Complacency or Complexity: California UROs Crawl to Accreditation

 

Another deadline has come and gone for the California workers’ compensation community. “A utilization review process that modifies or denies requests for authorization of medical treatment,” according to newly modified Labor Code section 4610(g)(4), “shall be accredited on or before July 1, 2018” by an independent, nonprofit organization that establishes and monitors UR performance criteria, such as URAC. As of mid-June, it was reported (Subscription Required) that nearly half of UROs had still yet to be certified. Is the sluggish crawl to compliance due to a complacent system culture or an extremely complex process?

The California Formulary Implementation Experience

There is additional context, another July 1st implementation, to consider in determining the cause of the surprisingly low percentage of compliance for UR accreditation – the California drug formulary experience.

California Assembly Bill 1124, passed in 2015, required that the Administrative Director of the Division of Workers’ Compensation (DWC) to establish an evidence-based drug formulary on or before July 1, 2017.

A RAND Corporation document titled “California Workers’ Compensation Drug Formulary:  Design, Implementation, and Impact Analysis Project Overview” was published on the DWC website on February 10th, 2016. The document listed necessary study questions, RAND’s approach to selecting a drug formulary model and critical implementation policies that the DWC would need to develop in advance of the July 1st implementation deadline.

  

Trade publications reported that major system stakeholders submitted public comments for the DWC during the period that ended on May 1st, 2017 recommending the implementation deadline be delayed to January 1st, 2018.  A good portion of comments focused on whether enough time was allowed to implement the closed drug formulary by certain stakeholder groups.  The California DWC subsequently announced the formulary implementation would be delayed and addressed this, and other perceived technical, issues raised by stakeholders.

As is the case with the URO accreditation, stakeholders who took the January 1st, 2018 formulary deadline seriously were ready to hit the ground running prior to the date. They worked hard to establish necessary communication and training throughout their networks ensuring everyone was speaking the same drug formulary language and buttoned up required programming in their systems. Those that did not take the deadline seriously crossed the threshold without being prepared; and experienced a bumpy road on new claims where exempt medications were put through the prospective review process unnecessarily. This ultimately downgraded the injured worker’s experience with the handling of their claim.     

The Long Costly Road to Accreditation

The accreditation process is no easy feat. UROs seeking accreditation must be willing to invest a material amount of time and money to completing the process.

As an example, a URO who already operates at a high-quality level will likely spend numerous months preparing for the accrediting body’s audit. UROs who operate at a less than optimal quality level are likely to experience a show-stopping burden to comply with audit standards. The audit consists of verifying documented procedural descriptions, staff interviews to verify that company operations align with the written descriptions provided to auditors.

More specifically, accreditation for URAC’s Workers’ Compensation Utilization Management (WCUM), which satisfies Labor Code section 4610(g)(4), measures up to 81 separate standards (the number fluctuates downward based on relevance to each respective URO). These standards are divided into two sections, CORE Standards and WCUM Standards.

CORE standards audit general business and operational requirements ranging from organizational structure, up-to-date policies and procedures, regulatory compliance, inter-departmental coordination, oversight of delegated functions, sales and marketing, management of business relationships, information management, quality management, staff qualifications and management, clinical staff credentialing and oversight, health care system coordination, and consumer protection and empowerment.

Workers’ Compensation Utilization Management (WCUM) standards audit review criteria, accessibility of review services (on-site and otherwise), standards for initiating review process, initial screening, initial clinical review, peer clinical review, peer-to-peer conversation, time frames for initial UM decision, notice of certification and non-certification decisions, utilization management policy, and information upon which utilization management is conducted. 

In cases where either documentation or practice is not in alignment with the accrediting body’s standards, documentation must be prepared, reviewed, and approved. The implementation of policy into practice must follow. This step can be a culture shock to company systems if not approached properly. Leadership is essential in cases where new processes are introduced to comply with strict accrediting standards managing transitional process friction.

The cost of payroll hours incurred by UROs seeking accreditation is material. Add to this the accrediting body’s fee (leading accreditation bodies can charge fees upwards of $35,000 irrespective URO size) and the fiscal impact can be prohibitive to smaller organizations.

