Why are doctors unwilling to treat injured workers?

In California, injured workers often struggle to find doctors willing to provide treatment. The main reason for this is simple: dollars and cents. Data prove doctors are paid financially unsustainable rates, far below the established state fee schedule rates, for bearing the administrative costs of treating injured workers.

Reimbursement data from the State Compensation Insurance Fund (SCIF) and Gallagher Bassett demonstrate that California’s workers’ comp fee schedule is meaningless. This is due primarily to the preponderance of discount reimbursement contracts forced on doctors under threat of exclusion from unverifiable Medical Provider Networks (MPNs).

The data from these claims administrators reveal that doctors often receive Medicare rates (or less) for navigating the costly requirements to treat injured workers. Below, we lay out six mandated administrative expenses that make these Medicare reimbursement rates unsustainable for practices.

While injured workers struggle to find doctors, California legislators are considering Assembly Bill 1278 which will allow unregulated network entities to “coordinate care” and reduce provider reimbursements even further.

Injured Worker Administrative Costs

Below is an outline of the required workflow for a physician’s treatment of an injured worker, on the worker’s first visit to the practice. These six administrative requirements only apply only to workers’ comp; they do not apply to Medicare or group health patients.

The requirements below consume amounts of time, person-hours, and resources that inform and justify California’s decision to set OMFS reimbursement rates for physician services at 139% of Medicare rates.

Unfortunately for providers and injured workers statewide, the OMFS is consistently undermined by contractual reimbursement discounts forced on providers in exchange for inclusion in unverifiable MPNs.

Below are further descriptions of each administrative cost incurred by a provider who agrees to treat an injured worker. These administrative costs are mandatory; if the doctor fails to adhere to any of these requirements, payment for treatment rendered is forfeited.

Since California fails to provide doctors with a reliable way to determine which employers maintain MPNs, the doctor must also undertake the costly administrative process of determining eligibility to treat the injured worker.

Coventry, a third-party entity that maintains MPNs, instructs providers to undertake the following steps to verify eligibility prior to treatment:

1. Contact the employer of the injured worker
2. Ask for the name of the employer’s insurer and
3. Contact the insurer to determine whether the doctor is in the MPN.

Also missing from the long list of administrative costs listed above are the practice costs of managing nurse case managers, unreturned phone calls to adjusters, endless correspondence from attorneys, and employer’s demands for work status.

Finally, payment regulations incentivize claims administrators to simply deny payment without consequences, forcing providers to expend even more administrative resources to receive meager reimbursements well below fee schedule rates.

Doctors, all of the above demonstrates the administrative expenses associated with treating injured workers are far greater than those required for Medicare patients — and the data below reveals payments are barely at Medicare rates (and often less).

Established Patient E&M Data Breakdown

Providers rely on the OMFS’s higher reimbursement rates for E&M and other services to offset the mandated administrative costs outlined above. But as daisyBill’s extensive reimbursement data reveal, OMFS rates are fantasy, not reality.

For established Evaluation and Management (E&M) services, the table below reflects data for medical bills submitted via daisyBill to Gallagher Bassett and SCIF, with dates of service between January 1, 2021, and March 31, 2023.

The data below demonstrate the alarming 15% rate at which Gallagher Bassett denies payment for established patient E&M services, compared to SCIF’s 7% denial rate.

Moreover, for all of the administrative work outlined above, Gallagher Bassett reimburses providers only 79% of Physician Fee Schedule rates, equivalent to just 105% of Medicare rates. SCIF reimburses providers only 72% of Physician Fee Schedule rates, equivalent to 96% of Medicare reimbursement.

This is the reason injured workers struggle to access care, in black and white. 

AB 1278: CA Assembly Dooms Doctors to Network Discounts

All sensible parties should agree that doctors who agree to treat injured workers should be compensated appropriately for the administrative burdens outlined above. But a pending bill has a reimbursement time-bomb built in for doctors across California.

Assembly Bill 1278 would allow third-party network scheduling entities to “coordinate care” for injured workers — i.e. to schedule appointments with physicians — through MPNs. This will put physicians in a position of subservience to network entities, which will require physicians to accept steeper and steeper reimbursement discounts in exchange for appointments to treat injured workers.

In other words, network entities will be taking a massive cut from doctors’ reimbursements, in exchange for scheduling appointments.

If California is serious about attracting and retaining doctors in the workers’ comp system, legislators and regulators must make treating injured workers financially defensible. Either mandate full OMFS reimbursement rates, reduce the amount of mandated paperwork, or some combination thereof.

The state must also reform the payment appeals process, which currently incentivizes claims administrators to improperly deny reimbursement.

What will not help: designating network entities like Coventry, MedRisk, Homelink, and others as unregulated “coordinators” (read: schedulers) that determine where injured workers may seek care — and the amount providers are paid for that care.

Workers’ comp can work for providers. daisyBill software, data, and expertise makes billing easier, faster, and less costly. Request a free demonstration below.

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