How Senate Bill 863 Will Affect Your Practice

How Senate Bill 863 Will Affect Your Practice


On August 31, 2012, the California Legislature passed Senate Bill 863, and the Governor signed the bill into law on September 18, 2012. The new law makes a number of important changes to the existing workers’ compensation system that will affect chiropractors, as well as applicants, other providers, insurers, and employers.  Here, we primarily look at the changes affecting chiropractors.

This new “reform package” is designed to streamline the process over medical treatment disputes. With the new law, all medical treatment disputes are decided by Independent Medical Review Organizations (IMR) as opposed to administrative law judges. Proponents of the new law argue this new dispute resolution process will streamline the system and expedite medical treatment for applicants. Opponents argue that the law disadvantages applicants – and their providers – by eliminating their appeal rights. The new dispute resolution process has been extricated from the judicial arena, and left to the Administrative Director’s appointed IMRs. The new law also places new restrictions on chiropractic treatment and imposes a $150 filing fee for lien claimants. Overall, the law imposes more regulations on healthcare providers. It remains to be seen whether taking treatment disputes out of the judicial arena will beneficial to providers or not. The immediate reaction of most providers seems to be doubtful on this point.

Most of the new provisions go into effect on January 1, 2013, regardless of the date of injury; therefore, it is important for providers to familiarize themselves with the new law. The following is a synopsis of the portions of the law relevant to chiropractors, and our initial recommendations in response. In this article we will focus on five areas that will impact chiropractors with workers’ compensation patients:

  • Independent Medical Reviews v. the Workers’ Compensation Appeals Board (WCAB);
  • 24 visit caps on chiropractic;
  • Enhanced self-referral prohibitions;
  • Increased difficulty in QME certification; and
  • Increased lien-filing fees.

The Law Removes Medical Treatment Decisions from the WCAB
One huge change in the law is that it removes dispute over medical treatment from the WCAB.  Essentially, once there is a dispute over medical treatment, an IMR will make the decision regarding medical treatment as opposed to administrative law judges (who will still hear other disputes between employers and employees). IMR panels are appointed by the Administrative Director and are to not have any ties to insurance companies. The IMR decision is “presumed correct” with very limited chances to appeal the decision – which would go back to the IMR anyway.

New section 4610.5 addresses disputes over utilization review (UR) decisions for injuries occurring after January 1, 2013. [1]  The new law also applies to UR decision disputes where the decision is communicated to the requesting physician on or after July 1, 2013 regardless of the date of injury. This section provides that UR disputes will only be resolved in accordance with section 4610.5. [2]

Furthermore, section 4602 includes a provision prohibiting the use of an Agreed Medical Examiner or Qualified Medical Evaluator to resolve a UR dispute.[3] If there is a dispute over the UR decision (which is made by the employer’s insurer in most cases), new section 4610.6 has been added to provide an independent medical review. The IMR “shall be limited to an examination of the medical necessity of the disputed medical treatment.”[4]  The IMR decision is “presumed to be correct and shall be set aside by the WCAB only upon proof by clear and convincing evidence of one or more of the following grounds for appeal”: (1)  Administrative director acted without or in excess of its powers. (2)  Decision procured by fraud. (3)  IMR was subject to material conflict of interest. (4)  Decision based upon bias on the basis of race, national origin, ethnic group, etc. (5)  Decision was the result of a plainly erroneous finding of fact, provided that the mistake of fact is a matter of ordinary knowledge based on the information submitted for review   and not a matter that is the subject of expert opinion.

Thus, it will be very difficult to “overturn” an IMR decision. This new dispute-resolution process completely extricates medical treatment decisions from the WCAB. This would seem very beneficial to insurers – especially since insurers are the ones making the initial UR decision.

The new dispute-resolution process may be tougher for providers who have to “prove” medical necessity to an IMR panel as opposed to an administrative law judge. The IMR panel only reviews documentation as opposed to live testimony presented to the judge.[1] Obviously, this loss of rights to the applicant may have due process implications.[2] It will also increase the need for clear and accurate records.

Chiropractors Are Limited to 24 visits and Then Can No Longer Serveas the Treating Physician

The new law makes no change to the 24-visit chiropractic limitation.[1] However, the new law does further restrict chiropractors in another manner. It provides that a chiropractor cannot serve as a treating physician at all after the employee has received 24 visits.[2]
Obviously, this new provision directly affects a chiropractor’s ability to treat injured workers with any serious injury – requiring extended care. The exceptions to this rule are quite limited. An employer can authorize additional visits for “physical medicine services” despite the restriction on chiropractic visits.[3] Further, the number of visits for postsurgical rehabilitation services is not restricted by this new provision.[4] But, other than that, chiropractors will have to refer their patients to another doctor after 24 visits.

