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Discount Dangers: The CA Provider’s Bill of Rights (Right V)

March 20, 2018 by Catherine Montgomery

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

According to California Labor Code, when a provider contracts with a payor to accept reduced reimbursements, it is incumbent upon the employer to take certain reasonable, clearly defined steps to direct their injured workers to the contracted provider for care.

A provider accepts reduced reimbursements because she/he has an expectation that the number of patients will increase. Instead, all too often, providers simply accept reduced reimbursements without an adequate return on investment. This series is meant to help providers hold employers and payors accountable.

Providers should insist that employers — and subsequently payors — earn these discounted reimbursements as mandated by the Labor Code.

 Labor Code Section 4609, on which we base every entry in our Provider’s Bill of Rights, is our guiding light. § 4609 details payors’ legal obligations regarding discount contracts and was enacted to keep unscrupulous payors and bill reviewers from cheating providers out of proper reimbursement. When a provider’s reimbursement is reduced, the Labor Code requires employers to “actively encourage” employees to visit the contracted providers.

Not only must employers actively encourage injured employees to visit contracted providers, employers must meet exact minimum standards of “active encouragement,” like employer-provided directories, displays, and websites that provide required information.

Therefore, based on Labor Code § 4609, we declare the following providers’ right to be indisputable:

5. When providers sign a discount contract, the employers participating in that contract will at minimum provide employees with that provider’s name, address, and telephone number.

“Active Encouragement” According to Code

LAB § 4609(b)(2) is the largest single subsection of the code. This subsection provides the precise definition of “active encouragement.” While no employer can force an employee to visit a given provider, this subsection lays out the bare minimum an employer must do in order for a payor to take advantage of reduced reimbursements:

...a payor is deemed to have actively encouraged employees to use the list of contracted providers if the employer provides information directly to employees during the period the employer has medical control advising them of the existence of the list of contracted providers through the use of a variety of advertising or marketing approaches that supply the names, addresses, and telephone numbers of contracted providers to employees…

However they go about it, employers must take an “advertising or marketing approach” to active encouragement that  — at the very least — supplies employees with providers’ basic contact information. The methods may include...

  • Provider directories
  • Lists of the providers in a given geographical area
  • Wall displays
  • Toll-free phone directories
  • Websites (the code notes that a website alone “shall not be deemed to satisfy the requirements”).  

The medium is up to the employer, but the mandate is non-negotiable.

Employers can’t take employees by the hand and guide them to the provider’s door. But the Labor Code requires employers to clear a path to that door, one with clear signposts.The exact strategies employers use may vary (though employers must disclose said methods to the provider, as we mentioned in our last entry), but employers must make every effort to give injured employees appropriate information and guidance.


DaisyBill has providers’ backs in the fight for proper workers’ compensation reimbursement. We offer tools to help determine exactly what providers are owed, bill quickly and compliantly, and prevail in disputes. Schedule a free demonstration, and see what DaisyBill can do for your office.

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