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At a Glance:
Title:
453-02-3197-m4
Date:
February 19, 2003
Status:
Medical Fees

453-02-3197-m4

February 19, 2003

DECISION AND ORDER

I. Summary

This case involves a dispute over the fair and reasonable rate of reimbursement for two different items of durable medical equipment: a bone growth stimulator and a cervical pillow. Oxymed, Inc. (Oxymed) provided a bone growth stimulator and two cervical pillows to injured worker_____, pursuant to a prescription from ____ treating physician. Oxymed then billed Texas Mutual Insurance Company (TMI), the workers’ compensation insurance carrier, the amount of $5,000 for the bone growth stimulator and $239 each for the two cervical pillows. TMI reimbursed the bone growth stimulator at the rate of $3,342.55 and the pillows at $55 and $120, respectively. Oxymed asserted that the reimbursement was not fair and reasonable and requested a hearing before the Medical Review Division (MRD) of the Texas Workers’ Compensation Commission (Commission). MRD issued a decision generally concurring with TMI’s rates of reimbursement. Oxymed then requested a hearing at the State Office of Administrative Hearings (SOAH) regarding the MRD decision, resulting in this proceeding.

Determining fair and reasonable reimbursements for the bone growth stimulator and the cervical pillows are the issues in this docket. After considering the evidence and arguments, the Administrative Law Judge (ALJ) concludes that Oxymed has not met its burden of proof to show that TMI’s reimbursement was not fair and reasonable and that Oxymed’s billed rates of $5,000 and $239 for the items were fair and reasonable. At the hearing, though, TMI conceded that it underpaid Oxymed by $237.36 for the bone growth stimulator. Accordingly, the ALJ finds that Oxymed is entitled to reimbursement from TMI in the amount of $237.36, plus interest, but is not entitled to any other relief.

II. Jurisdiction, Notice and Procedural History

The hearing in this docket commenced on February 4, 2003, in Austin, Texas, before ALJ Craig R. Bennett. The hearing concluded and the record closed that same day. Oxymed appeared and was represented by John V. Fundis, attorney. TMI appeared and was represented by Patricia Eads, attorney. The Commission neither appeared nor participated in this proceeding. 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.

III. Discussion and Analysis

A. Background.

On____,____ sustained work-related, compensable injuries to her neck and back. ____ began seeing Dr. Paul Vaughan for treatment of her injuries. On October 12, 2001, Dr. Vaughan prescribed a cervical pillow for ____ Two weeks later, on October 26, 2001, Dr. Vaughan prescribed a bone growth stimulator and another cervical pillow for her. TMI preauthorized the bone growth stimulator, but the cervical pillows did not require preauthorization. Oxymed provided the items to ____ in accordance with Dr. Vaughan’s prescriptions and billed TMI $5,000 for the bone growth stimulator and $239 each for the cervical pillows. TMI declined to reimburse the items at the billed rate, instead reimbursing the bone growth stimulator at the rate of $3,342.55, the first pillow at $55, and the second pillow at $120. Oxymed contested TMI’s reimbursement, and MRD concluded that TMI’s reimbursement rates were fair and reasonable. MRD ordered TMI to pay Oxymed an additional $65 (the difference between the $55 paid for the first cervical pillow and the $120 that MRD concluded was a fair and reasonable reimbursement rate for the pillow).[1] Oxymed appealed the MRD decision, leading to this proceeding at SOAH.

B. Applicable Law.

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.[2]Certain medical items and services, however, require preauthorization before they can be provided. Preauthorization is not required for cervical pillows because their cost is less than $500. On the other hand, a bone growth stimulator is durable medical equipment (DME) that requires a medical prescription and preauthorization by the insurance carrier.[3] Once preauthorization is granted, the insurance carrier is generally liable to reimburse the procedure or item of medical equipment in accordance with the Act and the Commission’s rules. [4]Section 413.011 of the Act provides that the Commission by ruleshallestablish medical policies and guidelines relating tofees 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.[5] That section further provides that guidelines for medical services fees must befair and reasonableand designed to ensure the quality of medical care and to achieve effective medical cost control.[6] Moreover, 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. In setting such guidelines, the increased security of payment afforded by the Act must be considered. Where the Commission has not established a fee guideline, an insurance carrier shall reimburse at fair and reasonable rates as described in Section 413.011(d).[7] Moreover, when an insurance carrier is to pay a health care provider for treatments or services for which the Commission has not established a maximum allowable reimbursement (MAR), 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.”[8]

After a service or item has been preauthorized and provided, the medical provider is to bill the carrier its usual and customary charges, with a notation indicating the appropriate billing code for the service or item in issue. Bone growth stimulators are coded under E0748. Cervical pillows do not have a specific billing code and are therefore appropriately billed under miscellaneous code E1399. There is no MAR for bone growth stimulators or for items billed under E1399, so reimbursement for each must simply be fair and reasonable. The Commission’s rules, at 28 Tex. Admin. Code § 133.1(a)(8), describe fair and reasonable 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.

