December 2015

Two Techniques to Trim Claim Costs

California mandates two cost-saving claims review techniques: utilization review (UR) and independent medical review (IMR). Here’s a brief overview of how they work.

Utilization reviews have saved companies around the country billions of dollars in workers’ compensation costs since California mandated utilization review in 2004. The California legislation, since adopted by many other states, requires every employer (or its workers' compensation claims administrator) to establish a utilization review (UR) process. Utilization review is a process reviewing and approving medical treatment based on medical necessity to cure and relieve work-related illness and injury.

UR can bring greater cost-efficiency to the recovery process and help injured workers return to health more quickly. It ensures that treatments are administered within established scientific guidelines — usually those compiled by The American College of Occupational and Environmental Medicine (ACOEM).

Studies have shown that UR effectively tames workers’ compensation costs. A report prepared by the California Workers Compensation Institute on the impact of reform legislation shows that in five of six types of services, utilization review resulted in fewer visits and lower amounts paid per claim.

Not all URs are created equal. Differences in approach by the client and the medical management company can cause a huge disparity in results.

For instance, all utilization review providers use registered nurses to perform the original review. If they find discrepancies, they often refer the case to a consulting physician, who charges much higher rates. Instead, it’s often cheaper and more effective for the nurse to contact the provider to discuss the reasons for the apparently inappropriate treatment.

Utilization review for workers’ compensation claims must take a different approach than UR for non-occupational claims. Since workers’ compensation also pays for lost time claims, a more costly treatment that reduces an injured worker’s time away from the job could be the most cost-effective solution.

Using occupational healthcare providers to manage the treatment of injured workers can help. Occupational healthcare specialists have experience in treating workers’ compensation patients and expert knowledge of the physical demands of work. When using an occupational medicine specialist to coordinate treatment, employees are more likely to get the treatment they need to get back to work sooner with fewer rebounds.

Independent Medical Review

Where utilization review ends, independent medical review (IMR) begins. If utilization review denies or delays a treating physician’s request for services, California law gives an injured worker the right to request independent medical review. In this process, the worker will contact the Division of Workers’ Compensation (DWC), which will contract with an independent medical review organization to conduct IMR. Employers pay the cost of IMR, which varies depending on the nature of the treatment and the number of medical professionals required to resolve the dispute. Still, the DWC says is "significantly lower" than the cost of litigating.

For more information or assistance with safety and compliance issues, please contact the PCOC Insurance Program Department at EPIC, (877) 860-7378 or visit www.pcocinsurance.com.