Every employer must establish a utilization review process. The utilization review process is the process by which the employer or other contracted entity reviews and approves, modifies, delays or denies physician requests for authorization before, during or after providing medical treatment services. Utilization reviews can occur before, during or after medical treatment to determine if the treatment is warranted.1 The physician’s treatment request can be modified, delayed or denied based upon the review, and the utilization review decision is valid for 12 months.2

You can establish the utilization review process directly through your insurer or through an entity with which you or your insurer contracts for utilization review services. The vast majority of employers are already provided with a utilization review organization through their workers' compensation insurance carrier and typically no action is required of the employer in this regard.

A drug formulary schedule that delineates when to prescribe certain medications is part of the utilization review process.3 The purpose is to allow the utilization review organization to review the medical necessity of addictive medications prescribed by physicians, a practice that has been becoming an increasing problem over the years. In conjunction with the drug formulary in an effort to reduce over-prescription of medication, every physician must access the Controlled Substance Utilization Review and Evaluation System (CURES) database maintained by the Department of Justice prior to prescribing scheduled medications to a patient, and to input into the system the medications being prescribed for a particular patient. This system keeps track of all scheduled medications prescribed to a particular patient. 4

Written policies and procedures must govern the utilization review process. Decisions based on the medical necessity of the proposed treatment services must be consistent with the DWC’s Medical Treatment Utilization Schedule (MTUS). The MTUS is updated regularly to ensure that it maintains pace with current medical innovations and treatment protocols as they evolve over time.

Utilization review is not required for treatment disputes where the claim has been denied, or where the treatment is for a body part or condition that is not part of an accepted claim.5 Therefore, if you deny the claim, you lose the ability to control the cost and the extent of the medical treatment via the utilization review process. Knowing this fact may factor into helping you decide whether to accept or deny the claim. If the denied claim is subsequently accepted, then previously submitted Requests for Authorization for treatment need to be retrospectively reviewed by the utilization review organization.

You must file the utilization review policies and procedures, as well as a description of the utilization process, with the administrative director. Upon request, you must disclose this information to employees, physicians and the public.

To oversee the utilization review process, an employer, insurer or other entity must employ or designate a medical director who holds an unrestricted license to practice medicine in California. The medical director must ensure that the utilization review process complies with Labor Code section 4610.

Every employer, insurer or other entity must maintain telephone access for physicians to request authorization for health care services.

The utilization review (UR) process must comply with specific time frames to ensure that injured employees are treated properly. Typically, that means that a decision to approve, modify or deny a non-expedited request for treatment authorization must be made within five business days of receipt of the request. Saturday is not considered a “business day” for purposes of counting the five-day timeline. If the administrative director determines that the employer, insurer or other entity failed to meet any of the time frames in Labor Code section 4610(g), by order, the administrative director can assess administrative penalties for each failure. Additionally, in those cases where the timelines for utilization review have not been met, the employee can ask the Workers Compensation Appeals Board to step in and determine the medical necessity of the medical treatment requested by their physician and bypass the utilization review process entirely (for more information, see the Dubon v. World Restoration case in below).

Neither the employer nor the claims administrator is allowed to modify or deny a request for medical treatment. An employer and a claims administrator can approve the request but cannot independently modify or deny the request. Only a reviewing physician, via the UR process, is entitled to modify or deny a request for medical treatment.6 It’s a $25,000 Mandatory Utilization Review Administrative Penalty for a non-physician to deny, modify or delay, on the grounds of medical necessity, a request for medical treatment.7

The UR process falls under the exclusive remedy provisions as confirmed by the California Supreme Court in King v. CompPartners. King restricts any effects of the UR system to remain within the workers' compensation jurisdiction, as King suffered multiple seizures when his Klonopin medication was discontinued without warning or weaning as a result of a UR non-certification. The Supreme Court held that King could not sue the insurer, employer or reviewing physician in civil court.8

Independent Medical Review and the Appeal Process

The UR process is supplemented by an appeals process called Independent Medical Review (IMR). Jurisdiction over medical treatment disputes has been taken away from the Qualified Medical Evaluators (QME), Agreed Medical Evaluators (AME) and the Workers Compensation Appeals Board, and moved over to the IMR process.

