Key Bills of Interest Introduced So Far
NAWBO-CA’s Art of Advocacy is Underway
As noted last month, the 2021-22 legislative session is moving ahead rapidly. The leadership in both houses are strongly enforcing a 12-bill limit for every Member, due to a potential COVID outbreak that could force another abbreviated session in 2021. In non-pandemic years, the bill limit is 24. However, it is rare that any legislator would introduce more than 15 or so bills each year, due to the costs associated with bill introduction and the limited staff available to handle this volume of bills.
Two bills of great concern to the employer and provider stakeholders in the workers’ compensation system are AB 399 introduced by Assemblymember Salas (D-Bakersfield) and AB 1465 introduced by Assemblymembers Reyes and Gonzalez. AB 399 is a reintroduction of AB 2294 that was held back in 2020, due to the COVID-19 related bill limits placed on legislators. However, the author and the sponsors have agreed to drop the floor and instead revise the bill language to put more reporting requirements on Medical Provider Networks (MPNs). AB 1465 would establish a state-run MPN.
AB 399 (Salas) - As introduced, this bill would prohibit Medical Provider Networks’ (MPN) reimbursements to physicians who treat workers’ compensation patients to reimburse at a rate below the Official Medical Fee Schedule (OMFS) or Medicare level. Currently, California providers may negotiate to administer care at rates different than the workers’ compensation fee schedule, pursuant to Section 5307.11 of the Labor Code. Allowing networks and providers to freely contract for services at mutually agreed upon rates, similar to the practices in the group health market, has considerably lowered total medical costs and overall workers’ compensation premiums paid for by employers. As introduced, Assembly Bill 399 arbitrarily sets a reimbursement floor which greatly diminishes an MPN’s ability to negotiate with providers across all service types. The setting of an arbitrary floor to rates would significantly and negatively impact the entire workers’ compensation system for payers and employers and would result in a significant increase in medical costs alone, even without factoring in substantial administrative and systems costs.
Due to the heavy opposition from the employers, MPN and provider stakeholders, the sponsors have proposed amendments to drop the reimbursement floor and now require an MPN to allow a participating provider network to participate at each location at which they treat patients for 8 or more hours per week, on a monthly average. AB 399 also requires all treatment authorizations or certifications, adjuster correspondence, or billing explanation of review or explanation of benefits to include the MPN identification number, MPN name, and the name of the network covering the claimant provided in that correspondence. As amended, AB 399 would require the Administrative Director of the Division of Workers’ Compensation to assess an administrative penalty for each document which fails to include the required MPN information.
The amendments offered by the sponsor are still unworkable and will undoubtedly add more costs to the system. We believe that any adjustments to the system can be done administratively through the regulatory process after a thorough study of any issues has been completed. The code section already allows for the MPNs to have sole discretion to approve treatment at “non-listed” locations, so the amendments offered by the sponsors are duplicative of existing law and code sections. CCR Section 9767.4 reads: “An MPN determines which locations are approved for physicians to provide treatment under the MPN. Approved locations are listed in an MPN’s provider listing; however, an MPN has the discretion to approve treatment at non-listed locations.”
As proposed, AB 399 would add tremendous costs to the system. Increased Fraudulent Claims; Decreased Credentialing of legitimate medical groups; increased billing costs; and reduced coordination and Innovation between providers. These elements, combined, will have the unintended consequence of diminishing care of injured workers, while significantly raising costs for all California employers.
AB 1465 (Reyes/Gonzalez) – As introduced, this bill would require the Administrative
Director to establish a statewide medical provider network, called the California Medical
Provider Network (CAMPN). The bill would establish that an employee may choose to
treat within their employer’s network or the CAMPN. The bill would require that the
providers in the CAMPN be sufficient to enable treatment for a variety of injuries in all
parts of the state. The bill would specify criteria physicians must meet to be included in
the CAMPN and would require inclusion for those physicians that meet the criteria. The
bill would require the administrative director to establish rules and procedures for the
CAMPN and create and adopt a continuity of care policy. The CAMPN will consist of
physicians throughout the state who are willing and able to provide medical treatment to
injured employees. The implementation date for the CAMPN is January 1, 2022.
“Physician” is defined as “includes physicians and surgeons holding an M.D. or D.O.
degree, psychologists, acupuncturists, optometrists, dentists, podiatrists, and
chiropractic practitioners licensed by California state law and within the scope of their
practice as defined by California state law.”
Also, there is no mention in the bill about reimbursement or fee schedules. The only
sentence on reimbursement is the following: “The physician agrees to bill in accord with
the official medical fee schedule established pursuant to Section 5307.1.” We can
assume that treatment through the California network would have to be paid at 100% of
fee schedule, rather than at discounts from the fee schedule that under AB 399 would
The California Workers’ Compensation Institute (CWCI) and the Workers’
Compensation Insurance Rating Bureau (WCIRB) are preparing cost estimates on this
bill, but we clearly know that adding a second state-run MPN program would increase
costs to the WC system with no guarantee of better outcomes for injured workers.
AB 511 (Muratsuchi) Access to Capital: Crowdfunding - Sponsored by Small Business California, this bill allows start-up and emerging small businesses to find investors who can provide capital to help them grow and create jobs, while providing greater protections to California investors participating in crowdfunding. This bill would revise the California Corporate Securities Law of 1968 to allow securities offering in California that would be coordinated with amended SEC rules 147A and Rule 504 of Regulation D.
