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At a Glance:
Title:
453-01-1179-m4
Date:
January 23, 2002
Status:
Medical Fees

453-01-1179-m4

January 23, 2002

DECISION AND ORDER

This consolidated proceeding involves the appeal by the Clinic for Special Surgery (the Clinic or Petitioner) from the Findings and Decision of the Medical Review Division (MRD) of the Texas Worker’s Compensation Commission (Commission). The Clinic is an ambulatory surgical center (ASC) in Fort Worth, Texas, that provides surgical services to patients for procedures not requiring in-patient hospitalization. The MRD declined to order additional payment in the three cases, and the Petitioner appealed those decisions. The issue in this case involves the question of what constitutes fair and reasonable reimbursement for facility charges.

This decision finds that Petitioner failed to carry its burden of proving it is entitled to any additional reimbursement.

I. JURISDICTION AND NOTICE

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

II. PROCEDURAL HISTORY

A hearing in Docket No. 453-01-1179.M4 was convened on May 16, 2001, in Austin, Texas. Petitioner was represented by Norman Darwin, an attorney. The Commission was represented by Tim Riley, a staff attorney with the Hearings Division. The Texas Workers’ Compensation Insurance Fund (the Fund) was represented by Tom Hudson, an attorney. Administrative Law Judge (ALJ) Katherine L. Smith presided.

On May 18, 2001, Petitioner filed a Joint Motion for Consolidation of Docket Nos. 453‑01‑1179.M4, 453-01-1262.M4, and 453-01-1263.M4. Evidentiary hearings were scheduled in Docket Nos. 453-01-1262.M4 and 453-01-1263.M4 for May 23, 2001, at 9:00 a.m. and 1:30 p.m., respectively. ALJ Smith granted the motion on May 22, 2001, and the evidentiary hearing for the consolidated docket was reconvened on May 23, 2001. The hearing was completed that day.

Closing briefs were filed by August 20, 2001. The ALJ reopened the record to allow Petitioner and the Commission to respond by October 25, 2001, to amicus briefs filed by ACE USA, Textron Inc., Continental Casualty Company, and the Texas Association of School Boards Risk Management Fund. An amicus brief was also filed by Eastside Surgery Center, Inc., on November 14, 2001. The record closed on January 14, 2002, with the filing of a set of Petitioner’s exhibits.

In a motion filed with its brief, the Fund requested that judicial notice be taken of nine recent MRD decisions. The ALJ chooses not to take judicial notice of those decisions in this proceeding.

III. BACKGROUND

In each of these cases, the claimant sustained a work-related injury. The compensability of those injuries are not in dispute. Daniel K. Boatright, D.O, treated the claimants at the Clinic. Dr. Boatright performed fluoroscopically-guided lumbar epidural steroid injections (ESIs). Reimbursement of Dr. Boatright’s services is not an issue. The Clinic billed the Fund separately for its services.

In each case the MRD denied additional reimbursement because the Clinic failed to submit EOB[1] documentation from other insurance carriers to support its billing as fair and reasonable. The disputed issue is whether the Clinic is entitled to additional reimbursement for the procedures provided each claimant. The Clinic bears the burden of proving by a preponderance of the evidence that it is entitled to additional reimbursement. 28 Tex. Admin. Code (TAC) § 148.21(h). Specific information on the individual claimants and dockets is discussed below.

453-01-1179.M4 (MRD Tracking No. M4-01-0165.01

Claimant __________ was injured on_________. The Clinic rendered services to _______on October 13, 1999, and requested reimbursement of $2,311.67. The Fund paid $397.80 for the services. The Clinic sought reimbursement of an additional $1,913.87, and submitted a request for dispute-resolution on November 1, 1999. The MRD issued its Findings and Decision on November 1, 2000, denying additional reimbursement. The Petitioner requested a hearing on November 13, 2000, and the Commission issued its Notice of Hearing on December 6, 2000.

453-01-1262.M4 (MRD Tracking No. M4-00-0491.01

Claimant ________was injured on________. The Clinic rendered services to _____on July 7, 1999, and July 28, 1999, and requested reimbursement of $3,547.67 for July 7 and $2,260.49 for July 28. The Fund paid $425.00 for the services of July 7 and $397.20 for the services of July 28, for a total of $822.80. The Clinic sought reimbursement of an additional $4,985.36[2] and submitted a request for dispute-resolution on November 1, 1999. The MRD issued its Findings and Decision on November 9, 2000, denying additional reimbursement. The Petitioner requested a hearing on November 20, 2000, and the Commission issued its Notice of Hearing on December 18, 2000.

453-01-1263.M4 (MRD Tracking No. M4-00-0490-01

Claimant ________was injured on________. The Clinic rendered services to _____on July 21, 1999, and requested reimbursement of $2,015.67. The Fund paid $397.80 for the services. The Clinic sought reimbursement of an additional $1,617.87, and submitted a request for dispute-resolution on November 1, 1999. The MRD issued its Findings and Decision on November 10, 2000, denying additional reimbursement. The Petitioner requested a hearing on November 20, 2000, and the Commission issued its Notice of Hearing on December 18, 2000.

IV. FAIR AND REASONABLE REIMBURSEMENT

The rate of reimbursement for ASCs is in dispute because the Commission does not currently have a guideline mandating a fixed amount for ASC charges for outpatient procedures. The services are to be reimbursed at a fair and reasonable rate.

A. Applicable Statutes and Rules

Workers' compensation insurance covers all medically necessary health care, which includes all reasonable medical aid, examinations, treatments, diagnoses, evaluations, and services reasonably required by the nature of the compensable injury and reasonably intended to cure or relieve the effects naturally resulting from a compensable injury. It includes procedures designed to promote recovery or to enhance the injured worker's ability to get or keep employment. Tex. Lab. Code Ann. (the Act) §401.011(19) and (31).

Section 413.011,Guidelines and Medical Policies, of the Act, provides that:

(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;
  2. use of medical services by employees who suffer compensable injuries; and
  3. fees charged or paid for providing expert testimony relating to an issue arising under this subtitle.

(b) 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.[3] (Emphasis added).

(d) The commission by rule shall establish medical policies relating to necessary treatments for injuries. Medical policies shall be designed to ensure the quality of medical care and to achieve effective medical cost control.

Rule 28 TAC § 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 that:

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),[4] until such time that specific guidelines are established by the commission.

Fair and reasonable is defined in Commission Rule 28 TAC § 133.1(a)(8) 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.

