What is Wrong With Utilization Review

Tuesday, July 21, 2009 | 0

By Dennis Knotts


ALLOW ME TO DISCLAIM:

Yes, it has actually come to that. However, when you've ticked off as many attorneys as I do, there are very few left to defend you in case the others gang up to sue me. So, here it is. I'm a claims adjuster. I find no shame in that confession; although many would equate it to a confession of a social dysfunction on the level of being a drug addict or alcoholic. I wear my label of my mental disorder/social dysfunction proudly. I'm not an attorney. I don't have a law degree. I never attended a formal law school outside of the numerous classes provided by our workers' compensation industry. And the following is purely an editorial based upon years of observation, experience and research from the claims adjuster point of view. Although this training was sufficient to allow me to serve as an expert witness in Superior Court for a few years, some people just get squeamish when I don't know the attorney's secret hand shake or password.

Also, these comments are made as a private citizen and not endorsed by any employer or agency...although if good comes out of this article there will be plenty who want to share the credit and none to take the blame. Like all claims adjusters, if something goes wrong it's my you-know-what. If it works out find, everyone was backing you all the way. Success is always the best defense.

As always, the names and facts have been changed to make them funny...except where they are true. This editorial is not designed to replace sound legal counsel - I will let you write your own definition of that term. As such, please consult your legal professional before implementing any actions, defenses or strategies you might think of while reading this...they need the work in these hard economic times.

Lastly, I find that it is easier to learn if you are laughing at the same time. Something my puppeteering career taught me long ago. Yes, that's a different confession of social dysfunction all its own. Therefore, this editorial will be tongue in cheek, which while that means it's trying to be funny and entertaining, it also means there's a good chance of biting my tongue...which is what several of you might say while you read it.

GEORGE THE BARTENDER:

I'm going to have to blame George the Bartender for this. For those who have not met George the Bartender, he is a fictional character that an attorney uses to explain some of the complex points of workers' compensation law. I'm not sure if he is a registered trademark, but I couldn't find that little thing-a-ma-jig on my computer to mark it that way. Sorry.

The setting is always after a hard day at the WCAB. The professionals slip over to a local hotel where there is a bar in the lounge.  Some of the players make a comment, and George the Bartender always gets confused. This always opens the door for a better explanation.

I was introduced to George the Bartender second-hand by a friend's e-mail. Normally, George the Bartender stories do a good job of explaining the problem. However, in this last installment there was no good answer. An attorney friend and I spent a couple of weeks kicking e-mails back and forth trying to find the solution missing from the George the Bartender story. We finally had to come to the conclusion that there was no solution.

Those who know me know I do not believe in a no-win scenario. I've tricked the Kobayashi Maru on a number of occasions, not by reprogramming the computer; but by digging deeper into the Labor Codes. This time, no matter how deep I dug, there was no solution.

THE KOBAYASHI MARU OF WORKERS' COMPENSATION:

For those one or two people who missed the latest Star Trek movie or don't understand the concept of Kobayashi Maru scenario. [Yes, I've chosen to use the Wikipedia spelling of the term.] It is designed to be a no-win scenario. It's a test of character that sees how you deal with failure and imminent death. No matter what you do to find a solution, the computer alters the scenario to block your best efforts. Well, credit should go to lawmakers for creating the Kobayashi Maru of workers' compensation: Utilization Review.

WHAT WAS THE DOCTOR'S OFFICE REALLY ASKING?

The entire concept of mandatory utilization review came about because lawmakers made the incorrect assumption that medical decisions were not being made by medical personnel. While you might have some rare instances of this happening because of an inexperienced claims adjuster, the reality is that claims adjusters never made medical decisions.

When the doctor's office called the claims adjuster for authorization, it was understood that when the nurse or receptionist asked: "Will you authorize...?" it was never a request for a claims adjuster to make a medical decision. It was an abbreviated question of "Will you authorize payment for...?"

The question of medical necessity had already been determined by the physician. The call was to determine if payment was going to be made or would there be issues barring or reducing payment for services rendered.


JUST SEND ME A BLANK CHECK:

There was an experience I had to deal with many years ago which illustrates this problem perfectly. I received a call from a physician who asked me to approve a hernia surgery. Now I knew he wasn't asking me to make the decision as to whether or not the employee needed the surgery. He had already made that decision. He was just looking for someone to send him the check for services rendered.

