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In 2003, the Legislature reformed the workers’ compensation medical care delivery system by repealing the PTP’s presumption of correctness and implementing an objective standard of care determined by evidence-based medicine guidelines. The result was the creation of a Medical Treatment Utilization Schedule (MTUS),  a dynamic series of medical treatment guidelines designed to create a “standard of care” by which proposed medical treatment would be evaluated.

In late 2012, another round of reforms began to take shape in the form of Senate Bill 863. The inability of the adversarial and judicial systems in workers’ compensation to effectively implement the standard of medical care intended by the prior reforms through the adoption of the Medical Utilization Treatment Schedule and utilization review led to the creation of a new medical dispute resolution process: independent medical review. A common principle of both UR and IMR is the process of evaluating requests for medical tests and treatments for medical necessity, efficacy, and appropriateness.

And this week the CWCI published a report that compiled data on utilization review and independent medical review decisions from a variety of sources. According to the study, “due to the availability of the MTUS and other evidence-based medical guidelines, three out of four medical treatment requests are approved by claims adjusters without the need for additional oversight, with 25 percent of the treatment requests requiring elevated utilization review.”

IMR upheld 78.9 percent of all reviewed elevated UR decisions, while overturning 21.1 percent, with a majority of the UR decisions upheld in all 14 medical service categories. As was the case in elevated UR, pharmacy-related IMR decisions were by far the most prevalent, accounting for one third of all IMR determinations. Of those pharmacy-related reviews, 78 percent upheld the UR decision, while 22 percent overturned the prior UR decision. Consultations, laboratory services, and tests and measurement had the highest percentage of overturned UR decisions following IMR (50 percent, 34.2 percent and 35.3 percent respectively). Among the high-volume IMR requests, durable medical equipment, which accounted for 1 out of 10 IMR determinations, had the lowest percentage of UR modifications (13.2 percent), while 85 percent of all IMR decisions on physical medicine upheld the UR determinations.

Physical medicine practitioners accounted for the largest proportion of the reviewers (43 percent), followed by occupational medicine specialists (20 percent), orthopedists (14 percent) and family practitioners/internal medicine specialists (10 percent). No other medical specialty accounted for more than 5 percent of the IMR reviewers.

Thus, the CWCI study concludes “The fact that only a small proportion of medical treatment requests are modified or denied shows that UR/IMR are serving as intended, as an exception process.” Federal and group health plans typically use a shared risk model to balance supply and demand for medical services. Medicare, Medicaid and almost all group health programs use mandatory utilization review, along with supply-side controls such as fee schedules, closed provider panels, highly regulated pharmaceutical formularies, explicit limits on specific procedures and therapies and prohibitions on experimental procedures and equipment and demand-side controls such as co-payments and deductibles, contractually based limitations on services. Because cost controls such as co-payments and deductibles cannot be used in the workers’ compensation system, cost containment programs are typically limited to the use of fee schedules, medical treatment guidelines, partial limits on specific procedures and utilization review.

However, the study presents alarming data on opioid pain medication use. UR and IMR pharmaceutical reviews represent 43 and 25 percent of all decisions respectively. In terms of pharmaceutical control, a chronic pain management guideline was implemented within the MTUS in July 2009 for the purposes of providing better oversight controls on the use Schedule II and Schedule III opioids and other pain management therapies. Researchers found that between 2009 and 2012, Schedule II and Schedule III opioids have essentially remained at one quarter of all California workers’ compensation outpatient prescriptions and 30 percent of total prescription drug expenditures. This data compiled on UR and IMR decisions suggests that between one-third to one-half of the UR and IMR pharmacy reviews involved opioids or compound drug requests. The authors have also separately documented the high rate of Schedule II opioid prescriptions for minor back pain, strains of the extremities and mental health disturbances, a questionable use of these highly addictive and dangerous pain medications.

The sustained high rate of Schedule II and Schedule III opioids and the high rate of pharmacy-related UR and IMR decisions suggest an opportunity for stronger pharmaceutical utilization and cost controls. A forthcoming CWCI study will compare new trends in Schedule II and Schedule III opioid use in California workers’ compensation and compare California utilization and cost factors against an alternative closed formulary method used in other states.