investigations and penalties for utilization review violations

INVESTIGATIONS AND PENALTIES FOR UTILIZATION REVIEW VIOLATIONS

Suzanne P. MarriaSuzanne P. Marria

CounselCounsel

Division of Workers’ CompensationDivision of Workers’ Compensation

DWC Educational Conference 2006DWC Educational Conference 2006

OVERVIEWTitle 8, Cal. Code Regs. §§ 9792.11 – 9792.15

Investigation Procedures (§ 9792.11)Investigation Procedures (§ 9792.11) Penalty Schedule for Violations (§ Penalty Schedule for Violations (§

9792.12)9792.12) Penalty Adjustment Factors (§ 9792.13)Penalty Adjustment Factors (§ 9792.13) Liability for Penalties (§ 9792.14)Liability for Penalties (§ 9792.14) Order to Show Cause, Hearing Order to Show Cause, Hearing

Procedures, Methods of Appeal (§ Procedures, Methods of Appeal (§ 9792.15)9792.15)

TRIGGERS§ 9792.11(g)

Factual information or a complaintFactual information or a complaint Containing facts indicating a possible Containing facts indicating a possible

violation, ORviolation, OR By selection of a claims administrator By selection of a claims administrator

as part of a DWC audit under Labor as part of a DWC audit under Labor Code §§ 129 or 129.5Code §§ 129 or 129.5

SITES OF INVESTIGATION§ 9792.11(a)

EmployerEmployer Insurer or TPAInsurer or TPA UR vendor (entity with whom the UR vendor (entity with whom the

employer or insurer contracts for employer or insurer contracts for services required by Labor Code § services required by Labor Code § 4610)4610)

SCOPE OF INVESTIGATION§ 9792.11(a)

Files and documentsFiles and documents PracticesPractices Other records whether electronic or Other records whether electronic or

paperpaper

RELATION TO AUDITS§ 9792.11(C)

UR investigation may be independent, ORUR investigation may be independent, OR

May be concurrent with routine, target or full May be concurrent with routine, target or full audit under Labor Code §§ 129 or 129.5audit under Labor Code §§ 129 or 129.5

WHO WILL INVESTIGATE

Expect Medical Unit and Audit Unit staff to play Expect Medical Unit and Audit Unit staff to play rolerole

Planning is on-goingPlanning is on-going Role of each unit likely to have different focal Role of each unit likely to have different focal

pointspoints– For example, Medical Unit staff likely to have bigger role For example, Medical Unit staff likely to have bigger role

in review of filed plans, screening complaints, reviewing in review of filed plans, screening complaints, reviewing medical documentation and decision-making at UR site, medical documentation and decision-making at UR site, peer-to-peer communications, etc.peer-to-peer communications, etc.

– Audit Unit staff likely to focus on screening complaints, Audit Unit staff likely to focus on screening complaints, review of claims file and claims administrator’s review of claims file and claims administrator’s compliance with notices, communications, timelines, etc.compliance with notices, communications, timelines, etc.

Depending on the reason for an investigation, the staff Depending on the reason for an investigation, the staff involved and scope of investigation is likely to varyinvolved and scope of investigation is likely to vary

PENALTY STRUCTURE§ 9792.12

Violations track requirements of LC § 4610 & UR Violations track requirements of LC § 4610 & UR regulations (8 CCR §§ 9792.6 – 9792.10)regulations (8 CCR §§ 9792.6 – 9792.10)

Single instance penalties (§ 9792.12(a)(1) – (10))Single instance penalties (§ 9792.12(a)(1) – (10))– One violation carries penalty up to maximum One violation carries penalty up to maximum – Penalty amounts from $1000 to $ 50,000Penalty amounts from $1000 to $ 50,000

Multiple instance penalties (§ 9792.12(b)(1) – (14))Multiple instance penalties (§ 9792.12(b)(1) – (14))– Instances grouped: 10 or less; 11 – 20; 21 – 40; more than Instances grouped: 10 or less; 11 – 20; 21 – 40; more than

