Workers’ comp payers throughout California ignore the state fee schedule and fail to reimburse providers the mandated reimbursements rates as allowed by the state fee schedule.

While the Official Medical Fee Schedule (OMFS) establishes reimbursement rates due to providers that treat injured workers, Preferred Provider Organizations (PPO) and other discount contracting entities regularly reduce the amounts actually paid to these doctors treating injured workers.

In the interest of transparency in our industry, DaisyBill recently began publishing reimbursement data gathered by our software for California workers’ comp medical treatment services. This data reflects that in 2021, payers have collectively reimbursed providers only 82% of rates allowed by the OMFS.

In this post, we explore some of our data, beginning with a closer look at the overall reimbursement summary, as well as reimbursement rates tracked by billing line item.

CA OMFS Reimbursement Reductions: The Big Picture

As shown below, our CA OMFS Reimbursement Reductions page includes an overall reimbursement summary, offering the biggest-picture view of losses due to discount contracts.

(These data update daily; the amounts below may have changed since this writing):

• $125,357,583 = The total amount owed for all medical treatment services, by all claims administrators, to all providers, at OMFS rates. Hypothetically, if DaisyBill providers were actually paid at 100% OMFS rates, this would be the total paid for all services in 2021 so far.
  
• $102,989,062 = The total amount claims administrators actually reimbursed providers, after the payer applied PPO and other network discounts.
  
• $22,368,520 = The amount per the OMFS claims administrators owed and failed to pay providers. Where does this revenue go, if not to providers?
• 82% = Instead of receiving 100% of the rates allowed by the OMFS, collectively, providers only received 82% of the OMFS amounts due. Again, where exactly does the other 18% end up?

These data, updated daily, represent all bills for dates of service on or after January 1, 2021, excluding:

• Bills for which the payer did not return a valid electronic Explanation of Review (EOR)
• Bills the payer denied altogether

Together, the above numbers tell the short version of a very troubling story — California claims administrators collectively reimburse DaisyBill providers at just 82% (as of this writing) of OMFS rates.

For context, to account for the extraordinary practice overhead involved in treating injured workers, the OMFS pegs the Physician Fee Schedule reimbursement rates for workers’ comp services at roughly 130% of Medicare rates. In reality (again, as of this writing), claims administrators have collectively paid our providers at only 107% of Medicare reimbursement rates.

CA OMFS Reimbursement Reductions by Line Item

In the next table on the page, we can see reimbursement rates broken down by line item. In other words, each row of this table represents a single reimbursement for a single procedure code.

In total, DaisyBill currently has over 1,072,084 line items’ worth of data on record for electronic EORs received in 2021. On any given day, the most recent 1,000 rows of line item data, by date of service, populate this table.

The table can be manipulated in various ways to gain different insights. Reimbursements can be viewed by:

• Claims Administrator: Alphabetically by insurer, self-insured employer, or TPA.
• Employer: Alphanumerically by the employer responsible for ensuring treatment. Employer names are masked to protect confidentiality.
• Provider: Alphanumerically by provider Federal Employer Identification Number (FEIN); actual FEIN numbers are masked to protect provider confidentiality.
• Fee Schedule: Alphabetically by the applicable portion of the OMFS. Our data cover:

• Ambulatory Surgical Center (ASC) services
• Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS)
• Pathology services
• Pharmacy services
• Professional (Physician and Non-Physician Practitioner) services

• Date of Service: Chronologically by date of service. Again, only the most recent 1,000 line items by date of service are available on any given day.
• Procedure Code: Alphanumerically by billing code — extremely useful for seeing the vast discrepancies between reimbursements for the same exact service.
• OMFS Reimbursement Due: Numerically by OMFS rate for each procedure code, regardless of how much the claims administrator actually paid.
• Amount Paid: Numerically by the actual amount the claims administrator remitted to the provider for the procedure code, regardless of the OMFS rate.
• OMFS Balance Due: Numerically by the difference between the OMFS rate for the procedure code and the amount actually remitted to the provider by the claims administrator.
• OMFS % Paid: Numerically by the amount remitted to the provider for the procedure code, as a percentage of the OMFS rate for that procedure code.

Data Source: Electronic EORs

To see how the data populating our OMFS reimbursement data page is derived, see the example below.

Looking closely at one line item, we see that Liberty Mutual paid one provider only 49% of the OMFS rate for CPT 99214. The OMFS rate for CPT 99214, at this provider’s locality, is $188.78. However, Liberty Mutual has access to a 51% PPO discount on this procedure code, reducing reimbursement to $93.36 or only 49% of the reimbursement allowed by the OMFS.

These data were fed directly into the system from our billing software, based on the electronic EOR, or 835 file, returned by Liberty Mutual. The paper version of the same EOR is below:

As the next page of the EOR shows, the discount contracting entity behind this reduction is Anthem Blue Cross:

By tracking, aggregating, and publicizing these data, we hope to demonstrate in the clearest possible terms what drives providers away from the workers’ comp system. Despite regulations regarding “silent” PPOs, contractual discounts are allowed to spread unchecked, often without the provider’s knowledge or understanding of how.

As injured workers face shrinking options when seeking treatment, these numbers reveal the primary root of California workers’ comp’s unsustainability. Sadly enough, it all adds up.

Make RFAs, billing, and appeals easier than ever — and get paid faster. DaisyBill empowers providers to collect what’s owed in record time. Contact us to learn how we can help your practice.

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