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 in these cases, the carrier must “(1) 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 TAC § 133.304(i)(1). Finally, 28 TAC § 133.305(e)(1)(F) provides:

(e) All requests for medical dispute resolution shall be made on the form and in the manner prescribed by the Commission.

(1) All requests shall be legible and include:

(F) if the dispute involves treatment(s) and/or service(s) for which the Commission has not established a maximum allowable reimbursement, documentation that discusses, demonstrates, and justifies that the payment amount being sought is a fair and reasonable rate of reimbursement in accordance with § 133.1(relating to Definitions for Chapter 133, Benefits-Medical Benefits).

B. The Clinic’s Position

The Clinic notes that it lost before the MRD only because it failed to document its charges with EOBs verifying that other carriers had paid similar charges, and not because the MRD found the Fund’s method of payment to be determinative. The Clinic contends that it provided a sufficient number of EOBs at the hearing to establish that its charges were “fair and reasonable.” Clinic Ex. 6. Relying on an April 23, 2001, letter written by the Commission’s Acting Director Virginia May, the Clinic asserts it is the Commission’s policy that EOBs showing the payments of other carriers establish the standard of “”fair and reasonable.” Ms. May wrote:

Rule 133.305(e)(1)(F) requires “. . . documentation that discusses, demonstrates, and justifies that the payment amount being sought is a fair and reasonable rate of reimbursement. . . ;” ambulatory surgical care falls within this category. Providing Explanation of Benefits (EOB) in which you have been reimbursed by other insurance carriers for similar treatments as those in dispute, is a basis to show that the fees you charged for ambulatory surgical care are fair and reasonable. This has been and continues to be the case; there has been no change to our rules or process regarding this.

Clinic Ex. 9. The Clinic argues that § 413.043(a)[5] of the Act, which makes it a criminal offense for a health care provider to charge a carrier more than what it normally charges for similar treatment, buttresses this standard of fair and reasonable.

The Clinic argues further that although the Commission has been able to satisfy the mandate of the fair and reasonable standard by creating fee guidelines for some providers, its failure to create guidelines for providers such as ASCs indicates that the Commission could not comply with the statutory mandate by formalizing a “one size fits all” approach. The Clinic asserts that the unique nature of the services ASCs provide is incompatible with a fee guideline and requires a method of determining fair and reasonable charges on a case-by-case basis. Among those providers recognized by 28 TAC § 134.401 as being excepted from established fee guidelines are smaller hospitals, psychiatric and/or rehabilitative inpatient hospitals, and emergency room services that do not lead to inpatient admission.

Pointing to the EOBs it provided, the Clinic notes that from January 1, 1998, to December 21, 2000, other carriers reimbursed between 67 and 100% of the amounts billed, including other Texas workers’ compensation carriers. Payments of between 77 and 81% of the amounts billed were from HMOs and PPOs to the Clinic as an out of plan provider; payments of 88% of the amounts billed were from other state workers’ compensation systems; and payments of 100% of the amounts billed were from the Federal Department of Labor. Clinic Ex. 6; 1 Tr. at 96-104.

The Clinic notes that the treating doctor, not the Clinic, dictates the level of services and supplies required by the procedure. The treating doctor determines whether an anesthesiologist, heart monitor, or fluoroscope[6] are required. 1 Tr. at 256. With a “one size fits all” pricing structure, the Clinic is put in the position of determining whether it can afford to make such equipment available. The Clinic points out that although Fund witness Dr. Robert Joyner questioned the need for a fluoroscope in these cases, he could not deny that many anesthesiologists use a fluoroscope for more precise placement of the needle. The Clinic does not have the prerogative to overrule the judgment of the treating doctor.

The Clinic also points to the testimony of Dr. Linden Dillin, the Clinic’s owner, that the Texas Department of Health imposes certain requirements on the Clinic that are not imposed on doctors’ offices. The clinic’s operating room must have a special air conditioning system that has at least 15 air changes per hour, for an example. Prudent medical practices also require that trained technicians be available in the pre-op and post-op rooms, as well as in the operating room. 1 Tr. at 56-57, 64-66.

The Clinic points out that after one takes out the cost of supplies, which Fund witness Rick Ball testified totaled $313.97, $83.83 remains to compensate the Clinic for construction and maintenance costs, insurance, taxes, utilities, equipment, technical and administrative staff, and profit. 2 Tr. at 32. This pricing would require the Clinic to shift the cost of workers’ compensation patients to other types of carriers. The Clinic argues that the Medicare program already shifts costs, which is one of the reasons that the legislature and the Commission have not adopted a payment system based on Medicare fee schedules.

The Clinic argues that because no guidelines have been established for ASCs, section 413.011(b) is not relevant to policies establishing payments for ASCs. In contrast, section 413.011(d), which refers to medical polices the Commission establishes, makes no reference to an “equivalent standard of living” being required. Even if the phrase “effective medical cost control” incorporates the concept of “equivalent standard of living,” it cannot be strained to the point of justifying that only Medicare guidelines can be used to pay ASCs.

C. The Funds’s Response

The Fund contends the Clinic failed to meet its burden of proof that its charges are fair and reasonable, based on the criteria of § 413.011(b).[7] More specifically, the Fund notes that the Clinic failed to show that its methodology will achieve effective medical cost control and failed to present evidence of amounts paid on behalf of managed cares patients of ASCs or on behalf of other non-workers’ compensation patients with an equivalent standard of living. The Fund argues that it is not enough to show what other ASCs have been paid by other carriers. Paying based on such evidence fails to achieve effective cost control because the provider may increase his compensation at any time, as Dr. Dillin admitted. 1 Tr. at 149-50, 153. As further evidence, the Fund notes that the Clinic increased its charge for fluoroscopy by 53% from $750 to $1,150 over a three month period. 1 Tr. at 119-121. The Fund asserts that the Clinic is relying on the percentage of billed charges payment method, which has been routinely rejected by the Commission.

The Fund points out that the statutory standards of §413.011(b) were interpreted and applied in the 1992 and 1997 hospital fee guidelines (HFGs).[8] When the Commission implemented the HFGs, it rejected percentage of billed charges reimbursement, such as the “hospital facility ratio,” which paid 85% to 100% of billed charges, because it did not provide adequate medical cost control. 3 Tr. at 8; Fund Ex. 4 at 21-23. The Commission also rejected a “discount from billed charges” approach, the Fund argues, because “it leaves the ultimate reimbursement in the control of the hospital.” 22 Tex. Reg. at 6276. Instead, the Commission adopted per diem payments whereby a hospital is paid a fixed sum for each day a workers’ compensation patient is in the hospital. Id. at 6267-69; Fund Ex. 4 at 24.

