Workers’ Comp Executive reports that California payers show little interest in paying injured workers indemnity benefits with debit cards despite a legislative push to replace the use of paper checks.

Oh, the irony.

Payers go to significant (and arguably manipulative) lengths to pay providers with virtual credit cards (VCCs), while most barely attempt to pay injured workers by debit card. We have a theory as to why: there’s no way to generate extra revenue with debit card indemnity payments.

Only California’s State Compensation Insurance Fund (CA State Fund) switched to debit card indemnity payments, and the switch was overwhelmingly successful.

Meanwhile, VCC payments continue to enrich payers at the expense of providers. As daisyNews has demonstrated, opting out of VCC requires extraordinary efforts by providers’ administrative staff.

WC Exec: Innovation “Hindered”

According to the Executive, the California legislature commissioned a study on the use of debit cards for indemnity payments, but payers refused to participate as “deadlines for the study came and went.”

Pointing to a “Lack of Effort” from payers, the Executive noted comments from the Commission on Health and Safety and Workers’ Compensation (CHSWC) indicating that payers “never really explored the feasibility of adopting debit cards.”

However, one insurer played ball: California’s State Fund “dared to choose to lead the way,” and discovered that the overwhelming majority (96%) of injured workers covered by State Fund preferred debit card payments.

Given the option, only 3.14% of State Fund-covered workers chose to receive paper checks.

CA Must Start Leading, Stop Acquiescing to Payers

There’s no readily apparent reason for payers not to have participated in the effort to modernize indemnity payments and make the system more efficient.

While CHSWC received responses from payers that included supposed reasons for refusing to try debit card payments, the Executive quotes a CHSWC representative as “questioning those responses if, in fact, those were legitimate issues.”

Meanwhile, payers are sure to expend the time and effort necessary to partner with VCC payment vendors and persuade providers to accept hefty credit card fees. Those payers may then share in the spoils, enjoying rebates and revenue sharing from VCC vendors and effectively turning providers into revenue streams.

Asking payers to adopt innovation, comply with laws and regulations, report data, and otherwise make “voluntary” efforts to improve California’s workers' compensation system has consistently failed.

It’s time to stop asking and start applying incentives and/or consequences.

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