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At a Glance:
Title:
453-01-2727-m4
Date:
March 29, 2002
Status:
Medical Fees

453-01-2727-m4

March 29, 2002

DECISION AND ORDER

This case involves a medical fee dispute over whether Liberty Mutual Fire Insurance Company (Liberty Mutual or the carrier) should pay Susan Linder, M.D. $116.00 an hour rather than $100.00 an hour for chronic pain management treatments administered to claimant, _____. Liberty Mutual has paid part of the bill; the remaining amount in controversy is $848.00. This decision addresses the threshold legal issue of whether Liberty Mutual’s use of payment reduction code F-Reduction According to Medical Fee Guidelines, was proper and complied with the Texas Labor Code requirement that a carrier provide sufficient reason for reducing a provider’s reimbursement.

The Administrative Law Judge (ALJ) finds that Liberty Mutual did not meet its burden of proving code F was the proper payment code for the double reduction it made to Dr. Linder’s hourly rate. The ALJ divided the hearing on the merits for this case into two phases with the threshold legal issue presented in Phase I. Because the decision in Phase I disposes of the entire case, the ALJ concludes the proceeding and orders Liberty Mutual to reimburse Dr. Linder an additional $848.00.

Factual Background and Procedural History

The claimant sustained a compensable injury on__________, and entered Dr. Linder’s chronic pain management treatment program in 2000. Dr. Linder treated the claimant on June 26, 27, 28, 29, 30, and July 3, 2000, and billed Liberty Mutual for 53 hours of treatment at $145.00 an hour. Liberty Mutual reduced Dr. Linder’s hourly charge for the treatments from $145.00 to $100.00, citing payment reduction code F-Reduction According to Medical Fee Guidelines, to explain the reduction on its explanation of benefits form. Dr. Linder filed a request for medical dispute resolution on February 26, 2001, and sought reimbursement at 80% of her hourly billed amount or $116.00 per hour under the applicable medical fee guideline for interdisciplinary programs. The difference between the amount reimbursed ($5,300.00) and the amount sought ($6,148.00) is $848.00.

On March 22, 2001, the Medical Review Division (MRD) ordered the additional reimbursement on the basis that CPT Code 97799-CP has no exact maximum allowable reimbursement and the carrier’s use of payment reduction code F to explain the reduction was, therefore, incorrect. Liberty Mutual appealed the MRD decision on April 3, 2001, and the case was referred to the State Office of Administrative Hearings for contested case hearing.

At the hearing convened December 5, 2001, attorneys for Liberty Mutual, Dr. Linder, and the Texas Workers’ Compensation Commission (Commission)[1] explained that this case involved a threshold legal issue concerning the proper payment reduction code, and a second issue concerning whether the hourly rate Liberty Mutual has set for pain management services constitutes fair and reasonable reimbursement. The parties jointly moved the Administrative Law Judge (ALJ) to divide the case into two phases and address the following threshold legal issue in Phase I:

Whether Liberty Mutual’s use of code F-Reduction According to Medical Fee Guidelines, was proper and sufficiently explained the carrier’s reason for reducing reimbursement for a service that has no assigned maximum allowable reimbursement under the Medical Fee Guideline.

If code F was appropriate, did Liberty Mutual waive its opportunity to raise a new reason for the reduction at the SOAH proceeding when it did not raise the reason at the MRD level?

The record closed at the conclusion of the Phase I briefing schedule on January 26, 2002. Because the ALJ’s decision in this hearing phase resolves the case, the parties will not proceed to Phase II to try the issue of whether Liberty Mutual has set a fair and reasonable reimbursement rate for chronic pain management treatments.

REASONS FOR DECISION

Liberty Mutual’s Position

When Liberty Mutual processed Dr. Linder’s bill, it reduced her $145.00 hourly rate to $125.00, the rate it considers fair and reasonable for chronic pain management treatments, then applied a 20% reduction mandated by the Medical Fee Guideline. Liberty Mutual maintained that code F adequately explained the fair and reasonable rate reduction because the Medical Fee Guideline requires carriers to reimburse providers at a fair and reasonable rate for services not assigned a maximum reimbursement value in the Guideline. Because the CPT code at issueC97799-CPCis a Description of Procedure or DOP code and has no maximum allowable reimbursement or MAR, Liberty Mutual explained that it, therefore, reimbursed Dr. Linder at the $125.00 rate, then reduced the $125.00 rate by 20% to $100.00 because Dr. Linder’s chronic pain management program is not certified by the Commission on Accreditation of Rehabilitation Facilities (CARF).[2] The parties do not dispute the CARF reduction.

