UR Penalties Avoiding the Big K Ones

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UR Penalties - Avoiding the Big (K) Ones

• Suzanne Marria
• Staff Counsel
• Division of Workers Compensation

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Overview The Law

• UR penalty regulations became effective June 7,
  2007
• Sections 9792.11 through 9792.15, Title 8
  California Code of Regulations (CCR)
• UR regulations, 8 CCR 9792.6 9792.10, specify
  how to comply with UR statute (Labor Code 4610)

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Employers Complying Since 2004

• January 1, 2004, every employer required to have
  UR process per LC 4610
• UR regulations, 8 CCR 9792.6 9792.10, specify
  how to comply with UR statute (Labor Code 4610)
• Emergency UR regulations effective 12/13/04
  final effective 9/22/05

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Penalty Regulation Overview

• 9792.11 outlines investigation procedures
• 9792.12 sets out penalty schedule
• 9792.13 lists penalty adjustment factors
• 9792.14 addresses liability for penalties
• 9792.15 specifies how penalty assessments will be
  served, rights to contest and request a hearing,
  hearing procedures and appeal processes

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UR vs. Referral to UR Reviewer

• Utilization Review includes approvals
• For the purposes of this section, utilization
  review means utilization review or utilization
  review management functions that prospectively,
  retrospectively, or concurrently review and
  approve, modify, delay, or deny, based in whole
  or in part on medical necessity to cure and
  relieve, treatment recommendations by
  physiciansprior to, retrospectively, or
  concurrent with the provision of medical
  treatment services pursuant to Section 4600.
  (Labor Code 4610(a))

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UR vs. Referral to UR Reviewer (cont)

• Non physicians (claims adjusters, RNs) may
  approve, discuss and request reasonable
  information needed to make decision without
  referral to reviewing physician (8 CCR
  9792.7(b)(3))
• Medical Director is responsible for all UR
  decisions (8 CCR 9792.6(l)) and must ensure the
  process for reviewing and approving, modifying,
  delaying or denying complies with LC 4610 and the
  UR regulations (8 CCR 9792.7(b)(1))
• No non physician may modify, delay or deny (LC
  4610(e))

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Sites of Investigation

• Authority to investigate utilization review
  process of employer, insurer or other
  organization subject to LC 4610 (LC 4610(i) 8
  CCR 9792.11(a))
• Utilization review organization (URO) defined as
  any person or entity used by employer, insurer or
  TPA to fulfill part or all of the employers UR
  responsibility under LC 4610 (8 CCR 9792.11(a))

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You Say Tomato, I Say Tomato DWC UR Field
Investigations/DWC Audits

• UR investigations may occur at any location where
  LC 4610 UR processes occur (8 CCR 9792.11(c))
• Each URO or each claims adjusting location
• May be concurrent with PAR
• Slightly different rules based on whether done
  concurrent with PAR (profile audit review) at
  claims adjusting location

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Types of UR Investigation (9792.11(c))

• Routine scheduled
• Target
• Return Target 18 months after prior
  investigation if performance rating below 85
• Special Target at any time based on credible
  complaint information

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Investigations at URO

• Routine investigation (8 CCR 9792.11(c)(1)(A))
• Once every 3 years
• May include review of credible complaints
  received since last investigation or, if none,
  since UR penalty regulations effective
• Return Target and Special Target
• Checking compliance in previously investigated
  files, or
• Focus on complaint
• Can be random sample of prior 3 full months or
  specific types of requests for authorization

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Investigation at Claims Adjusting Location

• Routine (8 CCR 9792.11(c)(2)(A))
• Once every 5 years concurrent with PAR audit
  under LC 129 or 129.5
• Return Target and Special Target
• Same as for URO

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Soup to Nuts Investigation Process

• General Investigation Process
• Notice of Utilization Review Investigation
• Requests for general UR system information
• Provide within 14 calendar days
• Notice of Investigation Commencement
• Identifies UR request files randomly selected
  for review
• 14 calendar days to provide true, correct copies
  of records
• On site investigation may request additional
  records
• Preliminary Investigation report provided to
  subject

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Soup to Nuts Investigation Process (cont)

• Preliminary Investigation report provided to
  subject
• Performance rating calculated (8 CCR
  9792.12(b)(1))
• Preliminary notice of penalty assessments, if any
• Conference to discuss preliminary report, if
  need, within 21 calendar days
• Order to Show Cause and final investigation
  report
• Settle or appeal
• Stipulate and provide notice with final report,
  abatement measures implemented and DWC web
  address Serve notice.

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They Start When?

