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At a Glance:
Title:
453-01-2091-m4
Date:
April 12, 2002
Status:
Medical Fees

453-01-2091-m4

April 12, 2002

DECISION AND ORDER

Transcontinental Insurance Company (Carrier) appealed the Findings and Decision of the Medical Review Division (MRD) of the Texas Worker’s Compensation Commission (Commission) denying its request for a refund from Vita Healthcare (Provider). Provider, an ambulatory surgical center (ASC), provided surgical services to Claimant____ for a procedure that did not require inpatient hospitalization.

Provider billed Carrier $7,801.70 for the ASC care. Consistent with the Commission’s rules, Carrier paid Provider 50 % of the amount charged and requested an audit.[1] The audit, performed by Austin & Associates, determined that the fair and reasonable amount of reimbursement was $900.[2] Carrier asked the Provider twice to refund the overpaid amount.[3] Provider refused. Carrier appealed. MRD found that the Carrier did not prove it was entitled to a refund because it failed to "supply written documentation to establish that a refund is due, and that payment made to Respondent [the Provider] was above a fair and reasonable charge for a similar procedure in a similar surgical setting."[4] Carrier appealed this decision. The issue here is, what is a fair and reasonable reimbursement for ASC services provided the Claimant?

The Administrative Law Judge (ALJ) finds that $900 is a fair and reasonable reimbursement for the ASC care provided to the Claimant. Therefore, the Carrier is entitled to a refund of $3,000.85 from the Provider.

I. JURISDICTION AND NOTICE

There are no contested issues of jurisdiction or notice. Therefore, the ALJ addresses those matters in the findings of fact and conclusions of law.

II. PROCEDURAL HISTORY

On January 9, 2002, ALJ Catherine C. Egan convened the hearing. James Loughlin, attorney, represented Carrier. Eric Carter, attorney, appeared telephonically and represented the Provider. Jacqueline Harrison, staff attorney, represented the Commission. Ms. Harrison requested that the record remain open until January 15, 2002, to file briefs regarding the admissibility of Carrier’s expert testimony. No one filed a brief on this issue. However, on January 25, 2002, Carrier filed a copy of the decision styled Clinic for Special Surgery vs. Texas Workers’ Compensation Commission and Texas Workers Compensation Insurance Fund, SOAH Docket Nos. 453-01-1179.M4, 453-01-1262.M4; and 453-01-1263M4 decided January 23, 2002, and asked that it be considered by the ALJ. Carrier explained "the issues addressed in this decision are directly relevant to the issues in the instant case." The ALJ agreed and reopened the record for consideration of this decision. The record was closed on January 25, 2002.

III. BACKGROUND

The Claimant sustained a work-related injury, the compensability of which is not in dispute. The treating physician treated the Claimant at the Provider’s facility. Reimbursement of the treating physician’s services is not in dispute. The Provider billed Carrier $7,801.70 for ASC services provided on June 29, 2000, associated with the exploration of the Claimant’s left index finger and the removal of neuroma.[5] The surgery lasted about sixty minutes, and after a few minutes of recovery time the Claimant left.[6] Carrier requested an audit and in compliance with the Commission rules paid the Provider $3,900.85 (50 % of the bill). According to the audit prepared by Austin & Associates, a fair and reasonable reimbursement is $900 using the reimbursement methodology based on the per diem rates from the Commission inpatient fee guideline. Carrier requested a refund from the Provider of $3,000.85. The Provider refused to pay this amount.

Carrier has the burden of proof in this matter because Carrier is the party seeking relief. 28 Tex. Admin. Code (TAC) § 148.21 (h). The disputed issues are, what is a fair and reasonable reimbursement for the ASC services provided to the Claimant and is the Carrier entitled to a refund of $3,000.85?

IV. FAIR AND REASONABLE REIMBURSEMENT

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).

Currently, the Commission does not have a guideline mandating a fixed amount for ASC charges for outpatient procedures. When reimbursements for services are not identified in an established fee guideline, the services must be reimbursed at fair and reasonable rates as described in Section 413.011(b) of the Act until the Commission establishes guidelines.

Commission Rule 28 TAC § 133.1(a)(8) states that:

8) Fair and reasonable reimbursement--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.

Because the Commission has not established a maximum allowable reimbursement in this case, 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 TAC §133.304(i)(1).