To support its position, Liberty Mutual relied on Section 413.011 of the Texas Labor Code, Commission Rule 134.1[3], and Section VI of Medical Fee Guideline’s General Instructions governing reimbursement. The ALJ discusses the carrier’s reliance on these authorities in further detail in her analysis. Liberty Mutual also asserted that it properly determined and applied its fair and reasonable rate for chronic pain management services to Dr. Linder’s bill because Commission policy has long required carriers to provide uniform reimbursement for the same service as now articulated in revised Rule 133.304, adopted July 15, 2000. Liberty Mutual reasoned that because the statute, rules, and fee guideline require it to uniformly pay providers and to set a fair and reasonable rate for services billed under Description of Procedure code, code F was appropriate to indicate the bill was reduced according to the Guideline.

Dr. Linder and the Commission’s Position

In Dr. Linder and the Commission’s (Respondents’) view, the bill should have been reimbursed under payment reduction code M at $116.00 per hour, which is 20% below Dr. Linder’s $145.00 hourly rate. To support their position, Dr. Linder referred to the July 2000 instructions for the TWCC-62, which designates code F for use when a bill is reduced to the applicable maximum allowable reimbursement. The Respondents asserted that Liberty Mutual should have used code M, which applies to a reduction for a service with no maximum allowable reimbursement. A reasonable provider would not, Respondents argued, interpret denial code F as encompassing a reduction to a fair and reasonable rate preset by a carrier, and Liberty Mutual should have set forth a sufficient reason for the reduction as required by Section 408.027 of the Labor Code and Commission Rule 133.304.[4]

Respondents further contended that Liberty Mutual failed to raise at the MRD level any issue about the fairness and reasonableness of the $125.00 rate it has set for chronic pain management reimbursements. Therefore, in Respondents’ view, Liberty Mutual has waived any issue of fair and reasonable reimbursement and the scope of this proceeding should be limited to the issue before the MRD.

Analysis

The ALJ agrees with Dr. Linder’s position and upholds the MRD decision. Liberty Mutual reduced reimbursement for Dr. Linder’s chronic pain management services two times Conce to the carrier’s fair and reasonable rate and once for the lack of CARF accreditation. The ALJ finds that payment reduction code F did not adequately explain both of those reductions as required by Section 408.027(d) of the Labor Code.

Section 408.027(d) requires a carrier who disputes reimbursement to 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 for health care services provided to an employee. Using code F to identify the reason for Liberty Mutual’s reductions only reasonably alerted Dr. Linder to one of those reductions. Because the Guideline’s Medicine Ground Rules mandate a 20% reduction for non-CARF accredited programs, Dr. Linder would logically have concluded that code F referred only to that 20% reduction.

Although Liberty Mutual contended that it is required under Commission Rule 134.1(f) to set a fair and reasonable reimbursement rate for chronic pain management services, the ALJ finds the Respondents’ position more tenable. While Rule 134.1(f) does provide that [r]eimbursement for services not identified in an established fee guideline shall be reimbursed at fair and reasonable rates...until specific fee guidelines are established, the ALJ notes that Rule 134.1(a) also provides that [t]he ground rules and the medical service standards and limitations as established by the fee guidelines shall be used to properly calculate the payments due to the health care providers. The Guideline expressly designates chronic pain management programs as services billed under CPT Code 97799-CP based on the Guideline’s general instruction for Documentation of Procedure.[5] A procedure must be documented when the services provided are not specifically listed or are unusual or too variable to have an assigned MAR, andthe required documentation may vary based on its complexity. The ALJ agrees with the Respondents that the definition of Documentation of Procedure allows for variable valuations of services based on the written documentation provided with a particular bill, and code F does not sufficiently explain the reason for reducing a DOP bill.

The ALJ acknowledges Liberty Mutual’s argument that the general instruction for Reimbursement under Section VI of the Guideline states that CPT codes for which no reimbursement amount is listed shall be reimbursed at the fair and reasonable rate. However, Section III of the same general instructions requires a carrier to determine reimbursement for a Description of Procedure by the written documentation attached to or included in the bill. Because the value of a service with no set maximum allowable reimbursement may vary, applying a rate predetermined to be fair and reasonable and coding it as a reduction mandated by the fee guideline requires the provider to engage in guesswork about the reason for the reduction. For that reason, the ALJ found unpersuasive Liberty Mutual’s argument that Dr. Linder could logically have concluded the additional reduction was based on the $125.00 rate it had predetermined to be fair and reasonable for all chronic pain management services regardless of documentation.

Liberty Mutual also argued that Section 413.011(b)[6] of the Labor Code requires a carrier to provide uniform reimbursement for similar services. Section 413.011(b) states that:

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 [a representative].

