California employers should be suspicious of Third-Party Administrator (TPA) Sedgwick’s record-keeping.

A doctor (a daisyCollect client) treated a Starbucks injured worker and submitted an electronic bill (e-bill) to Sedgwick for the treatment. Sedgwick responded with an electronic Explanation of Review (e-EOR) indicating a payment of $331.74 would be sent.

The promised payment was just shy of the amount owed under California’s Official Medical Fee Schedule (OMFS). The e-EOR included the following payment details:

• Payment method: check
• Check reference number
• Check effective date
• Total payment amount: $331.74.

But the physician never received that $331.74 check.

Enter specialty network Paradigm. Exit $62.34 of the providers’ reimbursement.

Instead of Sedgwick, Paradigm sent the physician a check for $269.40, which was $62.34 less than the amount Sedgwick’s e-EOR promised. This switch in payment raises an uncomfortable question:

• Did Sedgwick tell Starbucks the provider was paid $331.74, or
• Did Sedgwick report the $269.40 that was actually paid?

Either way, Starbucks should be paying attention, because the payment records Sedgwick sent to providers don’t match reality.

Why Sedgwick Employers Should Be Alarmed

This Starbucks bill spotlights a troubling possibility: Sedgwick’s accounting may not reflect what’s truly happening with employers' workers’ comp dollars.

When TPAs funnel payments through third-party vendors, it’s easy to obscure workers’ comp expenses. Does Starbucks know what happened to the missing $62.34 that was supposed to pay for the treatment of its employee?

Below is the bogus e-EOR Sedgwick sent to the physician reporting the details of a $331.74 check that Sedgwick NEVER sent to the physician.  

Paradigm Pays Physician - But How Much Did Starbucks Pay?

Instead of receiving the $331.74 from Sedgwick specified in the e-EOR, the physician received a $269.40 check from Paradigm, representing only 70% of the amount owed per the state fee schedule for the treatment rendered.

As the Paradigm paper EOR (below) shows, Paradigm arrived at this absurdly discounted rate by applying a HealthSmart network discount. But there’s one problem: according to the provider, they have no discount agreement with HealthSmart.

Clearly, the physician has been shorted out of the amount due for treating a Starbucks injured worker. Has Starbucks also been shorted out of $62.34 through a vendor network entity that doesn’t disclose the actual amount Sedgwick spent on treatment?

While $62.34 may not sound like much on a single bill, multiply that across thousands of claims, and you’re looking into an accounting black hole.

Starbucks, Are You Auditing?

California employers can’t afford to take Sedgwick’s word at face value. This Starbucks example demonstrates that Sedgwick’s numbers don’t add up.

If Starbucks’ experience is any indication, Sedgwick’s payment reports to physicians are unreliable at best, and misleading at worst. If Sedgwick isn’t telling doctors the whole story, what are they telling the employers footing the bill?

Employers deserve full transparency. Every employer dollar should be accounted for, and every dollar meant for medical care should fund medical care, not disappear into a maze of opaque “discount” arrangements and vendor deals.

Employers that rely on Sedgwick should take a hard look at this TPA. The data don’t lie, but Sedgwick’s reporting just might.

daisyBill can’t track where employers’ dollars go. But we track exactly how much practices are paid (and when), so providers always know the score.

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