Key points

Introduction

The value and impact of treatment guidelines in improving outcomes for patients and controlling costs is significantly enhanced in Washington state workers’ compensation by incorporating the guidelines into a structured UR program.

This article briefly describes (1) how the Washington State Department of Labor and Industries (L&I) UR program uses treatment guidelines and (2) the impact of the UR program on costs and outcomes.

Introduction

The value and impact of treatment guidelines in improving outcomes for patients and controlling costs is significantly enhanced in Washington state workers’ compensation by incorporating the guidelines into a structured UR program.

This article briefly describes (1) how the Washington State Department of Labor and Industries (L&I) UR program uses treatment guidelines and (2) the impact of the UR program on costs and outcomes.

The Washington utilization review process

Since the 1980s, the Washington workers’ compensation UR process has supported the purchase of proper and necessary care for injured workers. UR is required for all inpatient services, all spinal injections, advanced imaging (MRI studies of the spine, upper and lower extremities, and brain MRI and computed tomography [CT] studies for headaches), physical and occupational therapy after the 24th visit, and selected outpatient intervention services. The UR process compares requests for medical services with medical treatment guidelines that are deemed appropriate for such services and includes the preparation of a recommendation based on that comparison. The UR program applies only to claims that are adjudicated by the State Fund (not self-insured employers). The program applies to both physicians and facilities. L&I contracts with Qualis Health for UR. Qualis Health is a health care consulting organization, with headquarters in Seattle, Washington, and regional offices located in Alabama, Alaska, California, Idaho, and the District of Columbia.

Providers requesting authorization are asked to refer to L&I’s Medical Treatment Guidelines for information on what specific clinical information is required for selected procedures. (For details on L&I’s Medical Treatment Guidelines see links below.) Qualis Health uses the Department’s Medical Treatment Guidelines as the basis for their recommendations. When there are no Department Medical Treatment Guidelines available, Qualis Health uses InterQual proprietary criteria. An initial clinical review is conducted by a registered nurse or physical therapist. If it does not meet guidelines or criteria, it is referred for physician review. If the physician reviewer is unable to recommend approval, the requesting physician has the opportunity to discuss the case with a Qualis physician. A re-review option is available with a practicing matched specialty provider. Qualis Health recommendations are then sent to the L&I claim manager. The claim manager reviews the information and recommendation made by Qualis Health and then decides whether to authorize or deny the request.

A streamlined authorization process was created for what are called Group A providers. Providers may be eligible to become Group A providers if they have 100% UR approval recommendations when they performed 10 or more reviews during a 1-year review period. Group A providers are not required to submit clinical information, chart notes, or diagnostic reports to Qualis Health for most outpatient surgeries. They are required to submit a form with the planned procedure, description and current procedural terminology (CPT) codes, place of service, date or anticipated date of service, and office contact name and phone number. However, even Group A providers must follow the full clinic review process for all spine procedures and other complex surgeries. Retrospective audit of 20% of cases is completed on all Group A providers to ensure continued compliance with the guidelines. All providers are reviewed annually to determine Group A eligibility.

For some reviews, Qualis Health provides Web-based UR, which allows providers to submit and review request status online and to complete questionnaires online that can affect the request status. By using a combination of questionnaires and checklists along with Web-based submission, the cost of UR can be reduced and the turnaround time for authorizations can be substantially reduced.

For advanced imaging authorization, the department requires requesting providers to use a Web-based system; this applies to MRI of the spine, upper extremity, and lower extremity and brain MRI or CT of the head due to headache. This requirement was put in place because the Washington Legislature passed a law in 2009 (engrossed substitute house bill [ESHB] 2105, Chapter 258) that directed the State to convene an Advanced Imaging Management Work Group. State agencies were directed to implement the Work Group recommendations.

More detail about the Washington UR program can be found at: http://lni.wa.gov/ClaimsIns/Providers/AuthRef/UtilReview .

More detail about L&I’s Medical Treatment Guidelines can be found at: http://lni.wa.gov/ClaimsIns/Providers/TreatingPatients/TreatGuide .