• Routine - not likely before November 2007
• Complaints
• Have been handling complaints
• Targeted investigations possible now
• Advance Notice generally (8 CCR 9792.11(j)
  through (n)) unless less useful for Special
  Target or Return Investigation
• Special Target Request for response to
  complaint (8 CCR 9792.11(q))

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They Look Backward?

• Investigations conducted on or after June 7, 2007
• Any conduct on or after June 7, 2007 (8 CCR
  9792.11(i))

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They Ask for What?

• Random sample of requests for authorization
• Request for authorization means written
  confirmation of oral requestor written request
  for a specific course of medical treatment (8
  CCR 9792.6(o))
• Received in 3 most recent full calendar months
  before Notice of UR Investigation issued
• Table in 9792.11(d) proportionate sample all
  if 5 maximum 59 request files

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Penalty Structure Overview

• Mandatory penalties (8 CCR 9792.12(a))
• No waiver Discretionary abatement reduction
• Lesser penalties (8 CCR 9792.12(b))
• Only assessed if fail 85 threshold in routine
  investigation
• Routine - subject to waiver or abatement
  reduction upon written agreement (8 CCR
  9792.12(b)(2))
• Mitigation factors (8 CCR 9792.13)
• UR violations will carry UR penalty, not audit
  administrative penalty (8 CCR 9792.11(g))

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Mandatory Penalties

• No UR plan established - 50,000
• No Medical Director per 9792.6(l) employed or
  designated - 50,000
• Non-physician issues medical necessity decision
  to modify, delay or deny - 25,000
• Physician reviewers denial or modification is
  outside scope of practice (license) - 25,000
• No timely response to expedited review request -
  15,000

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Mandatory Penalties (cont)

• Concurrent review fail to discuss or document
  attempt to discuss reasonable treatment options -
  10,000
• No letter in lieu of filing UR plan - 10,000
• UR plan fails to contain minimum elements of
  9792.7(a) - 5,000
• No approval solely because condition for which
  treatment requested not addressed by MTUS -
  5,000
• Fail to file material modification plan within 30
  days - 5,000
• Fail to respond to PTPs request in non-expedited
  concurrent review - 2,000
• Fail to respond to non-expedited prospective
  request - 1,000
• Non-physician reviewer who approves a
  modification does not possess the PTPs amended
  written request - 1,000
• Fail to respond to retrospective review request -
  500
• Post investigation non-compliance - 500
  (9792.12(a)(16)-(17))
• Not making UR information available if requested-
  100 (9792.12(a)(15))

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Lesser Penalties (9792.12(b))

• Primarily for technical errors in UR
• 100 penalty
• No notice to parties of basis for extending
  decision date
• Denial for lack of information with no
  documentation of request for more information
• After receive requested information, fail to
  timely decide and communicate per 9792.9(g)(3)
  for prospective or concurrent review

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Lesser Penalties (9792.12(b)) (cont)

• 50 penalty
• Fail to timely notify within 5 working days that
  need more information to make decision
• Fail to timely communicate approval decision to
  requesting physician by phone or fax within 24
  hours of making decision
• Fail to send written notice of decision to
  modify, delay or deny
• Fail to communicate decision on retrospective
  review within 30 days of receiving information
  needed to make decision
• Fail to give immediate written notice cannot make
  decision within 14 calendar days due to (A) have
  not received all necessary information requested
  (B) physician reviewer asked for reasonable
  additional exam or test or (C) need expert
  consultation immediate within 24 hours of
  knowing will need an extension of time (8 CCR
  9792.6(j))

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85 Threshold

• No technical penalties ( 100, 50) will be
  assessed if meet or exceed 85 pass rate
• AD calculates performance rating based on review
  of randomly selected UR request files
• If on Return Target Investigation, you fail the
  85 pass rate, penalty amounts will not be waived
  and may be 2x (to max. 100,000) or 5x (to max.
  200,000) (8 CCR 9792.12(b)(3))

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Telling your Side

• Respond to AD letter about complaint
• Penalty Adjustment Factors (8 CCR 9792.13)
• Medical consequences or gravity of violation
• Good faith of UR or claims administrator
  documentation of attempts to comply can reduce
  each lesser penalty by 20
• History of prior penalties
• Frequency of violations found during
  investigation
• Other mitigation where strict application would
  be clearly inequitable
• Whether abated violation within time period AD
  specifies

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Tell It To The Judge

• AD serves Order to Show Cause
• 30 days after service, pay penalty or file answer
  and request for hearing
• Administrative hearing process
• 60 days Notice of time, date, place of hearing
• Hearing officer pre-hearing meetings and orders
• Written Determination and Order AD adopts or
  modifies Final Determination
• Appeal by filing petition like petition for
  reconsideration with WCAB Board in SF

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Hot Potato Blues Who Gets the Penalty?

