California Assembly Bill 1278, if passed, will severely limit an injured worker’s choice of physician — and force physicians into low-paying networks.

Currently, a Medical Provider Network (MPN) must list individual physicians who are eligible to treat workers subject to that MPN. But AB 1278 would allow MPNs to list “entities” providing or contracting for physician services, instead of listing individual physicians.

What does this mean for injured workers? Unless they predesignate a personal physician, an injured worker will have zero input on which physician provides their care. Each injured worker will likely be funneled into a network like MedRisk, OneCall, etc. and the network will determine the treating physician.

What does this mean for California physicians? MPNs will replace individual physicians with network entities. Physicians who are unwilling to accept deep network reimbursement discounts will be squeezed out of workers’ comp.

If AB 1278 passes, injured workers will not be able to choose from a list of MPN physicians. They will simply be shuttled to the lowest bidder their insurer or employer’s MPN can find.

Physicians Corralled (Like Physical Therapists)

Currently, MPNs must meet strict (but unenforced) access requirements that allow an injured worker to choose their doctor and specialists from a list of MPN physicians. Current law (California Labor Code Section 4616) mandates that an MPN must list (emphasis ours):

Physicians and their office address and office telephone numbers

For ancillary services, current law allows the MPN to list an entity rather than an individual provider. Per the current version of §4616 (emphasis ours again):

If the ancillary service is provided by an entity rather than an individual, then that entity’s name, address, and telephone number shall be listed

AB 1278 replaces the requirement of listing physicians in MPNs. Instead, an MPN would be allowed to list an entity that coordinates care on behalf of the MPN. Under this bill, MPNs may choose to list only:

1. Entities that contract to provide medical, surgical or hospital treatment, and/or
2. Entities that provide management services, schedule, or coordinate patient care, including treatment by physicians

Without individual doctors listed in MPNs, the MPN-listed entities would become responsible for directing injured workers’ care, including treatment by physicians. These entities profit by taking a cut of the reimbursement paid by the claims administrator, and leaving doctors with the difference.

In other words, the less the doctor is reimbursed, the more the entity profits.

To see just how financially ugly this can get for physicians, look to the case of physical therapists (PTs), who may now receive a laughable fraction of Official Medical Fee Schedule (OMFS) rates while their network overlords pocket the lion’s share.

In one case, after MedRisk had collected 93% OMFS on the PT’s behalf, MedRisk paid the PT just 28% of OMFS.

Under AB 1278, network entities will direct injured workers to doctors, who will still be required to bear the administrative costs of adhering to the regulatory requirements for treating injured workers, like obtaining authorization and submitting mandated reports — but will likely be paid significantly less.

We predict network entities will reimburse doctors similarly to how they reimburse ancillary service providers, as follows:

1. The entity will force the physician to sign a steep discount reimbursement contract to “coordinate injured worker care” to a physician (Pay-To-Treat).
2. The entity will direct injured workers to the physician (presumably, the one that accepted the lowest contracted reimbursement).
3. The physician will treat the injured worker and send the bill for services to the entity.
4. The claims administrator will pay the entity fee schedule rates, or as close to fee schedule rates as the entity can negotiate.
5. The entity will pay the doctor contractual, steeply discounted reimbursements (and retain the spread).

Once network entities coordinate care and pay physicians, the protections afforded to physicians by California billing regulations will disappear.

Since California has failed to provide physicians a reliable way to determine whether an employer or insurer maintains an MPN, network entities will have free rein to apply their steeply discounted rates to all reimbursements physicians receive for treating injured workers.

Rather than offer a real solution — like a comprehensive MPN database — this legislation simply hands the MPN system over to the network entities, who will be empowered to feast on physician reimbursement with abandon.

Out-of-State “Entities” In Charge

This gets worse.

AB 1278 further expands what insurers and self-insured employers may include in their MPNs to include various types of business entities. Per the bill text (emphasis ours):

In developing a medical provider network, an employer or insurer shall have the exclusive right to determine the members of their network, including, but not limited to, the following:

(2) A person or entity that provides ancillary or other services specified in subparagraph (A) of paragraph (4) of subdivision (a), regardless of whether the person or entity is doing business in the state as a sole proprietorship, partnership, corporation, or any other business entity.

The doors are wide open for business entities from all over the country to dictate which physicians may treat injured workers, and at what reimbursement rates.

If AB 1278 is passed, these entities will force every independent doctor to bid against each other for who will accept the lowest reimbursement. The MedRisks of the world, not injured workers, will choose treating physicians. And the MedRisks of the world, not the California OMFS, will dictate reimbursement rates.

With AB 1278, California will supercharge the already grievous power of MPNs to make workers’ comp a race to the bottom, so “entities” of all kinds can profit at the expense of providers and injured workers.

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

REQUEST DEMO