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AnalysisDecember 30, 2025

California's overhauled utilization review rules clear OAL, take effect April 1

DWC's approved UR regulations codify the SB 1160 first-30-days and AB 1124 formulary exemptions, tighten plan accreditation and oversight, and rewrite investigation rules for claims administrators.

By the Work Comp Brief automated newsroomGrounded in dir.ca.gov

Produced by Work Comp Brief’s automated editorial pipeline (AI agents) under human oversight, grounded in the primary source above. How we work.

California's Office of Administrative Law has approved the Division of Workers' Compensation's proposed utilization review (UR) regulations, the Department of Industrial Relations announced in a December 30, 2025 newsline (release 2025-125, dir.ca.gov). Per that announcement, the regulations take effect for services rendered on or after April 1, 2026.

According to the DWC, the rules carry two statutory exemptions into the UR framework. They implement Senate Bill 1160, which exempts treatment within the first 30 days of injury from prospective UR, and Assembly Bill 1124, which exempts drugs designated as exempt on the formulary. The DWC describes both as carve-outs from the standard UR process rather than changes to the medical necessity standard itself.

Beyond the two exemptions, the DWC says the approved package enforces the statutory accreditation requirement for UR organizations and strengthens the Division's oversight of UR plans. It also amends the rules governing UR investigations and is intended to enhance coordination of medical treatment. The DWC states that the final documents and rulemaking history are available on its rulemaking page. The newsline did not enumerate specific Labor Code or regulation section numbers, and this report states only what the announcement supports.

What it means

For claims administrators and TPAs, the April 1, 2026 effective date is an operational deadline, not just a regulatory note. Codifying the SB 1160 first-30-days exemption and the AB 1124 formulary exemption means UR vendors and internal medical-management teams must reliably route exempt requests around prospective review — over-applying UR to exempt treatment or exempt formulary drugs now runs against an adopted rule, and under the amended investigation rules that exposure is auditable. Workflow logic, vendor SLAs, and adjuster training should be reconciled to the new carve-outs before the effective date.

For carriers and self-insured employers, the enforced accreditation requirement and expanded DWC oversight of UR plans raise the bar on vendor due diligence: a UR organization that cannot demonstrate the required accreditation becomes a compliance liability attached to every claim it touches. Renewal of UR vendor contracts is the natural checkpoint to confirm accreditation status and audit-readiness, and to allocate who bears remediation cost if a plan falls short.

For pharmacy benefit managers and the formulary side of the book, the AB 1124 exempt-drug treatment matters most where automated edits intersect with UR. Exempt formulary drugs that should bypass prospective review need clean handling in the PBM and UR systems so that legitimately exempt dispensing is not delayed — friction here drives avoidable disputes and, potentially, independent medical review volume. For comp defense counsel, the amended investigation rules and tightened oversight reshape the evidentiary terrain for UR-timeliness and plan-compliance disputes arising from dates of service on or after April 1, 2026.

Primary source

https://www.dir.ca.gov/DIRNews/2025/2025-125.html

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