The Fund also asserts that the criterion “amounts paid for persons of an equivalent standard of living,” sets a ceiling. Workers’ compensation payments may not exceed amounts charged for similar services and paid on behalf of persons with a standard of living equivalent to that of injured workers. To implement this criterion, the Commission examined amounts paid and accepted for persons outside of the workers’ compensation system. The Commission found that Medicare and managed care patients have equivalent standards of living to Texas workers’ compensation patients. Id. at 6270‑72. Consequently, to set the HFG per diem payments, the Commission used payments made by both Medicare and managed care plans. Id. at 6270.

In response to the argument that EOBs are “highly probative” evidence of fair and reasonable rates because of the legal presumption that all carrier payments are based on methodologies that comply with the statutory standards for fair and reasonable payments, the Fund counters that its payments are just as probative. 3 Tr. at 22-25; Fund Ex. 11. The Fund also asserts that it is not alone in paying a small part of the Clinic’s bills. Clinic Ex. 5 at 1. Instead of being probative, the EOBs show that many carriers are actually paying a percentage of billed charges as evidenced by the uniformity with which their payments equal 85, 90, or 100% of billed charges. The Fund notes that Clinic Ex. 5 shows more payments at 85% of billed charges than any other percentage, which is understandable because 85% was the minimum amount of billed charges payable to hospitals under the previous facility ratio adopted by the former Industrial Accident Board. In the absence of a fee guideline, many carriers pay 85% of billed charges because 15% was the largest discount they could take under the old formula. 2 Tr. 74-75. Pointing to the testimony of Ms. Julie Shank, a consultant, the Fund notes that many carriers pay a percentage of billed charges in the absence of a fee guideline for reasons of administrative convenience. Fund Ex. 4 at 40. According to Ms. Shank, one carrier even believes it must pay 100% of billed charges if there is no fee guideline. Id. at 42.

The Fund sserts that many carriers operate in multiple states and are not knowledgeable about the statutory standards in Texas for fair and reasonable payments. Fund Ex. 3 at 37-38. They offer many different lines of insurance and use standardized medical bill processing systems, all of which are based on “usual and customary standards. “Usual and customary” charges are not the same as “fair and reasonable” charges in Texas, but many carriers do not recognize the difference. Id. at 48-49.

Although the HFG does not apply to ASCs, the Fund asserts that it is appropriate to look to the HFG to compare the Clinic’s charges with the payments a hospital would receive for providing the same services. Any procedure done in an ASC can be done in a hospital in a day or less. 1 Tr. at 172. For a one-day surgical stay, a hospital collects $1,118. 2 Tr. at 8. In one of the cases at issue, the patient was in the operating room (OR) for about 20 minutes and in the recovery room for 35 to 40 minutes. 3 Tr. at 33. The Clinic normally bills $26.50 a minute for OR time and $7 a minute for recovery room time. 1 Tr. at 81; Clinic Ex. 2. In this case, the billed time would come to $775 for a hour of facility usage. In response to the argument that the comparison to the hospital per diem is not appropriate because hospitals can lose money on the first day of a stay that they recoup in subsequent days of the stay, the Fund argues that this does not mean every surgical procedure results in a loss for hospitals on the first day. The Fund argues that an ESI is a relatively simple procedure frequently done in doctors’ offices. 1 Tr. at 223-24. Dr. Joyner, the Fund’s witness, charges $250 for all of his services. 1 Tr. at 198. The ASC he uses charges $400 to $450 for an ESI. 1 Tr. at 235.

The Fund also points to instances in which the Commission used the 1997 HFG per diems to approve the Fund’s per diem payments to small, rural hospitals, even though they are exempt from the 1997 HFG. 2 Tr. at 57. The MARs[9] in the Medical Fee Guideline (MFG) have also been used to price hospital out-patient services such as physical therapy and radiology. Fund Ex. 5 at 55-56. And even though the Commission once stated that outpatient services and MRI/CAT scans should not be reimbursed at the MFG rates, since then, MFG rates have been used to price MRI/CAT scans. 22 Tex. Reg. at 6286; 2 Tr. at 57-60.

In this case, the Clinic charged $1,150 for fluoroscopy. The Commission’s MAR for the technical component of fluoroscopy is $88. 1 Tr. at 122-124. The technical component covers charges for “personnel; materials, including ionic contrast media and drugs; film or xerograph; space; equipment; and other facility resources.” 1996 MFG, Radiology Ground Rules I.A.4. Although Dr. Dillin believes the use of a mobile fluoroscope warrants the higher charge, Fund witness Mr. Ball testified that the Commission’s MAR would pay the same regardless of the type of unit used. 2 Tr. at 60-63. Dr. Joyner found the Clinic’s charge to be “ludicrous” and testified that the ASC he uses charges $249 for use of the same unit. 1 Tr. at 207-08, 197. The Fund also points out that at a charge of $1,150 per use, the $150,000 fluoroscope would be paid for in only 130 uses. 1 Tr. at 47. In 2000, 267 ESIs were performed at the Clinic, thus the machine would be paid for in less than a year. 1 Tr. at 132, 134; Clinic Ex. 5.

In further support of its position, the Fund points out that the Clinic charges three times the list price for most drugs and supplies, even though Dr. Dillin admits that the Clinic is generally entitled to 7% plus 10% of the inventory’s actual cost for the cost of ordering, stocking, and carrying the inventory. 1 Tr. at 78, 81. The Commission’s pharmacy fee guideline sets the maximum allowable mark-up at 38% for generic drugs and 9% for brand name drugs. 2 Tr. at 18. Although the per diem payment covers most drugs in a hospital, the Commission allows a charge equal to cost plus a 10% mark-up for expensive drugs. 2 Tr. at 16-17. Even though Fund witness Dr. Joyner buys sterile gloves for $0.50 a pair, the Clinic charges $8.76 for the gloves. The Clinic charged $437 for supplies and drugs used in the lead case,[10] while Dr. Joyner charges only $130 for supplies and drugs, and the ASC he uses incurs at the most $67. 1 Tr. at 196, 198-99. Although the Clinic claims that it has no choice but to give Dr. Boatright what he requests, the Fund argues that Dr. Boatright demanded nothing more than a customized “single shot epidural tray” for which the Clinic charges $44 and Dr. Joyner buys (also customized) for $9. Fund Ex. 7; 1 Tr. at 204. Moreover, according to Dr. Joyner, an ASC has a responsibility to confer with surgeons who create unnecessary costs. 1 Tr. at 242-43, 250-51.

