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Snapshot: Medical Necessity Dispute Resolution Trends 2014-2020

Workers’ Compensation Research and Evaluation Group

This report presents baseline information about medical necessity dispute resolution trends in the Texas workers’ compensation system. While the medical necessity dispute process has remained stable for more than 15 years, occasionally stakeholders raise concerns that the process results in unnecessary denials or delays of medical care for injured employees. The Texas Department of Insurance and the Division of Workers’ Compensation (DWC) do not have data on the number and outcome of preauthorization and concurrent review requests for medical care. But they are able to gauge the health of the workers’ compensation utilization review process by tracking the number and outcome of medical necessity disputes that health care providers and injured employees request. This report provides an overview of medical necessity dispute trends over the last few years.

Read the full report.

Published: November 2021 by the Workers' Compensation Research & Evaluation Group.

Medical necessity disputes down 52% since 2014. Eight out of 10 disputes involve non-network claims. 98 percent of disputes involve preauthorization denials. More than 70% of dispute decisions upheld the insurance carrier’s denial. 18-20 days to resolve disputes.
From January 2014 to December 2020, health care providers and injured employees filed a total of 13,210 medical necessity disputes. About 550 health care providers submitted 80 percent of these disputes. Medical necessity disputes declined since 2005 and this trend has continued in recent years. In 2014, DWC received 2,826 medical disputes. By 2020, that number fell to 1,357 (a reduction of about 52 percent). Several factors contributed to this decline, including fewer workers’ compensation claims filed, the adoption of health care networks in 2006, and DWC’s adoption of evidence-based treatment guidelines in 2007.
Figure 1.1: Total Number of Medical Necessity Disputes, 2014-2020 - 2014: 2,826; 2015: 2,578; 2016: 1,883; 2017: 1,573; 2018: 1,621; 2019: 1,372; 2020: 1357.

Non-network claims account for most medical necessity disputes (about 8 out of 10). The proportion of medical disputes for network claims was between 20 and 25 percent from 2014 to 2019, and then dropped to 16 percent in 2020. Although almost half of new workers’ compensation claims are treated in networks, network medical necessity disputes are less frequent since networks contract with health care providers and those contracts include requirements to follow the network’s treatment guidelines and preauthorization requirements.

Figure 1.2: Distribution of Medical Necessity Disputes by Network Status, 2014-2020 - 2014: 23% network, 77% non-network; 2015: 21% network, 79% non-network; 2016: 25% network, 75% non-network; 2017: 22% network, 78% non-network; 2018: 20% network, 80% non-network; 2019: 21% network, 79% non-network; 2020: 16% network, 84% non-network.

Generally, there are three types of medical disputes in the workers’ compensation system:

  • fee disputes - disputes over the amount of payment for an injured employee’s medical services;
  • preauthorization disputes/concurrent review medical necessity disputes - disputes about the medical necessity of future or current medical treatments that the insurance carrier denied; and
  • retrospective medical necessity disputes - disputes about the medical necessity of treatments already provided and billed.

Most medical necessity disputes in recent years (more than 9 out of 10) were associated with preauthorization denials. Concurrent review disputes declined (from 8 percent in 2014 to 2 percent in 2020), and retrospective medical necessity disputes only represented about 1 percent of medical necessity disputes. In 2020, health care providers and injured employees did not request any retrospective medical necessity dispute.

Figure 1.3: Distribution of Medical Necessity Disputes by Type of Medical Dispute, 2014-2020 - 2014: less than 1% retrospective disputes, 8% concurrent disputes, 92% preauthorization disputes; 2015: 1% retrospective disputes, 3% concurrent disputes, 96% preauthorization disputes; 2016: 1% retrospective disputes, 3% concurrent disputes, 96% preauthorization disputes; 2017: less than 1% retrospective disputes, 4% concurrent disputes, 96% preauthorization disputes; 2018: less than 1% retrospective disputes, 3% concurrent disputes, 97% preauthorization disputes; 2019: less than 1% retrospective disputes, 2% concurrent disputes, 98% preauthorization disputes; 2020: 0% retrospective disputes, 2% concurrent disputes, 98% preauthorization disputes.

As part of the 2001 and 2005 legislative reforms, the Texas Legislature required the use of evidence-based treatment guidelines by health care providers and insurance carriers to provide guidance on what medical services were appropriate for specific work-related injuries. As a result, most medical necessity disputes resulted in decisions that upheld the insurance carrier’s utilization review denial. In 2020, about 70 percent of disputes involving network claims and 79 percent of disputes involving non-network claims upheld the insurance carrier’s utilization review decision.

Figure 2.1: Percentage of Network and Non-Network Disputes where the IRO Upheld the Insurance Carrier’s Utilization Review Decision, 2014-2020 - 2014: 75% network, 81% non-network; 2015: 82% network, 83% non-network; 2016: 81% network, 81% non-network; 2017: 72% network, 79% non-network; 2018: 71% network, 76% non-network; 2019: 76% network, 81% non-network; 2020: 70% network, 79% non-network.
Texas Insurance Code Chapter 4202 and Texas Administrative Code §133.308 require an Independent Review Organization (IRO) to resolve medical necessity disputes within specified time frames. IROs must resolve preauthorization and concurrent review disputes no later than 20 days from the date the IRO received the dispute and no later than 30 days when doing retrospective reviews of medical necessity.

The mean time frame to resolve preauthorization and concurrent review medical necessity disputes was between 18 and 20 days. While the mean time frames to resolve retrospective medical necessity disputes varied over time, these disputes are infrequent. IROs received three retrospective review disputes in 2019 but did not render a decision on them. No retrospective review dispute was filed in 2020.
Figure 3.1: Average Number of Days to Resolve Medical Necessity Disputes by Type of Dispute - 2014: preauthorization disputes 19 days, concurrent review disputes 20 days, retrospective review disputes 32 days; 2015: preauthorization disputes 19 days, concurrent review disputes 19 days, retrospective review disputes 35 days; 2016: preauthorization disputes 19 days, concurrent review disputes 19 days, retrospective review disputes 22 days; 2017: preauthorization disputes 18 days, concurrent review disputes 18 days, retrospective review disputes 34 days; 2018: preauthorization disputes 19 days, concurrent review disputes 20 days, retrospective review disputes 32 days; 2019: preauthorization disputes 19 days, concurrent review disputes 20 days, retrospective review disputes 32 days; 2020: preauthorization disputes 19 days, concurrent review disputes 20 days, retrospective review disputes 32 days.

For more information, contact: WCResearch@tdi.texas.gov

Last updated: 11/9/2021