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Holmes Prosthetic Center, LLC (Holmes) sought additional reimbursement from Zurich American Insurance Company (Zurich) for services rendered to an injured worker (Claimant), who sustained a work-related compensable injury on _______. After reviewing the evidence presented and the applicable law, the Administrative Law Judge (ALJ) concludes that Zurich owes Holmes no additional reimbursement.
There are no disputed issues of notice or jurisdiction. Therefore, those matters are set out in the Findings of Fact and Conclusions of Law without further discussion here.
Holmes appealed the Medical Fee Dispute (MFD) Decision issued by the Texas Department of Insurance, Division of Workers’ Compensation (Division) on September 27, 2021. The MFD Decision ordered Zurich to reimburse Holmes $54,097.08 for implantables1 used during outpatient surgery provided to Claimant. Holmes appealed the MFD Decision to the State Office of Administrative Hearings (SOAH) and sought $92,720.85 in additional reimbursement.
On February 9, 2023, SOAH ALJ Steve Rivas convened a hearing on the merits by Zoom videoconference. Attorney Larry Trimble represented Holmes. Attorney William Wright represented Zurich. The record closed on March 3, 2023, after the parties submitted written closing arguments.
Under Texas Labor Code section 413.011(a), the Commissioner shall adopt health care reimbursement policies and guidelines that reflect the standardized reimbursement structures found in other health care delivery systems with minimal modifications to those reimbursement methodologies as necessary to meet occupational injury requirements. Furthermore, under Texas Labor Code section 413.011(d), fee guidelines must be fair and reasonable and designed to ensure the quality of medical care and to achieve effective medical cost control.
28 Texas Administrative Code section 134.403 applies to medical services provided in an outpatient acute care hospital. Absent a contracted fee schedule, reimbursement to a provider shall be the maximum allowable reimbursement (MAR) amount, including any applicable outlier payment amounts and reimbursement for implantables.2 An “implantable” is an object or device that is surgically implanted, embedded, inserted, or otherwise applied, and related equipment necessary to operate, program, and recharge the implantable.3 MAR for implantables is calculated as follows:
(f) The reimbursement calculation used for establishing the MAR shall be the Medicare facility specific amount, including outlier payment amounts, determined by applying the most recently adopted and effective Medicare Outpatient Prospective Payment System (OPPS) reimbursement formula and factors as published annually in the Federal Register. The following minimal modifications shall be applied.
(1) The sum of the Medicare facility specific reimbursement amount and any applicable outlier payment amount shall be multiplied by:
(A) 200 percent; unless
(B) a facility or surgical implant provider requests separate reimbursement in accordance with subsection (g) of this section, in which case the facility specific reimbursement amount and any applicable outlier payment amount shall be multiplied by 130 percent.
(2) When calculating outlier payment amounts, the facility’s total billed charges shall be reduced by the facility’s billed charges for any item reimbursed separately under subsection (g) of this section.
(g) Implantables, when billed separately by the facility or a surgical implant provider in accordance with subsection (f)(1)(B) of this section, shall be reimbursed at the lesser of the manufacturer’s invoice amount or the net amount (exclusive of rebates and discounts) plus 10 percent or $1,000 per billed item add-on, whichever is less, but not to exceed $2,000 in add-on’s per admission.4
Fair and reasonable reimbursement shall be consistent with the criteria of Texas Labor Code section 413.011, ensure that similar procedures provided in similar circumstances receive similar reimbursement, and be based on nationally recognized published studies, published Division medical dispute decisions, and/or values assigned for services involving similar work and resource commitments, if available.5
For products and services for which no relative value unit or payment has been assigned by Medicare, Texas Medicaid as set forth in 28 Texas Administrative Code sections 134.203(d) or 134.204(f), or the Division, reimbursement shall be provided in accordance with 28 Texas Administrative Code section 134.1 (relating to Medical Reimbursement).6
Unresolved disputes “over the amount of payment due for services determined to be medically necessary and appropriate for treatment of a compensable injury” may be resolved by a contested case hearing at SOAH.7 As the party seeking relief from the MFD Decision, Holmes has the burden of proof by a preponderance of the evidence.8
Holmes offered 10 exhibits,9 which were admitted as evidence, and called its owner, John Holmes, to offer testimony. Zurich offered 24 exhibits,10 which were admitted, but called no witnesses.
The facts of this case are mostly undisputed. On _______, Claimant sustained a work-related compensable injury. Due to his injury, both of Claimant’s legs were amputated around his knees and Claimant was fitted with implantables on both legs. However, it is unclear from the record who provided Claimant his implantables prior to 2018.
On October 4, 2018, due to infections caused by of Claimant’s original implantables, Holmes fitted Claimant with new implantables on both legs.11 The implantable on Claimant’s left leg consisted of a prosthetic patella and other parts that made up his left leg.12 The implantable on Claimant’s right leg consisted of prosthetic parts fitted below Claimant’s natural patella that made up his right leg.13 Holmes raised no issue with the reimbursement he received for his services in 2018.
On _______, Claimant lost his left leg implantable while either jet skiing or waterskiing.14 The parties seemed unclear as to how the accident occurred. Mr. Holmes was not certain if it occurred on _______ Lake or _______. Regardless, Zurich did not dispute this point. On July 17, 2019, Holmes sought preauthorization to replace Claimant’s left leg implantable,15 which Holmes received on July 25, 2019.16 The preauthorization letter stated, “This is a review of medical necessity only. This does not guarantee that benefits will be payable under Workers Compensation coverage. Benefit payments are always subject to a determination by a claims adjuster at the time the service was rendered.”17
On September 11, 2019, Holmes provided Claimant the implantable and billed Zurich a total of $146,817.93. Of that amount, $80,000 was billed under Healthcare Common Procedure Coding System (HCPCS) Code L5999, attributable to a prosthetic part manufactured by the German-based company Ottobock.18 Zurich denied full reimbursement on the basis that Holmes lacked preauthorization or precertification for the procedure19 and that Zurich was not liable for replacement of a lost implantable.20 On August 26, 2021, Holmes filed a request for MFD resolution with the Division. On September 27, 2021, the MFD Decision awarded $54,097.08 reimbursement to Holmes, which Zurich has paid. Holmes appealed the MFD Decision to SOAH for additional reimbursement.
John Holmes testified that on _______, he received a phone call from Claimant, who stated that he lost his implantable at “the lake.” Mr. Holmes explained that on that date, he commissioned a diver to search the area where Claimant claimed he lost the prothesis, but it could not be located. Mr. Holmes said a police report was not made for the lost implantable.
Mr. Holmes testified that despite losing the implantable in a lake accident, Claimant still needs it to remain employed and to promote recovery of his _______ compensable injury. Mr. Holmes believed Zurich owes reimbursement for all of Claimant’s medical expenses regardless of whether the expenses rise out of Claimant’s own negligence.
The MFD Decision found that Holmes received preauthorization for the replacement of the implantable and that Zurich waived its right to deny reimbursement based on medical necessity or because Claimant lost the implantable. The MFD Decision also found (and the parties agree) that Code L5999 has no assigned value and, in the absence of an applicable fee guideline or negotiated contract, reimbursement shall be fair and reasonable under 28 Texas Administrative Code section 134.1(f).
The MFD Decision noted that in considering reimbursement, the Division requested supporting documentation from Holmes to support full reimbursement; however, Holmes’s documentation, which included a manufacturer’s note that the cost of the implantable was $115,000, did not discuss, demonstrate, or justify a reimbursement of $80,000 for Code L5999.21 As such, the MFD Decision applied 28 Texas Administrative Code section 134.203(d)(3), which mandates that the MAR be calculated according to 28 Texas Administrative Code sections 134.203(f) and 134.1.22
Holmes billed Zurich under several HCPCS codes for the procedure to replace Claimant’s implantable. In determining $54,097.08 of reimbursement, the MFD Decision found a MAR for all but one code, that being HCPCS Code L5999. There is no question that Code L5999 has no assigned value and, as such, reimbursement shall be fair and reasonable under the Division’s rules. In addition to the peculiarities of this case (such as how and where Claimant lost the implantable), the ALJ finds the MFD Decision appropriately determined reimbursement.
The testimony provided by Mr. Holmes at the hearing was unhelpful. Obviously, a new implantable would benefit Clamant. The question, however, is whether the reimbursement amount was fair and reasonable. Under these circumstances, the ALJ finds that $54,097.08 is appropriate.
Under Texas Labor Code section 413.011, fair and reasonable reimbursement shall ensure that similar procedures provided in similar circumstances receive similar reimbursement. In this case, Holmes failed to demonstrate a similar circumstance where a provider of implantables was fully reimbursed following a loss of an implantable under any circumstance, not to mention a loss sustained during a recreational activity. Moreover, Holmes failed to show full reimbursement is appropriate based on nationally recognized published studies, published Division medical dispute decisions, and/or values assigned for services involving similar work and resource commitments. In short, there is no precedence for ordering full reimbursement under the circumstances presented in this matter. Despite the manufacturer’s $115,000 cost of the item billed under Code L5999, the ALJ finds Holmes did not meet its burden to prove by a preponderance of the evidence that Zurich owes any additional reimbursement.
1. On _______, an injured worker (Claimant) sustained a work-related compensable injury.
2. Due to Claimant’s injury, both of his legs around his knees were amputated.
3. Prior to 2018, Claimant was fitted with “implantables” on both of his legs.
4. On October 4, 2018, due to infections caused by Claimant’s original implantables, Holmes Prosthetic Center, LLC (Holmes) fitted Claimant with new implantables on his legs.
5. Holmes raised no issue with the reimbursement he received for his services in 2018.
6. On _______, Claimant lost his left leg implantable in a jet ski or waterskiing accident on Lake or _______.
7. Claimant did not file a police report for the lost implantable.
8. On July 17, 2019, Holmes sought preauthorization to replace Claimant’s left leg implantable.
9. On July 25, 2019, Holmes received preauthorization.
10. The preauthorization letter stated, “This is a review of medical necessity only. This does not guarantee that benefits will be payable under Workers Compensation coverage. Benefit payments are always subject to a determination by a claims adjuster at the time the service was rendered.”
11. On September 11, 2019, Holmes provided the implantable to Claimant and billed Zurich American Insurance Company (Zurich) a total of $146,817.93.
12. Of that total amount, $80,000 was billed under Healthcare Common Procedure Coding System (HCPCS) Code L5999, attributable to a prosthetic part manufactured by the German-based company Ottobock.
13. Zurich denied full reimbursement on the basis that Holmes lacked preauthorization or precertification for the procedure and that Zurich was not liable for replacement of a lost implantable.
14. On August 26, 2021, Holmes filed a request for medical fee dispute (MFD) resolution with the Texas Department of Insurance, Division of Workers’ Compensation (Division).
15. On September 27, 2021, the MFD Decision awarded $54,097.08 reimbursement to Holmes, which Zurich has paid. Holmes appealed the MFD Decision to the State Office of Administrative Hearings (SOAH) for $92,720.85 additional reimbursement.
16. On November 2, 2021, the Division issued a Notice of Hearing.
17. On November 3, 2022, SOAH issued an Order Scheduling Hearing on the Merits.
18. The notice, along with the SOAH Order Scheduling Hearing on the Merits, informed the parties of the time, place, and nature of the hearing; the factual matters to be considered; the legal authority and jurisdiction under which the hearing would be held; and the statutory provisions applicable to the matters to be considered.
19. On February 9, 2023, SOAH Administrative Law Judge Steve Rivas convened a hearing on the merits by Zoom videoconference. Attorney Larry Trimble represented Holmes. Attorney William Wright represented Zurich. The record closed on March 3, 2023, after the parties submitted written closing arguments.
20. Zurich adequately reimbursed Holmes for services provided to Claimant.
1. SOAH has jurisdiction over this proceeding, including the authority to issue a decision and order. Tex. Lab. Code § 413.031; Tex. Gov’t Code ch. 2003.
2. Adequate and timely notice of the hearing was provided. Tex. Gov’t Code §§ 2001.051-.052.
3. Holmes had the burden of proof in this proceeding by a preponderance of the evidence. 28 Tex. Admin. Code § 148.14(b), (e).
4. The MFD Resolution Findings and Decision concluding that Zurich owes $54,097.08 is fair and reasonable. Tex. Lab. Code § 413.011; 28 Tex. Admin. Code § 134.403(f).
Zurich is not required to pay Holmes any additional reimbursement for services provided to Claimant.
Texas Labor Code section 413.0312(g) and 28 Texas Administrative Code section 133.307(h) require the non-prevailing party to reimburse the Division for the cost of services provided by SOAH. Texas Labor Code section 413.0312(i) requires SOAH to identify the non-prevailing party and any costs for services provide by SOAH in its final decision. For purposes of Texas Labor Code section 413.0312, Holmes Prosthetic Center, LLC is the non-prevailing party. The costs associated with this decision are set forth in Attachment A to this Decision and Order and are incorporated herein for all purposes.
Signed April 26, 2023.
STEVEN M. RIVAS
ADMINISTRATIVE LAW JUDGE
STATE OFFICE OF ADMINISTRATIVE HEARINGS
1 28 Tex. Admin. Code § 134.403(e)(2).
