PPO Discounts STILL NOT Applicable to Med-Legal

PPO Discounts STILL NOT Applicable to Med-Legal

It’s hard to believe we still have to write this — or is it? California claims administrators may not apply Preferred Provider Organization (PPO) reductions to physician bills for Medical-Legal services. Yet we still see claims administrators like Sedgwick do exactly that.

Worse, when the physician submits a Second Review appeal, the claims administrator digs in, denying the appeal and insisting on its non-existent right to a portion of the physician’s reimbursement. This necessitates more time and expense, as the provider must pay $180 to request Independent Bill Review (IBR).

In this way, Sedgwick recently attempted to gift itself a 50% discount for a Medical-Legal evaluation. Read on to see how the provider successfully appealed this improper reduction.

PPO Discounts: OMFS vs MLFS

As we pointed out when AmTrust and Guard Insurance pulled this same stunt, the Division of Workers’ Compensation (DWC) has been consistent in disallowing PPO discounts for Medical-Legal services.

PPO and other network discounts are allowed under California Labor Code Section 5307.1, which governs the Official Medical Fee Schedule (OMFS), but not the Medical-Legal Fee Schedule (MLFS). The MLFS is governed by a separate section of the Labor Code, Section 5307.6. The requirements in one section of the Labor Code are not interchangeable with the requirements in another.

The only means by which a payer may apply reimbursement rates different from the MLFS is with a separate written agreement specifically addressing Medical-Legal services. IBR precedent affirms this; the DWC’s IBR proxy, Maximus, regularly overturns PPO reductions for Medical-Legal bills.

Sedgwick Swipes 50% (but Physician Prevails)

A daisyBill physician client submitted a bill for a straightforward Supplemental Medical-Legal Evaluation, reporting MLFS billing code ML203. Despite literal decades in the claims management business, Sedgwick still managed to erroneously take $325 off a $650 bill, using an improper OccuNet/Fairly Group PPO discount.

Within 90 days of receiving the Explanation of Review (EOR) above, the provider submitted a Second Review appeal. Somehow, despite all the bill review expertise and experience at Sedgwick’s disposal, Sedgwick managed to make the same unforced error again, denying further reimbursement. What are the odds?

Within 30 days of receiving the final EOR, the provider ponied up $180 and filed for IBR. For Maximus, it was an open-and-shut case, as the IBR Letter of Final Determination shows.

The Final Determination goes on to clarify that the Labor Code provisions used to justify PPO discounts under the OMFS have no bearing on payment under the MLFS.

At this point, Maximus may be as tired of overturning these discounts as providers are of paying $180 to appeal them. The law, IBR precedent, and publicly available resources on this topic are as clear as a California summer sky. Yet somehow, we predict that Sedgwick and other claims administrators will find a way to keep missing the memo.


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