According to this definition, then, when the Commission has not established a fee guideline for a particular procedure, service, or item, the reimbursement amount is to be determined using the same factors used by the Commission in setting fee guidelines.Therefore, the appropriate “fair and reasonable” reimbursement is the lowest one that ensures the quality of medical care andaccounts for the factors used by the Commission in setting fee guidelines. In regard to the disputed charges in issue, if both TMI and Oxymed’s proposed reimbursement amounts comply with the statutory considerations and are objectively fair and reasonable, then 28 Tex. Admin. Code § 133.1(a)(8) dictates that the lesser amount is the proper reimbursement.[9]

C. Oxymed’s Evidence and Arguments.

Oxymed argues that payments by other insurance carriers for Oxymed’s bone growth stimulators and cervical pillows reflect the market value of such items and establishes fair and reasonable rates of reimbursement. Oxymed points out that other insurance carriers have reimbursed Oxymed the full billed amounts, $5,000 and $239 respectively, for bone growth stimulators and cervical pillows. Oxymed offered into evidence the explanations of benefits (EOBs) from these other insurance carriers purporting to show such reimbursements. Specifically, Oxymed offered three separate EOBs for each item. Based on these EOBs, Oxymed contends that it has met its burden of proof to show that its billed amounts are fair and reasonable and that it is entitled to be reimbursed such amounts from TMI.

D. TMI’s Arguments.

TMI points out that OxymedCas the appealing partyChas the burden of proof. TMI argues that Oxymed, to carry its burden of proof, first must establish that TMI’s reimbursement rates are not fair and reasonable. If Oxymed can show that, then to recover it would next be required to show that its billed charges are fair and reasonable. TMI argues that Oxymed has not met either of these requirements. First, TMI contends that Oxymed has not shown that TMI’s reimbursements were not fair and reasonable. In particular, TMI asserts that Oxymed offered no evidence attacking TMI’s methodology or showing how the amount reimbursed was inadequate under the statutory guidelines. TMI argues that it is not sufficient to simply put on EOBs from other carriers because those, in themselves, are not relevant to the amount reimbursed by TMI and certainly do not show how TMI’s reimbursements are not fair or reasonable. Second, TMI attacks Oxymed’s proposed method for calculating fair and reasonable reimbursement rates and asserts that Oxymed has not shown that its billed charges meet the statutory requirements for “fair and reasonable.” TMI notes that Oxymed simply relies on what it has been reimbursed by other carriers. TMI asserts this is inconsistent with, and does not take into account, the factors listed in § 413.011(d) of the Act, because there is no evidence establishing how the other carriers determined their reimbursement rates.

TMI next argues that its payment methodology results in a fair and reasonable rate of reimbursement consistent with the criteria of § 413.011(d). TMI argues that its methodology, which is based on the federal Medicare system’s reimbursement rates, takes into account all of the factors identified in § 413.011(d). Specifically, TMI argues that its methodology ensures quality of care, achieves effective medical cost control, results in comparable amounts paid for persons of an equivalent standard of living, and takes into account the security of payment. TMI offered evidence showing that it reimbursed the bone growth stimulator at the same rates offered under the federal Medicare program.[10] For the cervical pillow, TMI initially determined that there was not a Medicare rate for cervical pillows, so it researched and found what it determined to be comparable pillows available for $120. Therefore, it reimbursed at this amount.[11] At the hearing, TMI asserted that it has since determined that there is a Medicare rate of $28.27 that applies to cervical pillows. Therefore, it argues that it overpaid for the pillows and Oxymed is not entitled to any additional amounts.

E. ALJ’s Analysis.

As noted previously, the ALJ concludes that the applicable statutes and rules require workers’ compensation insurance carriers to develop reimbursement methodologies for calculating fair and reasonable reimbursement amounts. In calculating reimbursements, the factors identified in Section 413.011(d) must be considered, i.e., the reimbursement must be “designed to ensure the quality of medical care and to achieve effective medical cost control,” 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 should take into account “the increased security of payment afforded.” In this case, to carry its burden of proof, Oxymed is required to first show that TMI’s reimbursement rates do not result in a fair and reasonable payment in light of these factors. Oxymed has not met that burden.

Oxymed’s evidence in this case consisted only of EOBs from other carriers. In and of themselves, these EOBs do not show how TMI’s payments are not fair and reasonable. At best, the EOBs show that some other carriers reimburse more than TMI for the same items. But, that is not sufficient to allow the ALJ to conclude that TMI’s reimbursements are not fair and reasonable. Without additional evidence, the ALJ could just as easily conclude that the other carriers paid too much as he could conclude that TMI paid too little. There is simply no basis for the ALJ to conclude, from the face of the EOBs, that the other carriers’ payments are consistent with the statutory guidelines and that TMI’s payments are not.

