One of the state’s largest medical providers says the state has shortchanged it hundreds of thousands of dollars in workers’ compensation payments, a figure that is going up every day.
Scottsdale Healthcare Corp. filed suit last month in an effort to get the state to pay more for the claims.
Mark Wagner, Scottsdale Healthcare’s attorney, said the company may seek more than $400,000 if the state continues to ignore its concerns.
Wagner said the state hired a third party to decide how much is reasonable to pay for each health service rather then paying the hospital for the actual bill. Wagner said when the hospital bills the state $1,000, it will likely receive only $300 back.
According to the lawsuit, Scottsdale Healthcare has never agreed to accept less than it bills, and no law or regulation requires the corporation to accept less than it charges.
In Arizona, employers are required to provide workers’ compensation insurance for their employees. Industrial Commission Director Larry Etchechury said entities who are self-insured, like the commission and the state, often hire vendors to help them select reasonable prices to pay for claims, because they aren’t large enough to entice hospitals into established contracts for lower prices.
The state became self-insured in 1994, and began contracting three years ago with the price-setting vendor Advantage, said Michael Murphy, claims manager in risk management for the Arizona Department of Administration. Advantage then subcontracted with Qmedtrix, the company cited in the lawsuit. According to Qmedtrix, 50 percent of medical claims have billing errors — a number it says decreases significantly with a third-party review of the charges.
Neither the state nor the Industrial Commission considered that using a price-setting vendor might be illegal, according to Etchechury and Murphy. The process is “standard industry practice,” said ADOA spokesman Alan Ecker.
Cost containment is now the health care “buzz word” in the Arizona Legislature, Etchechury said. Although the Industrial Commission has had the authority since 1925 to set a fee schedule for payments to doctors, it doesn’t have that same authority for payments to hospitals, he said. Legislators must determine whether to change that.
Wagner said he sent the state attorney general’s office three warning letters — one in May and two in June — which were “pretty much” ignored.
Andrea Esquer, spokeswoman for the attorney general, said the office was not aware of the lawsuit.