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At a Glance:
September 27, 2002
Retrospective Medical Necessity


September 27, 2002



First Rio Valley Medical, P.A. (Petitioner) sought reimbursement for medical services provided injured worker ____ but First American Insurance Company (Carrier) denied payment. Upon review of the claim, the Medical Review Division (MRD) of the Texas Workers' Compensation Commission (the Commission) denied the claim of $561. Petitioner requested a hearing to challenge the MRD’s order.

On August 7, 2002, Ruth Casarez, Administrative Law Judge (ALJ), convened the hearing at the William P. Clements Building, 300 West 15th Street, Austin, Texas. Attorney William Maxwell appeared by telephone and represented the Petitioner; attorney Steven Tipton represented the Carrier. The Commission was not a party to the action. The parties did not contest notice or jurisdiction. After the evidence was presented, the parties were given until August 20, 2002, to submit closing arguments. The record of the hearing closed on that date.


Mr. Maxwell introduced a copy of the MRD's certified record (C.R.) into evidence and rested his case. Mr. Tipton introduced into evidence a copy of the Carrier’s peer review and independent medical examination reports.[1] Although Mr. Maxwell did not object to the admissibility of the exhibit at the hearing, in his closing argument, he indicated Petitioner generally object[ed] to the peer reviews proffered by the Carrier because they did not comply with 28 Tex.Admin. Code (TAC) §19 et seq. . . . and[b]ecausethe peer reviews . . . fails [sic] to properly comply with the requirements of 28 TAC §19.001 et seq., objects to their consideration by the ALJ and any weight or credibility being assigned thereto. Furthermore, relying on the decision in Patient Advocates v. TWCC, 2002 WL 704678, Petitioner also objected to any weight being placed on the MDR’s decision and any weight being placed on any impermissible audit performed by the carrier.[2]

The main issue in this case is whether the Petitioner demonstrated medical necessity for the services that were provided and billed under CPT Codes 99078, 99214, and 99080-73. Carrier denied payment for the services under CPT Code 99078 as not medically necessary (denial code AU) and the other two services as not medically necessary pursuant to peer review (denial code AV).[3] The MRD found that Petitioner’s documentation did not substantiate medical necessity in accordance with the Spine Treatment Guideline (STG) for the services under CPT Code 99078, because the documentation presented merely reflected that Claimant was given the instructions normally supplied to a consumer by the EBIce unit[4] maker. As to the other charges, the MRD found Petitioner’s documentation did not show what the medical necessity was for the office visit on 9/7/01 and whether it was related to the compensable injury, and that the limited notes submitted by Petitioner related to the additional TWCC 73 issued on September 12, 2001, did not appear to show a change required for the work status report in accordance with Commission rule 129.5.

  1. Rulings on Petitioner’s evidentiary objections
  2. Petitioner’s objection to the peer reviews that were offered by the Carrier because they do not comply with 28 TAC §19.2001, et seq., is overruled because the specific objection was not made at the time the exhibit was offered. Stein v. American Residential Mgmt., Inc. 793 S.W.2d 1, 1 (Tex. 1990) and Pfeffer v.Southern Tex. Laborers’ Pension Trust Fund, 679 S.W.2d 691, 693 (Tex. App.BHouston [1st Dist.] 1984, writ ref’d n.r.e.), McKinney v. National Union Fire Ins. Co., 772 S.W.2d 72, 74 (Tex. 1989) and also TRE 103(a)(1).
  3. Petitioner’s objection to the peer reviews that were offered by the Carrier because the Court in Patient Advocates v. TWCC, Aheld that the dispute and audit rules established by the TWCC are void . . . is overruled for the same reason and according to the same authorities listed above.

As to Petitioner’s argument that the peer reviews should not be considered a basis for denial of the service under CPT Code 99078, Petitioner is correct: the peer reviews will not be considered for that particular service because the Carrier did not deny that service based on a peer review. The service was denied based on AU, unnecessary treatment without peer review. The peer reviews will be considered as to the services indicated under Codes 99214 (date of service 9/7/01) and 99080-73 (date of service 9/12/01), as those services were denied based on denial code AV, unnecessary treatment with peer review. Two of the three doctors’ reports (described as peer reviews by Petitioner) were reports from doctors who performed independent medical examinations (IME). Both IME reports were sent to Claimant and Dr. Howell, an employee of Petitioner. (See C.R. pp. 110-118 and Respondent’s Ex. 1). Thus, the assertion that the reports should not be considered because they were not sent to Petitioner is without merit.

