Bill Text: CA SB127 | 2011-2012 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Official medical fee schedule: physician services.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Vetoed) 2012-03-01 - Consideration of Governor's veto stricken from file. Veto sustained. [SB127 Detail]

Download: California-2011-SB127-Amended.html

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BILL NUMBER: SB 127	AMENDED
	BILL TEXT

	AMENDED IN SENATE  MAY 3, 2011

INTRODUCED BY   Senator Emmerson

                        JANUARY 27, 2011

   An act to amend Section 5307.1 of the Labor Code, relating to
workers' compensation.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 127, as amended, Emmerson. Official medical fee schedule:
physician services.
   Existing law establishes a workers' compensation system,
administered by the Administrative Director of the Division of
Workers' Compensation, to compensate an employee for injuries
sustained in the course of his or her employment.
   Existing law requires the administrative director, after public
hearings, to adopt and revise periodically an official medical fee
schedule that establishes reasonable maximum fees paid for medical
services, other than physician services and other prescribed goods
and services, in accordance with specified requirements.
   Existing law, notwithstanding the above provisions, further
authorizes the administrative director, after public hearings, to
adopt and revise, no less frequently than biennially, an official
medical fee schedule for physician services, in accordance with
specified requirements.
   This bill would require the administrative director, in order to
keep the fee schedule for physician services appropriately updated,
to annually adopt the Current Procedural Terminology (CPT) codes,
descriptors, and modifiers published by the American Medical
Association  , as specified  .
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 5307.1 of the Labor Code is amended to read:
   5307.1.  (a) The administrative director, after public hearings,
shall adopt and revise periodically an official medical fee schedule
that shall establish reasonable maximum fees paid for medical
services other than physician services, drugs and pharmacy services,
health care facility fees, home health care, and all other treatment,
care, services, and goods described in Section 4600 and provided
pursuant to this section. Except for physician services, all fees
shall be in accordance with the fee-related structure and rules of
the relevant Medicare and Medi-Cal payment systems, provided that
employer liability for medical treatment, including issues of
reasonableness, necessity, frequency, and duration, shall be
determined in accordance with Section 4600. Commencing January 1,
2004, and continuing until the time the administrative director has
adopted an official medical fee schedule in accordance with the
fee-related structure and rules of the relevant Medicare payment
systems, except for the components listed in subdivision (j), maximum
reasonable fees shall be 120 percent of the estimated aggregate fees
prescribed in the relevant Medicare payment system for the same
class of services before application of the inflation factors
provided in subdivision (g), except that for pharmacy services and
drugs that are not otherwise covered by a Medicare fee schedule
payment for facility services, the maximum reasonable fees shall be
100 percent of fees prescribed in the relevant Medi-Cal payment
system. Upon adoption by the administrative director of an official
medical fee schedule pursuant to this section, the maximum reasonable
fees paid shall not exceed 120 percent of estimated aggregate fees
prescribed in the Medicare payment system for the same class of
services before application of the inflation factors provided in
subdivision (g). Pharmacy services and drugs shall be subject to the
requirements of this section, whether furnished through a pharmacy or
dispensed directly by the practitioner pursuant to subdivision (b)
of Section 4024 of the Business and Professions Code.
   (b) In order to comply with the standards specified in subdivision
(f), the administrative director may adopt different conversion
factors, diagnostic related group weights, and other factors
affecting payment amounts from those used in the Medicare payment
system, provided estimated aggregate fees do not exceed 120 percent
of the estimated aggregate fees paid for the same class of services
in the relevant Medicare payment system.
   (c) Notwithstanding subdivisions (a) and (d), the maximum facility
fee for services performed in an ambulatory surgical center, or in a
hospital outpatient department, may not exceed 120 percent of the
fee paid by Medicare for the same services performed in a hospital
outpatient department.
   (d) If the administrative director determines that a medical
treatment, facility use, product, or service is not covered by a
Medicare payment system, the administrative director shall establish
maximum fees for that item, provided that the maximum fee paid shall
not exceed 120 percent of the fees paid by Medicare for services that
require comparable resources. If the administrative director
determines that a pharmacy service or drug is not covered by a
Medi-Cal payment system, the administrative director shall establish
maximum fees for that item. However, the maximum fee paid shall not
exceed 100 percent of the fees paid by Medi-Cal for pharmacy services
or drugs that require comparable resources.
   (e) Prior to the adoption by the administrative director of a
medical fee schedule pursuant to this section, for any treatment,
facility use, product, or service not covered by a Medicare payment
system, including acupuncture services, or, with regard to pharmacy
services and drugs, for a pharmacy service or drug that is not
covered by a Medi-Cal payment system, the maximum reasonable fee paid
shall not exceed the fee specified in the official medical fee
schedule in effect on December 31, 2003.
   (f) Within the limits provided by this section, the rates or fees
established shall be adequate to ensure a reasonable standard of
services and care for injured employees.
   (g) (1) (A) Notwithstanding any other provision of law, the
official medical fee schedule shall be adjusted to conform to any
relevant changes in the Medicare and Medi-Cal payment systems no
later than 60 days after the effective date of those changes,
provided that both of the following conditions are met:
   (i) The annual inflation adjustment for facility fees for
inpatient hospital services provided by acute care hospitals and for
hospital outpatient services shall be determined solely by the
estimated increase in the hospital market basket for the 12 months
beginning October 1 of the preceding calendar year.
   (ii) The annual update in the operating standardized amount and
capital standard rate for inpatient hospital services provided by
hospitals excluded from the Medicare prospective payment system for
acute care hospitals and the conversion factor for hospital
outpatient services shall be determined solely by the estimated
increase in the hospital market basket for excluded hospitals for the
12 months beginning October 1 of the preceding calendar year.
   (B) The update factors contained in clauses (i) and (ii) of
subparagraph (A) shall be applied beginning with the first update in
the Medicare fee schedule payment amounts after December 31, 2003.
   (2) The administrative director shall determine the effective date
of the changes, and shall issue an order, exempt from Sections
5307.3 and 5307.4 and the rulemaking provisions of the Administrative
Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1
of Division 3 of Title 2 of the Government Code), informing the
public of the changes and their effective date. All orders issued
pursuant to this paragraph shall be published on the Internet Web
site of the Division of Workers' Compensation.
   (3) For the purposes of this subdivision, the following
definitions apply:
   (A) "Medicare Economic Index" means the input price index used by
the federal Centers for Medicare and Medicaid Services to measure
changes in the costs of a providing physician and other services paid
under the resource-based relative value scale.
   (B) "Hospital market basket" means the input price index used by
the federal Centers for Medicare and Medicaid Services to measure
changes in the costs of providing inpatient hospital services
provided by acute care hospitals that are included in the Medicare
prospective payment system.
   (C) "Hospital market basket for excluded hospitals" means the
input price index used by the federal Centers for Medicare and
Medicaid Services to measure changes in the costs of providing
inpatient services by hospitals that are excluded from the Medicare
prospective payment system.
   (h) Nothing in this section shall prohibit an employer or insurer
from contracting with a medical provider for reimbursement rates
different from those prescribed in the official medical fee schedule.