I asked for the employee's name and searched for it on the Wang — yes it was that long ago. His name was not there. We had no claim on him. I advised the physician I couldn't authorize it unless I knew who the employer was. The physician didn't know and it wasn't in the file. I asked him to ask the employee. He couldn't do that. I tried to explain that unless I could verify that the employee worked for an employer we insured, there was no way I could authorize payment of the surgery. This comedy of errors lasted several minutes more when I finally asked him if the employee was there. He admitted that the employee was in the office. I demanded he put the employee on the phone so I could get some information. He told me he couldn't. It finally came out that the employee was already under for the surgery.

He had prepped the employee, put him under, was ready to make the incision when one of the nurses noted that no one had authorized payment of the surgery. That's when he called me. He declared that if I wouldn't authorize payment for the surgery, he was going to wake the employee up and send him home. I told him he would have to do what he needed to do. However, I did make one recommendation. Before he woke up the employee to send him home for non-payment, I strongly suggested he call his malpractice insurance carrier and discuss this with them before taking any action.

The issue was not whether or not he needed the surgery. We were not debating that. We were debating who was going to pay for the services rendered. Without knowing who the employer was, and if we had an insurance policy covering that employer, and without knowing if this was an accepted claim for that employer; I literally had no legal authority to obligate that employer for the cost of the surgery.

TACKLING UTILIZATION REVIEW:

By now the sessions of Insurance Education Association's workshop: Tackling Utilization Review should be over and so I can make a shameless plug for the workshop I've taught for two semesters now. I had taught utilization review from a legal standpoint, not the medical. I do not even own an ACOEM book just so I am never tempted to use it to make a medical decision. Better to play it safe.

However, I found that the attitude you have when you deal with utilization review makes all the difference in the world. When it was first introduced the California Applicants' Attorneys' Association (CAAA) had injured workers' lined up around the block to make an emotional plea against the process. I had to wonder about this, and the more I studied utilization review; the more I began to wonder what the real motives behind their protests were.

RANDOM TREATMENT EQUALS RANDOM RESULTS:

The whole concept of evidence-based medicine came from two doctors who realized that where treatment was random, so were the results. "I don't know what else to do for you...let's try this!" And then people are surprised when no one got well.

Our two physicians start looking into a way of removing the "random" from the random treatment side of the equation. By tracking down scientific studies, and using double and triple blinds to protect the effectiveness of a treatment protocol they began to find that when a patient exhibited these symptoms and this protocol was used; then treatment was effective. People got well. Wow! What a concept.

I was sold on the concept and I would preach to our new employees in their orientation session that if they were injured on the job they had an advantage over the older employees because if they were injured on the job there was a standard of care that offered them the maximum potential for full recovery. We couldn't promise full recovery, but this would be the maximum potential available to them

THE DOUBLE-EDGED SWORD:

The first time through when I taught Tackling Utilization Review I compared Utilization Review to a double-edged sword. One side was defensive for denied claims and the other side was offensive for accepted claims. I cautioned that utilization review was not to be thought of as purely a cost-containment process. Years ago at Pacific States Casualty Co., we had introduced utilization review to the workers' compensation industry. It was seen only as a way of cutting treatment and cutting bills. Where we saved a few pennies on the medical costs we ended up spending hundred of dollars more on temporary disability, permanent disability and litigation costs. We learned the error of our ways.

So armed with this vision of utilization review offering the maximum potential for full recovery given these medical findings relating to the employee, I taught students to use this as a kind of quality control. We should insist on this level of care to get employees well. We should become the advocates for the injured workers.

METROPOLIS:

This is not where Superman lives. It's an old science fiction novel that became one of the first silent films. It's about a great city depending upon its technology to survive. The upper class enjoys all the benefits; while the lower class is sucked dry by the machines. Needless to say a rebellion comes about. The book — being a very old book — had a moral to the story; and even put it on the opening page: "The mediator between head and hand must always be the heart." In Metropolis the upper class were the head and the lower class the hand. There was no heart to mediate between the two; and the upper class destroyed the lower class.

