DECISION AND ORDER
Vista Healthcare, Inc. (Vista) requested a hearing to contest decisions by the Medical Review Division (MRD) of the Texas Workers’ Compensation Commission (Commission) denying additional payment for ambulatory surgical center services. Vista operated ambulatory surgical centers (ASCs) in Houston, Texas, and provided surgical services to patients not requiring in-patient hospitalization. As related to these dockets, Vista billed Transportation Insurance Company (Carrier) for services provided to two different claimants. Carrier reimbursed less than the billed amount and Vista requested medical dispute resolution before MRD, which subsequently declined to order any additional payment for the services. In this docket, Vista has the burden of proving that it is entitled to additional payment for the services rendered. After considering all of the evidence and arguments, the Administrative Law Judge (ALJ) concludes that Vista has failed to meet that burden; therefore, it is not entitled to any additional reimbursement.
II. APPLICABLE LAW
This case is governed by the Texas Workers’ Compensation Act (the Act). The workers’ compensation insurance scheme created by the Act covers all medically necessary health care, including 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.
Section 413.011 of the Act directs the Commission to establish medical policies and guidelines relating to 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. That section of the Act further provides that guidelines for medical services fees must provide for fees that are fair and reasonableand designed to ensure the quality of medical care and to achieve effective medical cost control. 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 also must be considered.
In 2001, the Commission had not yet adopted payment guidelines for ASC services. In reimbursing providers for services without a fee guideline in place, an insurance carrier is required to reimburse for those services at a fair and reasonable rate, as described in Section 413.011(d) of the Act. The then-applicable rule, 28 TAC § 133.1(a)(8), defined “fair and reasonable reimbursement” as follows:
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.
Therefore, 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. The appropriate “fair and reasonable” reimbursement is the lowest one that ensures the quality of medical care and takes into account all factors the Commission must use in setting fee guidelines.
A. Background Facts
Both claimants sustained work-related injuries. The compensability of the injuries is not in dispute. The claimants received care at a Vista ASC facility. The physicians performing the treatments billed Carrier, and the physicians’ charges are not in dispute in this proceeding; nor is there a dispute about the treatments given. Rather, what is in dispute is the amount billed separately by Vista for its facility charges associated with the procedures performed by the treating physicians.
For the claimant in 453-03-0629.M4, Vista billed Carrier its usual and customary charge of $9,380.51 for services rendered on April 24, 2001. Carrier reimbursed Vista $3,035.52, an amount representing approximately 32% of the billed amount. For claimant in 453-03-0631.M4. Vista billed Carrier its usual and customary charge of $11,198.05 for services rendered on July 20, 2001. Carrier reimbursed $2,246.16, an amount representing approximately 20% of the billed amount. In this matter, Vista seeks additional reimbursement that would provide it a total reimbursement equal to 70% of its billed charges.
To support its request for additional reimbursement, Vista presented evidence of its billing practices, in the form of a spreadsheet that showed the amount of reimbursement it typically received from other insurance carriers and governmental bodies for the ASC services it provided in 2001. Vista argues that it is entitled to additional reimbursement essentially because it historically has received a level of reimbursement from other insurance companies and Medicare that is higher than that offered by Carrier in this case. In particular, according to the data presented by Vista, its average reimbursement rate for ASC services has been approximately 60% of billed charges. Further, its median reimbursement has been 70% of billed charges. In fact, at least one of Vista’s contracts with a health network (representing numerous insurance carriers) provided that Vista would be reimbursed at 70% of its billed charges.
However, the evidence also indicated that Vista received payment of its billed charges at varying levels. Vista’s own spreadsheet showed that in 2001, Vista received payments varying from 4% to 100% of its billed charges from a variety of payors. In other words, payment of 70% of billed charges was not a universal practice in the industry. Vista also presented testimony of Jean Wincher, who was Vista’s administrator. She oversaw admissions, billing, and collections for Vista. She testified she did not participate in setting Vista’s policies or practices on billing, including Vista’s Chargemaster system. Ms. Wincher explained that, for the most part, Vista compared payments received from a variety of its payors, including carriers reimbursing under negotiated contracts, and billed Carrier amounts similar to those amounts. She also stated that she had attempted informally, but without success, to get clarification from Commission staff regarding appropriate methods to derive a fair and reasonable rate. Based on this evidence, Vista argues that it is entitled to be reimbursed at 70% of its billed charges for the services at issue in these dockets.