Petitioner’s Evidence and Argument

On________, Claimant ___ employed as a custodian for _______ Consolidated Independent School District, suffered a compensable injury when in performing his job, he lifted a portable choir raiser and hurt his right shoulder. Claimant sought medical attention for pain in the right shoulder and was treated at Petitioner’s facility by several chiropractors, including Sam Allen and Robert S. Howell, from May 2001 through November 2001. After treating Claimant with conservative physical therapy, Dr. Allen on August 7, 2001, released Claimant to return to work until September 7, 2001, with restrictions, i.e., no lifting of items more than 40 pounds, no pushing or pulling of anything more than 20 pounds, and not working more than eight hours per day. (C.R. p. 34). On September 12, 2001, he issued another TWCC 73, authorizing Claimant to return to work from September 7 through October 7, 2001, with the restrictions that he not lift items weighing more than 50 pounds, not push or pull anything weighing more than 50 pounds and that he not work more than eight hours per day. (C.R. p. 39).

Because of complaints about continued pain in the right shoulder, Dr. Howell prescribed an EBIce unit for Claimant to use on his shoulder. According to Petitioner’s request for reconsideration, Dr. Howell personally met with Claimant on August 18, 2001, to demonstrate how the EBIce unit functioned and how it should be used. Petitioner billed Carrier $475 for the counseling session under CPT Code 99078, extensive patient education.[5] Petitioner pointed to the Medical Fee Guideline (MFG)BEvaluation /Management Ground Rules Part III, related to patient counseling to justify the counseling session.

In early September 2001, Dr. Howell also referred Claimant to R. Marcelo Rodriguez, M.D., for an evaluation to determine if Claimant would be a good candidate for a pain management program. Dr. Rodriguez’ evaluation resulted in a puzzling recommendation that Claimant be “referred for 3 hours of mental health evaluation and 1/2 hour for a PPA evaluation with Rick Moses, Ph.D., to see if he is a good candidate for either biofeedback, individual or group counseling or a multi disciplinary chronic pain management program. However, the following notation was included at the end of the recommendation page: DO NOT RECOMMEND MENTAL HEALTH EVALUATION. NEED ARTHROSCOPY OF THE RIGHT SHOULDER TO RULE OUT ROTATOR CUFF TEAR AND POSITIVE IMPINGEMENT. (See C.R. p. 38).

Petitioner argued it should be paid for the services rendered because they were medically necessary. Education is an important component in ensuring Claimant properly used the EBIce unit. Additionally, Claimant was evaluated on September 7, 2001, because he appeared to have personality traits that made him susceptible to developing a chronic pain condition. (C.R. p. 37). And, on September12, 2001, Petitioner’s Dr. Allen prepared another TWCC 73, allowing Claimant to continue working under different restrictions than had previously been indicated. As to the two later services that were rendered, Petitioner argued the Carrier never sent it a copy of the peer review that was the basis for the denial.[6] Thus, the denial was not proper.

Respondent’s Evidence and Argument

Respondent introduced copies of a peer review by Marty Hall, D.C., and reports of independent medical examinations performed by Donald H. Nowlin, M.D., and by Kim Ellis, D.C.

Carrier refused to pay the claim, arguing the services were not medically necessary. Specifically, Carrier argued the charge under CPT Code 99078 was unwarranted because Petitioner did not show the counseling session related to the use of the EBIce unit was medically necessary, and that Petitioner had not proved Dr. Howell had, in fact, spent one hour counseling Claimant. Further, it agreed with the MRD’s observation that Petitioner appeared to have given Claimant nothing more than the manufacturer’s instructions on how to properly use the EBIce unit.

The Carrier also relied on Dr. Nowlin’s IME report as a basis to deny the latter two claims. Dr. Nowlin examined Claimant on August 9, 2001, and found Claimant’s right shoulder injury had been resolved and concluded that no further diagnostic testing or treatment was required. The IME report was sent to Dr. Howell, who disagreed with its findings and conclusions. The Commission then authorized another examination and designated Kim Ellis, D.C., to perform the second IME. Dr. Ellis examined Claimant on November 28, 2001, and also determined Claimant’s injury had been resolved. Based on the reports of both IME doctors, Carrier continued to deny the charges for services rendered on September 7 and 12, 2001.