There must be a mediator. In the workers' compensation system, the utilization review is the head. It is hard, cold and unemotional. The hand is still the injured worker. The concept of utilization review providing the maximum potential for full recovery cried out for there to be a heart to mediate what the reviewing physician said and what the injured worker needed. Despite the rumors of claims adjusters being the only living heart donors, we were the only ones in a position who could demand better for our injured workers. If they get well, they go back to work, the claim closes; and we all get on with our lives.

However, I also advocated that where a claim was denied; then utilization review became the defense side of the sword to protect the employer from fraud and abuse. That was before I met George the Bartender.

THE DWC EDUCATIONAL SEMINAR 2009:

My thanks go out to Bob Wong and his staff for putting on a fantastic yearly event called the DWC Educational Seminar. This has always been a great place to come and learn about what's happening in the industry and what changes have taken place - or are about to take place. My thanks to Bob and to all the instructors who have does such a wonderful job year after year!

While it's a great place to learn; it's also a good place for me to keep getting myself in trouble. Some of my students are keeping logs of when I've spoke up or asked the wrong question to the wrong person. Each year they wait to hear some story of me getting into trouble and being made to stand in the corner.

This last year, we heard a comment we couldn't believe. One of the speakers was telling us that we needed to send our requests for medical treatment on denied claims through utilization review. Her reasoning was that if the claim were later found compensable; then we had made medical decisions on the file and were not physicians; and there would be penalties to pay. Somehow the fact that the issue was unresolved at the time of the decision not to send request through didn't seem to mean anything to her. But we asked the question: "So what if utilization review finds the treatment is appropriate?"

"You have to pay for it."

Wait a minute! Pay for treatment not just on a delayed claim, but on a denied claim this does not make sense.

The industry stewed over this for several months. When the audit unit showed up at our door we put the question to them. Their response was to hold off the medical requests and when a case was found compensable, just send it through retroactively. Sounded like good advice.

THE OBSESSIVE COMPULSIVE SYNDROME:

I strongly believe that there are two personality traits needed to be a good claims adjuster: Does not play well with others; and does not respect authority. I keep getting asked to word these qualifications in a more politically correct manner, but everyone understands these terms; and would miss the concept if we worded them in politically correct lingo.

We have to make decisions based upon the law no matter what people think of us. Hence, the "does not play well with others" requirement. We have to challenge everyone from doctors to attorneys to judges. Hence, the "does not respect authority" part of the requirements. I have also learned that it helps to have a severe obsessive/compulsive disorder because the job is so demanding you have to have an obsessive/compulsive disorder of the most severe degree to put in that much effort to do a job that lawmakers have made physically impossible. Lawmakers seem to excel at creating Kobayashi Maru scenarios for claims adjusters. I seriously doubt if there is a lawmaker anywhere who could do the job they demand of us. Maybe we should pass a law that no lawmaker can make any reform or changes to work comp until they have been a successful claims adjuster for two years. I'll pass out the petition at the end of the class.

I should have accepted the recommendation of the audit unit; but then I started thinking about it. Nope it didn't work. In fact, the Supreme Court shot the whole thing down in flames.

THE SANDHAGEN FALLOUT:

Mr. Sandhagen was injured on the job and his physician made a recommendation to conduct an MRI to see if his pain was due to the injury or a non-industrial condition. Now be honest. That sounds like a great idea, doesn't it? I would love to know if I was responsible for the treatment or not. But the recommendation got sent through utilization review. Utilization review gave it a thumbs down verdict, but didn't make the decision timely. That started all of the chaos relating to medical evaluations.

I would argue that the Supreme Court was incorrect in part of their verdict, but being a humble claims adjuster and not having a body guard; I will hold that part of the argument off until a later time. However, the thrust of the message from the Supreme Court is that if you don't do your utilization review in a timely manner; then you can't use utilization review to address the medical issue. Now I have to agree with the original claims adjuster's defense that I don't see that written anywhere in the Labor Code. I do see administrative penalties for failing to act in a timely manner, but nothing about barring a medical opinion. I wonder how that plays out in real life: "I'm sorry, your arm is broken; but I didn't figure that out within my allotted timeframe. Therefore I guess that means your arm isn't broken, and doesn't need to be set. Have a nice day." 

