Pennsylvania Supreme: Non-Treating Providers May Not Intervene in Utilization Review

In Pennsylvania, if an insurer contends that a medical service, drug or device is unnecessary, it must resolve the dispute through a process called utilization review, where medical professionals decide if the request is reasonable.

The Pennsylvania Supreme Court ruled Wednesday that non-treating providers, such as pharmacies and imaging centers, may play no role in that process.

The high court rolled back an appellate court decision that effectively added new language to the state Workers’ Compensation Act by requiring non-treating providers be given due-process rights in utilization-review decisions. The unanimous opinion says the act makes it clear that providers have no property interest in their claims until after UR determines the goods or service are reasonable and necessary.

“Absent a constitutionally protected property interest, there is no viable due process claim,” the opinion says.

The dispute that was brought to the Supreme Court for resolution started out as an administrative proceeding before the state Department of Labor and Industries Medical Fee Review Section in 2017. Claimant Thomas Shaw, an employee of the Roman Catholic Archdiocese of Philadelphia, had injured his year three years before and was prescribed medications by his physician. Keystone Rx LLC dispensed the drugs and billed the employer’s insurer, Compservices/AmeriHealth Casualty Services.

The insurer filed a UR request. The utilization review organization determined that all medications dispensed after Nov. 2, 2016 were unreasonable and unnecessary because they were unrelated to Shaw’s workplace knee injury.

While non-treating providers cannot participate in the UR process, they can challenge decisions by insurers and employers that refuse to pay their bills.

Keystone petitioned the Medical Fee Review Section, which initially ruled that Compservices owed the pharmacy $4,000. The insurer appalled to the Fee Review Hearing Office, which vacated the previous determination and found the insurer owed nothing because UR determined the medications were unnecessary and that the pharmacy had no standing to challenge a UR decision.

Keystone appealed to the Commonwealth Court, which is an intermediate court of appeal. The Commonwealth Court determined that because a hearing officer had decided that the medications were unnecessary, it had correctly concluded that Keystone could not challenge that finding.

But the appellate court went further: It ruled that from the date of the decision forward, non-treating providers must be given notice and a right to intervene in UR proceedings.

The ruling grabbed the attention of business and insurance groups, which noted that Pennsylvania has been using UR for more than 20 years. The Pennsylvania Chamber of Business and Industry. Insurance Federation of Pennsylvania, American Property Casualty Insurance Association and the National Association of Mutual Insurance Companies were among groups that filed amicus briefs after Compservices appealed to the Supreme Court.

The high court said the Commonwealth’s ruling was “unconventional.” For all intents and purposes, the appellate court had deemed the UR procedures called for by the Workers’ Compensation Act to be unconstitutional, the opinion says. To remedy the “infirmity,” the court “engrafted” onto the act a new requirement that non-treating providers be given notice and an opportunity to intervene in UR proceedings.

The Supreme Court said, however, that the law does not bestow property rights onto providers for goods and services that are deemed medically unnecessary. Therefore, the Commonwealth’s concerns about “due process” are unfounded.

Justice David Wecht elaborated in a concurring opinion. He said providers such as laboratories, medical imaging centers, opticians and pharmacies are free to petition the state legislature if they believe the UR rules are unfair.

“Short of legislative intervention, non-treating providers will have to make the business decision of whether to continue providing services to workers’ compensation claimants,” Wecht wrote.