Medical Invoicing

Health Care Providers Reference: Medical Invoicing Step-by-Step


Medical Invoicing Overview

There are some differences in invoicing processes and procedures related to medical services or medical devices. This document will outline the particular distinctions of these two types of invoicing, what documentation is required for invoicing, state rules regarding payments, use of a patient’s insurance benefits, and how to invoice step-by-step.


Supporting Documentation

Due to the nature of medical and allied health services and the California state parameters of payment, providers are required to submit certain supporting documentation with their invoices.

  • Evaluation Reports and Prescriptions
    When an evaluation is performed on a patient, the Department of Rehabilitation (DOR) requires an evaluation report documenting the findings and treatment recommendations. Oftentimes, this will include a prescription or specific recommendation for services or devices that will aid the patient in achieving his/her employment goal with the DOR.

  • Wholesale Cost Documentation
    When invoicing for some devices (e.g., hearing aids, low vision aids), wholesale cost documentation may be required in order for the DOR to reimburse for taxes and shipping costs. For more information regarding wholesale documentation requirements, contact your local district office.


State Rules on Getting Quotes/Bids

Depending upon specific service or cost, the DOR may be required to obtain additional quotes. In most cases, the health care provider who performed the evaluation can also be the provider selected to perform the treatment service or issue the medical device to a DOR patient (known as a DOR consumer). However, at times, depending on the specific service or device recommended and its price, the DOR may be required to obtain quotes/bids from multiple providers/vendors. In these cases, the recommending provider is not guaranteed to be selected to be the treating provider.


Billing Patient Comparable Benefits First

As a state agency, before the DOR purchases services or devices, the DOR shall determine whether payment for the services or devices is available from other sources as a comparable service and benefit, including, but not limited to, health or disability insurance, employee benefits, social security programs, welfare and social service programs, and other programs sponsored by federal, state, city, and county government agencies that serve individuals with disabilities. Services and devices may be provided and paid for by the DOR only to the extent that payment is not readily available from another source.

Consumers eligible for similar benefits are required to apply for and fully utilize those similar benefits to the extent required by regulations. If the consumer refuses to apply for or use the similar benefit, the DOR can possibly deny provision of the service(s) for which the similar benefit is available. This does not preclude provision of other services for which there is no similar benefit, providing the Individualized Plan for Employment (I.P.E.) remains viable and will most likely succeed without the provision of the service that was denied.

  • Is the DOR a Secondary Insurance?
    The DOR is not an insurance carrier. The DOR may be considered a third party payer, which will authorize only those services/items which are required for the consumer to participate in a vocational rehabilitation plan for employment.

  • Dollar Amounts Authorized and Billed (Partial Payments from Insurance Carrier and the DOR)
    Oftentimes, the DOR consumer will have a comparable service/benefit available, such as insurance, that will cover all or part of the cost.

    In the cases where the DOR has information on what the comparable benefit will cover – Explanation of Benefits (EOB) letter, document showing details on the covered cost or reason for denial – the DOR will authorize only the remaining balance of the item/service. This will appear as a comparable benefit/deductible procedure code appropriate to the service and procedure category. The description will read something like, "Comparable benefit (such as Medi-Cal, Medicare, or private insurance) partially covers the cost of this service. DOR is paying the remaining balance from the comparable benefit, consumer’s private insurance copayment, or private insurance deductible."

    If, prior to authorizing, the DOR does not yet have information on what the comparable benefit will cover (such as an EOB letter, document showing details on the covered cost or reason for denial) the DOR will authorize the full amount of the service/item. The condition is written to the provider on the authorization that the provider will bill the insurance carrier, Medicare, Medi-Cal or other co-payer, as appropriate and available for the service/device.

    An itemized proof of payment/EOB or denial from the comparable benefit or co-payer must be presented with any invoice to the DOR before the DOR will make payment. Except with Medi-Cal, the DOR will pay the difference between the amount authorized by the DOR and the amount paid by co-payer(s). In regard to Medi-Cal, the amount paid by Medi-Cal is considered full payment.

    However, if there is a specific item that Medi-Cal denies, the DOR can pay for that specific item. The items billed to the co-payer must be the same as those billed to the DOR because any denial must be for the specific item authorized by the DOR. The DOR and/or co-payer payment constitutes payment in full and the consumer is not responsible for any portion.

    When the DOR authorizes a service/item and an insurance carrier pays for part of it, the DOR can pay for the remaining balance, except with Medi-Cal. If the insurance carrier denies specific items or authorized components of the item, the DOR can pay for those items.