The ALJ agrees with the Respondents that this section was intended to prohibit the Commission from establishing excessive reimbursement rates and does not require absolute uniformity of all reimbursement amounts, especially where documentation of the procedure is required for valuation.

Although Liberty Mutual insisted that longstanding Commission policy requires uniformity of carriers’ payments, the ALJ found unpersuasive Liberty Mutual’s reference to revised Commission Rule 133.304 as an enunciation of that policy. The Commission revised and adopted Rule 133.304 on July 15, 2000, ten days after the claimant’s last treatment. Both parties agree that the revised rule does not apply to this case, but they found it instructive on the threshold issue for different reasons.

To support its uniform payment argument, Liberty Mutual referred to revised Rule 133.304(i), which now requires insurance carriers to 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 where no maximum allowable reimbursement is set. But the ALJ notes that if the revised rule is an expression of preexisting Commission policy as Liberty Mutual asserts, Rule 133.304(i) also requires the carrier to explain and document the method used to calculate the rate of pay, which Liberty Mutual did not do in this case.

Respondents point out that subsection (c) of the revised rule also provides in that the explanation of benefits shall include the correct payment codes required by the Commission’s instructions and shall provide sufficient explanation to allow the provider to understand the reasons for the carrier’s actions. The TWCC-62 code instructions revised in July 2000 designate code F for use when the carrier is reducing payment from the billed amount in accordance with the appropriate Commission fee guideline and expressly states that code F is not to be used for charges with no established maximum allowable reimbursement. Rather, code M applied when the carrier reduces payment for a service with no set a maximum allowable reimbursement. Respondents argued that these revised instructions were well-known to the carriers before they became effective.

Because the parties referred to the revised rule for propositions favorable to their respective positions, the ALJ considered those arguments, but wondered whether the TWCC-62 code designations existed in a similar form at the time Dr. Linder billed the claimant’s treatments. The parties did not provide the pre-July 2000 TWCC-62 instructions, but the ALJ examined the version of Rule 133.304 in effect when this dispute arose. Under the rule at that time, a carrier’s use of code F was limited to reductions in payment for an explicitly stated fee guideline or negotiated contract amount. The rule further defined and limited explicitly stated fee guideline amounts to: (1) the product of the appropriate conversion factor and a specific relative value unit or set fee amount, as described in '134.201 of this title (relating to Medical Fee Guideline) including the application of the Medical Fee Guideline ground rules...[7]

Because payment exception code F could be used under the former version of the rule only for explicitly stated fee guideline amounts, and the only explicitly stated fee guideline amount was the 20% reduction for non-CARF accredited chronic pain management programs under the Medicine Ground Rules, Liberty Mutual could not use code F to explain its initial reduction to the amount it determined to be fair and reasonable for chronic pain management services. The ALJ, therefore, concludes, in addition to the reasons discussed above, that using code F in this case did not adequately explain the reasons for Liberty Mutual’s double reduction of Dr. Linder’s hourly rate.

Conclusion

Liberty Mutual failed to carry its burden of proof and the ALJ finds the additional reimbursement appropriate. Because the ALJ has upheld the MRD decision, she need not decide whether Liberty Mutual waived its opportunity to raise a new reason for the reduction in this proceeding.

Findings of Fact[8]