Not only do the EOBs fail to show that TMI’s payments are unfair and unreasonable, they also do not establish that Oxymed’s billed charges are fair and reasonable in light of the applicable statutes and rules. While it may not be Oxymed’s responsibility to consider the statutory factors in developing its usual and customary charges, it is Oxymed’s burden to show that these factors are met if it intends to establish that its charges are fair and reasonable under the Act. Here, Oxymed offered no insight into how its charges were calculated, what its costs were, what Commission MARs may exist for comparable items, or any other evidence that would enable the ALJ to determine what reasonable market rates might be for the items in question in light of the statutory guidelines. Payments by a few other carriers are not sufficient to enable the ALJ to conclude that Oxymed’s charges are fair and reasonable in light of the factors identified in Section 413.011 of the Act.

Moreover, even if EOBs were sufficient to show a fair and reasonable reimbursement rate, the EOBs offered by Oxymed are not adequate in regard to the cervical pillows. As noted, cervical pillows do not have a specific billing code and are thus coded under E1399. Oxymed’s EOBs purport to show reimbursement for items billed under E1399, but do not specifically identify cervical pillows. Therefore, the reimbursements reflected on the EOBs could be for any number of items that might also be billed under the miscellaneous billing code E1399. Oxymed would have the ALJ infer that the items reimbursed were cervical pillows without any basis for doing so other than the billed charges are consistent with what Oxymed billed in this case for cervical pillows. The ALJ could not make such an inference on the evidence before him.[12]

For all of the reasons set forth above, the ALJ finds that Oxymed has not met its burden of proof in this case. Therefore, it is not entitled to any additional reimbursement from TMI other than the $237.36 that TMI concedes it owes Oxymed as additional reimbursement for the bone growth stimulator.

IV. Findings of Fact

  1. On_____, claimant______ sustained work-related, compensable injuries to her neck and back while employed by an employer carrying workers’ compensation insurance underwritten by Texas Mutual Insurance Company (TMI).
  2. On October 12, 2001, Dr. Paul Vaughan prescribed a cervical pillow for F.C.
  3. On October 26, 2001, Dr. Vaughan prescribed a bone growth stimulator and another cervical pillow for____.
  4. TMI preauthorized the purchase of the bone growth stimulator.
  5. Oxymed provided two cervical pillows and a bone growth stimulator to____ in accordance with Dr. Vaughan’s prescriptions and TMI’s preauthorization.
  6. Oxymed billed TMI $5,000 for the bone growth stimulator and $239 each for the cervical pillows. On Oxymed’s billing, the bone growth stimulator was coded as E0748 and the cervical pillows were coded as E1399.
  7. TMI declined to reimburse the items at the billed rate, instead reimbursing the bone growth stimulator at the rate of $3,342.55, the first pillow at $55, and the second pillow at $120.
  8. Oxymed sought additional reimbursement and submitted a request for dispute resolution to the Texas Workers’ Compensation Commission (Commission).
  9. The Medical Review Division (MRD) of the Commission issued its Findings and Decision on April 17, 2002, ordering additional reimbursement in the amount of $65.00.
  10. Oxymed requested a hearing on May 13, 2002, and the Commission issued its original Notice of Hearing on June 11, 2002.
  11. The hearing in this docket convened on February 4, 2003. Oxymed appeared and was represented by John V. Fundis, attorney. TMI appeared and was represented by Patricia Eads, attorney. The staff of the Commission did not appear nor participate. ALJ Craig R. Bennett presided. The hearing was completed and the record closed that same day.
  12. There is no billing code assigned for cervical pillows under the Commission’s guidelines.
  13. Billing code E1399 is used for “miscellaneous” medical equipment. For billing code E1399, there is no maximum allowable reimbursement (MAR), but items are limited to reimbursement at fair and reasonable rates.
  14. Billing code E0748 is used for bone growth stimulators and there is no MAR for these items.
  15. The only evidence presented by Oxymed in this case consisted of EOBs from other carriers.
  16. Oxymed offered no evidence regarding how its charges were calculated, what its costs were, what Commission MARs may exist for comparable items, or any other evidence that would enable the ALJ to determine what reasonable market rates might be for the items in question in light of the statutory guidelines.
  17. The EOBs submitted by Oxymed as evidence reference billing code E1399 but do not specifically identify cervical pillows as an item being reimbursed.
  18. TMI conceded that, under its reimbursement methodology, it should have reimbursed Oxymed $3,579.91 for the bone growth stimulator; therefore, TMI conceded that it owes Oxymed the additional sum of $237.36.