D. The Fund’s Request that its Methodology be Approved

The Fund asserts that reimbursement to ASCs is one of the largest remaining loop holes of the medical fee reimbursement system, which is growing because surgeries are increasingly being done on an outpatient basis. Fund Ex. 5 at 56; Fund Ex. 4 at 47-48. The Fund asserts that in the absence of a fee guideline, it has developed and applied a payment method consistent with 28 TAC § 133.304(i) that is fair and reasonable in contrast to the Clinic’s charges of $2,300-3,500. In the interest of judicial economy the Fund requests that the ALJ decide whether the Fund’s ASC payment methodology results in a fair and reasonable fee in accordance with § 413.011(b).

Using CPT code 62289, which is billed by surgeons for the ESI procedure, the Fund determined the group the code fell into under the Medicare pricing rules for ASCs. 3 Tr. at 18. Medicare divides the CPT codes for all surgical procedures performed in ASCs into eight groups based on resource consumption. 3 Tr. at 10, 44-45. CPT code 62289 and 62282[11] fall into Medicare ASC Group 1, the least intensive resource group. 3 Tr. at 18. Medicare’s base payment for Group 1 was $314, of which Medicare pays only 80%, with the patient being responsible for 20%. Unlike Medicare, Texas workers’ compensation patients have no co-pay responsibility, which means that worker’s compensation payments are compensated at 100%. 3 Tr. 13‑14, 18, 105. In 1994 the Health Care Financing Administration (HCFA), the monitoring agency for Medicare, determined for each CPT code the median amount charged by providers. 3 Tr. at 19; TWCC Ex. 2 at 88. Taking the median charge of $419 as a representative amount of billed charges and adding 20% of $419 to $314, the Fund derived a total payment of $397.80. 3 Tr. at 20. The Fund argues that its use of the data developed by HCFA, which is used to set Medicare payments to ASCs, is appropriate for several reasons: HCFA developed specific dollar payments rather than use a percentage of billed charges approach; it treats ASCs separately from hospitals; its pricing is based on national cost data collected from ASCs every five years; its statutory obligation is to develop a “fair” fee that takes into account the voluntary nature of the Medicare system; and HCFA data and pricing is in the public domain.

In response to the argument that each ASC’s bill must be considered on a case-by-case basis, precluding application of the Fund’s payment methodology, the Fund argues that 28 TAC § 133.304(i) requires the Fund to develop and apply a consistent payment methodology. Moreover, a systematic approach is required in order to treat all providers equally and to handle the volume of billings. 3 Tr. at 81-82. Individual deviations are permitted when warranted, but they have to be explained and documented. And unlike the HFG guideline, which pays $1,118 per day for all surgical admissions, the Fund’s methodology divides the range of ASC surgeries into eight groups, which pays a different amount depending on the complexity of the procedure.

The Fund points to the ALJ’s decision in East Side for support. In that case, the ASC sought $2,213.70 for an injection of steroids in the elbow. The Fund paid $860, which the ALJ found to be fair and reasonable. The ALJ held thatthe $312 Medicare ratesupports the Carrier’s position that payment of $860 was more than adequate under the Act because the Medicare rate was intended to ensure access to quality medical care, achieve effective medical cost control, and not be in excess of the amount that would be paid for similar treatment of non-workers’ compensation patients of an equivalent standard of living.

Dkt. No. 453-97-1351.M4 at 12.

The Fund argues that its payment satisfies the statutory standards. Quality of care is ensured because the vast majority of providers are willing to accept its payments and no providers have ceased to accept patients insured by the Fund as a result of the adoption of the ASC payment methodology. Fund Ex. 3 at 45. Of the 8,300 claims paid using the current methodology, only 132 are disputed. Of the 470 providers submitting the 8,300 claims, only seven are challenging the payment. 3 Tr. at 22-24. The lack of reaction from providers reflects that Medicare payments are widely accepted and represent the middle of today’s health care pricing regimen. Fund Ex. 5 at 53. Cost control is achieved because providers cannot affect their own compensation by merely increasing their charges, and the methodology meets the criterion of amounts paid for persons of an equivalent standard of living. Even though the statute requires that payment not be in excess of the fee charged for treatment of an individual of an equivalent standard of living, the Fund’s payment is higher than the amount Medicare paid ASCs for an ESI in 1999, and is more than twice the combined payments of Medicare and the patient today. The total compensation under Medicare is now $176.49. 3 Tr. at 15-16, 69. In addition, the Fund’s payment is consistent with the payments of many managed care plans, which pay either near the Medicare rate or slightly less. Fund Ex. 5 at 49.

To provide support for its payment amount, the Fund did a survey of other states to see how ASCs are paid. Looking to other states that have adopted specific dollar payments for ASCs, Ms. Shank found six states,[12] whose payments range from $280 in Florida to $494 in Rhode Island and averaged $408. Five of those set the specific dollar payments for ASCs using the Medicare system as the basis for their payment. Fund Ex. 4 at 34-36.

The soundness of the Fund’s payment methodology was tested by actuarial expert Milliman & Robertson. The firm examined the differences between the Fund’s methodology and Medicare, the effect of inflation on the data the Fund used, and the potential differences in the types of procedures done for workers’ compensation patients and Medicare patients. It concluded that the methodology was sound and produced fair and reasonable payment. 3 Tr. at 97-128; Fund Ex 13. In response to the Clinic’s complaint that the Fund’s method has no indexing feature to protect against inflation, the Fund responded that this is true of every Commission fee guideline.

E. The Clinic’s Response

The Clinic complains that the Fund’s methodology is flawed in its use of the Commission’s inpatient hospital fee guideline because the facilities that are excluded by 28 TAC § 134.401(1)(a), such as ASCs, are small, provide services that are incapable of being anticipated, and provide personalized services requiring that consideration be given to the EOB method of payment.

The Clinic argues that none of the income factors pertaining to in-patient hospitals apply to ASCs. The Clinic’s surgery facilities are used only when physicians schedule procedures, which is usually three days a week. 1 Tr. at 134. By limiting their facilities to those procedures that do not require an overnight stay or other diagnostic services, ASCs derive income only from the limited types of surgeries performed. The Clinic provides pre-op, surgical, and post-op facilities. The Clinic also provides supplies required by the procedures performed and administrative back-up. In contrast, hospitals, which have operating rooms, plus radiology, pathology, pharmaceuticals, and general laboratory facilities that must be available 24 hours per day, are able to generate income for the facility 24 hours per day every day of the year. In addition, hospitals are compensated for each day that a patient remains in the hospital even though that patient may require little follow-up care.