4040– Amounts per tier generally:Amounts per tier generally:

$ 200; $ 800; $ 3200; $ 6400 OR$ 200; $ 800; $ 3200; $ 6400 OR $ 100; $ 400; $ 800; $ 1600$ 100; $ 400; $ 800; $ 1600

LIABILITY FOR PENALTIES§ 9792.14

Penalties may be assessed against each “claims Penalties may be assessed against each “claims administrator” for the violation(s) that occur during administrator” for the violation(s) that occur during the time each has responsibility for the file or the UR the time each has responsibility for the file or the UR process process ( § 9792.14(a))( § 9792.14(a))– Claims administrator includes insurer, TPA, Claims administrator includes insurer, TPA,

employer whether insured, self insured or legally employer whether insured, self insured or legally uninsured, JPA and ‘other entity subject to LC uninsured, JPA and ‘other entity subject to LC 4610’,e.g. UR vendor (§ 9792.6(c))4610’,e.g. UR vendor (§ 9792.6(c))

There is joint and several liability for penaltiesThere is joint and several liability for penalties There may be successor liability after a merger, There may be successor liability after a merger,

consolidation or where there is a substantial continuity consolidation or where there is a substantial continuity of business operations and/or the new business entity of business operations and/or the new business entity uses substantially the same workforceuses substantially the same workforce

SINGLE INSTANCE PENALTIES

Failure to establish UR process, file UR plan Failure to establish UR process, file UR plan and maintain UR process in compliance with and maintain UR process in compliance with Labor Code § 4610Labor Code § 4610– Up to $ 50,000Up to $ 50,000– § 9792.12(a)(1)§ 9792.12(a)(1)

No Medical Director holding unrestricted No Medical Director holding unrestricted license to practice as MD or DO (osteopath) license to practice as MD or DO (osteopath) in CAin CA– Up to $ 10,000Up to $ 10,000– § 9792.12(a)(2)§ 9792.12(a)(2)

SINGLE INSTANCE PENALTIES (con’t.)

Decision to delay, modify or deny treatment is Decision to delay, modify or deny treatment is made by someone whomade by someone who is not the reviewer, expert is not the reviewer, expert reviewer or medical director (§ 9792.12(a)(6))reviewer or medical director (§ 9792.12(a)(6))– Up to $ 5,000Up to $ 5,000 – Medical Director is only an MD or DO who holds Medical Director is only an MD or DO who holds

an unrestricted CA license to practice (§ an unrestricted CA license to practice (§ 9792.6(l))9792.6(l))

– Reviewer and expert reviewer may be MD, DO, Reviewer and expert reviewer may be MD, DO, psychologist, acupuncturist, optometrist, psychologist, acupuncturist, optometrist, podiatrist, chiropractor licensed in any state (§ podiatrist, chiropractor licensed in any state (§ 9792.6(h), (q))9792.6(h), (q))

Contrast Non-physician Reviewers

Non-physician reviewers may:Non-physician reviewers may:– ApproveApprove requests for authorization by requests for authorization by

applying specified criteria applying specified criteria (§ 9792.7(b)(3))(§ 9792.7(b)(3)) – DiscussDiscuss applicable criteria with requesting applicable criteria with requesting

physician physician (§ 9792.7(b)(3))(§ 9792.7(b)(3))– Request appropriate additional informationRequest appropriate additional information

that is necessary to render a decision, as that is necessary to render a decision, as long as the time limits under 8 Cal. Code long as the time limits under 8 Cal. Code Regs. § § 9792.9(b)(1), (b)(2) or (c) are not Regs. § § 9792.9(b)(1), (b)(2) or (c) are not exceeded exceeded (§ 9792.7(b)(3))(§ 9792.7(b)(3))


Decision to modify or deny requested Decision to modify or deny requested treatment, procedure, service or product is treatment, procedure, service or product is outside the scope of practice or the outside the scope of practice or the professional competenceprofessional competence of the medical of the medical reviewer making the decisionreviewer making the decision