As a firm believer in third-party audits and accreditation (I passionately advocated, in a past life, for evidence-based medicine guidelines to be required to align with National Academies (formerly Institute of Medicine) standards for trustworthy clinical practice guidelines for state adoption in workers’ compensation), I loudly applaud the State of California for passing a statute that requires this quality standard. I can’t help but feel that unless there is appropriate enforcement by way of licensure revocation, fees, or other measures, compliance will remain spotty at best. 

Now what?

I predict the July 1st deadline will have little consequences for non-compliant UROs. Sure, they’ll experience challenges in the credibility of their denials, but ultimately may not see any state-sanctioned penalty for non-compliance. The lack of compliance will be mostly felt by injured workers who will have to contend with the added system friction due to the URO not being accredited. I HOPE I’M WRONG.

Fortunately for insurers, employers and employees, there are at least 56% of licensed UROs in California that have taken the charge for accreditation seriously and have made the investment to comply.

My recommendation to system stakeholders – seek out the accreditation seal. If your URO is accredited, let them know you appreciate their tireless effort in support of quality medical care for California’s injured workers. If the accreditation seal eludes your URO, you can be certain the cost of non-compliance will hit your ledger directly and indirectly.

Employers, heed the warning of this blog and replace your non-compliant vendor with a partner that values the impact that compliance has on your most valuable asset – your people.

The low compliance rate to Labor Code section 4610(g)(4) may, at the end of the day, be a combination of both a complacent system with little to no penalty for non-compliance and an accreditation process whose complexity reaches new heights.

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The Narrative of Workers’ Compensation is Changing

 

The workers’ compensation system looks much differently today than it did a decade ago, partly due to the opioid epidemic. Tragedies of this scale have a way of spurring unexpected outcomes bringing people together from all walks of life and disciplines. Workers’ compensation stakeholders have, and continue to experience, numerous paradigm shifts among insurers, pharmaceutical benefits management companies, and utilization review organizations. These shifts are all good; they are getting the thinking more in line with a patient-centric approach in each respective vertical.

Changes Among Insurers

Insurers have historically been a natural target of misplaced frustration brought on by system friction in workers’ compensation. They are often painted with a broad brush as callus, cold entities incapable of humanizing the consequences thrust onto someone’s life due to a workplace injury or illness. While this accurately characterizes some players in this vertical, there are others who are successfully changing their culture in how claims are perceived internally and what a successful outcome looks like in today’s workers’ compensation environment. They understand that a win does not always equate to short-term savings.

National Council on Compensation Insurance (NCCI) President Bill Donnell recently had a sit-down with Tracy Ryan, Liberty Mutual’s Chief Claims Officer and outgoing NCCI Board Chair. When presented with the question on how insurers in workers’ compensation can demonstrate their relevance and value, she responded with what some might consider a non-traditional answer from an insurer:  Insurers must share real-life stories of how the workers compensation industry fulfills the “noble mission” of helping injured workers recover from work related injuries.

Is this just marketing speak?

NCCI is now documenting real-life stories as described by Ryan. Their online catalog documents recounts of actual claims from various insurers describing scenarios in which the patient/employee is always the center of the process. Marketing speak or not, this is reflective of an agency’s push to make their focus on patients more apparent in hopes of inspiring a paradigm shift throughout a seemingly antiquated industry.     

The narrative is changing…

Changes Among PBMs

Pharmaceutical benefit management (PBM) companies have the complex job of, well, working themselves out of a job (that’s my personal take). Think about it:  A PBM’s success is most frequently measured by the number of inappropriately prescribed drugs they are able to intercept prior to them reaching unsuspecting injured workers. These unfilled prescriptions have a direct negative impact on a PBM’s bottom line.

CompPharma’s latest data reflects a 9.8% decline in pharmacy costs across 29 payers included in their 2017 survey. According to the PBM consortium, the decrease was the result of continued focus on improved clinical management, the expansion of utilization review and prior authorization, increased clinical involvement in the management of claims, and more structured drug alerts and alert management processes resulting in significant reductions in opioid spending.

