BILL NUMBER: SB 1152 INTRODUCED
BILL TEXT
INTRODUCED BY Senator Wyland
FEBRUARY 21, 2012
An act to amend Section 5307.1 of the Labor Code, relating to
workers' compensation.
LEGISLATIVE COUNSEL'S DIGEST
SB 1152, as introduced, Wyland. Workers' compensation: official
medical fee schedule.
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 an official medical fee schedule that establishes the
reasonable maximum fees paid for medical services, with exceptions as
specified.
This bill would make technical, nonsubstantive changes to existing
law.
Vote: majority. Appropriation: no. Fiscal committee: no.
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, shall 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) (1) 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, the maximum reasonable fee
paid shall not exceed the fee specified in the official medical fee
schedule in effect on December 31, 2003, except as otherwise provided
in this subdivision.
(2) Any compounded drug product shall be billed by the compounding
pharmacy or dispensing physician at the ingredient level, with each
ingredient identified using the applicable National Drug Code (NDC)
of the ingredient and the corresponding quantity, and in accordance
with regulations adopted by the California State Board of Pharmacy.
Ingredients with no NDC shall not be separately reimbursable. The
ingredient-level reimbursement shall be equal to 100 percent of the
reimbursement allowed by the Medi-Cal payment system and payment
shall be based on the sum of the allowable fee for each ingredient
plus a dispensing fee equal to the dispensing fee allowed by the
Medi-Cal payment systems. If the compounded drug product is dispensed
by a physician, the maximum reimbursement shall not exceed 300
percent of documented paid costs, but in no case more than twenty
dollars ($20) above documented paid costs.
(3) For a dangerous drug dispensed by a physician that is a
finished drug product approved by the federal Food and Drug
Administration, the maximum reimbursement shall be according to the
official medical fee schedule adopted by the administrative director.
(4) For a dangerous device dispensed by a physician, the
reimbursement to the physician shall not exceed either of the
following:
(A) The amount allowed for the device pursuant to the official
medical fee schedule adopted by the administrative director.
(B) One hundred twenty percent of the documented paid cost, but
not less than 100 percent of the documented paid cost plus the
minimum dispensing fee allowed for dispensing prescription drugs
pursuant to the official medical fee schedule adopted by the
administrative director, and not more than 100 percent of the
documented paid cost plus two hundred fifty dollars ($250).
(5) For any pharmacy goods dispensed by a physician not subject to
paragraph (2), (3), or (4), the maximum reimbursement to a physician
for pharmacy goods dispensed by the physician shall not exceed any
of the following:
(A) The amount allowed for the pharmacy goods pursuant to the
official medical fee schedule adopted by the administrative director
or pursuant to paragraph (2), as applicable.
(B) One hundred twenty percent of the documented paid cost to the
physician.
(C) One hundred percent of the documented paid cost to the
physician plus two hundred fifty dollars ($250).
(6) For the purposes of this subdivision, the following
definitions apply:
(A) "Administer" or "administered" has the meaning defined by
Section 4016 of the Business and Professions Code.
(B) "Compounded drug product" means any drug product subject to
Article 4.5 (commencing with Section 1735) of Division 17 of Title 16
of the California Code of Regulations or other regulation adopted by
the State Board of Pharmacy to govern the practice of compounding.
(C) "Dispensed" means furnished to , or for ,
a patient as contemplated by Section 4024 of the Business and
Professions Code and does not include "administered."
(D) "Dangerous drug" and "dangerous device" have the meanings
defined by Section 4022 of the Business and Professions Code.
(E) "Documented paid cost" means the unit price paid for the
specific product or for each component used in the product as
documented by invoices, proof of payment, and inventory records as
applicable, or as documented in accordance with regulations that may
be adopted by the administrative director, net of rebates, discounts,
and any other immediate or anticipated cost adjustments.
(F) "Pharmacy goods" has the same meaning as set forth in Section
139.3.
(7) To the extent that any provision of paragraphs (2) to (6),
inclusive, is inconsistent with any provision of the official medical
fee schedule adopted by the administrative director on or after
January 1, 2012, the provision adopted by the administrative director
shall govern.
(8) Notwithstanding paragraph (7), the provisions of this
subdivision concerning physician-dispensed pharmacy goods shall not
be superseded by any provision of the official medical fee schedule
adopted by the administrative director unless the relevant official
medical fee schedule provision is expressly applicable to
physician-dispensed pharmacy goods.
(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 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.
(C) The maximum reasonable fees paid for pharmacy services and
drugs shall not include any reductions in the relevant Medi-Cal
payment system implemented pursuant to Section 14105.192 of the
Welfare and Institutions Code.
(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) This section does not 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 shall 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 shall not reduce the
fee for a procedure that is currently reimbursed at a rate at or
below the Medicare rate for the same procedure.
(l) 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.