Discount Dangers is a DaisyBill series on the various ways discount contracts incorrectly reduce providers’ reimbursements. With this series, we shine a light on the worst discount practices, and help providers fight back.

Providers have rights.

We can’t state this strongly enough. In so many ways, the California workers’ compensation system is rigged against providers. That’s why it’s vital for providers to know exactly how the law protects them from unfair treatment and improper reimbursement. This is particularly crucial when it comes to discount contracts, which are often abused in ways that are more than just unfair; they’re also non-compliant.

California Labor Code §4609 is the provider’s greatest weapon in the fight against discount contract abuse. It was designed specifically to ensure that contractual discounts are not extended beyond their intended recipients, especially in the form of “silent” PPO discounts. Here at DaisyBill, we’ve identified ten distinct legal rights guaranteed to providers by §4609. The first two of these rights, outlined below, come directly from the opening paragraph of the Labor Code:

(a) In order to prevent the improper selling, leasing, or transferring of a health care provider’s contract, it is the intent of the Legislature that every arrangement that results in any payor paying a health care provider a reduced rate for health care services based on the health care provider’s participation in a network or panel shall be disclosed by the contracting agent to the provider in advance and shall actively encourage employees to use the network, unless the health care provider agrees to provide discounts without that active encouragement.^[1]

The Labor Code §4609 is clear. With that, we declare the first two entries in our Provider’s Bill of Rights:

1. A contracting agent must disclose to a provider, in advance, every arrangement where the network or panel was sold, leased, or transferred to a payor in order to apply the network or panel discount.
2. No providers can be required or expected to offer discounted reimbursement rates to insurers or employers who are not actively steering patients to their office.

The bottom line: Despite the less scrupulous activities of some payers, health care discount contracts are not meant to be traded or given away at a whim. Therefore, no arrangement should exist wherein a provider is expected to accept reduced reimbursements without being informed of the reductions in advance. Most importantly, those discount arrangements should actively steer patients to providers.

Every explanation of review (EOR) sent with payment must list the name of any discount contract used to reduce the reimbursement. Providers should closely examine the discount contract listed on EOR’s as many reduce reimbursements as much as 30% below the amount allowed by the Official Medical Fee Schedule (OMFS).

If a claims administrator applies a contract discount (such as a PPO discount) to a work comp bill, there’s a fair chance it’s in contravention of LC §4609, as the majority of these arrangements were not made with the knowledge of the provider and most do not actively steer injured workers to the provider.

Know your rights. Don’t let discount contract abuse hurt your bottom line. Schedule a free demonstration of DaisyBill’s Billing Software today.

DaisyBill makes calculating correct OMFS rate reimbursements easier than ever. Our software also allows providers to appeal incorrect reimbursements— especially those based on invalid discount rate— quickly and compliantly.

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