Vista’s theory of reimbursement based on charges derived from a general comparison with other payors assumes that the reimbursement rate of Vista’s other payors were themselves consistent with the criteria in the Act and rules. The ALJ is not persuaded that Vista’s evidence of its billing practices and what it typically has received in reimbursement for its services establishes a fair and reasonable reimbursement rate. Vista’s reliance on the data from the other payors is misplaced because the record is silent as to why the other payors agreed to pay Vista the amounts they did. Additionally, there is no evidence that Vista inquired into the reasons for the reimbursement paid by other payors or that it conducted any analysis of how its rates–regardless of their derivation–complied with the state’s statutory scheme. Billed charges and historical reimbursement rates, by themselves, do not show compliance with the factors identified in Section 413.011 of the Act for determining a fair and reasonable reimbursement. The amounts that other carriers have paid may be some indication of what might be a fair and reasonable amount, but by itself that information is not dispositive under the statutory guidelines.
Further, the large variance in payment levels received by Vista undercut Vista’s assertion that 70% of billed charges was a fair and reasonable reimbursement amount. Vista’s comparison data demonstrated only that it billed Carrier what can be characterized as its usual and customary rate. However, merely billing a workers’ compensation carrier its usual and customary rate does not meet the requirements set forth in Section 413.011(d) of the Act for appropriate billing. While payment data might be indicative of a fair and reasonable amount if it is uniformly consistent, it provides little persuasive value when it shows wide variations in reimbursement amounts.
Since Vista presented no evidence that it developed a billing structure that took account of the state’s requirements for rates for reimbursing workers’ compensation providers, Vista failed to provide any credible evidence to show that the rates they billed Carrier met the statutory criteria. Therefore, Vista failed to meet its burden of proof.
Although it may not be Vista’s responsibility to consider the statutory factors in developing its usual and customary charges, it is Vista’s burden to show that the reimbursement amount sought satisfies these factors and, thus, is fair and reasonable under the Act. In this case, Vista’s evidence has not established this.
As Vista failed meet its burden of proof to show that 70% of its billed charges met the criteria for fair and reasonable reimbursement set forth in § 413.011 of the Act, the ALJ concludes that no additional reimbursement is warranted. In support of this determination, the ALJ makes the following findings of fact and conclusions of law.
IV. FINDINGS OF FACT
- Each of the claimants involved in the two dockets addressed by this order received care at a Vista ASC facility for their compensable, work-related injuries.
- The claimants each received a different surgical procedure; the surgical services involved in this case are (1) release of scar (CPT Code 26597); and (2) destruction of cranial (CPT Code 64699).
- Transportation Insurance Company (Carrier) is the insurance carrier responsible for the workers’ compensation insurance benefits administered to each of the claimants.
- Vista billed Carrier its usual and customary charges for the services provided to each of the claimants, with those charges being $9,380.51 (CPT Code 26597) and $11,198.05 (CPT Code 64699).
- For the charge of $9,380.51, Carrier reimbursed Vista $3,035.52, an amount representing approximately 32% of the billed amount.
- For the charge of $11,198.05, Carrier reimbursed Vista $2,246.16, an amount representing approximately 20% of the billed amount.
- Vista sought additional reimbursement and submitted to the Commission a request for dispute resolution in each of the dockets.
- MRD issued its Findings and Decision in each of the dockets, ordering no additional reimbursement by Carrier.
- Vista requested a hearing in each docket, and the Commission issued a timely notice of hearing and referred the cases to the State Office of Administrative Hearings for assignment of an Administrative Law Judge to hear the disputes.
- All parties received adequate notice of not less than 10 days of the time, place, and nature of the hearing; the legal authority and jurisdiction under which the hearing was to be held; the particular sections of the statutes and rules involved; and a short, plain statement of the matters asserted.
- On May 24, 2007, SOAH Administrative Law Judge Steven M. Rivas held a contested case hearing concerning the two referenced dockets at the William P. Clements Office Building, Fourth Floor, 300 West 15th Street, Austin, Texas. Vista appeared at the hearing through its attorney, Cristina Hernandez. Carrier appeared through its attorney, James Loughlin. The record closed on June 11, 2007, after the parties submitted closing written arguments.
- The reimbursements that Vista has received from different insurance carriers for the same services in issue in this proceeding have varied significantly.
- Vista presented no evidence that it developed a billing structure that took account of the state’s requirements for rates for reimbursing workers’ compensation providers.
