In 2014, California legislators enacted laws requiring employers to conduct Utilization Review (UR) for every treatment recommended for a work-related injury. In 2016, legislators amended the law to demand data verifying that employers meet their legal obligations to make timely and compliant UR decisions.

Unfortunately, it’s unclear whether the Division of Workers’ Compensation (DWC) has acted on this directive.

Senate Bill 1160, passed in 2016, amended the California Labor Code to “...require the administrative director to develop a system for electronic reporting of documents related to utilization review performed by each employer, to be administered by the [DWC] (emphasis added).”

Legislators (and Governor Newsom) recognized that UR data are critical to determining whether employers consistently authorize necessary care in a compliant and timely manner. The well-being of their injured worker constituents depends on a properly functioning UR system.

Data collection is the clear, objective way to identify potential abuse of that system.

Therefore, the legislature directed the DWC to establish an electronic means to gather data on every UR decision issued by an employer’s claims administrator. But seven years later, the agency has not complied with this requirement to our knowledge.

As usual, California claims administrators are the beneficiaries of this failure to uphold UR compliance and accountability. As usual, (as demonstrated by daisyBill’s past reporting), injured workers are the victims of the lack of UR accountability.

CA Law Requires UR Decision Oversight

In California, if a provider fails to obtain employer authorization for any treatment, including retrospective authorization for an emergency, the employer is not obligated to pay for that treatment.  

The provider must fax a Request for Authorization (RFA) form to the employer’s claims administrator listing the recommended treatment. In response, the employer’s claims administrator must send the physician a UR decision approving, denying, or modifying the treatment.

In other words, California grants employers’ claims administrators the power to enforce authorization requirements by allowing claims administrators to deny payment when a provider fails to obtain authorization.

Question: Who enforces the laws employers must adhere to when issuing a UR decision?

Answer: In 2016, California legislators amended California Labor Code Section 4610, requiring the DWC to electronically collect every UR decision issued by California employers (emphasis ours):

“The administrative director shall develop a system for the mandatory electronic reporting of documents related to every utilization review performed by each employer, which shall be administered by the Division of Workers’ Compensation. The administrative director shall adopt regulations specifying the documents to be submitted by the employer and the authorized transmission format and timeframe for their submission.

For purposes of this subdivision, “employer” means the employer, the insurer of an insured employer, a claims administrator, or a utilization review organization, or other entity acting on behalf of any of them.”

The legislature and Governor directed the DWC to establish mandatory electronic reporting for every UR performed in California. This reporting would inform the DWC whether employers’ claims administrators and their Utilization Review Organizations (UROs) are improperly denying care or untimely responding to RFAs.

DWC Ignores CA Law?

Seven years later, daisyBill has seen no evidence that the DWC has done a blessed thing to implement the mandated electronic reporting of UR decisions.

As physicians fax claims administrators millions of RFAs with millions of medical documents to request care for injured workers, there is no data to inform how compliant (or not) claims administrators are with existing UR laws and regulations.

Suppose the DWC had performed as instructed by California law; there would be reams of data to determine essential information about UR decisions issued by employers, including:

1. Types and quantities of treatments being requested by physicians
2. Timeliness of UR decisions sent timely by claims administrators and/or their vendors
3. How often claims administrators delay UR decisions by requesting additional information
4. Whether UR physicians are adhering to the Medical Treatment Utilization Schedule (MTUS)
5. Statistics regarding UR approval, denial, and modification rates for each claims administrator

Of course, California claims administrators benefit from the DWC’s lack of action, because laws and regulations are difficult to enforce without the necessary data. In the absence of information, wrongdoing cannot be prosecuted; it can only be expected to continue. Injured workers will continue to suffer as a result.

Perhaps we shouldn’t be surprised. After all, the DWC has taken what can charitably be called a laissez-faire approach to the enforcement of California laws and regulations, including those that apply to the agency itself.

We can’t make UR fair — but we can make it easy. Enjoy 30-second RFAs, UR decision tracking, and more with daisyBill..

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