2 28 Tex. Admin. Code § 134.403(e)(2).
3 28 Tex. Admin. Code § 134.403(b)(2).
4 28 Tex. Admin. Code § 134.403(f)-(g).
5 28 Tex. Admin. Code § 134.1(f).
6 28 Tex. Admin. Code § 134.203(f).
7 Tex. Labor Code § 413.031(c).
8 28 Tex. Admin. Code § 148.14(b), (e).
9 Holmes Exhibits 1-10.
10 Zurich Exhibits A-X.
11 Zurich Exs. V, W, X.
12 Id.
13 Id.
14 Holmes Ex. 3 at 2. The medical record from _______ Hospital in _______, dated _______, indicated that Claimant “lost left … prothesis in lake last week.” Id. Claimant did not testify.
15 Holmes Ex. 3 at 1.
16 Holmes Ex. 3 at 11.
17 Id.
18 Holmes Ex. 5. See also 28 Tex. Admin. Code § 134.203(d).
19 Zurich Exs. E, F.
20 Zurich Ex. G.
21 Zurich Ex. R at 4.
22 Zurich Ex. R at 4-5.
Petitioner Executive Risk Indemnity (Carrier) challenges the decision of the Texas Department of Insurance, Division of Workers’ Compensation (Division), which ordered reimbursement of $39,111.59 to MHHS Hermann Hospital (Provider). The Administrative Law Judge (ALJ) finds that Provider did not provide the required documentation with its request for reimbursement and subsequent requests for reimbursement. Therefore, the ALJ concludes that Provider is not entitled to reimbursement.
There are no contested issues of notice or jurisdiction; therefore, these matters are addressed solely in the Findings of Fact and Conclusions of Law.
On February 2, 2022, the Division received Provider’s request for a Medical Fee Dispute Resolution (MFDR).1 On February 18, 2022, Carrier filed a response to the MFDR request, arguing that Provider failed to provide required documentation—an itemized statement of charges—prior to requesting an MFDR.2 On February 25, 2022, the Division issued its MFDR decision, finding that Provider was entitled to reimbursement in the amount of $39,111.59 plus interest.3 Carrier requested a hearing at the State Office of Administrative Hearings (SOAH) to contest the Division’s determination. On September 8, 2022, the Division issued a Request to Docket letter that, when combined with SOAH’s order setting the hearing, issued October 3, 2022, served as a notice of hearing.
On December 15, 2022, SOAH ALJ Brent McCabe convened a hearing on the merits via Zoom videoconference. Carrier appeared through its attorney, John Fundis. Provider appeared through its non-attorney representative, Donna Bachmann. The record closed with the filing of exhibits on December 20, 2022.
This case involves a medical fee dispute for reimbursement under a workers’ compensation policy provided by Carrier. The resolution of a fee dispute is regulated by the Division’s billing, audit, and payment rules.4 When submitting a medical bill for reimbursement, a provider is required to submit certain documentation to the carrier.5 In addition to the documentation required for all reimbursement submissions, a provider seeking reimbursement for hospital services is required to submit an itemized statement of charges.6 The carrier must take action on the request, which includes sending an explanation of benefits to the provider.7
If a health care provider is denied or paid a reduced amount for the medical services rendered to an injured employee, the provider is entitled to review— MFDR—by the Division.8 The request for an MFDR shall include, among other things, a copy of all medical bills related to the dispute as originally submitted to the carrier.9 If a dispute remains after an MFDR review, a party may request a contested case hearing at SOAH.10 As the party requesting a hearing at SOAH to challenge an adverse medical fee dispute decision, Carrier has the burden of proof to show by a preponderance of the evidence that Provider is not entitled to reimbursement.11 The hearing before SOAH is a de novo review of the issues involved.12
At the hearing, Carrier offered seven exhibits, which were admitted, and the testimony of Tara Kerz, vice president of medical review services at CorVel Corporation (CorVel)—the company that provides medical bill review services for Carrier. Provider offered the testimony of its representative, Donna Bachmann, an insurance recovery analyst for ClaimAssist, LLC (ClaimAssist)—a company who handles the submission of Provider’s medical bills for reimbursement—and did not offer any exhibits.
Ms. Kerz testified that Carrier, through CorVel, received and reviewed the following submissions for medical bill reimbursement from Provider related to hospital services for an injured worker with service dates between May 20, 2021, through June 4, 2021:
| Document | Date Received | Date of Carrier’s Decision | Carrier’s Decision and Basis for Decision |
|
Original Medical Bill Submitted for Reimbursement13 | 7/20/21 | 7/29/21 | Denied for failing to include required documentation14 |
| First Request for Reimbursement15 | lO/ll/21 | lO/l3/21 | Denied because it was considered duplicate billing because did not constitute a complete request for reconsideration under the rules16 |
| Second Request for Reimbursement17 | ll/1/21 | 11/11/21 | Denied because it was considered duplicate billing because it did not constitute a complete request for reconsideration under the rules18 |
| Third Request for Reimbursement19 | ll/l5/21 | 11/22/21 | Denied because the information requested was not provided or was insufficient20 |
| Fourth Request for Reimbursement21 | 12/10/21 | 12/16/21 | Denied because this information requested was not provided or was insufficient22 |
Ms. Kerz indicated that Provider did submit an itemized statement with its request for MFDR;23 however, Carrier did not receive this itemized statement with Provider’s original request for reimbursement or any of the requests for reconsideration.
Ms. Bachmann testified that she was the person who submitted the claim for reimbursement and subsequent requests for reconsideration. She believed that an itemized statement had been provided to Carrier. To submit medical bills, Ms. Bachmann described a system that ClaimAssist uses, which required her to select which documents to print and be sent. After processing the selected documents, the system will indicate that the selected documents were printed. After the system completes the process for selection and printing, the documents are mailed using a third-party mailing service. As for this claim, Ms. Bachmann acknowledged that she was having difficulties with this system and the selection of documents to print. She indicated that she would select her documents, but the system would only print a small subset of the selected documents. She felt that Carrier received multiple requests for reconsideration because she would request the documents but only a few pages would be sent, such as the uniform billing form and appeal letter. For the last request for reconsideration received on December 10, 2021, Ms. Bachmann testified that she checked her system following her selection, and the system indicated that all documents had printed. Ms. Bachmann stated that because ClaimAssist uses a third party to mail the documentation, she cannot demonstrate that the itemized statement of charges was actually mailed. However, because the applicable documents were confirmed as printed, she concludes that all the necessary documents including the itemized statement would have been sent to Carrier and she does not know why they do not have it in their system.
IV. AnalysisAt the hearing, the parties agreed that the sole dispute is whether the itemized statement was submitted with the claim for reimbursement or any request for reconsideration to Carrier. Carrier argues, and Provider acknowledges, that if the ALJ finds that an itemized statement was not provided, then the Division improperly found that Provider was entitled to reimbursement. However, the parties agree that if the ALJ finds that the itemized statement was provided to Carrier, then Provider is entitled to reimbursement and the amount of reimbursement determined by the Division is correct.
Carrier met its burden to establish that an itemized statement of charges was not provided by Provider in the original claim for reimbursement or any of the three requests for reconsideration. Ms. Kerz testified that Exhibits D through G represented the documents received by Carrier in connection with this claim for reimbursement. In these documents, there is no itemized statement of charges, and Ms. Kerz testified that Carrier never received an itemized statement prior to receiving Provider’s request for MFDR. While Ms. Bachmann indicated that she believed the entire file, including the itemized statement, was provided to Carrier, she could not demonstrate that it was sent. Additionally, she identified difficulties she experienced with the system ClaimAssist used to prepare and deliver the documents. This difficulty is demonstrated by the multiple requests for reconsideration that contained only a few documents. While Ms. Bachmann felt that the last reconsideration request corrected these issues, the evidence that Carrier did not receive the itemized statement along with the repeated difficulties suggest that it was not included in the final request for reconsideration or the prior submissions.
Considering this evidence, the ALJ finds that it is more than likely than not that an itemized statement of charges was not provided to Carrier. A provider is required to submit an itemized statement of charges when submitting a medical bill for reimbursement for hospital services.24 The parties agreed that if the itemized statement was not provided, Provider is not entitled to reimbursement. Therefore, given the finding in this case, the ALJ concludes that Provider is not entitled to reimbursement of the medical bills at issue in this case.
1. From May 20, 2021, through June 4, 2021, MHHS Herman Hospital (Provider) provided hospital services for an injured worker covered by the workers’ compensation insurance system.
2. In July 2021, Executive Risk Indemnity (Carrier) received a claim for reimbursement from Provider for the hospital services.
3. Carrier denied reimbursement and sent to Provider an explanation of benefits form for the claim, indicating that the service lacked information needed and that Provider should resubmit with an itemized statement of charges for consideration.
4. On October 11, 2021, Carrier received a request for reconsideration of the denial of the claim for reimbursement from Provider.
5. Carrier denied the request and considered this submission to be duplicate billing because it did not comply with the rules for submitting a request for reconsideration.
6. On November 1, 2021, Carrier received a second request for reconsideration of the denial of the claim for reimbursement from Provider.
7. Carrier denied the request and considered this second reconsideration submission to be duplicate billing because it did not comply with the rules for submitting a request for reconsideration.
8. On November 15, 2021, Carrier received a third request for reimbursement of the denial of the claim for reimbursement from Provider.
9. Carrier denied this request for reimbursement because Provider did not provide the requested information, or the documentation was insufficient.
10. On December 10, 2021, Carrier received a fourth request for reconsideration of the denial of the claim for reimbursement from Provider.
11. Carrier denied this request for reimbursement because Provider did not provide the requested information, or the documentation was insufficient.
12. Provider did not provide to Carrier an itemized statement of charges for the service dates with its claim for reimbursement or any of its requests for reconsideration.
13. On February 2, 2022, the Texas Department of Insurance, Division of Workers’ Compensation (Division) received Provider’s request for a Medical Fee Dispute Resolution (MFDR).
14. In the MFDR response, Carrier argued that reimbursement should be denied because Provider did not submit the required itemized statement of charges.
15. On February 25, 2022, the Division issued its MFDR decision, finding that Provider was entitled to reimbursement in the amount of $39,111.59 plus interest.
16. Carrier timely requested a hearing at the State Office of Administrative Hearings (SOAH) to contest the Division’s determination.
17. On September 8, 2022, the Division issued a notice to the parties with a statement of the nature of the hearing; 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 either a short, plain statement of the factual matters asserted or an attachment that incorporated by reference the factual matters asserted in the complaint or petition filed with the state agency.
18. On October 3, 2022, the SOAH Administrative Law Judge (ALJ) issued an order with the statement of the time and place of the hearing and instructions for participating in the hearing.
19. On December 15, 2022, SOAH ALJ Brent McCabe convened a hearing on the merits via Zoom videoconference. Carrier appeared through attorney John Fundis. Provider appeared through its non-attorney representative, Donna Bachmann. The record closed with the filing of exhibits on December 20, 2022.
1. Adequate and timely notice of the hearing was provided to the parties. Tex. Gov’t Code §§ 2001.051-.052.
2. If a health care provider is denied or paid a reduced amount for the medical services rendered to an injured employee, the provider is entitled to review— an MFDR—by the Division. Tex. Labor Code § 413.031(a).
3. If a dispute remains after the MFDR review, a party may request a contested case hearing at SOAH. Tex. Labor Code § 413.0312(e).
4. SOAH has jurisdiction over this proceeding, including the authority to issue a decision and order. Tex. Labor Code §§ 413.031, .0312(e); Tex. Gov’t Code ch. 2003.
5. The hearing before SOAH is a de novo review of the issues involved. <em>See Vista Med. Ctr. Hosp. v. Texas Mut. Ins. Co.</em>, 416 S.W.3d 11, 17-18 (Tex. App.— Austin 2013, no pet.).
6. Carrier has the burden of proof to show by a preponderance of the evidence that Provider is not entitled to reimbursement. 28 Tex. Admin. Code § 148.14(b), (e).
7. A provider seeking reimbursement of hospital services is required to submit itemized statement of charges with its request for reimbursement. 28 Tex. Admin. Code § 133.210(c)(5).
8. Provider is not entitled to reimbursement for the claim-at-issue submitted to Carrier for hospital services provided to the injured worker.
It is ORDERED that Provider is not entitled to reimbursement, because it did not submit the required documentation to Carrier.
Texas Labor Code section 413.0312(g) and 28 Texas Administrative Code section 133.307(h) require the nonprevailing party to reimburse the Division for the cost of services provided by SOAH. Texas Labor Code section 413.0312(i) requires SOAH to identify the nonprevailing party and any costs for services provided by SOAH in its final decision. For purposes of Texas Labor Code section 413.0312, Provider is the nonprevailing party. The costs associated with this decision are set forth in Attachment A to this Decision and Order and are incorporated herein for all purposes.
Signed February 14, 2023.
ALJ Signature(s):
Brent McCabe,
Presiding Administrative Law Judge
Footnotes:
1 Carrier Ex. A at 2.
2 Carrier Ex. B at 2.
3 Carrier Ex. C at 4.
4 28 Tex. Admin. Code ch. 133.
