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Contracting Custom Reimbursement: Labor Code 5307.11 Explained

May 25, 2017 by Catherine Montgomery

As any work comp biller knows, the rules for reimbursement start with the Official Medical Fee Schedule (OMFS) or other established fee schedules. In rare instances, however, the OMFS does not list a reimbursement for a service. One example is “by report” reimbursement, which we covered in this space earlier this year. Another exception comes when a health care provider or facility negotiates reimbursement rates that differ from those in the applicable fee schedule. California Labor Code § 5307.11 specifically allows the claims administrator and provider to enter into a separate contract to provide services at an agreed upon rate.

We’ll let Labor Code 5307.11 do the talking, with our emphasis:

“A health care provider or health facility licensed pursuant to Section 1250 of the Health and Safety Code, and a contracting agent, employer, or carrier may contract for reimbursement rates different from those in the fee schedule adopted and revised pursuant to Section 5307.1. When a health care provider or health facility… and a contracting agent, employer, or carrier contract for reimbursement rates different from those in the fee schedule, the medical fee schedule for that health care provider or health facility licensed pursuant to Section 1250 of the Health and Safety Code shall not apply to the contracted reimbursement rates.”[1]

But there’s a catch. In order to officially contract for a fee that differs from the maximum reimbursement amount allowed by the OMFS or other fee schedule, a provider of services must memorialize the reimbursement amount as agreed to by an authorized agent of the claims administrator in writing – and they must do so prior to providing services.  

A signed authorization is also considered contractual in nature, so long as it includes the fee(s) in question and is individually initialed by the Claims Administrator or an authorized agent thereof.

To memorialize the different rates for the authorized treatment, use DaisyBill’s sample “Contract Pursuant to LC Section 5307.11 Pre-Authorization and Pre-Negotiated Fee Arrangement,” and substitute billing codes and fees as necessary. Remember, prior to providing services, the claims administrator agent should sign the contract agreeing to the established reimbursement.


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[1] Full text of Labor Code 5307.11 here.

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