Up to $ 5,000Up to $ 5,000 § 9792.12(a)(3)§ 9792.12(a)(3)


Other Penalties with up to $ 5,000 maximum:Other Penalties with up to $ 5,000 maximum:– Fail to state Fail to state medical criteria or guideline relied on, medical criteria or guideline relied on,

the the clinical reasonsclinical reasons and and reviewer’s conclusions on reviewer’s conclusions on medical necessity (§ 9792.12(a)(4))medical necessity (§ 9792.12(a)(4))

– Denial Denial solelysolely on the basis that the requested on the basis that the requested treatment is treatment is not addressed by ACOEM when the not addressed by ACOEM when the requesting physician has provided specific clinical requesting physician has provided specific clinical rationale and referenced relevant pages of other rationale and referenced relevant pages of other evidence-based nationally recognized guidelines (§ evidence-based nationally recognized guidelines (§ 9792.12(a)(5)) 9792.12(a)(5))

– Fail to respondFail to respond to a request for authorization by the to a request for authorization by the employee’s physician employee’s physician (§ 9792.12(a)(7))(§ 9792.12(a)(7))

– Fail to Fail to authorize and provide treatment consistent authorize and provide treatment consistent with ACOEMwith ACOEM until the claim is accepted, denied or until the claim is accepted, denied or the $10,000 limit under Lab. Code § 5402(c) the $10,000 limit under Lab. Code § 5402(c) reached reached (§ 9792.12(a)(9))(§ 9792.12(a)(9))


Other Penalties with up to $ 5,000 maximum Other Penalties with up to $ 5,000 maximum (con’t.):(con’t.):– During concurrent review, denying During concurrent review, denying

authorization or discontinuing medical careauthorization or discontinuing medical care prior to discussion with requesting physician prior to discussion with requesting physician about reasonable options for a care and about reasonable options for a care and making good faith effort to agree on care plan making good faith effort to agree on care plan (§ 9792.12(a)(8))(§ 9792.12(a)(8))

Concurrent UR review only occurs during in Concurrent UR review only occurs during in patient stay (§ 9792.6(d))patient stay (§ 9792.6(d))

Fail to file complete and current copy of UR plan Fail to file complete and current copy of UR plan or letter in lieu carries up to $ 1000 penalty or letter in lieu carries up to $ 1000 penalty (§ 9792.12(a)(10) (§ 9792.12(a)(10)

MULTIPLE INSTANCE PENALTIES§ 9792.12(B)

Fail to make Fail to make timelytimely expedited review expedited review decisiondecision– § 9792.12(b)(1)§ 9792.12(b)(1)

Fail to Fail to timely notifytimely notify that additional that additional information is needed to make UR decisioninformation is needed to make UR decision– § 9792.12(b)(2)§ 9792.12(b)(2)

Deny authorization based on lack of Deny authorization based on lack of information but claims administrator information but claims administrator fails to fails to documentdocument the request for necessary the request for necessary reasonable information when it was madereasonable information when it was made– §9792.12(b)(3)§9792.12(b)(3)

MULTIPLE INSTANCE PENALTIES (con’t.)

Fail to include all required topicsFail to include all required topics in the written in the written decision to modify, delay or deny requested treatmentdecision to modify, delay or deny requested treatment– § 9792.12(b)(4)§ 9792.12(b)(4)

Fail toFail to timely decide after receipt of requested timely decide after receipt of requested information for concurrent or prospective review information for concurrent or prospective review (i.e. (i.e. within 5 working days and 14 calendar days from date within 5 working days and 14 calendar days from date of request)of request)– § 9792.12(b)(5)§ 9792.12(b)(5)

Fail to communicate approval within 24 hours Fail to communicate approval within 24 hours of of making the decision, for prospective & concurrent UR making the decision, for prospective & concurrent UR reviewreview– § 9792.12(b)(6)§ 9792.12(b)(6)