Impact of guidelines and utilization review

The financial impact of the implementation of guidelines in the Washington UR program is considerable. Based on quarterly data from 2014, the L&I UR program produced annual gross savings of an estimated $14,925,386; costs of the UR program were $7,405,563; net savings were $7,519,824; and the return on investment was approximately $2.00. Here is a breakdown of the numbers:

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  Inpatient cases: Estimated annual savings $3,920,000; cost of review $1,113,840; net savings $2,806,160; return on investment $3.52

  
  
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  Outpatient cases: Estimated annual savings $1,882,492; cost of review $1,026,000; net savings $856,492; return on investment $1.83

  
  
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  Outpatient discography cases: Estimated annual savings $18,400; cost of review $2880; net savings $15,520; return on investment $6.39

  
  
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  Outpatient physical medicine cases: Estimated annual savings $4,411,095; cost of review $2,334,548; net savings $2,076,547; return on investment $1.89

  
  
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  Imaging cases: Estimated annual savings $2,831,159; cost of review $1,233,720; net savings $1,597,439; return on investment $2.29

  
  
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  Spinal injection cases: Estimated annual savings $1,862,240; cost of review $1,233,720; net savings $628,520; return on investment $1.51

The aforementioned numbers likely underestimate the cost savings. These savings reports reflect denials of requested services that were found not to meet guidelines. But when other measures are considered, a bigger impact is observed. Data suggest that there would have been many requests for authorization that were not submitted because the provider was aware of the guidelines and understood that a request would not meet guidelines. For example, when a new guideline is created or a guideline is revised, efforts are made to assess the impact of the changes on patient outcomes and costs. Spinal injections performed on an outpatient basis were affected by a guideline issued in 2012. L&I studied a baseline number of spinal injections before implementing UR and compared it with the current numbers. Data from September 2012 through September 2014 suggest that the number of spinal injections has decreased by 40%. Similarly, after UR for advanced imaging was implemented in 2010, costs dropped dramatically. Between 2009 and 2013, total costs for advanced imaging dropped from $30 million to $14 million. The annual UR cost is roughly $1 million. Clearly, the return on investment has been significant. Thus, the impact of evidence-based UR is both direct, specific to denial rates of known requests, and indirect, related to an important sentinel effect of implementation.

The impact on quality of care and clinical outcomes from the UR program includes an overarching effect from using evidence-based standards of care to encourage providers to use best practices and to perform procedures when appropriate for given clinical circumstances. As described elsewhere in this issue, L&I’s treatment guidelines represent a thorough review of the scientific medical literature by recognized clinical experts from the University of Washington and other medical institutions and by internal epidemiology staff. They are evidence based, along with a process based on consensus among the clinical experts participating in a statutorily established medical advisory committee. The process is transparent and includes public input. The guidelines are widely disseminated and are available through the National Guideline Clearinghouse (see www.guideline.gov ). With this background, it is likely that clinical outcomes are improved when the UR process results in avoiding unnecessary procedures and authorizing procedures when they are likely to be of benefit to the injured worker.

It can be difficult to quantify effects on quality of care. One potential proxy measure of the value of the UR program in Washington workers’ compensation in achieving high-quality care is the low number of denials overturned on appeal. A small number of denied authorizations are appealed. Quarterly average re-reviews are 55. The re-review process includes a second review by a matched specialty provider. L&I’s current re-review rate is 2.2%, and 83% of those reviews have determination to uphold the original recommendation.

Little research has been done on the impact of UR on cost or quality of care. Although the focus of this article is on the Washington UR program, studies in Washington and other states have provided some limited data on the impact of UR, with varying results. Here is a sample of the published literature relating to UR:

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  A study in the late 1980s analyzed Aetna’s UR customers compared with a representative sample of its customers who had no UR. Statistical adjustments were made for the utilization management status, employee demographics, plan benefits, group size, year effects, and seasonality. The data suggested that UR reduced overall medical expenses by 4.4% and inpatient expenses by 8.1%, largely by reducing length of stay.