The Clinic complains that the Fund’s methodology is also flawed because it is based on the Medicare fee schedule, which the Commission did not adopt in setting the HFG. 3 Tr. at 7. It points out that workers’ compensation payments in Texas are higher than Medicare payments. 3 Tr. at 64‑66. The Clinic argues that it is difficult to see how the standard of living of the Medicare population, which is defined as a population over 65, is different from any other group’s. The Clinic argues that a comparison of the standard of living of Rotarians, Baptists, or Dallasites to that of workers’ compensation patients would probably produce identical results. The Clinic complains that there is nothing distinctive about the standard of living of the Medicare population and that the only characteristic that separates the Medicare population from any other segment of society is that their medical bills are paid from a single source. The Clinic asserts that the Fund simply picked a population group whose medical payments are less than those made by EOBs and set its level of payment there, which is neither fair nor reasonable.

The Clinic charges that the Fund has no legal authority to create its own set of guidelines using the Medicare schedule. By imposing a mandated rate, the Fund is usurping the authority reserved for the Commission. Even though the Commission has the statutory authority to mandate fees through guidelines, the Clinic asserts, it has not chosen to do so for ASCs except through the EOB method of determining what is a fair and reasonable payment. The use of EOBs permits providers and carriers to negotiate their fees. When it can be shown that other carriers have accepted the reasonableness of a fee, that may be considered evidence that such fees are within acceptable limits.

The Clinic complains more specifically that no other state has adopted a Medicare based workers’ compensation payment plan for ASCs. Furthermore, the Fund’s methodology is flawed because it does not have an automatic indexing feature that would protect against inflation and “other factors.” 3 Tr. at 121-122.

F. The Commission’s Position

Although the MRD found that the Clinic did not establish it was entitled to additional reimbursement in the three cases at issue, the Commission’s position in this proceeding is that fair and reasonable reimbursement is to be determined on a case-by-case basis. In support of the Clinic’s position, the Commission argues that EOB payments are presumptive evidence of fair and reasonable rates because carriers have a duty to review bills and are subject to sanctions if they do not. Tex. Labor Code § 413.016.[13] The Commission argues that § 413.011 is not the only method available for establishing fair and reasonable, that its use is not mandated by the Commission, and that it is not the sole factor in determining fair and reasonable. A health care provider must be able to establish what it believes to be fair and reasonable using documentation and methods commonly available to it. The Commission contends that even though the legislature directed the Commission to establish fees that do not provide for payment in excess of the fee charged and paid for by an individual of an equivalent standard of living or by someone acting on that individual’s behalf, absolute compliance with this statutory standard may not always be possible and could adversely affect access to quality of care. 22 Tex. Reg. at 6290. The Commission argues that the mandate to follow § 413.011 is only directed to the Commission when establishing fee guidelines, and is not directed to health care providers. The Commission contends that it would be onerous for a health care provider to have to establish that an individual charge is not in excess of the fee charged and paid for similar treatment by an injured individual of an equivalent standard of living or by someone acting on that individual’s behalf.

The Commission asserts that the 1997 HFG used Medicare rates only because the Commission opted for a “per diem” reimbursement scheme. Medicare rates were relevant because

Texas acute care hospitals . . . received 33.3% of their gross patient revenue from third party payors and 40% from Medicare. Because these sources account for the vast majority of hospital patient revenue, the reimbursements paid by these payors is relevant to determine what fees are paid for similar treatment of persons of an equivalent standard of living, for establishing fair and reasonable fees, and for establishing fees at which hospitals will continue to provide quality health care while the Commission still achieves cost control. Voluntary participation in managed care contracts and in Medicare shows that reimbursement received from those payors are sufficient to cover the hospitals’ costs.

22 Tex. Reg.at 6268. The preamble also stated that

managed care contracts with hospitals were determined to be the best indication of a market price voluntarily negotiated for hospital services. The development of fee guidelines which comply with statutory mandates requires the careful analysis of available data and reimbursement options for the services to be covered by the guideline. The same methodology may not be appropriate for every guideline.

Id. at 6272-73.

The Commission argues further that it specifically warned against the use of the 1997 HFG for other types of services because the data was insufficient to support the assumption that the rates would be the same. According to the preamble,

the Commission disagrees that outpatient services should be included in this Acute Care Inpatient Hospital Fee Guideline. . . . The Commission does not at this time have sufficient data to set reimbursements regarding outpatient services provided in a hospital setting and as a result, cannot at this time confirm or dispute the contention that the costs of outpatient services are indeed different when provided in a hospital.

Id. at 6286. And even though looking to hospital fees may seem logical, the Commission notes the preamble warns that the 1997 HFG does not apply to other facility services because the “guideline was developed to regulate only acute care inpatient stays, and the research performed only pertained to acute care inpatient hospital stays.” Id. at 6287. To ensure access to quality health care, outpatient services would be reimbursed at fair and reasonable rates until a future outpatient fee guideline is established. Id. at 6279.

The Commission argues that the “per diem” reimbursement does not produce fair and reasonable payment in all cases because it is designed on the concept that “acute inpatient care” will necessarily exceed a one-day admission. High initial costs will be recouped by multiple per diem payments. “[T]he per diem rates . . . balance any more costly services the first day with any less costly services during the additional days of the length of stay for patients.” Id. at 6300. The Commission argues that such balancing is not available to the Clinic because of its single day admissions.

The Commission complains that the Fund’s methodology, which is based on the CPT Code billed, does not take into account individual differences in the manner in which the services were performed or the facility where they were performed. The Commission also argues that in the absence of a fee guideline, a carrier cannot set “one-size fits all” rate. It asserts that the services must be analyzed “case-by-case” when determining payment when the standard is fair and reasonable. In support, the Commission points out that it rejected the “service basis up front regardless of claim” method with respect to DOP[14] in new Commission Rule 133.304(i). According to the preamble to 28 TAC § 133.304, “Insurance carriers must determine the reimbursement for any treatment(s) and/or service(s) for which the Commission has not determined an MAR on a case-by-case basis, not a service basis up front regardless of claim.’ The variability of those treatment(s) and/or service(s) makes setting a standard reimbursement impossible; otherwise the Commission would have set an MAR for them.” 25 Tex. Reg. 2115, 2122 (March 10, 2000). The Commission also relies on the language of 28 TAC 134.401(c)(2)(C), which states, “Independent reimbursement is allowed on a case-by-case basis if the particular case exceeds the stop-loss threshold as described in paragraph (6) of this subsection or if the ICD-9 primary diagnosis code is listed in paragraph (5) of this subsection.”

