The Three Steps to Compliant e-Billing
Since October 2012, California claims administrators are legally obligated to compliantly accept and process workers’ compensation e-bills.
Frequently Asked Questions
Q: Do California Claims Administrators have to accept electronic billing for workers’ compensation?
A: Yes. Yes. Absolutely, yes. This was mandated by Senate Bill 863 way back in 2012.
Q: Is e-billing like e-mail? Can I just send a claims administrator scans of my paper bills?
A: Unfortunately, it’s a lot more complicated than that. The California Division of Workers’ Compensation (DWC) outlines strict e-billing rules and responsibilities for providers and claims administrators. Most e-billing is handled by third-party EDI agents such as Daisybill who have the technology needed to convert treatment information into electronic files and compliantly process them.
Two free resources from the California DWC outline comprehensive e-billing rules and responsibilities for providers and claims administrators:
- The Medical Billing and Payment Guide compares the rules for paper versus electronic medical treatment bills.
- The Electronic Medical Billing and Payment Companion Guide supplements and explains California’s electronic standards and requirements for all bill types in the workers’ compensation system.
Per the DWC, there are three main steps required to compliantly submit and process electronic bills.
Step 1 - 837 Electronic Bill + 275 Supporting Documentation
A provider creates and electronically transmits a complete bill to the claims administrator.
A complete electronic bill is comprised of two parts:
- Treatment information. The data that normally populates a CMS 1500 or other paper billing form is converted into an electronic file known as an 837. Rather than being submitted on a paper form via the mail, the bill information is sent electronically to the claims administrator.
- Supporting documentation. The required workers’ compensation-specific supporting documentation, such as the PR-2 or DLSR, is sent to the claims administrator in PDF format in a separate file known as a 275 file.
Step 2 - 277 Acknowledgment
Within two working days of receipt of a complete electronic bill from a provider, the claims administrator must review the electronic bill and return an acknowledgement to the provider. This mandatory acknowledgement is known as a 277.
The 277 acknowledgement alerts the provider of two possible outcomes:
- The bill is accepted for adjudication or processing.
- The bill is rejected and will not be adjudicated or processed.
An accepted 277 acknowledgement documents that the claims administrator received the bill and that the bill will be processed – this is like receiving a certified return receipt in the mail.
A rejected 277 acknowledgement means the claims administrator will not process the bill. Per the DWC regulations, there are seven reasons why a claims administrator may return a rejection acknowledgement:
- Invalid form or format
- Missing information
- Invalid data
- Missing attachments
- Missing required documents
- Injured workers’ claim of injury is denied
- There is no coverage by the claims administrator
The claims administrator must send the provider a specific rejection acknowledgment explaining the reason for the rejection so the provider can correct the error and re-submit the bill.
Step 3 - 835 Electronic Explanation of Review
Within 15 working days from receipt of an accepted electronic bill, the claims administrator must send the provider an electronic EOR. The electronic EOR is known as an 835 file. (By way of contrast, claims administrators are allowed a whopping 30 calendar days to remit a paper EOR after receipt of a paper bill).
This EOR timeline only applies to bills that were accepted by the claims administrator in Step 2.
Behind the Scenes
Generally speaking, providers and claims administrators cannot transmit or receive the various required electronic files – the 837, 275, 277, and 835 – that underpin electronic billing, so each hires a third party like DaisyBill to manage electronic billing on their behalf. These third parties, known as EDI agents, help providers compliantly submit and process electronic bills according to the three steps outlined above.
As an EDI agent hired by a provider, DaisyBill submits compliant e-bills (837s) with supporting documents (275s) to the EDI agent hired by a claims administrator. The claims administrator EDI agent, in turn, sends DaisyBill either the accepted and rejected acknowledgements (277s) and sends DaisyBill the electronic EORs (835s).
Webinar: e-Billing for Workers’ Compensation
Thousands of workers’ comp professionals across the state use DaisyBill’s Revenue Cycle Management software to compliantly process electronic bills. To learn more, schedule a no-pressure demo with one of our billing experts.
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