California appears to turn a willfully blind eye to what seems like an abuse of the Independent Bill Review (IBR) system for Medical-Legal disputes.

Data from daisyCollect reveal that Sedgwick Claims Management Services, Inc. repeatedly denies payment for Medical-Legal services based on laughably inapplicable and false reasons — reasons that anyone with even the most basic understanding of Medical-Legal billing (let alone one of California’s biggest claims administrators) would recognize as invalid.

These repeated false payment denials force physicians to request IBR, wasting the time and resources of both the practice and the state. Worse, if the physician fails to undertake the arduous, expensive steps necessary to fight Sedgwick all the way to IBR, California allows Sedgwick to keep the falsely denied reimbursement.

Essentially, California rewards Sedgwick’s faulty bill review.

Since June 2020, on behalf of physician clients, daisyCollect has paid over $9,500 in IBR filing fees and sent over 9,700 pages of documents to dispute 53 Sedgwick denials of Medical-Legal bills. Maximus (the state’s independent bill review entity) has overturned 100% of the denials so far, restoring to physicians almost $67,000 in falsely denied payment.

The data demonstrate that Sedgwick repeatedly applied the same false denial reasons to many of the disputed bills, begging the question: when will California regulators take action to address Sedgwick’s suspect bill review practices?

To paraphrase a saying, fool me once, shame on you. Fool me 53 times…

Though the damning statistics below should come as no surprise to any doctor that has dealt with Sedgwick (or read this blog), all stakeholders should be shocked at California regulators’ apparent unwillingness to confront what appears to be either:

• A purposeful gaming of the system, or
• A level of incompetence in bill review so astounding as to raise doubts concerning Sedgwick’s ability to function as a claims administrator

The Sedgwick Approach Explained

The California Division of Workers’ Compensation (DWC) is responsible for oversight of IBR cases filed by providers disputing Sedgwick’s payment denials. As such, the DWC witnesses the entire process described below — yet takes no action. 

Sedgwick executes its faulty bill review as follows:

1. Deny payment for any reason, plausible or not (with no consequences for blatantly false reasoning)
2. If the physician fails to submit a Second Review appeal within 90 days, Sedgwick keeps the disputed reimbursement (cha-ching)
3. When a physician submits a Second Review appeal, Sedgwick falsely denies the appeal as a “duplicate bill” (cha-ching; Sedgwick denied 92% of the Second Review appeals submitted by daisyCollect in this manner)
4. If the physician fails to request IBR within 30 days by submitting hundreds of pages of records and the $180 IBR filing fee, Sedgwick keeps the disputed reimbursement (cha-ching)
5. When Maximus overturns Sedgwick’s faulty bill review, pay the evaluator.

Sedgwick doesn’t need to worry if Maximus overturns Sedgwick’s payment denials, because there are no consequences; at worst, Sedgwick simply has to pay the bill. In the opinion of daisyBill, this is an abdication of the DWC’s role as regulator — one that encourages abuse and makes the DWC at least partially culpable for the results.

In total, daisyCollect physicians have recovered $66,967.68 in revenue from Sedgwick since June 2020, with $17,194.98 at stake in pending IBR decisions.

Securing the reimbursement Sedgwick owes costs time, person-hours, and resources. These costs are imposed on practices by Sedgwick and by the DWC, whose refusal to discourage this behavior creates the conditions for this payment chaos.

Sedgwick: Generating Costly Friction in Workers’ Comp

California law imposes strict timelines (noted above) and unique documentation requirements on Medical-Legal evaluators to appeal improper payment denials and adjustments.

Since June 2020, to file the 53 IBR requests disputing Sedgwick’s faulty Medical-Legal bill review, daisyCollect submitted a total of 9,759 pages of documentation and paid $9,540 in IBR fees:

As the statistics below show, Sedgwick’s two most favored (false) payment denial reasons are:

• “Claim Non-Compensable” (16 bills, 10 Overturned and 6 Pending) - This denial reason is literally never applicable to any Medical-Legal bill
• “Insufficient Documentation” (16 bills, 15 Overturned and 1 Pending) - All 16 of the Original bills sent by daisyCollect included the required documentation, including the Medical-Legal reports

For 49 out of the 53 bills, Sedgwick falsely denied the Second Review appeal as a “duplicate” of the original bill — a frustratingly typical move by Sedgwick.

The table below lists the details of all 53 IBR disputes between daisyCollect and Sedgwick, 0% of which Maximus resolved in Sedgwick’s favor.

What lessons can we learn from the data above?

1. Sedgwick, one of California’s largest claims administrators, repeatedly denies payment for Medical-Legal services for reasons with no basis in reality.
2. When asked to take another look, Sedgwick fails to correct its errors, forcing physicians to escalate and get the state involved.
3. California allows Sedgwick to engage in this payment abuse.

Sedgwick faces no consequences for this unbelievably wasteful approach to bill review. This claims administrator has no incentive to improve its process, because continuing to fail miserably at properly adjudicating bills for Medical-Legal services can only result in increased profits.

As the costs associated with Medical-Legal disputes continue to skyrocket, Sedgwick is doing its part to add even more to the pile of pointless expenditures by failing spectacularly at its sole job: claims administration.

We’ve already asked Sedgwick to do better. The question is: when will California regulators stop ignoring the problem?

Med-Legal billing requires specialized expertise. daisyCollect professionals use our advanced software (and years of experience) to protect your practice. Request a demo below:

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