Fail to send a written decisionFail to send a written decision to modify, to modify, delay or deny requested services delay or deny requested services within 24 within 24 hourshours, for concurrent review, , for concurrent review, or 2 business or 2 business daysdays, for prospective review, for prospective review– § 9792.12 (b)(7)§ 9792.12 (b)(7)

Fail to communicateFail to communicate decision on decision on retrospective review retrospective review within 30 calendar dayswithin 30 calendar days of receipt of information reasonably of receipt of information reasonably necessary to make determinationnecessary to make determination– § 9792.12(b)(8)§ 9792.12(b)(8)


Fail to provide written notice immediatelyFail to provide written notice immediately of of LC 4610(g)(5) excuse: DecisionLC 4610(g)(5) excuse: Decision on request on request cannot be madecannot be made within 14 calendar days, for within 14 calendar days, for prospective and concurrent review, or 30 prospective and concurrent review, or 30 calendar days for retrospective review calendar days for retrospective review because:because:– Not in receipt of all information reasonably Not in receipt of all information reasonably

necessary and requested, ornecessary and requested, or– Require consultation by expert reviewer, orRequire consultation by expert reviewer, or– Employer has asked for additional Employer has asked for additional

examination or test that is reasonable and examination or test that is reasonable and consistent with good medical practice consistent with good medical practice


Failure to explain reason for or length of LC Failure to explain reason for or length of LC 4610(g)(5) delay 4610(g)(5) delay (i.e. fail to state what info (i.e. fail to state what info was requested but not received, name of was requested but not received, name of expert reviewer, test or exam sought, or expert reviewer, test or exam sought, or anticipated date of decision after delay)anticipated date of decision after delay)– § 9792.12(b)(11)§ 9792.12(b)(11)

Failure to have documentation verifying LC Failure to have documentation verifying LC 4610(g)(5) excuse 4610(g)(5) excuse at time claims at time claims administrator either delays or extends the administrator either delays or extends the time for the UR decisiontime for the UR decision– § 9792.12(b)(10)§ 9792.12(b)(10)


Following LC 4610(g)(5) delay or extension, failure Following LC 4610(g)(5) delay or extension, failure to communicate decision to communicate decision timely timely (i.e. within 5 (i.e. within 5 working days, for prospective or concurrent working days, for prospective or concurrent review, or 30 calendar days for retrospective review, or 30 calendar days for retrospective review)review)– § 9792.12(b)(12)§ 9792.12(b)(12)

Following LC 4610(g)(5) delay or extension, failure Following LC 4610(g)(5) delay or extension, failure to communicate timely decision to communicate timely decision to requesting to requesting physician, provider of goods or services identified physician, provider of goods or services identified in request, injured worker and his or her attorneyin request, injured worker and his or her attorney– § 9792.12(b)(13)§ 9792.12(b)(13)


Failure to disclose or make availableFailure to disclose or make available the UR the UR criteria or guidelines in use criteria or guidelines in use to the publicto the public upon requestupon request– § 9792.12(b)(14)§ 9792.12(b)(14)

PENALTY ADJUSTMENT FACTORS§ 9792.13

Medical consequences or gravity of violationsMedical consequences or gravity of violations Good faith of employer, insurer, TPA or UR vendorGood faith of employer, insurer, TPA or UR vendor History of prior penalties for UR violationsHistory of prior penalties for UR violations Number and type of violationsNumber and type of violations Size of the claims adjusting or UR vendor locationSize of the claims adjusting or UR vendor location Time period covered in investigationTime period covered in investigation Refusal of requesting provider or injured worker to Refusal of requesting provider or injured worker to

cooperate in the UR process (§ 9792.13(d))cooperate in the UR process (§ 9792.13(d)) Adjustment of penalties in the discretion of the Adjustment of penalties in the discretion of the

Administrative DirectorAdministrative Director Multiple instance penalties will be the Multiple instance penalties will be the lesser oflesser of : 3X : 3X

the value of the sum of all requested medical services the value of the sum of all requested medical services in each group of violations or the amount of the in each group of violations or the amount of the penalty per the schedule (§ 9792.13(b))penalty per the schedule (§ 9792.13(b))

