A Brief Overview of Utilization Review in California

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For many, utilization review (UR) is an abstract concept. If you have a fuzzy understanding of UR, this article is for you. If you have a solid understanding of UR, then this article may be a good refresher. Either way, if your work involves workers’ comp, you should have at least a basic understanding of how the UR process works.

For the sake of review, the California workers’ compensation system provides five key benefits: temporary disability (TD), permanent disability (PD), medical benefits to cure and/or relieve the effects of an injury or illness, vocational rehabilitation (often called VR or “Voc Rehab”) and death benefits.

SB 228 AND SB 899 MAKE CALIFORNIA A UR STATE

A major shift in the medical benefit landscape occurred in January 2004, via SB 228. Affirmed by SB 899, Labor Code Sec. 4610 (as a cost containment measure) required all employers to establish and maintain a UR process. Under these requirements, when an injured worker’s treating physician requested treatment, the request would be analyzed to see if the proposed treatment was medically necessary. If the treatment was deemed medically necessary it would be approved. If not, the request would be denied.

From 2004 to 2007, the Medical Treatment Utilization Schedule (MTUS) was simply The American College of Occupational and Environmental Medicine (ACOEM) guidelines, per statute. In 2007, the Administrative Director changed MTUS to be ACOEM plus the Colorado acupuncture guidelines. In 2009 MTUS was changed again to add post-surgical guidelines and chronic pain guidelines that came from Official Disability Guidelines (ODG). MTUS continues to be revised in an effort to be on the cutting edge of medical technology and innovation while keeping costs down. The latest version of MTUS is available on the California Department of Industrial Relations web site.

WHAT IS THE UR PROCESS?

An insurance adjuster or third party administrator (TPA) usually receives the request for treatment from the injured worker’s treating physician (or from a specialist referred by the treating physician). This is typically done using a Request for Authorization (RFA) form. The adjuster has the right to approve the requested treatment but not to deny it. If he doesn’t approve it, he may send the request to UR. The adjuster will then send the request to a UR company (also called UR agent), such as UniMed Direct. UniMed Direct, an independent company not owned by or affiliated with the insurance company or TPA, will process the UR request.

A UR company (or URA) generally has five business days to review the RFA and approve, deny or modify the request. To make the determination, the URA will analyze the RFA and applicable medical records and compare the information to MTUS. If the RFA correlates with MTUS the request will generally be approved. If not, then a UR physician will examine the case. This context often results in a peer-to-peer telephone call between the UR physician and the injured worker’s treating physician.

For example, the treating physician requests home health care, 40 hours a week, for a worker who is not homebound. Home health care is specifically addressed by MTUS in the Chronic Pain Guidelines. In that section it states that a patient must be homebound to qualify, and home health care is limited to no more than 35 hours a week. In this example, the UR physician would call the treating physician for a peer-to-peer conversation. The treating physician may modify his request to comply with MTUS, or refuse to do so. If that occurs, the UR physician will issue a report denying the request.

WHAT HAPPENS AFTER A DENIAL?

If the treating physician disagrees with the denial, he may recommend that the injured worker seek Independent Medical Review (IMR). Some insurance carriers have an internal appeals process, which is not required. The IMR process came about via SB 863 and became effective January 1st, 2013. This IMR model is similar to what we see in group health. The IMR physician will review the RFA, the medical records and the UR physician’s recommendation, and either approve or deny the request.

Generally, when the IMR denies the request, the process ends. There are avenues to appeal an IMR decision to the Workers’ Compensation Appeals Board (WCAB), but they are very limited. Also, a UR denial (unless reversed by IMR) will stand for 12 months from the date of the denial. However, if there is new medical evidence or a change in circumstances, the treating doctor may submit a new RFA.

CAN MTUS BE REBUTTED, OR IS IT FINAL?

Labor Code Sec. 4604.5 provides that MTUS, while presumptively correct, can be rebutted. This is done by showing a preponderance (51%) of the scientific medical evidence that a variance from MTUS is reasonable to cure or relieve the injured worker from the effects of her injury.

WHAT ARE PROSPECTIVE, CONCURRENT, AND RETROACTIVE UR?

The home health care example demonstrates prospective UR. Prospective UR is covered by Labor Code 4610(g)(8) and makes up the vast majority of UR cases. In prospective UR the doctor requests treatment in advance, and the request is analyzed prospectively. Concurrent UR, as it sounds, happens concurrently. This may occur, for example, when the injured worker is hospitalized, and the question arises, “How long should the patient be in the hospital?”

Per Labor Code 4610 (g)(1) retrospective review (including bill review) occurs after treatment is administered. Here, the question is “Was the treatment reasonable and necessary?” Many other rules govern retrospective review, and a URA has 30 days to make its decision and deny or pay the bill.

IS UR USED TO DETERMINE WHETHER OR NOT AN ACCIDENT IS WORK RELATED?

No. In California, an insurance adjuster may dispute that an injury is work-related in accordance with California Code of Regulations 9792.9.1.(b). In this instance, after receiving an RFA, the adjuster would give written notice to “defer UR” because the injury is likely not compensable. The matter will then proceed to the WCAB, which will hold a hearing, usually with input from a Qualified Medical Examiner (QME), to determine if the injury is work-related. If it is found to be work-related, the case may then go to UR. If not, then the claim will be denied prior to the UR process. UR itself is not a part of the process to dispute compensability.

I hope this article provides useful information about UR and the California UR process in particular. UR is highly regulated, and if you’re new to workers’ comp, it can be difficult to learn. Don’t be discouraged. Our advice is to stick with it. UR is an excellent cost containment system in California and in several other states, and it will be well worth your investment to learn it.

Tom Swiatek

Tom Swiatek

As Assistant Vice President of Regulatory Services, General Counsel, and Editor in Chief of UR Nation, Tom Swiatek draws on his experience as an insurance attorney on both the general liability side, as well as on workers’ compensation matters. As a California Workers’ Compensation Section Member, Tom is leading the discussion with respect to the regulatory challenges and opportunities facing the workers’ compensation system.