Time- Dated Material GAVIN NEWSOM, GOVERNOR OFFICE OF ADMINISTRATIVE LAW California Regulatory Notice Register REGISTER 2024, NUMBER 23–Z PUBLISHED WEEKLY BY THE OFFICE OF ADMINISTRATIVE LAW JUNE 7, 2024 PROPOSED ACTION ON REGULATIONS TITLE 2. STATE PERSONNEL BOARD Hearings and Appeals — Notice File Number Z2024–0528–06 ............................................ 721 TITLE 4. SCHOOL FINANCE AUTHORITY Charter School Facility Grant Program — Notice File Number Z2024–0528–08 .............................. 723 TITLE 4.

TAX CREDIT ALLOCATION COMMITTEE State Historic Rehabilitation Tax Credits — Notice File Number Z2024–0528–02 ............................. 726 TITLE 8. DIVISION OF WORKERS’ COMPENSATION Utilization Review Standards — Notice File Number Z2024–0528–03 ...................................... 730 TITLE 9. DEPARTMENT OF REHABILITATION Pre–Employment Transition Services — Notice File Number Z2024–0528–07 ................................ 751 TITLE 14.

BOARD OF FORESTRY AND FIRE PROTECTION Drought Mortality and Forest Fire Prevention Exemption Amendments, 2024 — Notice File Number Z2024–0528–09 ................................................................................. 754 TITLE 14.

BOARD OF FORESTRY AND FIRE PROTECTION Less Than 3–Acre Conversion Exemption Amendments, 2024 — Notice File Number Z2024–0528–10 ............. 759 GENERAL PUBLIC INTEREST DEPARTMENT OF FISH AND WILDLIFE Consistency Determination Request for Tenmile Creek Stream Bank Erosion Prevention and Riparian Restoration Project 2080–2024–011–01 Laytonville, Mendocino County .................................... 764 (Continued on next page)

DEPARTMENT OF FISH AND WILDLIFE Consistency Determination Number 2080R–2024–007–03, Lagunitas Creek Watershed Enhancement Project Phase 1, Marin County .......................................................... 765 DEPARTMENT OF FISH AND WILDLIFE Consistency Determination Number 1653–2024–136–001–R1, French Creek 2024 River Kilometer 3.2–3.3 Restoration Project, Siskiyou County .................................................. 770 DEPARTMENT OF FISH AND WILDLIFE Consistency Determination Number 2080–2024–006–05, Zaca Station to Orcutt Drainage Rehabilitation Project, Santa Barbara County ......................................................... 772

SUMMARY OF REGULATORY ACTIONS Regulations filed with the Secretary of State .......................................................... 777 The California Regulatory Notice Register is an official state publication of the Office of Administrative Law containing notices of proposed regulatory actions by state regulatory agencies to adopt, amend or repeal regulations contained in the California Code of Regulations. The effective period of a notice of proposed regulatory action by a state agency in the California Regulatory Notice Register shall not exceed one year [Government Code § 11346.4(b)].

It is suggested, therefore, that issues of the California Regulatory Notice Register be retained for a minimum of 18 months. CALIFORNIA REGULATORY NOTICE REGISTER is published weekly by the Office of Administrative Law, 300 Capitol Mall, Suite 1250, Sacramento, CA 95814-4339. The Register is printed by Barclays, a subsidiary of West, a Thomson Reuters Business, and is offered by subscription for $338.00 (annual price). To order or make changes to current subscriptions, please call (800) 328−4880. The Register can also be accessed at https://oal.ca.gov .

CALIFORNIA REGULATORY NOTICE REGISTER 2024, VOLUME NUMBER 23–Z 721 PROPOSED ACTION ON REGULATIONS Information contained in this document is published as received from agencies and is not edited by Thomson Reuters. TITLE 2. STATE PERSONNEL BOARD HEARINGS AND APPEALS 2024–03 Notice is hereby given that the State Personnel Board (Board) proposes to adopt

Section 58.14 and amend Sections 58.12, 58.13, 59.3, 60.1, and 60.2 in order to clarify, streamline or correct the deficiencies of rules related to hearings and appeals. (Cal. Code Regs., title 2, §§ 58.12, 58.13, 59.3, 60.1, and 60.2.) PUBLIC HEARING A public hearing regarding the proposed regulatory action will be held on July 23, 2024, at 10:00 a.m. via WebEx.

In order to participate in the public hearing, please see the following options: ● Via Video (Online) You may click, or copy and paste into your web browser, the following link: https://spb-meetings. webex.com/wbxmjs/joinservice/sites/spb-meetings/ meeting/download/c71d9077d6c94d29a7846ca4dd412 986?siteurl=spb-meetings&MTID=m52e2a0c36ffabb a60b962a1c4dbcd815 Then enter the following information to gain access to the hearing: Meeting Number: 2556 476 6011 Meeting password: jjSuzAkC332 ● Via Telephone You may also participate by dialing the phone num- ber first and then the participant code listed below: Phone Number: +1–408–418–9388 Participant Code: 25564766011## The telephonic conference to be used for the public hearing is accessible to persons with mobility impair - ment.

Persons with sight or hearing impairments are requested to notify the contact person for these hear - ings (listed below) in order to make specific arrange - ments, if necessary. WRITTEN COMMENT PERIOD Any interested party, or their duly authorized rep - resentative, may submit written comments relevant to the proposed regulatory action to the contact person listed below. Michelle La Grandeur, Chief Policy Division State Personnel Board 801 Capitol Mall Sacramento, CA 95814 Email: michelle.lagrandeur@spb.ca.gov The written comment period closes on July 22, 2024.

Only written comments received by that time shall be reviewed and considered by the Board before it adopts, amends, or repeals a regulation. AUTHORITY AND REFERENCE The Board proposes to adopt

section 58.14 and amend sections 58.12, 58.13, 59.3, 60.1, and 60.2 of Ti- tle 2,

Chapter 1 of the California Code of Regulations pursuant to the authority vested in it by the California Constitution,

article VII,

section 3, and Government Code (Gov. Code)

section 18701. The proposed reg - ulation will implement, interpret, and make specific the provisions of the California Constitution,

article 7,

section 3, and Government Code sections 18672 and 18675. INFORMATIVE DIGEST/POLICY STATEMENT OVERVIEW The Board is a constitutional body responsible for enforcing California’s civil service statutes. (Cal. Const.,

article VII, §§ 1, subdivision (b), and 3; Gov. Code, § 18660.) In addition, the Board, by majority vote of all its members, prescribes probationary peri - ods and classifications, adopts other rules authorized by statute, and reviews disciplinary actions imposed against state employees. (Ibid.) Regulations adopted by the Board are exempt from the Administrative Procedure Act, except as expressly specified. (Gov. Code, §§ 18211, 18215, and 18216.) The amendments will ensure that California Code of Regulations related to hearings and appeals are consistent with existing practices.

In reviewing other state regulations, the Board found that the instant regulatory proposal is consistent and compatible with existing state regulations. FISCAL IMPACT ON PUBLIC AGENCIES ● Mandate on local agencies and school districts: None.

CALIFORNIA REGULATORY NOTICE REGISTER 2024, VOLUME NUMBER 23–Z 722 ● Cost to any local agency or school district that must be reimbursed in accordance with Govern - ment Code sections 17500 through 17630: None. ● Cost or savings to any State agency: None. ● Other nondiscretionary cost or savings imposed on local agencies: None. ● Cost or savings in federal funding to the State: None. SIGNIFICANT EFFECT ON HOUSING COSTS None.

ECONOMIC IMPACT ON BUSINESS ● Significant, statewide adverse economic impact directly affecting businesses including the abili - ty of California businesses to compete with busi - nesses in other states: None. ● Effect on small business: None. The proposed regulations only set standards related to tempo - rary assignments. Accordingly, it has been de - termined that the adoption of the proposed reg - ulations would not affect small businesses in any way.

COST IMPACT ON A REPRESENTATIVE PRIVATE PERSON OR BUSINESS The agency is not aware of any cost impacts that a representative private person or business would nec - essarily incur in reasonable compliance with the pro - posed action since the regulatory change only impacts hearings and appeals within state civil service. RESULTS OF ECONOMIC IMPACT ASSESSMENT Adoption of these regulations will not: 1. Create or eliminate jobs within California. 2. Create new businesses or eliminate existing busi- nesses within California. 3. Affect the expansion of businesses currently do - ing business within California. 4.

Affect worker safety or the state’s environment. The adoption of these regulations, however, will have a positive impact on the general health and wel - fare of California residents in that the benefits of this regulatory action create a fair, equitable, and consis - tent process for the civil service selection process.

CONSIDERATION OF ALTERNATIVES The Board must determine that no reasonable alter - natives it has considered or that have been otherwise identified and brought to the attention of the Board would be more effective in carrying out the purposes for which the instant action is proposed, or would be as effective and less burdensome to affected private persons than the proposed action, or would be more cost–effective to affected private persons and equally effective in implementing the statutory policy or other provision of law.

CONTACT PERSONS Inquiries concerning the proposed regulatory ac - tion, including questions regarding procedure, com - ments, or the substance of the proposal, may be di - rected to: Michelle La Grandeur, Chief Policy Division State Personnel Board 801 Capitol Mall Sacramento, CA 95814 Phone: (916) 651–0924 Email: michelle.lagrandeur@spb.ca.gov The backup contact person for these inquiries is: Carlos Gomez, Analyst Policy Division State Personnel Board 801 Capitol Mall Sacramento, CA 95814 Phone: (916) 651–8350 Email: carlos.gomez@spb.ca.gov Please direct requests for copies of the proposed text of the regulations, the initial statement of reasons, or other information upon which the rulemaking is based to Compliance Review Division Chief, Michelle La Grandeur, at the above address.

AVAILABILITY OF RULEMAKING FILE The Board is maintaining a rulemaking file for the proposed regulatory action, which as of the date of this notice contains the following: 1. A copy of the text of the regulations for which the adoption is proposed in strikeout and underline; 2. A copy of this notice and initial statement of rea- sons for the proposed adoption; and 3. Any factual information upon which the pro - posed rulemaking is based. If written comments, data or other factual infor - mation, studies or reports are received, they will be added to the rulemaking file. The file is available for

CALIFORNIA REGULATORY NOTICE REGISTER 2024, VOLUME NUMBER 23–Z 723 public inspection during normal working hours at the State Personnel Board, 801 Capitol Mall, Sacramen - to, CA 95814. Items 1 through 3 are also available on the Board’s website at www.spb.ca.gov under “What’s New?” Copies may be obtained by contacting the per- son via the address, email, or phone number listed above. AVAILABILITY OF CHANGED OR MODIFIED TEXT After considering all timely and relevant comments received, the Board may adopt the proposed regula - tions substantially as described in this notice.

If the Board makes modifications that are sufficiently related to the originally proposed text, it will make the mod - ified text (with the changes clearly indicated) avail - able to the public for at least 15 days before the Board adopts the regulations as revised. Please send requests for copies of any modified regulations to the atten - tion of the person at the address indicated above. The Board will accept written comments on the modified regulations for 15 days after the date on which they are made available to the public.

AVAILABILITY OF THE FINAL STATEMENT OF REASONS It is anticipated that the proposed regulations will be filed with the Office of Administrative Law and shall include a Final Statement of Reasons. Copies of the Final Statement of Reasons may be obtained from the contact person when it becomes available. AVAILABILITY OF DOCUMENTS ON THE INTERNET Copies of the Notice of Proposed Action, the Initial Statement of Reasons, and the text of the regulations in underline and strikeout can be accessed on the Board’s website at www.spb.ca.gov under “What’s New?” TITLE 4.

SCHOOL FINANCE AUTHORITY CHARTER SCHOOL FACILITY GRANT PROGRAM NOTICE IS HEREBY GIVEN that the California School Finance Authority (Authority), organized pur - suant to Sections 17170 through 17199.6 of the Edu - cation Code, proposes to amend the regulations de - scribed below after considering all comments, objec - tions, and recommendations regarding the proposed action. Any person interested may present written statements or arguments relevant to the proposed ac - tion to the attention of the Contact Person as listed in this Notice no later than Monday, July 22, 2024.