B. The Carrier’s Position

While the Commission has not set a maximum allowable reimbursement amount for ASC care, it has determined the fair and reasonable reimbursement for services similar to those in dispute but provided in an inpatient hospital setting. Therefore, the Commission’s Acute Care Inpatient Hospital Fee Guideline (ACIHFG), argues Carrier, should be used as guide to assess what a fair and reasonable reimbursement is in an ASC setting. Austin & Associates used the ACIHFG per diem reimbursement rates for similar services provided for nonsurgical inpatient care ($870) and for surgical inpatient care ($1,118) to reached its conclusion that $900 is a fair and reasonable reimbursement for the ASC services provided the Claimant.

Julie Shank, a former employee of the Commission who participated in developing and implementing the medical fee guideline and the hospital fee guideline and was the Director of MRD from 1991 to 1996, is currently self-employed as a consultant. Ms. Shank explained that the criteria set out in Section 413.011[7] of the Act was used to draft both the medical fee guideline and the hospital fee guideline, including the ACIHFG. These criteria included quality of care and effective medical cost control. The guidelines could not pay more than the fee charged for similar treatment of an injured person with an equivalent standard of living, according to Ms. Shank. Consequently, the Commission looked at managed care and Medicare to determine the appropriate rate to charge for the services. Based on this information, the Commission set the maximum recovery for an inpatient hospitalization on a surgical admission at $1,118 per day.

Ms. Shank explained that in an inpatient hospital setting, the fee covers the nursing services, dietary services, housekeeping, the operating room, equipment and supplies, intensive care, emergency room care, and other expenses associated with a hospital. According to Ms. Shank, an ASC is a free standing clinic providing services for those surgeries that do not need to be performed in an "inpatient" setting, and as such should be less expensive than inpatient hospital care. Facility services at an ASC include the operating and recovery room, the use of medical equipment and supplies, and nursing services. Ms. Shank testified that if the doctor had performed the same procedure provided to the Claimant in an "inpatient" hospital setting, the maximum reimbursement would be $1,118, for a stay greater than 23 hours.

Ms. Shank opined that because Medicare is an "equivalent standard" which was used in assessing the appropriate fees to set for the medical fee guideline and the hospital fee guideline, considering what Medicare has determined is appropriate to determine a fair and reasonable reimbursement for an ASC. Medicare has set the reimbursement for ASC care based on the different categories of medical services being provided. The maximum recovery by Medicare for services provided in an ASC is $949.[8]

Ms. Shank also looked into the fees allowed for ASC care by equivalent worker’s compensation commissions in other states for the same services. The other states considered by Ms. Shank charged less than $900 for ASC services. However, only a few states have systems comparable to the Texas fee guideline system. Ms. Shank concluded by stating in her expert opinion $900 is a fair and reasonable reimbursement for the services provided under the criteria of Section of 413.011 of the Act.

Under cross-examination, Ms. Shank testified that she is not familiar with what other insurance carriers are paying for these services in the same geographical area.

The position of the Provider and the Commission

Neither the Provider nor the Commission presented evidence other than the MRD decision.

ALJ’s Analysis

As discussed in Clinic for Special Surgery vs. Texas Workers’ Compensation Commission and Texas Workers Compensation Insurance Fund, when the Commission has not established a fee guideline, reimbursement for services must 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."[9]

The maximum reimbursement rate for "inpatient hospitalization" for the same or similar services is $1,118 a day. This rate covers all the services provided by an ASC-the operating room, recovery room, equipment, medications, supplies, and nursing services. To permit an ASC to charge substantially more (originally seven times more) than a hospital providing inpatient care for at least 23 hours is unwarranted.

Beyond consideration of the inpatient hospital fee guideline, Carrier also considered data developed by the Health Care Financial Administration (HCFA) to set Medicare payments. The ALJ agrees with the conclusion reached in Clinic for Special Surgery vs. Texas Workers’ Compensation Commission and Texas Workers Compensation Insurance Fund that "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."

Carrier 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. In addition, Carrier provided ample evidence that a longer inpatient hospital stay would have resulted in a maximum payment of $1,118.

Based on this evidence, Carrier met its burden of proof and established that a fair and reasonable reimbursement for the services provided to the Claimant by the Provider on June 29, 2000, is $900. Therefore, the Carrier is entitled to a refund of $3,000.85 from the Provider.