NOTICE, HEARING AND APPEAL PROCESS

§ 9792.15

Written Order to Show Cause (OSC) is issued Written Order to Show Cause (OSC) is issued and served by Administrative Directorand served by Administrative Director

OSC states proposed penalty assessment, OSC states proposed penalty assessment, alleged violations for each penalty and alleged violations for each penalty and time/date/place of hearingtime/date/place of hearing

Claims administrator must serve copy of OSC on Claims administrator must serve copy of OSC on employer within 5 business daysemployer within 5 business days

Within 30 calendar days of date of service of Within 30 calendar days of date of service of OSC, must pay penalties or ‘appeal’ by filing OSC, must pay penalties or ‘appeal’ by filing answer answer

Administrative Director has discretion to hold an Administrative Director has discretion to hold an informal pre-hearing conference to resolveinformal pre-hearing conference to resolve

HEARING AND APPEAL PROCESS (con’t.)§ 9792.15

Hearing officer handles pre-hearing discovery, Hearing officer handles pre-hearing discovery, conferences and presides at hearingconferences and presides at hearing

After evidentiary hearing, Hearing Officer issues After evidentiary hearing, Hearing Officer issues Recommended Determination and Order Assessing Recommended Determination and Order Assessing Penalty (RDP)Penalty (RDP)

Once RDP issued, Administrative Director has 60 Once RDP issued, Administrative Director has 60 calendar days to adopt or modify, by issuing Final calendar days to adopt or modify, by issuing Final Determination and Order Assessing Penalty Determination and Order Assessing Penalty

Any appeal must be filed within 20 calendar days of Any appeal must be filed within 20 calendar days of service of the Final Determination and Order Assessing service of the Final Determination and Order Assessing Penalties.Penalties.

Petition Appealing must be filed like petition for Petition Appealing must be filed like petition for reconsideration with WCAB in SFreconsideration with WCAB in SF

If no appeal filed, penalties must be paid within 30 If no appeal filed, penalties must be paid within 30 calendar days of service of the Final Determination and calendar days of service of the Final Determination and Order Assessing Penalties Order Assessing Penalties

RULEMAKING SCHEDULE

March 17, 2006 - Formal rulemaking expected March 17, 2006 - Formal rulemaking expected to beginto begin

May 5, 2006 – Public hearing begins at 10 AM May 5, 2006 – Public hearing begins at 10 AM at 1515 Clay Street, Auditorium, Oakland, CA at 1515 Clay Street, Auditorium, Oakland, CA (Oakland State Building) (Oakland State Building)

Written comments must be received by 5 PM Written comments must be received by 5 PM on May 5on May 5thth, 2006. Oral comments may be , 2006. Oral comments may be made at the hearing.made at the hearing.

Any changes to the regulation text after May Any changes to the regulation text after May 55thth will trigger a new 15 day public comment will trigger a new 15 day public comment period.period.

COPIES and COMMENTS

Text of proposed regulations will be available Text of proposed regulations will be available from DWC on and after March 17from DWC on and after March 17thth through through http://www.dir.ca.gov/DWC/dwc_home_page.http://www.dir.ca.gov/DWC/dwc_home_page.htmhtm

Request rulemaking documents from and Request rulemaking documents from and send comments to:send comments to:

Maureen Gray, Regulations CoordinatorMaureen Gray, Regulations Coordinator

Division of Workers’ Compensation, Legal UnitDivision of Workers’ Compensation, Legal Unit

P.O. Box 420603P.O. Box 420603

San Francisco, CA 94142San Francisco, CA 94142

INVESTIGATIONS AND PENALTIES FOR UTILIZATION REVIEW VIOLATIONS

Suzanne P. MarriaSuzanne P. Marria

CounselCounsel

Division of Workers’ CompensationDivision of Workers’ Compensation

DWC Educational Conference 2006DWC Educational Conference 2006

investigations and penalties for utilization review violations

Documents