DECISION AND ORDER

This proceeding involves an appeal by Petitioner Transcontinental Insurance Company (the Carrier) from Findings and Decision of the Medical Review Division (MRD) of the Texas Worker’s Compensation Commission (Commission) awarding Co-Respondent Memorial Surgical Center (the Center) additional reimbursement for services. The Center is an ambulatory surgical center (ASC) in Houston that provides surgical services to patients for procedures not requiring inpatient hospitalization. The Commission does not currently have a guideline mandating a fixed amount for ASC charges for outpatient procedures. ASC services are to be reimbursed at a fair and reasonable rate. The Center billed $10122.44 for its services, but the Carrier reduced the Center’s billed charges to $1800 on the basis that the Center’s charges were not fair and reasonable. In this Decision and Order, the Administrative Law Judge (ALJ) finds that the Carrier carried its burden of proving that it reimbursed the Center at a fair and reasonable rate and, therefore, the Center is not entitled to any additional compensation for the services at issue.

I. PROCEDURAL HISTORY, NOTICE, AND JURISDICTION

There were no contested issues or jurisdiction or notice. Therefore, those matters are addressed in the findings of fact and conclusions of law without further discussion here.

ALJ Renee M. Rusch convened the hearing in this matter on February 25, 2002, at the hearings facility of the State Office of Administrative Hearings. The Carrier was represented by James Laughlin, an attorney. The Center appeared pro se through its employee, Joyce Leonard, who appeared by telephone. The Commission was not represented at the hearing. After the taking of evidence, the hearing was adjourned and the record closed the same day.

II. BACKGROUND

On______, Patient ____ suffered a compensable back injury. On July 3, 2001, and July 10, 2001, Dr. Ben Tiongson used the Center’s facilities to treat__ with lumbar facet injections at L3-4, L4-5, and L5-S1. On each date of service, Patient ___spent less than one hour in the Center’s operating room.

The Center billed the Carrier for everything but Dr. Tiongson’s services. The Center’s charges included operating room time, recovery room time, nursing time, supplies, and anesthesia.

The Center billed the Carrier $5,031.37 for services rendered on July 3, 2001, and $5,091.07 for services rendered on July 10, 2001. The Carrier paid the Center $900 for the services rendered on each date, with the explanation that it had reduced the Center’s charges for operating room services to “fair and reasonable,” and that the other services for which the Center billed were “included in global charge.” (Pet. Ex. 5 [Certified Record] at 36 and 37.) When the Center requested dispute resolution at the MRD, the Center stated that it did not expect its billed charges to be paid in full, but it did expect fair and reasonable reimbursement. (Pet. Ex. 5 at 12.) The Center provided five Explanations of Benefits (EOBs) from three carriers indicating those carriers paid an average of 85% of the Center’s billed charges. (Pet. Ex. 5 at 5.)^[1] Relying on the EOBs, the MRD ordered additional payment of $6,804.07, which amount constitutes 85% of $10,122.44 (the amount the Center billed), less 15% (the percentage the other carriers had deducted on average), less the $1,800 the Carrier already paid. The Carrier appealed the MRD’s decision.

III. FAIR AND REASONABLE REIMBURSEMENT

A. Applicable Statutes and Rules

Section 413.011, Guidelines and Medical Policies, of the Workers’ Compensation Act (the Act), provides in relevant part:

(a) The commission by rule shall establish medical policies and guidelines relating to:

(1) fees charged or paid for medical services for employees who suffer compensable injuries, including guidelines relating to payment of fees for specific medical treatments or services; . . .

(b) Guidelines for medical services fees must befair and reasonableand designed to ensure the quality of medical care and to achieveeffective medical cost control. The guidelines may not provide forpayment of a fee in excess of the fee charged for similar treatment of an injured individual of an equivalent standard ofliving and paid by that individual or by someone acting on that individual’s behalf. The commission shall consider theincreased security of paymentafforded by this subtitle in establishing the fee guidelines.^[2] (Emphasis added).