5 28 Tex. Admin. Code § 133.210(a)-(b).
6 28 Tex. Admin. Code § 133.210(c)(5).
7 28 Tex. Admin. Code § 133.240(e).
8 Tex. Labor Code § 413.031(a).
9 28 Tex. Admin. Code § 133.307(c)(2)(J).
10 Tex. Labor Code § 413.0312(e).
11 28 Tex. Admin. Code § 148.14(b), (e).
12 See Vista Med. Ctr. Hosp. v. Tex. Mut. Ins. Co., 416 S.W.3d 11, 17-18 (Tex. App.—Austin 2013, no pet.).
13 See Carrier Ex. D at 1.
14 See Carrier Ex. A at 9-10 ("Please resubmit with hospital itemization for further payment consideration. Thank you.").
15 See Carrier Ex. B at 8-12.
16 See Carrier Ex. B at 3-5.
17 See generally Carrier Ex. E.
18 See Carrier Ex. Bat 13-15.
19 See generally Carrier Ex. F.
20 See Carrier Ex.Bat 21-22. Ms. Kerz testified that this submission was denied as duplicate billing like the previous request; however, the explanation of benefits indicates the information requested was not provided or was insufficient. Carrier Ex. B at 22.
21 See generally Carrier Ex. G.
22 Carrier Ex. A at 14-16. Ms. Kerz testified that this submission still did not contain an itemized statement.
23 Carrier Ex. A at 19-33.
24 28 Tex. Admin. Code § 133.210(c)(5).
An Administrative Law Judge (ALJ) with the Texas Department of Insurance, Division of Workers’ Compensation (Division) denied _______ reimbursement of about $39,000.00 in out-of-pocket medical expenses because his request for medical fee dispute resolution was too late—more than one year after his out-of-pocket medical expenses were incurred and more than 60 days after a prior administrative decision determined that his injury was compensable. Mr. _______ now appeals that decision to the State Office of Administrative Hearings (SOAH). After holding a hearing and considering the evidence and the applicable law, the SOAH ALJ concludes that Mr. _______ is not entitled to additional reimbursement because his request for medical fee dispute resolution was untimely.
In _______, _______ was injured while working for _______, and in December 2020, the Division issued a decision concluding that Mr. _______ suffered a compensable injury and was entitled to workers’ compensation benefits. In April 2022, the Division issued another decision, concluding that Mr. _______ was not entitled to reimbursement of about $39,000.00 in out-of-pocket medical expenses incurred after the injury. Mr. _______ appealed to SOAH for a contested case hearing about the matter. On November 16, 2022, a hearing was held before SOAH ALJ Andrew Lutostanski. Mr. _______ represented himself. Attorney Steven M. Tipton represented the insurance carrier, New Hampshire Insurance Company. Afterward the parties filed exhibits and closing arguments, and the record closed on December 16, 2022.
Medical fee disputes are governed by the Division’s billing, audit, and payment rules.1 Certain parties may request medical fee dispute resolution.2 Mr. _______ may request medical fee dispute resolution because he is an injured employee in a dispute with his insurance carrier about reimbursement for medical expenses he paid for.3 A requestor must timely file the request for medical fee dispute resolution with the Division or the requestor waives the right to medical fee dispute resolution.4 A request must be “filed no later than one year after the date(s) of service in dispute,” unless an exception applies.5 One exception to the one-year deadline is when a related compensability, extent of injury, or liability dispute under Labor Code Chapter 410 has been filed.6 Then the “medical fee dispute shall be filed not later than 60 days after the date the requestor receives the final decision, inclusive of all appeals, on compensability, extent of injury, or liability.”
The Division deems a request filed on the date it receives the request.7 Unless the great weight of evidence indicates otherwise, the Division deems the received date for written communications sent by the Division that require the recipient to perform an action by a specific date after receipt to be the earliest of:
(1) five days after the date mailed via United States Postal Service regular mail, (2) the first working day after the date the written communication was placed in an insurance carrier’s Austin representative’s electronic box, or (3) the date faxed or electronically transmitted.8
The Division will review a request for medical fee dispute resolution and take appropriate action, including issuing a decision.9 A request for medical fee dispute must include the date of the injury, the dates of the services in dispute, a description of the services paid, the amount paid by the injured employee, and the amount of the medical fee in dispute.10 A party to a medical fee dispute may seek review of a Division decision by first requesting a benefit review conference. If after that the matter still remains unresolved, a party may appeal by requesting a contested case hearing before SOAH.11 The party seeking review of the medical fee dispute resolution decision has the burden of proof by the preponderance of the evidence.12
In _______, Mr. _______ led an emergency response team for _______.13 Wearing heavy firefighting gear and a breathing apparatus weighing about 90 pounds, he went to the scene of an unknown odor at a petrochemical manufacturing complex, found a flammable product pump leak, and used hand tools to stop the leak. Afterward he felt burning pain in his neck and back and went home and rested on the floor. He reported his injury.18 His insurance carrier disputed whether Mr. _______14 15 sustained a compensable injury at work and suffered a disability as a result.
In late 2020, the Division held a hearing about whether Mr. _______ sustained a compensable injury and suffered a resulting disability.16 Afterward, in December 2020, a Division ALJ found in favor of Mr. _______ and ordered the carrier to pay him workers’ compensation benefits.17 The decision did not warn Mr. _______ that, because his injury was compensable, according to 28 Texas Administrative Code § 133.307(c)(1)(B)(i) he had until no later than 60 days after the date he received the decision to file a medical fee dispute with the Division.8
A couple months later, on February 22, 2021, the Division mailed Mr. _______ and the carrier notice that the Division ALJ’s decision had become final.19 The notice told the parties that if they were not satisfied with the decision they could appeal to district court.20 The notice did not mention 28 Texas Administrative Code § 133.307(c)(1)(B)(i) or the need to file a medical fee dispute with the Division no later than 60 days after the date of receiving the decision.21
In March 2021, Mr. _______ requested that the carrier reimburse him for medical expenses he had incurred and provided the carrier a list of medical expenses.22 He also requested assistance from the Division’s Office of Injured Employee Counsel in communicating with the carrier because they had been unresponsive. A month later, on April 26, 2021, Mr. _______ filed a complaint with the Division, stating the carrier “failed to respond to request for reimbursement of out-of-pocket medical expenses within 45 days.”23
Months passed. In August 2021, Mr. _______’s then-attorney requested that the carrier reimburse Mr. _______ for medical expenses.[24] In November 2021, Mr. _______ filed another complaint with the Division, this time stating that his insurance carrier “will not provide a reasonable way to apply for reimbursement of out-of-pocket medical expenses” and instead required a particular form.[25]
Eventually, on December 16, 2021, Mr. _______ filed a request with the Division for assistance on a “medical fee dispute.” Mr. _______ noted he sought “medical fee reimbursement” from his carrier and said his claim was delayed because the carrier told him he had to use a particular form and because the carrier ignored a letter from his attorney requesting reimbursement of out-of-pocket medical expenses.26 Mr. _______ included an itemized list of medical expenses. Nearly all of the expenses were incurred in 2018, 2019, and early 2020; there were 27only a few from December 2020 or later.28
In response to Mr. _______’s request for medical fee dispute resolution, the Division notified the carrier of the medical fee dispute, and then a Division ALJ issued a decision about the disputed out-of-pocket medical expenses.29 The Division ALJ concluded that, for nearly all of the medical expenses involved, Mr. _______ was not entitled to reimbursement because his request for medical dispute fee resolution was too late—more than a year after the medical expenses were incurred and more than 60 days after receipt of the December 2020 decision on compensability.30 Mr. _______ appealed the Division ALJ’s decision to SOAH for this contested case hearing.
Under the Division’s rules, Mr. _______’s request for reimbursement of out-of-pocket medical expenses was untimely.
Generally, a request for medical fee dispute resolution must be “filed no later than one year after the date(s) of service in dispute.”31 Although Mr. _______ filed complaints with the Division in April and November 2021, neither complaint requested medical fee dispute resolution: the April complaint was about the carrier’s failure to respond to a request for reimbursement, and the November complaint was about the carrier making the reimbursement process difficult by requiring a particular form. And neither complaint had the features of a request for medical fee dispute resolution: the dates of the services in dispute, a description of the services paid, the amount paid by the injured employee, and the amount of the medical fee in dispute.32 Rather, a preponderance of the evidence shows that Mr. _______ first requested medical fee dispute resolution on December 16, 2021, when he told the Division he had a medical fee dispute with the carrier and provided the dates of the services in dispute, a description of the services, and the amounts paid. The Division’s ALJ therefore correctly determined that Mr. _______’s request for medical fee dispute resolution concerning out-of-pocket medical expenses incurred before December 16, 2020, was untimely under the general one-year deadline.
Mr. _______’s request for medical fee dispute resolution was also untimely under the applicable exception. Here an exception applied because there was a related compensability dispute: the December 2020 decision concluded Mr. _______’s injury was compensable.33 As a result, Mr. _______ had more than the usual one year after date of service to file a request for medical fee dispute resolution; he had until “not later than 60 days after the date the requestor receives the final decision ... on compensability.”34 Mr. _______ was deemed to have received the December 2020 decision a few days after it was mailed, and he does not dispute timely receiving it or the February 2021 notice informing him that 60 days had passed and the December 2020 decision was final. So Mr. _______ had until February 2021 to file his request for medical fee dispute resolution. He didn’t file by then. He first requested medical fee dispute resolution in December 2021.
Mr. _______ argues that he has much experience in workers’ compensation— having even written a book on it—and “if someone as well versed in the workers’ compensation system cannot prevail in this matter, what hope does the average injured worker have?”35 Although the fairness of a labyrinthine workers’ compensation system can be questioned, ultimately its existence and structure is a question for the Texas Legislature and for the Commissioner of Insurance.36 The ALJ only applies the law as it is. Because Mr. _______’s request for resolution was untimely, he is not entitled to reimbursement of his out-of-pocket medical expenses involved in this appeal.
1. _______ worked for _______.
2. In _______, Mr. _______ was injured while working at _______ when he went to the scene of an unknown odor at a petrochemical manufacturing complex, found a flammable product pump leak, and used hand tools to stop the leak.
3. His insurance carrier, New Hampshire Insurance Company (the carrier), disputed that Mr. _______ sustained a compensable injury at work and suffered a disability as a result.
4. On December 14, 2020, an Administrative Law Judge (ALJ) with the Texas Department of Insurance, Division of Workers’ Compensation (Division) issued a decision in Mr. _______’s favor, concluding he sustained a compensable injury, suffered a resulting disability, and was entitled to workers’ compensation benefits.
5. Mr. _______ received the final decision on compensability, extent of injury, or liability on or about December 19, 2020.
6. In February 2021, Mr. _______ received a notice from the Division that the December 2020 decision was final.
7. In March 2021, Mr. _______ requested that the carrier reimburse him for medical expenses he had incurred and provided the carrier a list of medical expenses.
8. On April 26, 2021, Mr. _______ filed a complaint with the Division, stating the carrier failed to respond to his request for reimbursement of out-of-pocket medical expenses within 45 days.
9. In August 2021, Mr. _______’s then-attorney requested that the carrier reimburse Mr. _______ for medical expenses.
10. In November 2021, Mr. _______ filed another complaint with the Division, this time stating that his insurance carrier would not provide a reasonable way to apply for reimbursement of out-of-pocket medical expenses and instead required a particular form.
11. Mr. _______ first filed a request for medical fee dispute resolution with the Division on December 16, 2021. He included an itemized list of medical expenses. Nearly all of the expenses were for services in 2018, 2019, and early 2020. Only three were for services from December 16, 2020, or later.
12. A Division ALJ issued a decision about the disputed out-of-pocket medical expenses. The Division ALJ concluded that, for nearly all of the medical expenses involved, Mr. _______ was not entitled to reimbursement because his request for medical dispute fee resolution was too late.
13. Mr. _______ timely appealed the decision to the State Office of Administrative Hearings (SOAH). He seeks reimbursement of about $39,000.00 in out-of-pocket medical expenses.
14. On August 30, 2022, the Division referred the matter to the SOAH for a hearing and issued a notice of hearing.
15. On September 8, 2022, SOAH sent the parties an order scheduling the hearing.
16. Together, the Division’s notice of hearing and the SOAH order scheduling the 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 either a short, plain statement of the factual matters asserted, or an attachment that incorporated by reference the factual matters asserted in the complaint or petition filed with the state agency.
17. On November 15, 2022, a hearing was held before SOAH ALJ Andrew Lutostanski. Mr. _______ represented himself. Attorney Steven M. Tipton represented the carrier. The record closed on December 16, 2022, after receiving the parties’ written closing arguments.
1. SOAH has jurisdiction over this proceeding, including the authority to issue a decision and order. Tex. Lab. Code §§ 413.031, .0311; Tex. Gov’t Code ch. 2003.
2. Adequate and timely notice of the hearing was provided to the parties. Tex. Gov’t Code §§ 2001.051-.052.
3. As the party seeking relief, Mr. _______ had the burden of proof, including the burden to prove it timely filed his request for medical fee dispute resolution. <em>Patients Med. Ctr. v. Facility Ins. Corp.</em>, 623 S.W. 3d 336, 343 (Tex. 2021); 1 Tex. Admin. Code § 155.427; 28 Tex. Admin. Code § 148.14(b).
