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Study Shows 94.1 Percent Approval Rate for California WC Treatment Services

Oakland — A new study shows that following the adoption of recent changes that streamline the California workers’ compensation medical review and approval process, 94.1% of medical services performed or requested for California injured workers were either approved (92.5%) or approved with modifications (1.6%).  

The California Workers’ Compensation Institute (CWCI) study measures medical service approval, modification, and denial rates overall and by service category in the first 10 months following the 2018 implementation of changes that altered the Utilization Review (UR) process adopted over a decade ago and the Independent Medical Review (IMR) process that took effect in 2013.  The recent changes include adoption of a prescription drug formulary based on evidence-based guidelines (authorized by AB 1124), which exempts certain drugs from prospective UR; as well as changes mandated by SB 1160 that allow UR exemptions for most medical services provided within 30 days of injury, basic services performed by Medical Provider Network providers that meet evidence-based guidelines, and emergency services. 

The study found that overall, 29% of the services denied or modified by UR physicians went to IMR where the IMR physicians overturned 8.5% of the UR decisions they reviewed, raising the approval rate from 93.9% to 94.1%.  Final approval rates, however, varied significantly by service category, ranging from 78.6% for Injections to 99.7% for Evaluation & Management services.  Notably, in the pharmaceutical category, 88.1% of the prescriptions were approved by UR, 2.6% were approved with modifications, and 9.2% were denied.  Following IMR, 10.6% of the pharmaceutical denials and modifications were overturned, which pushed the overall approval rate for prescription drugs up to 88.6%.  Breaking out results for the top drug groups revealed wide-ranging results, with denial rates ranging from 2.9% for anti-inflammatories, which are exempt drugs under the formulary, to 18.0% for dermatologicals and 20.9% for musculoskeletal therapy agents.  Opioids had a relatively high denial rate of 17.4% as well as the highest modification rate of any drug category (8.2%), with most modifications involving reductions in the quantity of the drug or the number of refills for a prescription.  

An updated look at IMR decisions from 2014 through June 2019 shows the volume of determination letters declined in the first half of this year, falling back down to 2015-2017 levels after increasing in 2018.  The update on IMR also revealed that 11.8 percent of the 2019 IMR decisions were for UR reviews where the service was approved, but the quantity or duration was modified to bring them in accord with evidenced-based standards.  These modifications were rarely overturned in IMR, which suggests that a regulatory change precluding IMR submissions when a UR modification reduces the number or frequency of a medical service to levels that meet evidence-based standards could eliminate a substantial number of IMRs that are being submitted without an opportunity to determine results from the approved level of treatment.   

More details, analysis, and graphics from the study, including data on the involvement of high-volume law firms in the IMR process and the proportion of disputed services requested by high-volume medical providers are available in a CWCI Research Update Report, “Post-Reform Medical Approval Rates in California Workers’ Compensation,” posted under Research at www.cwci.org..