V. CONCLUSIONS OF LAW
- The Texas Workers’ Compensation Commission (Commission) (now the Division of Workers’ Compensation of the Texas Department of Insurance) has jurisdiction over this matter pursuant to the Texas Workers’ Compensation Act. Tex. Lab. Code Ann. § 413.031.
- 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(d) and Tex. Gov’t Code Ann. ch. 2003.
- In each case in issue in this proceeding, the request for a hearing was timely made pursuant to 28 Tex. Admin. Code § 148.3.
- Adequate and timely notice of the hearing was provided according to Tex. Gov’t Code Ann. §§ 2001.051 and 2001.052.
- 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. § 401.011(19) and (31).
- In each of the dockets in this proceeding, Vista had the burden of proving by a preponderance of the evidence that it was entitled to additional reimbursement. 28 Tex. Admin. Code (TAC) § 148.21(h).
- 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), until such time that specific guidelines are established by the Commission. 28 TAC § 134.1(f) (Emphasis added).
- 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 fee guidelines. Tex. Lab. Code Ann. § 413.011.
- A “usual and customary” charge may be the same as a “fair and reasonable” reimbursement amount only if there is evidence that the factors set out in § 413.011 of the Act are satisfied; that is, that the amount achieves effective medical cost control, taking into account payments made to others with an equivalent standard of living, and considering the increased security of payment.28 TAC § 133.1(a)(8).
- Billed charges and historical reimbursement rates, by themselves, do not show compliance with the factors identified in Section 413.011 of the Act for determining a fair and reasonable reimbursement.
- Vista failed to show that its usual and customary billed charges—or even 70% of its billed charges, which is the amount sought by it in this proceeding—are fair and reasonable.
- Vista has failed to show by a preponderance of the evidence that it is entitled to additional reimbursement for the services in issue in this proceeding.
Having found thatVista has not shown itself entitled to relief from the orders of the Medical Review Division of the Texas Workers’ Compensation Commission in the underlying cases, IT IS, THEREFORE, ORDERED that Transportation Insurance Company is not required to provide any additional reimbursement for the services in issue in the two dockets in this proceeding.
Signed August ____, 2007.
STEVEN M. RIVAS
Administrative Law Judge
STATE OFFICE OF ADMINISTRATIVE HEARINGS
- Effective September 1, 2005, the functions of the Commission were transferred to the newly-created Division of Workers’ Compensation of the Texas Department of Insurance. This case arose before that transfer of authority, but only recently went to hearing because of related ongoing litigation that had a bearing on the handling of ambulatory surgical center cases.↑
- Because these cases were heard together, the ALJ issues this single decision in the two dockets involved.↑
- Vista, as the party seeking to overturn the MRD’s decision, has the burden of proof under Tex. Lab. Code Ann. § 413.031. See also SOAH rule 28 Tex. Admin. Code § (TAC) 148.14(a) (eff. June 9, 2005). The prior rules regarding burden of proof, located at 28 TAC § 148.21(h) and (i), also assigned the burden of proof to the appealing party.↑
- Tex. Lab. Code Ann. § 401.001, et seq.↑
- Tex. Lab. Code Ann. § 401.011(19) and (31). Unless otherwise noted, all cites to statutes and rules are to those in effect in 2001.↑
- Tex. Labor Code Ann. § 413.011(d).↑
- 28 Tex. Admin. Code § 134.1(f).↑
- Compare 28 TAC § 134.1(c) - (e).↑
- Vista’s Exhibit No. 1, a table delineating variables including CPT code, date of service, amount billed, amount paid, percentage of the billed amount paid, and carrier name for approximately 2000 procedures performed in 2001.↑
- In essence, half of all procedures were reimbursed at higher than 70% of billed charges, while half were reimbursed at less than 70% of billed charges. See Vista’s Exhibit No. 1 at page 51.↑
- Vista cited an agreement it had with Focus Healthcare Management for the Focus PPO Network, which paid 70% of billed charges.↑
- According to Ms. Wincher, Chargemaster is a program that assigns and correlates billing amounts with various CPT codes and medical procedures.↑
- In fact, the Commission has previously rejected a “percentage of billed charges” methodology for determining fair and reasonable reimbursement amounts because it does not comply with the statutory directive of cost control.↑
- The findings and conclusions apply to each of the dockets involved. Because the outcome of this case does not rest on any claimant-specific circumstances, the ALJ makes no specific findings related to the individual claimants or their injuries.↑