The Commission also points out that the 1996 MFG did not rely on Medicare data. Preamble to the MFG, 1996, 21 Tex. Reg. 2361, 2362 (March 22, 1996).

G. ALJ’s Analysis

Section 413.011(a) 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) of Subchapter A--Medical Policies unambiguously requires the use of § 413.011(b) to establish a payment rate for services not identified in a fee guideline. 28 TAC § 134.1(f). A review of Chapter 134, which is titled Guidelines for Medical Services, Charges and Payments, shows that it is generally directed to health care providers. There is little support for the Commission’s position that § 413.011 does not embody the applicable standards or that those standards need not be applied. When there is no fee guideline, reimbursement for services must still be (1) “fair and reasonable,” (2) “designed to ensure the quality of medical care and to achieve effective medical cost control,” (3) must 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 reimbursement paid to the Clinic must be considered according to these criteria. Although the preambles to the MFG and HFG may urge caution about the use of the Medicare fee schedule, they do not trump the clear direction of 28 TAC §134.1(f) and § 413.011(b) of the Act. Furthermore, the Commission recognizes that the legislature intended § 413.011 “as a strong policy objective to which the Commission should apply its judgment and expertise when balancing all statutory standards and objectives.” 22 Tex. Reg. at 6290.

The Clinic’s attempt to rely on the letter written by Acting Director Virginia May is misguided. Although the authentication of the letter may not be in doubt, itsapplication as policy is. For one thing, there is no information about the type of process that led to its adoption to add permanence to the so-called policy. See 1 TAC § 155.53(b)(3). And as the letter states, providing EOBs is a basis to show fair and reasonable, not the basis. Finally, the Commission’s failure in this proceeding to add its weight to the Clinic’s reliance on such a policy is telling. See Commission’s Reply to Amicus Briefs. An unpublished policy of uncertain derivation cannot trump a rule that has been properly implemented according to statute. Brinkley v. Texas Lottery Comm’n, 986 S.W.2d 764, 770 (Tex. App.BAustin 1999, no pet.); Rodriguez v. Service Lloyds Ins. Co., 997 S.W.2d 248, 254 (Tex. 1999.)

The ALJ is also unconvinced by the Clinic’s and Commission’s arguments that the fear of prosecution and administrative penalties make EOBs presumptive evidence of what is fair and reasonable. A health care provider commits an offense only if he charges an amount greater than normally charged. Tex. Labor Code § 413.043(a). There is no indication that the Clinic or any other provider charged more than their usual and customary charges. TWCC Ex. 1 at 9. Moreover, Carriers have little to fear from paying 85 or 100% of the usual and customary charge in these cases when there is no fee guideline and the Commission is sending out mixed signals as to what constitutes fair and reasonable. See Tex. Labor Code § 413.016.

Although the Clinic argues that the Commission has not set a fee guideline for ASCs because the services provided are incapable of being anticipated, that is not the case in these proceedings. The argument was also made by both the Commission and the Clinic that ASCs provide unique services requiring a case-by-case review. In these proceedings, the ALJ saw no evidence of unique services. Although Dr. Boatright, the treating physician, did not testify, the ALJ reviewed his medical notes. The ALJ was surprised to see no medical notes in the certified record for the most expensive procedure of $3,547.67 for July 7, 1999. See TWCC Ex. 2. As for the medical records that do exist, the ALJ was struck with the uniformity of the three procedures. Entire paragraphs are identical. Further, a review of Dr. Boatright’s notes show little out of the ordinary. There appeared to be nothing unique about the procedures and nothing medically unique about these patients. Besides the patients’ anxieties, a fear of needles, or the need for a greater amount of sedation, no other medical problems, such as cardiovascular concerns, existed. The ALJ was influenced most by the testimony of Fund witness Dr. Joyner, who stated that he has performed 20,000 injections during his career, most of which he was able to perform in his office. 1 Tr. at 195. Based on Dr. Joyner’s testimony and the videotaped testimony of Dr. Nick Tsourmas showing an ESI procedure at the Pain Management Clinic in Austin, an ESI is a routine, simple procedure. 1 Tr. at 214; Fund Ex. 6-A.

Although the Clinic argues that it is not providing Cadillac service, and thus is not billing for Cadillac care, that is not the impression the testimony gives. For one thing, Dr. Dillin boasts of having state of the art, sophisticated equipment, including two fluoroscopic systems costing $150,000 each. 1 Tr. at 23, 47-50, 58. Charging $8.76 for a pair of sterile gloves, which Dr. Joyner buys for $0.50, also says otherwise. TWCC Ex. 1 at 41; 1 Tr. at 203. The ALJ was also struck by one inconsistency between Dr. Boatright’s notes and the bills submitted by the Clinic. In at least two cases, Dr. Boatright wrote that the patients were transported to the recovery room where they remained in the monitored setting for approximately 30 minutes, yet the Clinic billed for 60 minutes. TWCC Ex. 3 at 15, 24; TWCC Ex. 2 at 14, 24. Perhaps Dr. Boatright’s notes were incorrect, and the 30 minute reference was a rote entry. But if that is the case, then that that is further evidence he regarded the procedures as indistinguishable from each other.

The ALJ was also influenced by the comparison to the reimbursement rate for hospitals, which is $1,118.00 a day for a patient’s stay and treatment, including operating room, recovery room, medications, and supplies. The comparison was appropriate and informative. Although hospitals may have economies of scale that ASCs do not, the argument that the Clinic has fewer ways of making a profit is not persuasive. It makes no sense for the Clinic to be earning twice as much as a hospital does in one day for only one hour of service. ASCs’ obligations seem no more variable than do hospitals’. The services provided can easily be anticipated, thus enabling the ASCs to calculate appropriate billing.

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 TAC § 133.304(i)(1). Where the Commission fails to act, the carriers may be obliged to step in.

In these proceedings, the Fund has 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 is appropriate because paying a specific dollar amount rather than paying a percentage of billed charges ensures cost control and because 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.

Although the Clinic questioned the relevance of comparing the elderly Medicare population to the working population, Fund witness Dr. Ron Luke[15] noted that the concept of standard of living relates to consumption and not income. Studies have shown that because of government programs and other factors, the Medicare populations’ standard of living is either equivalent to or slightly above the nonelderly population. Fund Ex. 5 at 16, 23. The Clinic also suggested that Medicare rates were not relevant because greater care was due injured workers to return them to work. Dr. Luke testified, however, that the cost of a steroid injection is going to be the same, although the course of treatment might be different. “[N]othing about the goal of treatment would have any relevance to the price that was paid for a given unit of a given treatment.” Fund. Ex. 5 at 43-45.