  
  
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  A study was conducted by the Columbia University in 1989. New York City and its unions temporarily replaced actual UR with sham review for half the participants in the city’s fee-for-service health insurance plan. The results were mixed, with a conclusion that the UR program probably had little effect.

  
  
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  A study published in 1997 analyzed the effects of guidelines for elective lumbar fusion as part of its inpatient UR program. Discharge data from the Comprehensive Hospital Abstract Reporting System were used to identify lumbar surgical cases. After November 1988, when the guidelines went into effect, the state rates for fusion operations declined 33%, whereas rates for nonfusion operations essentially were unchanged. The sharpest decline corresponded in time to implementation of the guidelines. Before the initiation of L&I guidelines, the proportion of fusions among L&I patients was higher than among non-L&I patients. The opposite was true by the end of 1992, and the L&I proportion decreased more rapidly than the non-L&I proportion. The researchers concluded that the data suggest that the L&I lumbar fusion surgery criteria and reimbursement standards implemented in 1988 contributed to a decline in rates of performing that procedure, with a sentinel effect on statewide fusion operation rates, not just in workers’ compensation. The UR aspect of the guidelines as well as the process of involving surgeons in the preparation and dissemination of guidelines also may have been contributory.

  
  
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  A 1999 study analyzed a study population residing primarily in the South and Midwest. It analyzed 11,785 UR reviews performed on workers’ compensation patients from 1991 through 1993. The investigators concluded: “The long-run value of utilization management (UM) as an approach to containing costs and improving quality within the workers’ compensation system remains an unanswered question. The general perception among medical professionals and administrators is that UM, as practiced, is burdensome, inefficient, and clinically unscientific. We believe that these weaknesses can, and should, be addressed. As more and better treatment outcome information becomes available, it will be possible to improve UM review protocols by linking the review criteria more closely to current knowledge of medical outcomes and clinical epidemiology. UM is burdensome and inefficient because it relies on a global ‘one size fits all’ approach to the performance of review screening. It is time that more clinically sophisticated, targeted approaches be developed that could better accomplish the objectives of cost containment and quality improvement, at lower expense.”

  
  
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  A study analyzed an orthopedic UR program in Washington workers’ compensation in the early 1990s. The outcomes of back and neck injury claims (primarily sprains and strains) filed in the 2 months after the program was fully operational were compared with 2 comparable groups of claims from the same base population filed before the program’s availability. The study found no difference between subjects and controls with respect to work-loss days, rate of claim closure, or permanent impairment. This quality-based program, used as an adjunct to claims management, failed to improve outcomes. However, this program was based on use of an analytics program to send data on potential red flags to claims staff, with the outcomes reliant on claims adjudicators’ action. This program did not depend on review and denial/acceptance of specific procedures.

  
  
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  Another study analyzed a UR program in Washington workers’ compensation, which used guidelines developed collaboratively with the state medical association. These guidelines dealt with 10 areas: medical back hospital admissions, lumbar arthrodesis, lumbar laminectomy, thoracic outlet syndrome surgery, cervical laminectomy, knee surgery, shoulder surgery, ankle/foot surgery, lumbar MRI, and carpal tunnel surgery. From 1993 through 1998, a total of 100,005 UR reviews were conducted, half of which used the guideline-based review criteria. The overall denial rate for the guideline-based reviews was 7.3%. The highest denial rates were for thoracic outlet syndrome surgery (19.1%) and lumbar fusion (17.7%). The investigators concluded that the use of guideline-based UR protocols may improve the effectiveness of UR as a tool to identify potentially inappropriate care.

  
  
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  There are a variety of treatment guidelines used by UR programs across the United States. A report on the process of selecting workers’ compensation treatment guidelines in California described screening criteria using an internationally accepted tool (the Appraisal of Guidelines Research and Evaluation Instrument) to evaluate the technical quality of these guideline sets. The 5 guideline sets meeting the criteria were Clinical Guidelines by the American Academy of Orthopedic Surgeons, American College of Occupational and Environmental Medicine Occupational Medicine Practice Guidelines, Optimal Treatment Guidelines (IntraCorp), McKesson/InterQual Care Management Criteria and Clinical Evidence Summary (McKesson), and Official Disability Guidelines. The researchers conclude that selecting mandatory workers’ compensation guidelines should involve careful planning and a transparent, well-defined process.

