The City of Los Angeles (LA) is a self-insured, self-administered employer. This means that the city assumes all of the responsibilities of a claims administrator to compliantly manage and pay for workers’ comp claims for employees of the City of LA.
As most readers know, claims administrators, in this case, the City of LA, must compliantly accept electronic bills from providers and must also compliantly return electronic explanations of review (EORs) to providers. This is the LAW in California.
The formats for providers and claims administrators to exchange workers’ comp electronic billing and payment files are standardized. The electronic format that providers use to send bills is known as an “837” file. In response to an electronically transmitted bill, the claims administrator must electronically send the provider a complete EOR, or “835” file.
Often claims administrators engage vendors to assist in receiving electronic bills and returning electronic EORs. Even though a claims administrator may elect to use a vendor to assist with this electronic process, ultimately the claims administrator is responsible for complying with all rules and regulations.
The state of California does not penalize the vendor for noncompliance, the state penalizes the claims administrator.
A Friendly Email to the City of LA
Currently, the City of LA fails to comply with California rules because it fails to send electronic EORs to providers who electronically transmit workers’ comp bills to the city.
DaisyBill recently contacted the City of LA about its noncompliant EORs. We reached out to the city because, as a self-administered employer, it serves as its own claims administrator and is therefore responsible for compliance.
Below is an email sent by DaisyBill to the City of LA Account Manager where we try to determine the reason for the missing transmission of electronic EORs:
Hope you are doing well and you haven't been personally impacted by the fires in LA this week. It's hard to watch the news and worse to live it.
I wanted to get in touch re: 835's. I'm not showing DaisyBill receives any 835's from [your bill review].
We recently found an issue with 835's from another Bill Review that was preventing WCEDI from being able to pass them to DaisyBill successfully. Wondering if something similar might be occurring with [your bill review].
Are 835's for City of LA bills issued? If so, I'd love to figure out why DaisyBill isn't receiving them. [emphasis added]
The City of LA forwarded our email to its bill review vendor which did not respond with an answer to our question.
Breach of Duty
As an important reminder, the state of California does not penalize the bill review vendor for noncompliance; the state penalizes the claims administrator (the City of LA).
The City of LA is breaching its duty by failing to comply with California workers’ comp electronic billing rules and regulations. Breach of duty by a claims administrator is a serious infraction where the claims administrator waives any objection to the amount of the bill because it allegedly breached a duty prescribed by Labor Code sections 4603.2 or 4603.3 or by the related Rules of the Administrative Director.
This all started when a DaisyBill client asked us to determine the reason for the City of LA failing to electronically transmit EORs. We looked at the EOR metrics for the City of LA and emailed the City of LA a simple question: “Are 835's for City of LA bills issued? If so, I'd love to figure out why DaisyBill isn't receiving them.”
DaisyBill keeps precise metrics on claims administrator compliance. Below is a graph showing the historical receipt of the EORs from the City of LA. The red represents paper EORs which require “Manual Posting” by provider staff. The blue represents the receipt of electronic EORs; as you can see from the graph, the City of LA stopped sending electronic EORs in early 2014.
Clearly, DaisyBill clients are not receiving the required electronic EORs from the City of LA.
Workers’ Comp Advocate
DaisyBill’s mission is to improve workers’ comp for all stakeholders by bringing transparency to the friction encountered by providers who treat injured workers. Our goal is simple: to reduce provider friction so more providers agree to treat injured workers. More providers are a win for both employers and injured workers.
We want to make workers’ comp better for all stakeholders, preferably in partnership with claims administrators and vendors.