PPO discounts not permitted in medical provider's reimbursement
Musculoskeletal Institute of Louisiana v. Rollins, Inc., No. 45,629-WCA (La. Ct. App. 09/22/10).
Ruling: The Louisiana Court of Appeal held that an employer could not use preferred provider organization contracts to reduce the amount reimbursed to a medical provider for treatment to an injured worker.
What it means: Under the Louisiana workers' compensation law, preferred provider organization discounts are not authorized.
Summary: A medical group practice specializing in orthopedics, neurosurgery, and pain management provided treatment to two workers injured at work. Both employers were self-insured and used a third-party administrator to administer the claims. In both cases, the provider was reimbursed at a rate less than the amount set forth in the reimbursement schedule. The charges were reduced pursuant to the reimbursement schedule and then reduced another 10 percent through the use of a PPO contract. Generally, PPO network agreements set the rates a medical provider can collect at a reduced amount. The Louisiana Court of Appeal held that the PPO discounts were not authorized.
The court noted that another Louisiana appellate court held that the workers' compensation law prohibited contracts that would relieve an employer of liability. The court said that the employer's use of PPO contracts to additionally lower the reimbursement "violates the spirit and intent" of the workers' compensation law. The employer argued that the statute setting a maximum reimbursement rate suggested that the parties could agree to a lesser rate, but the court noted that the provider did not charge a rate lower than the reimbursement schedule.
The court also held that the employer failed to provide notice of the PPO agreement. The workers held no benefit cards and the provider did not receive written notice as required by statute.
The court reversed the provider's award of penalties and attorney's fees because the claim had not accrued. Additionally, the employer reasonably controverted the provider's claim.
Read more at the WorkersComp Forum homepage.
December 16, 2010
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