  • Required Documentation: Evidence of Benefit or Insurance Denial
    An itemized proof of payment/EOB or denial from the comparable benefit or co-payer must be presented with any invoice to the DOR before the DOR will make payment. The DOR, as a government entity, must ensure that a substitute item was not paid for by other government programs such as Medi-Cal and/or Medicare and the documentation clearly supports the denial of the specific item. If the insurance denied specific units/components, a denial document is required to outline the specific of the denial so that DOR can cover the remaining units/components that the insurance did not cover.

  • Patient Share of Cost or Co-Payment Due
    Medicare and private insurance carriers are handled in the same way. The DOR may pay for the portion of the co-payment/deductible not covered by Medicare, including the consumer’s co-payment/deductible. The total amount paid by Medicare and the DOR must not exceed the total amount authorized.

    When Medi-Cal co-pays with Medicare, (often referred to as a Medi-Medi) the DOR cannot pay the consumer’s "share of cost" if one has been determined by Medi-Cal. If a payment is made by the DOR, the combined payment of Medicare, Medi-Cal, and the DOR cannot exceed the total amount authorized by the DOR.

    Medi-Cal, like the DOR, considers its payment full remuneration for purchases and goods rendered. However, if there is a specific item that Medi-Cal denies, the DOR may pay for that specific item. Such payment is not a co-payment since the services are identifiable "units" not covered by Medi-Cal. Because the DOR and Medi-Cal utilize the same payment rates, additional payment is not made for services which have been reimbursed by Medi-Cal. On other coverage’s, the DOR provides for payment of the maximum allowance, less the amount paid from other sources. This payment is therefore accepted by the medical provider as constituting full and complete reimbursement for the service.

    In the cases where the DOR is paying the consumer’s co-payment or deductible, the DOR will authorize only the remaining balance of the item/service. This will appear as a comparable benefit/deductible procedure code appropriate to the medical service and procedure category. The description will read something like, "Comparable benefit (such as Medi-Cal, Medicare, or private insurance) partially covers the cost of this service. DOR is paying the remaining balance from the comparable benefit, consumer’s private insurance copayment, or private insurance deductible."


Process Overview

The following table provides a process overview of the steps for providing and invoicing for services/devices. Each step is discussed more thoroughly in the sections that follow.

Process Overview Chart
Stage Description
Criteria for Provision of Medical Services DOR decides if the consumer needs medical, dental, vision, or psychological services or devices to attain the job goal.
Exam / Evaluation Authorization and performance of medical, dental, vision, or psychological evaluation. Document results of evaluation and recommend treatment services/devices as appropriate.
Treatment Authorization and provision of treatment services/devices as appropriate to the job goal.
Invoicing Provider invoices comparable benefits, and then provides EOB or denial when billing the DOR.

The DOR staff audits the invoice and posts payment.

State Controller’s Office issues warrant (check).

Step-by-Step Guide

The following tables outline the step-by-step processes for medical invoicing. For purposes of demonstrating the full range of medical services, the first table begins with authorization and evaluation and the second table proceeds through treatment service/device provision invoicing. Many providers will be performing both the evaluation and the necessary medical services and thus, invoicing for both.

  • Medical, Dental, Vision, or Psychological Exams and Evaluations
    Exam/evaluation is the first step in providing DOR consumers with the necessary medical services and devices for their employment goals. This table describes the steps involved in authorizing, providing, and invoicing for evaluation services.

    Medical, Dental, Vision, or Psychlogical Exam and Eveluation Step-by-Step
    Step Action Responsible Person(s)
    1 Authorize medical, dental, vision, or psychological exam/evaluation using appropriate medical procedure codes. The authorization form is called "Authorization and Invoice for Medical Services" (form number DR 297C).
    • Due to the state requirement for payment, when the patient has comparable benefits (Medi-Cal, Medicare, private health insurance), DOR staff will instruct providers to bill the patient’s comparable benefits prior to billing the DOR.
    DOR Staff
    2 Perform specific medical, dental, or psychological exam/evaluation according to the DOR authorization. Fee-for-Service Health Care Provider
    3 Write report documenting findings and recommendations. Include prescription for appropriate services or devices, as a result of exam/evaluation findings. Recommended services or devices must be necessary for the patient to reach his/her employment outcome. Fee-for-Service Health Care Provider
    4 Invoice the patient’s comparable benefits, as applicable, for services rendered (Medi-Cal, Medicare, private insurance). Fee-for-Service Health Care Provider
    5 After receiving the insurance evidence of benefit or denial, invoice the DOR for:
    • the unpaid balance if there is one
    • the specific items denied by the insurance, but authorized by the DOR
    • the entire service/device if the comparable benefit denies payment
    Submit the following documents to the DOR District Office along with your invoice:
    • Insurance EOB or denial
    • For psychological evaluations: list completed tests
    Fee-for-Service Health Care Provider
    6 Process the invoice balance applicable to the DOR for services rendered, up to amount authorized. DOR Staff
    7 Process payment and issue warrant (check). State Controller’s Office
  • Medical, Dental, Vision, or Psychological Treatment Services and Devices
    After the evaluation is completed and the health care provider has offered a prescription/recommendation in the evaluation report, the DOR will review the recommendations. If the recommendations are in alignment with DOR policies and the individual consumer’s employment goal, the DOR will authorize treatment services and/or devices accordingly. This table describes the steps involved in authorizing, providing, and invoicing for treatment services and devices.

