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Recent Pennsylvania Supreme Court Ruling Impacts Medical Cost Containment in Workers’ Compensation

April 3, 2023
January 8, 2021

On September 1, 2020, the Pennsylvania Supreme Court granted allocatur in the case of Keystone Rx LLC v. Bureau of Workers’ Comp. Fee Review Hearing Office. In its Per Curiam Order, the Pennsylvania Supreme Court granted allowance of appeal to address the following issues:

  • Did the Commonwealth Court exceed the scope of its authority and substitute its judgment for that of the Pennsylvania Legislature, when it promulgated a new rule which mandates non-healthcare providers are entities with standing and the right to intervene in the Workers' Compensation Act's Utilization Review process?
  • Did the Commonwealth Court err when it gave non-healthcare providers the right to void at any time, a Utilization Review Determination regarding the reasonableness and necessity of the care of the physician who wrote the prescription, which led to the non-healthcare provider providing a good or service to the injured worker?
  • Whether the Commonwealth Court violated the separation of powers doctrine by engrafting a new requirement onto the Pennsylvania Workers' Compensation Act's process for conducting utilization review of treatment by a health care provider, by prospectively directing that non-treating entities be given notice and an opportunity to intervene in utilization reviews?

In Keystone, the Pennsylvania Commonwealth Court mandated that a non-healthcare provider(such as a pharmacy) must be given notice and the opportunity to participate in the UR process.

The Pennsylvania Utilization Review process is found in section 306 (f.l) (6) of the Pennsylvania Workers' Compensation Act. The Utilization Review process is designed to assess whether the medical care an injured worker receives for a work injury is reasonable and necessary. Disputes as to reasonableness or necessity of treatment by a healthcare provider shall be resolved in accordance with the following: (i) The reasonableness or necessity of all treatment provided by a healthcare provider under this act may be subject to prospective, concurrent, or retrospective [UR] at the request of an employee, employer or insurer. (emphasis added). If the medical care is found not to be reasonable or necessary, the medical provider who provided the care will not be paid for the care under review. If the employer, carrier, injured worker, or healthcare provider disagrees with the Utilization Review Determination, they may file a Petition to Review which will be decided by a workers’ compensation judge.  

Before the Commonwealth Court’s decision in Keystone, participation in the Pennsylvania Utilization Review process was limited to employees, employers, insurers, and healthcare providers. Healthcare providers are defined under the Act as:

(1) A doctor of medicine or osteopathy who is authorized to practice medicine or surgery (as appropriate) by the State in which the doctor practices; or

(2) Any other person determined by the Secretary to be capable of providing health care services.

Notwithstanding the clear and unambiguous language chosen by the Pennsylvania General Assembly in defining the parameters and participants of the UR process, the Commonwealth Court in Keystone arrived at the following holding: "We hold that for [utilization review] procedures occurring after the date of this opinion where an employer, insurer, or an employee requests [utilization review], a provider which is not a "healthcare provider" as defined in the Act, such as a pharmacy, testing facility or provider of medical supplies, must be afforded notice and an opportunity to establish a right to intervene under the usual standards for allowing intervention.”

Although the Pennsylvania Legislature enacted the UR process to further ensure that injured workers receive appropriate care, the benefits afforded to employers and insurers through the UR process cannot be overstated. The UR process provides a necessary means by which an insurer/employer can objectively question the treatment claimant receives, knowing that if treatment is deemed unreasonable and unnecessary, payment obligations cease. Affording non-healthcare providers, the opportunity to participate in the UR process and advocate for treatment payment undoubtedly will increase the likelihood that treatment under review is deemed reasonable and necessary. It stands to reason that an increased advocation for treatment payment will lead to increased payment obligations for insurers/employers. The inevitability of this outcome provides a compelling reason for employers and carriers to advocate for the Pennsylvania Supreme Court's reversal of this decision.