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Title: 

453-04-7265-m4

Date: 

November 7, 2005

Type: 

Medical Fees

453-04-7265-m4

DECISION AND ORDER

Transcontinental Insurance Company (Carrier), requested a hearing on an order of the Texas Workers’ Compensation Commission’s Medical Review Division[1] (MRD) that it pay OxyMed, Inc. (Provider), for providing certain durable medical equipment (DME) for Claimant. The DME is an external bone growth stimulator. The MRD ordered Provider to pay $2,050 in addition to the $2,950.00 already paid by the Carrier for the device. This decision and order finds that Carrier proved that the $5,000 billed by Provider is not fair and reasonable for the stimulator under the circumstances of this case, and orders $554.35 additional reimbursement to Provider for the bone growth stimulator.

I.JURISDICTION, NOTICE, AND PROCEDURAL HISTORY AT SOAH

On September 28, 2005, ALJ Charles Homer III convened the hearing at the William P. Clements Building, 300 West 15th Street, Austin, Texas. Carrier was represented by Erin H. Shanley, attorney. OxyMed was represented by Scott Hilliard, attorney. Jurisdiction and notice were not contested and will be addressed in the findings of fact and conclusions of law. Following the presentation of evidence, the record was closed on the same day.

II.BACKGROUND

On___, Claimant, who worked for a road construction company, sustained a compensable injury to his spine. On July 18, 2003, a physician indicated that Claimant would have a two-level spinal fusion and requested the bone growth stimulator that Provider supplied. External bone growth stimulators are considered to be durable medical equipment (DME). On July 24, 2003, Provider delivered a stimulator to Las Colinas Medical Center in the Dallas area where Claimant was hospitalized, presumably recovering from surgery to his spine.[2]

On July 25, 2003, Provider submitted a request for reimbursement for $5,000 for the DME. Carrier paid $2,950, and disallowed the remaining $2,050 for the stimulator under code “M,” maximum allowable reimbursement.[3] Provider requested reconsideration and, after Carrier denied the request, asked for medical dispute resolution by the MRD. In a decision dated May 28, 2004, the MRD determined that Provider should be reimbursed the additional $2,050 for the DME. Carrier requested a hearing on that determination.

III.LEGAL STANDARD

The parties agree that their dispute is over the appropriate rate of reimbursement for the bone growth stimulator furnished for Claimant’s use by Provider, and that no Maximum Allowable Reimbursement is identified in a fee guideline that applies to the bone growth stimulator. In such a circumstance, applicable law begins with Texas Labor Code Ann. (Code) § 413.011(d), which provides:

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 the fee guidelines.

The Commission Rule at 28 TAC § 134.1(c) provides:

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, §413.011 until such period that specific fee guidelines are established by the commission.

“Fair and reasonable” reimbursement is defined in Commission Rule 28 TAC § 133.1(a)(8) 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.

When a carrier pays a health care provider for treatments or services for which the Commission has not established a maximum allowable reimbursement, the carrier must “(1) 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.” 28 TAC § 133.304(i)(1).

IV. EVIDENCE, PARTIES’ POSITIONS, AND ANALYSIS

Neither party presented comprehensive, direct evidence of a methodology to determine the fair and reasonable cost of services provided. Of the evidence presented, Carrier’s is sufficiently persuasive proof of a fair and reasonable charge for the same or similar services rendered by

Provider at the time those services were supplied; hence the ALJ follows Carrier’s evidence and orders reimbursement of $554.35 in addition to the $2,950 already ordered to Provider for the bone growth stimulator at issue.

No witnesses appeared for either party. Carrier offered six exhibits documenting its denial of reimbursement and the evidence before the MRD, as well as the 2003 Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies Fee Schedule (DMEPOS). Provider submitted 31 pages of documents, including the invoice from its supplier for the DME, whose cost to the Provider was $2,700.

The MRD’s entire rationale for ordering additional reimbursement to Provider is as follows:

The Requestor [Provider] provided redacted EOBs from insurance carrier that supports amount billed as a fair and reasonable reimbursement. The redacted EOBs support a need for a change in reimbursement. Additional reimbursement of $2,050 is recommended.[4]

Provider explains that it submitted several different Alternate TWCC – 62s (“explanations of benefits” or EOBs) to the MRD with the explanation that they were EOBs that reflected payments by other insurance carriers for the same or similar DME in the Dallas area. Thus, the term “carrier” in the MRD’s rationale should be understood to be plural and to refer to EOBs received by Provider from several different insurance carriers, none of them Carrier in this case.