4. A requestor must timely file the request with the Division or waive the right to medical fee dispute resolution. 28 Tex. Admin. Code § 133.307(c)(1).
5. A request for medical fee dispute resolution must be filed no later than one year after the date of service in dispute unless an exception applies. 28 Tex. Admin. Code § 133.307(c)(1)(A).
6. When a related compensability, extent of injury, or liability dispute under Labor Code Chapter 410 has been filed, the medical fee dispute shall be filed not later than 60 days after the date the requestor receives the final decision, inclusive of all appeals, on compensability, extent of injury, or liability. 28 Tex. Admin. Code § 133.307(c)(1)(B)(i).
7. Mr. _______’s request for medical fee dispute resolution was untimely. He therefore waived his claims for reimbursement of out-of-pocket medical expenses for services provided before December 16, 2020.
Mr. _______ is not entitled to additional reimbursement from the carrier for his out-of-pocket medical expenses because he waived his claims.
Section 413.0312(g) of the Texas Labor Code and 28 Texas Administrative Code § 133.307(h) require the non-prevailing party to reimburse the Division for the cost of services provided by SOAH. Section 413.0312(i) requires SOAH to identify the non-prevailing party and any costs provided by SOAH in its final decision. For purposes of section 413.0312 of the Texas Labor Code, Mr. _______ is the non-prevailing party. The costs associated with this decision are set forth in Attachment A to this Decision and Order and are incorporated herein for all purposes.
Signed: February 13, 2023.
ALJ Signature:
Andrew Lutostanski
Presiding Administrative Law Judge
Petitioner Travelers Indemnity Company of Connecticut (Carrier) challenges the decision of the Texas Department of Insurance, Division of Workers’ Compensation (Division) to order reimbursement of $16,750.00 to Respondent North Texas Pain Recovery Center (Provider).
Provider challenged the jurisdiction of the State Office of Administrative Hearings (SOAH) to hear this matter by filing a plea to the jurisdiction. The plea to the jurisdiction was denied. Provider’s arguments related to jurisdiction are discussed in the analysis section below.
On October 29, 2021, the Division received Provider’s request for a Medical Fee Dispute Resolution (MFDR). On December 1, 2021, the Division issued its MFDR decision, finding that Provider was entitled to reimbursement in the amount of $16,750.00 plus interest. Carrier requested a hearing at SOAH to contest the Division’s determination. On June 30, 2022, the Division issued a Request to Docket letter that, when combined with SOAH’s order setting the hearing, dated August 1, 2022, served as a notice of hearing.
On October 20, 2022, SOAH ALJ Rebecca S. Smith convened a hearing on the merits via Zoom videoconference. Carrier appeared through attorney William Weldon. Provider appeared through its non-attorney representative, Brian Shepler. The record closed with the filing of exhibits that same day.
This case involves a medical fee dispute for reimbursement under a workers’ compensation policy provided by Carrier. If a health care provider is denied or paid a reduced amount for the medical service rendered to an injured employee, the provider is entitled to review—the MFDR—by the Division.1 If a dispute remains after that review, a party may request a contested case hearing at SOAH.2 As the party requesting a hearing at SOAH to challenge an adverse medical fee dispute decision, Carrier has the burden of proof to show by a preponderance of the evidence that Provider is not entitled to reimbursement.3 The hearing before SOAH is a de novo review of the issues involved.4
Not all workers’ compensation reimbursement issues are resolved in an MFDR. Of relevance here, under Texas Insurance Code Section 1305.451, a carrier that establishes or contracts with a network is required to provide an employer a description of how to access care under the network.5 The employer, in turn, is required to provide that information to employees.6 Disputes “regarding whether an employer properly provided an employee with the information required by this section may be resolved using the process for adjudication of disputes under Chapter 410, Labor Code, as used by the [Division].”7 Under Texas Labor Code chapter 410, which generally addresses adjudication of a carrier’s liability for coverage for an injury or death, contested case hearings are handled by Division ALJs, not by an MFDR.8
The Division’s rules addressing medical fee disputes set out several procedural requirements for requesting and responding to a MFDR. Among those requirements are that the party responding to a request may only address denial reasons that were presented to the requestor before the date the request for MFDR was filed.9 Any new reasons for denial “shall not be considered in the review.”10
The Division’s rules also provide substantive requirements relating to workers’ compensation. Carrier emphasizes one of those rules, which states that the treating doctor “is the doctor primarily responsible for the efficient management of health care and for coordinating the health care for an injured employee’s compensable injury.”11 The treating doctor shall “except in the case of an emergency, approve or recommend all health care reasonably required that is to be rendered to the injured employee including, but not limited to, treatment or evaluation provided through referrals to . . . other health care providers.”12
Neither party presented testimony. Carrier introduced five exhibits, and Provider introduced four exhibits.
From November 18, 2020, through January 28, 2021, Provider provided pain management treatment to an injured worker covered by the workers’ compensation system. Provider submitted claims for that treatment to Carrier.13
Carrier denied reimbursement and sent to Provider an Explanation of Benefits (EOB) form for each claim, listing several standard codes that set out the reasons for the denial. In this case, the primary issue involves code 5631, which states, “[t]he provider is not authorized to bill for this procedure/service.”14 This code is on all the EOBs but the last one.15 Other codes Carrier provided in the EOB forms were:
15: payment adjusted because the submitted authorization number is missing, invalid, or does not apply to the billed services or provider;
45: charge exceeds fee schedule/maximum allowable or contracted/legislated fee arrangement;
P12: workers’ compensation jurisdictional fee schedule adjustment;
309: the charge for this procedure exceeds the fee schedule allowance;
877: reimbursement is based on the contracted amount; and NRWK: priced using Coventry-owned contract.
In spring 2021, Provider requested a contested case hearing to challenge whether the injured worker’s employer had provided him with the information about Carrier’s network required by Texas Insurance Code section 1305.451. Without that information, Carrier could not use Petitioner’s out-of-network status to deny reimbursement. This contested case, which was heard by a Division ALJ, only addressed the required network information. In a Decision and Order issued on September 28, 2021, the Division ALJ found that the employer and Carrier had not provided the required information. Accordingly, the Division ALJ found that Carrier could not deny reimbursement based on the Provider’s out-of-network status.
Around a month later, Provider filed a request for an MFDR with the Division, challenging Carrier’s other reasons for denying reimbursement.16 In the MFDR response, Carrier argued that reimbursement should be denied because the claim forms submitted to Carrier indicate that the referring provider was Peter Grays, MD.17 According to Carrier, Dr. Grays was not the injured employee’s treating doctor. Instead, as set out on the Report of Medical Evaluation form submitted to the Division on behalf of the claimant, Candice Addison, MD, was the treating doctor.18 Carrier argued that under the Division’s rules, only the treating doctor could make a referral.19
The Medical Fee Dispute Resolution Officer found that Provider was entitled to $16,750.00 plus interest in reimbursement. In making this finding, the officer reviewed the separate billing requests and the codes Carrier provided in the EOBs in response to each of the billing requests. Of particular significance is the officer’s finding that the use of code 5631 did not inform Provider that the Carrier’s concern was the status of the doctor who had referred the injured worker for treatment:
The insurance carrier in its position statement argued “As stated on the Carrier's Explanation of Benefits, denial reason 5631, this provider is not authorized to bill for this procedure/service, as the Provider was not approved or referred by the Treating Doctor.”
The response from the insurance carrier is required to address only the denial reasons presented to the health care provider before . . . the request for [MFDR] was filed with the DWC. Any new denial reasons or defenses raised shall not be considered in this review. The submitted documentation does not support that a denial based on not approved or referred by the treating doctor was provided to the requestor before this request for MFDR was filed. Therefore, the [Division] will not consider this argument in the current dispute review.
Carrier raises two main issues in its challenge to the MFDR decision. The first issue is whether, contrary to the MFDR finding, Carrier raised the referral issue with Provider before the MFDR was filed. If the issue was not timely raised, it may not be considered here. Assuming the referral dispute was timely raised, then the second issue is whether Carrier established that as a valid reason for denial.
Carrier’s first issue depends on the meaning of code 5631 in the EOBs. If code 5631 is, as Carrier argues, broad enough to inform Provider that someone other than the treating physician referred the injured worker to Provider for treatment, then the MFDR should have addressed denial on this basis. If Carrier’s use of the code did not inform Provider that it was denying reimbursement because of this improper referral, then the Division’s rules prevent that reason from being considered in this matter.
In response to Carrier, Provider argues that SOAH lacks jurisdiction and that res judicata bars Carrier’s argument. It alternatively argues that Code 5631— “[t]he provider is not authorized to bill for this procedure/service”—only means that a provider is out of network.
Beginning with Provider’s jurisdiction arguments, the ALJ notes that this matter is a review of the MFDR, which Provider itself filed with the Division. SOAH generally has jurisdiction to conduct de novo reviews of MFDR decisions.20 The ALJ finds that SOAH has jurisdiction over this matter.
Res judicata, or claim preclusion, “prevents the relitigation of a claim or cause of action that has been finally adjudicated, as well as related matters that, with the use of diligence, should have been litigated in the prior suit.”21 The Division Decision and Order addressed whether the injured employee had been given information about the Carrier’s network, the consequence of which was the Carrier could not deny reimbursement based on Provider’s out-of-network status.
But Carrier is not currently arguing that it may deny reimbursement on out-of-network status. Instead, it argues that reimbursement should be denied based on an improper referral. Provider does not argue that referral issues should have been, or could have been, addressed in the previous Division proceeding that resulted in the Decision and Order. Res judicata does not apply here.
Carrier argues that it explained to Provider that it was denying reimbursement based on the referring doctor when it used code 5631—that the provider was not authorized—in the EOB. Carrier argues that all the standardized codes, such as 5631, are necessarily broad so there could be many reasons why the provider could have been unauthorized. Thus, it argues, it provided the information to Provider before the MFDR, so it is not barred from presenting it in this proceeding. For its part, Provider presented its understanding that code 5631 only means that a provider was out of network.
The issue here is whether Carrier’s reason for the denial—that the referral was from a doctor who was not listed as the treating doctor—was presented to the Provider before it filed the MFDR.22 Even if Carrier is correct that code 5631 is so broad that a provider could be unauthorized for many different reasons, then that code is so broad that does not satisfy the requirement of presenting an explanation to a provider before raising it in the MFDR. This is particularly the case because that code also appears to be the one used to indicate that Provider was out of network. The ALJ agrees with the MFDR finding that Carrier did not present Provider with the referral explanation before the MFDR filing, so that explanation cannot be addressed in the MFDR. Accordingly, the question of whether the referral was proper does not need to be addressed here, either.23
For this reason, the ALJ concludes that Carrier has not met its burden and the MFDR decision ordering reimbursement of $16,750.00 plus interest should be upheld.
1. Adequate and timely notice of the hearing was provided to the parties. Tex. Gov’t Code §§ 2001.051-.052.
2. If a health care provider is denied or paid a reduced amount for the medical service rendered to an injured employee, the provider is entitled to review— the MFDR—by the Division. Tex. Labor Code § 413.031(a).
3. If a dispute remains after the MFDR review, a party may request a contested case hearing at SOAH. Tex. Labor Code § 413.0312(e).
4. SOAH has jurisdiction over this proceeding, including the authority to issue a decision and order. Tex. Labor Code §§ 413.031, .0312(e); Tex. Gov’t Code ch. 2003.
5. Unlike an MFDR, disputes regarding whether an employer properly provided an employee with required information on a carrier’s network can be resolved by a Division ALJ. Tex. Ins. Code § 1305.451(e).
6. Res judicata, or claim preclusion, “prevents the relitigation of a claim or cause of action that has been finally adjudicated, as well as related matters that, with the use of diligence, should have been litigated in the prior suit.” <em>Barr v. Resolution Trust Corp. ex rel. Sunbelt Fed. Sav</em>., 837 S.W.2d 627, 628 (Tex. 1992).
7. The September 28, 2021 Division Decision and Order, limited to addressing network information, does not prevent SOAH from addressing the issues raised in this hearing because those issues belong in an MFDR.
8. Carrier, as the party challenging the MFDR decision, has the burden of proof. 28 Tex. Admin. Code § 148.14(b).
9. The hearing before SOAH is a de novo review of the issues involved. <em>See Vista Med. Ctr. Hosp. v. Texas Mut. Ins. Co., </em>416 S.W.3d 11, 17-18 (Tex. App.—Austin 2013, no pet.).
10. A party responding to a MFDR request may only address denial reasons that were presented to the requestor before the date the request was filed. Any new reasons for denial “shall not be considered in the review.” 28 Tex. Admin. Code § 133.307(d)(2)(F).
11. Because Carrier’s denial based on the role of the referring doctor was not presented to Provider before the MFDR, this basis cannot be considered.
It is ORDERED that Carrier is required to reimburse Provider $16,750.00 plus interest.