  1. The claimant, _____, suffered a compensable injury on _________
  2. The claimant’s treating physician referred her to a chronic pain management program operated by the Respondent, Susan Linder, M.D.
  3. Dr. Linder’s chronic pain management program provides coordinated, goal oriented, interdisciplinary team services to reduce pain, improve functioning and decrease the dependence on the health care system of patients with chronic pain.
  4. Dr. Linder’s chronic pain management program is not accredited by the Commission on Accreditation of Rehabilitation Facilities (CARF).
  5. Dr. Linder treated the claimant on June 26, 27, 28, 29 and 30, and July 3, 2000, for a total of 53 hours.
  6. Dr. Linder billed Liberty Mutual Fire Insurance Company (Liberty Mutual) for 53 hours of chronic pain management treatments under CPT code 97799-CP at $145.00 per hour and included documentation of the procedure with her bill.
  7. Liberty Mutual reduced Dr. Linder’s $145.00 hourly rate to $125.00, the amount Liberty Mutual predetermined to be fair and reasonable reimbursement for this service, then reduced the $125.00 rate by 20% to $100.00 per hour because the doctor’s chronic pain management program is not CARF-accredited.
  8. Liberty Mutual reimbursed Dr. Linder at $100.00 per hour for 53 hours or a total of $5,300.00, and denied the amount exceeding that figure under code F, defined by the explanation of benefits as a Reduction According to Medical Fee Guideline.
  9. Dr. Linder requested reconsideration and Liberty Mutual again denied the amount in excess of the $100.00 hourly rate based on code F.
  10. Dr. Linder’s chronic pain management treatments have no Maximum Allowable Reimbursement (MAR) under the Medical Fee Guideline and are billed under CPT code 97799-CP at the value of the service determined by the documentation of the procedure accompanying the bill.
  11. Instead of evaluating Dr. Linder’s services based on the documentation attached to the bill, Liberty Mutual assigned a predetermined fair and reasonable value to the services in the amount of $125.00 per hour and explained that evaluation by using code F on its explanation of benefits.
  12. Dr. Linder filed a Request for Medical Dispute Resolution with the Texas Workers’ Compensation Commission (the Commission) on April 3, 2001, seeking additional reimbursement of $848.00, which Commission’s Medical Review Division (MRD) granted on March 22, 2001.
  13. Liberty Mutual timely requested a hearing before the State Office of Administrative Hearings (SOAH).
  14. Notice of the hearing was sent November 21, 2001.
  15. The notice contained a statement of the time, place, and nature of the hearing; a statement of the legal authority and jurisdiction under which the hearing was to be held; a reference to the particular sections of the statutes and rules involved; and a short, plain statement of the matters asserted.
  16. Phase I of the hearing was held December 5, 2001, with Administrative Law Judge Deborah L. Ingraham presiding and representatives of Liberty Mutual, Dr. Linder, and the Commission participating. The record closed January 26, 2002.

Conclusions of Law

  1. The Commission has jurisdiction over this matter pursuant to Section 413.031 of the Texas Workers' Compensation Act (the Act). Tex. Lab. Code Ann. ch. 401 et seq.
  2. SOAH has jurisdiction over this proceeding, including the authority to issue a decision and order, pursuant to Tex. Lab. Code Ann. §413.031(d) and Tex. Gov’t Code Ann. ch. 2003.
  3. Adequate and timely notice of the hearing was provided in accordance with Tex. Gov’t Code Ann. §2001.052.
  4. The Petitioner, Liberty Mutual, had the burden of proof in this matter. 28 Tex. Admin. Code §148.21(h).
  5. Pursuant to Findings of Fact Nos. 3-11, payment reduction code F did not adequately explain payment reductions for both a fair and reasonable rate and the lack of CARF accreditation as required by Tex. Lab. Code Ann. § 408.027(d).
  6. Liberty Mutual did not meet its burden of proving code F adequately explained that it reduced Dr. Linder’s reimbursement request according to the Medical Fee Guideline.
  7. Dr. Linder is entitled to additional reimbursement in the amount of $848.00.

ORDER

IT IS, THEREFORE, ORDERED that Susan Linder, M.D.’s request for additional reimbursement in the amount of $848.00 from Liberty Mutual Fire Insurance Company for chronic pain management treatments rendered from June 26 through July 3, 2000, is GRANTED.

FURTHER ORDERED that within 60 days of the date of this Order, Liberty Mutual submit to Dr. Linder and the Commission an amended Explanation of Benefits form reflecting the correct codes for its reductions.

Issued this 29th of March, 2002.

Deborah L. Ingraham
Administrative Law Judge
STATE OFFICE OF ADMINISTRATIVE HEARINGS

  1. Dr. Linder and the Commission were aligned in this case. The ALJ occasionally refers to them as one party when it serves the purpose of the discussion.
  2. Dr. Linder’s program is not CARF accredited and is thus subject to a 20% fee reduction under Medicine Ground Rule II (C). Medicine Ground Rule II (C) controls single and interdisciplinary programs. For non-CARF accredited interdisciplinary programs like chronic pain management programs, the ground rule dictates reimbursement at 20% below the usual and customary reimbursement.
  3. 28 Tex. Admin. Code § 134.1.
  4. 28 Tex. Admin. Code 133.304.
  5. The Guideline's General Instructions for DOP states as follows:
  6. III. Documentation of Procedure

    1. Documentation of procedure (DOP) in the maximum allowable reimbursement (MAR) column indicates that the value of this service shall be determined by the written documentation attached to or included in the bill. DOP is used when the services provided are not specifically listed or are unusual or too variable to have an assigned MAR. The required documentation may vary based on the complexity of the procedure...
  7. Now Tex. Lab. Code § 413.011(d).
  8. 28 Tex. Admin. Code 133.304 (c)(1)(2000).
  9. The parties stipulated to the facts in Findings of Fact Nos. 1, 2, 4, 5, and 6.
End of Document
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