Commission Rule 134.1(f), found in subchapter A, Medical Policies, of Chapter 134, Guidelines for Medical Services, Charges, and Payments, of the Commission’s rules, provides:

Reimbursement for services not identified in an established fee guideline shall be reimbursed at fair and reasonable rates as described in the Texas Workers’ Compensation Act, Section 8.21(b),^[3] until such time that specific guidelines are established by the commission. 28 TEX. ADMIN. CODE §134.1(f)

Commission Rule 133.1(a)(8) defines fair and reasonable as:

Reimbursement that meets the standards set out in § 413.011 of the Texas Labor Code, and the lesser of a health care provider’s usual and customary charge, or

(A) the maximum allowable reimbursement, when one has been established in an applicable Commission fee guideline,

(B) the determination of a payment amount for medical treatment(s) and/or service(s) for which the Commission has established no maximum allowable reimbursement amount, or

(C) a negotiated contract amount.

28 TEX. ADMIN. CODE § 133.1(a) (8).

When a carrier is to pay a health care provider for treatments or services for which the Commission has not established a maximum allowable reimbursement, as here, the carrier must develop and consistently apply a methodology to determine fair and reasonable reimbursement amounts to ensure that similar procedures provided in similar circumstances receive similar reimbursement. 28 TEX. ADMIN. CODE § 133.304(i)(1).

B. The Parties’ Positions

The Carrier’s Position

The Carrier asserted that in the absence of a fee guideline, it has developed and applied a reimbursement methodology that meets the requirements set forth in Section 413.011 of the Act and is consistent with 28 TEX. ADMIN. CODE § 133.304(1). The Carrier’s payment methodology utilized, as “anchor points,” the Commission’s inpatient surgical per diem rate of $1,118 and the Commission’s non-surgical inpatient per diem rate of $870. Reasoning that an inpatient stay is a stay that lasts at least 23 hours, and that the purpose of an ASC is to provide less expensive care than is available during an inpatient hospital stay, the Carrier established four levels of reimbursement, ranging from $870 to $1,100, based on the time the patient spent in the ASC’s operating room.^[4] On the low end of the scale, for operating room time of 29 minutes or less, the Carrier set the reimbursement rate at $870. At the high end of the scale, for operating room time of 91 minutes or more, the Carrier set the reimbursement rate at $1,100. Because Patient ____ spent between 30 and 60 minutes in the operating room on each occasion, the Carrier reimbursed each date of service at the rate of $900. (Pet. Ex. 5 at 40 and 43; Shank Testimony.)

Had these procedures been performed in a hospital, the Carrier argued, the maximum reimbursement rate would have been $1,118, and the patient would have stayed overnight and received meals. The Carrier’s expert witness, Julie Shank, testified that the costs associated with an inpatient stay typically are higher than those associated with use of an ASC because the services performed at an ASC typically are less intensive than the surgical services performed on an inpatient basis. (Shank testimony.)^[5] Thus, the Carrier argued, it is unreasonable to pay more for an outpatient procedure or surgery than for an inpatient surgery.

The Carrier supported its determination of fair and reasonable by comparing the Commission’s surgical per diem rate with the rate set forth by the federal Health Care Financing Administration (HCFA) in the Medicare methodology. Medicare sorts services into eight groups, and all procedures in a group are reimbursed at the same rate. Group 1 consists of the least intensive services and has the lowest reimbursement rate. Group 8 consists of the most intensive services and has the highest reimbursement rate. HCFA surveyed rates charged by ASCs nationwide, determined the median charge for each code, and then utilized that information in setting the reimbursement rate for each group. (Shank Testimony.)

The CPT Codes for the services provided in this case, lumbar facet injections, are listed in the Commission’s 1996 Medical Fee Guidelines as CPT Code 64442, for one injection at a single level of vertebrae, and CPT Code 64443, for each additional injection level.^[6] Medicare assigns the CPT Codes at issue to Medicare Group 1. The Medicare reimbursement rate for Group 1 is $323. (Pet. Ex. 2.) That rate includes all services performed at the facility except the doctor’s services. Medicare utilizes a multiple procedure rule: If more than one procedure is performed in a given setting the first procedure is paid at 100% of the reimbursement rate, and each additional procedure is paid at 50%. Thus, in this case, using the CPT Codes listed in the 1996 Medical Fee guidelines, the first injection (CPT Code 64442) would be reimbursed at the rate of $323, and each additional injection (CPT Code 64443) would be reimbursed at 50% of $323. Because three injections were performed here, the total reimbursement, under Medicare, would be $646.^[7]