The Authority Board, upon its own motion or at the request of any interested party, may thereafter adopt the pro - posal substantially as described below or may modify such proposals if such modifications are sufficient - ly related to the original text. With the exception of technical or grammatical changes, the full text of any modified proposal will be available for 15 days prior to its adoption from the person(

s) designated in this No - tice as the Contact Person and will be mailed to those persons who submit statements related to this proposal or who have requested notification of any changes to the proposal. PROPOSED REGULATORY ACTION The Authority proposes to amendments to Sec - tions 10170.5 and 10170.6 of Title 4 of the California Code of Regulations (Regulations) as permanent reg - ulations. The Regulations implement the Authority’s responsibilities related to the Charter School Facility Grant Program. AUTHORITY AND REFERENCE Authority:

Section 47614.5 of the Education Code.

Section 47614.5(

m) allows the Authority to adopt reg- ulations in order to administer the Program. Reference: Sections 47614.5 of Education Code. INFORMATIVE DIGEST/POLICY STATEMENT OVERVIEW The California School Finance Authority (Author - ity) is organized and operated pursuant to the Cali - fornia School Finance Authority Act under sections 17170 through 17199.5 of the Education Code. Pursuant to Education Code,

Section 47614.5, the State Legislature directed the Authority to commence administration of the Charter School Facility Grant Program with the 2013–14 fiscal year and to adopt regulations to implement the statute. Effective July 1, 2013, the Authority initiated its administration of the Charter School Facility Grant Program, and pursuant to

Section 47614.5(m), a Certificate of Compliance was approved on August 6, 2014 (OAL Regulatory Action #2014–0625–01C). The Charter School Facility Grant Program (Pro - gram) provides annual grants to offset annual on– going facility costs for charter schools that service a high–percentage of students eligible for free or reduced–price meals (FRPM) or located in a public elementary school boundary serving a similar demo -

CALIFORNIA REGULATORY NOTICE REGISTER 2024, VOLUME NUMBER 23–Z 724 graphic. Funds are made available to Charter Schools through an application and review process.

In order to be eligible for Program grant funds, Ap - plicants are required to meet minimum eligibility re - quirements, which include, but are not limited to, the following: (1) applications are to be submitted by or on behalf of a Charter School; (2) a current charter has been awarded and is in place at the time of the application submission, or in the case of a first year charter, there is evidence that a charter petition has been submitted for approval to the Chartering Author- ity; and (3) either fifty–five percent (55%) or more of the student enrollment at the charter school site must be eligible for free or reduced–price meals (FRPM); or the charter school site for which grant funds are requested must be physically located in the local at - tendance area of a public elementary school that has fifty–five percent (55%) or more of its students eligible for FRPM.

The anticipated benefits of the proposed regulations are the increased general welfare of students and their related communities as these grant funds subsidize fa- cility related costs that would typically be paid out of the charter school’s general funding. The proposed regulations set forth Authority’s poli- cies and procedures for administering the Program as it relates to application and submission dates.

SUMMARY OF PROPOSED REGULATIONS

Section 10170.5, subdivision (a) (1) — These changes add “by 9:00 a.m. on April 10.,” “August 31.” and “and deadlines.” Also, the removal of “in the month of” and “the date five weeks from the date the Application is made available by the Au- thority.” This change was establishing static dates for the initial application to provide consistency as well greater transparency for potential Ap - plicants. The August deadline date was chosen based on feedback from stakeholders. The Au - gust 31 date allows for school staff to return from summer breaks, as well. For understandable rea - sons, this period for communication with school is limited. This date avoids that concern.

Section 10170.5, subdivision (a) (4) — Add “If any of the dates listed in 10170.5(a) (1) and (2) fall on a Saturday or Sunday or a holiday listed in Ed- ucation Code

Section 45203, the new date will be the following business day.” This change was to ensure the opening and/or closing dates were held on business days where staff can assist with is - sues or concerns.

Section 10170.6, subdivision (e) — Remove “July 15” as the deadline for other facility re - lated cost submission and replace with “August 31.” This date was chosen based on feedback from stakeholders. The August 31 date allows for school staff to return from summer breaks as well. For understandable reasons, this period for communication with school is limited. This date avoids that concern. EVALUATION OF INCONSISTENCY AND INCOMPATIBILITY The Authority performed a search in the California Code of Regulations and the proposed regulations are neither inconsistent nor incompatible with existing state regulation.

CITATIONS FOR PROPOSED REGULATIONS MANDATED BY FEDERAL LAWS OR REGULATIONS Not applicable. OTHER MATTERS PRESCRIBED BY STATUTES APPLICABLE TO THE SPECIFIC STATE AGENCY OR TO ANY SPECIFIC REGULATION OR CLASS OF REGULATIONS No other matters prescribed by statute are applica - ble to the Authority or to any specific regulation or class of regulations pursuant to

Section 11346.5(a) (4) of the California Government Code pertaining to the proposed regulations or the Authority. MANDATE ON LOCAL AGENCIES OR SCHOOL DISTRICTS The Authority has determined the proposed regu - lations do not impose a mandate on local agencies or school districts. FISCAL IMPACT The Authority has determined that the Regulations do not impose any additional cost or savings to any state agency, any costs to any local agency or school district requiring reimbursement under

Part 7 (com - mencing with

Section 17500) of Division 4 of Title 2 of the Government Code, any other non–discretionary cost or savings to any local agency, or any cost or sav- ings in federal funding to the State. On an annual basis, the State Legislature will is - sue appropriations for purposes of the Program grant funds based on availability of funding and demand for the Program. There will be no cost or savings to any State Agency pursuant to Government Code Sections 11346.1(

b) or 11346.5(a) (6).

CALIFORNIA REGULATORY NOTICE REGISTER 2024, VOLUME NUMBER 23–Z 725 INITIAL DETERMINATION REGARDING ANY SIGNIFICANT, STATEWIDE ADVERSE ECONOMIC IMPACT DIRECTLY AFFECTING BUSINESS The Authority has made an initial determination that the proposed regulations will not have any signif- icant, statewide adverse economic impact directly af - fecting businesses, including the ability of California businesses to compete with businesses in other states. EFFECT ON SMALL BUSINESSES The Authority has determined that the adoption of the proposed regulations will not affect small business.

The Program is a voluntary grant program available to charter schools to assist in the costs of charter school facilities. RESULTS OF ECONOMIC I M PACT A NA LYSIS Assessment of Effect on Jobs and Business Expansion, Elimination or Creation Adoption of these regulations will not create or eliminate jobs within California, nor create new busi - nesses or eliminate existing businesses within Cali - fornia. The proposed regulations could likely impact the expansion of businesses currently doing business within the State of California.

The purpose of the pro- posed regulations is to set forth administrative criteria and requirements for administering a Grant program that will disburse funds to existing charter schools in need across the State of California for per pupil facil - ities funding. Assessment of Effect to the Health and Welfare of California Residents, Worker Safety, and the State’s Environment The purpose of the program and proposed regu - lations is to set forth administrative criteria and re - quirements for administering this grant program.

The Authority do not expect any anticipated benefits to worker safety or the State’s environment. However, while each funding is different, funding for facilities may allow schools to free up assets potentially allow - ing actions resulting in improved worker safety. Addi- tionally, there may be a positive effect on the welfare of some California residents. As the intent of the pro - gram is to enhance financings related to charter school facilities, the Charter FinE Program and its proposed regulations have the potential to directly benefit the welfare of students and their related communities.

COST IMPACTS ON A REPRESENTATIVE PRIVATE PERSON OR BUSINESS The Authority is not aware of any costs impacts that a representative private person or business would necessarily incur in reasonable compliance with the proposed action. COST IMPACT ON HOUSING The proposed regulations will not have any effect on housing costs. REASONABLE ALTERNATIVES In accordance with Government Code

section 11346.5(a) (13), the Authority must determine that no reasonable alternative to the regulations considered by the Authority or that has otherwise been identified and brought to the attention of the Authority, would be more effective in carrying out the purpose for which the regulations are proposed or would be as effective and less burdensome to affected private persons than the regulations, or would be more cost–effective to af- fected private persons and equally effective in imple - menting the statutory policy or other provision of law.

The Authority invites interested persons to present statements with respect to alternatives to the proposed regulations during the written comment period. AGENCY CONTACT PERSONS Written comments, inquiries, and any questions regarding the substance of the proposed regulations shall be submitted or directed to: Katrina Johantgen, Executive Director, California School Finance Authority at: 300 S.

Spring Street, Suite 8500 Los Angeles, CA 90013 (213) 620–4608 or 901 P Street, Third Floor, Suite B Sacramento, CA 95814 (916) 651–7710 or kjohantgen@treasurer.ca.gov or csfa@treasurer.ca.gov The following person is designated as a backup Contact Person for inquiries only regarding the pro - posed regulations:

CALIFORNIA REGULATORY NOTICE REGISTER 2024, VOLUME NUMBER 23–Z 726 Ryan Storey 300 S. Spring Street, Suite 8500 Los Angeles, CA 90013 (213) 620–6360 or rstorey@treasurer.ca.gov WRITTEN COMMENT PERIOD Any interested person, or their authorized repre - sentative, may submit written comments relevant to the proposed regulations to the Authority. The written comment period on the regulations will end on Mon - day, July 22, 2024. All comments to be considered by the Authority must be submitted in writing to the Agency Contact Person identified in this Notice by that time.

In the event that changes are made to the proposed regulations during the written comment pe - riod, the Authority will also accept additional written comments limited to any changed or modified regula- tions for 15 calendar days after the date on which such regulations, as changed or modified, are made avail - able to the public pursuant to Title 1,

Chapter 1, Sec - tion 44 of the California Code of Regulations. Such additional written comments should be addressed to the Agency Contact Person identified in this Notice. AVAILABILITY OF INITIAL STATEMENT OF REASONS, RULEMAKING FILE AND EXPRESS TERMS OF PROPOSED REGULATIONS The Authority has established a rulemaking file for this regulatory action, which contains those items re - quired by law. The file is available for inspection at the Authority’s office at 901 P Street, Third Floor, Suite B, Sacramento, California, during normal business hours.

As of the date this Notice is published in the Notice Register, the rulemaking file consists of this Notice, the Initial Statement of Reasons, and the proposed text of the Regulations. Copies of these items are available upon request, from the Agency Contact Person des - ignated in this Notice. The Sacramento address will also be the location for inspection of the rulemaking file and any other public records, including reports, documentation and other materials related to this pro - posed regulatory action.

In addition, the rulemaking file, including the Initial Statement of Reasons and the proposed text, may be viewed on the Authority’s Web site at www.treasurer.ca.gov/csfa. PUBLIC HEARING No public hearing regarding the proposed regula - tions has been scheduled. Anyone wishing a public hearing must submit a request in writing, pursuant to

Section 11346.8 of the Government Code, to the Au - thority at least 15 days before the end of the written comment period. Such request should be addressed to the Agency Contact Person identified in this Notice and should specify the regulations for which the hear- ing is being requested. 15–DAY AVAILABILITY OF CHANGED OR MODIFIED TEXT After the written comment period ends and follow - ing a public hearing, if any is requested, the Author - ity may adopt the proposed regulations substantially as described in this Notice, without further notice.

If the Authority makes modifications that are sufficient - ly related to the originally proposed text, it will make the modified text (with the changes clearly indicated) available to the public (including through the Author - ity’s website described above) for at least fifteen (15) calendar days before the Authority adopts the pro - posed regulations, as modified. Inquiries about and requests for written copies of any changed or modified regulations should be addressed to the Agency Con - tact Person identified in this Notice.

AVAILABILITY OF FINAL STATEMENT OF REASONS The Authority is required to prepare a Final State - ment of Reasons pursuant to Government Code sec - tion 11346.9. Once the Authority has prepared a Final Statement of Reasons, a copy will be made available to anyone who requests a copy and will be available on the Authority’s website described above. Written requests for copies should be addressed to the Agency Contact Person identified in this Notice. TITLE 4.