The time frame is five working days from the receipt of all necessary information to make the decision; but in no event more than 14 days from the date the request was made. There's no way I can hold off submitting those medical requests until the case is found to be compensable and treat them as a retroactive review. None of them would be admissible before the WCAB.

THE NO-WIN SCENARIO:

So now you begin to understand just a little the problem claims adjusters are dealing with. Add to this a case law early during utilization review's life where an adjuster accidently had a request for surgery go through. Utilization review approved the surgery. He tried to revoke the authorization for legal reasons the next day, but the physician refused saying he had the authorization. He did the surgery and the WCAB ordered the claims adjuster to pay for it and the additional benefits caused by the surgery.

THE MEDICAL TREATMENT LIEN SHUFFLE:

This is where George the Bartender came in. Two physicians talking about the killing they made on their treatment bills because the claim had been denied. George didn't understand and several drinks were not going to enlighten him. It's all about a routine that takes place at so many WCAB's every day called the "Medical Treatment Lien Shuffle."

When a claim is denied, the physician files liens for the costs of the treatment. There's just one problem with this, unless the treatment is on a delayed claim and costs less than $10,000; the employer has no legal liability to pay for it. It's true. Check it out in Labor Code 3602 (c). Where the conditions of compensation set forth in Section 3600 do not concur, the liability of the employer shall be the same as if Division Four had not been enacted.

Now there are some interesting things under the workers' compensation insurance policy that need to be addressed here. The workers' compensation insurance policy states that the insurance carrier will pay for those costs for which the employer is liable. Per Labor Code 3602(c) the employer is not liable for any of the costs of treatment or benefits on a claim that has failed to meet all the requirements listed under Labor Code 3600. The insurance carrier technically has no legal authority to pay these claims on behalf of the employer. There is no policy or contract extending the authority to do so. But it happens. Even worse, the employer is saddled with those costs as if the carrier had the legal authority to pay the bill and charge it back to him/her.

If we did a strict interpretation of the workers' compensation policy, then the insurance carrier could pay for these liens; but would not be allowed to add them to the Unit Stat Reports where they would incorrectly suggest the employer was legally liable for them.

So where did it all go wrong?

MAKING AN EFFORT:

The Labor Code requires the employer [or his/her insurance carrier] to make an effort to resolve all liens before a settlement can be approved. The claims adjuster no longer has the legal right to deny any payment and seek to litigate questionable and fraudulent liens. All the lien claimants know this and so they just keep dragging you down to the WCAB — even years later — knowing that at some point you will give them something to go away.

So the claims adjuster makes the effort. However, you have to make a real effort or the WCJ gets mad at you. Then suddenly your minor offer is not enough and the lien claimant has made a counter offer. Without realizing it, you have created the misconception that you are in negotiations with the lien claimant, and the WCJ now becomes the moderator at the auction: "I have three thousand. Do I hear four? Is there a four? You, mister claims adjuster/attorney; give me a four!"

You're required to make a counter offer to their offer or you're accused of having an ego and not really wanting to resolve the lien. Of course you don't want to resolve the lien. You came down to try the lien. Then comes the threat that the judge suggests very vaguely that whoever doesn't make the offer or accept the deal will be the one ruled against and having to pay legal fees to appeal. If you try to argue about saving money or protecting the employer; the WCJ is quick to point out that if that's the case, give them the money and save yourself the legal fees. THAT'S how you save money at the WCAB. You give it to people who don't deserve it.

The Medical Treatment Lien Shuffle kicks in. You're pulled out on the dance floor. When the dance is over you're feeling like the date who was slipped the date rape drug and wondering how to regain your lost innocence. [Sorry for that image, but it was the only clear way to describe the feeling of violation you encounter in the process.]

But then insult is added to your injury. Here's a perfect example from one of my former students. The facts have been altered but the lack of logic still remains: An employee needed Durable Medical Equipment [DME]. The adjuster provided the equipment through an approved vendor. The employee used it for a couple of weeks. The employee recovered and the adjuster paid the bill for $250. Two days after the vendor picked up the DME, another vendor calls to advise they have just filled the prescription. The adjuster tells them they are not authorized, there is no longer a need, and go pick up the equipment. They do, but bill for over $10,000 for the same equipment that was never used.