Ms. Shank was involved in drafting the Commission’s 1988 hospital fee guidelines, which employed a percentage-based payment methodology and provided that hospitals were reimbursed at 85-100% of their billed charges, with the exact percentage depending on the ratio between the facility’s revenues and expenses. Under that system, hospitals had no incentive to control costs, and thus they increased their charges to compensate for being paid only a percentage of their billed charges. Therefore, in drafting the 1997 hospital fee guidelines, the Commission rejected the percentage-based payment methodology and considered the amounts paid by Medicare and the amounts paid under managed care contracts. The Commission determined:

Because hospitals do a large volume of Medicare services and accept Medicare payment rates, the Commission believes that Medicare rates are fair and reasonable payment for Medicare patients, and ensure Medicare patients access to quality health care. The Medicare fee program is also designed to achieve effective cost control, another statutory objective the Commission must try to meet in its own fee guidelines. Finally, the Commission believes that Medicare patients are persons of an equivalent standard of living to workers’ compensation patients. . . . [T]he Medicare population is at least of an equivalent standard of living, and rates paid on their behalf for medical services are relevant to fair and reasonable rates for workers’ compensation patients. For these reasons, it is relevant to consider estimated Medicare per diem rates. (Preamble to Acute Care Inpatient Hospital Fee Guideline, July 4, 1997 Texas Register at 32.)

In the Commission’s proposed new guidelines for professional fees, the Commission has set reimbursement rates at 120% the Medicare rate. (26 Tex. Reg. 10786, 10791, Dec. 28, 2001.) If one were to apply that methodology here, the appropriate reimbursement rate would be 120% of $646, i.e., $775.20Bstill less than the $900 the Carrier paid. (Shank Testimony.) According to Ms. Shank, Texas facilities obtain approximately 70% of their revenues from Medicare and managed care contracts; thus, consideration of the Medicare reimbursement rate will not adversely affect quality of care. Additionally, she noted that the legislature, in its recent revisions to Section 413.011 of the Act, now requires the Commission to use Medicare methodology in establishing fee guidelines.^[8]

Finally, to provide even more support for the Carrier’s payment amount, Ms. Shank did a survey of all 50 states and the District of Columbia to see how ASCs are paid. She determined that other states that use Medicare methodology have set rates comparable to the rate set by the Carrier here. She testified that this procedure would be reimbursed at the rate of $520 in Mississippi, $663.90 in Massachusetts, $729.98 in Pennsylvania, and $980 in Nevada. She also testified that three other states, Rhode Island, New York, and Florida, have or are working toward a workers’ compensation reimbursement methodology that uses the Medicare rates.

The Center’s Position

The Center’s representative, Joyce Leonard, argued that the Carrier’s methodology is not appropriate and that each bill should be considered on a case-by-case basis. She urged the ALJ to look at each procedure individually and consider all of the services listed on the Center’s bill. She conceded, however, that she was not aware that Patient____ had any conditions that made administration of the lumbar facet injections especially difficult, and the operative record did not reflect that Patient ____ experienced any complications. Ms. Leonard interpreted the medical records as indicating that the total time that elapsed between Patient___’s admission to and discharge from the Center on each of the dates at issue was less than one hour. (See also Ex. 5 at 14, 26.)^[9]

The Center did not object to the admission into evidence of documents relating to Medicare payment methodology. Indeed, Ms. Leonard admitted that she believes the Medicare methodology is good. She argued, however, that when the Carrier reduced the Center’s billed charges, the Carrier’s EOB stated that the basis for payment was time in the operating room, without any reference to Medicare methodology. If the EOB had mentioned Medicare methodology, Ms. Leonard opined, the Center “probably would not have challenged” the Carrier’s reimbursement. She did not, however, cite any legal authority supporting the Center’s apparent contention that the ALJ should not consider the Carrier’s evidence regarding Medicare reimbursement rates.

IV. ANALYSIS

The Carrier’s Reliance on Medicare Data to Support its Determination of Fair and Reasonable Reimbursement

The ALJ does not agree with Ms. Leonard that, because the Carrier did not reference the Medicare reimbursement rate on the EOB, the Carrier is precluded from relying on Medicare reimbursement rates in this proceeding. The law requires that if an insurance carrier disputes the amount of payment or the health care provider’s entitlement to payment, the carrier shall send to the Commission, the health care provider, and the injured employee a report that “sufficiently explains” the reasons for the reduction or denial of payment. TEX. LABOR CODE § 408.027(d). Carriers are required to use form TWCC-62, Notice of Medical Payment Dispute, or its equivalent, for that purpose. 28 TEX. ADMIN. CODE § 133.304(a). Alternate forms are commonly referred to as an EOB.

