Turning the Clock Back on California’s Workers’ Compensation System

The California Applicants’ Attorney Association (CAAA) is promoting AB 1107 to California Legislators in hopes of materially modifying utilization review exemptions for medical treatment. CAAA has gone on the record stating that they are “dealing with a system that is broken and has failed to deliver the necessary medical care to workers who suffer job-related injuries, whether by lack of accountability or blatant discrimination”.

Is AB 1107 a step in the right direction in promoting prompt, adequate medical treatment for injured workers in the State of California?

In concept, AB 1107 seems like a reasonable idea: Remove layers of potentially unnecessary validation for the medical necessity of medical treatment and expedite the delivery of said treatment to the injured worker. The bill’s overly simplistic approach, however, sets the California workers’ compensation industry up for a trip to the past – more than a decade in the past.

Removing Utilization Review

According to California’s Division of Workers’ Compensation (DWC), Utilization Review(UR) is the process used by employers or claims administrators to review treatment to determine if it is medically necessary. UR is used to decide whether or not to approve medical treatment recommended by a physician which must be based on the medical treatment guidelines.

UR has been under the microscope in California for a number of years. UR over-use is frequently debated on the California workers’ compensation education conference circuit and is often credited to be a material driver of spending waste in the state. However, it is important to realize that inappropriate medical treatment administered by a physician (within an MPN, or otherwise) such as a spinal fusion, would be costlier and may cause more harm to the injured worker than good.

The public’s interest in the program seemingly peaked with the publication of the King v. CompPartners, Inc. case in August 2018. California’s Supreme Court ruled that workers’ compensation law provides the exclusive remedy for an employee who alleges injuries caused by a utilization reviewer’s denial of medical treatment.

Editorials published following the case verdict have argued that the workers’ compensation system may not be working as legislature intended. Consequently, I made a prediction in a blog published in September 2018 that there would be an effort “to unravel the UR and IMR processes”. This is precisely the aim of AB 1107 and its proponents.

Unintended Consequences of AB 1107

If the fundamental purpose of UR is to decide whether or not to approve medical treatment, which must be based on California’s adopted evidence- based medical treatment guidelines and drug formulary, the byproduct of eliminating this process is effectively removing the use of evidence-based medicine in determining medical necessity for requested treatments.

study by the California Workers’ Compensation Institute (CWCI) captures the impact of removing UR on the use magnetic resonance imaging (MRI) in Washington State. Washington’s Department of Labor and Industries (L&I) measured the effect of eliminating UR on MRI use in 2003. Their assessment found an increase of 54% in spinal MRI scans and a 72% jump in lower extremity MRI scans. According to L&I, reviewers were unable to identify any other factors than the removal of UR that accounted for the material increases in MRIs.

Bypassing UR is equal to bypassing the use of evidence-based medicine, a cornerstone of California’s workers’ compensation approval process. Evidence-based medicine was adopted to control over-utilization of medical services, set parameters for effective care, and to reduce treatment costs.

By the Numbers

The validation of the use of evidence-based medicine through UR has proven to be effective in California. The most recent study by the CWCI on Independent Medical Reviews (IMR) volume and outcomes states that UR decisions have been upheld 90.7% of the time.

This means that IMR physician reviewers agreed with UR physician reviewers 90.7% of the time on the modification or denial of the treating provider’s medical request. It is important to emphasize that the treatment request modifications, denials and subsequent independent reviews were conducted by physicians. IMR decisions incorporate the review of medical records and other information provided to support the request, as well as a review of recommendations from California’s evidence-based medical treatment utilization schedule (MTUS).

CWCI’s data also identifies that the majority of disputed medical services that go through IMR originate from a small number of physicians. Specifically, the top 10% of physicians identified in the IMR decision letters issued for the study period (1,190 doctors) accounted for 86% of the disputed service requests, while the top 1% (119 providers) accounted for 44% of the disputed services.

DWC Administrative Director George Parisotto addressed an audience at the California Self Insurers Association’s 2019 annual education conference and stated that according to DWC data, 85% of workers’ compensation claims that request IMR are represented by an attorney. This brings into question whether the high volume of IMRs is attorney driven.

An assessment of California’s workers’ compensation reforms (including IMR) conducted by the Department of Industrial Relations (DIR) reported that the average medical costs per claim (excluding medical cost containment expenses) decreased by about 8% between 2011 and 2015 while benefits for workers for permanent disability increased approximately 30%. The report also found that more than $41 million in Return to Work supplemental payments had been disbursed to eligible workers whose benefits are disproportionately low in comparison to their earnings losses.

