Talk About UR in CA Has No Basis in Data

Good information is the precursor to good decisions.

In order to get good information one must have good data, or at least some data.

In California, it appears that some important decisions are pending without requisite data by which to determine if the information behind decisions is good.

In this case I'm talking about the current debate as to the cost/benefit discussion concerning utilization review (UR).

I have been critical of the industry regarding the cost of cost-containment services. Utilization review, the process of obtaining third party review of medical treatment requests, is partially a cost-containment service. I say partially because theoretically utilization review should also benefit the patient to ensure that unnecessary or ill-conceived medical procedures are not foisted upon him or her without demonstrable efficacy.

Regardless, according to the latest information from the Workers' Compensation Insurance Rating Bureau (WCIRB) cost-containment services now comprise 47% of all loss expenses, estimated to total $370 million in 2011.

The question being examined now by the California legislature is whether the system is seeing value but it seems that question can not be answered with the data that is, or rather is not, currently collected.

Pending is AB 1687, by Paul Fong, D-Cupertino, that would authorize attorney fees when an injured worker with an award of future medical treatment successfully appeals a utilization review denial.

The legislative analysis to the bill gives a broad estimate as to how many utilization review requests are denied - between 6% and 20%.

Tracing this incomplete estimate backwards to its origin - from legislative analyst Julie Salley-Gray who is a consultant to the Assembly Appropriations Committee, to bill sponsor California Professional Firefighters, to the Division of Workers’ Compensation DWC - we come to find out that DWC doesn't track this data.

The vague estimate blame then gets passed on to the Commission on Health Safety and Workers' Compensation (CHSWC).

DWC spokesman Peter Melton said in an email to WorkCompCentral that the division does not track or keep UR statistics.

“It seems these numbers are from a January 2011 CHSWC lien report,” Melton wrote.

The CHSWC lien report, however, provides only the percentage of medical liens that were filed as a result of a UR denial. CHSWC reported authorization for treatment was in dispute in 70% of liens surveyed.

Utilization review was the reason treatment was not authorized in 6% of the liens filed with the Workers' Compensation Appeals Board, according to CHSWC. The reason treatment was denied in 20% of cases was unknown or not stated.

"'Authorization,' as used in the lien report, is not the same as 'authorization' as used in UR," Melton wrote. "The 6% only means that of all medical dispute liens filed with the WCAB that did not involve a fee schedule dispute, only 6% involve UR denials. The 20% is in the 'other' category and cannot be logically related to UR denials."

So it turns out that between 6% and 20% of utilization review requests aren't really denied; they are just lien disputes and 20% of lien disputes do not have a relationship to UR denials.

The California Applicant's Attorneys Association (CAAA) has been critical of UR and on May 15 a statement saying delayed and denied treatment is a significant cost driver.

Barry Hinden, legislative chair for the CAAA and the association’s past president, said during a telephone interview for the WorkCompCentral story on Thursday that based on his personal experience he thinks that 80% or even 90% of treatment requests are denied.

Hinden's experience is going to be much different than an overall number because the cases he is managing necessarily will involve dispute - but whether it is 6, 20, 80 or 90% is still alarming because the bottom lien is that nobody knows.

Nobody knows ...

Consequently the conversation about the costs and benefits of UR is premature. We can't discuss this topic because we don't have the data to make intelligent decisions.

For that reason AB 1687 needs to be deferred. The industry doesn't really know what it is spending its money on and whether value is being created, destroyed or remaining inert.