The Fund 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. 3 Tr. at 8-9, 16-17, 46-49; Fund Ex. 3 at 34-36, 39, 44. The ALJ finds no basis in the record for the Clinic’s assertion that the legislature and the Commission have not adopted a payment system based on Medicare fee schedules because the Medicare program already shifts costs. Because the Commission’s fee guidelines generally pay 65% higher than Medicare rates, the ALJ was concerned that the Fund’s methodology will compensate at a lower rate than would a Commission guideline. There is evidence, however, that the Fund’s methodology now pays more than twice what Medicare does for the same service. 21 Tex. Reg. at 2362; 3 Tr. at 15-16. The fee that the Fund is willing to pay is certainly more in line with what the legislature anticipated than what the Clinic is charging and what other carriers may be paying.

The ALJ also found little evidence that reimbursement at $397 will affect access to quality health care. Dr. Joyner testified that when he needs the services of an ASC, the one he uses charges $400 to $450 for similar services. Id. at 235. When he performs the services in his office, he charges only $250. 1 Tr. at 198. The Fund provided additional evidence that other providers have been willing to accept the Fund’s payment. There was also evidence that Blue Cross of Texas pays less than 100% of Medicare. Fund Ex. 5 at 49. Therefore, there is no indication that adhering to the statute will adversely affect access to quality health care. Although the Clinic complains that the Fund’s methodology does not have an automatic indexing feature to account for inflation and other factors, the concern is not persuasive because the same can be said for the Commission’s guidelines

Health care providers like the Clinic, which do not have managed care contracts, may find it difficult to determine the fees charged for similar treatment of an injured individual of an equivalent standard of living. 1 Tr. at 97. It may be unfortunate that only the consumption habits of Medicare patients have been rigorously studied in contrast to Rotarians, Baptists, and Dallasites. Nevertheless, that difficulty does not excuse providers from attempting to meet the requirements of the statute. In this case there was clearly no evidence that the provider was interested in achieving effective medical cost control. To the question, “Isn’t the reason that ASCs exist is to provide a less costly place to do relatively minor surgeries than hospitals?” Dr. Dillin testified, “I don’t believe that that’s the reason for ASCs existing. I mean, I don’t see where that is stipulated. I have never seen that written as a governmental requirement in order to open up an ASC.” 1 Tr. at 178. The ALJ found Dr. Dillin’s equivocal answer to be disingenuous and counter-intuitive.

Both parties rely on the new revisions to § 413.011 of the Labor Code in support of their positions regarding the use of HCFA data in the workers’ compensation fee arena. The amended § 413.011(a) and (b) reads as follows:

(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.

Although the legislature made it clear in subsection (b) that it was not requiring verbatim adoption of the Medicare fee schedule, it clearly is not improper to consider HCFA data and models in developing fair and reasonable rates. The new statute gives greater weight to the Fund’s position in this proceeding.

Eastside Surgery Center raises the argument in its amicus brief that 28 TAC § 133.1(8) requires the carrier to reimburse the provider’s usual and customary charge when there is no MAR or negotiated contract. Although, by itself, the definition of “fair and reasonable” in the rule could be interpreted to mean “usual and customary” if there is no MAR or negotiated contract, such an interpretation would be contrary to § 413.011 of the Act and the Commission’s other rules. A rule must be read in harmony with the law by which it was authorized. State Board of Insurance v. Deffebach, 631 S.W.2d 794, 798 (Tex. Civ. App. - Austin1982, writ. ref’d n.r.e.). The more appropriate interpretation of the rule is that a carrier shall pay a usual and customary charge only if the factors set out in § 413.011 are also met. A usual and customary standard may be the same as a fair and reasonable one only if there is evidence that it 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.

Based on the foregoing evidence, the amounts reimbursed by the Fund were fair and reasonable reimbursement for the services provided to the patients by the Clinic on the dates of service. The Clinic failed to meet its burden of proving entitlement to additional reimbursement in this case.

