We’ll say it as often as we have to: Preferred provider organization discounts do not apply to bills for medical-legal services.

Catherine Montgomery

It’s a lesson that Sedgwick Claims Management Inc. has yet to learn. The third-party administrator recently applied a PPO discount to charges for medical diagnostic tests rendered as part of a medical-legal evaluation.

California regulations instruct that diagnostic testing is reimbursed according to the rates established by the Physician Fee Schedule. However, using Physician Fee Schedule rates does not make testing performed in a medical-legal context subject to PPO discounts.

Fortunately, the qualified medical evaluator (QME) was a daisyCollect client, and our billing pros won’t let Sedgwick skirt the reimbursements owed.

Sedgwick slashes med-legal reimbursement

The QME billed Sedgwick for a comprehensive medical-legal evaluation that required several diagnostic psychological and neuropsychological tests.

We’ve exposed Sedgwick's previous attempts to apply PPO discounts to medical-legal bills. Despite these public admonishments and independent bill reviews flatly overturning Sedgwick’s dubious discounting, Sedgwick apparently just can’t be bothered to adhere to California laws and regulations.

For self-insured employer Kaiser Foundation Hospitals, Sedgwick correctly reimbursed the primary evaluation billing code (ML201). However, the TPA inappropriately applied a “Sedgwick Preferred Network — Strata” 10% discount to all six diagnostic tests.

Per California law and regulations, daisyCollect is submitting this bill back to Sedgwick with a second review appeal, which hopefully won’t have to be followed by a request for IBR.

PPOs do not apply to med-legal services

California Code of Regulations Section 9794 mandates that diagnostic testing is reimbursable as a medical-legal service when the following is true:

1. The medical documentation provided to the physician lacks “adequate medical information” that would otherwise make the test unnecessary.
2. Subjective complaints and physical findings warrant the tests in order to complete the evaluation.

As evidenced by its paying (albeit incorrectly) for the diagnostic tests in question, Sedgwick clearly acknowledges that the tests were appropriate and necessary.

What Sedgwick fails to understand is what Maximus (the entity that conducts IBR) previously explained to Sedgwick in a 2022 final determination. Per Maximus, the provisions of the California Labor Code that allow PPO discounting “do not apply to medical-legal services,” and medical-legal charges "are not subject to contractual PPO discounts.”

Medical-legal physician evaluators: Know your rights. If a claims administrator tries to cut your reimbursement with PPO or other network discounts, submit a second review appeal within 90 days of receiving the EOR. If necessary, request IBR. Precedent is on your side.

Catherine Montgomery is the co-founder and CEO of daisyBill, a provider of workers' comp end-to-end revenue cycle management software. This post appears with permission.