Utilization Review and Nevada’s New ODG Formulary

Nevada is joining a growing list of states changing their Workers’ Compensation systems by adopting the Official Disability Guidelines (ODG) Drug Formulary, which is a list of prescription drugs that insurers are expected to cover for workplace injuries. As a result, utilization review (UR) is needed for medications that fall outside the approved list or require medical justification.  

While this shift may seem straightforward, there’s more happening beneath the surface. For claims adjusters in Nevada, this change isn’t just about what drugs are on the list. It’s about navigating prior authorization, handling medical documentation, and making informed decisions in an uncertain environment. As Nevada prepares for implantation, utilization review is one of the most important tools adjusters can rely on to stay compliant, consistent, and clinically sound.   

What is the ODG Drug Formulary?

In June 2025, Nevada passed Senate Bill 317, requiring the Division of Industrial Relations to adopt and implement the ODG Drug Formulary by July 1, 2027. 

The ODG Drug Formulary is a nationally recognized, evidence-based list of medications developed to guide treatment decisions in Workers’ Compensation claims. Its primary goal is to reduce unnecessary or inappropriate prescribing by offering a standardized approach to medication approvals. This helps providers, insurers, and adjusters align treatment with best practices. 

Here’s how the new system will work in Nevada:  

• Drugs listed and approved in the formulary can be prescribed and reimbursed without delay. 

• Drugs not listed or approved will require prior authorization. 

• Doctors can still request non-formulary drugs if they believe it’s medically necessary, but these requests now require utilization review. 

Gray Areas in Nevada’s ODG Law

Unlike states that adopt closed drug formularies with strict, enforceable rules, Nevada’s approach leaves much of the process undefined. The statute uses the word “may” frequently. The language gives insurers and providers a lot of leeway, which creates gray areas, especially when it comes to ongoing medication use.  

This lack of clarity can raise the following questions:  

• When and how is prior authorization triggered?  

• How long can a medication be prescribed without proof of clinical benefit? 

• What justifies denying a drug when the provider is technically following the rules?  

The framework is there, but the enforcement is still hazy. This means adjusters and insurers have a responsibility to make sound, consistent, and defensible decisions.  

That’s where utilization review becomes essential. It helps claims professionals apply consistent, medically supported decision-making, even when the statute leaves room for interpretation.  

The Essential Role of Utilization Review

With Nevada’s ODG Formulary on the way, utilization review becomes vital for determining whether a prescribed drug is appropriate, medically necessary, and aligned with current guidelines. 

Here’s how utilization review helps adjusters navigate the shift: 

1. Handling Prior Authorization for Non-Formulary Drugs

If a drug isn’t listed, or is listed but not approved for the injury, the treating provider must submit a prior authorization request. From there, a UR reviewer evaluates the medical necessity based on: 

• ODG guidelines
• Treatment notes
• Diagnosis details
• Injury specifics

This process ensures that medication decisions are grounded in clinical evidence, not just policy interpretation or cost. 

According to the American College of Occupational and Environmental Medicine (ACOEM), formularies are most effective when paired with strong UR processes to ensure the right treatments reach the right patients at the right time.  

2. Being Prepared for Appeals and Hearings

If a non-formulary drug is denied, the injured worker or their representative can appeal the decision to a hearings officer. In these cases, clear documentation and clinical justification are essential.  

This is where having a robust utilization review process becomes critical. It gives adjusters: 

• Clear, objective medical reasoning
• Well-documented reviewer notes
• Support for consistent, defensible decisions if the case goes to a hearing

In other states, like Indiana and Texas, well-documented UR decisions have become essential evidence in appeals processes tied to non-formulary drug denials. Nevada’s system is expected to follow a similar path. 

3. Navigating the Gray Areas

One of the biggest concerns raised by medical directors and regulatory experts is the lack of clarity around ongoing medication use. 