Here, the Carrier met those requirements when it advised the Center, on two Forms TWCC-62, one issued on July 24, 2001, and the other issued on July 26, 2001, that the Center’s charges for operating room services had been reduced to “fair and reasonable” and that the other services for which the Center billed were “included in global charge.” (Pet. Ex. 5 at 36 and 37.) In narrative explanations, the Carrier stated that it had applied the criteria set forth in Section 413.011(b) of the Act in establishing fair and reasonable reimbursement rates. The Carrier stated: “In light of the reduced expenses incurred in an outpatient setting, it is unreasonable to pay more for an outpatient procedure or surgery than an inpatient surgery.” The Carrier explained that it used “as anchor points” the Commission’s per diem rate of $1,118 for an inpatient hospital surgical stay and the Commission’s per diem rate of $870 for a non-surgical inpatient medical stay, and, using those “anchor points,” established four payment levels for outpatient procedures or surgeries, depending on the amount of time the patient spent in the operating room. The Carrier advised that, under its methodology, an ASC’s facility charges for a procedure during which the patient spent 30-60 minutes in the operating room, as Patient did, would be reimbursed at the rate of $900. (Pet. Ex. 5 at 40 and 43.)

In these circumstances, there does not appear to be anything inappropriate about the Carrier’s reliance, at the MRD and in the hearing in this matter, on Medicare reimbursement rates as evidence supporting the Carrier’s determination that the Center’s charges were not fair and reasonable and that the amount the Carrier paid was fair and reasonable.

Fair and Reasonable Reimbursement

Section 413.011 of the Act requires the Commission to establish medical policies and guidelines relating to fees charged or paid for medical services. Commission Rule 134.1(f) unambiguously requires the use of former Section 413.011(b) (now Section 413.011[d]) to establish a payment rate for services not identified in a fee guideline. And the Commission’s rules instruct carriers to develop and consistently apply a methodology to determine fair and reasonable amounts for services not subject to maximum allowable reimbursement. 28 TEX. ADMIN. CODE §133.304(i) (1). Where, as here, the Commission has not established a fee guideline, reimbursement for services must still (1) be “fair and reasonable,” (2) be “designed to ensure the quality of medical care and to achieve effective medical cost control,” (3) not exceed “the fee charged for similar treatment of an injured individual of an equivalent standard of living and paid by that individual or by someone acting on that individual’s behalf,” and (4) should “consider the increased security of payment afforded.”

The ALJ was not persuaded by the Center’s argument that each ASC’s bill must be considered on a case-by-case basis, precluding application of the Carrier’s payment methodology. The Commission’s rules require the Carrier to develop and apply a consistent payment methodology. 28 TEX. ADMIN. CODE§ 133.304(i). Presumably, a systematic approach will enhance the Carrier’s ability to treat all providers equally and to handle a large volume of billings. Moreover, unlike the 1997 hospital fee guideline, which pays $1,118 per day for all surgical admissions, the Carrier’s methodology divides the range of ASC surgeries into four groups and pays a different amount depending on the length of time the patient spends in the operating room, a factor which, presumably, relates to the complexity of the procedure.

The Center urged the ALJ to review the specific services that were provided to Patient____ and for which the Center seeks over $5,000 for each date of service. Upon reviewing the medical records, the ALJ was struck by the similarity between the two procedures. Dr. Tiongson’s operative report for July 10, 2001, is identical–word for word–to his operative report of the July 3, 2001, procedure, except that the July 3, 2001, report reflected injections to Patient’s left side, and the July 10, 2001, report reflected injections on the patient’s right side. (Pet. Ex. 5 at 29-30, 34-35.) The record contained no evidence of unique circumstances or services. Indeed, both operative reports expressly state that no complications were noted.

The ALJ was influenced by the comparison to the Commission’s reimbursement rate for hospitals, which is $1,118 a day for a surgical patient’s stay and treatment, including operating room, recovery room, medications, and supplies. The comparison seems appropriate here. The ALJ recognizes that, in some cases, a hospital may incur high expenses and lose money on the first day of a stay that it can recoup in subsequent days of the patient’s stay, but an ASC does not have that opportunity. However, it makes no sense for the Center to earn, for approximately one hour of services, over four times the inpatient surgical per diem rate established by the Commission. This is especially true because the Carrier presented convincing evidence that the costs associated with an inpatient surgical hospital stay typically are higher than those associated with use of an ASC because the services performed at an ASC typically are less intensive than the surgical services performed on an inpatient basis.