TAX CREDIT ALLOCATION COMMITTEE The California Tax Credit Allocation Committee (CTCAC) proposes to adopt the regulations described below after considering all comments, objections, and recommendations regarding the proposed action. WRITTEN COMMENT PERIOD Any interested person, or his or her authorized rep - resentative, may submit written comments relevant to the proposed regulatory action to anthony.zeto@ treasurer.ca.gov and ricki.hammett@treasurer.ca.gov. Comments may also be submitted via mail to:

CALIFORNIA REGULATORY NOTICE REGISTER 2024, VOLUME NUMBER 23–Z 727 California Tax Credit Allocation Committee Attention: Anthony Zeto/Ricki Hammett 901 P Street, Room 213A Sacramento, CA 95814 The written comment period closes on July 22, 2024. To ensure CTCAC will consider your comment it must be received by July 22, 2024. PUBLIC HEARING CTCAC does not intend to conduct a Public Hearing on the matter of these regulations, unless requested. Any interested person may submit a written request for a public hearing no later than 15 days prior to the close of the written comment period. AUTHORITY

Section 17053.91 and 23691 of the Revenue and Tax- ation Code authorizes CTCAC to adopt regulations re- lating to an allocation system to administer the alloca- tion of State Historic Rehabilitation Tax Credits. REFERENCE

Section 17053.91 and 23691, Revenue and Taxation Code (RTC). INFORMATIVE DIGEST

Summary of Existing Laws and Effect of the Proposed Action CTCAC was statutorily created by

Chapter 658, Statutes of 1987, in response to the 1986 Federal Tax Reform Act. The Legislature adopted Senate Bill Number 451 (Chapter 703, Statutes of 2019), as amended by As - sembly Bill Number 150 (Chapter 82, Statutes of 2021), adding Sections 17053.91 and 23691 to the Rev- enue and Taxation Code. This allows a taxpayer that receives a tax credit allocation to claim credit against those taxes for each taxable year beginning on or after January 1, 2021, and before January 1, 2027, for the rehabilitation of certified historic structures.

The leg - islature finds that California’s historic buildings are an important asset to communities throughout the state, and the preservation and restoration of these buildings is vital to economic development, enhancing civic pride, increasing tourism, and maintaining vibrant and inclusive neighborhoods. There shall also be allowed a credit for qualified re- habilitation expenditures for a qualified residence de - termined by CTCAC and the Office of Historic Preser- vation (OHP) to rehabilitate the historic character and improve the integrity of the residence in the year of completion.

Revenue and Tax Code sections 17053.91 and 23691 authorize OHP to adopt regulations to implement the requirements of these sections within the bill, establish a written application in coordination with CTCAC, es- tablish a process to determine that an applicant meets the requirements of these sections and to ensure that the rehabilitation project meets the Secretary of the Interior’s Standards for Rehabilitation, and establish a process to approve or reject all historic tax credit allocation applications.

Anticipated Benefits of the Proposed Regulations The broad objective of the legislation is to leverage dollars in private investment enabled by allocation of the credits, create construction jobs as a result of this investment, create long–term jobs associated with the use of rehabilitated historic buildings, and stimulate economic activity associated with the rehabilitation of historic buildings facilitated by the credits.

When used in conjunction with the federal historic preservation tax credits, state historic rehabilitation tax credits prove an important financial incentive for reinvestment in the historic cores of communities. Historic preservation tax incentives generate jobs, enhance property values, create affordable housing, and augment revenues for federal, state, and local governments.

States that have partnered a state incentive with the federal Historic Preservation Tax Incentives pro - gram have reaped significant economic development benefits, including construction and building industry job creation, increased state tax revenues through in - creased employment and wages, increased local prop- erty tax revenues through increased property values, and increase local tax revenues through state taxes and heritage tourism.

The specific benefits from the legislation are a 20% or a 25% personal income tax or corporate tax cred - it for the certified rehabilitation of a certified historic structure or a qualified residence. Evaluation of Inconsistency/Incompatibility with Existing State Regulations The Committee has determined that the proposed regulations are not inconsistent or incompatible with existing state regulations. Application for tax credit allocations is a nonmandatory activity and these reg - ulations ensure a fair and efficient process for alloca - tions as to both applicants and the Committee.

The proposed regulations are compatible with OHP’s regulations, Title 14, California Code of Reg - ulations, Division 3,

Chapter 11.5 California Register of Historical Resources: Adoption of New Subchapter 1,

Section 4859.01–4859.06. Per RTC

Section 17053.91 and 23691. OHP is required to develop regulations and work with CTCAC to implement the program, adopt regulations, establish a written application and deter -

CALIFORNIA REGULATORY NOTICE REGISTER 2024, VOLUME NUMBER 23–Z 728 mine project requirements to ensure that the rehabili - tation project meets the Standards for Rehabilitation. OHP and CTCAC developed a joint application which will be reviewed by both OHP and CTCAC and while OHP and CTCAC regulations are compatible there are differences in the

definitions that are listed between OHP and CTCAC. Though they have the same meaning, different statutes may be referenced. OHP also must determine if a structure is a certified historic structure and OHP’s regulations explain what the requirements are. DISCLOSURES REGARDING THE PROPOSED ACTION CTCAC has made the following initial determinations: Mandate on local agencies or school districts: None. Cost or savings to any state agency: None. Cost to any local agency or school district requiring reimbursement pursuant to Gov. Code

sec. 17500 et seq: None. Other nondiscretionary cost or savings imposed on local agencies: None. Cost or savings in federal funding to the State: None.

Pursuant to the State Administrative Manual Sec - tion 6614, an Economic and Fiscal Impact Statement (Form 399) has been completed and is part of the rulemaking record.” Significant statewide adverse economic impact directly affecting business, including the ability of California businesses to compete with businesses in other states As a voluntary program offering state tax credits for the rehabilitation of certified historic structures, the proposed action will have no adverse economic impact directly affecting business.

Because the pro - gram is voluntary, businesses and individuals are not required to comply with the program regulations or requirements or incur any costs if they do not submit an application applying for the tax credit program. Applicants for the state tax credits described in the regulations may incur costs including but not limited to application fees, consultant and project team fees, project and/or development reports, application prepa- ration including photograph compilation, drawing preparation, and reproduction.

SB 451 cites that OHP and CTCAC may charge a reasonable fee in an amount that does not exceed the reasonable costs incurred by fulfilling its responsibil - ities under SB 451. OHP Fees include the following: Qualified Residence fees are set at a flat rate of $900. $450 is paid with the Initial Project Application and $450 is paid with the Completed Project Application. All income–producing properties incur a fee of 1% of the Completed Qualified Rehabilitation Expense (QRE) up to the first $125,000. An additional 0.15% for the QRE expenses above $125,000 is added to the 1% base fee. Fees are capped at $6000.

The Initial Project Application fee is one half of the estimated QRE cost declared on the Initial Project Application. The Completed Project Application fee is the bal - ance of the final fee calculated from the final total QRE cost declared on the form minus the Initial Ap - plication fee. CTCAC Fees include the following: A processing fee in the amount of $500 for Quali - fied Residence projects and $1,000 for all other proj - ects submitted when the Initial Project Application is forwarded to the CTCAC.

An administrative fee in the amount of 2% of the tax allocation credit due within 10 calendar days of the allocation award at project completion. Significant effect on housing costs: The proposed changes will ensure the award of allocation for the re- habilitation of qualified residences. Cost impacts on a representative private person or business: CTCAC is not aware of any cost impacts that a representative private person or business would necessarily incur in reasonable compliance with the proposed regulations.

Results of the Economic Impact Analysis/Assessment Program regulations will require an applicant to submit an application for approval, establish the eco - nomic benefits of the project and pay a fee that has been approved by the OHP and CTCAC. There will be some cost involved in applying for and receiving the credits, including fees. The fees are considered reasonable to support the staff time to re - view applications, as there are no administrative funds available for the allocation of this credit. Any costs should be easily offset by the state tax credit issued to lower the applicant’s state tax obligation.

Beyond the fees to apply for the program, these regulations do not create any costs or benefits. Based on the legislation that created the tax credit program, however, OHP and CTCAC concludes that it is: 1. Unlikely that the program will eliminate any jobs. 2. Likely that the program will create an unknown number of jobs. 3. Likely that the program may create an unknown number of new businesses to cater to the creation of a new state tax credit. 4. Unlikely that the program will eliminate any ex - isting businesses. 5.

Likely that the program will affect the expan - sion of businesses currently doing business in the state.

CALIFORNIA REGULATORY NOTICE REGISTER 2024, VOLUME NUMBER 23–Z 729 6. Likely that the public and private benefits of the program will include long term jobs associated with the use of rehabilitated historic buildings and the overall economic activity associated with the rehabilitation of historic buildings facilitated by the state credits, and a 20% or 25% state tax credit for the certified rehabilitation of a certified historic structure.

Despite the fact that these regulations do not create any economic impacts beyond the fees being charged to apply for the tax credits, the specific goals, pur - poses, and objectives that the tax credits authorized by this legislation are anticipated to achieve over the five–year term of the credit are as follows: ● Leveraging two hundred eighty–seven million ($287,000,000) in private investment. ● Creating 1,300 construction jobs and an addition- al 2,140 ongoing jobs. ● Creating eight hundred million dollars ($800,000,000) in economic activity. ● Reusing existing culturally contributing build - ings that lower the cost of construction compared to new construction and lower construction– related greenhouse gas production associat - ed with procurement and transportation of new materials.

Returning many underused or vacant properties to a useful life through the repair and restoration of vintage materials and features that were the product of now rare skilled trades brought by diverse cultures and which contributed to California’s own unique cul- ture and community fabric. The proposed regulations are not expected to affect worker safety or the state’s environment. Small Business Determination CTCAC has determined there is no cost impact on small businesses. Federal tax credit program history has shown that small businesses benefit by the tax credit program.

Many of the tax credits go to enti - ties that utilize small businesses when they purchase goods and services or lease space to small businesses. The proposed regulation may also positively affect small businesses in the rehabilitation of a certified his- toric structure under their ownership. Small business owners of certified historic structures may benefit by an eight million dollar ($8,000,000) set aside for tax - payers with qualified rehabilitation expenditures of less than one million dollars ($1,000,000). CONSIDERATION OF ALTERNATIVES In accordance with Government Code

section 11346.5, subdivision (a) (13), CTCAC must determine that no reasonable alternative it considered or that has otherwise been identified and brought to its attention would be more effective in carrying out the purpose for which the action is proposed, as effective and less burdensome to affected private persons than the pro - posed action, or more cost–effective to affected pri - vate persons and equally effective in implementing the statutory policy or other provision of law.

CTCAC invites interested persons to present state - ments or arguments with respect to alternatives to the proposed regulations during the written comment period.

CONTACT PERSONS Inquiries concerning the proposed rulemaking ac - tion may be directed to: Anthony Zeto California Tax Credit Allocation Committee 901 P Street, Suite 213A Sacramento, CA 95814 916–654–6340 anthony.zeto@treasurer.ca.gov or Ricki Hammett California Tax Credit Allocation Committee 901 P Street, Suite 213A Sacramento, CA 95814 916–653–1054 ricki.hammett@treasurer.ca.gov AVAILABILITY OF STATEMENT OF REASONS, TEXT OF PROPOSED REGULATIONS, AND RULEMAKING FILE CTCAC will make the entire rulemaking file available for inspection and copying throughout the rulemaking process at its office at the above address and online at https://www.treasurer.ca.gov/ctcac/ programreg/regulations.asp.

As of the date this notice is published in the Notice Register, the rulemaking file consists of the Notice of Proposed Action, the pro- posed text of the regulations, the Initial Statement of Reasons, and the STD. 399. Please direct requests to inspect or copy the rulemaking file to the contact per - son(

s) listed above. AVAILABILITY OF CHANGED OR MODIFIED TEXT After considering all timely and relevant comments received, CTCAC may adopt the proposed regulations substantially as described in this notice. If CTCAC makes modifications that are sufficiently related to the originally proposed text, it will make the modified text (with the changes clearly indicated) available to

CALIFORNIA REGULATORY NOTICE REGISTER 2024, VOLUME NUMBER 23–Z 730 the public for at least 15 days before adopting the reg- ulations as revised. Please direct requests for copies of any modified regulations to the contact person(

s) listed above. If substantive modifications are made, CTCAC will accept written comments on the modi - fied regulations for the duration of the period of public availability. AVAILABILITY OF THE FINAL STATEMENT OF REASONS Upon its completion, CTCAC will make copies of the Final Statement of Reasons available. Please di - rect requests for copies to the contact person(

s) listed above. AVAILABILITY OF DOCUMENTS ON THE INTERNET Copies of the Notice of Proposed Action, the Initial Statement of Reasons, and the text of the regulations with modifications highlighted, as well as the Final Statement of Reasons, when completed, and modi - fied text, if any, may be accessed via CTCAC’s web - site at https://www.treasurer.ca.gov/ctcac/programreg/ regulations.asp. TITLE 8.

