Answers to frequently asked questions about utilization review (UR) for claims administrators
In addition to the FAQs below, claims administrators may call 1-800-736-7401 during normal business hours to speak to a live representative at the Division of Workers' Compensation Information Services Center.
Claims administrators may also call a local office of the state Division of Workers' Compensation (DWC) and speak to the Information and Assistance (I&A) Unit for help during regular business hours.
Claims administrators may find the DWC's fact sheets and guides for injured workers useful and can access them on the I&A Unit's Web page.
Throughout this FAQ, when citations to Title 8 of the California Code of Regulations are made, they will appear in this format: (CCR, Title 8 §number.) Citations to California's Labor Code appear as: (LC number).
Topics covered in this FAQ include:
Utilization review
Who can make UR decisions?
UR program requirements
Types of UR and prior authorization
UR penalty regulations
Maintaining and modifying a UR plan
About utilization review:
Q. When does the UR process begin?
A. The UR timeframe for responding to treatment requests begins when the request for authorization (RFA) is first received, whether by the claims administrator or utilization review organization (URO).
Q. Except for expedited reviews, prospective or concurrent reviews of RFAs require a five-business day turnaround of the UR decision. When do the five days begin, and how are the 5 days counted?
A. Prospective or concurrent decisions must be made within five normal business days from the date the written RFA was first received, whether by the employer, the claims adjuster or the URO. The date of receipt, if before 5:30 p.m., is counted as day zero, and the next day is counted as day 1. A “normal business day” does not include Saturdays, Sundays, or holidays. Holidays can be found on the California Department of Human Resources internet website. If a counted day falls on a Saturday, Sunday, or holiday, then the count resumes on the next normal business day.
Q. How should the UR decision be communicated?
A. Prospective, concurrent, or expedited review decisions must initially be communicated by phone, fax, or email within 24 hours of the decision. If the communication is by telephone, written notice must also be sent to the requesting physician the injured worker, and, if applicable, the injured worker’s representative. The written notice must issue within 24 hours of the decision for concurrent review, within two business days for prospective review, and, for expedited review, within 72 hours of receipt of the request for treatment authorization.
Q. Is utilization review required in every case?
A. Not necessarily. Although every treatment request may be subject to UR, a claims administrator may decide to authorize treatment without putting the request through UR. Additionally, an employer may choose to reduce the cost of physician review by designing a “prior authorization” program within the employer’s UR plan. (See below: About prior authorization.)
DWC supports the establishment of UR best practices that allows claims administrators to approve appropriate levels of care for injured workers at the lowest possible levels within the claims organization, without having to send those requests for external physician review, i.e., utilization review.
Further, the legislature has determined that, unless excepted, treatment addressed in and consistent with the medical treatment utilization schedule from a physician that meets network requirements, that is rendered within the first 30 days of a work injury, is not subject to prospective UR. Also not subject to prospective UR under these circumstances are drugs listed as exempt on the MTUS Drug Formulary List. Treatments exempt from prospective UR may still be subject to retrospective UR at the employer’s discretion, but only for the purpose of determining consistency with the medical treatment utilization schedule.
About who can make UR decisions:
Q. Who can make UR decisions? Who can modify and deny an RFA?
A. It depends.
Decisions to approve treatment requests or request additional medical information may be made by claims adjusters, other non-physician reviewers, nurses, or physicians. Additionally, a non-physician reviewer may discuss the treatment plan with the requesting physician. If the requesting physician decides to make a change in the RFA or in the treatment plan, the claims administrator or URO must have documentation from the requesting physician of that change.
Decisions to modify or deny treatment requests may only be made by physicians.
About UR program requirements:
Q. Do we have to have a Medical Director to oversee our utilization review program? What are the requirements for a Medical Director?
A. Yes. All claims administrators must have a UR program and all UR programs must have a medical director. The medical director must hold an unrestricted license to practice medicine in California issued pursuant to Section 2050 or 2450 of the Business and Professions Code, is responsible for all decisions made in the UR process, and must ensure that all UR decisions (approvals, delays, modifications and denials) comply with the law.
Q. Does a UR plan need to be approved by the DWC?
A. Generally, yes. Effective July 1, 2018, every employer, either directly or through its insurer or an entity with whom utilization review services are contracted, is required to submit a description of the UR process that modifies or denies treatment requests and its written policies and procedures to the Administrative Director for approval.
