On Friday, DaisyBill took the unusual step of directly contacting dozens of California claims administrators. We wanted to enlist these organizations’ assistance to resolve a failure on the part of their clearinghouse vendor, WorkCompEDI, to execute an integral and mandated electronic billing step.

Since mid-September 2020, WorkCompEDI has, self-admittedly, suspended transmitting the required acknowledgment of electronic bill receipt that claims administrators must send to providers. These transmittals are the mandated electronic acknowledgments (X12C/005010X214 Health Care Claim Acknowledgment (277)), which must be sent within two working days of receipt of an electronically submitted bill.

Multiple claims administrators responded to our email and expressed appropriate concern regarding their vendor, WorkCompEDI. Several claims administrators also expressed significant frustration at their seeming lack of options regarding this vendor failure -- a failure that compromised claims administrators’ compliance with California e-billing rules. (We emailed a response with some suggestions as to available recourse options).

Most claims administrators (aka ‘payers’ or ‘carriers or ‘insurers,’ etc) hire a clearinghouse to accept electronic bills sent by workers’ comp providers. However, even when a claims administrator hires a clearinghouse, the claims administrator remains ultimately responsible for its electronic billing compliance.

Below, we provide additional details about WorkCompEDI’s noncompliance and the impact of this noncompliance on its clients, the claims administrators.

Workers’ Comp e-Billing: Only 3 Steps Required

The California Division of Workers’ Compensation Electronic Medical Billing and Payment Companion Guide requires providers and claims administrators to perform the following three e-billing steps. The following steps use DaisyBill and WorkCompEDI as the electronic agent examples:

1. Provider (via DaisyBill): Electronically transmits a provider’s bill to the claims administrator, along with the required medical records in a standardized format known as an ASC X12N 837P file.
2. Claims administrator (directly or via their clearinghouse, WorkCompEDI): electronically sends the provider (via DaisyBill) a response verifying receipt of the electronic bill in a standardized format known as ASC X12N 277 Healthcare Claims Status Request Response.
3. Claims administrator (directly or via their clearinghouse, WorkCompEDI): Sends the provider (via DaisyBill) an Explanation of Review (EOR) with the recommended reimbursement for the billed services in a standardized format known as an ASC X12N 835 Claim Payment Advice file.

When a provider fails to follow California’s e-billing rules, the claims administrator can reject the provider’s e-bill and refuse to process the bill. When a claims administrator fails to follow these e-billing rules, the provider has no similar monetary recourse.

WorkCompEDI Admits to Failing Step 2

Since mid-September of this year, the clearinghouse WorkCompEDI has admitted to intentionally failing to perform Step 2, which requires transmitting 277 electronic acknowledgments within two working days of receipt of an electronically submitted bill.

A provider’s receipt of the 277 acknowledgment is mandated by California EDI rules. The 277 acknowledgment serves three critical purposes in electronic billing:

1. As proof that the provider timely submitted the bill or Second Review appeal,
2. To alert the provider that the claims administrator received the electronically transmitted bill; and 
3. For payment compliance purposes, the date of the provider’s receipt of the 277 acknowledgment sets the due date for the electronic EOR.

WorkCompEDI knowingly halted sending providers compliant 277 acknowledgments. According to an email DaisyBill received from WorkCompEDI, the failure to send the required 277 was necessary to complete implementing technology for a single client.

This was not a mere technical glitch.

California Workers’ Comp e-Billing: It’s E-A-S-Y (We Promise)

One claims administrator representative responded to our email by indicating that electronic billing was just “too complicated” for claims administrators to manage. Our response to this complaint is: California workers’ comp e-billing is EASY.  

Annually, DaisyBill compliantly delivers over 1.5 million workers’ comp e-bills to claims administrators for providers throughout the United States. In many ways, DaisyBill is a provider equivalent to WorkCompEDI: we electronically deliver e-bills on behalf of our provider clients whereas WorkCompEDI and other clearinghouses electronically accept and process those same e-bills on behalf of their claims administrator clients.

Based on our extensive experience in this industry, we know that compliant workers’ comp e-billing is not that complicated (let’s leave aside the undeniable complications of workers’ comp as a whole). When providers and claims administrators both follow the rules, e-billing is far, far, far superior to mailing paper bills.

Scope of WorkCompEDI e-Billing Failure

The table below documents the history of our efforts to get WorkCompEDI to address its failure to send 277 acknowledgements. Because providers did not receive 277 acknowledgements, it is unclear whether these bills were ever delivered to the designated claims administrator.  Since 9/17/2020, this failure has impacted thousands of provider e-bills.

When claims administrators (or their vendors, including bill review, utilization review organizations, and clearinghouses) ignore laws/regulations/rules, a provider is not in a position to enforce compliance. Compare this to the claims administrator prerogative of denying payment to a provider for equivalent non-compliance.

Claims administrators must enforce electronic billing compliance by their vendors. To the extent that claims administrators cannot do so, providers need state regulators to compel compliance.

Otherwise, WorkCompEDI’s failure is just one more symptom of a crumbling workers’ comp system due to systemic, widespread payer noncompliance -- a noncompliance for which providers themselves have no recourse except to abandon the treatment of injured workers.  

WorkCompEDI Failure to Comply With California Rules

This point bears repeating: States hold claims administrators responsible for their electronic billing compliance, and for the actions or inactions of their authorized agents, such as clearinghouses. Section 2.1.2 of the California Division of Workers’ Compensation Electronic Medical Billing and Payment Companion Guide specifically states that:

• Electronic billing rules allow for use of agents to accomplish the requirements of electronic billing.
• Entities using agents are responsible for the acts or omissions of those agents executed in the performance of services for the entity.

Despite this example of clearinghouse noncompliance, e-billing with DaisyBill works amazingly well. Sign up for a demo to see how DaisyBill makes your work comp billing life better!

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