Applicable Law

Section III of the Evaluation/Management (E/M) Ground Rules of the MFG provides that

For the purposes of E/M, counseling is defined as a discussion with the patient and/or

family member(s) concerning one or more of the following:

  1. Diagnostic results, impressions, and/or recommended diagnostic studies;
  2. Prognosis;
  3. Risks and benefits of treatment options;
  4. Instructions for treatment and/or follow-up;
  5. Importance of compliance with chosen treatment options;
  6. Risk factor reduction; and
  7. Patient and family education.

Section IV of the E/M Ground Rules provides that

* * *

In the case where counseling and/or coordination of care constitutes more than 50% of the physician/patient and/or family encounter whether face-to-face time in the office or other outpatient setting or floor/unit time in the hospital or nursing facility, then time is considered the controlling factor in qualifying for a particular level of E/M services. The extent of counseling and/or coordination of care shall be documented in the medical record.

Section VI specifies the CPT Codes to be used to bill E/M services rendered in the doctor’s office or in an outpatient or other ambulatory facility. Codes 99211-99215 are to be used to bill E/M services provided to established patients who present for follow-up and/or periodic re-evaluation of problems or for the E/M of new problem(s) in established patients. (See 1996 MFG p. 9).

CPT Code 99078, found under Special Services and Reports in the Medicine portion of the MFG, indicates the services under that code are physician educational services rendered to patients in a group setting.

Commission rule at 28 TAC § 129.5(d)(2) provides that a doctor shall file the Work Status Report (WSR or TWCC 73) when the employee experiences a change in work status or a substantial change in activity restrictions.[7] Section 129.5(a)(2) defines substantial change in activity restrictions as

a change in activity restrictions caused by a change in the employee’s medical condition which either prevents the employee from working under the previous restrictions or which allows the employee to work in an expanded and more strenuous capacity than the prior restrictions permitted (approaching the employee’s normal job);


As the party who appealed the MRD decision, Petitioner has the burden of proving the services it provided Claimant were medically necessary and should be paid by Carrier.

As indicated in the MRD decision, however, Petitioner’s documentation does not substantiate that the services were medically necessary. Petitioner tried to prove it was necessary for Dr. Howell to meet with and counsel Claimant for a full hour on the proper use of the EBIce unit by providing the written instructions that, it claims, were prepared and discussed by Dr. Howell with Claimant. It also argued it was necessary and important that Dr. Howell instruct Claimant on the proper use of the unit. Yet, other than the four pages of instructions,[8] there was nothing else presented by Petitioner, e.g., office visit notes that showed it was necessary for Dr. Howell to conduct a full hour of counseling with the Claimant. Nor was there any indication as to why the four-page script had to be explained by Dr. Howell himself, and no one else, such as a physician assistant or nurse. Finally, CPT Code 99078 is to be used to bill patient education provided by a physician to a group of patients. Petitioner provided no evidence whatsoever that anyone other than the Claimant was present for the training session. Thus, Petitioner did not establish the service on August 18, 2001, was medically necessary or that it should be reimbursed under CPT Code 99078.

Petitioner also argued it should be paid for Claimant’s evaluation on September 7, 2001. However, again Petitioner failed to show medical records of Dr. Howell that set out any reason(s) for his referring Claimant to Dr. Rodriguez. Although the report prepared by Dr. Rodriguez established that Claimant was evaluated on that date, there was nothing to show that the referral was needed in the first place.[9] Lack of such information is important in this case, considering the IME doctor’s conclusion, just two weeks before, that further diagnostic testing was not necessary. The evidence established that a copy of Dr. Nowlin’s August 21, 2001, report was sent to Dr. Howell, thus Petitioner cannot argue that it did not get a copy of the report. Despite the findings in the IME report, Petitioner nevertheless provided an additional diagnostic service (evaluation related to the need for chronic pain management) to Claimant without showing the service was medical necessity.

Finally, as to Petitioner’s issuance of a new TWCC 73, Petitioner provided no evidence that Claimant had experienced either a change in work status or a substantial change in activity restrictions as required by Commission rule 129.5 to require a new TWCC 73.

