OR Cases Highlight Complex Fee Relationships

Oregon passed this year, effective January 1, 2012, an interesting law in an attempt to regulate the complex relationship between medical providers and those responsible for paying for workers' compensation medical bills.

The law gives the Workers' Compensation Division authority to fine an individual or firm for attempting to direct care without proper certification. The only option for directing the care of injured workers in Oregon is through managed care organizations certified by the Department of Consumer and Business Services, the parent agency of the Workers' Compensation Division.

There are only five certified organizations operating in Oregon, but they provide about 40% of the treatment to injured workers.

In addition to directing care, managed care organizations can negotiate discounted rates with providers pursuant to ORS 656.248.

The Division implemented rules prohibiting carriers from using PPO rates for workers' comp without a contract signed by the provider and filed with the division. The contract must apply only to workers' compensation treatment, and the discount can't exceed 10%.

Providers were complaining in 2008 that preferred provider organization rates for group health were being applied to workers' compensation payments without their knowledge.

These laws are interesting because according to lawsuits recently filed insurance carriers in Oregon were improperly contracting for reimbursement rates below the state's medical fee schedule.

The suits allege that carriers are reimbursing procedures for treating injured workers at rates negotiated for group health. Providers agree to the discounted rates for group health because insurers are allowed to direct care, according to the attorney who filed these cases in an interview with WorkCompCentral.

But that is not the case in workers' compensation - as noted above, only in managed care organizations can the carrier direct care.

So the key to discounting of medical fees is, according to this logic, who gets to direct care. If the provider gets to direct care then the provider must be paid at fee schedule. If the carrier directs care then the provider gets paid according to the contracted rate.

I'm not sure I understand this logic and I'm sure someone will enlighten me.

I point out this situation as an example of how something perceptibly simple - paying the bill - can get convoluted and complex well beyond the lay person's understanding when the term "workers' compensation" intervenes.

The lawsuits are Lincoln City Physical Therapy LLC v. Travelers Casualty and Surety Co. et al., filed Dec. 2, and Erhardt Physical Therapy and Sports Medicine P.C. v. Liberty Mutual Fire Insurance Co. et al., filed Nov. 29.