Risks of Skipping Utilization Review and Medical Bill Review

In Workers’ Compensation claims management, every dollar counts. Claims teams are constantly balancing quality care for injured workers with the need to contain costs and avoid unnecessary treatments. Utilization review (UR) and medical bill review (MBR) are two essential tools that make this possible. Skipping or underusing UR and MBR doesn’t just mean lost savings. It can lead to prolonged disabilities, poor medical outcomes, inflated claim costs, and costly disputes.  

How Utilization Review and Medical Bill Review Make a Difference

Utilization review is about making sure the care planned or delivered is medically necessary, evidence-based, and appropriate for the injury. It involves clinical experts reviewing treatment plans before providing care to prevent overutilization of services like imaging, surgery, or medication. 

Example

The Centers for Disease Control and Prevention (CDC) did a study in 2021 that analyzed a policy requiring utilization review for advanced imaging in Washington State. They found that the policy led to a significant reduction in unnecessary imaging. This, in turn, helped avoid downstream procedures like spinal injections or surgeries that may not have been clinically appropriate. The overall result was reduced medical spending and shorter disability durations for injured workers. 

On the other hand, medical bill review happens after care is delivered. It’s a detailed audit of the medical bills submitted to verify coding accuracy, detect duplicate or inflated charges, and ensure fees match state schedules or contracted rates. Medical bill review protects against billing errors or abuse that can silently inflate claim costs. 

Example

From 2018 through 2023, California’s Independent Bill Review program, which serves as a formal medical bill review and dispute resolution mechanism, overturned over 50% of disputed denials. This awarded providers more than $12 million in rightful payments. This shows that even sophisticated payer systems can miss billing errors. Consistent, thorough medical bill review is critical to ensuring providers get paid fairly.  

What Can Go Wrong When Utilization Review and Medical Bill Review are Skipped?

Overlooking utilization review and medical bill review is risky. Here’s what can go wrong:  

1. Unnecessary Treatments Inflate Costs and Prolong Disability

Without UR, there’s no clinical oversight to ensure that tests, imaging, or procedures are medically appropriate before they’re approved.  

Example

If a lumbar MRI is ordered too early in a back injury claim, before conservative treatments have been tried, it can trigger a multitude of unnecessary follow-up procedures, including spinal injections or surgery. These procedures often drive-up claim costs and prolong injured workers’ disability periods.

The National Institute for Occupational Safety and Health (NIOSH) emphasizes that early conservative treatment, such as physical therapy and modified duty, typically leads to better outcomes than jumping to advanced imaging or surgery. NIOSH’s ongoing research into musculoskeletal disorders demonstrates that overuse of diagnostic imaging or invasive procedures can increase the risk of chronic disability.  

On the other hand, evidence-based, non-invasive care delivered early often speeds up return to work and reduces long term costs. Skipping UR means losing the chance to align care with best practices, putting both the claim and the injured worker at risk.  

2. Billing Errors Go Undetected

Without rigorous medical bill review, bills with incorrect or inflated charges slip through, silently increasing claim costs. Common issues include: 

• Duplicate billing
• Unbundling procedures that should be billed together
• Upcoding services to more expensive levels
• Billing for services not rendered
• Inaccurate surgical duration billing
• Wrong room charges
• Charges without pre-authorization

While these errors aren’t always intentional or fraudulent, they reflect the complexity of today’s medical billing environment. It requires trained eyes and technology to catch and correct costly mistakes.  

Example

In a 2023 case highlighted by the U.S. Department of Justice, a California provider was ordered to repay over $11 million after investigators uncovered widespread billing abuses, including upcoding and charging for services never provided in Workers’ Compensation claims. This example underscores how undetected billing errors, whether accidental or abusive, can quickly snowball into significant financial losses without a robust medical bill review process in place. 

3. More Litigation and Disputes

Without proper oversight like UR and MBR, claims become more vulnerable to litigation and disputes. Injured workers may face delays in care or miss out on optimal treatments entirely, while payers wrestle with inflated bills that are difficult to reverse. Even if the claims team or medical reviewer makes the right decision, it can still cause problems if it’s not well-documented.  

The Coalition Against Insurance Fraud estimates that organized medical fraud and billing abuse cost insurers billions annually. Inadequate UR and MBR processes leave companies exposed to billing errors and inflated charges, which can lead to long, costly disputes. Well-structured UR and MBR programs not only reduce risk but also keeps claims clean and defensible.  

4. Lost Opportunity to Contain Costs and Improve Outcomes

Ultimately, skipping utilization review and medical bill review means giving up control over both medical costs and claim outcomes. When these safeguards are overlooked, payers lose critical opportunities to: 

• Promote evidence-based, cost-effective care that improves patient outcomes
• Detect and correct billing errors early, before they snowball into larger financial issues
• Reduce unnecessary treatments, utilization, and costly medical procedures
• Support faster recovery and return-to-work timelines for injured workers

UR and MBR are not just cost-containment tools—they are essential components of a high-quality, defensible claims process.  

Want reduced costs and better claim outcomes? Talk to us today about strengthening your UR and MBR programs. 

Check out our sources:

California Division of Workers’ Compensation. 2020 Independent Bill Review (IBR) Report: Analysis of 2018–2019 Application Filings. California Department of Industrial Relations, 2021, https://www.dir.ca.gov/DIRNews/2021/2021-07.html.

Graves, Janessa M., et al. Impact of an Advanced Imaging Utilization Review Program on Downstream Health Care Utilization and Costs for Low Back Pain. Medical Care, vol. 56, no. 6, Jun. 2018, pp. 520–528. PMC, https://stacks.cdc.gov/view/cdc/122273/cdc_122273_DS1.pdf.

NIOSH. Musculoskeletal Health Program Overview. National Institute for Occupational Safety and Health, Centers for Disease Control and Prevention, https://www.cdc.gov/niosh/research-programs/portfolio/musculoskeletal.html.

U.S. Department of Justice. “Medical Provider to Pay Millions to Settle False Claims Allegations in Workers’ Compensation Program.” Justice News, 2023, https://www.justice.gov.

Washington State Department of Labor & Industries. Utilization Review (UR) Fact Sheet. L&I, https://lni.wa.gov/forms-publications/F245-465-000.pdf.