California workers’ comp allows discount networks to bleed the doctors who treat injured workers. Unfortunately for these workers and their employers, many of these financially wounded doctors are waving the white flag, and making the difficult decision to stop treating workers’ comp patients altogether.
Almost daily, we learn of another provider who decided to quit treating injured workers, because doing so is financially unsustainable in the long term. Many providers take a loss every time they treat a workers’ comp patient, for three primary reasons:
In theory, California’s Official Medical Fee Schedule (OMFS) takes the administrative burden into account by establishing reimbursement rates at 134.22% of Medicare rates. But in practice, providers are paid according to an Unofficial Medical Fee Schedule (UMFS), which falls very short of the OMFS rates.
For example, take the extremely common evaluation and management (E/M) procedure codes, which most doctors bill when treating an injured worker. The reimbursement data below for daisyBill clients demonstrates that providers receive, on average, only 104.7% of the amount allowed by Medicare for these E/M codes — not enough for a practice to keep the lights on.
In 2019, California fully aligned its OMFS reimbursement rates for Physician Services with Medicare reimbursement rates. Specifically, California now uses both of the following Medicare values to calculate Physician Fee Schedule reimbursement rates:
To calculate the actual dollar amounts paid to physicians for treating injured workers, California adopts a higher Conversion Factor than the Conversion Factor used to calculate Medicare reimbursements. To compare OMFS reimbursement rates to those of Medicare is as simple as calculating the difference between the two Conversion Factors.
The table below shows the Medicare and OMFS Conversion Factors for the last four years, along with OMFS rates as a percentage of Medicare rates. As the table shows, since 2019 the California OMFS has attempted to reimburse physicians at significantly higher rates than Medicare.
Year |
Medicare Physician Conversion Factor |
California Physician Fee Schedule (OMFS) Conversion Factor |
California Physician Fee Schedule % of Medicare |
2019 |
36.0391 |
45.8513 |
127.23% |
2020 |
36.0896 |
46.7900 |
129.65% |
2021 |
34.8931 |
45.8700 |
131.46% |
2022 |
34.6062 |
46.4500 |
134.22% |
But in 2022, rather than receiving the OMFS rate of 134.22% of Medicare rates, workers’ comp providers are paid the “UMFS” rates — which our data show is 104.7% of Medicare rates, for E/M services.
Below, we compare the abysmal amounts received by California workers’ comp providers for E/M codes to the amounts allowed by Medicare for the exact same services. Our data reveal the real-world UMFS rates our providers receive for each E/M procedure code (the final column expresses the UMFS rates as a percentage of Medicare rates).
The data below represents 2022 dates of service, and the respective payments received for each E/M service.
Procedure Code |
Bill Count with Procedure Code |
OMFS Reimbursement Due |
Reimbursement Paid |
OMFS Balance Due |
Reimbursement Percent of OMFS Rate |
Reimbursement Percent of Allowed Medicare Rate |
99202 |
296 |
$31,713 |
$27,049 |
$4,664 |
85% |
114.09% |
99203 |
5,531 |
$927,542 |
$790,972 |
$136,570 |
85% |
114.09% |
99204 |
10,680 |
$2,637,648 |
$2,065,703 |
$571,945 |
78% |
104.70% |
99205 |
5,733 |
$1,877,342 |
$1,421,107 |
$456,235 |
76% |
102.01% |
99211 |
245 |
$8,868 |
$7,773 |
$1,095 |
88% |
118.12% |
99212 |
2,423 |
$206,504 |
$170,273 |
$36,231 |
82% |
110.06% |
99213 |
39,721 |
$5,405,629 |
$4,396,928 |
$1,008,701 |
81% |
108.72% |
99214 |
82,935 |
$15,859,577 |
$12,242,106 |
$3,617,472 |
77% |
103.35% |
99215 |
16,384 |
$4,436,261 |
$3,213,161 |
$1,223,100 |
72% |
96.64% |
Total |
163,948 |
$31,391,084 |
$24,335,073 |
$7,056,012 |
78% |
104.70% |
California employers, be advised that your dollars are enriching PPOs and other middleperson entities, which siphon employer funds meant to cover workers’ injuries.
All employers should be outraged that these discount entities "keyed” $7 MILLION dollars away from the doctors that heal injured workers (Recently, Broadspire exposed precisely how networks and claims administrators work in tandem to implement the UFMS.).
Any physician can calculate the administrative costs associated with treating an injured worker, and conclude that those costs far (far, far, far) exceed those required to treat a Medicare patient.
The following are the steps necessary to treat an injured worker in California, with each step representing paid person-hours and other administrative expenses incurred by the practice:
Other than treating the patient, Medicare providers needn’t worry about any of the steps above, which collectively drain vast amounts of time and resources, and require highly knowledgeable, dedicated staff. The long list of additional administrative tasks required to treat an injured worker costs far more than 104.7% of the Medicare reimbursement.
Moreover, providers are overwhelmed with the chaos of trying to run post-pandemic practices, as it is proving nearly impossible to maintain the administrative staff necessary to meet the unique demands of workers’ comp.
How long can this go on?
DaisyBill provides content as an insightful service to its readers and clients. It does not offer legal advice and cannot guarantee the accuracy or suitability of its content for a particular purpose.