Workers' Compensation

California Department of Industrial Relations Regulations: Update and Comments

The development and implementation of regulations is a complex and time consuming process.  However they are just as important as the laws when it comes to making the system work well and reducing unnecessary expenses.

I recommend that you as an individual or your organization (or its system representatives) carefully review the proposed regulations and submit your comments and suggestions for improvement.

Below is the current status of the California Department of Industrial Relations 12 point plan to reduce expenses and improve the California workers compensation system.

It is extremely ambitious given the controversies being addressed and the complex nature of crafting regulations. But, given the interest and effort on the part of current Administrative Director of the Department of Industrial Relations (John Duncan) and the Acting Administrative Director (Carrie Nevans), (and the entire DWC legal team) these regulations are highly likely to be completed in short order.

Some of the output will be dependant upon recommendations from the Medical Committee working for the DIR.  Much of the original focus for these issues came from studies and efforts on the part of the Commission on Health and Safety and Workers Compnsation.

Number 1, 7, and 12 all have the potential to improve the quality of care for the injured worker while also reducing expenses in the system.  If done well could be a big win for the two major stake holders in the system.

Of the regulations listed here, number 11 (converting the physician fee schedule to RBRVS) is likely to be the most controversial.   This is because it would reduce the fees paid to the orthopedic surgeons, neurologists and a few other specialty medical providers while increasing the fees paid to the front line treating physicians.  It is intended to be revenue neutral but that goal is extremely difficult due to the “law of increased usage” where there is a change in the reimbursement rates.  Workers compensation is one of the last fee-for-service programs left in medicine.  Any significant change to the medical fee schedule is bound to be highly contentious.

Two potential gems for helping reduce medical expense are number 2 and 6.  Several claims organizations have overlaid their MPN with an HCO and the savings achieved have been significant.  Making the HCO process on par with the MPN may more claims administrators to use either or both.  This regulation is a follow up to the law (AB 749) which allowed the development of a pharmacy network (which was passed in 2001 and became effective January 1, 2002).  The pharmacy network regulations will encourage claims administrators to implement pharmacy networks and provide them an opportunity to save significant pharmacy costs.

Number 5 (electronic billing) was produced by a committee working with the DWC, and is largely based on the work that was done by a committee in the IAIABC (International Association of Industrial Accidents Boards and Commissions).  Which, in turn, is based on the technical process coming from the ANSI X 12 ( a technical format for transmitting or receiving medical data originally mandated as part of the Federal HIPAA legislation.  However HIPAA does not include a standard for transmitting pharmacy data (Pharmacy has its own standard for transmitting and receiving bills which is called NCPDP).  The issue of electronic billing of pharmacy bills will also have to be addressed.

Numbers 8 and 9 have significant opportunity for reducing unnecessary medical expenses in the system.  Texas, Illinois and other states have also been dealing with mischief caused by hardware pass through for spinal surgeries.

For specifics on proposed regulations you may go on the DIR website

  The above opinions are not that of SCIF or of Safeway Inc. or of the California Self Insured Security Fund.

Status of DIR’s 12-point plan

Plan listed in DWC Newsline 53-09, 12/29/2009

Status as of 6/28/2010 public information

1.  Tightening treatment guidelines:

·      Updated MTUS rules on compounded drugs—revised MTUS became effective July 18, 2009

·      The next revisions will address (1) presumption of correctness and burden of proof; (2) opiods; and (3) low back injuries


The latest revision of treatment guidelines revision was July 2009.  It included chronic pain guidelines.

Next rulemaking expected in March will address presumption of correctness and burden of proof.

The presumption of correctness and burden of proof rulemaking is posted on the DWC forum for comments through April 8, 2010.  Formal rulemaking will begin in July.  The next MTUS update will address chronic pain and opiods. 