DIVISION OF WORKERS’ COMPENSATION WORKERS’ COMPENSATION — UTILIZATION REVIEW AMEND, ADOPT, OR REPEAL SECTIONS 9767.6, 9781, 9785, 9785.6, 9786, 9792.6, 9792.6.1, 9792.7, 9792.7.1, 9792.8, 9792.9, 9792.9.1, 9792.9.2, 9792.9.3, 9792.9.4, 9792.9.5, 9792.9.6, 9792.9.7, 9792.9.8, 9792.9.10.1, 9792.10.2, 9792.10.3, 9792.10.4, 9792.10.5, 9792.10.6, 9792.10.8, 9792.11, 9792.12, 9792.13, AND 9792.15, 9792.27.1, A N D 9792.27.17 NOTICE IS HEREBY GIVEN that the Adminis - trative Director of the Division of Workers’ Compen - sation, Department of Industrial Relations (hereinafter “Administrative Director”), pursuant to the authority vested in him by Labor Code sections 59, 133, 4603.5, 4610, 5307.3, and 5307.27, proposes to amend sections 9767.6 through 9727.27.17, to establish and implement legislative changes under Senate Bill 1160 relating to utilization review (“UR”) and related rules.

PROPOSED REGULATORY ACTION The Administrative Director proposes to amend, adopt, or delete, as specified, the following regulations into

Article 3.5,

Article 5,

Article 5.5.1, and

Article 5.5.2 of Division 1,

Chapter 4.5, Subchapter 1, of title 8, California Code of Regulations:

Article 3.5 Medical Provider Network Amend

section 9767.6 Treatment and Change of Physicians within Medical Provider Network (MPN)

Article 5 Predesignation of Personal Physician; Request for Change of Physician; Reporting Duties of the Primary Treating Physician; Petition for Change of Primary Treating Physician Amend

section 9781 Employees Request for Change of Physician Amend

section 9785 Reporting Duties of the Prima- ry Treating Physician Adopt

section 9785.6 DWC Form PR–1: “Treating Physician’s Report” Mandatory for Services On or Af- ter 1/1/19 Amend

section 9786 Petition for Change of Primary Treating Physician

Article 5.5.1 Utilization Review Standards Delete

section 9792.6 Utilization Review Stan - dards—Definitions — For Utilization Review Deci - sions Issued Prior to July 1, 2013 for Injuries Occur - ring Prior to January 1, 2013 Amend

section 9792.6.1 Utilization Review Stan - dards—Definitions — On or After January 1, 2013 Amend

section 9792.7 Utilization Review Standards—Applicability Adopt

section 9792.7.1 DWC Form UR–01: “Appli- cation for Approval as Utilization Review Plan” Amend

section 9792.8 Utilization Review Stan - dards — Medically–Based Criteria Delete

section 9792.9 Utilization Review Standards — Timeframe, Procedures and Notice Content — For Injuries Occurring Prior to January 1, 2013, Where the Request for Authorization is Received Prior to July 1, 2013 Amend

section 9792.9.1 Utilization Review Stan - dards — Timeframe, Procedures and Notice — On or After July 1, 2013 Adopt

section 9792.9.2 Utilization Review — Dis - pute of Liability; Deferral Adopt

section 9792.9.3 Utilization Review — Timeframes Adopt

section 9792.9.4 Utilization Review — Deci- sions to Approve a Request for Authorization Adopt

section 9792.9.5 Utilization Review — Deci- sions to Modify or Deny a Request for Authorization Adopt

section 9792.9.6 Utilization Review — Ex - tension of Timeframe for Decision Adopt

section 9792.9.7 Utilization Review — Med- ical Treatment — First 30 Days of the Date of Injury

CALIFORNIA REGULATORY NOTICE REGISTER 2024, VOLUME NUMBER 23–Z 731 Adopt

section 9792.9.8 Utilization Review — MTUS Drug Formulary Amend

section 9792.10.1 Utilization Review — Dispute Resolution — On or After January 1, 2013 Amend

section 9792.10.2 Application for Indepen - dent Medical Review, DWC Form IMR Amend

section 9792.10.3 Independent Medical Re- view — Initial Review of Application Amend

section 9792.10.4 9792.10.4. Independent Medical Review — Assignment and Notification Amend

section 9792.10.5 Independent Medical Re- view — Medical Records Amend

section 9792.10.6 Independent Medical Re- view — Standards and Timeframes Amend

section 9792.10.8 Independent Medical Re- view — Payment for Review Amend

section 9792.11 Investigation Procedures: Labor Code § 4610 Utilization Review Violations Amend

section 9792.12 Administrative Penal - ty

Schedule for Utilization Review and Independent Medical Review Violations Amend

section 9792.13 Assessment of Administra- tive Penalties — Penalty Adjustment Factors Amend

section 9792.15 Administrative Penalties Pursuant to Labor Code §§4610, 4610.5, and 4610.6 — Order to Show Cause, Notice of Hearing, Determi- nation and Order, and Review Procedure

Article 5.5.2 Medical Treatment Utilization

Schedule Amend 9792.27.1 Medical Treatment Utilization

Schedule (MTUS) Drug Formulary —

Definitions Amend

section 9792.27.17 Formulary — Dispute Resolution TIME AND PLACE OF PUBLIC HEARING A public hearing has been scheduled to permit all interested persons the opportunity to present state - ments or arguments, oral or in writing, with respect to the proposed regulatory action, as follows: Date: Thursday, July 25, 2024 Time: 11:00 a.m.–5:00 p.m. Place: Elihu Harris State Office Building — Auditorium 1515 Clay Street Oakland, CA 94612 The State Office Building and its Auditorium are accessible to persons with mobility impairments.

Al - ternate formats, assistive listening systems, sign lan - guage interpreters, or other type of reasonable accom- modation to facilitate effective communication for persons with disabilities, are available upon request. Please contact the Statewide Disability Accommoda - tion Coordinator, Maureen Gray, at 1–866–681–1459 (toll free), or through the California Relay Service by dialing 711 or 1–800–735–2929 (TTY/English) or 1–800–855–3000 (TTY/Spanish) as soon as possible to request assistance.

Public comment will begin promptly at 11:00 a.m. and will conclude when the last speaker has finished his or her presentation or at 5:00 p.m., whichever is earlier. If public comment concludes before the lunch recess, no afternoon session will be held. The Administrative Director requests, but does not require, that any person who makes oral comments at the hearing also provide a written copy of their com - ments. Equal weight will be accorded to oral com - ments and written materials.

WRITTEN COMMENT PERIOD Any interested person, or his or her authorized rep - resentative, may submit written comments relevant to the proposed regulatory action to the Department of Industrial Relations, Division of Workers’ Compensa- tion. The written comment period closes at the end of the day on Thursday, July 25, 2024. The Division of Workers’ Compensation (Division) will consider only comments received at the Division by that time. Equal weight will be accorded to oral comments presented at the hearing and written materials.

Submit written comments concerning the proposed regulations prior to the close of the public comment period to: Maureen Gray Regulations Coordinator Division of Workers’ Compensation, Legal Unit P.O. Box 420603 San Francisco, CA 94142 Written comments may be submitted by facsimile transmission (FAX), addressed to the above–named contact person at (510) 286–0687. Written comments may also be sent electronically (via email) using the following email address: dwcrules@dir.ca.gov. All written comments must be received by the reg - ulations coordinator by the end of the day on Thurs- day, July 25, 2024.

AUTHORITY AND REFERENCE The Administrative Director is undertaking this regulatory action pursuant to the authority vested in him by Labor Code sections 59, 133, 4603.5, 4610, 4616, 5307.3, and 5307.27. Reference is to Labor Code sections 4600, 4600.4, 4601, 4603, 4603.2, 4604.5, 4610, 4610.5, 4610.6, and 5307.27.

CALIFORNIA REGULATORY NOTICE REGISTER 2024, VOLUME NUMBER 23–Z 732 INFORMATIVE DIGEST/POLICY STATEMENT OVERVIEW Existing law establishes a workers’ compensation system, administered by the Administrative Director of the Division of Workers’ Compensation (“DWC”), to compensate an employee for injuries sustained in the course of their employment. Labor Code

section 4600 requires an employer to provide medical, surgi - cal, chiropractic, acupuncture, and hospital treatment, including nursing, medicines, medical and surgical supplies, crutches, and apparatus, including orthotic and prosthetic devices and services, that is reasonably required to cure or relieve the injured worker from the effects of his or her injury. Existing law further de - fines medical treatment reasonably required to cure or relieve the injured worker from the effects of the work injury as meaning treatment based upon the guidelines adopted by the Administrative Director under Labor Code

section 5307.27, i.e., the medical treatment utili- zation

schedule (“MTUS”). Prior to January 1, 2018, Labor Code

section 4610 required employers to establish a utilization review (“UR”) process either directly or through its insurer (or an entity with which an employer or insurer con - tracted with for these services) to be governed by writ- ten policies and procedures designed to ensure that decisions were consistent with the MTUS.

This UR process required treating physicians to submit their treatment recommendations (prospectively, concur - rently, or retrospectively) along with supporting docu- mentation to the claims administrator who would then review the recommendations to determine medical necessity according to rules adopted by the Admin - istrative Director (“AD”) of the DWC.

Except under very specific circumstances or unless they fell within a claims administrator’s own prior authorization list, treatment requests were generally required to be sub - mitted prospectively (i.e., prior to treatment) for ap - proval or authorization, or else risk non–payment if the treatment was later determined by UR to have not been medically necessary. This process was tweaked under AB 1124 (Stat - utes 2015,

Chapter 525), which amended Labor Code

section 5307.27 to require the Administrative Direc - tor to adopt and incorporate an evidence–based drug formulary (Drug Formulary) into the MTUS by July 1, 2017. Generally, under the Drug Formulary, drugs classified as exempt can be dispensed as prescribed without undergoing prospective review so long as they are prescribed in accordance with the medical treat - ment utilization schedule. Unlisted drugs or drugs classified as non–exempt are still subject to the gen - eral rule requiring authorization via prospective UR.

The legislation’s aim was to speed up delivery of med- ications proven to be appropriate and effective. Claims Administrators were still allowed to perform retro - spective UR on exempt drugs for which payment may be withheld if determined to have been not medically necessary, but they cannot withhold the medication pending prospective UR if the drug was exempt on the Drug Formulary. Senate Bill 1160 (Statutes 2016,

Chapter 868) (“SB 1160”), effective January 1, 2018, amended Labor Code

section 4610 to exempt from prospective review treat- ment rendered within thirty days of the initial date of injury (unless an exception applied) so long as the treatment was rendered by an appropriate physician, and the physician complied with specified reporting and billing requirements. This “30–day exemption” rule would apply to exempt drugs (but not non– exempt) on the formulary as well. Claims administra - tors could still perform retrospective UR but solely for the purpose of determining if the treatment was medically necessary.

If such review reflected that the treatment was not medically necessary, a number of remedies other than withholding payment becomes available to the claims administrator. A retrospective review showing that the rendered treatment was not medically necessary would con - stitute good cause allowing the claims administrator to petition for a change of physician and could serve as grounds for termination of the physician from its medical provider network or health care organization.

Further, if a physician was found to have a pattern and practice of rendering treatment under the 30–day ex - emption period that was inconsistent with the MTUS, a claims administrator, after appropriate notice, could prohibit the physician from rendering treatment under the 30–day exemption period for any employee en - tirely. Additionally, for the lesser offense of failing to submit the report required under Labor Code

section 6409 and a complete request for authorization, an em- ployer could remove the physician’s ability to provide further exempt treatment to the particular employee. SB 1160 also imposed a faster UR timeframe for (non–exempt) formulary medications than for other treatment requests.

Instead of allowing for an exten - sion of time (of up to fourteen days) where additional information or an additional consultation or examina - tion is required as is generally the case for prospec - tive treatment requests, a UR decision in response to a request for a formulary drug is required to be com - pleted within five normal business days from receipt of the request.

This expedited timeframe also applies through the UR appeals process: for formulary dis - putes, an injured worker has 10 days from service of the adverse UR decision letter to submit an applica - tion for independent medical review (“IMR”), and the IMR organization has 5 working days from receipt of the IMR application and supporting documentation to issue a final determination.

CALIFORNIA REGULATORY NOTICE REGISTER 2024, VOLUME NUMBER 23–Z 733 SB 1160 further purported to improve oversight of UR companies by authorizing the DWC to have ap - proval authority over UR plans and by requiring UR entities performing modifications or denials of treat - ment requests to obtain accreditation with an inde - pendent, nonprofit organization. The legislature desig- nated Utilization Review Accreditation Commission (URAC) as the accrediting organization until or un - less further rules changed such designation.

