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.
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.