Wednesday, September 26, 2012

SB 863 Ups Ante for Specialists' Needs

There is one immutable fact about California's reform bill also known as SB 863 - a lot of people are going to need a whole lot of education, and not just about how the provisions of SB 863 affect their particular niche in the industry, but a whole new cadre of workers' compensation professionals will require training.

As a particular example, SB 863 introduces the concept of an Independent Bill Review (IBR) process.

In the "old" days, issues concerning medical bills went to a bill review company, which cut the bills according to some system or codes (often influenced by the contractual terms the bill review company had with the carrier or third party administrator), and then the vendor would usually be paid per the bill review recommendation. The vendor would dispute the amount and then file a lien, which after resolution of the case in chief, would "ripen" to allow the vendor to proceed to trial on the disputed amounts.

At some point the vendor would proceed to a District Office of the Workers' Compensation Appeals Board to enforce its lien rights and try to collect more money from the carrier/TPA. Workers' compensation judges (WCJ), trained in matters of evidence generally relating to injuries, disability and treatment, lack expertise in the complex world of medical billing.

Most of the time such matters end up settling, and quite often WCJs may just defer the matter several times until the issue does settle rather than delve into the quagmire of coding, mountains of paper, and confusing testimony inherent in medical bill disputes.

The consequence of frictional costs in this scenario can not be overstated.

SB 863's IBR process, on the other hand, keeps issues of medical billing out of the district offices and out of WCJ's courtrooms.

Bill review is still the primary adjustment of a vendor's bill under amended Labor Code section 4603.2. If an invoice is not paid in full on or after Jan. 1, 2013 after the first bill review, the vendor must resubmit it.

If after the second request for payment and review, and a dispute remains, the vendor would have to pay an administrative fee, which will be established through regulatory action, to begin the IBR process. The vendor can recover the administrative fee if the bill reviewer determines that the payer owes more money.

Labor Code 4603.6 requires the administrative director to assign bill review requests within 30 days. The IBR must make a written determination of any additional amounts to be paid to the provider within 60 days.

IBR decisions are presumed correct and can be set aside only with clear and convincing evidence that the decision was procured by fraud, influenced by an error of fact or was the result of bias.

If an IBR decision is set aside, the dispute is remanded to the administrative director to be submitted to a second review organization or to a different reviewer with the original organization.

If IBR determines that additional payments are due, the payer must conform to payment requirements in Labor Code Sections 4603.2 and 4603.4 and make payments within 45 days for normal requests for payment and 15 days for electronic receipt of an itemized billing and presumably the penalty provisions in those sections - a 15% increase plus interest at the civil judgment rate retroactive to the date of receipt of the bill.

Not only will carriers and TPAs need to have more medical billing experts on staff to avoid such penalty provisions, vendors also will want to have these experts on staff. The basic reason is money - both in terms of time to payment as well as avoiding filing fees and/or penalty provisions.

A vendor will either want to have a medical billing specialist on staff, or contract with a billing expert company, to avoid as much as possible having to a) pay for an IBR and then b) a lien filing/activation fee.

A carrier/TPA will also need to bulk up the staffing of medical billing specialists to ensure compliance with LC 4603.2 to avoid unnecessary increases in medical bill payments.

The complex set of rules of engagement and technical subtleties involved in medical billing is too much for a generalist - specialized training will be necessary for individuals within affected organizations to efficiently process billing without incurring unnecessary administrative fees or penalties. And specialized training for medical bill review is mandated through the California Insurance Code and Title 10, section 2592.04 of the Code of Regulations.

So while the general workers' compensation population is affected by the broad changes wrought via SB 863, there are classes of very specific job classifications that are particularly subject to specialization and those job classifications are going to be in greater demand as SB 863 matures through the regulatory process and the making of case law.

Conflict of Interest Disclosure: WorkCompCentral is an education provider.


  1. Dave, Thanks for your insight on these complex issues. It seems once again, treatment has been kicked to the curb... If I understand you I now will need to submit twice and the perhaps submit a lien... before any hopr of receiving my $496 for a short course of treatment. That won;t pay my rent... so I'm likely to get out... Sheesh... who will remain to treat the workers? The likely answer is that there will be the renewed development of the "mill" system, where many patients are shuffled through an inadequate pseudo-treatment process. Doesn't sound like any savings to me!

    1. Dream - yes, the new system discriminates against the small billings. We'll see where the unintended consequences pop up.

  2. isn't it sadly ironic though..., that treatment is the small billing...