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SACRAMENTO, Calif. -- Several anti-managed care bills targeting HMO utilization review practices could lead to higher workers compensation costs in California.

Provisions in two of the bills -- S.B. 324 and A.B. 332 -- may even go beyond UR decisions and apply also to determinations of whether an injury is compensable, insurance industry lobbyists note.

The bills, which passed the Legislature last month and are awaiting the governor's signature, require that all medical treatment decisions by health plans be made by California-licensed physicians.

This requirement is particularly onerous for insurers based outside California, industry lobbyists say, because decisions regarding denial of care often are made out of state or by claims adjusters without medical licenses.

"The addition of a California license requirement simply adds costs to the workers compensation system without providing benefits to injured workers," said Mark Webb, Western region vp for the American Insurance Assn. He is based in Sacramento, Calif.

The 1993 workers compensation reforms created a similar requirement. But under California workers comp law, the professionals making decisions regarding appropriateness of care are required to be licensed only in their state of residency, not specifically California.

Furthermore, "to suggest that issues of causation must be made by a licensed treater would not only add enormous costs to the workers compensation system but would require treaters to make legal decisions they are not always capable of making," Mr. Webb stated in a letter recommending Gov. Pete Wilson veto the bills. Decisions regarding whether an injury is compensable under workers compensation are legal, not medical, decisions, he explained.

Doug Widtfeldt, a lobbyist for the Sacramento-based Assn. of California Insurance Cos., agreed that "these bills are in conflict with workers compensation statutes that set forth a separate utilization review process within the comp scheme."

In fact, the administrative director of the Division of Workers Compensation is putting the finishing touches on the latest workers comp UR regulations, which will be presented to the Office of Administrative Law in a few weeks, a division spokesman said.

The anti-UR bills will become law within 30 days of passage if Gov. Wilson doesn't veto them. S.B. 324 is "double joined" to S.B. 557, a UR bill that pertains solely to health plans and excludes workers comp insurers. That means one cannot become law without the other. A.B. 332, however, can go forward with or without a signature.

It's ironic that the bills, which were intended to target health maintenance organizations, could have a detrimental effect on workers comp, observed ACIC's Mr. Widtfeldt.

"A lot of these managed care/anti-HMO bills were intended to focus on HMOs, but the people backing them couldn't understand how they'd affect the work comp system," he said.

Indeed, according to a legislative analysis of the bills, they initially were intended "to ensure that health maintenance organization personnel are not practicing medicine without a license."

According to the Medical Board of California, the state physician licensing agency, the legislation requires that the medical director of a health care service plan, who may make life and death decisions regarding the medical care rendered to a plan enrollee, be licensed to practice medicine in California.

During legislative debate, the board said it has heard repeatedly the concerns of those who have had the course of their medical care altered or even denied by their HMO after their doctors determined that care was necessary.

Other supporters of the legislation include consumer groups, provider groups and labor organizations. Health Access California, a health care consumer organization, states that HMOs and insurers try to avoid liability for denying care by claiming that their medical directors are not providing medical care when making decisions about medical necessity.

The California Assn. of Professional Liability Insurers acknowledged that physicians are being sued for alleged failure to provide care. It asserts that a physician is in an untenable position when medical judgment is vetoed by someone without medical skill and training.

But the California Assn. of Health Plans, an HMO industry trade group, argues that the legislation would preclude health plans from maintaining cost-effective claims processing procedures.

The CAHP also asserts that the bills could have the unintended effect of preventing California consumers from getting the best advice as to whether treatment should be covered. The group also argues that if plans must rely exclusively on the advice of California-licensed physicians, then expertise in other parts of the country will go untapped.

Because of the consequences for workers comp insurers, both the AIA and the ACIC are sending letters urging Gov. Wilson to veto all but S.B. 557, which specifically excludes workers comp. Both groups are neutral on S.B. 557.

Meanwhile, the California Legislature passed other anti-managed care legislation during its 1998 session, which ended just two weeks ago. All but one of the bills -- A.B. 974 -- are on the governor's desk.

A.B. 974, signed by Gov. Wilson on June 19, prohibits health plans from limiting coverage for a drug that had previously been approved by the plan. It also requires specified disclosures regarding the use and contents of drug formularies.

Among the other anti-managed care measures on the governor's desk:

* A.B. 2639 speeds up the treatment of life-threatening illnesses by placing a 72-hour time limit on a health plan or insurer to approve or deny treatment after the provider has recommended a treatment option. The bill also requires health plans and insurers to cover all cancer screening tests.

* S.B. 406 transfers regulation of health care service plans from the Department of Corporations to a newly established Health Care Service Plan Board of California within the Department of Consumer Affairs.

This was one of several bills proposed this year to transfer health plan regulation out of DOC because of concerns that the department has not been doing an adequate job of protecting consumers or ensuring that plans provide quality health care to enrollees.

Supporters, generally consumer organizations, argue that a DCA board would better regulate health plans in this state.

Health plans, however, oppose this bill. Blue Cross of California, for example, believes the DOC should retain jurisdiction over plans because of its considerable expertise. While the California Assn. of Life Underwriters agrees that the DOC is not the proper regulatory body for HMOs, it asserts that it would be much better to have all health insurance providers under one regulator. Under current law, all health plans licensed under the Knox-Keene Act, such as HMOs, are regulated by the DOC. However, indemnity plans are regulated by the Department of Insurance.

* S.B. 1125 establishes quotas for nurses in hospitals and limits the duties unlicensed personnel could perform.

This bill requires general acute care hospitals, acute psychiatric hospitals, and special hospitals, as defined, to adopt written policies and procedures for the training and orientation of nursing staff. It also requires the State Department of Health Services to adopt regulations by Jan. 1, 2000, that establish minimum, specific licensed nurse-to-patient ratios.