment Law Update conference, a 3-day event that will teach you everything you need to know about new laws and regulations, and your compliance obligations, for the year ahead—it’s one-stop shopping at its best.
Reform Legislation
New landmark legislation overhauls California’s troubled workers’ compensation system and promises significant cost savings. Here’s a rundown on the key reform provisions, contained in two bills, AB 227 and SB228. Keep in mind that Sacramento lawmakers have introduced a measure to repeal these reforms to permit Gov. Schwarzenegger to start over with a clean slate.
- Rate setting and filing. For the period Jan. 1, 2004, through Dec. 31, 2004, insurers may not use higher rates than they had in effect on July 1, 2003. Also, for policies beginning on or after Jan. 1, 2004, rates filed by insurers must take into account the savings from the legislation as projected by the WCIRB.
On its website, the insurance commissioner must compare the rates of the 50 companies writing the most business in California, thus giving employers a tool for comparing rates and coverage.
- Medical utilization. The Division of Workers’ Compensation (DWC) must adopt a medical utilization schedule that caps the number of chiropractic and physical therapy visits at 24 each. Plus, every employer must establish a utilization review process, either directly or through its insurer. The utilization review program must comply with specific time frames for making decisions regarding medical treatment recommendations.
- Medical fee schedules. The DWC must adopt, and periodically revise, new medical fee schedules setting reasonable maximum fees for medical services, drugs, fees, and goods. The fees generally must not exceed 120 percent of fees prescribed under the Medicare fee structure.
- Vocational rehabilitation repealed. The legislation repeals the existing vocational rehabilitation law, which allowed up to $16,000 in benefits for worker retraining. The law was replaced with a voucher system—called a “supplemental job displacement benefit”—for education-related retraining or skill enhancement for injured workers with permanent partial disability who don’t return to work for the employer within 60 days after temporary disability terminates. The new program applies to injuries suffered on or after Jan. 1, 2004.
Vouchers are worth between $4,000 and $10,000, depending on the severity of the injury. Within 10 days after the last temporarydisability payment, employers must providenotice of the right to supplemental displacementbenefits to the employee by certifiedmail. An employer won’t be liable for thesupplemental job displacement benefit if itoffers, and the employee rejects, modified oralternative work that meets the employee’swork restrictions and lasts at least 12 months.
- Fraud. The legislation cracks down on workers’ compensation fraud by boosting the penalty for fraud to the greater of $150,000 or twice the amount of the fraud, up from the current $50,000 cap or twice the amount ofthe fraud.
- Physician financial interest. The law adds outpatient surgery to the list of medical goods and services for which it’s illegal for a physician to refer an injured worker if the physician, or their immediate family, has a financial interest in the person or company receiving the referral.
- Generic medicines. Anyone dispensing medicine and medical supplies to an injured worker would have to provide the generic drug equivalent.
- Payments. Employers would have 45 days, instead of the current 60 days, to submit payment to a physician who has provided medical treatment to an injured worker, and penalties for late payment are increased. Government employers would still have 60 days to submit payment. In addition, employers must begin accepting electronic claims for payment by July 1, 2006, and such payments would be due within 15 days of being submitted.
- IIPP reviews. Workers’ comp insurers must conduct a detailed review of an employer’s injury and illness prevention program (IIPP) within four months of the start of the initial policy term. Be sure to update your IIPP now to make sure you’re in compliance. For information on what your plan should include, consult Cal-OSHA’s “Guide to Developing Your Workplace Injury and Illness Prevention Program,” available online at www.dir.ca.gov/dosh/dosh_publications/iipp.html.