At the board the slippery slope snags you. You have to make an effort — that's the law. You try to hold it to something minor. You end up settling for $750. The music dies down, the Medical Treatment Lien Shuffle is over and you are left lying violated on the floor. While you're trying to figure out how you ended up paying over twice the legitimate price for a bogus bill the judge and attorney and players all tell you what a wonderful job you've done. They even sign a paper telling you that you've saved your company/employer a lot of money.

It's all a sham! There was never that much money involved. It was a padded bill so that even if you offered ten cents on the dollar it would more than pay for any legitimate costs — even though no services were ever provided. The actual cost of their lien should not have been more than $250 — the amount you paid a legitimate vendor to provide the service. What part of "reasonable" in the "reasonably necessary" phrase under Labor Code 4600 do the players fail to recognize? The vendor should have gotten $25. That's what 10% of their actual lien should have been. But by exaggerating, falsifying and padding the liens go ten, twenty or thirty times what you would have paid if you had provided and paid for the treatment up front.

But the players at the WCAB have you gather the remnants of your dignity to cover your shame, give you a slip of paper as payment for your humiliation — as if paying for what they have done makes it any less of a violation. Then you have to go back to the employer, and tell them how much money you saved them because you gave the vendor money for not doing anything; or for giving them money for a bill they shouldn't have been paid on in the first place. At some point the employers are going to wise up to this scam.

So what does this have to do with utilization review? I'm glad you asked.

THE DECK IS STACKED AGAINST YOU:

The concept of utilization review is that it should act as a sword of defense when unnecessary treatment was provided to an employee. Unfortunately, the sword gets stuck in it sheath and you can't even pull it out. Another weapon of defense is also unable to function in these situations: the Official Medical Fee Schedule. Where treatment is denied, or a claim denied, the Official Medical Fee Schedule cannot be used to show what the reasonable costs of the service should be. What happened? Is some other kind of treatment provided on denied claims that isn't provided on accepted injuries? The minute you challenge the need for the treatment your weapons of defense are taken from you. You can't send the requests for medical treatment through utilization review on a denied claim for fear of having to pay for it. The result? You're paying for it anyway and since the Official Medical Fee Schedule doesn't apply, you're paying a lot more for it. Does anyone wonder what's wrong with this picture?

You are at the WCAB, ordered to make an effort to resolve bogus liens, without the protection of utilization review or the Official Medical Fee Schedule and a judge who feels it's an ego problem that's making you not want to pay something for nothing. In this scenario, there is no down side for vendor billing for services never rendered or authorized. There's no down side to billing for excessive treatment. There's no downside to ignoring the regulations at the WCAB and failing to show but continuing to call and harass the claims adjuster to give you something to go away.

I know of one situation where a lien claimant called the claims operation 10 times in one hour trying to get someone to give him money that the legal system had already told him he was not entitled to and this had been passed on to him verbally and in writing several times before.

SO WHAT'S WRONG WITH UTILIZATION REVIEW?

The problem with Utilization Review is that it is a square peg trying to fit into a round hole. Utilization Review was created for the Group Health industry. Lawmakers made a major mistake in thinking that all insurance was the same and parts were interchangeable.

Group Health Insurance deals with a world I refer to as pure medicine. Every decision made in the pure medicine world is 100% a medical decision. It is 100% based upon the medical necessity. In this pure medicine world the M.D. after the doctor's name really does stand for "Mighty Deity."

Unfortunately, workers' compensation insurance is not a pure medicine world. It is a world of medical-legal. Workers' compensation is a legal world where from time to time medical issues are raised and need to be addressed. Here the M.D. after the doctor's name does not stand for "Mighty Deity." This level of authority now falls to the workers' compensation judge [WCJ].

All this came to light many years ago. In the 1990's, Group Health Insurance companies were buying up workers' compensation insurance companies in an effort to start a pilot program of blending Group Health and Workers' Compensation into a 24-hour coverage program. I began to notice nurses from Group Health carriers coming into my workers' compensation classes. They came with an agenda. Before I could even introduce myself to the class, their hands were up and demanding my attention.

"Yes?" I asked.

"We need the legal definition of an injury."

