DECISION AND ORDER
Oxymed, Inc., (Provider) appealed the decision of the Medical Review Division (MRD) of the Texas Workers’ Compensation Commission (the Commission) denying additional reimbursement for durable medical equipment (DME) it provided to (Claimant). At issue is the fair and reasonable reimbursement amount for the DME. Provider billed Carrier $5,000 for the DME and was reimbursed $4,250. As set out below, the Administrative Law Judge (ALJ) concludes Provider is entitled to additional reimbursement of $750.
I. JURISDICTION, NOTICE AND PROCEDURAL HISTORY
There were no contested issues of jurisdiction or notice. Therefore, those matters are addressed in the findings of facts and conclusions of law without further discussion here.
The hearing on the merits convened July 15, 2003, before ALJ Sharon Cloninger at the State Office of Administrative Hearings (SOAH) in the William Clements Building, 300 West 15th Street, Fourth Floor, Austin, Texas. Attorney Peter N. Rogers represented Provider. Attorney Jeanie D. Cupit represented Carrier. The hearing adjourned and the record closed that same day.
Claimant sustained a compensableback injury on. As part of Claimant’s ongoing treatment, she was prescribed a bone growth stimulator by her doctor, Paul A. Vaughan, M.D., on July 24, 2001. (Pet. Ex. 1, 6). Provider supplied Claimant with the prescribed DME.
Fair and Reasonable Rate
Reimbursement rates for DME are governed by the 1996 Medical Fee Guideline. DME Ground Rules IV, V, and IX provide as follows:
IV. Non-listed Items and Documentation of Procedure
This document does not contain a specific MAR [maximum allowable reimbursement] for the DME items. The DME items should be billed at the usual and customary rate of the DME provider, and the insurance carrier shall reimburse the DME provider at an amount pre-negotiated between the provider and carrier or, if there is no pre-negotiated amount, the fair and reasonable rate for the item described. . . . .
V. Freight and Handling
Storage, shipping, handling, etc. are included in the provider’s usual and customary charge and shall not be reimbursed separately.
C. Invoices should be billed at the provider’s usual and customary rate. Reimbursement shall be in 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 Guideline.
Pursuant to 28 Tex. Admin. Code (TAC) §§133.1(8) and 134.1(c), fair and reasonable reimbursement must meet the standards set out in Tex. Labor Code Ann. §413.011, which states in relevant part that the Commission’s [g]uidelines 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. . . .
If the reimbursement amounts proposed by Provider and Carrier are different, the lower of the two is the proper reimbursement pursuant to 28 TAC § 133.1(a)(8), which states that fair and reasonable reimbursement is the lesser of a provider’s usual and customary charges or the determination of a payment when the Commission has not established a MAR.
Provider and Carrier did not pre-negotiate an amount for the DME in question. Consequently, the ALJ must determine if the $5,000 billed was Provider’s usual and customary rate for this DME, and what reimbursement rate is fair and reasonable.
C. Provider’s position
___testified that Provider buys bone growth stimulators in bulk from Orthofix for$2,700 each.He explained the markup from $2,700 to $5,000 reflects a profit and covers incidental costs such as storage, delivery, and time spent training claimants how to use the device.___ also testified the amount billed to Carrier is less than Orthofix’s catalog list price of $5,400 for one bone growth stimulator. Finally, ___ testified Provider bills the same amount of $5,000 to every carrier for this DME. Provider submitted two invoices that showed it had billed two other carriers $5,000 for this DME in the past, but there was no evidence as to what amount was reimbursed.(Pet. Ex. 1, 9-10).
D. Carrier’s position
Elaine Gilliam, branch manager of medical bill review for GENEX Services, testifiedthat Carrier pays 85 percent of the amount billed for any medical treatment or service for which there is no MAR under the Commission’s guidelines. The bone growth stimulator does not have a MAR, and the $4,250 reimbursed to Provider is 85 percent of Provider’s $5,000 bill. She said 85 percent is the most accepted rate in the industry, and is standard in all bone growth stimulator reimbursements by GENEX. The 85 percent standard achieves medical cost control, she said.
