Workers Comp Zone


Governor Newsom signed SB 537 (Hill) into law on October 8, 2019.

This legislation sailed through the California Senate and Assembly with no dissenting votes, although there was clearly hard bargaining regarding the terms of the bill. Several late amendments which changed the bill’s scope.

What does SB 537 do, and why should you care about this bill?

SB 537 attempts to address a number of  emerging problems in the comp system, particularly problems with MPNs, UR and medical treatment. The California Physical Therapists Association was a key proponent of many of the bill’s provisions. Key provisions (with some brief blogger comments) include the following:

Provider payment study

The bill requires that the DIR make a report to the Legislature by January 1, 2023 “comparing potential payment alternatives for providers to the official medical fee schedule“. We will likely see a study of alternative payment methods such as bundled treatment payments, outcome based payments, capitation, quality incentives, and value-based payment systems. 

Provider utilization data study

The bill requires the DIR to publish on its website (by January 1, 2024 and annually thereafter) provider utilization data for physicians who treated 10 or more injured workers during the preceding 12 months. The bill contains language that authorizes the use of individually identifiable information for the purpose of creating this database. Various studies have shown that a relatively small number of treating physicians are involved in high numbers of IMR disputes over UR treatment denials. Some stakeholders believe that this subset of providers are abusing the system, running treatment mills, and are unwilling to abide by treatment protocols, flooding the system with inappropriate treatment requests. Other stakeholders may counter that some of these physicians are treating the most chronic and vulnerable patient populations whose needs are not always recognized by treatment protocols. Although this provision will not go live for another three years, it will eventually intensify the focus on these physicians, who they are and why they are doing what they are doing.

Defines normal business day for UR timeframe purposes

Prior law had used the term “not to exceed five working days”  (LC 4610(i)(1)) as the timeframe for UR from the date of receipt of an RFA. Under SB 537 this is changed to “not to exceed five normal business days” from the receipt of an RFA. Labor Code 4600.4(b) uses the term “normal business day” in connection with the time frame for utilization review. SB 537 specifically defines “normal business day” to exclude every Saturday, Sunday and specified other holidays.

Widens requirements for MPN posting and strengthens MPN enforcement

All “participating providers” will have to be listed on a roster on the MPN website as of July 1, 2021. The administrative director will receive additional authority and discretion to enforce regulations on the internet address and roster requirements.

Prohibits non-medical entities from tampering  by altering or amending treatment requests

In response to complaints that some networks or non-medical entities had altered or amended treatment authorization requests by physicians and providers, the bill prohibits the practice.

Enables payors to access information on low-ball network payments to providers

SB 537 adds Section 5307.12 to the Labor Code. Subject to a payor (for example, an employer or an insurer) signing a nondisclosure agreement, an “entity that provides network services” that contracts with a health care provider or health facility for a reimbursement rate “that is more than 20 percent below the official medical fee fee schedule, excluding goods and pharmaceuticals” then is required (i.e. “shall provide“) to give “a written disclosure, on a form promulgated by the administrative director, of the reimbursement amount paid to the provider.”

An early September amendment to SB 537 dropped language that would have required a health care provider, employer, insurer or contracting agent that contracts for medical services in the workers’ compensation system at rates different from the official medical fee schedule (OMFS) to disclose those rates to the health care provider. 

Here is a link to the legislative website where you can find the final text of SB 537 as well as earlier versions of the bill and the Senate and Assembly analysis:

Stay tuned. I’ll soon be blogging on other bills recently signed.

Julius Young