In support of its four-level payment schedule, the Carrier applied a methodology based on the use of data developed by the HCFA to set Medicare payments. The use of such information to set payments to ASCs seems appropriate for two reasons. First, paying a specific dollar amount, rather than paying a percentage of billed charges, ensures effective cost control. Second, the Commission has found that the Medicare population has an equivalent standard of living to that of Texas workers’ compensation patients. And like Medicare fees, the workers’ compensation fee need only be set high enough to induce enough providers to participate in the system and thus ensure quality of care for injured workers. The Center presented no evidence that reimbursement under the Carrier’s methodology will adversely affect access to quality health care, whereas Ms. Shank testified that Texas facilities obtain approximately 70% of their revenues from Medicare and managed care contracts, thereby supporting the Carrier’s contention that its reimbursement rate will not adversely affect the quality of care. Additionally, recent amendments to Section 413.011 of the Act, which require use of Medicare methodology, lend great weight to the Carrier’s arguments in this proceeding.

EOBs reflecting that some other carriers paid an average of 85% of the Center’s billed charges on various occasions does not establish that the amounts the other carriers paid were in fact fair and reasonable, nor do they contribute to effective cost control.^[10] When the Commission adopted the 1997 Hospital Fee Guideline and the proposed new guidelines for professional fees, it did not utilize a percentage-based methodology, as a percentage-based payment methodology does not meet the statutory requirement of cost control.

The Carrier has provided persuasive evidence that Medicare payments are an appropriate benchmark to use in evaluating the fairness and reasonableness of its payments to health care providers. Moreover, the evidence establishes that the Carrier’s methodology currently pays considerably more than Medicare does for the same service. The fee that the Carrier has paid seems to be more in line with what the legislature anticipated than what the Center is charging and what some other carriers may be paying.

Conclusion

For the reasons discussed above, the ALJ concludes that the amounts paid by the Carrier constitute fair and reasonable reimbursement for the services the Center provided to Patient on the dates of service. Therefore, the Center is not entitled to additional reimbursement. This decision does not, however, reach the question of whether the Carrier’s four-level payment methodology would constitute fair and reasonable reimbursement for facility charges associated with

a service that fits into any Medicare group other than Group 1.

V. FINDINGS OF FACT

1. On______, Patient____ suffered a compensable injury and was employed at the time by an employer carrying workers’ compensation insurance underwritten by Transcontinental Insurance Company (the Carrier).
2. On July 3, 2001, and July 10, 2001, Dr. Ben Tiongson used the facilities of Memorial Surgical Center (the Center) to treat Patient lumbar facet injections at L3-4, L4-5, and L5-S1.
3. The Center billed the Carrier $5,031.37 for services rendered on July 3, 2001, and $5,091.07 for services rendered on July 10, 2001.
4. The Carrier paid the Center $900 for the services rendered on July 3, 2001, and another $900 for services rendered on July 10, 2001.
5. In an explanation accompanying its payment, the Carrier stated that it had reduced the Center’s charges for operating room services to “fair and reasonable” charges and that all other billed charges were included in the global charge.
6. On September 19, 2001, the Center requested dispute resolution at the MRD; the amount in dispute at the MRD was $8,322.44.
7. In Findings and Decision issued on October 26, 2001, the MRD ordered additional payment of $6,804.07, which amount constitutes 85% of $10,122.44 (the amount the Center billed), less 15% (the average percentage other carriers had deducted), less the $1,800 the Carrier already paid.
8. On November 12, 2001, the Carrier requested a hearing.
9. The Commission issued its Notice of Hearing on December 10, 2001.
10. Administrative Law Judge Renee M. Rusch convened the hearing on February 25, 2002, and the record closed the same day. The Carrier was represented by James Laughlin, an attorney. The Center appeared pro se through Joyce Leonard, who appeared by telephone and identified herself as an employee of the Center who performs collections and handles accounts receivable. The Commission was not represented at the hearing.
11. The Center provided explanation of benefits (EOBs) from three other carriers showing that those other carriers have been willing, on several occasions, to reimburse an average of 85% of the Center’s usual and customary charges for the same and similar services.
12. Showing what other carriers have been willing to pay is not evidence of effective medical cost control and is not evidence of amounts paid on behalf of non-workers’ compensation patients with an equivalent standard of living.
13. There was nothing unique about the services the Center provided to Patient____ on July 3, 2001, and July 10, 2001, respectively; Patient ____ did not have any conditions that made administration of lumbar facet injections especially difficult; and patient____ did not experience any complications during the procedure.
14. If the same procedures had been performed in a hospital, the maximum the hospital could have billed for all charges for the patient’s hospital stay and treatment, including operating room, recovery room, pharmacy, and supplies, would have been $1,118 for each date of service.
15. Using data developed by the Health Care Financing Administration to set Medicare payments to ASCs is appropriate because the Medicare population has an equivalent standard of living to that of Texas workers’ compensation patients.
16. Medicare would reimburse the services at issue at the rate of $646.
17. Paying a specific dollar amount, rather than paying a percentage of billed charges, ensures effective cost control.
18. Reimbursing services provided to Texas workers’ compensation patients at a rate equal to or exceeding the Medicare reimbursement rate will not adversely affect quality of medical care.
19. The EOBs provided by the Center do not support additional reimbursement.
20. The Carrier’s reimbursements in the amount of $900 for each date of service were based on its conclusion that such payments were fair and reasonable.