"The legal definition? You're hurt. That's it." No it wasn't and they wanted the legal definition. So being the dutiful instructor I went back and spent the week looking for the legal definition. I found it in Labor Code 3208. Unfortunately, when I read it to them the following week, they were not happy.

"Here it is. The legal definition of an injury. Labor Code 3208: 'An injury is any injury...'"

They were not happy with me. They were looking for the legal loopholes. Literally the concept was: now that I've got your premium money; how can I avoid paying your claim? This is why Group Health would never be able to develop a 24-hour coverage program. They will only provide the benefit while the money is still coming in. Under future medical cases, where the policy is not collecting any money, they will still have to provide the benefit. The Group Health industry picked up the ball and went home. They no longer wanted to play.

However, this still opened the door to other nurses coming into my class. A major piece of the puzzle came to light one evening when I mentioned a case law where a judge denied an employee's back surgery. You would have thought I had said the most sacrilegious thing that could ever be said. I nearly had to run for my life as they screamed and shouted about how a judge did not have the right to deny medical care. They were still thinking in "pure medicineese" — if there is such a word, and my spell check is clearly telling me there isn't. So Mr. Webster, I want credit when that word finally ends up in your dictionary. Their minds were not able to grasp the concept of medical-legal. Medical issues addressed in a legal environment.

SO WHERE DID WE GO WRONG?

Part of the problem is that we allowed people who have pure medicine mentality, introduce a pure medicine program into a medical-legal environment. After numerous e-mails, I finally came to the only way to deal with all of this was to use a doctor for utilization review who will send the decisions to me and let me send them to the medical provider. I would pass through the denials, and where the treatment was medically indicated, hold those back and send a legal denial. However, if you read the regulations, there are a lot of hefty penalties attached to that scenario as well. Failure to give the utilization review decision within 24 hours of the decision being made carries a pretty frightening penalty.

So as I was teaching the Utilization Review workshop this last time, it suddenly hit me. I had found the perfect solution; but it was denied to me...or was it?

What is needed in these kinds of scenarios is a legal filter. Workers' compensation is a medical-legal system. Not a pure medicine system. There has to be a legal filter between the reviewing physician at the utilization review service and the treating physician requesting the authorization. The way this program was structured left the key component out: the legal filter.

DOES NOT PLAY WELL WITH OTHERS:

Remember that one requirement in your personality makeup that makes you claims adjuster material? Well, this is where it comes together. We had encountered this battle in the early 1990's when Pacific States Casualty first introduced utilization review to the workers' compensation industry. Yes, it's my fault and I do apologize for it.

Our president was not a workers' compensation person. He was a group health person. One day he asked us: "Why can't we use utilization review in workers' compensation the way we did in group health?"

We didn't have an answer, didn't know we couldn't do it; and so we did it.

We contracted with a company out of Arizona. They hired five nurses; and I spent a couple of months training them in the basics of workers' compensation. However, when the program was up and running the problem became obvious: who had the finally authority on the file? The nurses insisted that they had ownership of the file and their decision was final. The claims adjusters had to sit across the table from the employer and defend these decisions; so we felt our decisions should be final. We did not play well together. Decisions were being made to cut off treatment, force employees back to work and deny second opinions on medical issues. Claims adjusters began fighting to get control of the file back. Nurses began sharpening their hypodermic needles and freezing their stethoscopes in preparation for the war ahead.

Fortunately, when the president saw how much money the utilization review process was costing us in litigation costs; we dropped the program. The issue was never resolved; but we had won the war just the same.

SO WHO HAS THE FINAL SAY?

Remember the comment about the workers' compensation insurance policy? The insurance carrier only has authority to pay for any costs the employer is "legally" liable for; not medically liable — legally liable.

DID ANYONE READ THE FINE PRINT?

The nice thing about teaching for the Insurance Education Association is that I get a lot of opportunities to teach a lot of subjects. I have no personal life, but I do have a lot of opportunities to teach. One such opportunity came a couple of weeks ago when I was teaching the CA 20 Advanced Issues class for IEA. We were studying the Regulations for claims adjuster certification. Then I saw it there under Insurance Regulation 2592.01. It was hidden in the end of the definition of "claims adjuster." In fine print it noted two parties to whom the definition of claims adjuster did not apply. The first was any attorney. But the second one was that this definition did not apply to physicians conducting utilization reviews under Labor Code 4610. It'll cut and paste the exact wording for all you detail freaks out there that need to see it for yourself. Insurance Regulation 2592.01:

..."Claims adjuster" does not include the medical director or physicians utilized by an insurer for the utilization review process pursuant to Labor Code section 4610.