V. FINDINGS OF FACT

  1. On _________, Claimant _________ suffered a compensable injury and was employed at the time by an employer carrying workers’ compensation insurance underwritten by the Transcontinental Insurance Company (Carrier).
  2. Claimant underwent the surgical exploration of her left index finger and the removal of neuroma by her doctor on June 29, 2000, at Vista Healthcare (Provider), an ambulatory surgical center (ASC).
  3. Reimbursement of the treating doctor’s services is not in dispute in this matter.
  4. The Provider requested reimbursement of $7,801.70 for its services.
  5. Carrier paid 50 % of the amount billed by the Provider ($3,900.85), and requested an audit in compliance with the Commission rules.
  6. Carrier hired Austin & Associates to conduct the audit of the services provided by the Provider.
  7. Following the audit, Austin & Associates determined that the fair and reasonable reimbursement for the ASC services provided Claimant by the Provider is $900.
  8. Based on the audit, Carrier requested a refund of $3,000.85 from the Provider, which the Provider refused to pay.
  9. Carrier submitted a request for dispute-resolution and on January 10, 2001, MRD issued its Findings and Decision denying Carrier’s request for a refund from the Provider.
  10. Carrier requested a hearing on February 21, 2001, and the Commission issued its Notice of Hearing on February 26, 2001.
  11. If the same procedure 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 the operating room, the medical equipment and supplies, the nursing service, and the recovery room, was $1,118 under the Commission’s Acute Care Inpatient Hospital Fee Guideline.
  12. The use of data developed by the Health Care Financing Administration to set Medicare 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.
  13. Medicare payments are an appropriate benchmark to use in evaluating the fairness and reasonableness of payments to the Provider because Medicare patients have an equivalent standard of living to Texas workers’ compensation patients.
  14. The maximum amount that Medicare reimburses for facility charges involving similar treatment is $949.
  15. Carrier’s reimbursement methodology, which reimburses at a rate of $900 is consistent with the Medicare payment amount for similar services provided.
  16. Carrier’s determination that $900 is the proper amount to reimburse the Provider for the ASC services provided the Claimant is a fair and reasonable reimbursement rate.

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. (the Act) § 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 Section 413.031(d) of the Act 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. 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. Section 401.011(19) and (31) of the Act.

  1. Carrier had the burden of proving by a preponderance of the evidence that it was entitled to a refund from the Provider. 28 Tex. Admin. Code (TAC) § 148.21(h).
  2. The Commission rules provide 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) [now Section 413.001], until such time that specific guidelines are established by the Commission. 28 TAC § 134.1(f).
  3. Section 413.011 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.
  4. Based on the Finding of Facts and Conclusions of Law, the Carrier met its burden of proof that the fair and reasonable charges for the services provided by the Provider to the Claimant was $900. Section 413.011(b) of the Act.
  5. Carrier developed and applied a payment methodology consistent with 28 TAC §133.304(i)(1) to decide fair and reasonable amount for services.
  6. Based on Findings of Fact and Conclusions of Law, the payment of $900 is a fair and reasonable reimbursement for the services provided to the Claimant at the Provider’s facilities.

ORDER

IT IS, THEREFORE, ORDERED that the appeal of Transcontinental Insurance Company requesting a refund of $3,000.85 from Vista HealthCare Inc. for the services provided the Claimant is GRANTED.

Signed this 12th day of April, 2002.

.

CATHERINE C. EGAN
Administrative Law Judge
STATE OFFICE OF ADMINISTRATIVE HEARINGS

  1. Section 408.027(b) of the Tex.Lab. Code Ann. provides:
  2. (b) If an insurance carrier disputes the amount charged by a health care provider and requests an audit of the services rendered, the insurance carrier shall pay 50 percent of the amount charged by the health care provider not later than the 45th day after the date the insurance carrier receives the statement of charge.

  3. Exh. 1 at 34.
  4. Exh. 1 at 8.
  5. Exh. 1 at 3.
  6. Exh. 1 at 14.
  7. Exh. 1 at 8.
  8. 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 ubtitle. (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. (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.
  9. Exh. 8.
  10. Section 413.011(b) of the Act.
End of Document
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