Example

Let’s say a doctor prescribes a drug that’s on the formulary, and continues to prescribe it for months, even if there’s no measurable clinical improvement. Under the current statute, there’s no explicit standard for when it’s inappropriate to continue reimbursing the drug.  

This leaves adjusters in a difficult position. The provider is technically complying with the law, but the treatment may no longer be beneficial. 

UR fills that gap. It gives claims teams a structured, clinically sound way to assess:

• Whether the treatment is still working
• If there’s evidence to support ongoing reimbursement
• Whether alternative care should be considered

RAND (Research and Development Corporation) research into drug formularies in states like California and Texas found that ongoing UR involvement reduced prolonged, ineffective medication use and helped prevent unnecessary claim extensions. 

4. Protecting Claims Outcomes and Timelines

When rules are evolving, treatment delays often follow, especially when there’s uncertainty about what’s approved. 

With an active UR process in place, adjusters can: 

• Get faster, clearer answers on questionable prescriptions
• Avoid delays caused by back-and-forth with providers
• Reduce claim duration tied to prolonged or inappropriate medication use

This isn’t just about containing cost. It’s about making sure injured workers receive effective, timely treatment that supports their recovery and return to work. 

What Adjusters Should Watch For

For claims adjusters in Nevada, the transition to the ODG Formulary will bring new challenges, especially during this in-between phase, where the structure is in place but many details are still being defined. With several other states already adopting ODG, and more likely to follow, Nevada’s rollout is part of a broader shift in how Workers’ Compensation medications are managed.  

Here’s what to keep an eye on:

Expect More Medications to Require Utilization Review

As the formulary takes effect, there will likely be an increase in prior authorization requests for drugs that aren’t listed or are restricted. Each of these will require utilization review to determine if the request meets medical necessity standards. 

Pushback From Providers May Increase

Doctors may be more likely to challenge denials or request non-formulary medications, especially in the early phases when enforcement and expectations aren’t yet standardized. Having a utilization review process that can produce clear, evidence-based reasoning will help adjusters respond with confidence. 

Documentation Will Be Scrutinized

In any appeal or hearing, detailed clinical documentation from utilization review can make the difference between a decision being upheld or overturned. Vague or generalized denials won’t hold up — utilization review provides the necessary clinical substance. 

ACOEM recommends pairing drug formularies with rigorous UR protocols to avoid treatment delays, reduce unnecessary care, and support fair adjudication when disputes arise. 

More Rules are Still to Come

The Administrative Director still needs to define how the formulary will function in practice, including how prior authorizations are processed, what standards apply to ongoing medication use, and how disputes are resolved. Until then, utilization review will serve as the clinical compass adjusters use to interpret the gray areas. 

Get Ahead Before 2027

Nevada’s adoption of the ODG formulary is a step toward more consistent, evidence-based treatment, but it also introduces complexity for claims professionals, especially adjusters. 

The truth is utilization review is no longer optional. It’s a critical tool for navigating regulatory uncertainty, identifying unnecessary or ineffective care, and ensuring that every claims decision is backed by clinical reasoning. 

As the state finalizes the details and implementation draws closer, the adjusters who will be best prepared are the ones building their review processes now — not in 2027. 

Build your UR foundation now. 

Check out our sources:

American College of Occupational and Environmental Medicine. A Guide to Developing a Workers’ Compensation Drug Formulary. ACOEM, 2014, https://www.acoem.org.

Gifford, Brian, et al. Outcomes Associated with Formulary Implementation in Workers’ Compensation. RAND Corporation, 2021, https://www.rand.org/pubs/research_reports/RRA114-1.html.

MCG Health. Official Disability Guidelines (ODG). MCG Health, 2025, https://www.mcg.com/odg.

Nevada Legislature. Senate Bill No. 317, 82nd Session (2023–2025). Nevada State Legislature, https://www.leg.state.nv.us/Session/82nd2023/Bills/SB/SB317.pdf.