Wait a minute! Why is that so important? I had had this issue before, previously with an attorney. There are very specific claims adjuster functions. One of those functions was that the claims adjuster could make decisions  regarding compensability of a claim. The claims adjuster could made decisions about reserves on a file. The claims adjuster could make decisions concerning bills and benefits. What all of this boiled down to was that a claims adjuster was authorized to obligate an employer to a financial expense. If the claims adjuster agreed, the employer would sustain a financial loss.

So let's put this into the big picture. Obviously, the Administrative Director wrote the regulations concerning utilization review without reading the Insurance Regulations concerning claims adjuster certification. The Administrative Director created procedures for utilization review that were contrary to the Insurance Regulations. Do Insurance Regulations trump Administrative Regulations? Better get a legal opinion on that. [OK attorneys, here's your  chance to earn a little extra money on the side.]

When the reviewing physician at the utilization review service makes the decision concerning the recommended treatment, in most cases they prepare the written notice, they contact the physician by phone or fax [actually more likely e-mail] and they submit the notice authorizing the procedure. In doing so, the reviewing physician has just violated the Insurance Regulations. The reviewing physician is not a claims adjuster. In fact, the reviewing physician is specifically excluded from being considered a certified claims adjuster. As such, the reviewing physician lacks the legal authority to obligate an employer for a financial expense.

IT'S ALL IN HOW YOU SAY IT:

During the early stage of utilization review (...it's starting to sound like a disease). In the early stage of utilization review, the DWC was putting on seminars concerning its regulations relating to utilization review. "Authorization" was defined as an "assurance" that appropriate payment would be made. If authorization was issued; then payment was guaranteed. It might be cut to fee schedule or contractual rates, but payment would be made.

Those conducting these early seminars were adding [without legal authority] that other words such as "appropriate," "necessary" or "certified" carried this same assurance of payment. I wasn't able to find that in either the Labor Code or the Regulations. However, it was gospel since it was delivered by someone with the Mighty Deity after their name. If a doctor tells us how to interpret a legal document; then it must be true. The industry reacted as such.

Also in the early stages of utilization review some companies would word their decision in such a way as to try and give the claims adjuster the legal filter needed. "The procedure is considered appropriate; however the final decision regarding authorization remains with the employer or claims adjuster."

That's the way it should have worked, but these efforts were dismissed. However, when we add in the Insurance Regulation's definition of a claims adjuster; we find that decisions are made by the reviewing physician concerning whether or not the treatment meets the medical standard; but the decision to authorize the payment and obligate the employer to pay for them must still rest with the claims adjuster. The reviewing physician should prepare the decision, but the notice to approve must still come from the claims adjuster since approval of a procedure obligates an employer to suffer the financial loss of paying for it. If the employer is not legally liable for the procedure, then even if it is medically needed [remember the hernia surgery from way back at the beginning of the editorial?] then the claims adjuster cannot obligate an employer to pay for it.

This would permit claims adjusters to use utilization review on denied claims, but replace approvals with legal objections to the services requested. The denials would be timely and therefore be admissible before the WCAB. The decision can be incorporated into the denial so it would be passed on to the treating physician and bar the penalties from the Audit Unit as long as it was timely. We would then be able to pull out our double-edged sword at the WCAB [figuratively speaking, let me make that point very clear having had a few of you in my classes] and fight unnecessary treatment on denied claims.

Isn't what I'm suggesting what claims adjusters did before utilization review was introduced into the system?

With that I rest my case. The Klingon ships are in flames. The survivors of the Kobayashi Maru have been rescued and it's on to our next mission: how to work the Official Medical Fee Schedule in on denied claims... [That may take the help of a few lawmakers, whom I've just spent a lot of this article offending. I never said I was smart.]



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Dennis Knotts has been a claims adjuster for many years and worked in all forms of claims operations. He also teaches for the industry when he is not causing trouble or in therapy.
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