Across the country, PBM’s have supported legislation proposing the standardization of evidence-based care by way of treatment guidelines and pharmaceutical drug formularies. This push has led to a notable change in prescribing habits in workers’ compensation playing a prominent role in process and cost efficiencies relating to pharmaceutical spending.

The added legislative and regulatory oversight of pharmaceuticals is prompting a move to non-pharmaceutical options, such as Cognitive Behavior Therapy (CBT) and activity-based treatment, for the treatment of pain. PBM efforts at every level (customer and state levels) are effectively balancing the way prescribers think about the need to use medications based on evidence-based care standards. 

The narrative is changing…

Changes Among UROs

According to California’s Department of Industrial Relations, Division of Workers’ Compensation, “Utilization review (UR) is the process used by employers or claims administrators to review treatment to determine if it is medically necessary. All employers or their workers’ compensation claims administrators are required by law to have a UR program. This program is used to decide whether or not to approve medical treatment recommended by a physician which must be based on the medical treatment guidelines.”

Due to the fact that UR is a payer’s right to review the request for treatment for medical necessity according to the state’s adopted medical treatment guidelines, the process is often seen as a detriment to the injured worker. UR is mistakenly seen as a yet another hurdle in the way of delivering promised medical care to the injured worker. As a result, leaders in workers’ compensation are urging payers to view utilization review through a more critical lens. It can no longer be viewed as a commodity, a service “thrown in” as part of a larger claims product.

“What patients need is careful, thorough UR by physicians with the time and training to foresee and speak to potential consequences of their determinations. And that costs money.” – Joseph Paduda, Principal, Health Strategy Associates; President at CompPharma

Done right, UR is not a mechanism of denial; it is assurance to employer and employee alike that only sound medical care proven to be effective according to leading scientific medical evidence and/or clinical consensus will be used for the restoration of the worker’s health.

Let’s go deeper:

Independent Medical Review (IMR) is the state-sanctioned process mandated specifically allowing injured workers the ability to appeal UR denials. Essentially, IMR holds UROs accountable to using sound scientifically medical evidence and/or clinical consensus when making a determination. If UR is upheld through IMR, it can be concluded that the URO followed the appropriate steps, consulted the appropriate medical evidence, and engaged adequately qualified medical peer reviewers in pursuit of their determination.

With this in mind, envision a scenario where a URO’s Independent Medical Review (IMR) uphold rates are higher than the state average. This statistic is incredibly difficult to accomplish since IMR, by design, is created to poke holes in the UROs assessment allowing the injured worker a fair, unbiased, 3rd party evaluation of the medical necessity of the requested treatment protocol. For a URO to exceed state-averages in IMR uphold rates takes a diligent commitment to quality, intentional focus on fairness, and consistent consideration of the scientific medical evidence via guidelines and/or clinical expertise.

National workers’ compensation thought-leaders have been urging payers, claims administrators, and managed care vendors for years to change their focus putting patients (i.e., injured workers) at the center of the equation (as it should be). We are finally seeing a national push in this direction. Make no mistake, it not a perfect system. There is no such thing. But I personally will celebrate the fact that we are slowly, but surely, moving in the right direction.

The workers’ compensation community is being forced to come together, today more than ever before, to help mend the broken in body and spirit. And from my vantage point, the community is responding as it should.

The narrative is changing…

   

CompPharma data used by permission.

Tragedy has a way of spurring unexpected outcomes bringing people together from all walks of life and disciplines. Here are my observations on the paradigm shifts happening throughout workers’ compensation partly due to the global tragedy that is the opioid epidemic.

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The California King Case: Imperceptible Implications for UROs

 

Many minds in the workers’ compensation community have been monopolized by California’s King v. CompPartners, Inc. case. On August 23rd, the State’s Supreme Court issued their ruling on the high-profile dispute:  Workers’ compensation law provides the exclusive remedy for an employee who alleges injuries caused by a utilization reviewer’s denial of medical treatment. This column is not as much about the legal details of the case as it is about pondering what comes next for the utilization review (UR) process. Are there imperceptible implications that could usher legislative and/or regulatory changes for Utilization Review Organizations (UROs) across the Golden State?

