Summary of Workers' Compensation Regulations – Updated August 1, 2005

Scroll down to view a summary of the Workers' Compensation regulatory changes of 2005. These regulations pertain to the following: Permanent Disability Rating, Spinal Surgery and Second Opinion Physians, Liens, Independent Medical Review, Vocational Rehabilitation, Utilization Review, Medical Provider Networks and the Official Medical Fee Schedule.

I. Permanent Disability Rating

The emergency amendments to Sections 9725 through 9727 provide for the use of various guidelines and definitions in determining disability. However, the sections have been amended to state that the provisions do not apply to "permanent disability evaluations performed pursuant to the permanent disability rating schedule adopted on or after January 1, 2005."

Section 9725 provides that disability should be measured by the Report of the Joint Committee of the California Medical Association and Industrial Accident Commission, but states that the section does not apply to permanent disability evaluations performed pursuant to the rating schedule adopted after 1/1/05.

Section 9726 provides that psychiatric elements of disability should be evaluated by "The Evaluation of Permanent Psychiatric Disability," but states that the section does not apply to permanent disability evaluations performed pursuant to the rating schedule adopted after 1/1/05.

Section 9727 defines "subjective disability" and details how to identify the condition, but states that the section does not apply to permanent disability evaluations performed pursuant to the rating schedule adopted after 1/1/05.

Section 9785 describes the guidelines that must be followed by the primary care physician in the course of his/her reporting duties and provides definitions in relation to those duties. This section provides that impairments are to be described in accordance with the AMA Guides to the Evaluation on Permanent Impairment, 5th Edition if evaluating permanent disability pursuant to the permanent disability evaluation schedule adopted on or after 1/1/05.

Sections 9785.2-9785.4 provide for the use of revised forms for the primary physician's progress and permanent and stationary reports.

Section 9805 provides that, for injuries on or after 1/1/05, percentages of permanent disability are to be determined pursuant to the Schedule for Rating Permanent Disabilities, which adopts and incorporates the AMA Guides.

Section 10150 describes the authority of the Disability Evaluation Unit, which issues disability ratings and prepares formal, summary, consultative, and informal rating determinations.

Section 10152 clarifies the definition of permanent disability and provides that a disability is considered permanent after maximum medical improvement has been reached (the condition has stabilized) and the condition is unlikely to improve in the next year.

Section 10158 states that a formal rating determination only constitutes evidence to the extent that it demonstrates the relation between the disability and the percentage of permanent disability.

Section 10160 describes the procedure for obtaining a summary rating determination. The language of the section was amended to state that any request for a supplemental comprehensive medical evaluation report must be made within 20 days of the receipt of the report.

Section 10163, form for apportionment referral, must be completed where there is potential for apportionment of disability. The final version of the form contains a section that states that the report can be returned to the medical evaluator for correction if apportionment is believed to be inconsistent with the law.

Section 10165.5, notice of options following permanent disability rating, describes percentage of disability and the benefits and disadvantages to various settlement options. This form also informs the claimant as to how to petition for review. The final version of the form limits the period within which administrative review can be requested to 30 days of receipt of the rating.

II. Spinal Surgery and Second Opinion Physicians

The following sections regarding second opinion physicians were made final on 12/15/04, and some were slightly amended from their 07/02/04 emergency versions.

Section 9788.01 provides the definitions for spinal surgery second opinions, including the definitions for "agreed second opinion physician," "completion of the second opinion process," "CPT," "income," "material familial affiliation," "material financial affiliation," "material professional affiliation," "parent, subsidiary, and otherwise related business entity," "receipt of the treating physician's report," "retired spinal surgeon," "second opinion physician," and "spinal surgery."

Section 9788.1 describes the process an employer objecting to a treating physician's recommendation for spinal surgery must complete. This section provides that the objection form must be sent within 10 days of receipt of the recommendation, and, if an agreement has been reached, notice of withdrawal must be given within 1 day. Section 9788.11 provides the actual form to be completed by the employer. The form requests basic coverage information as well as the reason(s) for the objection specific to the employee.

Section 9788.2 lists the qualifications required for a physician to apply to be on the list of second opinion physicians.

Section 9788.3 describes the application process for second opinion physicians. Applicants must submit documentation of their qualifications, keep the Administrative Director informed of any changes in personal information, and notify the Director of any accusations by the medical board.

