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|SENATE RULES COMMITTEE | SB 923|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524| |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
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UNFINISHED BUSINESS


Bill No: SB 923
Author: De León (D)
Amended: 9/8/11
Vote: 21


SENATE LABOR & INDUST. RELATIONS COMMITTEE : 6-0, 4/27/11
AYES: Lieu, Wyland, DeSaulnier, Leno, Padilla, Runner
NO VOTE RECORDED: Yee

SENATE APPROPRIATIONS COMMITTEE : 9-0, 5/26/11
AYES: Kehoe, Walters, Alquist, Emmerson, Lieu, Pavley,
Price, Runner, Steinberg

SENATE FLOOR : 39-0, 6/2/11
AYES: Alquist, Anderson, Berryhill, Blakeslee, Calderon,
Cannella, Corbett, Correa, De León, DeSaulnier, Dutton,
Emmerson, Evans, Fuller, Gaines, Hancock, Harman,
Hernandez, Huff, Kehoe, La Malfa, Leno, Lieu, Liu,
Lowenthal, Negrete McLeod, Padilla, Pavley, Price, Rubio,
Simitian, Steinberg, Strickland, Vargas, Walters, Wolk,
Wright, Wyland, Yee
NO VOTE RECORDED: Runner

ASSEMBLY FLOOR
: Not available


SUBJECT : Workers compensation: official medical fee:
schedule: physician services

SOURCE : United States HealthWorks Medical Group


CONTINUED





SB 923
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2

DIGEST : This bill requires the Administrative Director
(AD) of the Division of Workers Compensation to adopt a
resource-based relative value scale (RBRVS) for physician
services.

Assembly Amendments (1) delete date of on and after January
1, the AD is required to revise the Official Medical Fee
Schedule (OMFS) for physician services, (2) add language
which requires the initial RBRVS OMFS to use a conversion
factor or set of factors that is determined by the AD, as
prescribed, to result in no overall increased costs to the
workers' compensation system, (3) add double-jointing
language to AB 378 (Solorio) in order to avoid chaptering
out issues, and (4) make various technically changes.

ANALYSIS : Existing law:

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
RBRVS for all Medicare reimbursement of physician
services.

This bill:

1. Requires the AD to adopt an 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.







SB 923
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3


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.

6. Contains a double-jointing provision to avoid a
chaptering out problem with AB 378 (Solorio).

Comments

According to the sponsors of this bill, United States
Health Works Medical Group, this bill will implement nearly
10 years of study by the Division of Workers' Compensation
(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.

The RBRVS 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 code, is assigned three relative
value units (RVU). The three RVU are the work done, the
medical practice expense, and medical liability insurance.
This way, if the procedure takes a long period of 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.

During the last years of Governor Schwarzenegger's
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







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some cases significantly. For example, the 2010 Lewin
Group study estimated that surgery reimbursements would be
cut by nearly 10 percent and radiology (between 3.5 percent
and 12 percent), while physical medicine would see
reimbursement rates increase significant amount (between 12
percent and 16 percent). This opposition, plus the reality
of an upcoming new administration, eventually halted these
efforts.

FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No

According to the Assembly Appropriations Committee,
administrative costs associated with this bill 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.

SUPPORT : (Verified 9/9/11)

United States HealthWorks Medical Group (source)
California Academy of Family Physicians
California Coalition on Workers' Compensation
California Occupational Medicine Physicians
California Physical Therapy Association
Kaiser Permanente
Physical Therapy Provider Network
School's Insurance Authority
Western Occupational and Environmental Medical Association

OPPOSITION : (Verified 9/7/11)

California Orthopedic Association

ARGUMENTS IN SUPPORT : Proponents argue that this bill
requires a long-overdue conversion of the workers'
compensation fee schedule to a schedule based on RBRVS
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 payor to comply with.







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ARGUMENTS IN OPPOSITION : Opponents argue that, while an
RBRVS-system has considerable merit, this bill
significantly increases reimbursement rates for physicians,
increasing costs on employers and would endanger efforts to
increase workers' compensation benefits for seriously
injured workers. Opponents also note that increasing
reimbursement rates for certain specializations could
create perverse incentives for unnecessary medical
procedures, which would not be beneficial for injured
workers. Finally, opponents argue that the DWC is
empowered to create a RBRVS-based OMFS, and the future AD
of the DWC should be given the chance to do so.


PQ:kc 9/9/11 Senate Floor Analyses

SUPPORT/OPPOSITION: SEE ABOVE

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