This week’s Diabolical Discounter is the City of Riverside. This self-insured public employer slashed a doctor’s reimbursement for a municipal worker’s Evaluation and Management (E/M) service to just $31.42—only 22% of the amount allowed by California’s Official Medical Fee Schedule (OMFS).

Even more disturbingly, Riverside apparently arrived at this paltry figure by stacking not one, not two, but three Preferred Provider Organization (PPO) contracts—courtesy of some of the usual suspects: Careworks, Coventry, and MultiPlan.

The OMFS rate for this E/M visit is $140.65. That means this terrible trio of PPOs siphoned off $109.23—more than three times what the doctor was paid for treating the injured worker.

Riverside is making it a bad financial decision for providers to care for its injured employees. As a municipal employer, Riverside is using taxpayer dollars to enrich PPO middlepeople—and the private equity firms lurking behind the scenes—while doctors earn less than parking valets (and plumbers).

$31.42 to Treat an Injured Worker

Imagine running a medical practice with numbers like these.

The provider billed CPT Code 99213, a standard E/M service for an established patient, which the OMFS values at $140.65. But the City of Riverside paid only $31.42—just 22% of the OMFS rate and a mere 33% of what Medicare would pay for the same service.

The Explanation of Review (EOR) shows the dirty fingerprints of all three PPOs: Careworks, Coventry, and MultiPlan—each taking a slice, none providing care.

We don't know how much each of these PPO entities profited from this bill—but we know the $109 discount they finagled is more than triple the doctor’s reimbursement.

With reimbursement at less than the value of the discount, the doctor likely lost money given the cost of overhead (and med school bills). Essentially, this doctor paid to treat Riverside's employee.

CA Taxpayers: What Are You Really Funding?

The PPO discount game (thanks to Senate Bill 863 and the effectively unregulated Medical Provider Network system) forces physicians to sign away reimbursement under the (often illusory) promise of eligibility to treat injured workers.

In this case, Careworks, Coventry, and MultiPlan stripped nearly 80% of the OMFS-allowed fee from the physician. None of these entities treated the patient or provided care. Neither did their private equity investors, who quietly profit from this siphoning of healthcare dollars.

Private equity thrives on obscure contract terms, flimsy “guarantees” of injured worker access, and layers of discount-sharing that enrich everyone but the treating provider. Public employers like the City of Riverside are channeling taxpayer funds to middlepeople that undermine the system meant to support their employees.

Employers, public and private, should ask: what happens when enough doctors stop their involuntarily generous donations to private equity?

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