Small businesses, accounting for over two-thirds of new jobs nationally, often lack access to capital. As a result, owners of small businesses must rely heavily on credit card debt, home equity, and limited personal assets to start and grow businesses. Seed and later-stage growth capital enable entrepreneurs to prove a concept, build infrastructure necessary to support a business model and take other steps necessary to attract later-stage capital investment. For small businesses and start-ups, however, raising capital to get started can frequently be an overwhelming challenge.
In a move to help new businesses and start-ups, in 2012 Congress enacted the Jumpstart Our Business Startups Act (JOBS Act). The JOBS Act modernized the rules for raising equity capital by establishing crowdfunding provisions. Although the JOBS Act has successfully facilitated capital access by larger later-stage enterprises, it has not been effective in providing small businesses with access to critical seed-stage capital (up to 500k). For example, the cost associated with independent CPA reviews or audits, required by Regulation CF under Title III of the JOBS Act, is prohibitively expensive for startup businesses, and yet the reviews/audits do not provide meaningful information to investors, as startups do not have significant operations. CPA review of financial statements for offerings between $100,000 to $500,000 and audits for offerings over $500,000 cost between $15,000 to $75,000 or more.
The SEC recognized that a ‘one-size-fits-all’ regime to regulate capital formation may not be appropriate for smaller, earlier-stage companies. Accordingly, the SEC encourages states to adopt their own securities regulations to regulate smaller offerings. To further this goal, the SEC amended federal rules to enable states to regulate various securities offerings. Since enactment of the JOBS Act, thirty-five (35) states have adopted some form of “equity crowdfunding” exemptions, but California has not.
Assembly Bill 511 creates an exemption from qualification to enable a business in California to conduct an offering pursuant to SEC Regulation Crowdfunding but be exempted from the requirement to provide reviewed financial statements for seed offerings of up to $300,000. However, companies would be required to adopt the investor protections afforded by AB 511, which presently are absent from the federal JOBS Act. The investor protections present in the bill are:
- Attorneys’ fee provision for prevailing investors
- Prohibits class action waivers
- Prohibits jury trial waivers
- Prohibits choice of law provision other than California
- Prohibits forum selection outside of California
This bill offers both entrepreneurs and investors a safer means of filling the “capital gap” that exists for smaller early-stage seed capital offerings while helping to jumpstart companies so that they can become candidates for larger rounds of financing. AB 511 includes all of the investor protections that were agreed upon in a previous version of this bill (AB 2527).
AB 915 (Chiu) 25% Goal to Increase Procurement Opportunities for Women-Owned Businesses and Others - Sponsored by the California Asian Pacific Chamber of Commerce and supported by NAWBO-CA, this bill will establish a clear and consistent accountability process to ensure all State agencies, departments, boards, and commissions meet their 25 percent goal for minority, small business, and disabled veterans business participation in state procurements and contracts. This bill will also establish a definition of “Disadvantaged Business Enterprises” (DBEs) for state contracting purposes. This bill is scheduled for hearing in the Assembly Jobs, Economic Development and the Economy (JEDE) Committee on April 27th.
In California, small businesses account for 3.9 million, or 99.8% of all California businesses. Of these small businesses, 1.6 million are minority-owned. Small businesses not only contribute significantly to the economy but also account for 7 million employees across the state. In 2006, Governor Schwarzenegger signed EO S-02-06, which generally directed all state agencies, departments, boards, and commissions to achieve a minimum goal of 25% for small business participation in state procurements and contracts. While this EO remains on the books, the enforcement of this EO has been lax. Of the 231 state agencies, departments, and commissions, only 12 have adopted a small business/disabled veterans business enterprise policy. In 2017, Governor Brown signed AB 657 (Cunningham). This bill, among other things, initiated steps to establish a "small business liaison/advocate" for each agency that regularly interacts with small businesses. The primary responsibility of that position is to increase opportunities for small businesses and ensuring California meets its 25 percent goal.
AB 915 also establishes a more formal line of communication between the Department of General Services (DGS) and the Office of the Small Business Advocate in GO-Biz. Ostensibly, DGS serves as the first point-of-contact for all small businesses looking to do business with the State. Yet currently "minority-owned" (as well as "women-owned" and "LGBT-owned") certification is only available through the CA Public Utilities Commission (CPUC), whereas small Business (SB) and Disabled Veteran Business Enterprise (DVBE) certification are available through DGS. All these certifications are highly advantageous for business owners seeking to do business with the State of California but having no central point of contact is confusing and potentially disenfranchising for a minority, LGBT, and/or women-owned business.
The Art of Advocacy
Special thanks to SoCalGas for your sponsorship of The Art of Advocacy. Thank you to all of our NAWBO-CA members particularly our Advocacy and Public Policy Committee for your continued support and participation in NAWBO-CA advocacy meetings and events. The dual session of The Art of Advocacy addressed advocacy basics, best practices in advocacy, and legislative meeting dynamics.
Thank you to Kristin Olsen (California Strategies, LLC), Minnie Santillan (Chief of Staff, Assemblymember Blanca Rubio and Santillan Strategies) for your participation in Session I, and Assemblymember Cristina Garcia, Senator Nancy Skinner (Legislative Women’s Caucus); Dr. Alisha Wilkins (California Commission on the Status of Women and Girls); Soyla Fernandez (Fernandez Cervantes Government Affairs). The session recording will be distributed to individuals who purchased The Art of Advocacy tickets.
JOIN THE PUBLIC POLICY COMMITTEE
We encourage anyone interested in advocacy to join the Public Policy Committee. It’s open to all members and we meet on the 4th Friday of the month from 8:00 – 9:00 a.m. If you’re interested, email NAWBO-CA’s Advocacy and Public Policy Director Robin Allen at firstname.lastname@example.org. The bigger the team, the greater the outcomes!