Carrier argues that the MRD should not have considered Provider’s evidence and that the ALJ should not consider it because Provider’s evidence before the MRD and at SOAH consists of unredacted EOBs that are proscribed from such use by 28 Tex. Admin. Code (TAC) § 133.307(g)(3)(E). That section provides:

(E) Prior to submission, any documentation that contains confidential information regarding a person other than the injured employee for that claim or a party in the dispute must be redacted by the party submitting the documentation, to protect the confidential information and the privacy of the individual. Un-redacted [sic] information or evidence shall not be considered in resolving the medical fee dispute.

Provider responds that all claimant’s names, birthdates, social security numbers and addresses were removed from the EOBs both at the MRD and in its evidence at SOAH, so that the exhibits are not “unredacted” as that term is used in 28 Tex. Admin. Code (TAC) §133.307(g)(3)(E). Provider is correct regarding the information redacted from the EOBs; as submitted, it does not appear that the EOBs contain confidential information concerning claimants. Furthermore, as to their admission into evidence, Carrier has waived any objection it might have had in this proceeding by offering the EOBs as evidence.

Carrier also argues that prior MRD and SOAH decisions grant minimal, if any, evidentiary weight to EOBs relating to other uses of any device at issue in a fee dispute.[5] Carrier is correct regarding the cases it cites, but those cases do not reason that EOBs may not be relied on in part to prove that a particular charge is fair and reasonable.

Carrier produced the 1993 Medicare Fee Guidelines as evidence of a fair and reasonable rate for the stimulator. Those guidelines prescribe a “floor” rate of $2,978.70 and a “ceiling” rate of $3,504.35 for code E0748 “NU,”[6] which corresponds, according to Carrier, to the simulator when new, as it was supplied by Provider. Carrier argues that the Medicare Fee Guidelines are a better indicator of a fair and reasonable price because they reflect an effort to control costs, because Medicare patients have a standard of living at least as high as the general population of claimants, and because no one is compelled to accept the Medicare rate. Thus, according to Carrier, its evidence of a fair and reasonable rate is of much greater weight than Respondent’s EOBs from other carriers.

Carrier is correct that its evidence is entitled to consideration. This ALJ adopts the reasoning of a SOAH case cited by Carrier that considered the applicability of Medicare Fee Guidelines to another fee dispute about a service for which there was no Maximum Allowable Reimbursement. In that case, the ALJ wrote as follows:

The use of data developed by the Health Care Financing Administration (HCFA) to set payments to ASCs is appropriate because paying a specific dollar amount rather than paying a percentage of billed charges ensures cost control and because the Commission has found that the Medicare population has an equivalent standard of living to that of Texas workers’ compensation patients.[7]

On the other side of the scale, the selected EOBs offered by Provider may be, as it argues, at least some evidence of the usual and customary charges for an external bone growth stimulator in the Dallas area. But Provider has offered no evidence of the methodology it used in selecting the EOBs it presented, nor does it assert that the EOBs offered in this proceeding are all of the EOBs for its services in the Dallas area for any period of time. Thus, the transactions evidenced by the EOBs have not been shown to represent usual and customary charges; therefore, they provide no basis for a decision.

Provider has argued, but not shown, that the EOBs in evidence are for the same or similar devices. It has argued that the services and the particular model of bone growth stimulator provided in this case are specific to Claimant’s condition and are top-of-the-line, but although Provider showed that Claimant presented with some additional circumstances that may have warranted a high-end model stimulator,[8] its evidence does not show that such a model was either requested or provided for Claimant’s use. Thus, Provider’s evidence is insufficient to overcome the data Carrier offers, which on its face appears to have been compiled with at least some thought to cost control as required by Code § 413.011(d), 28 TAC §§ 133.1(a)(8) and 134.1(c).

V. CONCLUSION

Of the evidence presented by each party, Carrier’s evidence is, in this case, much more compelling. Carrier’s evidence shows that Medicare applied a “floor” rate of $2,978.70 and a “ceiling” rate of $3,504.35 to goods and services billed under E0748 for new equipment. In the case at hand, no evidence points to any amount below the ceiling rate, and the MRD ordered reimbursement of $5,000 for the bone growth stimulator. Therefore, the ALJ finds that Carrier has

proved that the reimbursement amount ordered by the MRD above $3,504.35 was not fair and reasonable, and will order total reimbursement of $3,504.35, which amounts to additional reimbursement of $554.35.

