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california legislation > SB 923

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SENATE THIRD READING
SB 923 (De León)
As Amended August 26, 2011
Majority vote

SENATE VOTE :39-0

INSURANCE 8-3 APPROPRIATIONS 15-2

-----------------------------------------------------------------
|Ayes:|Solorio, Hagman, Feuer, |Ayes:|Fuentes, Harkey,|
| |Hayashi, Miller, Olsen, | |Blumenfield, Bradford, |
| |Skinner, Torres | |Charles Calderon, Davis, |
| | | |Donnelly, Gatto, Hall, |
| | | |Hill, Lara, Nielsen, |
| | | |Norby, Solorio, Wagner |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Carter, Grove, Wieckowski |Nays:|Campos, Mitchell|
| | | | |
-----------------------------------------------------------------
SUMMARY : Requires the Administrative Director (AD) of the
Division of Workers' Compensation (DWC) to adopt a
resource-based relative value scale (RBRVS) for physician
services. Specifically, this bill :

1)Requires the AD to adopt an Official Medical Fee Schedule
(OMFS) for physician services based on the RBRVS by January 1,
2013.

2)Requires the AD to adopt and revise the OMFS for physician
services no less frequently than every two years.

3)Defines "Resource-Based Relative Value Scale" as the relative
value scale created by the federal Centers for Medicare and
Medicaid Services and set forth in the Federal Register for
each calendar year.

4)Requires the new RBRVS fee schedule to be revenue neutral.

5)Provides that the changes to the OMFS be phased in over a
three-year period.

EXISTING LAW :








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1)Establishes a comprehensive system of workers' compensation
benefits for employees who suffer from an injury or illness
that arises out of and in the course of employment,
irrespective of fault, including medical benefits.

2)Requires the AD to adopt and periodically revise an OMFS to
establish reasonable maximum medical fees for medical
services, including physician services.

3)Requires, as a matter of federal law, the use of the
Resource-Based Relative Value Scale (RBRVS) for all Medicare
reimbursement of physician services.

FISCAL EFFECT : According to the Assembly Appropriations
Committee, administrative costs associated with this legislation
would be minor and absorbable as the AD has been studying the
feasibility of adopting an RBRVS-based schedule for at least
five years and is already statutorily required to periodically
update the OMFS for physician services.

COMMENTS :

1)According to the sponsors of the bill, U.S. Health Works
Medical Group, this bill will implement nearly ten years of
study by the DWC to bring the California workers' compensation
fee schedule into the 21st century. In particular, an RBRVS
system would compensate primary care physicians at a higher
level, a result most observers agree is appropriate.

2)The Resource-Based Relative Value Scale was created in 1985 at
Harvard University by Dr. William Hsiao and published in 1988.
The goal of the scale was to assign each procedure a relative
value, which would then be adjusted by geographic cost
differences, in order to reimburse procedures done through
Medicare by their actual cost and value. The scale was
adopted in 1992 by President George H.W. Bush for the purposes
of reimbursing Medicare physician services.

With RBRVS, each service, which is defined by the Current
Procedural Terminology (CPT) code, is assigned three relative
value units (RVU). The three relative value units are the
work done, the medical practice expense, and medical liability
insurance. This way, if the procedure takes a long period of








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time or is especially dangerous, the reimbursement rate will
be higher, or the reimbursement rate may be lower if the
procedure is quick and relatively low-risk.

3)During the last years of the Schwarzenegger Administration,
the DWC attempted to revise the OMFS for physician services
based on RBRVS. However, when the DWC began the process for
adopting an RBRVS model, it quickly encountered significant
opposition from specialists in the medical field, as their
reimbursements would be lowered, in some cases significantly.
For example, the 2010 Lewin Group study estimated that surgery
reimbursements would be cut by nearly 10% and radiology
(between 3.5% and 12%), while physical medicine would see
reimbursement rates increase significant amount (between 12%
and 16%). This opposition, plus the reality of an upcoming
new administration, eventually halted these efforts.

4)Proponents argue that this bill will require a long-overdue
conversion of the workers' compensation fee schedule to a
schedule based on the system utilized by the Medicare system.
Proponents note that the existing system is antiquated and
based on valuations and assumptions that are out-of-date and
place primary treating physicians at a disadvantage.
Proponents also note that an RBRVS-based schedule would be
simpler and easier for employers and payors to comply with.

5)Opponents argue that RBRVS is an unnecessary and costly method
to update the OMFS, and that it has been shown by use in other
states to harm access to care for injured workers. It is
unnecessary because the AD already has the authority to adopt
an RBRVS system if, in the expert judgment of the AD that is
the appropriate approach. There is also the concern that the
mandate could be understood to require revenue neutrality,
which would necessitate reductions in compensation for
specialists to make up for increases to primary care providers
when there is no evidence specialists are overpaid.

Related legislation . SB 127 (Emmerson), which addresses the
OMFS for physician services, requires the use of current Current
Procedural Terminology (CPT) codes.


Analysis Prepared by : Mark Rakich / INS. / (916) 319-2086









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