Q. Does a UR plan need URAC accreditation?
A. Generally, yes. Unless exempted by the Administrative Director as a nonprofit, public sector internal utilization review program, a utilization review organization that modifies or denies requests for treatment must be accredited (with URAC) and must retain active accreditation while providing UR services.
Q. Who should get a copy of a decision to modify or deny a treatment request, and what must be included with such a decision?
A. For all dates of injury, the written decision shall be provided to the requesting physician, the injured worker, and if the injured worker is represented by counsel, the injured worker's attorney and shall contain the following information:
The decision must be in writing and it must contain:
- The date on which the DWC Form RFA was first received.
- The date on which the decision is made.
- A description of the specific course of proposed medical treatment for which authorization was requested.
- A list of all medical records reviewed.
- A specific description of the medical treatment service approved, if any.
- A clear, concise, and appropriate explanation of the reasons for the claims administrator's decision, including the clinical reasons regarding medical necessity and a description of the relevant medical criteria or guidelines used to reach the decision pursuant to section 9792.8. If a utilization review decision to modify, deny or delay a medical service is due to incomplete or insufficient information, the decision shall specify the reason for the decision and specify the information that is needed.
- The Application for Independent Medical Review, DWC Form IMR, with all fields, except for the signature of the employee, to be completed by the claims administrator. The application, set forth at section 9792.10.1, shall include an addressed envelope, which may be postage-paid for mailing to the Administrative Director or his or her designee.
- A clear statement advising the injured employee that any dispute shall be resolved in accordance with the independent medical review provisions of Labor Code section 4610.5 and 4610.6, and that an objection to the utilization review decision must be communicated by the injured worker, the injured worker's representative, or the injured worker's attorney on behalf of the injured worker on the enclosed Application for Independent Medical Review, DWC Form IMR, within 30 calendar days of receipt of the decision.
- Include the following mandatory language advising the injured employee: "You have a right to disagree with decisions affecting your claim. If you have questions about the information in this notice, please call me (insert claims adjuster's name in parentheses) at (insert telephone number). However, if you are represented by an attorney, please contact your attorney instead of me."
- Details about the claims administrator's internal utilization review appeals process for the requesting physician, if any, and a clear statement that the internal appeals process is voluntary process that neither triggers nor bars use of the dispute resolution procedures of Labor Code section 4610.5 and 4610.6, but may be pursued on an optional basis.
- The name and specialty of the reviewer or expert reviewer, and the telephone number in the United States of the reviewer or expert reviewer.
- The hours of availability of either the reviewer, the expert reviewer or the medical director for the treating physician to discuss the decision, which shall be, at a minimum, four hours per week during normal business hours, 9:00 a.m. to 5:30 p.m. Pacific Time, or an agreed upon scheduled time to discuss the decision with the requesting physician. In the event the reviewer is unavailable, the requesting physician may discuss the written decision with another reviewer who is competent to evaluate the specific clinical issues involved in the medical treatment services.
"For information about the workers' compensation claims process and your rights and obligations, go to www.dwc.ca.gov or contact an information and assistance (I&A) officer of the state Division of Workers' Compensation. For recorded information and a list of office, call toll free 1-800-736-7401."
About types of UR and prior authorization:
Q. What are the different types of UR?
A. Prospective, concurrent, retrospective and expedited review. Please refer to regulation 9792.6.1 and 9792.9.1 for more information.
Q. What is prior authorization?
A. "Prior authorization" has a special definition in the California workers' compensation system. It is defined as "the claims administrator's practice of any prior authorization process, including but not limited to where authorization is provided without the submission of the RFA or DWC Form RFA." To qualify as prior authorization, the process must be clearly described in the UR plan filed with the DWC, because by definition "authorization" means "assurance that appropriate reimbursement will be made for an approved specific course of proposed medical treatment….” (Section 9792.6.1(a).)
The UR plan's description of what qualifies within the prior authorization process must be clear about what is required by the treating physician and how the physician will be informed of the conditions under which treatment will qualify under the prior authorization process.
For example, the "prior authorization" process described in the UR plan may allow the claims administrator to inform a particular clinic, medical provider or medical providers in the employer's MPN that all treatment and diagnostic testing given within the first five days of an injury is automatically approved and will be paid for upon submission of a bill in compliance with the billing regulations. Or, another "prior authorization" process may state that whenever rotator cuff surgery is approved through the normal prospective review process, a prescribed course of postsurgical rehabilitation is automatically approved (e.g. up to 24 postsurgical physical therapy visits even if they exceed the cap in LC section 4604.5). Or, the description of the prior authorization process may be based on documentation of specific combinations of presenting signs and symptoms, e.g. an MRI is authorized when a patient who has had low back pain with radiation to one lower extremity presents with "red flags" or with worsening symptoms and there are new and/or abnormal physical findings.
