Here is a summary of legislative and regulatory developments and challenges for the third quarter of 2016 and their practical implications:

California

1. The California Division of Workers’ Compensation has published the final version of its revisions to the Medical Treatment Utilization Schedule’s Chronic Pain Medical Treatment Guidelines. The focus of the revision is opioid use, but there are other changes worth noting.

First, the April 6, 2015, version of the ODG Guidelines for Chronic Pain is adopted in its entirety and incorporated by reference into MTUS. Second, the definition of “chronic pain” is made more specific. Previously the chronic pain medical treatment guidelines became applicable “in the absence of any cure for the patient who continues to have pain that persists beyond the anticipated time of healing.” The definition of chronic pain has been made more specific: “. . . in the absence of any cure for the patient who continues to have pain lasting three or more months from the initial onset of pain.

• Implications: By bringing the MTUS guidelines on the treatment of chronic pain in line with generally recognized standards and giving objectivity to when they are applied, these changes should assist claim payers in their UR activities.

2. The California General Assembly has overwhelmingly passed legislation that addresses the WC utilization review and the WC lien process. Unless Governor Brown unexpectedly vetoes the measure, most health care services delivered on MPN claims with dates of injury on or after January 1, 2018, will not generally be subject to prospective utilization review for 30 days after injury. There are several categories of services exempted from this prohibition, however, including major radiology and EMG diagnostic services, which remain subject to pre-30 day prospective UR.

Other provisions of the bill require the DWC to include in the Medical Treatment Utilization Schedule a drug formulary by July 1, 2017, and to adopt medical guidelines for physical and occupational therapy, addressing “at a minimum, the frequency, duration, intensity, and appropriateness of all treatment procedures and modalities commonly performed in workers’ compensation cases.” There isn’t a specific deadline for adoption of the PT/OT guidelines, perhaps because there are very few evidence-based standards at this level of detail which are publically available at this time.

• Implications: If enacted into law, which is likely, SB 1160 will roil the WC system with another wave of regulatory reform measures. Penalties for non-compliance of reporting requirements will be significantly raised, but there are offsetting gains in curtailing abuses in lien filings and in requiring accreditation of UR processes by URAC in the interim and by an independent accrediting organization chosen by the DWC after July 1, 2018.

Virginia

As earlier reported, in January 2016 Virginia enacted legislation requiring implementation of a WC fee schedule by January 1, 2018. The measure, SB 631, also contains troublesome language allowing employers to contract only “directly” with either providers, contracting entities or “PPO arrangements,” which are also limited to direct contracts with providers.

• Implications: As the law is currently written, it may be interpreted to prohibit the common PPO network practice of using indirectly contracted providers via subnetworks. Property-casualty trade association lobbyists have acknowledged that this flaw should be addressed by “cleanup” corrective legislation, but to date this initiative has not been started. With Virginia’s 2016 legislative season over, insurance industry forces will need to focus on this correction soon in order to prevent disruption to WC network operations in 2018.