Thus, for the reasons stated above, the ALJ concludes that Petitioner did not meet its burden of proof and agrees with the MRD decision that no reimbursement is appropriate.


  1. Claimant, an employee of_____________________, sustained an injury to his right shoulder when he lifted a portable choir raiser while performing his work on ___________
  2. At the time of the injury, Claimant’s employer had workers’ compensation insurance through First American Insurance Company.
  3. Claimant sought medical attention for his injury, and in May 2001, he began treatment with First Rio Valley Medical P.A. for pain in his right shoulder.
  4. Dr. Howell conducted an initial examination of Claimant on May 7, 2001.
  5. Claimant’s job duties required that he do some lifting (occasionally of items heavier than 25 pounds), reaching, and vacuuming. The pain in Claimant’s right shoulder increased when he performed such tasks.
  6. On August 7, 2001, Petitioner’s Dr. Allen completed a work status report (TWCC 73) allowing Claimant to return to work, with restrictions that he not lift objects heavier than 40 pounds, not push or pull objects heavier than 20 pounds, and that he not work longer than eight hours per day.
  7. Claimant continued to receive massage therapy and therapeutic exercises from Dr. Howell through November 2001.
  8. On August 9, 2001, Donald H. Nowlin, M.D., performed an independent medical examination (IME) to assess Claimant’s condition and determine if he had reached maximum medical improvement (MMI).
  9. After the examination, Dr. Nowlin concluded the right shoulder strain had been resolved, as he found Claimant could perform all ranges of motion of the shoulder and all shoulder testing was negative.
  10. Dr. Nowlin further concluded that Claimant required no additional diagnostic testing or further medical treatment.
  11. Dr. Howell disagreed with Dr. Nowlin’s assessment of Claimant’s condition and MMI determination and requested another independent examination. Dr. Howell also continued to provide rehabilitative physical therapy to Claimant.
  12. On August 18, 2001, Dr. Howell counseled Claimant concerning how to use the EBIce unit that he had prescribed. The session was billed at $475 under CPT Code 99078.
  13. The counseling session described in Finding No. 12 was not in a group setting.
  14. Dr. Howell also referred Claimant to Dr. Rodriguez for an evaluation as to need for a chronic pain management program (CPMP). No medical records or notes of Dr. Howell were presented to show why the referral was made.
  15. Dr. Rodriguez evaluated Claimant on September 7, 2001, to determine if he would be a good candidate for a CPMP. The evaluation was billed at $71 under CPT Code 99214, office visit for evaluation and management of an established patient.
  16. On September 12, 2001, Petitioner’s Dr. Allen prepared another work status report concerning Claimant’s condition. The report was billed at $15 under CPT Code 99080-73.
  17. Petitioner presented no evidence that Claimant’s work status had changed or that there had been a substantial change in what Claimant could or could not do between August 9, 2001, the date of the first TWCC 73, and September 12, 2001.
  18. Petitioner furnished the services described in Findings Nos. 12 through 16, and billed Carrier $561 for such services.
  19. At the Commission’s request, Kim S. Ellis, D.C., the Commission’s designated doctor, conducted an independent medical examination of Claimant on November 28, 2001, to evaluate Claimant’s condition and determine whether he had reached MMI.
  20. Dr. Ellis found that the right shoulder strain had been resolved as evidenced by Claimant’s having normal range of motion in the right shoulder, normal motor functions, and normal sensory nerve function in the right extremity.
  21. Carrier denied reimbursement of the claim, indicating the services were not medically necessary; the services provided on the two later dates were denied based on no medical necessity based on a peer review.
  22. On December 19, 2001, the Petitioner appealed the Carrier’s reimbursement denial to the Medical Review Division (MRD) of the Texas Workers' Compensation Commission (the Commission).
  23. On March 13, 2002, the MRD concluded the claim should be denied because Petitioner’s documentation did not substantiate medical necessity for the services.
  24. On March 25, 2002, Petitioner appealed the MRD’s decision.
  25. The Commission sent notice of the hearing to the parties on April 30, 2002. The hearing notice informed the parties of the matter to be determined, the right to appear and be represented, the time and place of the hearing, and the statutes and rules involved.
  26. The hearing was held on August 7, 2002. Petitioner was represented by attorney William Maxwell, and the Carrier was represented by its attorney, Steven M. Tipton. The record of the hearing closed on August 20, 2002, with the filing of closing arguments.