The regulation allows the employer flexibility to tailor the prior authorization process to meet its needs. However, because prior authorization (as with all treatment authorizations) involves medical issues, it must have medical director oversight, either through the UR plan medical director or the claims administrator's own medical director. Approving requests by means of a prior authorization system is part of UR and must be submitted to the DWC administrative director as part of, or as a material modification to, the written UR plan.
Prior authorization should not be confused with pre-authorization, which involves prospective review. Prospective review is the process for obtaining prior authorization and applies when the treating physician is required to submit an RFA and obtaining approval before providing treatment.
About UR penalty regulations:
Q. Who is subject to UR penalties?
A. Claims administrators and UROs.
Q . What triggers a UR investigation? What is the difference between a PAR and UR investigation?
A. UR investigations apply to UR organizations (“UROs”) and are conducted by the group within DWC’s Medical Unit assigned to handle UR investigations. Performance Audit Reviews, or PAR audits, which contain a UR component, apply to Claims Administrators and are conducted by the DWC’s Audit Unit.
The DWC’s UR investigations group conducts a routine investigation of each URO at least once every five years. A targeted investigation may also be conducted based on receipt of a credible complaint (called a "special target investigation").
Claims administrators are also subject to routine investigations at least once every five years, but these routine investigations are generally conducted as part of the existing performance audit review (PAR) process under Labor Code sections 129 and 129.5.
Additionally, if the claims administrator or URO has failed a previous routine investigation, the DWC can return for a target investigation (called a "return target investigation"). A return target investigation is done within 18 months after a routine investigation in which the investigation subject failed to pass with a score of at least 85 percent.
Q. What happens at an investigation?
A. During a routine investigation, a random sample of RFAs received over the most recent, full three-month period prior to the investigation and any additional records that may be needed will be reviewed. The administrator, at either the URO or the claims adjusting location being investigated, will get a notice at least 14 days before the investigation begins stating that the administrator will need to provide copies of all requested documents.
The investigation process varies according to whether the investigation is conducted on a claims adjusting location in conjunction with a performance audit review (PAR) audit, or is conducted on a utilization review organization (URO). For a claims adjusting location, the audit pertaining to the UR portion is labeled a "URA" investigation. Auditors from the DWC Audit Unit conduct the PAR audit and also review a sample of files containing RFAs.
In a URO investigation, the URO is required to submit files either in hard copy or electronically to the UR Investigations group within the DWC Medical Unit for review. In some cases the Medical Unit will also do an on-site investigation.
Q. What are the other UR penalties?
A. There are two types of penalties: Mandatory or "a" and “c” penalties (listed at section 9792.12(a) and section 9792.12(c), respectively); and “b” penalties (listed at section 9792.12(b)). Mandatory penalties cannot be waived. “B” penalties, in amounts of $50 and $100, however, may be subject to waiver or abatement.
The DWC will calculate a performance rating for "b" penalties based on a review of the randomly selected requests for authorization.
All violations found during the investigation will be cited with the appropriate penalty amount under CCR, Title 8 §§9792.12(a) or 9792.12(b). All violations found must be abated even if no penalty amount is paid.
No "b" penalties, however, will be assessed for payment during a routine investigation if the subject meets or exceeds 85 percent in the performance rating, which is the "pass rate." Even if the subject doesn't meet the pass rate, it is possible to have the "b" penalties waived by the administrative director if the investigation subject provides evidence showing how the violations have been abated and agrees in writing to a return investigation to verify the abatement measures are still being practiced.
About maintaining and modifying a UR plan:
Q. Where do we file the UR plan?
A. The complete UR plan must be filed with the DWC administrative director, either by the claims administrator or by the designated URO. The claims administrator may send a letter naming its URO, if the URO has submitted a complete UR plan to the DWC. Additionally, as of July 1, 2018, if aUR plan modifies or denies requests for treatment, unless exempt, it must obtain DWC approval of its plan.
The plan should be mailed/emailed to:
Division of Workers' Compensation
Medical Unit - Utilization Review
P.O. Box 71010
Oakland, CA 94612
DWCUR@dir.ca.gov
A material modification, defined at subdivision (n) of section 9792.6.1, must be filed within 30 calendar days of a change to the utilization review standards or vendors and sent to the DWC. Failure to do so can result in a mandatory penalty.
January 2024