DECISION AND ORDER

This is a dispute over interpretation of the stop-loss provisions of the Texas Workers’ Compensation Commission’s (Commission’s) 1997 Acute Care Inpatient Hospital Fee Guideline. The Administrative Law Judge (ALJ) concludes the stop-loss provisions do not apply and that the workers’ compensation carrier owes no additional reimbursement to the hospital, contrary to what was ordered by the Commission’s Medical Review Division (MRD).

I. HISTORY AND ISSUES

On____, the workers’ compensation claimant (Claimant) underwent spinal fusion surgery at Southwest Texas Medical Hospital (STMH). The Claimant remained in the hospital through September 29, 2004. STMH calculated the bill for its services at $70,759.24, and requested reimbursement of 75 percent of that amount, which is $53,069.43. The 75 percent figure was based on the stop-loss provisions of the Commission’s 1997 Acute Care Inpatient Fee Guideline (the Guideline), 28 Tex. Admin. Code (TAC) §134.401(c)(6). Under the Guideline, hospital stays typically are reimbursed at a per diem rate. As explained in that subsection of the Guideline, however,

Stop-loss is an independent reimbursement methodology established to ensure fair and reasonable compensation to the hospital for unusually costly services rendered during treatment to an injured worker. This methodology shall be used in place of and not in addition to the per diem based reimbursement system . . . .

The minimum level for application of the stop-loss methodologyBthe stop-loss thresholdBis $40,000. If a bill qualifies for the stop-loss methodology, reimbursement for the entire admission is paid at 75 percent of the audited charges.

In this case, STMH’s bill includeda charge of $55,056.00 for implantables^[1]. In its audit, the workers’ compensation carrier, American Home Assurance Company (AHAC), reduced the pricing for the implantables to cost plus ten percent, which it claims is the fair and reasonable level mandated by the Guideline. That reduction brought the total bill below the stop-loss threshold of $40,000. Therefore, AHAC paid the per diem amounts, plus the cost of the implantables, plus ten percent. The difference between that amount and what STMH believes is appropriate reimbursement is $36,727.33.

After its request for reconsideration was denied, AHAC filed a timely request for medical dispute resolution. The Commission’s Medical Review Division ruled in STMH’s favor, whereupon AHAC filed a timely request for a hearing.

The hearing was convened June 2, 2005, with ALJ Bill Zukauckas presiding. Only AHAC appeared at the hearing, which was adjourned the same day. The record also closed that same day.

AHAC argues that it was entitled, and indeed required, to audit STMH’s bill under the Guideline itself, 28 TAC §134.401(b)((2)(C) and the Commission’s rule for retrospective review of medical bills, 28 TAC §133.301. In its audit, AHAC determined that the fair and reasonable charge for implantables was cost plus ten percent. Reducing the implantables to that level brought the bill below the stop-loss threshold.

II. ALJ’S ANALYSIS

Under 28 TAC §148.21(h), the Petitioner, in this case AHAC, has the burden of proof. The ALJ concludes it met that burden.

The first issue is the extent to which AHAC could audit the bill. The ALJ agrees with AHAC that AHAC was entitled to review the bill retrospectively under the provisions of 28 TAC §133.301.

The second issue is whether, in the audit, AHAC properly reduced the implantables charge to the “fair and reasonable” level of cost plus ten percent. The Guideline, at 28 TAC §134.401(c)(4)(A)(i), establishes cost plus ten percent as the level of reimbursement for implantables. The ALJ concludes this is the appropriate reduction in this case based on the stop-loss level of $40,000 not being reached. Therefore, AHAC has calculated and paid STMH at the daily per diem amount and costs for implantables plus ten percent. AHAC has shown that it does not owe STMH any additional reimbursement.

III. FINDINGS OF FACT

1. On____, the workers’ compensation claimant (Claimant) underwent spinal fusion surgery at Southwest Texas Methodist Hospital (STMH).
2. The Claimant remained in the hospital through September 29, 2004.
3. STMH calculated the bill for its services at $70,759.24, and requested reimbursement of 75 percent of that amount, which is $53,069.43.
4. The 75 percent figure was based on the stop-loss provisions of the Commission’s 1997 Acute Care Inpatient Fee Guideline (the Guideline), 28 Tex. Admin. Code (TAC) §134.401(c)(6).
5. STMH’s bill includeda charge of $55,056.00 for implantables.
6. STMH’s cost for those implantables was $11,091.00.
7. In its audit, the workers’ compensation carrier, American Home Assurance Company (AHAC), reduced the pricing for the implantables to cost plus ten percent.
8. AHAC’s reduction brought the total bill below the stop-loss threshold of $40,000.
9. Because the audited total bill was below $40,000, AHAC paid the per diem amounts set out in the Guideline, plus the cost of the implantables plus ten percent.
10. The difference between the amount paid by AHAC and the amount that would be payable under the stop-loss methodology is $36,727.33.
11. After its request for reconsideration was denied, AHAC filed a timely request for medical dispute resolution.
12. The Commission’s Medical Review Division ruled in STMH’s favor, whereupon AHAC filed a timely request for a hearing.
13. Notice of the hearing date was sent to all parties March 4, 2005.
14. The original notice of hearing 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.
15. The hearing was convened June 2, 2005, with ALJ Bill Zukauckas presiding. Only AHAC appeared at the hearing, which was adjourned the same day. The record also closed that same day.

IV. CONCLUSIONS OF LAW

1. 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.
2. Adequate and timely notice of the hearing was provided in accordance with Tex. Gov’t Code Ann. §2001.052.
3. Under 28 TAC §148.21(h), the Petitioner, in this case AHAC, has the burden of proof.
4. Under the Guideline, hospital stays typically are reimbursed at a per diem rate.
5. The stop-loss provisions of the Guideline, 28 Tex. Admin. Code (TAC) §134.401(c)(6), establish an independent reimbursement methodology in lieu of the per diem methodology.
6. AHAC was entitled to review STMH’s bill retrospectively under the provisions of 28 TAC §133.301.
7. Pursuant to 28 TAC §134.401(b)(1)(C) and 28 TAC §133.301, AHAC’s audit was not limited to the deduction of personal items and items unrelated to the compensable injury.
8. The Guideline, at 28 TAC §134.401(c)(4)(A)(i), establishes cost plus ten percent as the level of reimbursement for implantables when the implantables are additional reimbursements, supplementing the per diem rates, when total charges fall below the stop-loss threshold.
9. The stop-loss provisions of 28 TAC ‘134.401 should not be applied in this case.
10. AHAC owes no additional reimbursement to STMH.

ORDER

It is therefore ordered that American Home Assurance Company owes no further reimbursement to Southwest Texas Medical Hospital.

Signed July 26, 2005.

BILL ZUKAUCKAS
Administrative Law Judge
STATE OFFICE OF ADMINISTRATIVE HEARINGS

1. Implantables are hardware, e.g. screws and rods, implanted in a patient during back fusion surgery.↑