When it comes to payer abuse of the authorization process in healthcare, the jig isn’t exactly up yet — but federal legislators and regulators seem to be catching on to private insurer schemes that create profit at the expense of care.

Nationwide, authorization requirements can delay or prevent necessary medical care. Accordingly, the Centers for Medicare and Medicaid Services (CMS) recently debuted new rules that force some healthcare insurers to:

• Speed up denial/approval decisions
• Provide specific reasons for denials
• Use an automated electronic authorization process
• Publicly report data on denial rates

While these new CMS rules apply only to entities (including private insurers) that work with Medicare, Medicaid, or insurance exchanges, these rules demonstrate that the federal government has realized what the California legislature realized years ago: some payers will deny treatment for the wrong reasons.

Yet, the California Division of Workers’ Compensation (DWC) continues to ignore the 2016 state law requiring the agency to create an electronic reporting system of Utilization Review (UR) data to show how often workers’ comp payers deny providers’ treatment requests for injured workers.

California passed this essential UR reporting law over 7 years ago. What’s taking so long? And what does the DWC accomplish by keeping Californians in the dark about denials of potentially medically necessary care for injured workers?

Below, see daisyBill’s 2023 UR statistics highlighting the urgent need for the DWC to adhere to California law.

CA Workers’ Comp UR Data 2023

daisyBill offers its clients daisyAuth technology, which automates the faxing of Requests for Authorization (RFAs) and tracks UR decisions. As shown in the table below, California workers’ comp claims administrators (aka: payers) and their Utilization Review Organizations (UROs) approved just 70% of all provider-requested treatments requested in 2023.

*The remaining 9% reflects UR decisions in which the claims administrator neither approved nor denied the requested treatment but either modified the treatment, contested liability, or deferred the UR decision.

The above data represent tens of thousands of UR decisions claims administrators sent in response to providers’ formal Requests for Authorization (RFAs).

Needless to say (but we’ll say it anyway), the notion that only 70% of the requested treatments were medically necessary strikes us as something that warrants closer examination.

Moreover, as we reported in mid-2023, approval and denial rates varied drastically from one payer to another — suggesting that medical necessity isn’t the only factor in these decisions, unless specific payers just happen to get an inordinate number of bogus RFAs from providers.

Authorization: Containing Costs or Preventing Care?

A January CMS press release states that the new healthcare insurance requires (emphasis ours):

“...all impacted payers to include a specific reason for denying a prior authorization request, which will help facilitate resubmission of the request or an appeal when needed.

Finally, impacted payers will be required to publicly report prior authorization metrics, similar to the metrics - PDF Medicare FFS already makes available.”

While “prior authorization” in group health operates differently than authorization in workers’ comp, the principle remains the same. When payers are empowered to veto care by a treating physician in the name of cost control, improper denials are an inevitable side effect the system must guard against.

California legislators attempted to establish protections for injured workers against authorization abuse with Senate Bill 1160, which amended the California Labor Code to require the DWC “...to develop a system for electronic reporting of documents related to utilization review performed by each employer…”

Specifically, the intent of SB 1160 was to ensure that UR was not conducted in the dark and to identify troubling patterns of denial rates. Yet, so far, the DWC has not taken action (of which we’re aware) to comply with this law.

As evidenced by the new CMS rules, reformers are making inroads. To protect the rights (and health) of injured workers, the DWC should:

• Immediately comply with SB 1160 and establish a UR reporting system
• Mandate electronic transmission of RFAs and UR decisions (currently faxed)
• Establish a universal UR decision format (currently, there is no mandated form or format for UR decisions, which are often complex, lengthy, and contain irrelevant information)

The federal government and CMS are taking steps in the right direction. The California legislature took a similar step over seven years ago, in 2016. All that remains is for the DWC to care about the care injured workers don’t receive.

 Submit RFAs in 30 seconds and automatically track UR decisions with daisyAuth. Request a demo below!

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