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California’s independent medical review: Pursuing necessary and appropriate care

California uses Independent Medical Reviews (IMRs) to resolve disputes regarding medical treatment for injured employees. This process was enacted by way of a landmark workers' compensation reform, Senate Bill 863. The bill, which took effect January 1, 2013, [1] implemented specific cost-saving efficiencies for employers, among other objectives.

Recommendations for medications or treatment go through a Utilization Review (UR) to verify medical necessity. If the UR denies or modifies a treating physician’s recommendations, an evaluation may be conducted through an Independent Medical Review (IMR). The Department of Industrial Relations contracts with an IMR organization to conduct these reviews on its behalf, which in California is currently Maximus Federal Services.

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The reviewing physician with Maximus conducts an analysis to determine whether the medications and/or treatment in question are medically necessary and appropriate. The resulting IMR could uphold, partially uphold, or overturn the UR denial. That decision is labeled the IMR Final Determination. This determination becomes the decision of the administrative director of the Division of Workers’ Compensation [2] and is deemed final and binding on all parties. [3]

IMRs and Medicare Set-Asides

An IMR can swing a Medicare Set-Aside (MSA) by pinpointing only those services medically necessary and appropriate, thus minimizing future medical exposure. This has proven particularly significant in terms of costly prescription drugs. Approximately half of IMR requests in 2014 were for pharmaceuticals, most commonly pain medications. [4] As anyone who regularly works with MSAs will tell you, prescription drugs are consistently the major cost driver.

When Senate Bill 863 was enacted, it was unclear whether CMS would accept an IMR determination as part of its review and approval of a WCMSA proposal. Time and again, CMS has not found UR denials alone persuasive enough to omit recommendations made by a treating physician. However, while credence may not be given to the UR on its own, we have had success when the UR is supported by an upholding IMR grounded in California law.

Medicare’s policy traditionally defers to local fact finders in determining whether specific treatment is compensable. We continue to provide a jurisdictionally focused and team-oriented approach to MSP compliance, resulting in innovative medical and legal arguments that not only help limit exposure but also ensure adequate compliance. We work with our clients to keep them informed about intricate state workers' compensation laws, which can improve the likelihood of settling claims involving Medicare beneficiaries.

[1] Department of Industrial Relations, Division of Workers’ Compensation, State of California

[2] Labor Code § 4610.6(g)

[3] In certain limited circumstances, you can appeal the Final Determination. Appeals must be filed with the Workers’ Compensation Appeals Board within 30 days from the date of the Determination Letter. See Labor Code § 4610.6(h).

[4] Department of Industrial Relations, State of California. News Release No. 2014-115. “Report on Independent Medical Review Shows Progress Made” December 12, 2014

Kate Riordan, J.D.

Kate Riordan, J.D., is director of Medicare Secondary Payer initiatives for Casualty Solutions at Verisk. You can contact Kate at

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