The regulations proposed in this notice of rulemak - ing are intended to cement, implement, and enforce the legislative mandates in SB 1160 with the aim of expediting treatment to injured workers; improving oversight of UR plan entities; and supporting the use of industry best practices. Additionally, the DWC has taken this opportunity to make changes to some ex - isting regulations to improve or fix issues related to medical treatment that have been problematic in the workers’ compensation system.

Significantly, this in - cludes the addition of a physician reporting form, the PR–1, which combines the PR–2 (physician progress report) and the RFA (request for authorization) form, and adds information fields for the reporting of occur- rences currently required by law of a primary treating physician. Further, references in the regulations to the word “delay” have been deleted in the proposed rules to comply with the legislative deletion of that word in Labor Code

section 4610 and related sections. A closer look at the changes in the proposed rulemaking by subject matter follow: Improvements to care coordination and changes to medical treatment processes ● When an employee is required to obtain health care for an occupational injury through a medical provider network (MPN), the employer or insur - er is obligated to take specific actions to assist the injured employee in obtaining medical care.

This includes arranging for an initial medical evalu - ation with an MPN physician, and notifying the injured employee of his/her right to be treated by any physician of choice within the MPN after the initial visit. The same types of obligations ap- ply for when treatment is obtained outside of the MPN system. The proposed regulations add to the employer or in- surer’s obligations to better coordinate care by requir- ing delivery of all relevant medical records relating to the claim to the initially selected physician within 20 days of notice of the employee’s selected physician.

The employer or insurer must advise any subsequently selected physician, whether in an MPN or not, that any medical records deemed relevant by the provider shall be delivered upon request. Additionally, all selected physicians must be advised by the employer or insurer of the relevant MPN identification number if applica - ble, name, telephone number, fax number, email ad - dress, and mailing address of the person or entity to whom the request for authorization and bills should be sent.

For treatment outside of an MPN, if applicable, the claims administrator must also provide the phy - sician with a list of medical treatment services that can be rendered without the submission of a request for authorization. (See proposed

section 9767.6(

f) and 9781(d).) ● Existing law requires each new primary treating physician to file a report following the initial ex - amination entitled, “Doctor’s First Report of Oc - cupational Injury or Illness” with the employer or employer’s insurer and with the Division of Workers’ Compensation within 5 days of the ini- tial examination in the manner prescribed by the Administrative Director. The proposed regulation clarifies that only the ini - tial primary treating physician (PTP), which may in - clude physicians rendering first aid, are required to file such report. (See proposed

section 9785(e).) ● Existing law sets forth a number of circumstanc - es for which a PTP is required to issue a report within 20 days to the claims administrator. A re - port must be issued if the employee’s condition undergoes a significant change; if there is any sig- nificant change in the treatment plan; if the em - ployee may return to modified or regular work; if the employee’s condition requires him or her to leave work or requires changes in working condi- tions; if the employee is released from care; etc.

When a report is required, except for a response to a request for information, the PTP is required to make such report on a Primary Treating Physi- cian’s Progress Report (Form PR–2) or in narra - tive form as prescribed. Alternatively, by mutual agreement between the claims administrator and physician, the PTP may make reports in any oth - er manner and form. If a physician needs to make a treatment request, the physician must, in addi - tion to the Form PR–2, file a Request for Authori- zation on the DWC Form RFA in the manner pre- scribed by the Administrative Director.

These regulations propose a new form, the PR–1, to be used whenever one of the conditions prompting the PTP to file a report within 20 days occurs and for requesting treatment. Essentially, the new PR–1 form combines the PR–2 and the DWC Form RFA. This form shall replace the need for both the PR–2 and DWC Form RFA, and be required after six months following the effective date of these regulations. However, a PTP will still have the option to file a narrative report to fulfill the reporting requirements as prescribed.

The new PR–1 form retains many of the same attributes of the PR–2 and DWC Form RFA but will add fields to facilitate efficient and effective treatment. It will allow

CALIFORNIA REGULATORY NOTICE REGISTER 2024, VOLUME NUMBER 23–Z 734 the physician to indicate the purpose of the form and then only fill out those relevant sections. The first sec- tion of the form will require basic information which can be saved and used again when the need for another report arises. If the purpose of the report is to request treatment, the physician will have the opportunity to indicate the specific MTUS/ACOEM guideline that supports the treatment request. (See proposed sections 9785(

g) and (h); and 9785.6.) ● Under existing law, when a treating physician submits a request for authorization of treatment to a claims administrator, unless the request is exempt from prospective utilization review (UR), the claims administrator may approve the request or alternatively put the request through UR to de- termine whether the requested treatment is med - ically necessary.

Existing law requires that a re - quest for authorization be set forth on an RFA form (or as otherwise allowed), signed by the requesting physician, and sent to the claims ad - ministrator’s designated address, email address, or fax number. In order for an RFA to be “com - plete,” the RFA must identify the employee and provider, specifically identify the recommended treatment(s), and be accompanied by supporting documentation. The proposed regulations amend the definition of a “complete RFA” to include the requirement that the treatment recommendations be included in the specif - ically designated

section of the form; that the docu - mentation accompanying or substantiating the request have issued or been created no earlier than 30 days pri- or to the submission of the RFA; and that the request be signed by the requesting physician. The regulations also propose that electronic submission of an RFA be sent through the use of a secure, electronic email sys - tem. (See proposed

section 9792.6.1(u).) The 30–day exemption to prospective UR ● Existing law requires employers to pay for nec - essary medical treatment arising from an occu - pational injury. In order to ensure the necessity of recommended medical treatment, existing law allows an employer or claims administrator to re- view treatment requests through a process called utilization review (“UR”).

For payment of medi - cal treatment to be guaranteed, a treating physi - cian must obtain authorization for the treatment by submitting a request for authorization of treat- ment (“RFA”) prior to rendering the treatment. ● Existing law enacted under SB 1160, effective January 1, 2018, barring a dispute of liability and unless expressly excluded, exempts medical treat- ment rendered within 30 days of the date of inju - ry from prospective utilization review (“30–day exemption”) if addressed by the Medical Treat - ment Utilization

Schedule (MTUS) and if proper reporting requirements are met (i.e., timely sub - mission of the report required under Labor Code

section 6409 and a complete RFA) by an autho - rized provider. The proposed regulations would require the treat - ment or services anticipated to be provided to the injured worker in the first 30 days after the date of injury, including the exempt drugs prescribed to the injured worker under the MTUS Drug Formulary, to be set forth in an RFA as specified in the regula - tions (see proposed 9792.9.7(a) (4) referring to

section 9785(h)); and to be submitted concurrently with the Doctor’s First Report of Occupational Injury or Ill - ness (DFR). The proposed regulations would require subsequent treating physicians who treat the injured worker within the first 30–day period to also submit an RFA indicating treatment being rendered following the initial visit. ● Existing law enacted under SB 1160 allows a claims administrator to bar a physician who does not comply with timely reporting requirements from providing further treatment to the employee under SB 1160’s 30–day exemption.

Additionally, a claims administrator could perform retrospec - tive UR for any treatment provided under the 30– day exemption to determine whether the provid - er has a pattern and practice of rendering treat - ment inconsistent with the MTUS.

If so, a num - ber of remedies become available to the claims administrator, including removal of the provid - er’s ability to render treatment under the 30– day exemption, termination of the provider from the claims administrator’s network of providers (whether medical provider network or health care organization), or substantiation as good cause of a claims administrator’s petition for a change of physician.

The proposed regulations would allow a claims administrator to remove a physician’s ability to pro - vide treatment under the 30–day exemption for the remainder of the 30–day period to an injured work - er for whom the physician failed to timely submit the DFR or RFA as required by law by issuing written notice to the physician which identifies the specific re- porting failure, informs the physician that they can no longer render exempt treatment for the particular in - jured worker and that any such treatment is subject to prospective utilization review. (See proposed

section 9792.9.7(d).) Where a PTP has been found to have a pattern and practice of failing to render treatment that is consis - tent with the Medical Treatment Utilization

Schedule (MTUS), the proposed regulations would allow the claims administrator to remove the ability of the phy - sician to render treatment under the 30–day exemption

CALIFORNIA REGULATORY NOTICE REGISTER 2024, VOLUME NUMBER 23–Z 735 to all claims administered by the claims administrator by (1) providing written notice to the physician that documents, via retrospective review, the physician’s pattern and practice of failing to render treatment that is consistent with the MTUS (including the MTUS Drug Formulary); (2) advising the physician that they can no longer render exempt treatment to any injured worker whose claims are administered by the claims administrator; and (3) advising of the requirement that all subsequent medical treatment is subject to prospective utilization review. (See proposed

section 9792.9.7(c) (1) (A).) Where a PTP has been found to have a pattern and practice of failing to render treatment that is consis - tent with the Medical Treatment Utilization Sched - ule (MTUS), the proposed regulations would allow a claims administrator to petition for a change in pri - mary treating physician (PTP) under “good cause” despite the PTP’s membership in the claims admin - istrator’s MPN. (See proposed

section 9786(b) (6) and 9792.9.2(c) (1) (B).) If the petition is granted, the reg - ulations propose that the replacement PTP be chosen from within the MPN listing and shall meet the MPN access standards. (See proposed

section 9767.6(g).) Where a PTP has been found to have a pattern and practice of failing to render treatment that is consis - tent with the Medical Treatment Utilization Sched - ule (MTUS), the proposed regulations would allow a claims administrator to terminate the physician from the claims administrator’s or employers medical pro - vider network or health care organization. (See pro - posed

section 9792.9.7(c) (1) (C).) The proposed regulations would define “pattern and practice” as used in this context to mean when treat - ment is rendered inconsistent with the MTUS (includ- ing the MTUS Drug Formulary) for 20 separate and unrelated, recommended medical services or goods with 10 or more injured workers over the course of 3 months; or for eight separate and unrelated medical services or goods with 2 or less injured workers within one month. (See proposed

section 9792.9.7(c) (2).) The proposed regulations would further require any disputes between the treating physician and the claims administrator regarding these provisions to be re - solved by the Workers’ Compensation Appeals Board (WCAB). (See proposed

section 9792.9.7(e).) ● Existing law enacted under SB 1160 limits the ap- plication of the 30–day exemption to prospective UR to expressly exclude the following: (1) phar - maceuticals, to the extent they are neither ex - pressly exempted from prospective review nor authorized by the drug formulary; (2) nonemer - gency inpatient and outpatient surgery, includ - ing all presurgical and postsurgical services; (3) psychological treatment services; (4) home health care services; (5) imaging and radiology ser - vices, excluding X–rays; (6) all durable medical equipment, whose combined total value exceeds two hundred fifty dollars ($250), as determined by the official medical fee schedule; (7) electro - diagnostic medicine, including, but not limited to, electromyography and nerve conduction stud- ies; and (8) any other service designated and de - fined through rules adopted by the administrative director.

The proposed regulations would clarify the none - mergency inpatient and outpatient surgery category limitation to the 30–day exemption to include such services provided in any setting (inpatient hospital, outpatient hospital, surgical clinic, ambulatory surgi - cal center, or physician’s office), and to services and treatments necessary and routinely furnished for the purpose of surgery, before, during, and after a proce - dure; including, but not limited to, related diagnostic tests or procedures, rehabilitation services, durable medical equipment or supplies, and routine post– surgical pain management treatment or services.

The proposal would further define “surgery” to mean: (1) any procedure set forth in the Surgery

section of the American Medical Association’s Current Procedural Terminology (CPT®) pursuant to the physician and non–physician practitioner fee

schedule at

section 9789.12 et seq., and (2) any Healthcare Common Pro- cedure Coding System (HCPCS) procedure code de - fined as “surgery” in the Hospital Outpatient Depart - ments and Ambulatory Surgical Centers Fee Sched - ule at

section 9789.30 et seq. (See proposed

section 9792.9.7(b) (2).) The proposed regulations would also clarify that the limitation regarding psychological treatment services includes diagnostic services, psychotherapy, and other services or procedures to an individual or group in all care settings provided by a physician or other qualified health care provider; and includes psychiatric pharma- ceuticals, to the extent they are not expressly exempt from prospective utilization review under the MTUS Drug Formulary. (See proposed 9792.9.7(b) (3).) The proposed regulations would also clarify that the limitation regarding home health care includes medi - cally necessary health care as well as associated ser - vices provided to the injured worker in the residential setting. (See proposed 9792.9.7(b) (4).) The proposed regulations would further clarify that the limitation regarding durable medical equipment extends to prosthetics, orthotics, and supplies where the purchase or rental cost of the item with necessary supplies, if any, for the expected course of treatment is greater than $250.00 as determined by the DWC Of- ficial Medical Fee

Schedule (OMFS) or, for an unlist- ed item, where the billed amount will be greater than $250.00. (See proposed 9792.9.7(b) (6).)

