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At a Glance:
Title:
453-02-0178-m4
Date:
June 25, 2003
Status:
Medical Fees

453-02-0178-m4

June 25, 2003

DECISION AND ORDER

I. Introduction

Oxymed, Inc. (Provider) has appealed the decision of the Texas Worker’s Compensation Commission (TWCC) Medical Review Division (MRD) denying its request for additional reimbursement of $1,657.45. The disputed bill was for certain durable medical equipment (a bone growth stimulator, or BGS) that it provided to _____ (Claimant). The Administrative Law Judge (ALJ) upholds the MRD decision and denies the Provider further reimbursement, because it failed to prove its usual and customary fee for the equipment met the Labor Code’s requirement that it also be fair and reasonable.

II. DISCUSSION

The Law

The amount of reimbursement to be paid is governed by section IX. C of the Ground Rules for Durable Medical Equipment in TWCC’s 1996 Medical Fee Guideline, which was adopted by reference in 28 Tex. Admin. Code § 134.201. It provides:

. . . Invoices shall be billed at the provider’s usual and customary rate. Reimbursement shall be an amount pre-negotiated between the provider and the carrier or if there is no pre-negotiated amount, the fair and reasonable rate. A fair and reasonable reimbursement shall be the same as the fees set for the “D” codes in the 1991 Medical Fee Guidelines. (Emphasis added.)

The Provider and Carrier had not pre-negotiated an amount to be paid for a BGS (classified under the ICD-9 code of 723.8), and there is no D code in the 1991 Medical Fee Guidelines for a BGS. Consequently, it must be determined what the Provider’s usual and customary rate was, and whether that or some lower amount was fair and reasonable.

Section 413.011 (d) of the Texas Labor Code, while not specifically applicable, sheds some light on what is meant by “fair and reasonable.” That statute sets the standard for medical services fee guidelines and provides:

Guidelines for medical servicesfees must be fair and reasonable and designed toensure 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 chargedfor 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.)

The Facts& Arguments

The Claimant sustained a work-related injury. Following a two-level cervical diskectomy and decompression surgery, her physician prescribed a BGS to increase her cervical fusion rates during the healing process. After the request for a BGS was preauthorized,[1] the Claimant obtained a BGS from the Provider, which then sent an invoice for $5,000 to the Carrier. However, the Carrier only reimbursed $3,342.55 to the Provider.

The Provider’s rate is just its usual and customary one, according to the Carrier - not a fair and reasonable rate. According to the Carrier, the Provider’s reliance on EOBs showing what other companies have paid for BGSs would not prove the fair and reasonable rate, because there is no proof those companies were efficiently utilizing health care.

The Carrier’s witness, Claims Analyst Deborah Bailey, testified about the consistent methodology the Carrier developed to determine a fair and reasonable rate for a BGS. She pointed out that TWCC has determined that Medicare rates are fair and reasonable payment for Medicare patients; that Medicare rates assure Medicare patients access to quality health care; and that Medicare patients are of a standard of living equivalent to workers’ compensation patients.[2] Therefore, beginning in July 1998, the Carrier based its reimbursement rate on the Medicare rate listed in the 1998 Region C DMEPOS Supplier Manual published by Palmetto Government Benefit Administrators for use by Medicare providers in Texas. There, the fair and reasonable reimbursement for code EO748 (Osteogenesis Stimulator-non-invasive spinal applications) for a new BGS in Texas was $3,342.55. Ms. Bailey testified that the Carrier had consistently reimbursed (141 times) at that rate for BGSs in 2000 and 2001.

Ms. Bailey explained further that the 1998 figure was used because it was difficult to access the most current information at the time; therefore, that figure was utilized by the Carrier at the time of this billing, early 2001. The Medicare rates in Texas for a new BGS in other years close in time to the billing year were as follows: 1999 - $3,342.55; 2000 - $3,342.55; and 2001 - $3,352.58.[3]

Because the Claimant’s first fusion was a failure, her physician prescribed, and received preauthorization for, a second BGS. Again, the Provider charged $5,000 for the BGS, and the Carrier reimbursed it $3,342.55 on October 15, 2001. For that claim, the Provider also disputed the reimbursement amount, but when MRD upheld the Carrier’s rate as fair and reasonable, the Provider did not appeal to SOAH.

The Provider, as the appellant, had the burden of proving that its usual and customary rate for the BGS was achieved by a fair and reasonable methodology, and that the Carrier’s methodology was flawed. The Provider’s evidence, which was documentary only, can be summarized as follows:

  • Ex. 1 - 7 EOBs indicating other carriers paid Provider approximately $5,000 for BGSs in 2001; and
  • Ex. 2 - 19 EOBs indicating other carriers paid Provider approximately $5,000 for BGSs in 2000 and 2001.

The Provider tendered no evidence explaining how it had arrived at its usual and customary charge of $5,000 for a BGS.

Analysis & Conclusion

There is no direct evidence of the Claimant’s standard of living, and the Carrier maintained that determining the rate by referring to generally available information for all workers and particularly to the fees set for Medicare reimbursements in Texas was fair and reasonable. It supported its view by relying on TWCC’s previously referenced statement in the preamble to other fee guideline rules that were adopted in 1997. Of course, that preamble did not relate to durable medical equipment, and, in fact, the Commission did not adopt the Medicare compensation rates across the board for acute-care-inpatient-hospital fees; it only noted that it was relevant to consider them.