Self-Referrals Are Restricted But With the Exceptions Set Forth in Section 139.31

The bill also increases the restrictions on self-referrals. It provides that it is unlawful for any interested party to refer a person for services provided by another entity, if the other entity will be paid for those services by the workers’ compensation system, and the interested party has a financial interest in the other entity.[5] This prohibition, however, does not apply to a physician’s referral that is exempted by section 139.31.[6] The new law expands the prohibition on self-referrals to any interested party as opposed to just physicians. Section 139.3 – the original rule prohibiting self-referrals – was only applied to physicians.[7] Thus, the new law restricts not just doctors, but all people, from making self-interested referrals.

Section 139.31, however, provides a number of exceptions to the general prohibition in section 139.3. Notably, subsection (e) provides that the prohibitions in section 139.3 do not apply “to any service for a specific patient that is performed within, or goods that are supplied by, a physician’s office, or the office of a group practice.”[1] Thus, a group practice could refer patients within the group practice without violating the enhanced self-referral ban.[2]

Only Option for Chiropractic QMEs is Workers’ Compensation Evaluation Certification

Chiropractors were permitted to serve as Qualified Medical Examiners by either completing a chiropractic post-graduate program or being certified in workers’ compensation evaluation. The new law deletes the 300-hour post graduate option for becoming a QME and renewing as a QME and leaves only the option to be certified in California and that the certification program include instruction on disability evaluation report writing.[4] The disability evaluation report writing must be approved by the administrative director and shall include, but is not limited to, 12 or more hours of instruction.[5]

Once eligible to sit for the QME exam, the requirements for chiropractors to become QMEs remain unchanged:

  1. Pass an examination written and administered by the administrative director for the purpose of demonstrating competence in evaluating medical-legal issues in the workers’ compensation system.
  2. Devote at least one-third of their total practice time to providing direct medical treatment, or have served as an agreed medical evaluator on eight or more occasions in the 12 months prior to applying for appointment
  3. Be certified in California workers’ compensation evaluation by a provider recognized by the administrative director.
  4. Do not have any conflict of interest (evaluator may not request or accept any compensation from any source that does or could create a conflict with his or her duties as an evaluator.)
  5. Meet all additional medical or professional standards included in the regulations regarding standards for medical evaluations.)[6]

Filing Fee for Lien Claimants

The new law will also increase costs to providers. All liens filed on or after January 1, 2013, shall be subject to a $150 filing fee. Providers will also have to provide proof that they paid the filing fee along with the filing.[1] On or after January 1, 2013, any lien submitted without the filing fee shall be invalid and shall not operate to extend the time limit to file the lien.[2]
Any lien filed prior to January 1, 2013, shall be subject to a “lien activation fee” unless the lien claimant provides proof of having paid a filing fee as previously required by former section 4903.05.[3] The activation fee of $100 will be due on or before January 1, 2014.

This new filing fee will likely encourage providers to submit as many claims as possible before the January 1, 2013 deadline. Notwithstanding this, lien claimants still must pay a $100 “activation fee” for existing claims. These new rules are supposedly designed to curb frivolous lien claims. Unfortunately, these excessive filing fees may have the effect of simply increasing the cost of treatment to begin with – while decreasing providers’ willingness to treat workers’ compensation patients. In any event, providers should be prepared to pay the “activation fee” on existing claims. Providers should also submit as many claims as possible prior to January 1, 2013, to avoid the new filing fee (a savings of $50 per lien claim).


It does not seem that anything in SB 863 will make it easier for chiropractors to treat injured workers, or to get paid for doing so. Record keeping is up, appeal rights are down; filing fees are up, QME opportunities are down; self-referral restrictions are up, patient visits are down.  That said, given that chiropractors are still in the system, they must be prepared to adapt to the coming changes. A few areas of preparation are obvious. First, record keeping – properly identifying and documents the medical necessity for any treatment – will be at a premium.  Second, taking the new steps needed to be certified as a QME should start right away. Third, lien filings should be taken care of before the new fees kick in. Finally, consider restructuring in a way that minimizes the impact of this legislation.

Chiropractors can no longer be the treating doctors after 24 visits. That is not true for other physicians in the workers’ compensation system. Chiropractors can partner with other providers in a multi-disciplinary practice. While there are increased prohibitions on self-referrals, there is an explicit exception for group practices. Chiropractors should avail themselves of this opportunity. Referral to a medical doctor at another practice that you have a financial connection to cannot be done.

[1] Cal. Labor Code §4610.5.  All references are to the Labor Code unless otherwise stated.
[2] Id.
[3] Workers’ Compensation Blog, Lexis Nexis Communities, “California: Utilization Review and IMR in SB 863,” September 7, 2012.
[4] §4610.6.
[5] Workers’ Compensation Blog, Lexis Nexis Communities, “California Workers’ Compensation Reform SB863 Analysis: Medical Treatment Provisions,” September 7, 2012.
[6] Id.
[7] §4604.5(c)(1).
[8] §4600 (c)(1).
[9] §4600 (c)(2)(A).
[10] §4600 (c)(3).
[11] §139.32(c).
[12] §139.32(i)(3).
[13] §139.3.
[14] §139.31(e).
[15] Id.
[16] §4903.5(c)(1).
[17] §4903.5(c)(2).
[18] §4903.6(a).

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