V. Conclusions of Law

  1. The Texas Workers’ Compensation Commission has jurisdiction over this matter pursuant to the Texas Workers’ Compensation Act (the Act). Tex. Lab. Code Ann. § 413.031.
  2. The State Office of Administrative Hearings has jurisdiction over this proceeding, including the authority to issue a decision and order, pursuant to Tex. Lab. Code Ann. § 413.031 and Tex. Gov’t Code Ann. ch. 2003.
  3. The request for a hearing was timely made pursuant to 28 Tex. Admin. Code § 148.3.
  4. Adequate and timely notice of the hearing was provided according to Tex. Gov’t Code Ann.§§ 2001.051 and 2001.052.
  5. The Commission rules provide that reimbursement for services not identified in an established fee guideline shall be reimbursed atfair and reasonable rates as described in the Texas Workers’ Compensation Act until such time that specific guidelines are established by the commission. 28 Tex. Admin. Code § 134.1(f).
  6. Fair and reasonable reimbursement rates must be designed to ensure the quality of medical care and to achieve effective medical cost control. They should 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 increased security of payment afforded by the Act should be considered in determining fair and reasonable rates of reimbursement. Tex. Lab. Code Ann. § 413.011.
  7. Oxymed has the burden of proving by a preponderance of the evidence that the reimbursement amount offered by TMI was not fair and reasonable and that it was entitled to additional reimbursement. 28 Tex. Admin. Code § 148.21(h).
  8. Payments by a few other carriers are not sufficient to enable the ALJ to conclude that Oxymed’s charges are fair and reasonable in light of the factors identified in Section 413.011 of the Act.
  9. Oxymed has failed to present evidence sufficient to carry its burden of proving that the amount of reimbursement offered by TMI was not fair and reasonable. Specifically, the EOBs offered as evidence by Oxymed do not establish that TMI’s rate of reimbursement was not fair and reasonable in light of the Act and the Commission’s rules.
  10. Oxymed has failed to present evidence sufficient to carry its burden of proving that its billed charges were fair and reasonable. Specifically, the EOBs offered as evidence by Oxymed do not establish that Oxymed’s billed charges were fair and reasonable in light of the Texas Workers’ Compensation Act and the Commission’s rules.
  11. TMI should be required to pay Oxymed the additional reimbursement of $237.36, consistent with TMI’s representations on the record at the hearing in this case.
  12. Oxymed’s request for any additional reimbursement should be denied.

ORDER

IT IS ORDERED that Texas Mutual Insurance Company is to pay to Oxymed, Inc. the total additional sum of $237.36 plus interest. All other requests for relief are denied.

Signed AT AUSTIN, TEXAS the 19th day of February, 2003.

CRAIG R. BENNETT
Administrative Law Judge
STATE OFFICE OF ADMINISTRATIVE HEARINGS

  1. At the hearing, TMI represented that it has already paid the additional $65 to Oxymed in accordance with the MRD decision.
  2. Tex. Lab. Code Ann. §401.011(19) and (31). The Texas Workers’ Compensation Act is found at Tex. Lab. Code Ann. § 401.001et seq. and is hereafter referred to as “the Act.”
  3. 28 Tex. Admin. Code § 134.600(h)(11) (all DME in excess of $500 must be preauthorized).
  4. 28 Tex. Admin. Code § 134.600(b)(1)(B).
  5. Tex. Lab. Code Ann. § 413.011(d).
  6. Id.
  7. 28 Tex. Admin. Code § 134.1(f).
  8. 28 Tex. Admin. Code§ 133.304(i)(1).
  9. If both are reasonable, the lower of the two is the proper reimbursement because 28 Tex. Admin. Code § 133.1(a)(8) states that fair and reasonable is the “lesser” of the provider’s usual and customary charges or the determination of a payment amount (presumably by the insurer) when the Commission has not established a MAR.
  10. Actually, TMI reimbursed under 1998 reimbursement rates and not the 2001 rates that applied at the time. Because of this error, TMI conceded at the hearing that it owed $237.36, the difference between the rates.
  11. Again, TMI underpaid Oxymed. TMI reimbursed one pillow at $120, but the other at only $55. MRD ordered additional reimbursement of $65, and TMI represented at the hearing that it had made this payment to Oxymed, resulting in both pillows effectively being reimbursed at $120.
  12. At the hearing, Oxymed argued that without making such an inference the ALJ could not conclude that TMI properly paid Oxymed for the cervical pillows in issue (because TMI’s EOB references only the billing code E1399 and not the item description). The difference, though, is that the record contains other evidence, including the specific bills themselves on which TMI’s EOBs are based, that match up the items provided to the specific billing codes and dates of service. There is no such evidence in the record regarding the EOBs offered by Oxymed.
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