The Provider’s evidence was that other carriers have routinely paid the Provider $5,000 for BGS. However, it provided absolutely no evidence explaining how it had calculated that rate and why it was fair and reasonable. As argued by the Carrier, there is no proof the other carriers who paid the $5,000 rate were efficiently utilizing health care.

While the evidence in this case is scanty, the ALJ finds the Carrier’s evidence is more meaningful within the context of the workers’ compensation laws. The Carrier proved by a preponderance of the evidence that its rate was fair and reasonable, because it was the same as Medicare charged for a BGS in Texas. Thus, it more clearly met the standard set out in the Labor Code of paying a fee not in excess of the fee charged for similar treatment of an injured individual of an equivalent standard of living.[4] The Provider has failed to carry its burden of showing that the fair and reasonable rate for a BGS was $5,000. For the reasons set out above, the ALJ concludes that the Provider’s appeal of the MRD order should be denied, and no additional reimbursement should be made by the Carrier.

III. FINDINGS of Fact

  1. ____ (Claimant) sustained a work-related neck injury on________, while her employer had worker’s compensation insurance carrier with Texas Mutual Insurance Company (Carrier).
  2. Following a two-level cervical diskectomy and decompression surgery, Claimant’s physician prescribed a bone growth stimulator (BGS) to increase her cervical fusion rates during the healing process.
  3. After the request for a BGS was preauthorized, the Claimant obtained a BGS from Oxymed, Incorporated (Provider), which sent an invoice for $5,000, its usual and customary rate for a BGS, to the Carrier in early 2001. However, the Carrier only reimbursed $3,342.55 to the Provider.
  4. The Provider filed a dispute with the Texas Worker’s Compensation Commission (TWCC) Medical Review Division (MRD), which found the Carrier’s rate was fair and reasonable and did not order further reimbursement to the Provider.
  5. The Provider timely appealed that decision to the State Office of Administrative Hearings (SOAH), and the parties received proper notice of the SOAH hearing.
  6. On May 1, 2003, Barbara C. Marquardt, Administrative Law Judge, convened the hearing on the 4th floor of the William P. Clements Building, 300 West Fifteenth Street, Austin, Texas. The Provider was represented by John V. Fundis, Attorney. Katie Kidd, Attorney, appeared and represented the Carrier. The record closed on the same day.
  7. In relation to a rulemaking for another fee guideline, TWCC has stated that Medicare rates are fair and reasonable payment for Medicare patients; that Medicare rates assure Medicare patients access to quality health care; and that Medicare patients are of a standard of living equivalent to workers’ compensation patients.
  8. Because of the factors listed in Finding 7, beginning in July 1998 the Carrier reimbursed $3,342.55 for BGSs, which is the Medicare rate for Texas listed in the 1998 Region C DMEPOS Supplier Manual published by Palmetto Government Benefit Administrators for use by Medicare providers in Texas. The Carrier consistently reimbursed (141 times) at that rate for BGSs in 2000 and 2001.
  9. The fair and reasonable charge for the BGS supplied by the Provider to____ was $3,342.55.

IV. CONCLUSIONS of Law

  1. The Texas Workers’ Compensation Commission (TWCC) has jurisdiction to decide the issue presented pursuant to the Texas Workers’ Compensation Act (the Act), Texas Labor Code Ann. § 413.031.
  2. The State Office of Administrative Hearings has jurisdiction over matters related to the hearing in this proceeding, including the authority to issue a decision and order, pursuant to the Act §413.031(d) and Texas Gov’t Code Ann. ch. 2003.
  3. Proper notice of hearing was provided pursuant to Texas Gov’t Code Ann. § 2001.052.
  4. The rate referenced in Finding 9 is fair and reasonable as required by section IX. C of the Durable Medical Equipment Ground Rules in the 1996 Medical Fee Guideline (adopted by reference in 28 TAC § 134.201), because it more clearly met the standard set out in
  5. § 413.011 (b) of the Act of paying a fee not in excess of the fee charged for similar treatment of an injured individual of an equivalent standard of living.
  6. Based on the above, the Provider is not entitled to additional reimbursement for the durable medical equipment it provided to _______.

ORDER

IT IS ORDERED that the Appeal is denied, and Oxymed, Incorporated is not entitled to any additional reimbursement for the bone growth stimulator it provided to_______.

Signed June 25, 2003.

BARBARA C. MARQUARDT
Administrative Law Judge
STATE OFFICE OF ADMINISTRATIVE HEARINGS

  1. While Provider’s request for preauthorization named $5,000 as its fee, the Carrier’s letter preauthorizing the request stated it was only a determination of medical necessity and not an agreement to a particular price. Ex. 1 at 27.
  2. Preamble to Tex. Admin. Code § 134.401, “Acute Care Inpatient Hospital Fee Guideline,” published at 22 Texas Register 6264, 6284 (July 4, 1997).
  3. On cross-examination, Ms. Bailey conceded that the 2001 Medicare rate for Texas, $3,352.58, should have been the reimbursement rate in this case, noting that when other tools (besides the referenced 1998 catalog) became available to the Carrier, it updated its methodology. This decision does not find that an additional $10 should be paid to the Provider, because it is a de minimus amount.
  4. Texas Labor Code Ann § 413.011 (d).
End of Document
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