  1. The Texas Workers' Compensation Commission has jurisdiction to decide the issue presented, pursuant to the Texas Workers' Compensation Act, Tex. Lab. Code Ann. §413.031.
  2. The State Office of Administrative Hearings has jurisdiction over matters related to the hearing in this proceeding, including the authority to issue a decision and order, pursuant to Tex. Lab. Code Ann. §§ 402.073 and 413.031(d) and Tex. Gov't Code Ann. ch. 2003.
  3. Petitioner timely filed notice of appeal of the MRD decision, as specified in 28 Tex. Admin. Code (TAC) § 148.3.
  4. Proper and timely notice of the hearing was effected upon the parties according to Tex. Gov't Code Ann. ch. 2001 and 28 TAC § 148.4(b).
  5. Petitioner had the burden of proving that it was entitled to reimbursement of its claim by a preponderance of the evidence, pursuant to 28 TAC § 148.21(h) and (i).
  6. Petitioner failed to establish medical necessity for the services it provided Claimant and billed under the following CPT Codes: 99078 ($475), 99214 ($71), and 99080-73 ($15).
  7. Petitioner did not prove that it was entitled to payment for services rendered Claimant on August 18, September 7, and September 12, 2001.


It is hereby ordered that the claim of First Rio Valley Medical, P.A. for $561 is denied.

Signed this 27th day of September, 2002.

Administrative Law Judge
State Office of Administrative Hearing

  1. Respondent’s Ex. 1 was admitted into evidence without objection. After stating he had no objection to the admission of the exhibit, Mr. Maxwell added: other than to hearsay and items that I’ll deal with in my closing argument . . . In his written argument, he appears to lodge general and specific objections to the exhibit’s admissibility.
  2. See Petitioner’s Closing argument, pp. 1-2.
  3. The denial or payment exception codes, including AU and AV, that are available to carriers for reducing or denying payment on a bill are set out in the TWCC 62, Explanation of Benefits form, as revised in July 2000.
  4. The EBIce unit is described as a water circulating machine with attached sterile cold pad and submersible pump. From the information in the certified record (pages 30-33), it appears that iced water is put into the 10-quart cooler that comes with the unit. When the pump is turned on, it circulates the water causing it to fill the sterile cold pad and circulate back into the cooler. The cold pad is placed over bandages on the body area that is being treated. The pump cycles on and off so that the area is not subjected to excessive cold. The cold therapy helps relieve pain.
  5. CPT Code 99078 does not have a maximum allowable reimbursement, but rather is listed as requiring documentation of procedure (DOP). The code describes the procedure as Physician educational services rendered to patients in a group setting (e.g., prenatal, obesity, or diabetic instructions). (See 1996 Medical Fee Guideline p. 60).
  6. Petitioner pointed to Commision rule 133.304(h), which states that if a carrier relies on a peer review to justify its denial, it is required to send a copy of the peer review to the Petitioner with its explanation of benefits (EOB). In this case, Petitioner argued the Carrier did not send Petitioner the peer reviews.
  7. Section i of the rule provides the amount to be reimbursed for a work status report (WSR) is $15; CPT Code 99080 with modifier 73" is to be used when the doctor is billing for a report required under subsections (d)(1), (d)(2), and under section f (related toWSR following a functional capacity evaluation and required medical examination doctor’s WSR that indicates the employee can return to work with or without restrictions).
  8. See C.R., pp. 30-33 for the instructions.
  9. In its request for medical dispute resolution, Petitioner argued that: The doctor has written a script’ for the purchase of this EBIce unit to treat Mr. N. for continued shoulder pain and restricted range of motion. . . . (See C.R. p. 52). The MRD was not persuaded and found the four-page script was essentially the manufacturer’s instructions on how to use the unit that were provided to consumers who purchased the EBIce unit.

  10. Petitioner supplied no medical records that indicate why Claimant was referred for evaluation by Dr. Rodriguez on September 7, or why Dr. Allen prepared a new TWCC 73 on September 12. The billing statements for those services in the certified record at pages 17-18) seem to indicate stiffness and myalgia as the reason for the services billed under CPT Code 99214 on 9/7/01 and CPT Code 99080-73 on 9/12/01, respectively.
End of Document