CALIFORNIA REGULATORY NOTICE REGISTER 2024, VOLUME NUMBER 23–Z 736 The proposed regulations would, with respect to the electrodiagnostic medicine limitation, define it to be a medical specialty where the physician uses neuro - physiologic techniques to diagnose, evaluate, and treat patients with impairments of the neurologic, neuro - muscular, and/or muscular systems.

This would in - clude, but is not limited to, procedures set forth in the American Medical Association’s Current Procedural Terminology (CPT®) Medicine section, under the sub- heading “Neurology and Neuromuscular Procedures,” and any test that measures the speed and degree of electrical activity in the muscles and nerves in order to make a diagnosis. (See proposed 9792.9.7(b) (7).) The proposed regulations would expressly add the following to the list of services or treatments for which the 30–day exemption does not apply: spinal injec - tions including therapeutic medial branch nerve block injections; facet joint injections; intradiscal injections; epidural injections; and sacroiliac joint injections. (See proposed 9792.9.7(b) (8).) UR Relating to the MTUS Drug Formulary Existing law requires medical treatment reasonably required to cure or relieve the injured worker from the effects of his or her injury to mean treatment that is based upon the MTUS guidelines adopted pursu - ant to Labor Code

section 5307.27. Existing law re - quires all prescribers and dispensers of medications in the workers’ compensation system to adhere to an evidence–based drug formulary (“MTUS Drug For - mulary”) that was incorporated into the MTUS under Assembly Bill 1124 (Statutes 2015,

Chapter 525), and which became effective January 1, 2018. Existing law under the MTUS Drug Formulary exempts expressly listed medications from prospective UR while requir - ing it for others. Senate Bill 1160 (Statutes 2016,

Chapter 868), in ad- dition to creating the 30–day exemption to prospective utilization review (UR), amended Labor Code

section 4610 to require that all prospective decisions regarding requests for treatments covered by the formulary be made in no more than five normal business days from the receipt of a request for authorization. Although other, non–formulary treatment requests may warrant an extension of time under specified circumstances, no such extension was allowed for treatments covered by the formulary.

Additionally, the 30–day exemption to prospective UR (and concomitant rules regarding claims administrators’ right to retrospective UR and applicable remedies) would only apply to medications that were exempt on the MTUS Drug Formulary. ● The proposed regulations would incorporate these statutory changes within the regulatory scheme starting with the inclusion of a definition for “MTUS Drug Formulary.” (See proposed sec- tion 9792.6.1(s).) ● The proposed regulations would further express - ly indicate that existing utilization review time - frames apply so long as they do not contravene the timeframes relating to formulary disputes, which follow the timeframes set forth specifical - ly for those types of disputes under proposed sec- tion 9792.9.8. (See proposed

section 9792.9.3(e).) ● The proposed regulations would clarify that drugs identified as “exempt,” identified as subject to the Special Fill policy, or identified as subject to the Perioperative Fill policy on the MTUS Drug List would be exempt from prospective UR. (See pro- posed

section 9792.9.8(a).) ● The proposed regulations would instruct that, for a drug that did not qualify as exempt on the MTUS Drug Formulary, regardless of whether such drug was requested within the 30–day ex - emption time period, a request for authorization via prospective UR is required in the manner set forth in the regulations or in a manner agreed upon by the treating physician and the claims ad- ministrator. (See proposed

section 9792.9.8(b).) ● The proposed regulations would reiterate the stat- utory mandate that prospective UR decisions to approve, modify, or deny an request for authori - zation (RFA) for a drug that does not qualify as exempt on the MTUS Drug Formulary must not exceed 5 business days from the date of receipt of the RFA. Where additional information is re - quired on an RFA for medication not qualified as exempt on the MTUS Drug Formulary, the pro - posed regulations would require that a request for such information to be made within 2 business days from the date of receipt of the RFA.

If the in- formation is not received within 5 business days from the date of the RFA, the request may be de- nied in accordance with applicable regulations. (See proposed

section 9792.9.8(b) (1).) ● The proposed regulations would require UR for any medication not listed on the MTUS Drug For- mulary to be processed pursuant to rules applica- ble to treatment not exempt under the 30–day ex- emption and not covered by the MTUS Drug For- mulary. This means that the “default” timeframe for UR, which applied to all treatment before the formulary and 30–day exemption were created, would apply to such unlisted medications. (See proposed

section 9792.9.8(d).) ● The proposed regulations would clarify that, ex - cept for medications that qualified as exempt from prospective UR under the 30–day exemp - tion, a UR decision to deny an RFA for a drug that would otherwise be exempt because it fell into an exempt category under the MTUS Drug

CALIFORNIA REGULATORY NOTICE REGISTER 2024, VOLUME NUMBER 23–Z 737 Formulary, may be cause for denial of payment. (See proposed

section 9792.9.8(e).) ● The proposed regulations would clarify that dis - putes over the medical necessity of medications covered under the MTUS Drug Formulary are to be resolved either via a claims administrator’s voluntary internal UR appeals process or by in - dependent medical review (per Labor Code sec - tion 4610.5 and 4610.6).

With respect to a deci - sion to modify or deny a request for authorization because of a reason other than medical necessi - ty, the proposed regulations would clarify that such disputes would be resolved only through the claims’ administrator’s voluntary internal ap- peals process or by the Workers’ Compensation Appeals’ Board. With respect to disputes based on both medical necessity and a reason oth - er than medical necessity, the proposed regula - tions would require the non–medical necessity reason to be resolved first. (See proposed

section 9792.9.8(f).) ● The proposed regulations would clarify the rules that would apply when an initial treating physi - cian dispenses or prescribes a drug listed on the MTUS Drug Formulary within the first 30 days of the date of injury (i.e., under proposed

section 9792.9.7(a)). The proposal would require the phy- sician to include all drugs being prescribed or dispensed to treat the injured worker in the treat - ment plan

section of the DFR and to list them also on the RFA. Additionally, subsequent pri - mary treating physicians would also be required to submit an RFA on which all drugs being pre - scribed or dispensed are indicated following their first visit with the injured worker. (See proposed

section 9792.9.8(g) (1).) ● The proposed regulations would allow [or repeat the statutory mandate that?] a treating physician to prescribe or dispense a drug identified as ex - empt on the MTUS Drug List without the need to obtain authorization through prospective review. (See proposed

section 9792.9.8(g) (2).) ● The proposed regulations would require a treating physician who prescribes a drug not identified as exempt on the MTUS Drug List to request autho- rization through prospective UR by submitting an RFA as prescribed by law or in a manner agreed upon by the physician and the claims administra- tor. (See proposed

section 9792.9.8(g) (3).) ● The proposed regulations would allow a claims administrator to conduct retrospective review of an exempt drug prescribed or dispensed to the in- jured worker within 30 days of the date of injury solely for the purpose of determining whether the use of the drug is consistent with the recommen - dations set forth in the applicable guideline of the MTUS. (See proposed

section 9792.9.8(g) (4).) Where such retrospective review results in a de - termination that the use of the exempt drug was inconsistent with the MTUS, the proposed regu - lations would prohibit the denial of payment, but would allow such determination to be included as a basis to find that the physician has a pattern and practice of failing to render treatment con - sistent with the MTUS. (See proposed

section 9792.9.8(g) (4) (

A) and (B).) UR Appeals Under existing law, a UR decision that modifies or denies a treatment request may be appealed via inde - pendent medical review (“IMR”). To do so, an injured worker (or other eligible person) must submit an IMR application to the IMR organization within 30 days of receipt of the adverse UR decision letter.

Under SB 1160, however, an IMR application pertaining to med- ications prescribed under the drug formulary adopted under AB 1124, must be submitted within 10 days of service of the written UR decision letter. ● The proposed regulations would require that the expedited 10–day timeframe for submitting an IMR of a medication covered under the drug for- mulary apply where a UR decision letter only modifies or denies a medical treatment request for a drug listed on the MTUS Drug List. (See proposed

section 9792.10.1(a) (2).) Existing law allows a claims administrator or UR entity to offer an internal appeals process so long as it does not preclude the availability of IMR. Existing law requires that a request for an internal UR appeal be made within 10 days after receipt of a UR deci - sion letter, and for a determination to be issued by the claims administrator within 30 days of receipt of the request. ● The proposed regulations would require, for a UR decision that only modified or denied a request for a drug listed on the MTUS Drug List, that any internal UR appeal decision to be completed and issued within 10 days after receipt of a request for an internal UR appeal. (See proposed

section 9792.10.1(f ) (2).) After a request for IMR has been deemed eligible, existing law requires an IMR organization (“IMRO”), within one business day, to send out a written notice of the case assignment to the employer, employee (or em- ployee’s representative), and the requesting physician. The notice must indicate that, among other things, the claims administrator has 15 calendar days to submit medical records pertinent to the dispute. The notice must also warn that failure to comply with such re - quirement may result in fines, penalties or other rem - edies, up to $5,000. The same applies to expedited

CALIFORNIA REGULATORY NOTICE REGISTER 2024, VOLUME NUMBER 23–Z 738 review cases except that the submission of records must be made within 24 hours following receipt of the notice. ● The proposed regulations would add a require - ment that, for a dispute only involving a drug or drugs listed on the MTUS Drug Formulary, the submission of records must be made within 10 calendar days of the date of the notice. The sub - mission of records for all other disputes would re- main at 15 calendar days. (See proposed

section 9792.10.4(b) (5).) ● The proposed regulations would delete the $5,000 cap. (See proposed

section 9792.10.4(b) (5) and (6).) Existing law authorizes the IMRO to reasonably re- quest appropriate additional documentation or infor - mation necessary to make a determination of medical necessity. When such a request is made, the party to whom the request was made must submit the request - ed documentation within 5 business days after the re - quest is received in routine cases, or 1 calendar day in concurrent or expedited cases. ● The proposed regulations would require a party to submit the requested documentation in 2 busi - ness days where the dispute is only about a drug listed on the MTUS Drug Formulary. (See pro - posed

section 9792.10.5(c).) Existing law requires the IMRO to complete its re - view and make a final determination of a regular (i.e., not expedited) medical treatment dispute within 30 days of receipt of the application for IMR and sup - porting documentation. ● The proposed regulations would require the IMRO to complete its review and make a final determination of a non–expedited medical treat - ment dispute, other than a dispute that only de - nies or modifies a medical treatment request for a drug listed on the MTUS Drug List, within 30 days of receipt of the IMR application and sup - porting documentation and information. (See proposed

section 9792.10.6(g) (1).) ● The proposed regulations would require the IMRO to complete its review and make a final de- termination of a dispute that only denies or mod - ifies a medical treatment request for a drug listed on the MTUS Drug List within 5 business days of receipt of the IMR application and supporting documentation and information. (See proposed

section 9792.10.6(g) (4).) Existing law sets forth costs for IMR, borne by the claims administrator, for years 2013 and 2014. The costs are distinguished based on whether the review is regular, expedited, or withdrawn. Expedited re - views are more costly than regular reviews and, for each type, more costly if performed by a physician as defined by Labor Code

section 3209.3 who holds an M.D. or D.O. degree (as opposed to a degree of another kind). Additional costs apply if a review requires two more medical reviewers to participate. ● The proposed regulations would omit all of the factors affecting cost except for withdrawn re - views. Under the proposal, all requests for IMR would cost $345.00 regardless of whether the re - view is regular or expedited, regardless of the reviewer’s credentials, and regardless of wheth - er there were more than one reviewer who par - ticipated in the review. (See proposed

section 9792.10.8(a) (1).) Existing law requires a lesser payment (currently $215.00) for each application where review is termi - nated by the independent organization prior to the receipt of the documentation and information provid - ed under

section 9792.10.5 by a medical reviewer. If, however, the review of an application and documenta- tion and information provided under

section 9792.10.5 is terminated by the independent review organization subsequent to the review by the medical reviewer, the cost will be the same as if a determination had been issued. ● The proposed regulations would clarify that if the withdrawal of an IMR occurs during (and not only subsequent to) the receipt of documenta- tion and information under

section 9792.10.5 by the medical reviewer, it would not qualify for the lower fee associated with a withdrawal. (See pro- posed

section 9792.10.8(a) (2).) Under existing law, an IMR final determination may be appealed under Labor Code

section 4610.6(

h) if one or more specified legal findings are made. The remedy for such a finding is to remand the issue back to the same independent medical review organization (IMRO) for re–review with a different reviewer, or for re–review with a different IMRO. No cost is currently associated with ordered re–reviews. ● The proposed regulations would set forth that a first order for re–review would be performed by the independent review organization at no cost, but that any subsequent ordered re–reviews on the same IMR case after the first one would in - cur a cost of $295.00. (See proposed

section 9792.10.8(a) (3).) Existing law requires disputes over formulary rules, other than medical necessity disputes covered by UR and IMR, to be resolved through the procedure for non IMR/IBR disputes set forth in the applicable WCAB regulations. ● The proposal would amend the reference to the WCAB rule to align with recent changes. (See proposed

section 9792.27.17(b).)

