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3. X12 835 EOR Noncompliant: 835 N/A (277 Reject)

Last update
September 8, 2022

Audit Complaint Data

Bill Transmission: Original Bill / Second Review - 835 N/A (277 Reject)

EDI Noncompliance: The claims administrator sent the provider an incorrect 277 Acknowledgement rejecting the e-bill. Subsequent to sending the 277 rejection, the claims administrator sent the provider an electronic EOR. Conflicting 277 ACKs impose needless billing costs on providers as follows: 1) Provider must needlessly expend administrative resources to contact claims administrator to ‘correct’ the incorrectly rejected e-bill and 2) Provider needlessly incurs an additional cost to submit a second e-bill in response to the claims administrator erroneously rejecting the initial e-bill.

Targeted Profile Audit Review

This Audit Complaint Data submitted to the DWC represents a credible complaint and credible information of a claims handling violation.

CCR §10106.1(c)(3) instructs that the Audit Unit “shall review and compile complaints” that indicate a claims administrator is “failing to meet their obligations under Divisions 1 or 4 of the Labor Code or regulations of the Administrative Director.”

Pursuant to LAB §129, CCR §10106.1(c)(3) provides the DWC Audit Unit may target audit subjects based on: “...credible complaints and/or information received by the Division of Workers' Compensation that indicate possible claims handling violations, except that the Audit Unit will not target audit subjects based only on anonymous complaints unless the complaint(s) is supported by credible documentation.

Per California DWC Medical Billing and Payment Guide 7.2, any electronically submitted bill determined to be completed, not paid or objected to within the 15 working day period, shall be subject to audit penalties per Title 8, California Code of Regulations section 10111.2(b)(10),(11).

Pursuant to CCR §10111.2(b)(10), the penalty for each failure to pay or object, in the manner required by law or regulation, to a bill for medical treatment provided or authorized by the treating physician, including medical treatment provided pursuant to LAB §5402(c), is as follows when the bill remains unpaid at the time the audit subject is notified that the claim was selected for audit:

  • $100 for each bill of $100 or less, excluding interest and penalty;
  • $200 for each bill of more than $100, but no more than $500 excluding interest and penalty;
  • $300 for each bill of more than $500, but no more than $1,000, excluding interest and penalty;
  • $500 for each bill of more than $1,000, excluding interest and penalty.

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