Audit Complaint: Sedgwick 16,261 Noncompliant Second Review Responses

Audit Complaint: Sedgwick 16,261 Noncompliant Second Review Responses

Using data generated by tens of thousands of electronic bills sent by our provider clients, daisyBill has demonstrated consistent non-compliance with California e-billing regulations by Third-Party Administrator (TPA) Sedgwick Claims Management Services.

Below are the message and formal Audit Complaints daisyBill submitted to the Division of Workers’ Compensation (DWC), outlining the following systemic violations:

  • Sedgwick falsely denied 4,930 compliant Second Review appeals as alleged “duplicates” of original bills already submitted.
  • Sedgwick failed to return electronic Explanations of Review (e-EORs) in response to 11,331 Second Review appeals, as required by the DWC.

We urge the DWC to enforce California workers’ comp billing and payment requirements, and impose appropriate consequences on Sedgwick for its consistent failure to comply. Sedgwick’s actions impose an unnecessary administrative burden on providers, and unjustly deprive providers of due reimbursement for treating injured workers.

Sedgwick: Disregarding Second Review Requirements

To: XXXXXXXX@dir.ca.gov

Subject: Sedgwick Non-compliance: Second Review Denied as Duplicate - 4,930 bills, Second Review X12 835 Missing - 11,331 bills


Below is an Audit Complaint reporting credible data that Sedgwick:

  1. Incorrectly denied 4,930 Second Review appeal submissions as duplicate bills, and
  2. Failed to send electronic EORs (X12 835) to California providers as mandated by California law for 11,331 Second Review appeal submissions. 

This Audit Complaint data represents California workers’ comp Second Review appeals submitted to Sedgwick by daisyBill providers from January 1, 2019 through April 30, 2022.

Second Review Submission Date 1/1/2019 - 4/30/2022

Count

Percent of Total Appeals

Second Review Appeals Submitted to Sedgwick

45,945

Sedgwick Improperly Denied as Duplicate Bill - EOR contained Claim Adjustment Reason Code (CARC) 18

4,930

11%

Sedwick Failed to Send electronic EOR in response to Second Review appeal

11,331

25%

Total Sedgwick Second Review Non-compliance

16,261

35%

Second Review Denied as Duplicate

Between 1/1/2019 and 4/30/2022, daisyBill clients submitted 45,945 Second Review appeals to Sedgwick to dispute improper payment amounts or denials of payment. In each instance, the provider complied with California CCR §9792.5.5(d)(2) and the California DWC Electronic Medical Billing and Payment Companion Guide. Each Request for Second Review included:

  1. Condition Code Qualifier BG and Condition Code W3 in Box 10d of the CMS-1500,
  2. Resubmission Code and Original EOR Reference Number in Box 22 of the CMS-1500, and
  3. DWC Form SBR-1

Yet, Sedgwick denied 4,930 (11%) of the Second Review appeals as duplicate bills or failed to send an electronic explanation of review in response for 11,331 (25%) of the Second Review appeals.

Both failures represent Sedgwick circumventing California regulations mandating that Sedgwick respond with a final written determination on each of the items or amounts in dispute by issuing a compliant explanation of review.

Attached to this email are two separate CSV documents with credible data demonstrating the following:

#1 Sedgwick Second Review CARC 18 Denial - Duplicate Bill

For January 1, 2019 through April 30, 2022, this CSV lists 4,930 e-bills providers submitted where Sedgwick incorrectly denied the Second Review appeal submission as a duplicate. The attached CSV list includes the following columns:

  • Column L: [Bill] Transmission Date
  • Column V: EOR (835) Compliance Due Date
  • Column W: EOR (835) Receipt Date
  • Column AN: Patient Name
  • Column AO: Claim Number
  • Column AY: CARCS - Joined - Sedgwick incorrectly denied Second Review appeal submission as a duplicate by returning CARC 18 in the 835.

#2 Sedgwick Second Review electronic EOR (X12 835) Missing

For January 1, 2019 through April 30, 2022, this CSV lists 11,331 e-bills providers submitted where Sedgwick failed to return a mandated electronic EOR to the provider in response to the Second Review appeal. The attached CSV list includes the following columns:

  • Column L: [Bill] Transmission Date
  • Column V: EOR (835) Compliance Due Date
  • Column W: EOR (835) Receipt Date - This column is BLANK because Sedgwick failed to send the provider an electronic EOR (835).
  • Column AN: Patient Name
  • Column AO: Claim Number

Second Review - Audit Complaint Details

This Audit Complaint Data submitted to the DWC represents a credible complaint and credible information of claims handling violations. Per Title 8, California Code of Regulations section 10111.2(b)(10),(11), Sedgwick should be subject to audit penalties.

CCR §9792.5.5(g): Within 14 days of receipt of a request for second review that complies with the requirements of subdivision (d), 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. The determination shall contain all the information that is required to be set forth in an explanation of review under Labor Code section 4603.3 including an explanation of the time limit to raise any further objection regarding the amount paid for services and how to obtain independent bill review under Labor Code section 4603.6.

The Medical Billing and Payment Guide Section 7.4 specifically instructs the following: The claims administrator must respond to the Request for Second Review within 14 days of receiving the request by issuing a final written determination on the bill utilizing the explanation of review specified in Appendix B.

Further, per Appendix B, the claims administrator shall issue the ASC X12/005010X221A1 Payment/Advice (835) Technical Report Type 3 as its explanation of review for an electronic bill that is a Request for Second Review.


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