Snapshot: Medical Necessity Dispute Resolution Trends 2014-2020

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.

Key findings

Number of medical necessity disputes declining

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.

Most medical necessity disputes involve non-network claims

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.

The majority of medical necessity disputes involve preauthorization denials

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.

The majority of disputes decisions upheld the insurance carrier’s denial

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.

Most medical necessity disputes resolved with 18-20 days

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.