VI. CONCLUSIONS OF LAW

1. The Texas Workers’ Compensation Commission has jurisdiction to decide the issue presented pursuant to the Texas Workers’ Compensation Act. Tex. Labor Code Ann. § 413.031.
2. The State Office of Administrative Hearings has jurisdiction over matters related to the hearing in this proceeding, including the authority to issue a decision and order, pursuant to Tex. Labor Code Ann. §413.031(d) and Tex. Gov’t Code Ann., ch. 2003.
3. Adequate and timely notice of the hearing was provided according to Tex. Gov’t Code Ann.§§ 2001.051 & 2001.052.
4. The Carrier had the burden of proving by a preponderance of the evidence that it has reimbursed the Center at a fair and reasonable rate and that the Center is not entitled to additional reimbursement. 28 Tex. Admin. Code § 148.21(h) & (i).
5. If reimbursement for services is not identified in an established fee guideline, the services shall be reimbursed atfair and reasonable rates as described in the Texas Workers’ Compensation Act, Section 8.21(b), until such time as the Commission establishes specific guidelines. 28 TEX. ADMIN. CODE §134.1(f).
6. Guidelines for medical services fees must be fair and reasonable and designed to ensure the quality of medical care and to achieve effective medical cost control. The guidelines may not provide for payment of a fee in excess of the fee charged for similar treatment of an injured individual of an equivalent standard of living and paid by that individual or by someone acting on that individual’s behalf. The commission shall consider the increased security of payment afforded by this subtitle in establishing the fee guidelines. TEX. LABOR CODE§ 413.011.
7. A “usual and customary” charge may be the same as a “fair and reasonable” one only if there is evidence that the factors set out in § 413.011 of the Texas Labor Code are also met; that is, that the charge achieves effective medical cost control, takes into account payments made to others with an equivalent standard of living, and considers the increased security of payment.28 TEX. ADMIN. CODE § 133.1(a) (8).
8. Based on Findings of Fact Nos. 2-5 and 12-20 and Conclusions of Law Nos. 5-8, the Carrier’s reimbursement to the Center in the amount of $900 for each date of service was fair and reasonable. Tex. Labor Code Ann. §413.011(b).

ORDER

IT IS, THEREFORE, ORDERED that the appeal of Transcontinental Insurance Company is GRANTED; the Order of the Texas Workers’ Compensation Medical Review Division dated October 26, 2001, is reversed; and Memorial Surgical Center is not entitled to additional reimbursement from Transcontinental Insurance Company for the services at issue in this matter.

Signed this 24^th day of April, 2002.

.