   (i) Except as provided in Section 4626, the official medical fee
schedule shall not apply to medical-legal expenses, as that term is
defined by Section 4620.
   (j) The following Medicare payment system components may not
become part of the official medical fee schedule until January 1,
2005:
   (1) Inpatient skilled nursing facility care.
   (2) Home health agency services.
   (3) Inpatient services furnished by hospitals that are exempt from
the prospective payment system for general acute care hospitals.
   (4) Outpatient renal dialysis services.
   (k) Notwithstanding subdivision (a), for the calendar years 2004
and 2005, the existing official medical fee schedule rates for
physician services shall remain in effect, but these rates shall be
reduced by 5 percent. The administrative director may reduce fees of
individual procedures by different amounts, but in no event shall the
administrative director reduce the fee for a procedure that is
currently reimbursed at a rate at or below the Medicare rate for the
same procedure.
   (l) (1) Notwithstanding subdivision (a), the administrative
director, commencing January 1, 2006, shall have the authority, after
public hearings, to adopt and revise, no less frequently than
biennially, an official medical fee schedule for physician services.
If the administrative director fails to adopt an official medical fee
schedule for physician services by January 1, 2006, the existing
official medical fee schedule rates for physician services shall
remain in effect until a new schedule is adopted or the existing
schedule is revised.
   (2) In order to keep the official medical fee schedule for
physician services appropriately updated to include current
procedures and services, the administrative director shall annually
adopt the Current Procedural Terminology (CPT) codes, descriptors,
and modifiers published by the American Medical  Association.
New procedures added by this update shall be coded "By Report (BR)"
until the administrative director, through public hearings, adopts
and revises the official medical fee schedule rates for physician
services.   Association. 
   (m) (1) Notwithstanding subdivisions (a), (b), (f), and (g),
commencing January 1, 2008, the administrative director, after public
hearings, may adopt and revise, no less frequently than biennially,
an official medical fee schedule for inpatient facility fees for burn
cases in accordance with this subdivision. Until the date that the
administrative director adopts a fee schedule pursuant to this
subdivision, the inpatient fee schedule adopted and revised in
accordance with subdivisions (a) and (g) shall continue to apply to
inpatient facility fees for burn cases.
   (2) In order to establish inpatient facility fees for burn cases
that are adequate to ensure a reasonable standard of services and
care, the administrative director may do any of the following:
   (A) Adopt a fee schedule in accordance with the Medicare payment
system, or adopt different conversion factors, diagnostic related
group weights, and other factors affecting payment amounts from those
used in the Medicare payment system.
   (B) Adopt a fee schedule utilizing payment methodologies other
than those utilized by the Medicare payment system.
   (C) Adopt a fee schedule that utilizes both Medicare and
non-Medicare methodologies.
   (3) Inpatient facility fees for burn cases may exceed 120 percent,
but in no case shall exceed 180 percent, of the fees paid by
Medicare. Inpatient facility fees for burn cases shall be excluded
from the calculation of estimated aggregate fees for purposes of
other subdivisions of this section.
   (4) The changes to this section made by this subdivision shall
remain in effect only until January 1, 2011.