  
  
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  A study of the Wisconsin workers’ compensation system analyzed health outcomes and compared Wisconsin with 10 other states (California, Tennessee, Florida, North Carolina, Maryland, Texas, Connecticut, Michigan, Pennsylvania, and Massachusetts). In Wisconsin, UR is not required and there are no UR regulations. Among the 10 comparison states studied, UR is not required in Connecticut, Maryland, or Pennsylvania. The other 7 states (California, Florida, Massachusetts, Michigan, North Carolina, Tennessee, and Texas) all require UR. In 2009, researchers conducted interviews with workers injured in 2006. The interviews assessed improvement in health status from injury to interview, using the Short Form Health Survey (SF-12), which was developed for the Medical Outcomes Study, a multiyear study of patients with chronic conditions. The study found the following:

  
  
  
  
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    The median time from injury to first substantial return to work (as of 2.5 years postinjury) was lowest for Wisconsin (6 weeks) and highest for California (12 weeks).

    
    
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    The increase in the SF-12 score from the week after injury to the time of the interview was third best in Wisconsin (Pennsylvania and Massachusetts were better). The worst was California.

    
    
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    The percentage who were “somewhat” or “very” satisfied with overall health care was highest for Wisconsin at 89%. (California was lowest at 70%.)

  
  

This study seems to suggest that a system such as Wisconsin’s can achieve good outcomes without a UR program.

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  The Workers Compensation Research Institute, based in Cambridge, Massachusetts, compiled a national inventory of cost containment programs in workers’ compensation in 2013. It found that many states have no requirement for UR (such as Arizona, Colorado, Connecticut, Idaho, Maryland, New York, Ohio, Oregon, and Pennsylvania). In some states, only certified review organizations are authorized to perform UR functions (such as Arkansas, Illinois, Maine, Massachusetts, Mississippi, Texas, and Washington). In some states, the claims that are subject to UR include all inpatient hospitalizations and planned invasive surgery (such as Alabama, Kentucky, North Dakota, and Washington). In some states, use of treatment guidelines is mandatory. Examples of states where it is mandatory include California, Colorado, Florida, Massachusetts, Minnesota, New York, Ohio, Texas, and Washington. Examples of states where it is not mandatory include Connecticut, Illinois, Michigan, Oregon, and Pennsylvania.

  
  
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  A study published in 2014 compared California and Washington State with respect to population-level effects of lumbar fusion policy differences on utilization, costs, and safety. Washington State’s workers’ compensation program requires imaging confirmation of instability and limits initial fusions to a single level. In contrast, California requires coverage if a second opinion supports surgery, allows initial multilevel fusion, and provides additional reimbursement for surgical implants. The study identified workers’ compensation patients (n = 4628) in California and Washington using the Agency for Healthcare Research and Quality’s State Inpatient Databases, 2008–2009. Outcome measures included repeat lumbar spine surgery, all-cause readmission, life-threatening complications, wound problems, device complications, and costs. Analysis showed that California patients were more likely than those in Washington to undergo fusion for controversial indications, such as nonspecific back pain (28% vs 21%) and disc herniation (37% vs 21%), as opposed to spinal stenosis (6% vs 15%) and spondylolisthesis (25% vs 41%). California had higher adjusted risk for reoperation (relative risk [RR] 2.28; 95% confidence interval [CI], 2.27–2.29), wound problems (RR, 2.64; 95% CI, 2.62–2.65), device complications (RR, 2.49; 95% CI, 2.38–2.61), and life-threatening complications (RR, 1.31; 95% CI, 1.31–1.31). Hospital costs for the index procedure were greater in California ($49,430) than in Washington ($40,114).