Section 9788.4 describes when the Administrative Director can remove physicians from the list. Removal can occur where the physician is no longer qualified, medical boards have filed accusations against the physician, the physician fails to timely serve the second opinion report, the physician has failed to disclose precluding affiliations, the physician has failed to accept assignment, and the physician has timely filed notifications of unavailability.

Section 9788.5 provides that the Administrative Director will randomly select a physician within 5 days of receipt of an objection to a recommendation for spinal surgery. The final version of the section provides that the Administrative Director can exclude from the selection process of a second opinion physician any physician who has given notice of unavailability.

Section 9788.6 provides that the second opinion physician may examine the employee if the physician deems it necessary, but must examine the employee if the second opinion physician's diagnosis disagrees with that of the treating physician. The final version of the section distinguishes between the procedures for dealing with represented and unrepresented parties regarding communications. For represented employees, all communications, with the exception of communications regarding appointments and the availability of the report, between a second opinion physician and the parties must be in writing. For unrepresented employees, there should be no communication with the exception of communications during the exam and regarding appointments and the availability of the report.

Section 9788.7 provides that the second opinion physician's report can include a recommendation for different treatment if his opinion differs from that of the treating physician, and includes detailed instructions regarding what information that report should include.

Section 9788.8 states that the second opinion physician must serve the report on the parties within 45 days of receipt of the treating physician's report.

Section 9788.9 provides that the employer is responsible for the second opinion physician's fees. If an examination occurs, the fee is the same as that allowed under Section 9795 for a Basic Comprehensive Medical-Legal Evaluation. If an examination does not occur, the fee is the same as one half of that allowed for a Basic Comprehensive Medical-Legal Evaluation.

Section 9788.31 is the application for physicians wishing to be included in the list for spinal surgery second opinion physicians. The form requests information such as which medical school the physician attended, current hospital privileges, certifications, and disciplinary history.

Section 9788.32 provides the procedure followed upon receipt of an application to be on the list of second opinion physicians. If an applicant is rejected, the applicant has 30 days to request a hearing. A rejected applicant can reapply after 1 year or after deficiencies have been corrected.

Section 9788.91 provides that the employer shall authorize surgery if the second opinion physician's opinion concurs with the treating physician's opinion. If the second opinion physician's opinion does not concur with the treating physician's opinion, the employer has 14 days to file a declaration of readiness to proceed.

III. Liens

Section 10250 details the procedures to be followed where there is a claim for a lien. This section provides that no initial lien will be accepted unless accompanied by the full filing fee, and no payment of treatment or medical-legal lien will be enforced unless the filing fee has been paid.

IV. Independent Medical Review

The following regulations regarding independent medical review were added on 12/31/04 and were made final on 6/10/05.

Section 9768.1 provides definitions pertaining to independent medical review (IMR), including definitions for relevant records and various precluded affiliations.

Section 9768.2 prohibits conflicts of interest between the independent medical examiner and the parties and describes when such conflicts are likely to occur.

Section 9768.3 sets forth the qualifications required of an independent medical examiner. Such qualifications include being licensed, board certified, and free from accusations.

Section 9768.4 describes the process that must be completed by an applicant wishing to be an independent medical examiner. The applicant must apply, provide documentation of qualifications, designate certified specialties, agree to see assigned employees within 30 days, and keep the Director informed of any changes in personal information.

Section 9768.5 is the physician contract application form, which a physician must complete to be an independent medical examiner. The form requests information such as medical school attended, hospital privileges, Board certification, disciplinary history, and affiliations with potential parties.

Section 9768.6 provides that the Director will notify the applicant of acceptance if the physician meets the qualifications, and will also notify the applicant of rejection if the qualifications are not met. This section provides that the physician may reapply, and if 2 subsequent submissions have been denied, the physician can file an appeal with the Workers' Compensation Board.

Section 9768.7 states that a physician may request to be placed on the inactive list during the contract term, but the term will not be extended due to such a request.

Section 9768.8 provides that the Director can remove a physician from the list if the physician has submitted more than one untimely report, a conflict of interest was not disclosed, the physician failed to timely schedule appointments, confidentiality was not maintained, or the physician's qualifications no longer meet the standards. The Director has the authority to place a physician on the inactive list, and the physician has 30 days of receiving notice of such action to request a hearing.