    Medical, Dental, Vision, or Psychlogical Treatment Service and Device Step-by-Step
    Step Action Responsible Person(s)
    1 Document approvals from appropriate level DOR staff as needed for the service or purchase recommended in the health care provider’s evaluation report/prescription. DOR Staff
    2 Complete the requests for quotes (bids) when required based on state requirements for the purchase. DOR Staff
    3 Authorize medical, dental, vision, or psychological treatment services or devices using appropriate medical procedure codes.
    • For services, the authorization form is called "Authorization and Invoice for Medical Services" (form number DR 297C).
    • For devices, the authorization form is called "Purchasing Authority Purchase Order" (form number DR 297D).
    • Due to the state requirement for payment, when the patient has comparable benefits (Medi-Cal, Medicare, private health insurance), DOR staff will instruct health care providers to bill the patient’s comparable benefits prior to billing the DOR.
    DOR Staff
    4 Perform authorized treatment and/or issue the authorized equipment/devices to the patient. Fee-for-Service Health Care Provider
    5 Invoice the patient’s comparable benefits, as applicable, for services rendered (Medi-Cal, Medicare, private insurance). Fee-for-Service Health Care Provider
    6 Invoice the DOR, after receiving the insurance evidence of benefit or denial, for:
    • the unpaid balance if there is one
    • the specific items denied by the insurance, but authorized by the DOR
    • the entire service/device if the comparable benefit denies payment
    Submit the following documents to DOR along with your invoice:
    • Insurance Evidence of Benefit or denial
    • Treatment progress report if appropriate for the service provided (e.g., psychotherapy progress report): includes evaluation of the consumer's progress, prognosis, functional limitations and capacities
    • For devices:
      • Wholesale cost documentation (e.g., catalog list sheet, manufacturer’s wholesale invoice)
    Fee-for-Service Health Care Provider
    7 Process the invoice balance applicable to the DOR for services rendered, up to amount authorized. DOR Staff
    8 Send documentation to Central Office Accounting in Sacramento, who, in turn, submits documentation to the State Controller’s Office. DOR Staff
    9 Process payment and issue warrant (check). State Controller’s Office

Medical Frequently Asked Questions

Frequently Asked Questions
Question Answer
What is the difference between a catalog list sheet and the manufacturer’s wholesale invoice? A catalog list sheet is the price list or catalog page that a manufacturer publishes for the items it produces. It often contains multiple prices for an item, with marginally decreasing price as you purchase more items (i.e., purchasing in bulk yields a lower cost per item). Health care providers order from this manufacturer and re-sell the items to consumers at a profit.

The manufacturer’s wholesale invoice is the actual bill including taxes and shipping from the manufacturer to the health care provider. It is the proof of purchase for the specific item(s) ordered.
Does the DOR reduce my payment because I receive a discount from the manufacturer and it shows on my wholesale invoice? You may receive a discounted rate from the manufacturer and that discount would be reflected on your wholesale invoice. The DOR does not reduce the amount paid to a health care provider based on his/her discount rate from the manufacturer.

The DOR reimbursement rate for hearing aids is the one-unit wholesale price, often shown definitively on the catalog list sheet. If your manufacture’s wholesale invoice reflects a discounted rate, you can substantiate the higher rate one-unit wholesale rate by including the catalog list sheet. With this documentation, the DOR will not reduce payment based on your discounted rate.
Do I have to submit both a catalog list sheet and the manufacturer’s wholesale invoice? If so, why? The real need for the manufacturer’s invoice is to show the actual shipping cost and taxes paid for the item(s).

The DOR can only reimburse the health care provider for the actual taxes and shipping paid on the specific item. This information would only be listed on the manufacturer’s wholesale invoice and not the catalog list sheet.

The catalog list sheet is not required if you are only billing for the price listed on your manufacturer’s invoice before your discount is taken. However, you may wish to provide the catalog list sheet to document the one-unit wholesale price if that is what you are requesting on your invoice, especially if you receive a discount on your manufacturer’s invoice.
What type of reports do I need to provide with my invoice? Progress/final treatment report(s) submitted as a result of a service purchased by the DOR shall include an evaluation of the consumer’s progress, prognosis, functional limitations and capacities. You do not need to submit a report for a sale of durable goods without any corresponding services.

