CorVel Corporation, a national third-party administrator, incorrectly reimbursed multiple California workers’ comp providers for Ambulatory Surgical Center (ASC) services, at rates established by Medicare’s ASC fee schedule. Medicare ASC reimbursement rates are not applicable to California workers’ comp. Fortunately, DaisyBill clients alerted us to the problem.

We reached out to CorVel, whose representatives acknowledged the error. Working proactively with DaisyBill, CorVel updated their payment practices and agreed to reprocess all bills with dates of service 3/15/2018 through 5/22/2018.

The Twist in ASC Reimbursement

California’s hospital outpatient department/ASC fee schedule is complicated, to say the least. To assume that California’s Official Medical Fee Schedule (OMFS) calculates ASC reimbursements according to Medicare ASC rates is an understandable mistake to make.  

Per Labor Code Section 5307.1, reimbursement for services provided in a hospital outpatient department may not exceed 120% of the Medicare fee for the same services. Meanwhile, reimbursement for ASC services may not exceed 80% of the Medicare Hospital Outpatient Fee Schedule.

That’s right: California workers’ comp ASC reimbursements are based on Medicare’s Hospital Outpatient Fee Schedule, not Medicare’s ASC fee schedule. The OMFS sets reimbursements for both hospital outpatient and ASC services according to Medicare’s hospital outpatient rates, just at different percentages thereof.

Tricky, but that’s California workers’ comp for you.

The CorVel Conundrum

DaisyBill software automatically calculates correct OMFS reimbursements, and alerts providers to incorrect payments.

Multiple clients brought to our attention CorVel’s incorrect ASC adjudication and reimbursement practices. For example, the CorVel Explanation of Review (EOR) below incorrectly adjusts payment for the destruction of a premalignant lesion:

CorVel reduced the reimbursement by $773.27 based on “ASC Addendum AA & DD1.” However, the DWC adopted only one column of Addendums AA and EE, effective April 1 of this year. Otherwise, ASC reimbursement remains subject to LAB § 5307.1, setting rates at 80% of Medicare hospital outpatient rates.

This EOR is just one example of CorVel’s previous incorrect payment practices.

CorVel quickly took ownership of the reimbursement error, fixed the error and agreed to reprocess affected ASC bills. For that, we applaud CorVel. Too often, claims administrators prefer to shift the consequences of reimbursement mistakes onto providers. Rather than asking providers to appeal with a second review to rectify the Corvel error, CorVel took responsibility. Kudos.

As mentioned above, ASC providers will receive an additional payment from CorVel where appropriate. Note that if providers were overpaid by the claims administrator, the overpayments cannot be reclaimed.

We understand — perhaps better than anyone else — how wildly convoluted California workers’ comp reimbursement calculations can be. Heck, even the Division of Workers’ Compensation (DWC) loses the thread on occasion.

That’s why it’s so important for providers and claims administrators to stay on top of the rules. We urge all providers to check their EORs for proper reimbursement, and claims administrators to be thorough in their understanding of various states’ workers’ comp reimbursement systems.

You can get reimbursement calculations right, every time. Try our OMFS Calculator, which instantly computes the correct payment for services rendered, based on the latest OMFS updates.

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