“A focus on evidence-based medicine has had wide-ranging impact, reducing costs and unnecessary treatment and creating an efficient Independent Medical Review (IMR) to resolve disputes.” (California DIR)

By the numbers, medical disputes in California are not widespread. When disputes arise, the dispute resolution process (i.e., UR and IMR) is effective in protecting injured workers from inappropriate medical treatment and employers from unnecessary expense.

The workers’ compensation system in California is far from perfect. However, methods to expedite the delivery of care to injured workers already exist. Examples range from 30-day Pass-through / 30-day Exemption Items per SB 1160, Expedited Review, and Prior Authorization Lists. IMR processing timeframes have also improved to 9-days (average age from receipt of complete medical records) as of November 2018 (Parisotto, George. CSIA Conference Presentation. 09 April 2019).

The solution is not to repeal more than a decade of progress by passing over-reaching legislation. The solution is aligning with partners that value scientific evidence, improved health outcomes, collaboration with all stakeholders involved in the care and claim continuum, and whose practices are founded in transparency.

The vehicle to deliver prompt and appropriate medical treatment to injured workers is fueled by evidence-based medicine. If the California workers’ compensation community continues to work with the DWC to ensure the use of it in the clinic, the solutions that AB 1107 seeks to produce will come to fruition.

Categories: Evidence-Based Medicine (EBM), Managed Care, Opioids, State Government, State Workers' Compensation Standards, Utilization Review

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2 replies

  1. Hi Carlos,

    Good post. Should make people think about what they are doing.

    I have a slightly different perspective on the use of UR. I’d like to know how doing more UR for routine diagnostics and physical therapy affect other claims costs. Sure, you may see fewer medical exams/treatments, but what is the impact on delays in care, length of the claim, return-to-work stats, litigation rates, indemnity costs and more?

    I think the answer to initial UR is to pick your occ med referring physicians carefully and trust that they’ll do the right thing for the injured workers and the employer. Less UR might save lots of money.


  2. My comment on the statistic reported here they are deceptively inaccurate. Where due to the effects of this new UR and IMR system, which has allowed at least for State Compensation Insurance Fund to now continually deny most all my treatment and has over the last 10 years failed to find and provide for me most of the Medical Providers I require, all of this can all be attributed to their fully abusing and over using these 2013 reforms. Reforms in themselves which have created such onerous requirements for Medical Providers to meet while receiving no extra pay to compensate them for doing so, that they have determined they can no longer accept Injured Workers as patients, finding all the extra work results in taking their valuable time away from treating Patients with Private Insurance, Medicare or paying out of pocket that keep their practices viable. So, with State Fund abuse along with these reforms this has left few to any Providers still willing to accept injured workers as patients in California, but also outside the state. As such, this would account for the statistics over the numbers of disputed treatments coming from just a few Doctors, with only a few left disputing. Where after this system was put into place, the rate of my denied treatment has escalated exponentially and where much treatment approved in the past and proven very successful over the years is no longer allowed. Where not only has my treatment been denied, but while living in Northern California, State Fund could no longer provide me the basics of a Primary Treating Physician, PTP, much less any of the Specialist I required. Leaving me traveling well over 100 mile to the Sacramento, CA. area from the Chico, Ca area to be seen by the few specialist who would still see me, but still no PTP there either. Thus finding no reason to stay in California, having to mainly just rely on those providers accepting my Medicare and Supplemental to now take care most all my WC Medical Needs. So, after years of lack of Providers and good medical treatment provided under WC, starting to see some treatment being denied as early as 2007, I was forced to leave my Position with CAL FIRE on100 % industrial Disability in 2009 due to Cumulative Injuries. But as this became more of a problem after 2013, and like I said my loosing most all of my local Providers, having to now travel 100rds of miles to see some, I fortunately found leaving California a benefit, but not in a manor that resulted in better treatment. This was because we were able to sell our home in Paradise, CA in 2017, before it burned in the 2008 Camp Fire. So prior to my leaving California as well as after doing so, as a result of lack of or denied good quality treatment for my 6 WC injuries, in 2018 after 9 years of litigation watching my conditions just deteriorate, this was very evident to the judge awarding me a 100% permanent disability on a combined 3 Injuries, with another 25% for another unsettled injury, already having 2 other injury settled at 38% and 19% in the past. Having a substantial award that could have been much less in settled years earlier, but more importantly given me a much better quality of life into my retirement year they stole from me. So, again under this broken over-abused system denying more treatment than now is approving and leaving just a few Providers willing to see injured workers as patient, no wonder the statistic can be skewed in favor of the Workers’ Comp Insurance Industry. This needs fixing now or you may no longer see any Medical Providers left, much less see injured worker return to their jobs, with more settlements like mine.


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