The IMR process applies to all injuries on or after January 1, 2013, and all utilization review decisions on or after July 1, 2013. If the UR process is completed in a timely manner, IMR is the exclusive avenue for the employee to appeal a denial or modification of treatment for all injuries.9

The employer is not allowed to appeal the utilization review approval of requested medical treatment. Utilization review is the employer’s sole arbiter of whether it has to pay for requested medical treatment. Only the employee is given the option of a second step in the process and to proceed through the IMR process if that individual disputes the modification or denial of a treatment request.

Under the IMR process, the claims examiner will attach a completed appeal form to the UR denial or modification notice. This form is known as an IMR Application. The employee has 30 days in which to file the IMR Application along with any other relevant information.10 The form is filed with MAXIMUS, the current state contracted vendor who is solely responsible for reviewing an appeal of a utilization review dispute.

The timeline to file an IMR Application to appeal a Utilization Review denial is 10 days for disputes over medications denied pursuant to the aforementioned drug formulary schedule.11

Upon receipt of an IMR Application, MAXIMUS assigns an anonymous, independent reviewer. After the assignment of the reviewer, the claims administrator is notified of the assignment and has 10 days to provide copies of the relevant medical documentation to MAXIMUS.12 The decision of medical necessity is thereafter made by MAXIMUS within 30 days (earlier deadlines are applicable for emergency treatment).

The timeline for MAXIMUS to render a decision regarding denial of prescription medication is five days.13

Further appeal can be made to the Workers Compensation Appeals Board, but only on limited issues (e.g., fraud, bias, clear error); the finding of medical necessity cannot be disturbed on appeal.14

The purpose behind the implementation of both UR and IMR was to remove determinations of medical necessity from the WCAB and leave it to medical professionals to decide whether a particular treatment request is medically necessary.

However, the case of Dubon v. World Restoration has created limited exception to this rule if the UR process is “untimely.” Under that circumstance, the Dubon decision allows the judge to rule on the question of medical necessity, but the injured worker still has the burden to prove that the disputed treatment is required.15

If the UR process is timely but there are other defects, the employee’s only remedy is through IMR. The Appeals Board has issued conflicting decisions regarding the validity of an untimely IMR process.16 This issue appears to have been resolved in the Court of Appeals, which held that the 30-day timeline for an IMR decision after receipt of an IMR Application is directory, not mandatory.17

Independent Bill Review

In an effort to eliminate uncertainty and conflict associated with payment of medical bills, Labor Code section 4603.6 provides for a mandatory bill review and appeal process by medical fee schedule experts who will determine the correct amount to pay a medical provider for a particular service. The Independent Bill Review (IBR) process, as it is known, is intended to eliminate most future liens.

If a medical treatment provider disputes the amount of reimbursement received from the insurance carrier, the dispute must go through IBR. The IBR decision is final and binding on both parties.

For dates of service on or after January 1, 2017, medical providers must submit their bills for payment no later than 12 months from the date of services. The purpose is to stop liens for medical services showing up long after the claim might have otherwise resolved.18

Medical providers who give treatment within the first 30 days of the date injury must submit their bills for payment within 30 days.19

An exception to this timeline is provided for emergency medical services. Billings for emergency medical services provided within the first 30 days of the injury can be submitted for payment up to 180 days after the date of those services.20

The IBR process is relatively straightforward. The medical provider submits its invoice along with the relevant medical report and the physician's National Provider Identifier (NPI) number to the employer or insurance carrier for payment, which then reviews and pays the bill. If the provider disputes the amount paid, they request a second review. If the amount paid is still disputed, then the medical provider must file an application for IBR. The IBR review organization then submits a decision within 30 days, which is binding on the parties. Failure to file an application for IBR conclusively deems the bill correctly paid.21

1. Lab. Code sec. 4610(a)