VI. FINDINGS OF FACT

  1. Claimant sustained a compensable on-the-job injury on___.
  2. Transcontinental Insurance Company (Carrier) is the workers’ compensation insurance carrier for claimant’s employer.
  3. A physician treating Claimant requested an external bone growth stimulator for postoperative treatment after a two-level fusion was performed on his back in July 2003.
  4. OxyMed, Inc., (Provider) supplied the stimulator and suspenders for the stimulator to Claimant’s physician for Claimant’s use on July 24, 2003.
  5. Provider billed $5,000 for the stimulator under CPT code E0748.
  6. Carrier paid Provider $2,950 for the stimulator.
  7. The Texas Workers Compensation Commission’s Medical Review Division (MRD) issued its Decision and Order on May 28, 2004, requiring Carrier to reimburse Provider $2,050 for the external bone growth stimulator.
  8. On June 9, 2004, Carrier filed a request for a hearing at the State Office of Administrative Hearings to challenge the MRD order.
  9. On July 19, 2004, the Commission issued a notice of hearing which included 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.
  10. The use of year 2003 data and fee ranges developed by the United States Health Care Financing Administration (HCFA) for Medicare to determine a fair and reasonable rate as required by Tex. Labor Code Ann (Code) § 413.011(d) in this case is appropriate because Medicare guidelines are a recognized health care delivery system’s standardized reimbursement structure that provides a measure of cost control as required by (Code) §413.011(d).
  11. The 2003 Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies Fee Schedule (DMEPOS) prescribes a “floor” rate of $2,978.70 and a “ceiling” rate of $3,504.35 for code E0748.
  12. A range of fair and reasonable rates for charges for a new external bone growth stimulator in the Dallas area during calendar year 2003 is from $2,978.70 up to $3,504.35.
  13. The fair and reasonable rate for the new external bone growth stimulator provided to Claimant in July 2003 in the Dallas area is $3,504.35.

VII. CONCLUSIONS OF LAW

  1. 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(k) and Tex. Gov’t Code Ann. ch. 2003.
  2. Carrier timely filed notice of appeal, as specified in 28 Tex. Admin. Code §148.3.
  3. Proper and timely notice of the hearing was effected upon the parties according to Tex. Gov’t Code Ann. ch. 2001 and 28 Tex. Admin. Code §148.4(b).
  4. Carrier had the burden of proof and proved its case by a preponderance of the evidence, pursuant to 28 Tex. Admin. Code §148.21(h) and (i), and 1 Tex. Admin. Code §155.41.
  5. When there is no pre-negotiated contract between the carrier and provider, the carrier is required to reimburse provider at the fair and reasonable rate for the item described. Tex. Labor Code Ann §413.011(d) and 28 TAC §§ 134.1(c) and 133.1(a)(8). Texas Worker’s Compensation Commission MedicalFee Guideline (1996), p. 253.
  6. The fair and reasonable charge for the external bone growth stimulator that Provider supplied for Claimant’s use in July 2003 is $3,504.35.
  7. Carrier should be ordered to reimburse Provider $554.35 in addition to the $2,950. previously paid for the external bone growth stimulator.

ORDER

IT IS, THEREFORE, ORDERED that Transcontinental Insurance Company is required to pay an additional $554.35 beyond the $2,950 previously ordered to be paid to OxyMed, Inc. for the bone growth stimulator furnished for Claimant’s use in July 2003.

Signed November 7, 2005

CHARLES HOMER III
Administrative Law Judge
STATE OFFICE OF ADMINISTRATIVE HEARINGS

  1. 1 Effective September 1, 2005, the functions of the Commission have been transferred to the newly created Division of Workers’ Compensation at the Texas Department of Insurance.↑
  2. 2 The file contains no description of Claimant’s injuries and treatment beyond notes on the request for the stimulator that was signed by the physician. (Provider Ex. 1, p. 1.) The notes indicate A2 level fusion – smoker – Use of Allograft bone.↑
  3. 3 Carrier Ex. 2. Provider also requested $40 reimbursement for a related device, which the Carrier also disallowed. The parties raised no issue about the $40 before or during the hearing.↑
  4. 4 Carrier Ex. 5, p. 2.↑
  5. 5 SOAH Docket No. 453-04-0010.M4 (December 19, 2003); SOAH Docket No. 453-02-3489.M5 (November 26, 2002); SOAH Docket No. 453-02-3878.M5 (November 27, 2002); SOAH Consolidated Docket Nos. 453-01-1179.M4, 453-01-1262.M4, and 453-01-1263.M4 (January 23, 2002).↑
  6. 6 Carrier Ex. 6, p. 14. “NU” refers to new equipment, and thus is the appropriate figure for this case, in which Provider has shown that it bought the equipment one day before it supplied it to Claimant’s physician.↑
  7. 7 SOAH Consolidated Docket Nos. 453-01-1179.M4, et al, above, at Finding of Fact No. 25.↑
  8. 8 Provider’s Ex. 1, p. 1 is physician’s notes dated July 18, 2003, that indicate “2 level fusion,” “smoker,” and “use of Allograft bone.”↑