Texas Labor Code § 413.0312(g) and 28 Texas Administrative Code § 133.307(h) require the nonprevailing party to reimburse the Division for the cost of services provided by SOAH. Texas Labor Code § 413.0312(i) requires SOAH to identify the nonprevailing party and any costs for services provided by SOAH in its final decision. For purposes of Texas Labor Code § 413.0312, Carrier is the nonprevailing party. The costs associated with this decision are set forth in Attachment A to this Decision and Order and are incorporated herein for all purposes.
Signed December 15, 2022.
ALJ Signature(s):
Rebecca Smith
Presiding Administrative Law Judge
Footnotes:
SOAH Docket Nos. 454-21-3024; 454-21-3104; 454-21-3139; 454-21-3164;
454-21-3168; 454-21-3169; 454-21-3253; 454-21-3254; 454-21-3255;
454-21-3103; 454-21-3105; 454-21-3167
Suffix: M4-NP
MRD Nos. ____________
Zurich American Insurance Company, Baptist Hospitals of Southeast Texas, and Old Republic Insurance Company (collectively, Carriers) separately challenged twelve decisions of the Texas Department of Insurance, Division of Workers’ Compensation (the Division) awarding reimbursement to Memorial Compounding Pharmacy (Memorial)(Provider) primarily for drugs created through compounding.1 Based on common issues of fact and law, the cases were joined for hearing.
After considering the evidence in the context of the applicable law, the drugs dispensed by Memorial were not approved by the Food and Drug Administration (FDA) and were considered investigational or experimental. Because Memorial did not seek and obtain preauthorization under the Division’s rules, the Administrative Law Judge (ALJ) finds that Carriers met their burden of proof on all twelve claims and Memorial is not entitled to reimbursement.
There are no contested notice issues in any of the twelve dockets.2 Following notifications by the Carriers that they were denying reimbursement for the compounds, Memorial requested medical fee dispute resolution with the Medical Fee Dispute Resolution (MFDR) department of the Division. The MFDR decisions were in Memorial’s favor, and Carriers requested de novo contested case hearings before the State Office of Administrative Hearings (SOAH).
The joined cases convened for hearing on July 26, 2022, via Zoom videoconference. At the start of the hearing, Memorial’s counsel requested a continuance based on personal circumstances. Memorial’s counsel also contended he was not prepared to cross-examine the Carriers’ expert witness. Memorial’s request for continuance was granted in part and denied in part. All of Carriers’ exhibits were admitted, and in lieu of live testimony, the ALJ converted the case for consideration on written submission and allowed the Carriers to present expert testimony with the written closing brief. A briefing schedule was ordered with the record close date set for September 6, 2022.
Memorial submitted a written closing brief and included an affidavit of KU, which was signed on December 10, 2018. The affidavit was not exchanged, referenced, or submitted before or during the July 26, 2022 setting. Ms. U also did not appear at the hearing and was not offered as a witness. The Carriers objected to the affidavit on several grounds. The objections to the affidavit are well-taken and sustained. Accordingly, Ms. U’s affidavit is not admitted as evidence and the ALJ has considered only the arguments in Memorial’s response brief.
An employee under the Texas Workers’ Compensation system who sustains a compensable injury is entitled to all health care reasonably required by the nature of the injury as and when needed, including investigational or experimental services.3 “Health care reasonably required” means health care that is clinically appropriate and considered effective for the injured employee’s injury and provided according to best practices consistent with evidence-based medicine or, if evidence-based medicine is not available, then generally accepted standards of medical practice recognized in the medical community.4 The Commissioner of the Division is required to adopt treatment guidelines that are evidence-based, scientifically valid, outcome-focused, and designed to reduce excessive or inappropriate medical care while safeguarding necessary medical care.5 Accordingly, the Division has adopted treatment guidelines known as the Official Disability Guidelines (ODG) in 28 Texas Administrative Code section 137.100.6 Further, Texas Labor Code section 413.014 authorizes the Division to adopt rules regarding preauthorization.
Relevant here, the Division has published the ODG Workers’ Compensation Drug Formulary (Closed Formulary).7 By definition, the Closed Formulary consists of all available FDA-approved prescription and nonprescription drugs prescribed and dispensed for outpatient use, subject to specific exclusions.8 A provider is not required to obtain preauthorization for drugs contained in the Closed Formulary, but the following categories are excluded from the Closed Formulary and require preauthorization from the carrier:9
(A) drugs identified with a status of “N” in the current edition of the Official Disability Guidelines (ODG);10
(B) any prescription drug created through compounding prescribed before July 1, 2018, that contains a drug identified with a status of “N” in the current edition of the ODG;
(C) any prescription drug created through compounding prescribed and dispensed on or after July 1, 2018; and
(D) any investigational or experimental drug for which there is early, developing scientific or clinical evidence demonstrating the potential efficacy of the treatment but which is not yet broadly accepted as the prevailing standard of care as defined in Texas Labor Code section 413.014(a).11
The resolution of a fee dispute is regulated by the Division’s billing, audit, and payment rules.12 In an appropriate case, a medical provider, such as Memorial, may dispute the amount paid by an insurance carrier, and in those cases, the Division’s authority is limited to resolving “the amount due for services determined to be medically necessary and appropriate.”13 On the other hand, issues regarding medical necessity and appropriateness (i.e., not payment) for workers’ compensation matters are not resolved through the Division and instead are resolved by utilization review through an Independent Review Organization (IRO) process.14
If it is determined in utilization review that the healthcare services provided or proposed to be provided to an injured employee are not medically necessary or appropriate, the provider receives an “Adverse Determination.”15 In the context of a group health insurance policy, the utilization review process resolves the question of whether a particular medical service is investigational or experimental.16 Unlike the group health context, however, utilization review in a workers’ compensation matter is not required to assign an investigational or experimental status to any drug (including a compounded drug) because the definition of “Adverse Determination” expressly excludes that determination.17 When a provider contests an Adverse Determination, the provider must appeal the Adverse Determination within 45 days of receipt of the decision.18
There are several undisputed facts in the twelve claims:
In their closing brief, the Carriers presented the expert testimony of Suzanne Novak, M.D., Ph.D.19 Dr. Novak is board-certified in Anesthesiology by the American Board of Anesthesiology. Dr. Novak also has a doctoral degree in Pharmacy Administration and is a Clinical Assistant Professor in the College of Pharmacy at the University of Texas at Austin. She is also the author of the Topical Analgesic entry in the Pain Chapter in the ODG.
According to Dr. Novak, the general concept of compounded drugs is to prepare customized medication formulations that are not available for individual patients who have specialized needs. For example, a patient may need the oral pill/capsule formulation of a drug to be in liquid form, or a patient who is allergic to the FDA formulation may need a compounded drug without the allergic component.
Dr. Novak testified that the FDA approves specific topical agents (as a gel, cream, or solution) that are identified in the Closed Formulary, but in the claims involved here the compounded drugs created by Memorial were not verified by the FDA for safety, effectiveness, or quality before being marketed; accordingly, the compounded drugs were not FDA-approved. As of July 1, 2018, there were only six topical drugs identified in the Closed Formulary and none of them were included in the compounded drugs at issue:20
| Drug Class | Generic Name | Brand Name | Generic Equivalent | Status |
|
Topical analgesics |
Capsaicin, topical | Qutenza | No | N |
|
Topical analgesics |
Diclofenac Sodium Gel |
Voltaren® Gel | Yes | Y |
|
Topical analgesics |
Dimethylsulfoxide | DMSO | Yes | N |
|
Topical analgesics |
Ketamine, topical | Ketamine | Yes | N |
|
Topical analgesics |
Lidocaine, topical | Lidoderm® | Yes | N |
|
Topical analgesics |
Salicylate topicals | Ben-Gay | Y-OTC | Y |
According to Dr. Novak, the compounded drugs created by Memorial were investigational or experimental and thus “not recommended” based on several factors including : the use (i.e., topical application of the compounded drug for eleven of twelve of the claims); the form of the drug(s); and the medium used (solution, gel, cream, ointment, etc.). Dr. Novak also referenced the medical records of the patients involved, which demonstrated that for several claims, there was simultaneous prescription(s) of the oral form of the same or similar drugs contained in the topical compound, which resulted in the inability to determine what drugs or class of drugs and in what amount were actually being delivered to the patient. Dr. Novak also noted the following:
|
Cause Number/ Patient Identifier |
Injury | Compound Ingredients | Additional considerations |
|
454-21-3105 A.T. |
Shoulder strain/sprain |
|
Duplication of classes of drugs; duplicate of a compound drug with oral drug prescription; local anesthetic would not be indicated for a work injury. |
Finally, Dr. Novak stated that, because many of the component drugs in the compounded drug have conflicting effects, additive effects, and/or no known effects in topical applications, the combination of factors rendered the compounded drugs experimental. The following is a summary of the patient information in the twelve claims with a reference to the specific ingredients of the compounded formulations.21
|
Cause Number/ Patient Identifier |
Injury | Compound Ingredients | Additional considerations |
| 454-21-3139 D.B. | Lower back strain |
|
Duplication of classes of drugs; D.B. also prescribed several oral medications in same classes, including methocarbamol (a muscle relaxant), Lidoderm patches (FDA-approved topical),and oxycodone; local anesthetic would not be indicated for a work injury. |
| 454-21-3103 T.J. | Right knee sprain |
|
Duplication of classes of drugs; duplicate of a compound drug with oral drug prescription Compound applied as cream rather than gel. Number of NSAIDs increases risk of gastrointestinal adverse events. |
|
Cause Number/ Patient Identifier |
Injury | Compound Ingredients | Additional considerations |
| 454-21-3014 T.J. (same patient as above) |
|
Duplication of classes of drugs; no evidence as to how much, if any, of the individual Meloxicam is actually delivered. | |
| 454-21-3168 T.J. (same patient as above) |
|
Same as above. | |
| 454-21-3169 T.J.(same patient as above) | Same as 454-21-3168 | Same as above. | |
| 454-21-3024 C.D. | Tarsal tunnel syndrome and complex regional pain syndrome |
|
Duplication of classes of drugs. |
|
Cause Number/ Patient Identifier |
Injury | Compound Ingredients | Additional considerations |
| 454-21-3253 J.P. | Failed back syndrome, lower back pain, lumbar radiculopathy, lumbar facet syndrome, and muscle spasm |
|
J.P. also on oral tramadol and ibuprofen; duplicate of a compound drug with oral drug prescription |
| 454-21-3254 J.P. (same patient as above) |
|
This date of service was a prescription for two oral medications between two fills of the topical compound in 454-21-3253 and 454-21-3255; tramadol was stopped on 12/4/7 because it made the claimant lightheaded. | |
| 454-21-3255 J.P. (same patient as above) | Same as 454-21-3253 |
|
Cause Number/ Patient Identifier |
Injury | Compound Ingredients | Additional considerations |
| 454-21-3164 C.H. | Lumbar strain; aggravation of disc “protrusion” |
|
Division determined the compensable injury did not extend to conditions the Carrier claimed were unrelated |
| 454-21-3167 B.W. | Contusion to left knee; sprain of medial collateral ligament of left knee |
|
Duplication of classes of drugs; no research to support the topical use of cyclobenzaprine. The drug relieves muscle spasm centrally (possibly in the brain stem) with no direct action on the muscle. |
As Memorial acknowledges, previous SOAH Decisions and Orders (all involving claims by Memorial) uniformly concluded that a carrier is relieved of liability for reimbursement when the provider has failed to seek and/or receive preauthorization for compounded drugs (topical or otherwise) that are not in the Closed Formulary.22 The claims in dispute here are no different from the prior matters—in many cases the ingredients in the compounded drugs are identical—and Memorial re-urges the same arguments from prior cases before SOAH that remain unpersuasive.
Memorial again contends that because the ingredients of the compounded drugs in dispute were all “Y” drugs, the resulting compounded drug should be considered in the Closed Formulary. Citing 28 Texas Administrative Code sections 134.500(3)(c) and .530(b)(3), Memorial also asserts that the Division’s rules regarding pharmaceutical benefits did not require preauthorization for compounded drugs containing “Y” drugs until after July 1, 2018. However, when the Division clarified its rules to note that all compounded drugs were subject to preauthorization, it did not absolve Memorial of the existing requirement to demonstrate the medical necessity and appropriateness of its compounded drugs.
Memorial concedes that the FDA does not recognize or approve that two or more of any of the individual ingredients be mixed and administered in topical form. Memorial does not dispute that all of the “Y” drugs/ingredients contained in the compounded drugs were FDA-approved only for oral use, and none of the compounded drugs included any of the approved topical drugs in the Closed Formulary (i.e., Voltaren Gel and Ben-Gay). Under the combination of oral medications and compounded creams prescribed to each patient, Dr. Novak persuasively opined that no one could reasonably predict how much of each drug class would be delivered and reasonably expected adverse reactions had not been investigated (another point that Memorial does not dispute). As Dr. Novak noted, there is no scientific analysis of the compounded drugs at issue, and they have not been accepted as the prevailing standard of care. Consistent with Dr. Novak’s testimony, when Memorial combined multiple ingredients—none of which were approved for topical use—into a single topical formulation, the result was a new, non-FDA approved and non-recognized drug that was experimental and investigational. Accordingly, except for the oral medications in SOAH Docket Nos. 454-21-3254 and 454-21-3164, discussed below, the compounded drugs were not in the Closed Formulary, and Memorial was required to seek preauthorization, which was not obtained.