• If more than one URO or claims administrator
  responsible for file, penalty may be assessed
  against each for vioaltion that occurred during
  the time each had responsibility for file or UR
  process (9792.14(a))
• Joint and several liability for penalties among
  principal and agents (9792.14(b))
• Successor liability if substantial continuity of
  business operations, or same or substantially
  same workforce (9792.14(c))

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UR Complaints

• Have been handling and issuing letters
• Most from treating physicians or employees
• Most UROs and claims administrators answer
  promptly and well
• Many communication misunderstandings
• Common sense will go a long way

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Thorny Issues in the Real World

• Yes, medically necessary but UR Doc questions
  causation
• How many times do I need to say No?
• First Request is stapled to the back of a bill
  sent to bill review
• Sandhagen pending

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Medically Necessary But Causal Link Questioned

• Two step decision process avoids problem
• Is requested treatment medically necessary ?
• If no, deny on medical necessity alone
• If yes, state medically necessary, add clinical
  reasoning that supports medical opinion regarding
  whether need for treatment arises from claimed
  injury and send report to adjuster
• Let adjuster issue UR denial in reliance on
  attached UR physician report and issue objection
  under LC 4062
• Denial based on causation without medical
  necessity determination from UR physician to
  requestor violates 8 CCR 9792.6(s), 9792.9(j)
  and Simmons en banc WCAB decision
• Denial by adjuster or RN case manager without UR
  physician report on medical necessity attached
  violates LC 4610(e), LC 4610(a), 8 CCR 9792.6(s)
  and Simmons

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Medically Necessary But(cont)

• Thus, by section 4610s express terms,
  utilization review is directed solely at
  determining the medical necessity of treatment
  recommendations. Therefore, section 4610 does
  not authorize a utilization review physician to
  determine whether the employees industrial
  injury caused or contributed to a need for
  treatment. (Simmons v State of California, SCIF
  (2005) 70 Cal. Comp. Cases 866 (en banc))
• UR physician can add comment questioning whether
  treatment is causally related
• UR physicians report is admissible to show
  compliance with UR timelines but not on issue of
  causation

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Medically Necessary But(cont)

• When a UR physician finds that requested
  treatment is medically necessary but questions
  whether the need for that treatment is causally
  related to the industrial injury, the defendant
  must either (a) authorize the treatment or (b)
  timely deny authorization based on causation
  within the deadlines in LC 4610(g)(3)(A) and
  timely initiate the AME/QME process within the
  specified time limits under LC 4062(a). If
  defendant decides to deny authorization for
  concurrent or prospective treatment based on a
  question arising in utilization review regarding
  the treatments causal connection to the injury
  then the defendant must reach this decision to
  deny within the time deadlines established by
  section 4610. (Simmons v. State of California,
  SCIF (2005) WCAB en banc

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No, No, I Really Mean No

• Request for authorization already denied
• Common sense and minimal good business practice
• Read request to determine whether any new or
  changed information
• Document sending response
• Remember Must keep UR records for at least 3
  years from UR decision or final decision after
  appeal (8 CCR 9792.11(s))

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Wolf in Sheeps Clothing?

• Fact pattern
• Drs First Report (DFR), immediate referral for
  diagnostic testing
• DFR to claims adjuster location
• Diagnostic physician sends bill to billing
  address
• Bill review denies payment because not
  authorized lien filed
• No one connects diagnostic billing to treatment
  plan within 30 days
• All parts of operation must communicate or you
  may spend more time and money in litigation

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Sandhagen Issues

• Pending at California Supreme Court
• Court of Appeal adopted WCAB en banc reasoning
  and decision
• Issues statutory interpretation re whether and
  when must do UR e.g. approvals and AME/QME
  process
• LC 4610(a) expressly includes approvals
• LC 4610(g)(3)(A) If the request is not approved
  in full, disputes shall be resolved in accordance
  with LC 4062.
• LC 4062(a) allows either employee or employer to
  invoke AME/QME to object to a medical
  determination by PTP about any medical issue not
  covered by 4060 or 4061 and not subject to
  Section 4610 utilization review. An employee
  objecting to a UR decision (i.e. delay, denial or
  modification under LC 4610) may object and invoke
  AME/QME.

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More Information

• FAQs to be added to website soon (www.dir.ca.gov,
  select Division of Workers Compensation)
• UR penalty regulation text is available on line
  at http//www.dir.ca.gov/t8/ch4_5sb1a5_5_1.html
• In pdf or Word document format at
  http//www.dir.ca.gov/dwc/DWCPropRegs/UREnforcemen
  tRegulations/UR_RegsFinal.pdf

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UR Penalties - Avoiding the Big (K) Ones

• Suzanne Marria
• Staff Counsel
• Division of Workers Compensation