CALIFORNIA REGULATORY NOTICE REGISTER 2024, VOLUME NUMBER 23–Z 739 Greater Oversight: URAC Accreditation and DWC Approval Prior to SB 1160, claims administrators or their con- tracted UR organizations were only required to file their UR plan with the DWC before operating in the California workers’ compensation system. The legis - lature determined that more oversight was required of UR entities to ensure industry best practices and to reduce frictional costs associated with disputes over treatment.

As such, beginning July 1, 2018, SB 1160 required UR processes that modified or denied treat - ment requests to obtain accreditation with URAC (or other entity named by the Administrative Director) and approval of their UR plans with the Administra - tive Director (“AD”). DWC Approval of UR plans: Existing law requires every claims administrator to establish and maintain a UR process to be set forth in a UR plan.

A claims administrator or an external UR organization contracted by the claims administra - tor to perform UR must file its UR plan, consisting of the policies and procedures and a description of the UR process, with the AD. A claims administrator who contracts with an external UR organization may, in lieu of its own plan, file a letter with the AD identify - ing its contracted UR organization with whom it con - tracts for UR services so long as that entity has filed its own complete plan with the AD.

The proposed regulations would require all UR or - ganizations who modify or deny treatment requests to have their plan approved by the AD. The UR plan would be required to submit its plan for approval to the DWC on a new form, signed by the medical di - rector, called the DWC Form UR–01, “Application for Approval as Utilization Review Plan.” (See proposed 9792.7.1.) The UR plan must be submitted in compact discs or flash drives in word–searchable PDF format.

The hard copy of the completed, signed original shall be maintained by the applicant and made available for review by the AD upon request. (See proposed 9792.7(c) (2).) The proposed regulations further indicate that the submission of an application for approval to the AD would release URAC from any obligation it may have to the UR applicant, contractually or otherwise, with respect to nondisclosure of any of URAC’s files re - lating to the applicant’s URAC accreditation or au - dits.

The DWC may obtain such documentation from URAC for the purpose of ensuring compliance with UR rules. (See proposed 9792.7(c) (3).) The proposed regulations further set forth the pro - cess for UR plan approval once an entity has submit - ted an application for approval of a UR plan. The pro- posal would allow the AD 30 days after receipt of an application to review and notify the organization as to the completeness of the UR plan.

If the plan is incom- plete, the AD shall specify the additional information or documents needed. (See proposed 9792.7(d).) Fol - lowing receipt of a complete UR plan, the AD shall have 60 days to approve or deny the plan. If the plan is in substantial compliance except for specific deficien- cies, a conditional approval may be granted for up to six months to allow the applicant the opportunity to correct those deficiencies.

If the deficiencies are not corrected within the first period of conditional approv- al, the conditional approval may be extended for up to another six months if the applicant has shown a good faith effort and ability to correct the deficiencies.

Un - less the deficiencies are removed prior to the expira - tion of the conditional approval and an approval has been granted, a conditional approval expires at the end of its stated period and the application shall be deemed denied. (See proposed 9792.7(e) (1).) The proposed regulations would require the AD to notify a UR plan applicant of a denial in writing, which shall include the reasons for non–approval.

The denial shall be transmitted via certified mail and re - main in effect for 12 months unless a lesser timeframe is agreed upon by the AD for good cause. (See pro - posed 9792.7(e) (2).) The proposed regulations would allow a UR plan applicant whose plan has been denied by the AD 20 days to file an appeal with the Workers’ Compensation Appeals Board. Petitions shall be concurrently served on the AD. (See proposed 9792.7(f).) The proposed regulations would allow the AD to require an organization to update its approved plan if needed for compliance.

It would allow a plan who receives a Notice of Required Update from the AD 30 days to bring its plan into compliance.

Failure to adopt and implement required changes could result in probation or suspension of a plan or revocation of its approval. (See proposed 9792.7(g).) The proposed regulations would set forth the fol - lowing reasons for which probation, suspension, or re- vocation for approved UR plans could occur: the plan is operating out of compliance with the terms of its approved plan or the law; the plan fails to timely adopt and implement updates to its UR plan as specified by the AD; the plan knowingly makes false statements or representations to the AD or fails to submit plan mod- ifications or updates as required by this Article; the plan fails to respond to at least two or more repeated requests or inquires by the AD concerning plan com - pliance. (See proposed 9792.7(h) (1).) If the AD determines that one or more of the preced- ing circumstances applies, the proposed regulations would require the AD to issue written notice of the violation after which the organization would have 14 days to correct the violation or respond with a plan to correct the violation. (See proposed 9792.7 (h) (2).)

CALIFORNIA REGULATORY NOTICE REGISTER 2024, VOLUME NUMBER 23–Z 740 The proposed regulations would allow the AD to place a UR organization on suspension, probation, or revoke its approval by issuing a Findings and Notice of Action to the organization specifying the time period for which such action will take place.

For revocations, the proposed regulation would bar the organization from applying for UR plan approval for 12 months fol- lowing the issuance of the Findings and Notice of Ac- tion unless a lesser timeframe is agreed upon for good cause by the AD. (See proposed 9792.7(h) (3) (A).) The proposed regulations would require a UR plan who has been issued a Findings and Notice of Action for suspension or revocation to issue a copy of such Findings and Notice of Action to all organizations for which it performs UR. (See proposed 9792.7(h) (3) (B).

The proposed regulations would allow a UR plan that has been issued a Findings and Notice of Action to request a re–evaluation of the probation, suspension, or revocation notice within 14 days of its issuance by submitting to the AD, under penalty of perjury, a written explanation accompanied by documentary evidence supportive of the request for re–evaluation. (See proposed 9792.7(i) (1).) The proposed regulations would require the AD to issue, within 45 days of the request for re–evaluation, a Decision and Order affirming, modifying, or re - scinding the Notice of Action, which must include an explanation of the AD’s decision.

The proposal would allow the AD to extend the time for issuing a Decision and Order for a period of 30 days and, at any time during re–evaluation, the AD could require the orga - nization to submit additional documentation or infor - mation. (See proposed 9792.7(i) (2).) As an alternative to requesting re–evaluation, the proposed regulations would allow a UR plan that has been issued a Findings and Notice of Action to ap - peal such notice to the Workers’ Compensation Ap - peals Board by filing a petition within 20 days of the issuance of the notice under California Code of Reg - ulations, title 8,

section 10560. The regulations would require that the petition be concurrently served on the AD. (See proposed 9792.7(j).) The proposed regulations would clarify that the rules pertaining to probation, suspension, and revo - cation would not prevent the possibility of applicable penalties under regulation

section 9792.12 (pertaining to UR investigations). (See proposed 9792.7(k).) The proposed regulations would require the AD to post on the DWC’s website a list of all entities who have filed a complete UR plan and indicate their evolv- ing statuses, which could include, but are not limited to, approved, denied, inactive, probation, suspended, or revoked.

The proposal would authorize the AD to mark as inactive a utilization review plan entity that has not conducted UR under its own name for a pe - riod of 12 consecutive months following the last UR activity performed under its own name. (See proposed 9792.7(l).) Existing law requires a UR plan to file a material modification of its UR plan within 30 days of the ma - terial modification, which is defined to be any change to the UR standards as specified in

section 9792.7. The current definition of a “material modification” of a UR plan is whenever there is a change to UR standards as specified in

section 9792.7. The proposed regulations shall require that a filing of a material modification includes a statement certi - fying that the UR plan, as modified, continues to be in compliance with the rules governing UR. (See pro - posed 9792.7(c) (4).) The regulations shall also amend the definition of a material modification of a UR plan to include (in addition to changes to a UR plan’s stan- dards under

section 9792.7) changes to its medical director, address, company name, or corporate struc - ture. (See proposed 9792.6.1(n).) URAC Accreditation: Existing law requires every utilization review pro - cess that modifies or denies requests for authorization of medical treatment to retain active accreditation by an independent, non–profit organization to certify that the UR process meets specified criteria aligned with industry best practices.

Unless and until the AD des - ignates another, URAC is statutorily designated as the accrediting organization. ● The proposed regulations define URAC by its physical address, or as designated on its web - site (see 9792.6.1(x)); and specifies that the type of URAC accreditation required for approval by the DWC of a UR plan that modifies or denies treatment requests is the Workers’ Compensation Utilization Management (WCUM) accreditation. (See 9792.7(a) (6) (A).) ● The proposed regulations expressly exempt a pub- lic sector internal UR plan that modifies or denies treatment requests from URAC accreditation if it provides in its plan submission a statement under penalty of perjury by the plan’s medical director that the plan meets or exceeds the standards es - tablished by URAC’s WCUM accreditation pro - gram. (See 9792.7(a) (6) (B).) UR Investigations — Process Existing law authorizes the Administrative Director (“AD”) to investigate utilization review (UR) process- es of UR organizations and/or claims administrators and assess administrative penalties for failure to com- ply with applicable rules. ● The proposal would clarify that the AD’s author- ity to investigate UR processes would include not only entities who perform the full scope of the UR process, but also those that perform only

CALIFORNIA REGULATORY NOTICE REGISTER 2024, VOLUME NUMBER 23–Z 741 a part of the UR process. (See proposed

section 9792.11(a).) Existing law establishes UR investigations as being either Routine or Target. A Routine Investigation must be performed at least once every 5 years and includes a review of a random sample of requests for autho - rization (RFAs) received by the investigation subject during the three most recent full calendar months pre- ceding the date of the start of the investigation; and may also include any credible complaints received by the AD. Target Investigations may be either a Return Target or Special Target Investigation.

A Return Tar - get Investigation occurs 18 months following the Rou- tine Investigation that resulted in a performance rat - ing of less than eighty–five percent. A Special Target Investigation may be conducted at any time based on credible information indicating the possible existence of a violation of UR rules. Violations uncovered in a Routine or Return Target Investigation are associated with either “mandatory” or “additional” penalties. The performance rating, which is calculated based on a review of the randomly selected requests, is associated with “additional” pen - alties.

These additional penalties are waived if the per- formance score meets or exceeds 85%. Waiver does not apply to mandatory penalties. An investigation subject who does not receive a passing performance rating (i.e., a performance rating below 85%) may also obtain waiver of the additional penalty amounts under an abatement process though abatement is not available for the purpose of changing the performance rating.

Abatement requires the inves- tigation subject to submit in writing to the AD, writ - ten evidence, tendered with a declaration made under penalty of perjury, that explains or demonstrates how the violation(

s) have been abated; grant the AD re– entry for a Return Target Investigation to verify com - pliance with the abatement measures; and agree to re - instatement of the previously waived penalty amounts at a multiplied rate if the violative condition(

s) are not abated within the specified time period or if the abate- ment measures are not consistent with specified abate- ment terms. The abatement process requires the AD to conduct a Return Target Investigation in 18 months following the Routine Investigation. A Return Target Investigation is allowed for up to four times, with each subsequent investigation resulting in a higher multipli- cation of the penalty amounts if the abatement terms are not successfully met.

In addition to waiver and the abatement process, ex- isting law also allows the AD discretion to mitigate UR investigation penalty amounts based on specified penalty adjustment factors.