Regarding SOAH Docket No. 454-21-3254, this date of service was a prescription for two oral medications (tramadol and ibuprofen) prescribed between two fills of the topical compounds in SOAH Docket Nos. 454-21-3253 and 454-21-3255, both of which had Adverse Determinations. The Carriers demonstrated by a preponderance of the evidence that there was no reason for prescribing as the patient had already indicated lightheadedness from tramadol. This drug regimen reasonably falls into the investigational or experimental categories and required preauthorization, which was not obtained. Regarding SOAH Docket No. 454-21-3164, the Division determined the compensable injury did not extend to conditions identified for the drug. This Adverse Determination was not appealed by Memorial within 45 days. Accordingly, there is no jurisdiction to consider that dispute. In sum, Memorial is not entitled to reimbursement on any of its claims.
IT IS ORDERED that Memorial is not entitled to reimbursement for the topical cream provided to the injured worker.
Texas Labor Code section 413.0312(g) and 28 Texas Administrative Code section 133.307(h) require the nonprevailing party to reimburse the Division for the cost of services provided by SOAH. Texas Labor Code section 413.0312(i) requires that SOAH identify the nonprevailing party and any costs for services provided by SOAH in its final decision. For purposes of Texas Labor Code§ 413.0312, Memorial Compounding Pharmacy is the nonprevailing party. The costs associated with this decision are set forth in Attachment A to this Decision and Order and are incorporated herein for all purposes.
SIGNED NOVEMBER 2, 2022.
Vasu Behara,
Presiding Administrative Law Judge
1 Compounding is defined in Texas Occupations Code section 551.003(9) as “the preparation, mixing, assembling, packaging, or labeling of a drug or device” See also Tex. Admin. Code § 134.500. Although “compound drug” and “compound” are not defined terms in the Texas Workers Compensation Act or Division rules, the phrase “compounded drug” as used in this Decision and Order is shorthand for “any prescription drug created through compounding.”
2 As an alternative argument on the merits, the Carriers contend that there is no jurisdiction in nine of the dockets (454-21-3139, 454-21-3103, 454-21-3104, 454-21-3168, 454-21-3169, 454-21-3024, 454-21-3253, 454-21-3255, and 454-21-3164) because retrospective medical necessity disputes and the extent of the injuries in the underlying claims were unresolved at the Division. As discussed below, the ALJ determines there is no jurisdiction to consider the dispute in 454-21-3164. Because the Carriers prevailed on the merits and it is dispositive of the claims in this case, the ALJ declines to reach the alternative jurisdictional argument.
3 Tex. Labor Code §408.021; see 38 Tex. Reg. 918 (February 15, 2013) (“TDI’s position is that, based upon Labor Code § 408.021, an injured employee is entitled to health care reasonably required by the nature of the injury as and when needed, including experimental and investigational health care services”).
4 Tex. Labor Code § 401.011 (22-a).
5 Tex. Labor Code § 413.011(e).
6 All references to “Division Rule” refer to the Divisions’ rules found in Texas Administrative Code, Title 28, Part 2.
7 28 Tex. Admin. Code § 134.500(3); see also 28 Tex. Admin. Code § 134.502; Tex. Labor Code § 408.028(b).
8 28 Tex. Admin. Code §§ 134.500(3), .502, .530((b)(1)(A)-(D); see also Tex. Labor Code § 413.014(a) (defining “investigational or experimental drug”).
9 28 Tex. Admin. Code §§ 134.530(e), .540(e) (restating requirement for preauthorization of pharmaceuticals not in the Closed Formulary for certified and non-certified networks); see also 28 Tex. Admin. Code § 134.600(p)(11).
10 Drugs listed in the Closed Formulary are assigned “Y” or “N” status. Drugs assigned “Y” status may be dispensed without preauthorization and do not require utilization review. Drugs assigned “N” status require preauthorization.
11 28 Tex. Admin. Code §§ 134.500(3), .502, .530((b)(1)(A)-(D).
12 See 28 Tex. Admin. Code ch. 133.
13 28 Tex. Admin. Code § 133.307; Tex. Labor Code § 413.031(c).
14 28 Tex. Admin. Code § 19.2009.
15 28 Tex. Admin. Code § 19.2003(b)(1).
16 Tex. Ins. Code § 4201.206.
17 28 Tex. Admin. Code § 19.2003(b)(1) (“(1) Adverse determination--A determination by a URA made on behalf of a payor that the health care services provided or proposed to be provided to an injured employee are not medically necessary or appropriate. The term does not include a denial of health care services due to the failure to request prospective or concurrent utilization review. For the purposes of this subchapter, an adverse determination does not include a determination that health care services are experimental or investigational.”) (emphasis added).
18 28 Tex. Admin. Code § 133.308(a)(3), (g), (h).
19 Addendum 6 to Carriers’ Closing Brief.
20 Appendix A, ODG Workers’ Compensation Drug Formulary.
21 See also Addendum 1 to Carriers’ Closing Brief.
22 See Decisions and Orders in 454-18-3324.M4.Np, 454-18-4177.M4-NP, 454-18-4955.M4-NP, 454-19-0171.M4-NP, 454-16-4910.M4-NP, and 454-16-1844.M4-NP
North Texas Rehabilitation Center (Provider) challenges decisions of the Texas Department of Insurance, Division of Workers’ Compensation, Medical Review Division (MRD or Division) that denied Provider additional reimbursement from Great American Alliance Insurance Company (Carrier) for a program of interdisciplinary traumatic brain injury rehabilitation provided by Provider to (Claimant). In Docket No. 454-21-3451.M4-NP, Carrier argues that Provider failed to timely file its request for Medical Fee Dispute Resolution (MFDR) for claims with dates of service September 5-6, 2018. For the remaining claims in both dockets, Carrier argues that Provider is not entitled to additional reimbursement because the payments already made are consistent with fair and reasonable reimbursement, while Provider’s reimbursement requests are not. The Administrative Law Judge (ALJ) agrees with both of Carrier’s arguments and concludes that Provider is not entitled to additional reimbursement.
There are no contested issues of notice or jurisdiction; therefore, these matters are addressed in the Findings of Fact and Conclusions of Law without further discussion.
Provider timely requested hearings before the State Office of Administrative Hearings (SOAH). SOAH Joint Order No. 2, issued October 11, 2021, consolidated the dockets and set them for hearing. The hearing on the merits was held via Zoom videoconference on January 20, 2022, before ALJ Heather D. Hunziker. Provider appeared and was represented by Insurance Manager Catherine Zacharias. Carrier appeared and was represented by attorney Steven Tipton. The record closed on February 18, 2022, after the filing of written closing arguments.1
The resolution of a fee dispute is regulated by the Division’s billing, audit, and payment rules.2 In an appropriate case, a health care provider, such as Provider, may dispute the amount paid by an insurance carrier.3 In those cases, the Division’s authority is limited to resolving “the amount of payment due for services determined to be medically necessary and appropriate.”4 The Division’s rules reflect the statutory guidance and specify that:
In resolving disputes regarding the amount of payment for health care determined to be medically necessary and appropriate for treatment of a compensable injury, the role of the division is to adjudicate the payment, given the relevant statutory provisions and division rules.5
A requestor, such as Provider, must timely file the request for MFDR with the Division’s MFDR section or waive the right to MFDR.6 Such a request must be “filed no later than one year after the date(s) of service in dispute.”7 Additionally, the requestor must provide documentation that discusses, demonstrates, and justifies that the payment amount being sought is a fair and reasonable rate of reimbursement in accordance with 28 Texas Administrative Code (TAC) § 134.1 when the dispute involves health care for which the division has not established a maximum allowable reimbursement or reimbursement rate, as applicable.8
Texas Labor Code § 413.011 sets forth reimbursement policies and guidelines and includes the following:
(d) Fee guidelines 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 Division rule that effects the above-referenced reimbursement guidelines is 28 TAC § 134.1 (Medical Reimbursement), which includes the following:
(e) Medical reimbursement for health care not provided through a workers’ compensation health care network shall be made in accordance with:
(1) the Division's fee guidelines;
(2) a negotiated contract; or
(3) in the absence of an applicable fee guideline or a negotiated contract, a fair and reasonable reimbursement amount as specified in subsection (f) of this section.
(f) Fair and reasonable reimbursement shall:
(1) be consistent with the criteria of Labor Code § 413.011;
(2) ensure that similar procedures provided in similar circumstances receive similar reimbursement; and
(3) be based on nationally recognized published studies, published Division medical dispute decisions, and/or values assigned for services involving similar work and resource commitments, if available.
The party seeking relief has the burden of proof by the preponderance of the evidence.9
Claimant suffered a compensable injury on (Date of Injury).10 On 38 days between May 7, 2018, and September 12, 2018, Claimant received interdisciplinary traumatic brain injury rehabilitation services from Provider, an outpatient rehabilitation facility, for the treatment of injuries sustained while on the job. The Division has not established a medical fee guideline for such services. For its services, Provider cited treatment code 97799 and billed Carrier $2,800 per service day, totaling $106,400.11 Provider’s documentation of services identified the varying types of, and amounts of time spent on, multidisciplinary therapies provided on each service date.12 Carrier issued explanations of benefits (EOB) for the claims, approving a total of $35,859.38.13 Carrier’s EOBs explained that the workers’ compensation jurisdictional fee schedule base rate was $720/day, and payment rates were calculated using allowances based upon whether the services rendered were cognitive rehabilitation, therapeutic exercises, biofeedback, group therapy, speech therapy, or individual counseling.14 Carrier’s EOBs explained the methodology as follows:
Billed charges are for a brain injury program approved under non-specific code 97799. Texas currently has 4 program [sic] that are identified within the guidelines where this code is used. One of those programs is an Outpatient Medical Rehabilitation Program where Modifier Code MR is used and the rate for this program for a CARF15 accredited facility is $90/hr. The head injury program being billed by [Provider] includes therapy/rehab hours that are reasonably the same as would be involved in this type of program. For the hours for rehab/therapy the Carrier … is using the same hourly rate for this CARF accredited facility. For more specific services that would not necessarily be included in such a program, and are more specific to this brain injury program the Carrier in an effort to find a Fair & Reasonable rate for these services has chosen to break these down by type of service performed as follows: Therapeutic Exercise: 97799 CARF Rehab Program x $90.00 per hour; Cognitive Rehab: G0515 $141.16 per hour; Biofeedback: 90902 $160.22 per hour; Group Therapy: 90853 $42.44 per hour; Speech Therapy: 92507 $125.71 per hour; Individual Counseling: 90837 $211.76 per hour.16
Provider requested reconsideration, in response to which Carrier denied additional payment.
Provider filed two requests for MFDR, with different dates of service, for Claimant’s outpatient rehabilitation. On April 19, 2019, Provider requested MFDR in Division File No. (DWC Number) (SOAH Docket No. 454-21-3304.M4-NP; MRD No. M4-19-3844-01) for 35 dates of service from May 7, 2018, to September 4, 2018.17 On September 9, 2019, Provider filed for MFDR in Division File No. (DWC Number) (SOAH Docket No. 454-21-3451.M4-NP; MRD No. M4-20-0042-01) for three further dates of service: September 5, 2018; September 6, 2018; and September 12, 2018.18 For each service date in its MFDR requests, Provider requested 100% of its billed charges of $2,800.19
MFDR Decisions issued June 14, 2019, and October 4, 2019, found that Provider had failed to support its position that additional reimbursement was due.20 Each MFDR Decision set forth certain statements of the Division regarding reimbursements based on hospital charges, as follows:
The Division previously found, as stated in the adoption preamble to the former Acute Care Inpatient Hospital Fee Guideline, that “hospital charges are not a valid indicator of a hospital’s costs of providing services nor of what is being paid by other payors” (22 Texas Register 6271). In formulating the fee guidelines, the division further considered and rejected alternative payment methods that used hospital charges as their basis because they “allow the hospitals to affect their reimbursement by inflating their charges” (22 Texas Register 6268-6269).21
Before the beginning of the hearing, the parties agreed that the operative facts in both cases were the same and the cases could be heard together. At the hearing, Provider offered no exhibits, but presented the testimony of its Insurance Manager, Catherine Zacharias. Carrier offered twelve exhibits, which were admitted, and presented the testimony of Senior Field Specialist and Adjuster, Spencer Spofford.
Ms. Zacharias testified for Provider about its services and billing. She said Provider is a rehabilitation facility. Provider’s brain injury program differs from other types of rehabilitation, in that it requires a minimum of five different disciplines of providers, which Ms. Zacharias said Provider can customize because Provider has twelve different types of providers. According to Ms. Zacharias, Provider customizes individual treatment for its patients and did so for Claimant.
Ms. Zacharias testified that Claimant received hand and shoulder exercises, bicycle therapy for his back injuries, and other therapy. She explained that sometimes chronic pain patients and brain injury patients are in the same therapy group, but not “work hardening” patients. She stated that, although the exercises would typically be done by the entire group at once in this type of group program, Claimant’s issues required personal one-on-one exercises.
