Since October 2012, California claims administrators are legally obligated to compliantly accept and process workers’ compensation electronic bills. In that time, electronic billing has consistently offered providers a much faster and more efficient avenue for processing their workers’ comp bills, and daisyBill has answered thousands of questions about electronic billing rules and compliance.
Emerging from millions of data points – we’ve successfully processed and tracked over 1.5 million electronic bills – is a rock-solid understanding of compliant electronic billing and its substantial differences from traditional paper billing. Can’t tell your 837s from your 275s? Not sure why your electronic bills are rejected? We compiled this primer to help you through the alphanumeric soup.
This guide draws upon two free resources from the California Division of Workers’ Compensation (DWC) that outline comprehensive electronic billing rules and responsibilities for providers and claims administrators:
Per the DWC, there are three main steps required to compliantly submit and process electronic bills. Let’s take them one by one.
A provider creates and electronically transmits a complete bill to the claims administrator.
A complete electronic bill is comprised of two parts:
Within two working days of receipt of a complete electronic bill from a provider, the claims administrator must review the electronic bill and return an acknowledgement to the provider. This mandatory acknowledgement is known as a 277.
The 277 acknowledgement alerts the provider of two possible outcomes:
An accepted 277 acknowledgement documents that the claims administrator received the bill and that the bill will be processed – this is like receiving a certified return receipt in the mail.
A rejected 277 acknowledgement means the claims administrator will not process the bill. Per the DWC regulations, there are seven reasons why a claims administrator may return a rejection acknowledgement:
The claims administrator must send the provider a specific rejection acknowledgment explaining the reason for the rejection so the provider can correct the error and re-submit the bill.
Within 15 working days from receipt of an accepted electronic bill, the claims administrator must send the provider an electronic EOR. The electronic EOR is known as an 835 file. (By way of contrast, claims administrators are allowed a whopping 30 calendar days to remit a paper EOR after receipt of a paper bill).
This EOR timeline only applies to bills that were accepted by the claims administrator in Step 2.
Put it all together, and the steps look like this:
Generally speaking, providers and claims administrators cannot transmit or receive the various required electronic files – the 837, 275, 277, and 835 – that underpin electronic billing, so each hires a third party to manage electronic billing on their behalf. That’s where we come in. daisyBill is an EDI agent, or electronic billing expert, that helps providers compliantly submit and process electronic bills according to the above outlined three steps.
As the EDI agent hired by a provider, daisyBill submits compliant electronic bills (837s) with supporting documents (275s) to the EDI agent hired by a claims administrator. The claims administrator EDI agent, in turn, sends daisyBill either the accepted and rejected acknowledgements (277s) and sends daisyBill the electronic EORs (835s).
Ultimately, providers and claims administrators are responsible for the compliance of the EDI agents they hire. Stay tuned – we’ll examine the relationships among EDI agents, providers, and claims administrators in greater detail in the coming weeks.
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.