RENEE M. RUSCH
Administrative Law Judge
STATE OFFICE OF ADMINISTRATIVE HEARINGS

1. The ALJ counted EOBs from six carriers in the certified record (Pet. Ex. 5 at 52-61), but the significance of each apparent EOB was not self-evident on each document’s face, and the Center offered no testimony identifying or explaining the EOBs. As the ALJ does not conclude that the EOBs resolve the issue of what constitutes fair and reasonable compensation, she has adopted the MRD’s count for purposes of consistency.↑
2. In 2001 the Legislature amended Section 413.011 so that Section 413.011(b) became Section 413.011(d), but the text remained unchanged. The amendments to the Act went into effect on June 17, 2001, but a claim based on a compensable injury that occurred before June 17, 2001, is governed by the law in effect on the date the compensable injury occurred. In this Decision and Order, references will be to the statute as it read before the amendments, unless otherwise indicated. Act of May 25, 2001, 77^th Leg. R.S., ch. 1456, § 6.02 (codified as amendments and new sections in chapters 401, 403, 408 – 413, 501, and 505 of the Tex. Labor Code).↑
3. Section 8.21(b) was codified in Section 413.011(b) of the Act.↑
4. The Commission’s Acute Care Inpatient Hospital Fee Guideline effective August 1, 1997, provides for reimbursement on a per diem basis for all services that occur on a particular day. There are three per diem rates: the medical per diem, which is the lowest rate; the surgical per diem, which includes operating room care and equipment, including anesthesiology equipment, recovery room care and equipment, x-rays, lab, supplies, meals, and floor care; and Intensive Care Unit per diem, which is the highest reimbursement rate and covers the most specialized care, including one-on-one or one-on-two nursing care. (28 TEX. ADMIN. CODE§ 134.401; Shank Testimony.)↑
5. Ms. Shank appears to have significant experience in this area. She has been a nurse for more than 20 years. In the 1990s, she worked as a nurse auditor for the Industrial Accident Board, the precursor of the Commission, and in the early 1990s, she became involved in the development of the Medical Fee Guideline and the Hospital Fee Guideline. For approximately five years, beginning in 1991, she was the director of the Commission’s MRD. Since 1996, she has been a consultant and expert witness. She performs utilization reviews for providers, does presentations and training, has written a workbook for the Texas Medical Association, and has performed work for the State Office of Risk Management and various legislative committees responsible for research and oversight of workers’ compensation matters.↑
6. According to Ms. Shank, these codes were developed by the American Medical Association, and some change each year. The new CPT Codes for lumbar facet injections are 64475 and 64476. Medicare uses the new CPT Codes. However, under the 1996 Medical Fee Guidelines, Texas Workers’ Compensation providers use the older codes.↑
7. The exhibits the Carrier provided in support of this figure indicate that this rate was effective October 1, 2001. The Carrier did not introduce evidence that this rate was effective in July 2001, when the Center provided the services at issue. The Center did not challenge the relevance of the October 1, 2001, rates, however. Moreover, in her testimony, Ms. Shank indicated that the rates are updated from time to time and suggested that the rates tend to increase rather than decrease. The Carrier also introduced evidence that, had these procedures been performed as an outpatient service at a hospital, the Medicare reimbursement rate for the facility charges associated with each procedure would have been $272.85.↑
8. Amended Section 413.011 provides: (a) The commission shall use health care reimbursement policies and guidelines that reflect the standardized reimbursement structures found in other health care delivery systems with minimal modifications to those reimbursement methodologies as necessary to meet occupational injury requirements. To achieve standardization, the Commission shall adopt the most current reimbursement methodologies, models, and values or weights used by the federal Health Care Financing Administration. . . . (b) In determining the appropriate fees, the commission shall also develop conversion factors or other payment adjustment factors taking into account economic indicators in health care and the requirements of Subsection (d). The commission shall also provide for reasonable fees for the evaluation and management of care as required by Section 408.025(c) and commission rules. This section does not adopt the Medicare fee schedule, and the commission shall not adopt conversion factors or other payment adjustment factors based solely on those factors as developed by the federal Health Care Financing Administration.↑
9. The ALJ was somewhat surprised by Ms. Leonard’s testimony in this regard, as the Carrier determined that the amount of time Patient spent in the operating room was between 30 and 60 minutes, and Dr. Tiongson’s operative reports stated Patient spent approximately 45 minutes in the recovery room. (Pet. Ex. 5 at 23 and 30.) Presumably, Ms. Leonard, as the Center employee in charge of collections and accounts receivable, understands what its records mean. The ALJ infers, therefore, that Dr. Tiongson’s statement that Patient spent approximately 45 minutes in the recovery room was a rough approximation and probably an over-estimate.↑
10. See, SOAH Docket No. 453-01-1179.M4, in which ALJ Katherine Smith rejected use of other carriers’ EOBs as evidence that statutory standards had been met.↑