V. FINDINGS OF FACT

  1. On, ________, _______suffered a compensable injury and was employed at the time by an employer carrying workers’ compensation insurance underwritten by the Texas Workers’ Compensation Insurance Fund (the Fund).
  2. Daniel K. Boatright, D.O. treated _____ with an epidural steroid injection on October 13, 1999, at the Clinic for Special Surgery (the Petitioner or the Clinic).
  3. The Clinic requested reimbursement of $2,311.67 for its services.
  4. The Fund paid $397.80 for the services.
  5. The Clinic sought additional reimbursement of $1,913.87 and submitted a request for dispute-resolution on November 1, 1999. The MRD issued its Findings and Decision on November 1, 2000, denying additional reimbursement.
  6. The Clinic requested a hearing on November 13, 2000, and the Commission issued its Notice of Hearing on December 6, 2000.
  7. On________, _________suffered a compensable injury and was employed at the time by an employer carrying workers’ compensation insurance underwritten by the Fund.
  8. Dr. Boatright treated _________ with epidural steroid injections on July 7 and July 28, 1999, at the Clinic.
  9. The Clinic requested reimbursement of $3,547.67 for July 7 and $2,260.49 for July 28 for its services.
  10. The Fund paid $425.00 for the services of July 7 and $397.20 for the services of July 28 for a total of $822.80.
  11. The Clinic sought additional reimbursement of $4,985.36 and submitted a request for dispute-resolution on November 1, 1999. The MRD issued its Findings and Decision on November 9, 2000, denying additional reimbursement.
  12. The Clinic requested a hearing on November 20, 2000, and the Commission issued its Notice of Hearing on December 18, 2000.
  13. On_________, _________ suffered a compensable injury and was employed at the time by an employer carrying workers’ compensation insurance underwritten by the Fund.
  14. Dr. Boatright treated _____ with an epidural steroid injection on July 21, 1999, at the Clinic.
  15. The Clinic requested reimbursement of $2,015.67 for its services.
  16. The Fund paid $397.80 for the services.
  17. The Clinic sought additional reimbursement of $1,617.87 and submitted a request for dispute-resolution on November 1, 1999. The MRD issued its Findings and Decision on November 10, 2000, denying additional reimbursement.
  18. The Petitioner requested a hearing on November 20, 2000, and the Commission issued its Notice of Hearing on December 18, 2000.
  19. Reimbursement of Dr. Boatright’s services is not an issue. The Clinic billed the Fund separately for its services.
  20. Showing what other ASCs have been paid by other carriers fails to achieve effective medical cost control and fails to present evidence of amounts paid on behalf of managed care patients of ASCs or on behalf of other non-workers’ compensation patients with an equivalent standard of living.
  21. The medical records of the three patients indicate nothing unique about the procedures performed by Dr. Boatright.
  22. An epidural steroid injection is a relatively simple procedure that can be performed in an office at a charge of $250.00.
  23. Another ambulatory surgical center charges as low as $400.00 to $450.00 for the same services.
  24. If the same procedure had been done 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 be $1,118.
  25. The use of data developed by the Health Care Financing Administration to set payments to ASCs is appropriate because paying a specific dollar amount rather than paying a percentage of billed charges ensures cost control and because the Commission has found that the Medicare population has an equivalent standard of living to that of Texas workers’ compensation patients.
  26. Medicare payments are an appropriate benchmark to use in evaluating the fairness and reasonableness of its payments to the Clinic because Medicare patients have an equivalent standard of living to Texas workers’ compensation patients.
  27. Medicare formerly reimbursed $314.00 and currently reimburses $176.49 for facility charges involving similar injections.
  28. The Fund’s reimbursement methodology, which reimburses at a rate of $397.80, pays more than twice the Medicare payment amount for similar services provided.
  29. The Fund’s reimbursement in the amounts of $397.80 and $425.00 were based on its conclusions that such payments are 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 (Vernon 1996).
  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 (Vernon 2000).
  3. Adequate and timely notice of the hearing was provided according to Tex. Gov't Code Ann.§§ 2001.051 & 2001.052 (Vernon 2000).
  4. Workers' compensation insurance covers all medically necessary health care, which includes all reasonable medical aid, examinations, treatments, diagnoses, evaluations, and services reasonably required by the nature of the compensable injury, and reasonably intended to cure or relieve the effects naturally resulting from a compensable injury. It includes procedures designed to promote recovery or to enhance the injured worker's ability to get or keep employment. Tex.Lab. Code Ann. § 401.011(19) and (31).
  5. The Clinic had the burden of proving by a preponderance of the evidence that it was entitled to additional reimbursement. 28 Tex. Admin. Code (TAC) §148.21(h).
  6. The Commission rules provide, “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), until such time that specific guidelines are established by the commission.” (Emphasis added.) 28 TAC § 134.1(f).
  7. Section 413.011 of the Guidelines and Medical Policies of the Act provides that:
    1. 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. (Emphasis added.)
  8. 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 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 TAC § 133.(8).
  9. Based on Finding of Fact No. 20 and Conclusions of Law Nos. 6-8, the Clinic failed to meet its burden of proof that its charges are fair and reasonable. Tex. Labor Code Ann. § 413.011(b).
  10. The Fund has developed and applied a payment methodology consistent with 28 TAC § 133.304(i)(1) to determine fair and reasonable amounts for services not subject to maximum allowable reimbursement.
  11. Based on Findings of Fact Nos. 21-29 and Conclusions of Law Nos. 6, 7, and 10, the payments provided by the Fund constituted a fair and reasonable reimbursement for the services provided at the Clinic’s facilities.

ORDER

IT IS, THEREFORE, ORDERED that the appeal of the Clinic for Special Surgery Center requesting additional reimbursement for the services provided is DENIED.

Signed this 23rd day of January, 2002.

.

KATHERINE L. SMITH
Administrative Law Judge
STATE OFFICE OF ADMINISTRATIVE HEARINGS

  1. Explanation of benefits or explanation of reimbursement.
  2. The MRD incorrectly referred to the amount in dispute as $3,985.36. This was apparently caused by an error in subtraction on Petitioner’s request for dispute resolution. TWCC Ex. 2 at 2, 6.
  3. In 2001 the legislature amended §413.011 so that § 413.011(b) will become § 413.011(d), but the text is unchanged. Reference will be made to the statute as it read prior to the amendment. Act of May 25, 2001, 77th Leg. R.S., ch. 1456, §6.02 (to be codified as amendments and new sections in chapters 401, 403, 408 - 413, 501, and 505 of the Tex. Labor Code).
  4. Section 8.21(b), which is now codified as§ 413.011(b) of the Act, provides that:
  5. All guidelines for medical services fees under this Act must be fair and reasonable and may not provide for payment of fees in excess of the fees charged for similar treatment of an injured individual of an equivalent standard of living when the fees for the treatment are paid by the injured individual or by someone acting on the injured individual's behalf. In establishing the fee guideline, the Commission shall consider the increased security of the payment afforded by the Act.

  6. (a) A health care provider commits an offense if the person knowingly charges an insurance carrier an amount greater than that normally charged for similar treatment to a payor outside the workers' compensation system, except for mandated or negotiated charges.
  7. A fluoroscope creates a real-time motion picture x-ray. It is used to guide the needle and to check the diffusion of the steroid injection. 1 Tr at 54, 117.
  8. 28 TAC § 133.134.1(f); East Side Surgery Center v. Texas Workers’ Comp. Comm’n and Texas Workers’Comp. Ins. Fund, SOAH Dkt. No. 453-97-1351.M4 (Slip. Op. at 9, October 2, 1998), (wherein the ALJ applied § 413.011(b) to similar facts involving payment to an ASC.)
  9. Preamble to the Acute Care Inpatient Hospital Fee Guideline, 22 Tex. Reg. 6264 (July 4, 1997).
  10. Maximum allowable reimbursement.
  11. The Fund calculated the figure by taking the total charges of $1,652.58 shown on Fund Ex. 7 and subtracting the charges for certain services (oximetryB$54.50, EKGB$10.54, and fluoroscopyB$1,150).
  12. The Clinic argues that 62282 is the more appropriate CPT code.
  13. Massachusetts, Florida, Nevada, Mississippi, Rhode Island, and Pennsylvania.
  14. (a) The division shall order a refund of charges paid to a health care provider in excess of those allowed by the medical policies or fee guidelines. The division shall also refer the health care provider alleged to have violated this subtitle to the division of compliance and practices.
  15. (b) If the division determines that an insurance carrier has paid medical charges that are inconsistent with the medical policies or fee guidelines adopted by the commission, the division shall refer the insurance carrier alleged to have violated this subtitle to the division of compliance and practices.

  16. DOP refers to documentation of procedure, which is used when the services provided are not specifically listed or are unusual or too variable to have an assigned MAR. MFG, 1996, General Instructions III.
  17. Dr. Luke is an economist who prepared the report titled “A Standard of Living Comparison Between the Working Population, the Medicare Population and the Managed Care Population, and the Managed Care Population” upon which the Commission relied in setting the 1997 HFG. Fund Ex. 5-A.
End of Document
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