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The Utilization Review Process and the Origins of Medical Necessity in Workers’ Compensation

Lower back pain diagnosisThe Scenario: George, a 47-year-old male, injured his back at work two days ago putting a box on a shelf. He is seeing his primary care physician for the first time. George’s physical assessment revealed low back pain with tenderness upon palpation. No leg pain or numbness. He has no confounding factors. The primary physician diagnosed George with a lumbar strain. As part of the treatment plan, the physician orders physical therapy and an MRI of the lumbar spine. The primary care physician submits the request for physical therapy and MRI of the lumbar spine to the workers’ compensation utilization management department for prior authorization.

Becky, the utilization review nurse, analyze the request for physical therapy and MRI of the lumbar spine along with medical notes. She asks herself, “Is the physical therapy medically necessary?” and “Is the MRI of the lumbar spine medical necessary?”

According to the Centers for Medicare & Medicaid Services Glossary (2016), medical necessity is defined as “services or supplies that: are proper and needed for the diagnosis or treatment of a medical condition, are provided for the diagnosis, direct care, and treatment of a medical condition, meet the standards of good medical practice in the local area, and aren’t mainly for the convenience of the patient or doctor.”1

An Introduction to Utilization Review in Workers Compensation

Nurse performing utilization reviewWorker’s compensation has changed in the last 100 years. Rising healthcare costs, quality of care, and overutilization are evident now more than ever before. These challenges must be addressed by the industry, and effective solutions are a must.

According to the Workers’ Compensation Medical Cost Containment: A National Inventory, 2021, medical benefits represent the single largest cost component for many state workers’ compensation systems.2

According to Back to the Basics: Cost Control and the Role of Precertification and Utilization Review in Workers’ Compensation, medical expenses on workers’ compensation claims are now averaging 60% of the claims cost.3

Utilization review (UR) is a method to match the injured worker’s clinical picture and care intervention to evidence-based criteria (such as ODG guidelines). This criteria helps guide the utilization review nurse in determining appropriate treatment and care at the appropriate time in a cost-effective manner.

History of Utilization Review in Workers’ Compensation

Wisconsin passed the first comprehensive workers’ compensation law in 1911, while Mississippi was the last state to jump on board in 1948. These early laws require employers to provide medical and wage replacement benefits for injured workers.4

Utilization review, as a process, was introduced in the 1960s to reduce overutilization of resources and identify waste. The utilization review function was initially performed by registered nurses (RNs) in the acute hospital setting. This skill set gained popularity within the workers’ compensation industry in the 1990s due to the rising cost of healthcare and overutilization of services.

Utilization Review Process in Workers’ Compensation

There are four review levels within the utilization review process for worker’s compensation: prospective, concurrent, retrospective, and appeal.

  • Prospective review assesses the need or medical necessity for the services and procedures before the services are performed.
  • Concurrent review means the monitoring by the organization or the managed care vendor for medical necessity and appropriateness, throughout the period in which designated medical services are being provided to the injured worker.
  • Retrospective review involves a review of medical necessity after treatment has been provided.
  • Appeal review involves additional documentation submitted to dispute the rationale provided by a previous utilization review decision.

The utilization process for workers’ compensation begins at the time the physician submits a request to the utilization department for review (prospective review).

The proposed procedure is reviewed by the nurse to determine medical necessity by using evidence-based guidelines (such as the ones offered by ODG). If the nurse is not able to approve the procedure per guidelines, the request may be escalated to physician review.  The physician reviewer decides on the proposed procedure using evidence-based guidelines along with their own clinical judgment.

The physician and the injured worker are notified of the recommendation.

The primary care physician and/or injured worker can appeal this recommendation if they do not agree (appeal review).

In the scenario at the beginning, Becky the utilization review nurse received two requests to review for medical necessity. Evidence-based guidelines, such as ODG, recommend physical therapy as the first line of treatment for a lumbar strain. According to current evidence, these guidelines also indicate that an MRI of the lumbar spine is not indicated for the injured worker with acute low back pain of fewer than 6 weeks duration and no “red flag” conditions. After reviewing the guidelines, Becky approves the physical therapy as medically necessary, but also finds the MRI of the lumbar spine is not medically necessary at this point in the injured worker’s treatment.

Although this is an overview of utilization review for workers’ compensation, it is important to note the process can also incorporate other steps and methodology such as:

  • Physician second-level review
  • Peer-to-peer review (physician to physician)
  • State regulatory requirement checks
  • Clinical documentation improvement efforts

Today, utilization review is one method used to demonstrate the quality of care and control costs. Utilization review has evolved into an important component of the workers’ compensation system by protecting the injured worker and educating care providers on the continual evolution of evidence-based, best practices.

-Danette Heine, Clinical Educator, ODG by MCG. Published November 16, 2021.

The information contained in this article concerns the ODG guidelines as of the date of publication, and may not reflect revisions made to the guidelines or any other developments in the subject matter after the publication date of the article.

Images courtesy Shutterstock/Bertold Werkmann/BearFotos


  1. Centers for Medicare & Medicaid Services Glossary (2016, 0514) Retrieved from https://www.cms.gov/apps/glossary/default.asp?Letter=M&Language=English
  2. Workers Compensation Research Institute (WCRI) article “Workers’ Compensation Medical Containment: A Nation Inventory, 2021 from https://www.wcrinet.org/reports/workers-compensation-medical-cost-containment-a-national-inventory-2021
  3. Back to the Basics: Cost Control and the Role of Precertification and Utilization Review in Workers’ Compensation from https://www.mitchell.com/insights/workers-comp/articles/back-basics-cost-control-and-role-precertification-and-utilization
  4. Guyton, Gregory P. A Brief History of Workers’ Compensation. The Iowa Orthopaedic Journal, 1999: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1888620/

The post The Utilization Review Process and the Origins of Medical Necessity in Workers’ Compensation appeared first on ODG by MCG.

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