Our weekly “Diabolical Discounts” features the most atrocious examples of the low reimbursements doctors receive for treating California’s injured workers.

This week’s diabolical discounter is Ralphs Grocery (a subsidiary of Kroger), which paid a doctor just $44.03 to treat an injured worker—a mere 22% of the Official Medical Fee Schedule (OMFS) rate and only 33% of the Medicare rate.

This self-insured employer allowed Sedgwick Claims Management, Inc. to gut a physician’s reimbursement using a toxic combination of two discount contracts from Coventry and MultiPlan.

Sedgwick, a Third-Party Administrator, manages Ralph’s injured employees’ claims. Sedgwick regularly stiffs providers, paying rates that are well-below the state’s Official Medical Fee Schedule (OMFS).

So, who’s benefiting from these discounts? Readers already know the answer: private equity firms, which have stakes in Sedgwick, Coventry, and all the middleperson companies who take their nibbles (or huge bites) of employer dollars along the way.

Doctors (and employers), look at the Explanation of Review (EOR) below and ask yourself a critical question: Why would any doctor treat a Ralphs injured worker?

Sedgwick Pays 33% Medicare Rates for Workers’ Comp (Thanks to Coventry & MultiPlan)

Make sure you’re sitting down (and haven’t recently eaten a large meal) before you look at the EOR below from Sedgwick.

For billing code 99214, a common Evaluation and Management CPT code, the OMFS reimbursement is $197.50. But rather than reimburse the doctor the OMFS rate, Coventry and MultiPlan took a “Network Reduction” of $153.48.

Neither Coventry nor MultiPlan provided the injured worker with any medical treatment. Instead, they simply helped themselves to a hefty portion of the treating physician’s reimbursement, leaving the physician with a whopping $44.03.

Again, that’s 22% of the OMFS rate, equivalent to 33% of the Medicare rate. 

What Coventry and MultiPlan stripped from this doctor was more than triple what Sedgwick paid the doctor for caring for a Ralphs injured worker.

With one unit of 99214 representing up to 39 minutes of work, this doctor could’ve made more money bartending (or plumbing).

Stop the PPO Madness

Someone convinced this provider to sign a PPO agreement in exchange for…well, it’s hard to know—but the usual promise is eligibility to treat injured workers, often through membership in a Medical Provider Network (MPN).

Spoiler alert: the benefits Coventry, MultiPlan, and others promise may or may not materialize.  

We can’t say if the provider knew that signing meant giving Sedgwick a 78% off coupon. We can’t say if the provider actually signed or if the toxic contract combo even applies to this bill—if not, it wouldn’t be the first time Sedgwick took invalid discounts.

With discount “stacking” and transferring rampant in California, this practice will likely suffer beyond this single example. Extrapolate the EOR above across the practice’s bills for different payers over months and years, and treating injured workers becomes unsustainable for doctors.

Whose bank accounts are swelling thanks to Ralphs/Kroger’s workers’ comp dollars? Private equity.

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