Ms. Zacharias testified that Claimant was able to get back to a partial workday as a result of Provider’s services, before he hit his head again, resulting in more significant brain injury. She said that Provider’s health care providers were the ones to determine the best treatment for Claimant; and Provider met all the guidelines for these determinations.
On cross examination, Ms. Zacharias admitted that Provider is only CARF accredited in pain management and outpatient rehabilitation—not brain injury. She explained that “CARF” stands for Certified Accredited Rehabilitation Facility and requires recertification every three years through surveying of every policy and procedure.
Ms. Zacharias testified that Provider uses “cost plus cogs” pricing, which combines all of Provider’s cost factors together. She said Carrier is the only insurance company that has not been able to agree with Provider on pricing—most other carriers are paying Provider 75 percent of what it is asking, not just 50 percent. She said Carrier wanted Provider to break down which treatments were given each day, but Provider was not prepared to separate the services provided because it is multidisciplinary.
Mr. Spofford is Carrier’s handling adjuster for the underlying workers’ compensation claim. He testified that Provider billed $2,800 per day on billing code 97799, which is a generic code for work hardening, chronic pain, and other types of treatment. He explained that $720 per day is the normal daily price for outpatient rehabilitation—not $2,800—although he acknowledged that another brain injury patient in the Dallas area had negotiated a rate of $765 per day for outpatient services.
Mr. Spofford said Provider had not accepted Carrier’s fee schedule payment of $720 per day, so Carrier tried to break the payments down by which type of multidisciplinary therapies were actually provided and use each of those individual modalities’ fee schedules. To do so, Carrier had to match CPT22 codes with the therapies given, then multiply those therapies’ fee schedules by the number of hours. According to Mr. Spofford, Carrier did not question the number of hours Provider billed for; and Carrier paid the same amount per hour as it would have for CARF-certified multidisciplinary rehabilitation therapy, even though Provider is not CARF certified for brain injury.
Mr. Spofford listed Carrier’s hourly reimbursement rates as follows: $141.16 for cognitive rehabilitation services, $90.00 for therapeutic exercises, $160.22 for biofeedback, $42.44 for group therapy, $211.76 for individual counseling, and $125.71 for speech therapy. According to Mr. Spofford, Carrier’s methodology resulted in a different amount paid for each day, between $830 and the “mid-one-thousands,” all of which were above the standard $720 per day (and the $765 per day agreed with the other Dallas provider referred to earlier). Mr. Spofford said the multidisciplinary fee schedule pays at $1000 per day, so some of Carrier’s payments are even above that.
Mr. Spofford observed that there were no separate bills for room and board, which he attributed to Provider’s services being on an outpatient basis; but he noted that Claimant was put up in a hotel near Provider’s facility. Mr. Spofford said no claim was filed for room and board, as would be required for those items to be covered. However, on cross examination, he noted that Carrier is required to reimburse for lodging when a claimant must travel a certain distance or remain at the facility for a certain number of hours; and he conceded he was not aware that room and board was included in Provider’s cost factor and considered in their $2,800 per day.
Mr. Spofford testified that Carrier’s reimbursement rates are correct and reflective of the actual services provided on each specific date; whereas Provider’s request for reimbursement of $2,800 per day was not based upon the specific services provided, which varied day to day. He said the reimbursements using Carrier’s methodology are more than fair and reasonable.
In its Closing Argument, Carrier cited SOAH dockets that have rejected evidence of other payments to the Provider, alone, as satisfying the fairness and reasonableness factor of effective medical cost control.23 Similarly, Carrier cited numerous SOAH dockets that have rejected using other carriers’ payments to other providers, as evidence of the fairness and reasonableness factor of consistency with other reimbursement schemes.24
Provider failed to timely file for MFDR for claims on two service dates. Provider filed its request for MFDR on September 9, 2019, for its claims with service dates including September 5-6, 2018. Provider did not claim any exception applied to the one-year deadline to file a request for MFDR. Therefore, pursuant to 28 TAC § 133.307(c)(1), Provider waived its right to MFDR for these claims. Because Provider did not timely file a request for MFDR for the services provided September 5-6, 2018, Provider is not entitled to any additional reimbursement from Carrier for those claims.
Claimant received interdisciplinary traumatic brain injury rehabilitation services from Provider on 36 dates between May 7, 2018, and September 12, 2018, exclusive of the two dates for which Provider waived its right to MFDR as discussed above. Payment is subject to the general medical reimbursement provisions of 28 TAC § 134.1(e) because the services were not provided through a workers’ compensation health care network.25 The Division has not established a medical fee guideline for the type of services Provider provided Claimant and there was no negotiated contract for the services; therefore, reimbursement must be made in accordance with a fair and reasonable amount as specified in 28 TAC § 134.1(f).26
With its MFDR request, Provider was required to provide documentation to discuss, demonstrate, and justify that the payment amounts being sought were fair and reasonable rates of reimbursement in accordance with 28 TAC § 134.1.27 Provider’s documentation in evidence shows that the Claimant’s treatments varied from day to day by type of therapy and time spent, and that Provider seeks payment of 100% of its billed charges of $2,800 per treatment day.28
It is Provider’s burden to show that the reimbursement amount sought satisfies the Texas Labor Code’s factors describing what is “fair and reasonable”; additionally, it is Provider’s burden to show that the reimbursement amount paid by Carrier does not satisfy the statutory “fair and reasonable” factors. As explained below, Provider has failed to meet its burden on both accounts.
Provider admitted no exhibits and made no argument; so, its position is supported only by Carrier’s exhibits and the testimony of Ms. Zacharias. The record evidence is sparse as to Provider’s billing methodology, citing only the generic billing code for work hardening, chronic pain, and other types of treatment; and including Claimant’s treatment records. Provider’s bills fail to explain why $2,800 per day was a fair and reasonable amount even though the amounts and types of treatment differed by the specific date of service.29 Ms. Zacharias explained that Provider’s pricing combines all the cost factors of its multidisciplinary treatment, so Provider could not separate the services provided. Ms. Zacharias also testified that other insurance companies have paid Provider 75 percent of what it billed.
As noted in the MFRD Decisions, the Division has stated that reimbursement methodologies that use billed hospital charges, or a percentage thereof, as their basis do not provide acceptable fair and reasonable reimbursement amounts. While traumatic brain injury rehabilitation services are not the same as hospital care, this principle is of similar concern in this dispute. A health care provider’s charges are not evidence of a fair and reasonable rate or of what insurance companies are paying for the same or similar services. Unquestioning payment of a health care provider’s billed charge would leave the determination of the payment amount in the provider’s own hands, contrary to the objective of effective cost control and the standard not to pay more than for similar treatment of an injured individual of equivalent standard of living, both in Texas Labor Code § 413.011(d). In accordance with the Division’s policy, neither the billed charges nor an amount based on a percentage of billed hospital charges can be considered to be a fair and reasonable reimbursement amount without further evidence. In the SOAH dockets cited by Carrier, discussed above, SOAH similarly rejected evidence of other payments to the provider, alone, as satisfying the fairness and reasonableness factor of effective medical cost control.
Neither Provider’s evidence of its billed charges, nor Provider’s evidence of other carriers’ payments to it (which were, at most, 75 percent of its billing, not 100 percent) suffices to find Provider’s requested reimbursement at 100 percent of Provider’s $2,800 daily rate to be fair and reasonable. Therefore, Provider failed to show by a preponderance of the evidence that the daily reimbursement amount it seeks is fair and reasonable.
Provider failed to provide compelling evidence that the amount paid by Carrier was not fair and reasonable. On the contrary, the fairness and reasonableness of Carrier’s payments were supported through numerous exhibits, testimony, and argument. The record evidence explains Carrier’s reimbursement methodology in detail,30 in which, as Mr. Spofford explained, Carrier used Provider’s documentation of services to identify the types of multidisciplinary therapies actually provided on each service date and, using each of those individual modalities’ fee schedules, multiplied the hourly fee by the number of hours to arrive at daily total amounts paid.
The daily amounts paid by Carrier, as listed in Provider’s Request for MFDR and detailed in Carrier’s EOBs,31 exceed the workers’ compensation jurisdictional fee schedule base rate of $720 per day for outpatient rehabilitation, and also exceed the $765 per day rate that Mr. Spofford testified was negotiated by another brain injury treatment provider in the area for outpatient services. Moreover, Carrier’s payments to Provider for CARF-certified treatment, even though Provider lacks CARF certification for multidisciplinary brain injury treatment, are eminently fair and reasonable.
The methodology used by Carrier is consistent with the criteria of Texas Labor Code§ 413.011; ensures that similar procedures provided in similar circumstances receive similar reimbursement; and is based on values assigned for services involving similar work and resource commitments.
Provider failed to meet its burden, because it Provided no compelling evidence that Carrier’s methodology resulted in an unfair or unreasonable reimbursement.
In conclusion, the ALJ finds that Provider waived MFDR for the services provided September 5-6, 2018, by its failure to timely file its request; therefore, Provider is not entitled to any additional reimbursement from Carrier for those services. Additionally, as to Provider’s remaining claims for 36 further dates of service, the ALJ finds that Provider is not entitled to additional reimbursement because Provider failed to show, by the preponderance of the evidence, that: (1) the daily amount Provider seeks is fair and reasonable; and (2) the reimbursements already made by Carrier were not fair and reasonable.
1. (Claimant) suffered a compensable injury on (Date of Injury).
2. On the date of injury, Great American Alliance Insurance Company (Carrier) was the workers’ compensation insurance carrier for Claimant’s employer.
3. On 38 days between May 7 and September 12, 2018, Claimant received outpatient interdisciplinary traumatic brain injury rehabilitation services from North Texas Rehabilitation Center (Provider), an outpatient rehabilitation facility, for the treatment of his injuries.
4. Provider billed Carrier $2,800 per service day, totaling $106,400, citing treatment code 97799, although the actual treatments varied from day to day.
5. Carrier issued explanations of benefits (EOB) for the claims approving a total amount of $35,859.38. The EOBs explained that payment rates were calculated above the workers’ compensation jurisdictional fee schedule base rate of $720/day, using allowances based upon whether the services rendered were cognitive rehabilitation, therapeutic exercises, biofeedback, group therapy, speech therapy, or individual counseling.
6. Provider requested reconsideration; and Carrier denied additional payment.
7. On April 19, 2019, Provider filed a request for medical fee dispute resolution (MFDR) with the Texas Department of Insurance, Division of Workers’ Compensation, Medical Review Division (MRD or Division), for Claimant’s outpatient rehabilitation in Division File No. (DWC Number) (MRD No. M4-19-3844-01) for 35 dates of service from May 7, 2018, to September 4, 2018.
8. On September 9, 2019, Provider filed a request for MFDR with the Division, for Claimant’s outpatient rehabilitation in Division File No. (DWC Number) (MRD No. M4-20-0042-01) for service dates of September 5, 2018; September 6, 2018; and September 12, 2018.
9. Provider failed to timely request MFDR within one year, for its services provided on September 5-6, 2018.
10. Provider timely requested MFDR of Carrier’s denial with the Division, with respect to the 35 dates of service from May 7, 2018, to September 4, 2018, and September 12, 2018.
11. On June 14, 2019, and October 4, 2019, MFDR decisions were issued by the Division, finding that Provider had failed to support its position that additional reimbursement was due in MRD Nos. M4-19-3844-01 and M4-20-0042-01.
12. Provider timely requested hearings before the State Office of Administrative Hearings (SOAH) to contest the MFDR Decisions in favor of Carrier.
13. On August 19, 2021, the Division provided timely notice of hearing to Carrier and Provider in SOAH Docket No. 454-21-3304.M4-NP, concerning MRD No. M4-19-3844-01.
14. On August 31, 2021, the Division provided timely notice of hearing to Carrier and Provider in SOAH Docket Nos. 454-21-3451.M4-NP, concerning MRD No. M4-20-0042-01.
15. In SOAH Joint Order No. 2, issued October 11, 2021, the Administrative Law Judge (ALJ) consolidated SOAH Docket 454-21-3304.M4-NP with SOAH Docket 454-21-3451.M4- NP for docketing and procedural purposes, and set them to be heard and decided together.
16. The notices of hearing, together with Joint Order No. 2, included a statement of the time, place, and nature of the hearing; statements of the legal authority and jurisdiction under which the hearing was to be held; references to the particular sections of the statutes and rules involved; and attachments that incorporated, by reference, the factual matters asserted in the complaints or petitions filed with the state agency.
17. The hearing on the merits was held via Zoom videoconference on January 20, 2022, before SOAH ALJ Heather D. Hunziker. Provider appeared and was represented by Insurance Manager Catherine Zacharias. Carrier appeared and was represented by attorney Steven Tipton. Post-hearing briefing was submitted; and the record closed February 18, 2022.
18. At the beginning of the hearing the parties agreed that the operative facts were the same in both dockets, and that they could be heard and decided together.
19. Provider’s services were not provided through a workers’ compensation health care network.
20. The Division has not established a medical fee guideline for the type of services Provider provided Claimant and there was no negotiated contract for the services.
