Schwarzenegger’s gift to insurance companies could harm patients

A gift to insurance companies from the State of California has come in the form of utilization review (UR) for the California Workers Compensation system.

UR is the process by which physicians may delay, modify or deny diagnostic tests and treatment prescribed by California-licensed physicians. The gift is that physicians do not need to be licensed in California to do UR for injured workers in California.
A loophole in the law was identified by a former administrative director of the Division of Workers Compensation (DWC) who determined that a license in any state would be sufficient to allow one to do UR. Assemblywoman Sally Lieber authored legislation (AB 2969) to stop this practice. Organizations including the California Manufacturers and Technology Association (CMTA) and American Insurance Association (AIA) have opposed it.

Legislative Advocate, Carl Brakensiek, of the California Society of Industrial Medicine and Surgery (CSIMS), wrote the following to California Senator Carole Migden on May 27: “According to the Medical Board of California ... to ‘perform an evaluation that leads to the modification, delay or denial of medical treatment is an act of diagnosing for the purpose of providing a different mode of treatment for the patient. Only a physician and surgeon licensed in California is allowed to override treatment decisions.’”

Executive Director of the Medical Board of California, Barb Johnson, stated the MBC’s position on May 20 to Lieber as follows: “The Medical Board of California at its April 25 meeting, considered your AB 2969. The board has taken a support position on this bill. This bill would ensure that any physician making a utilization review decision in California would be regulated by the Board, enabling the Board to address any complaint received regarding Medical Director decisions. This provides increased consumer protection over decisions that do not have patients as its primary concern.”

AB 2969 — the bill passed the legislature but was vetoed by Governor Schwarzenegger — would have made sure that only doctors licensed in California did UR in California. The meaning of this decision is that negligent UR by non-California licensed doctors cannot be addressed by the MBC whereas negligent UR by California-licensed doctors is subject for MBC scrutiny and potential discipline. Neither is the errant physician subject to discipline by his or her own state board since that state board doesn’t have jurisdiction in California. A similar situation existed in Texas until 2007 when Texans passed legislation to fix the problem.

Under the current California system, doctors with Texas licenses who are not licensed in California may do UR for injured workers in California. The reverse is not true. If a California-licensed doctor wants to do UR for injured workers in Texas, that doctor must also be licensed in Texas.

The position of the Schwarzenegger administration is supportive of the AIA, which in the course of lobbying for the defeat of AB 2969 reminded the Governor that AIA companies in California write over $3.5 billion in workers’ compensation premiums. This position was buttressed by the CMTA, which incorrectly stated that “this legislation would serve to dramatically reduce the number of physicians available to perform this service and therefore increase the costs of service.”

This assertion is wrong. There are more than enough California-licensed physicians to do the job. EK Health Services Inc., has a waiting list of physicians licensed in California who are able and willing to do utilization review.

Why would insurance companies prefer to have non-California licensed physicians do their UR? Some insurance companies prefer using doctors who do not fully understand the 26 pages of California-specific regulations governing UR. Some insurance companies would rather not use doctors who’ve taken the 12-hour course on pain management that is required of California-licensed doctors. These companies may very well prefer doctors whose primary concern is the welfare of the insurance companies that hire them.

That is why the MBC expressed its concern “over decisions that do not have patients as its primary concern.” And that is why the Union of American Physicians and Dentists, the California Society of Physical Medicine and Rehabilitation and CSIMS are sponsoring a new utilization review bill this year. (There is as yet no author or bill number.) The sponsors expect that the California Medical Association, the California Labor Federation, the California Orthopedic Association and the MBC, along with many others, will fight to get this legislation enacted into law.

Comments