Initial evaluations and report(s) submitted shall include a limited history, diagnosis, summary of functional limitations and capacities and the recommended treatment plan based upon the results of the evaluation or the provision of subsequent services. This includes prescription for treatment or devices as needed. In addition, physical/occupational/speech therapy or psychiatric therapy/psychological counseling shall include a recommended therapy plan.
Do I have to provide a prescription with my invoice? As noted in Question #4, if you are billing for an evaluation, the DOR requires a report with your invoice. The report should include any prescriptions or recommendations for further treatment or devices that the patient needs.

If you are the prescribing provider, then include your prescription or recommendation with the invoice. If you are not the prescribing provider and you received a prescription along with the DOR authorization, you do not need to include the prescription with the invoice since the DOR already has a copy on file.
Is the DOR a secondary insurance or third party payer? The DOR is not an insurance carrier. The DOR may be considered a third party payer, which will authorize only those services/items which are required for the consumer (patient) to participate in a vocational rehabilitation plan for employment and for which there are no other sources of payment.
Why do I have to bill the consumer’s medical insurance first? As a state agency, the DOR can only pay for services that are not covered by an insurance carrier or other programs.

Consumers eligible for similar benefits are required to apply for and fully utilize those similar benefits to the extent required by regulations.
How does invoicing work when there is an insurance carrier involved? Oftentimes, the DOR consumer will have a comparable service/benefit available, such as insurance.

In cases where the DOR has information on what the comparable benefit will cover – Explanation of Benefits (EOB) letter, document showing details on the covered cost or reason for denial – the DOR will authorize only the remaining balance of the item/service.

If, prior to authorizing, the DOR does not yet have information on what the comparable benefit will cover – EOB letter, document showing details on the covered cost or reason for denial – the DOR authorizes the full amount of the service/item. The condition is written to the vendor on the authorization that the vendor will bill the insurance carrier, Medicare, Medi-Cal or other co-payer, as appropriate and available for this service/item.

An itemized proof of payment/EOB or denial from the comparable service/benefit or co-payer must be presented with any invoice submitted to the DOR before the DOR will make payment. The DOR will pay the difference between the amount authorized by DOR and the amount paid by comparable benefit, except for Medi-Cal which is considered full payment.. In regard to Medi-Cal, the amount paid by Medi-Cal is considered full payment.

If there is a specific item that Medi-Cal denies, DOR can pay for that item. The items billed to the co-payer must be the same as those billed to DOR because any denial must be for the specific item authorized by DOR. The DOR and/or co-payer payment constitutes payment in full and the consumer is not responsible for any portion.
What happens if the insurance partially pays for an item? When the DOR authorizes a service/item and an insurance carrier only pays for part of it, the DOR can pay for the remaining balance, except with Medi-Cal. If the insurance carrier denies specific items or authorized components of the item, the DOR can pay for those items.
Can I invoice the DOR for the consumer’s share of cost or co-payment? It depends. Medicare and private insurance carriers are handled in the same way. The DOR may pay for the portion of the co-payment/deductible not covered by Medicare, including the consumer’s co-payment/deductible. The total amount paid by Medicare and the DOR must not exceed the total amount authorized.

When Medi-Cal co-pays with Medicare, (often referred to as a Medi-Medi) the DOR cannot pay the consumer’s "share of cost" if one has been determined by Medi-Cal. If a payment is made by the DOR, the combined payment of Medicare, Medi-Cal, and DOR cannot exceed the total amount authorized by the DOR.

Medi-Cal, like the DOR, considers its payment full remuneration for purchases and services rendered. However, if there is a specific item that Medi-Cal denies, the DOR may pay for that specific item. Such payment is not a co-payment since the services are identifiable "units" not covered by Medi-Cal.

In cases where the DOR is paying the consumer’s co-payment or deductible, the DOR will authorize only the remaining balance of the item/service.
Do I have to include the Evidence of Benefit (EOB) or insurance denial when I invoice the DOR? Yes, even if the DOR authorized the full amount of the purchase, the provider should bill the insurance company first. The EOB provides details of which units/components the insurance did not cover so that the DOR can pay for them. The DOR must confirm that only authorized items are paid for, that no substitute items were paid for by other government programs, or that documentation clearly supports the denial of a specific item.
What documents are required to be submitted to DOR for dental evaluation? If you are billing for new patient evaluation and full mouth x-ray, simply submit your itemized invoice.

In order to authorize treatment beyond the initial evaluation, the DOR requires that you submit a dental claim form (treatment plan), periodontal charting, original x-rays (electronically or hardcopy) and justification of need for prosthesis (if dentures are in the dental claim form).
Why do I need to list the tests given during a psychological evaluation? The DOR requires itemized documentation of completed services. This is most commonly included either on the invoice itself or on the evaluation report.