These include the medical consequences or gravity of the violations; document - ed good faith efforts of compliance by the claims ad - ministrator or UR organization; the history of previ - ous penalties; the frequency of violations discovered pursuant to the investigation; and extraordinary cir - cumstances when strict application of the mitigation guidelines would be clearly inequitable. ● The proposal would reorganize subdivisions within existing

section 9792.11 so as to group to- gether rules addressing the authority of the AD, the scope of UR investigations, and procedur - al rules of a general nature. (See proposed sec - tions 9792.11(b), (c), (d), (e), and (f).) Some sub- divisions were reorganized based on where they would make the most sense considering the in - vestigation type, sequence, or process. (See pro - posed

section 9792.11(h); and proposed

section 9792.11(t).) ● The proposal would also combine text which sep- arately addressed investigations for UR organiza- tions versus claims administrators such that the focus would be on the type of investigation (rou - tine or target) rather than the type of entity be - ing investigated. This is not a substantive change. (See proposed

section 9792.11(g).) ● The proposal would delete the assignment of a performance rating and all associated regula - tions, including the waiver and abatement process (and thereby the need for a Return Target Investi- gation and, thus, the need to differentiate between that and a Special Return Target). (See strikeout of applicable text in existing

section 9792.11(c).) Instead, investigations would be simply either Routine or Target and would result in the assess - ment of penalties pursuant to violations uncov - ered in the investigation. Violations would be as- sessed based on a

schedule of penalties catego - rized by the following subjects: violations related to UR plan requirements, violations related to UR plan operations, and violations relating to the UR investigation procedure and other miscellaneous provisions. ● The proposal would grow the population of files subject to investigation for UR organizations or claims administrators who process a greater num- ber of requests for authorization in the specified three–month calendar period.

Beginning with an organization that reviews 242 to 269 requests in the specified three month period, the sample file population subject to investigation would grow from 48 to 50 files; and, for organizations that process the largest number of authorization re - quests, i.e., reviews 531 or more files in the spec- ified three month period, the sample file popula - tion would grow from 59 to 70 files. (Proposed

section 9792.11(i).) Additionally, the proposal would authorize the AD to request additional files where the files initially se -

CALIFORNIA REGULATORY NOTICE REGISTER 2024, VOLUME NUMBER 23–Z 742 lected are incomplete or otherwise invalid. (See pro - posed

section 9792.11(j).) For investigation subjects who perform modifications and denials of requests for treatment, the proposed regulations would also re - quire 40% of the selection of investigation files (or as close to 40% as possible), to be comprised of files that modified or denied completed or accepted requests for authorization. In order to meet this goal, the proposal would authorize the AD to expand the scope of files subject to investigation to reach beyond the specified 3–month calendar period, up to a total of 6 months. (See proposed

section 9792.11(n).) ● With respect to mitigation, the proposal would clarify that mitigation is appropriate for consid - eration prior to the issuance of the final investiga- tion report. (See proposed

section 9792.13(a).) Existing law requires the AD to initiate an investi - gation by issuing a Notice of Utilization Review In - vestigation (“NURI”) to the investigation subject (un- less the AD determines that advance notice will ren - der the investigation less useful).

The NURI requires the subject to provide data including a list of every RFA received by the investigation subject during the specified three month period and, for each RFA, in - clude a number of data elements, including whether the UR determination approved, denied, or modified the request; or whether the request was withdrawn. ● With respect to a UR determination that denied a request, the proposal would require identifica - tion of the type of denial, i.e., whether it was due to a finding of no medical necessity or due to the requirement that additional information, tests, or consultation were required. (See proposed sec - tion 9792.11(k) (1).) Existing statutory law requires all UR plan process- es that modify or deny treatment requests to obtain and maintain accreditation with an independent, non– profit organization to ensure these types of UR plan processes are following industry best practices.

Until and unless the AD names another accrediting orga - nization, the legislature has designated URAC as the accrediting organization. ● The proposal would require a UR investigation subject to include in its NURI response a copy of the most recent accreditation document issued by URAC (or other named accrediting organiza - tion) which verifies that the UR plan organization meets the legislative accreditation requirement. (See proposed

section 9792.11(k) (5).) Existing law authorizes the AD to request any ad - ditional information during the UR investigation pro - cess including whether UR services are provided ex - ternally, the names of the UR organizations, the name and address of the employer, and the name and ad - dress of the insurer. ● The proposal would additionally authorize the AD to request documents relevant to the UR plans’ accreditation including but not limited to copies of audit or investigation reports, files, or documents generated between the plan and the accrediting organization. (See proposed

section 9792.11(l).) Existing law requires UR investigation subjects to provide required information within 14 calendar days of receipt of the NURI. ● The proposal would require that additional doc - umentation requested by the AD from a UR in - vestigation subject be provided within 5 business days unless an extension is granted in writing. (See proposed

section 9792.11(m).) Existing law requires a preliminary investigation report to be provided to the investigation subject fol - lowing review of selected UR investigation files. The preliminary report consists of the preliminary notice of UR penalty assessments, the performance rating, and may include further requests for additional doc - umentation or compliance.

If needed, a conference to discuss the preliminary investigation report may be scheduled within 21 days of the issuance of the report. ● The proposal would add a requirement that the AD include in the preliminary report a notice of intent to place the UR plan on probation or with - draw approval of the plan, and the reasons there - fore, where the investigation has uncovered the existence of a systemic problem in the operations, procedures, or policies of a UR plan organization.

The proposal would delete the requirement that the subject’s performance rating be included in the preliminary report since it is being eliminated from the UR investigation process. (See proposed

section 9792.11(v).) Existing law requires the AD to issue an Order to Show Cause Re: Assessment of Administrative Pen - alty (“OSC”) when the AD has found that an entity has failed to meet any of the requirements of the law pertaining to UR. The order must be in writing and must include notice of the administrative penalty, a final investigation report to include the penalties as - sessed, and the performance rating.

The OSC may also include, if necessary, one or more requests for documentation or compliance. ● The proposal would strike the necessity to in - clude a performance rating as part of the OSC and add the requirement that, if applicable, a no - tice of the AD’s intent to place the subject on pro- bation or to withdraw approval of the UR plan be included. (See proposed

section 9792.15(b) (2).) Existing law requires an investigated UR organiza - tion, within a specified time, to serve a notice, includ- ing a copy of the final investigation report, the mea -

CALIFORNIA REGULATORY NOTICE REGISTER 2024, VOLUME NUMBER 23–Z 743 sures implemented to correct such conditions, and the website address for the Division where the

summary of violations is posted, to any employer, Third Par - ty Administrator (TPA), or insurer for whom the UR organization performs UR; and on any self–insured employer or insurer if the investigation subject is a claims administrator. If a hearing was conducted as a result of an appeal, the notice should contain the Final Determination in lieu of the final investigation report. Documentation of compliance must be served on the AD within 30 calendar days from the date the notice was served. The AD is required to post on the DWC website a

summary of violations for each UR investi - gation after the time to file an answer to the Order to Show Cause Re: Assessment of Administrative Penal- ties has elapsed and no answer has been filed or after any and all appeals have become final. ● The proposal would, for investigation subjects whose investigations resulted in the UR plan be - ing placed on probation, require that the notice include a copy of the final investigation report, a statement indicating that the UR plan has been placed on probation by the Division, and the web- site address for the Division where the summa - ry of violations and probationary status is posted. (See proposed

section 9792.11(v) (1) (B).) For in- vestigation subjects whose investigations result - ed in a withdrawal of approval of its UR plan, the notice would include a copy of the final investiga- tion report, a statement that the UR plan’s approv- al has been withdrawn by the Division, and the website address for the Division where the sum - mary of violations and withdrawn status is post - ed. (See proposed

section 9792.11(v) (1) (C).) ● The proposal would require the AD, where an in- vestigation subject has been placed on probation, to commence another investigation of that UR plan in 180 to 360 days from the issuance of the previous final report or, if applicable, Final Deter- mination. This return investigation would be con- ducted in the same manner as required for routine investigations. (See proposed

section 9792.11(z).) ● The proposal would limit the amount of times a UR plan entity could be placed on probation to once per investigation. See proposed

section 9792.11(aa).) UR Investigations — Penalties Existing law at

section 9792.12 sets forth penalties that may be assessed during a UR plan investigation under

section 9792.11. Penalties are either (

a) Manda- tory UR Administrative penalties, (

b) Additional UR Penalties, or (

c) IMR–related UR penalties. ● The proposal would comprehensively reorganize the penalty

schedule to reflect, under subdivision (a), violations relating to UR plan requirements; under subdivision (b), violations relating to UR plan operations; under subdivision (c), violations relating to investigation procedures and miscella- neous violations; under subdivision (d), IMR ad - ministrative penalties; and, under subdivision (e), violations for any other act or failure not express- ly identified.

Changes under subdivision (a) (for violations relating to UR plan requirements): As aforementioned, existing law requires every claims administrator to establish and maintain a UR process to be set forth in a UR plan. A claims admin - istrator or an external UR organization contracted by the claims administrator to perform UR must file its UR plan, consisting of the policies and procedures and a description of the UR process, with the AD.

A claims administrator who contracts with an external UR organization may, in lieu of its own plan, file a letter with the AD identifying its contracted UR or - ganization with whom it contracts for UR services so long as that entity has filed its own complete plan with the AD. ● The proposal would add a penalty of $30,000 un- der subdivision (

a) for the failure to obtain ap - proval of a UR plan that modifies or denies treat- ment requests from the AD prior to operation. (See proposed

section 9792.12(a) (4).) As aforementioned, existing law requires every utilization review process that modifies or denies requests for authorization of medical treatment to retain active accreditation by an independent, non– profit organization to certify that the UR process meets specified criteria aligned with industry best practices. Unless and until the AD designates another, URAC is statutorily designated as the accrediting organization. ● The proposal would add a penalty of $10,000 un- der subdivision (

a) for failure to obtain or main - tain URAC accreditation as required prior to commencing or continuing to function as a UR plan. (See proposed

section 9792.12(a) (6).) Existing law prohibits an employer, or any entity conducting UR on behalf of the employer from offer - ing any financial incentive or consideration to a physi- cian based on the number of modifications or denials made by the physician. ● The proposal would add a penalty of $25,000 un- der subdivision (

a) for failure to comply with laws prohibiting financial incentives or consideration to physicians conducting UR. (See proposed sec- tion 9792.12(a) (8).) Existing law requires a utilization review organiza - tion to retain files and other records, whether electron- ic or paper, that pertain to the UR process for at least 3 years following either: (1) the most recent UR decision for each injured employee, or (2) the date on which any

CALIFORNIA REGULATORY NOTICE REGISTER 2024, VOLUME NUMBER 23–Z 744 appeal from the assessment of penalties for violations of Labor Code

section 4610 or sections 9792.6 through 9792.12 is final, whichever date is later. ● The proposal would add a penalty of $20,000 under subdivision (

a) for failure to retain re - cords as required by law. (See proposed

section 9792.12(a) (9).) Changes under subdivision (b) (for violations relating to UR plan operations): Under existing law, only a licensed physician may modify or deny requests for medical treatment. ● The proposal would clarify that only a physi - cian reviewer may modify or deny a request for treatment whether it be based on an assessment of medical necessity, or the non–receipt of re - quested information, test, or examination with - out which a determination of medical necessity cannot be made. Additionally, only a physician reviewer may deny a request that would other - wise be exempt from UR under Labor Code sec - tion 4610(

k) when the requesting physician has expressly and unequivocally stated or opined that there has been a change in the injured worker’s condition such as to warrant the repeat request. (See proposed

section 9792.12(b) (1).) ● The proposal adds a penalty of $25,000 for each of these types of violations. Existing law exempts from prospective UR cer - tain treatment rendered within 30 days from the date of injury if specified conditions are met (“30–day exemption”). ● The proposal would add a penalty of $3,000 for requiring prospective UR for each medi - cal treatment that was appropriately exempt un - der the 30–day exemption. (See proposed

section 9792.12(b) (5).) Existing law assigns a separate penalty for failure to respond to a complete DWC Form RFA or other re- quest for authorization accepted by the claims admin - istrator for non–expedited concurrent review, non– expedited prospective review, and retrospective review. ● The proposal would combine these violations un- der one subdivision. The proposal would also in - crease these penalties from $2,000 to $3,000 in the case of a non–expedited concurrent review; from $1,000 to $2,500 in the case of a non– expedited prospective review; and from $500 to $750 in the case of retrospective review. (See pro- posed

section 9792.12(b) (6).) Existing law imposes a penalty of $1,000 for the failure of a non–physician reviewer who approves an amended request to document such request as a result of a physician who has voluntarily withdrawn the re - quest in order to submit an amended request. ● The proposal would delete this provision. (See strike through of

section 9792.12(a) (8).) Existing law imposes a penalty