For California workers’ comp providers, we encourage submitting Second Review appeals when the claims administrator incorrectly adjusts or denies payment.

Below we show how Gallagher Bassett (“Gallagher”) ignores the California Official Medical Fee Schedule (OMFS) and incorrectly reimburses a provider an amount below the OMFS. The provider appeals for the correct reimbursement per the OMFS. Next, in response to the appeal, Gallagher clicks a keyboard button and denies the appeal for additional payment.

Rather than properly reimbursing the provider (as mandated by California law), Gallagher denies the appeal and simply waits for California laws to grind the provider into surrendering to Gallagher’s payment abuse.  

What follows is one example among many that shows the unraveling of the workers’ comp payment process. Plainly, claims administrators behave as if they can, without consequences, refuse payment to providers by ignoring and contorting the California laws, regulations, and rules put in place to protect providers.

This article is a warning for improperly paid providers and also a warning for employers. Employers: when choosing workers’ comp insurers or third-party administrators, consider the way in which these companies carry out their responsibilities as a reflection of the care given to your injured employees.

Gallagher Ignores OMFS Reimbursement

In the example below, Gallagher acting as the claims administrator for XL Insurance America, Inc. failed to properly reimburse the provider the OMFS-mandated reimbursement for a common evaluation and management code, CPT 99213.

In response to an Original Bill where the provider charged the amount due per the California fee schedule, below is the Explanation of Review (EOR) the provider received from Gallagher. Instead of properly reimbursing the amount mandated by the OMFS, the EOR shows that  Gallagher chose to ignore the OMFS and incorrectly reduced the reimbursement amount due to the provider by $16.27.

Gallagher also incorrectly calculated the reduction for the PPO Amount.

On behalf of XL Insurance America, Inc and Darden Restaurants, Gallagher chose to incorrectly reimburse a provider who treated an injured employee.

Gallagher Ignores OMFS Again

As directed by California law, the provider submitted a Second Review appeal on an SBR-1 form to dispute the incorrect reimbursement and the incorrect PPO reduction.

For Second Review appeals, California CCR § 9792.5.5. requires “the claims administrator shall respond to the provider with a final written determination on each of the items or amounts in dispute by issuing an explanation of review.”

Gallagher denied the Second Review by stating the appeal was a duplicate bill. A careful reading of the explanation codes reveals that Gallagher cannot even bother to spell check or use complete sentences when responding to Second Review appeals:

THIS APPEARS TO BE A DUPLICATECHARGE [sic] FOR A BILL PREVIOUSLY REVIEWED, OR THIS APPEARS TO BE A “BALANC [sic] FORWARD BILL” CONTAINING A DUPLICATE C [sic]”

Gallagher Sinks California Workers’ Comp

In order to collect the $16.25 originally due as mandated by the California OMFS, now the provider has only one recourse: filing an Independent Bill Review (IBR) within 30 days of receiving the Second Review denial. As mandated by California law, the provider must also pay $180 for the privilege of asking Maximus to review the reimbursement dispute.

If a provider fails to timely or compliantly file either the Second Review appeal or the IBR, California law deems the bill paid in full; no further payment is due. As more evidence of a sinking system, compare the nonpayment consequences inflicted upon providers to the complete lack of consequences that claims administrators apparently enjoy when these payers ignore California laws.

Gallagher demonstrates the ease with which a claims administrator can both ignore and corrupt California workers’ compensation laws with no expectation of repercussion.

Because California requires a provider to ultimately shoulder the burden of expending even more resources to receive the correct reimbursement, Gallagher need only click a keyboard button to sink the Second Review appeal, letting California laws grind the provider into payment submission.

Still have questions about the Second Review appeal process? Check out the free resources available on our website, including free webinars and regulations, and a thorough library of compliant language to use when filing a Second Review appeal in California.

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