III. ANALYSIS AND CONCLUSION
The DME Ground Rules governing this dispute indicate that in the absence of a pre-negotiated amount, a carrier shall reimburse the DME provider the fair and reasonable rate for the item. Provider and Carrier did not pre-negotiate an amount, so the ALJ must determine a fair and reasonable reimbursement rate. Carrier pays 85 percent of the amount billed for any medical treatment or service for which there is no MAR. Carrier presumably would have paid only 85 percent of Provider’s bill even if Provider had charged $4,250 for the DME in the first place. The ALJ does not find this to be fair and reasonable because it is a specified reduction of the amount billed regardless of the amount and of any evidence on the issue.
Provider’s usual and customary charge for this DME is $5,000, which is $400 below Orthofix’s catalog list price for one bone growth stimulator. The ALJ finds Provider’s $5,000 rate, which is roughly 92 percent of the catalog list price, to be fair and reasonable, especially because Provider’s charge includes incidental costs such as storage, delivery, and training claimants how to use the device.
The fair and reasonable amount of reimbursement in this case is $5,000. Carrier should reimburse Provider an additional $750.
IV.FINDINGS OF FACT
- . (Claimant) sustained acompensable back injuryon ___.
- On July 24, 2001, Claimant was prescribed a bone growth stimulator by her treating doctor, Paul A. Vaughan, M.D.
- The bone growth stimulator is durable medical equipment (DME).
- Oxymed, Inc. (Provider), furnished the DME to Claimant on August 24, 2001, and billed Continental Casualty Company (Carrier) $5,000 for the item.
- It is Carrier’s practice to pay 85 percent of the amount billed for bone growth stimulators.
- Carrier reimbursed Provider $4,250 for the DME, which is 85 percent of the $5,000 billed.
- Provider requested a hearing before the Medical Review Division (MRD) of the Texas Workers’ Compensation Commission (the Commission), which found Provider was not entitled to any additional reimbursement for the DME in a decision issued February 7, 2003.
- On February 21, 2003, Provider timely filed an appeal of the MRD decision with the State Office of Administrative Hearings (SOAH).
- Notice of the hearing was sent March 24, 2003.
- 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.
- The hearing was held July 15, 2003, with Administrative Law Judge (ALJ) Sharon Cloninger presiding and representatives of the Carrier and Provider participating. The hearing adjourned and the record closed that same day.
- Provider purchases bone growth stimulators in bulk from Orthofix for $2,700 each.
- Orthofix’s catalog list price for one bone growth stimulator is $5,400.
- Provider’s usual and customary charge for this DME is $5,000, which reflects a profit and covers incidental costs such as storage, delivery, and training claimants how to use the device.
- A fair and reasonable reimbursement for this DME is $5,000.
V. CONCLUSIONS OF LAW
- 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.
- 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.
- Provider timely filed its request for hearing as specified by 28 Tex. Admin. Code (TAC) §148.3.
- Adequate and timely notice of the hearing was provided in accordance with Tex. Gov’t Code Ann. §§ 2001.051 and 2001.052, and 28 TAC §148.4.
- The Provider, as the petitioner, has the burden of proof in this matter under 28 TAC § 148.21(h).
- The Durable Medical Equipment (DME) Ground Rules found in the Commission’s Medical Fee Guideline, adopted by reference at 28 TAC §134.201, directly apply in this case.
- Durable Medical Equipment Ground Rule IX. C provides that DME should be billed at the provider’s usual and customary rate, and that reimbursement shall be in an amount pre-negotiated between the provider and the carrier or, if no amount has been pre-negotiated, at a fair and reasonable rate.
- Provider’s charge of $5,000 was a fair and reasonable rate pursuant to 28 TAC § 133.1(a)(8).
- Based on the above Findings of Fact and Conclusions of Law, Carrier should reimburse Provider an additional $750 for the DME that it provided to Claimant.
IT IS, THEREFORE, ORDERED that Continental Casualty Company shall reimburse Oxymed, Inc. an additional $750 for the DME it provided to Claimant
Signed this 15th day of September, 2003.
SHARON CLONINGERAdministrative Law Judge
State office of administrative hearings
- Other treatments and services were addressed by the MRD, but the parties agreed the only matter before SOAH is the fair and reasonable reimbursement rate for the DME in question.↑
- A bone growth stimulator allows fractured bone to grow by sending electrical pulses to help the bone fuse, according to testimony from Keith Payne, collections specialist with Oxymed, Inc.↑
- There is no corresponding D code for this particular DME in the 1991 Medical Fee Guideline.↑
- The rule does not specify who will determine the payment.↑