California providers, if you suspect a reimbursement discount is invalid, you have the right to demand proof of an applicable discount contract.

As we detailed last week, the City of Anaheim paid a provider for treating a municipal employee at 26% below California’s fee schedule reimbursement rates. The Explanation of Review (EOR) cited a HealthSmart PPO agreement to justify the discount; however, the provider claims never to have signed a HealthSmart contract.

Below, see the letter daisyBill sent on the provider’s behalf demanding proof of the alleged HealthSmart contract.

Pursuant to California Labor Code Section 4609, providers may request that a payer furnishes proof of a discount agreement. Providers should do so when they:

• Do not recognize the name of the discount agreement cited on an EOR, and/or
• Suspect that the payer applied a reduction in excess of contractual terms.

As our letter explains, Anaheim now has until November 4 to produce a valid contract with terms that justify payment at 74% of state fee schedule rates. If Anaheim doesn't provide the signed agreement within 30 days, Anaheim owes the provider 100% of the fee schedule rate and cannot apply future discounts without the provider’s consent.

The clock is ticking.

Use the daisyBill letter below as a template to protect your practice from baseless PPO discounts.

§ 4609 Letter to City of Anaheim

On behalf of our client, daisyBill sent the letter below to the City of Anaheim’s Risk Management Division by Certified Mail with Electronic Return Receipt and by email.

The letter formally demands that Anaheim produce a copy of the supposed contract between the provider and HealthSmart PPO Network that allows the City of Anaheim to reduce the provider’s payment to 74% of the state fee schedule rate.

The letter notes that under § 4609, Anaheim has 30 business days to comply. If Anaheim fails to timely comply with the demand:

• The city must pay the provider 100% of the fee schedule rate.
• Anaheim is legally barred from imposing any future reimbursement discount on the provider without the provider’s express written consent.

California Labor Code § 4609(c)(2) mandates that a “payor” (aka: claims administrator) must (emphases ours):

“Demonstrate that it is entitled to pay a contracted rate within 30 business days of receipt of a written request from a provider who has received a claim payment from the payor…

…The failure of a payor to make the demonstration to a properly documented request of the provider within 30 business days shall render the payor responsible for the lesser of the provider’s actual fee or, as applicable, any fee schedule pursuant to this division, which amount shall be due and payable within 10 days of receipt of written notice from the provider, and shall bar the payor from taking any future discounts from that provider without the provider’s express written consent…”

daisyBill Power of Attorney

With the letter above, we enclosed the notarized Limited Power of Attorney (below), which the provider granted to daisyBill. This authorizes our agents to demand that claims administrators justify suspicious discounts as the provider’s legal representatives.

Stratacare/MedRisk EOR

Finally, daisyBill also enclosed the paper EOR that Stratacare (a bill review company under MedRisk) sent to the provider on behalf of the City of Anaheim.

This paper EOR contradicted an electronic EOR Anaheim had previously sent, which indicated payment at full fee schedule rates. As the EOR (below) shows, StrataCare/MedRisk took a $58.73 PPO reduction, citing “HEALTHSMART PPO NETWORK,” an organization with which the provider claims to have no legal agreement.

Make no mistake: claims administrators apply invalid reimbursement discounts based on contracts that don’t apply or don’t exist. daisyNews has published many examples of this, some unbelievably egregious.

If California providers make it Standard Operating Procedure to challenge every suspect discount in the manner we outline above, payers may change their behavior.

daisyCollect doesn’t just submit bills. We go to bat for your practice when payers break the rules. Click below to learn more:

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