In California workers’ comp, providers cannot rely on authorization to guarantee payment — despite what the law says. Today’s article shows exactly how a claims administrator can refuse payment for an injured worker’s treatment, even when treatment is unquestionably authorized.

In the gruesome example below, Sedgwick reeled off a string of blatantly false denial reasons in the Explanation of Review (EOR) sent to the doctor. Subsequently, the Division of Workers’ Compensation (DWC) used some of the same blatantly false denial reasons to deny the doctor’s right to file for Independent Bill Review (IBR).

Because the DWC failed to even question Sedgwick’s false denial reasons, the doctor was precluded from seeking correct payment through IBR, even though Sedgwick authorized the treatment.

The payment abuse described below is a textbook demonstration of how claims administrators and the DWC act in tandem to unjustly deny reimbursement to providers for authorized treatment, in direct contradiction of California law.

How Sedgwick Refuses Payment for Authorized Treatment

As required by California law, the provider submitted a Request for Authorization (RFA) to Sedgwick, complete with the appropriate procedure codes, which clearly identified the requested treatment for the injured worker:

• 12 sessions of 60-minute psychotherapy sessions

In the letter below, Sedgwick (indisputably) sent the provider a Utilization Review (UR) decision authorizing the provider to furnish requested treatment.

As the screenshot from daisyBill software (below) shows, Sedgwick subsequently:

1. Reimbursed the provider for the first 5 authorized psychotherapy sessions
2. Denied payment for the 6th authorized session
3. Reimbursed the provider for subsequent authorized sessions after the 6th session

Sedgwick’s EOR denying payment for the 6th session (below) included a smorgasbord of patently untrue denial reasons, none of which can withstand even a second’s scrutiny.

To refuse reimbursement to the provider for authorized treatment, the EOR Sedgwick sent to the provider listed the 17(!) denial reasons below, each more ridiculous than the last. Beside each of the 17 denial reasons, we explicitly lay out exactly what makes the reason so absurdly inapplicable to this bill (emphases added to Labor Code citations):

For the authorized 6th session, the provider submitted a Second Review appeal to Sedgwick to dispute the denied payment. Sedgwick then denied the Second Review appeal as a duplicate bill.

With no other option, the provider paid $180 to Maximus to file for IBR to pursue payment for the authorized 6th session. The provider included proof of authorization with the IBR request — yet the DWC ruled the dispute ineligible for IBR. 

According to the letter below, the DWC based its ineligible decision on two false denial reasons Sedgwick listed in its EOR, as follows:

1. “...the claim for workers’ compensation benefits has been denied.” (False. Per Labor Code 4610.3 “an employer that authorizes medical treatment shall not rescind or modify that authorization after the medical treatment has been provided based on that authorization for any reason” [emphasis added])

2. “...the services were not provided or authorized by designated (network/primary care) providers.” (False. Per Labor Code 4610.3  “Regardless of whether an employer has established a medical provider network…an employer that authorizes medical treatment shall not rescind or modify that authorization after the medical treatment has been provided based on that authorization for any reason” [emphasis added])

Sedgwick’s refusal to pay the provider for the 6th authorized session is nothing short of provider payment abuse, as follows: 

1. Sedgwick authorized the treatment. Full stop. The provider should be paid.
2. Sedgwick denied payment for authorized treatment with a string of false denial reasons.
3. Provider submitted a Second Review appeal to dispute the denied payment.
4. Sedgwick denied the Second Review appeal as a duplicate bill.
5. Provider paid $180 to file for IBR, and the DWC ruled the dispute ineligible based on Sedgwick’s false denial reasons.

If this is how Sedgwick, acting as Third-Party Administrator (TPA) for ACE American Insurance Company, treats the providers who heal injured workers, we shudder to imagine how Sedgwick treats the workers themselves when managing claims and benefits.

Worse, the DWC allowed this abuse.

By blindly accepting Sedgwick’s obviously false reasoning, the DWC enabled Sedgwick’s improper refusal to reimburse this doctor. How can California expect doctors to treat injured workers when the DWC accepts claims administrators’ false assertions without question — including assertions that fly in the face of California law?

Protect your practice revenue. Harness the power of daisyBill software, data, and expertise for faster, better workers’ comp billing.

SCHEDULE A DEMO