Section 9768.9 describes the procedure for requesting independent medical review. This section provides that an employee disputing service, diagnosis, or treatment should seek the opinion of a third physician. If the employee further disputes service, diagnosis, or treatment, the employee can request Independent Medical Review. The Director is then responsible for choosing an IMR within the appropriate specialty.

Section 9768.10 is the application form for independent medical review, and it requires information such as contact information, the reason for the request, and consent to the release of personal records.

Section 9768.11 describes the procedures for an IMR. This section details when tests can be ordered, when extensions can be granted, and where reports are to be served.

Section 9768.12 lists what the independent medical reviewer should include in the reports. The report should include the date of the review, the complaint, the information relied upon in the opinion, the patient's medical history, the findings, the diagnosis, the physician's opinion, and an analysis of whether the treatment is consistent with the treatment utilization schedule.

Section 9768.13 gives the Director the authority to destroy documents after 2 years.

Section 9768.14 provides that each independent medical reviewer must retain records for 5 years.

Section 9768.15 provides that payment is the responsibility of the employer or insurer and that an IMR is not entitled to any additional fees unless emergency procedures were required.

Section 9768.16 provides that the Director will adopt the opinion of the independent medical reviewer and issue a written decision within 5 days. The parties can appeal the decision to the Workers' Compensation Appeals Board within 20 days of the decision.

Section 9768.17 provides that an employee can seek treatment with a physician of his/her choice inside or outside the MPN if the independent medical reviewer does not agree with the disputed diagnosis, service, or treatment.

V. Vocational Rehabilitation

The following regulations regarding supplemental job displacement benefits were made final on 6/2/05.

Section 10133.50 defines terms in connection with supplemental job displacement benefits.

Section 10133.51 provides that the claims administrator should send the employee the mandatory form "Notice of Potential Right to Supplemental Job Displacement Benefit Form" within 10 days of the last temporary disability payment for injuries after 1/1/04. Section 10133.52, the mandatory form "Notice of Potential Right to Supplemental Job Displacement Benefit Form," informs the employee that s/he may be eligible for a voucher for retraining and/or skill enhancement, and details the rights that accompany this eligibility.

Section 10133.53 is the form required to be given to the employee notifying them of a notice of an offer of modified or alternative work.

Section 10133.54 provides that where there is a dispute regarding supplemental job displacement benefits, the parties can request that the Director resolve the dispute. To initiate arbitration, the parties must complete a form and submit all relevant documents. The Director has 30 days to issue a determination and order. Section 10133.55 is the mandatory form for requesting dispute resolution.

Section 10133.56 describes when an employee is eligible for supplemental job displacement benefits for injuries occurring on or after 1/1/04. Generally, an employee is eligible when the injury causes permanent partial disability, the administrator does not offer modified work within 30 days of the termination of temporary disability payments, and either the injured employee does not return to work within 60 days of the termination of temporary disability benefits or the injured seasonal employee fails to return to work the following season.

Section 10133.57 is the form for the supplemental job displacement voucher, which the injured employee must fill out and present for payment of education-related fees incurred in retraining or skill enhancement.

Section 10133.58 defines state accredited schools for the purposes of supplemental job displacement benefits.

Section 10133.59 provides that the Director is required to keep a list of Vocational and Return to Work counselors to assist injured employees, who can select a counselor to facilitate their vocational training.

Section 10133.60 provides that the administrator is not required to provide a supplemental job displacement voucher if the administrator offers modified or alternative work or if the maximum funds of the voucher have been exhausted.

VI. Utilization Review

The following regulations pertaining to utilization review were approved on an emergency basis by the Office of Administrative Law on 12/16/04.

Section 9792.6 defines "utilization review process" and terms related to utilization review standards.

Section 9792.7 provides that after 1/1/04, every administrator is required to maintain and establish a utilization review process for treatment after 1/1/04 regardless of date of injury. This section specifies what each utilization review plan should contain.

Section 9792.8 provides that criteria used in the utilization review process should be consistent with ACOEM Practice Guidelines, which are presumptively correct on the extent and scope of treatment until the effective date of the utilization schedule adopted. Any conditions not covered by ACOEM or the adopted schedule will be treated in accordance with other generally recognized and accepted treatment guidelines.