2. Providing a network option:

·      Reducing the HCO fees will make HCOs more on par with MPNs and give employers another option for choosing a network of doctors and eliminating utilization review costs·      The regulations were effective Jan. 1, 2010


Rules took effect 1/1/10

8 CCR 9771, 9778, 9779, 9779.5, and 9779.9

3. Simplifying MPN rules:

·      Updating the MPN rules to simplify the notice requirements

·      The public hearing was held on Oct. 8, 2009


The proposed regulations have been revised following public hearing.  The revisions were published for 15 days for public comment through 3/17/10.  A second 15 day comment period ended May 6, 2010.  The third 15 day comment period ended May 28, 2010.  We submitted the regulatory packet to OAL on 6/25/10.  Their review should be completed by 8/10/10.  The regulations will become effective 60 days after they are filed with the secretary of state.

Affected:  8 CCR 9767.3, 9767.6, 9767.8, 9767.12 9767.16, 9880, 9881, 9881.1, 10139, 


4. Improving medical cost reporting: 

·      The Workers’ Compensation Information System (WCIS) regulations will be updated to clarify medical lien reporting, which will allow DWC to better monitor medical costs

·      Notice of rulemaking  issued in October 2009


 Regulations were proposed 10/20/2009 to update the WCIS implementation guides, refine the claim information that must be electronically reported, clarify the process for lien reporting, and allow more time for filing the first report of injury. 

Public hearing was 12/15/09.  The first 15 day comment period ended June 10, 2010.

 8 CCR Sections 9701 and 9702.


5. Implementing electronic billing:

·      Medical e-billing regulations will encourage electronic billing and faster payments to physicians

·      DWC expects to issue a notice of rulemaking by November 2009


Proposed regulations issued March 2010.

Public hearings April 23, 2010 and April 26, 2010.  We expect to revise the regulations for an additional 15 day comment period.

Affected:  8 CCR 9792.5, 9792.5.0, 9792.5.1, 9792.5.2, 9292.5.3.

6. Creating pharmacy networks:

·      Will allow employers to contain pharmacy costs, which are rising at a higher rate than other medical costs

·      Advisory group in the fall of 2009

·      Draft regulations ready to post on public forum by winter 2009


Informal forum was open until 3/17/2010, after which the DWC is expected to begin formal rulemaking with a publication of proposed regulations.  There is no specific time for commencement of formal rulemaking. 



7. Streamlining requests for medical authorization: 

·      Revise PR-2 and PR-4 so it is clear when physician requesting approval for medical treatment

·      Draft regulations ready to post on public forum by winter 2009


Draft regulations were posted on the public forum for comments until April 5, 2010.  Formal rulemaking will begin this summer. 



8. Ambulatory surgical center fees:

·      Update OMFS to adopt Medicare’s 2008 ambulatory surgical centers fee schedule

·      Draft regulations ready to post on public forum by winter 2009


There was a stakeholder meeting on May 27, 2010.  We expect to begin informal rulemaking by posting draft regulations of the forum within the next two weeks.

9. Eliminating spinal hardware pass-through:

·      Amend OMFS to eliminate spinal hardware pass-through

·      Draft regulations ready to post on public forum by winter 2009

Informal stakeholder meeting held January 19, 2010.  Draft language was posted on the forum from June 8 through June 22. 

10. Streamlining utilization review (UR):

·      Amending the UR regulations will streamline procedures and reduce administrative costs

·      DWC expects to begin this rulemaking in the spring of 2010

Stakeholder meeting was held on April 8, 2010.  Draft revised regulations will be posted on the forum in July.

11. Updating coding for doctor payments:

·      Converting from the current physician fee schedule to a Resource Based Relative Value Scale (RBRVS) system

·      Final report from Lewin Group expected in February of 2010

·      Final regulations will be sent to OAL by July 2010

Draft regulations and the supplemental Lewin report were posted on the public forum for comments until April 5, 2010.  We expect to post a revised version on the forum soon.  Formal rulemaking usually begins several weeks or longer after an informal forum. 



12. Considering creation of a drug formulary:

·      Consider an additional revision to the MTUS or pharmaceutical fee schedules to include formulary restrictions.


The next MTUS update will address chronic pain and opiods.  This should be ready for the forum by August.