While the ruling is widely perceived as a win for proponents of California’s workers’ compensation system, the visibility of the King case has inspired numerous editorial pieces seemingly critical of the quality of UR. These write ups undermine the value of medically appropriate UR determinations and their ability to keep injured workers safe from avoidable disability due to iatrogenic conditions.

The details central to the case appear to provide a basis for those who argue that the workers’ compensation system may not be working as legislature intended. This perception will undoubtedly initiate more dialog among system influencers who are unhappy with today’s utilization and Independent Medical Review (IMR) landscape. Their primary objective will be to unravel the UR and IMR processes.

As certain stakeholder lobbies push to reduce the system’s administrative expenses, service vendors face ongoing pressure from employers and insurers to find ways to cut costs for their services that can result in lower quality and less effective products.

Make no mistake, the UR process at its core is designed for the benefit of injured workers and employers alike – the central figures of workcomp’s grand bargain. A high-quality review process ensures the safety of the worker remains top-priority while paving a path to functional restoration in a timely manner. This provides the employer assurance that they only pay for treatment that is proven to be efficacious by the scientific evidence and qualified medical professionals in order to facilitate optimal outcomes.

An argument can be made that while the legal questions around exclusive remedy may have been answered by the King case, the jury is still out regarding the ethical component of UR. Nicely summarized by a recent blog, UROs must take the time to consider the implications of their decisions on an injured worker’s health. It would greatly benefit the workers’ compensation community if all stakeholders involved in the care and claim continuum were to consider the same. In the end, doing what is right by the injured worker is what matters most.

However, if decisions to award business to UR vendors are primarily price-driven, the risk of cutting corners and potentially rendering the UR process inefficient, and ineffective, becomes very real. UROs have a duty to inform and educate clients, as well as the California workers’ compensation community at large, of the risks that accompany a bargain-bin approach to utilization review. The viability of the UR process depends on it. 

A bundled approach to managed care can produce efficiencies. It can also provide covering to conceal price gauging and quality defects in an UR product. How does a payer adequately survey for a high-quality UR service? 

A thorough review of the URO’s process and verifying the program’s accreditation is the only way to qualify the service for quality. UR is a component in workers’ compensation that inevitably requires a high degree of human intervention and clinical analysis. This is due to the complexities of certain medical scenarios that do not always fall within the guardrails of guidelines or best practice standards. These reviews take time to reach a well-informed determination that will usher the injured worker to functional recovery and productivity.     

Ironically, it is not unheard of for misguided payers to dictate a time-limit that their UROs can spend per review expecting the cost for clinical UR reviews and necessary processing to be restrictively low. This pressures UROs to rush decisions, and in some cases bypass necessary clinical analysis, making a decision without looking at the complete picture. Limiting the use of clinical resources required to ensure adequate medical care is being administered to the patient, in an effort to maximize savings, is not an effective strategy for cost and risk mitigation. It does quite the opposite; this practice exposes everyone involved to increased damages. There are no short-cuts to quality and improved outcomes.

The King debate now places California’s UR and IMR systems under increased public scrutiny. The question as to whether the workers’ compensation system is working as intended will only become more prominent in the months to come.

As unfortunate as the health implications suffered by the injured worker in this care are, they are not indicative of the positive day to day outcomes achieved for injured workers’ in California partly due to the UR process. Recently published data by the California Department of Industrial Relations (DIR) and its Division of Workers’ Compensation (DWC) measured that IMR overturned UR denial of treatment just 8.3% of the time in 2017. This affirms that 91.7% UR denials protected injured workers from the potential of extended disability due to inappropriate medical care.

Nonetheless, I expect the UR conversation to be a prominent point of discussion come next year’s legislative session. The additional attention placed on these areas will result in either an improvement in the quality of reviews through increased accountability, or unnecessary hurdles being introduced making it difficult for UROs to provide necessary protections to injured workers.      

Indeed, there will be implications for this segment of the workers’ compensation community that lie beneath the surface of the King case verdict. It will be incumbent upon UROs and their advocates to encourage a paradigm shift among payers respective to the purpose and true value of the utilization review process. In doing so, they will afford themselves a seat at the table to influence prospective legislative and regulatory change.

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Risico Insurance Provider