Section 9792.9 states that the request for authorization must be in written form and decisions should be made within 5 working days of the request. When expedited review is required, a decision should be made within 72 hours of the request.

Section 9792.10 provides that objection to a decision must be communicated within 20 days of the decision. The injured worker can file an application for adjudication of claim or request an expedited hearing if there is a bona fide dispute regarding entitlement to medical treatment.

Section 9792.11 gives the Director the power and authority to assess administrative and civil penalties for violations regarding utilization review guidelines.

VII. Medical Provider Networks

The following regulations regarding medical provider networks were adopted as emergency regulations on 11/01/04.

Section 9767.1 defines terms in relation to medical provider networks.

Section 9767.2 describes the procedures relating to the MPN application review process and provides that the Director has 60 days to approve or disapprove an application.

Section 9767.3 states that an employer or insurer can submit for approval one or more MPN plans and can submit for approval a plan that meets the specific needs of an insured employer. This section also sets out the required information for the different types of networks.

Section 9767.4, the cover page for MPN application, requires the name of the applicant, the type of applicant, the name of the network, the type of entity, and the personal information of the authorized individual.

Section 9767.5 provides the standards an MPN must meet. According to this section, an MPN must have a primary care physician, a hospital, and specialists nearby, must have a written policy for dealing with employees traveling outside the service area and emergency services, and shall ensure timely appointments are available.

Section 9767.6 provides that an employee has the right to choose his or her own physician after the initial medical evaluation with an MPN physician.

Section 9767.7 states that the employee has the right to obtain second and third opinions within the MPN, and it is the employee's responsibility to ensure that t he proper procedure is followed for obtaining subsequent opinions.

Section 9767.8 provides that the Director shall be given notice before the MPN plan is modified and describes when such notice would be necessary. This section also details the steps to be taken if modification is denied.

Section 9767.9 details when outside medical care should be switched to medical care inside the MPN. This section allows the employer to authorize treatment of injured covered employees being treated outside the MPN for injures or conditions that occurred prior to coverage of the MPN.

Section 9767.10 provides that an insurer offering an MPN shall complete treatment by a terminated provider.

Section 9767.11 details economic profiling policies and states that the insurer's filing off such procedures should describe profiling methodology, how economic profiling is used in utilization and peer review, and any incentives and penalties used in provider retention and termination.

Section 9767.12 details notification requirements. This section provides that an employee should be notified of the MPN when s/he is hired or when s/he transfers into the MPN, and details what information the notification should include.

Section 9767.13 describes when the Director should deny approval and the appeals process for applicants who have been denied approval.

Section 9767.14 gives the Director the authority to suspend or revoke a plan if service is not being provided adequately, the MPN fails to meet the requirements of the Labor Code, the MPN submits false or misleading information, or the MPN continues to use services of a provider or medical reviewer who is ineligible to provide treatment.

VIII. Official Medical Fee Schedule

Section 9789.10 defines "official medical fee schedule" and related terms.

Section 9789.11 states that for physician services rendered on or after 7/1/04, the maximum allowable reimbursement amount in OMFS 2003 is reduced by 5%, as long as the reimbursement does not fall below the Medicare rate. To determine the maximum allowable reimbursement, the following formula should be used: RVU x conversion factor x percentage reduction calculation = maximum reasonable fee before application of ground rules.

Section 9789.22 provides that the maximum fee for inpatient services is determined by multiplying the product of the health facility's composite factor and the applicable DRG weight by 1.20. Section 9789.32 describes the method by which to calculate the maximum fees for emergency room visits and surgical procedures, including services, drugs, and supplies.

Section 9789.40 provides that the maximum reasonable fee for pharmacy services is 100% of the fee prescribed in the Medi-Cal payment system.

Section 9789.50 states that the maximum reasonable fee for pathology and lab services is 120% of the rate for the same procedure code in the CMS' Clinical Diagnostic Laboratory Fee Schedule.

Section 9789.60 provides that the maximum reasonable reimbursement for equipment, supplies, and materials is 120% of the rate set forth in the CMS' Durable Medical Equipment, Prosthetics/Orthotics, and Supplies (DMEPOS) Fee Schedule.

Section 9789.70 states that the maximum reasonable reimbursement for ambulance services is 120% of the applicable fee for the Calendar Year 2004 set forth in CMS's Ambulance Fee Schedule.