by Haj Aoki, Division Manager & Eric McClain, Lead MSA Analyst

As featured last week on, the Department of Industrial Relations (DIR) and the Division of Workers’ Compensation (DWC) recently issued their annual report on the Independent Medical Review (IMR) program which analyzed data from 2020. IMR is the medical dispute resolution process that the California workers’ compensation system utilizes to resolve disputes regarding the medical necessity of treatment recommendations for injured workers, which have been denied or modified by the Utilization Review (UR) process. A UR decision modifying or denying a treatment request because it is not medically necessary is considered final and in effect for one year unless it is overturned by IMR. Senate Bill (SB) 863, a reform of the workers’ compensation system in California that included IMRs, was signed into law in September 2012 and went into effect on 01/01/13 for injuries occurring in 2013. Independent Medical Review (IMR) was then made available beginning on 07/01/13 to ALL injured workers regardless of their injury date. In its eighth year since the program began, it continues to be administered by Maximus Federal Services, Incorporated.

Of the total number of IMR filings received, pharmaceutical requests accounted for 34%, which was a smaller proportion of the total service requests than in past years. Of the pharmaceutical requests, 30% dealt with opioid analgesic issues[1]. In the report’s Executive Summary, the DIR and DWC went on to say that treatment request denials were overturned – an instance where Maximus did not uphold the UR denial – at an average rate of 9.5%. Of note, the category with the highest overturn rate was behavioral and mental health services at approximately 18%.  It was also stated in the report that while IMR activity declined in 2020 due to the COVID-19 pandemic, it appeared to stabilize toward the end of the year with application and case decision counts only slightly below those of the previous year.

How are IMRs Viewed by the Centers for Medicare & Medicaid Services (CMS)?

As noted in the CMS Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide, CMS will evaluate and recognize or honor any state-legislated, non-compensable medical services. However, CMS has been disregarding California Labor Code § 4610.6(g) that states:

“The determination of the independent medical review organization shall be deemed to be the determination of the administrative director and shall be binding on all parties.”

Instead, CMS has treated IMR as a UR, where they will follow a UR decision if the denied treatment has been replaced by an alternative treatment plan. It is also possible that if a denied treatment or medication continues to be paid on the workers’ compensation claim after the IMR denial, CMS will likely disregard it and include the denied treatment or medication in the allocation. They will, however, consider documentation that shows those payments were reversed, if made in error by the carrier. We have also noticed that if an IMR denial is the most recent medical record on file, CMS will typically reject that finding and go with the prior treatment suggestion.

The Impact of an IMR Final Determination Letter on a Medicare Set-Aside (MSA) and CMS Submission

In general, we have found that IMRs can be a useful tool in providing a reasonable MSA allocation when certain treatment requests have been found not to be medically necessary and appropriate – especially when other treatment options have been implemented and shown to be successful. Nevertheless, one must keep in mind how CMS will regard the events that follow receipt of an IMR final determination letter and be aware of the potential pitfalls discussed in this blog.

[1] Executive Summary – 2021 Independent Medical Review (IMR) Report: Analysis of 2020 Data