21. Provider seeks payment of 100% of its billed charges of $2,800 per treatment day.
22. The Division has stated that reimbursement methodologies that use billed hospital charges as their basis or that use a percentage of hospital billed charges as their basis do not provide acceptable fair and reasonable reimbursement amounts; and this principle applies equally to traumatic brain injury rehabilitation services.
23. Carrier’s method of reimbursement: (1) identified the types of multidisciplinary therapy provided on each service date, as noted in Provider’s documentation of services; (2) referred to each individual therapy modality’s fee schedule; and (3) multiplied each therapy’s hourly fee by the number of hours to arrive at daily total amounts paid.
24. The daily amounts paid by Carrier exceed the workers’ compensation jurisdictional fee schedule daily base rate for outpatient rehabilitation and exceed the daily rate negotiated by another provider for similar services.
25. Carrier’s reimbursement methodology would ensure that similar procedures provided in similar circumstances receive similar reimbursement and is based on values assigned for services involving similar work and resource commitments.
1. SOAH has jurisdiction over these proceedings, including the authority to issue a decision and order, pursuant to Texas Labor Code § 413.0312(e) and Texas Government Code ch. 2003.
2. Adequate and timely notice of the hearing was provided in accordance with Texas Government Code §§ 2001.051-.052.
3. As the party seeking relief from the MFDR decisions, Provider had the burden of proving by a preponderance of the evidence that it had not been reimbursed a fair and reasonable amount by Carrier for the services provided and was entitled to additional reimbursement. 28 Tex. Admin. Code § 148.14(b); 1 Tex. Admin. Code § 155.427.
4. A requestor shall timely file the request with the Division’s MFDR section or waive the right to MFDR. The request for MFDR must be filed no later than one year after the date(s) of service in dispute. 28 Tex. Admin. Code § 133.307(c)(1)(A).
5. The exceptions to the one-year filing deadlines set out in 28 Texas Administrative Code § 133.307(c)(1)(B) do not apply to Provider’s claims for services provided Claimant on September 5-6, 2018.
6. Provider waived the right to MFDR as to dates of service September 5-6, 2018; therefore, Provider is not entitled to any additional reimbursement for medical services provided to Claimant on these dates. 28 Tex. Admin. Code § 133.307(c)(1)(A).
7. Because Provider’s services were not provided through a workers’ compensation health care network, payment is subject to the Division’s general medical reimbursement provisions. 28 Tex. Admin. Code § 134.1(e).
8. Due to the absence of an applicable fee guideline or a negotiated contract, Provider’s reimbursement must be made at fair and reasonable rates as specified in the Department’s rules. 28 Tex. Admin. Code § 134.1(e)(3) (emphasis added).
9. Carrier’s reimbursement methodology was consistent with the criteria of Texas Labor Code § 413.011; would ensure that similar procedures provided in similar circumstances receive similar reimbursement; and was based on values assigned for services involving similar work and resource commitments. Therefore, the methodology used by Carrier resulted in a fair and reasonable amount. 28 Tex. Admin. Code § 134.1.
10. Provider failed to show by a preponderance of the evidence that the daily reimbursement amount it seeks is fair and reasonable, and that Carrier’s reimbursements were not fair and reasonable. Tex. Lab. Code § 413.011(d); 28 Tex. Admin. Code § 134.1.
11. Provider failed to show by a preponderance of the evidence that it is entitled to additional reimbursement for the services at issue in this proceeding.
Provider is not entitled to additional reimbursement for services provided September 5-6, 2018, because Provider waived its claims for such services; and, as to its claims for all other service dates, Provider is not entitled to additional reimbursement because it was reimbursed fairly and reasonably.
Texas Labor Code § 413.0312(g) and 28 TAC § 133.307(h) require the non-prevailing party to reimburse the Division of Workers’ Compensation for the cost of services provided by SOAH. Texas Labor Code § 413.0312(i) requires that SOAH identify the non-prevailing party and any costs for services provided by SOAH in its final decision. For purposes of Texas Labor Code § 413.0312, North Texas Rehabilitation Center is the non-prevailing party. The costs associated with this decision are set forth in Attachment A to this Decision and Order and are incorporated herein for all purposes.
SIGNED April 11, 2022.
Heather Hunziker
Administrative Law Judge
State Office of Administrative Hearings
1 SOAH Joint Order No. 3, issued January 27, 2022, held the record open for replies to closing arguments until February 18, 2022. Carrier filed its closing brief on February 4, 2022 (Closing Argument), and its reply brief on February 18, 2022; however, Provider filed no closing brief or response. Therefore, Carrier’s reply brief was not considered by the ALJ. Similarly, Carrier’s “Objections to Admission of [exhibits in Provider’s response], and Motion to Disregard and Strike” filed February 24, 2022, is denied for mootness.
2 See 28 Tex. Admin. Code (TAC) ch. 133. All citations in this Decision reflect the law applicable on the date of service for each claim.
3 28 TAC § 133.307.
4 Tex. Labor Code § 413.031(c); 28 TAC § 133.307(a)(2).
5 28 TAC § 133.307(a)(2) (emphasis added).
6 28 TAC § 133.307(c)(1).
7 28 TAC § 133.307(c)(1)(A). Provider did not assert an exception under 28 TAC § 133.307(c)(1)(B).
8 28 TAC § 133.307(c)(2)(O).
9 28 TAC § 148.14(b); 1 TAC § 155.427. Burden of proof in worker’s compensation insurance reimbursement cases determining fair and reasonable reimbursement was previously analyzed in great depth, in SOAH Docket No. 454-11-2417.M4 (consolidating 113 cases with the same basic legal issues and evidence) (affirmed as to burden of proof, reversed and rendered by the trial court in Zurich American Ins. Co. v. Houston Community Hospital, Cause No. D-1-GN-14-001325 in the 201st Judicial District Court of Travis County).
10 Carrier Exs. A-1 at 1, B-1 at 1.
11 Carrier Exs. A-3 at 7-41, B-3 at 9-11.
12 Carrier Exs. A-5, B-5.
13 Carrier Exs. A-4, B-4.
14 Carrier Exs. A-4, B-4.
15 CARF means Certified Accredited Rehabilitation Facility.
16 Carrier Exs. A-4, B-4.
17 Carrier Ex. A-1 at 1-2.
18 Carrier Ex. B-1 at 1.
19 Carrier Exs. A-1 at 1-2, B-1 at 1.
20 Carrier Exs. A-6, B-6.
21 Carrier Exs. A-6 at 295, B-6 at 35.
22 This acronym was not defined.
23 Carrier cites SOAH Consolidated Dockets No. 453-03-0143.M4, 453-03-3098.M4, 453-05-1535.M4 and 453-05-1536.M4, Vista Healthcare, Inc. v. Twin City Fire Insurance Co., Decision and Order (June 12, 2007). Closing Argument at 7-8.
24 Carrier cites SOAH Docket No. 453-01-179.M4, Decision and Order (January 23, 2002); Consolidated Dockets No. 453-03-0143.M4, 453-03-3098.M4, 453-05-1535.M4 and 453-05-1536.M4, Vista Healthcare, Inc. v. Twin City Fire Insurance Co., Decision and Order (June 12, 2007); and SOAH Consolidated Dockets No. 453-03-0515.M4, 453-03-0516.M4, and 453-03-2818.M4, Decision and Order (June 27, 2007). Closing Argument at 8-9.
25 28 TAC § 134.1(e).
26 28 TAC § 134.1(e)(3).
27 28 TAC § 133.307(c)(2)(O).
28 Carrier Exs. A-1, A-5, B-1, B-5.
29 Compare Carrier Exs. A-3 with A-5; B-3 with B-5.
30 See Carrier Exs. A-2, B-2 (Carrier’s Responses to Requests for Dispute Resolution, explaining in detail how Carrier applied its methodology in its EOBs); Carrier Exs. A-4, B-4 (Carrier’s EOBs).
31 Carrier Exs. A-1, B-1, A-4, B-4.
North Texas Rehabilitation Center (Provider) challenges decisions of the Texas Department of Insurance, Division of Workers’ Compensation, Medical Review Division (MRD or Division) that denied Provider additional reimbursement from Great American Alliance Insurance Company (Carrier) for a program of interdisciplinary traumatic brain injury rehabilitation provided by Provider to (Claimant). In Docket No. 454-21-3451.M4-NP, Carrier argues that Provider failed to timely file its request for Medical Fee Dispute Resolution (MFDR) for claims with dates of service September 5-6, 2018. For the remaining claims in both dockets, Carrier argues that Provider is not entitled to additional reimbursement because the payments already made are consistent with fair and reasonable reimbursement, while Provider’s reimbursement requests are not. The Administrative Law Judge (ALJ) agrees with both of Carrier’s arguments and concludes that Provider is not entitled to additional reimbursement.
There are no contested issues of notice or jurisdiction; therefore, these matters are addressed in the Findings of Fact and Conclusions of Law without further discussion.
Provider timely requested hearings before the State Office of Administrative Hearings (SOAH). SOAH Joint Order No. 2, issued October 11, 2021, consolidated the dockets and set them for hearing. The hearing on the merits was held via Zoom videoconference on January 20, 2022, before ALJ Heather D. Hunziker. Provider appeared and was represented by Insurance Manager Catherine Zacharias. Carrier appeared and was represented by attorney Steven Tipton. The record closed on February 18, 2022, after the filing of written closing arguments.1
The resolution of a fee dispute is regulated by the Division’s billing, audit, and payment rules.2 In an appropriate case, a health care provider, such as Provider, may dispute the amount paid by an insurance carrier.3 In those cases, the Division’s authority is limited to resolving “the amount of payment due for services determined to be medically necessary and appropriate.”4 The Division’s rules reflect the statutory guidance and specify that:
In resolving disputes regarding the amount of payment for health care determined to be medically necessary and appropriate for treatment of a compensable injury, the role of the division is to adjudicate the payment, given the relevant statutory provisions and division rules.5
A requestor, such as Provider, must timely file the request for MFDR with the Division’s MFDR section or waive the right to MFDR.6 Such a request must be “filed no later than one year after the date(s) of service in dispute.”7 Additionally, the requestor must provide documentation that discusses, demonstrates, and justifies that the payment amount being sought is a fair and reasonable rate of reimbursement in accordance with 28 Texas Administrative Code (TAC) § 134.1 when the dispute involves health care for which the division has not established a maximum allowable reimbursement or reimbursement rate, as applicable.8
Texas Labor Code § 413.011 sets forth reimbursement policies and guidelines and includes the following:
(d) Fee guidelines 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 Division rule that effects the above-referenced reimbursement guidelines is 28 TAC § 134.1 (Medical Reimbursement), which includes the following:
(e) Medical reimbursement for health care not provided through a workers’ compensation health care network shall be made in accordance with:
(1) the Division's fee guidelines;
(2) a negotiated contract; or
(3) in the absence of an applicable fee guideline or a negotiated contract, a fair and reasonable reimbursement amount as specified in subsection (f) of this section.
(f) Fair and reasonable reimbursement shall:
(1) be consistent with the criteria of Labor Code § 413.011;
(2) ensure that similar procedures provided in similar circumstances receive similar reimbursement; and
(3) be based on nationally recognized published studies, published Division medical dispute decisions, and/or values assigned for services involving similar work and resource commitments, if available.
The party seeking relief has the burden of proof by the preponderance of the evidence.9
Claimant suffered a compensable injury on (Date of Injury).10 On 38 days between May 7, 2018, and September 12, 2018, Claimant received interdisciplinary traumatic brain injury rehabilitation services from Provider, an outpatient rehabilitation facility, for the treatment of injuries sustained while on the job. The Division has not established a medical fee guideline for such services. For its services, Provider cited treatment code 97799 and billed Carrier $2,800 per service day, totaling $106,400.11 Provider’s documentation of services identified the varying types of, and amounts of time spent on, multidisciplinary therapies provided on each service date.12 Carrier issued explanations of benefits (EOB) for the claims, approving a total of $35,859.38.13 Carrier’s EOBs explained that the workers’ compensation jurisdictional fee schedule base rate was $720/day, and payment rates were calculated using allowances based upon whether the services rendered were cognitive rehabilitation, therapeutic exercises, biofeedback, group therapy, speech therapy, or individual counseling.14 Carrier’s EOBs explained the methodology as follows:
Billed charges are for a brain injury program approved under non-specific code 97799. Texas currently has 4 program [sic] that are identified within the guidelines where this code is used. One of those programs is an Outpatient Medical Rehabilitation Program where Modifier Code MR is used and the rate for this program for a CARF15 accredited facility is $90/hr. The head injury program being billed by [Provider] includes therapy/rehab hours that are reasonably the same as would be involved in this type of program. For the hours for rehab/therapy the Carrier … is using the same hourly rate for this CARF accredited facility. For more specific services that would not necessarily be included in such a program, and are more specific to this brain injury program the Carrier in an effort to find a Fair & Reasonable rate for these services has chosen to break these down by type of service performed as follows: Therapeutic Exercise: 97799 CARF Rehab Program x $90.00 per hour; Cognitive Rehab: G0515 $141.16 per hour; Biofeedback: 90902 $160.22 per hour; Group Therapy: 90853 $42.44 per hour; Speech Therapy: 92507 $125.71 per hour; Individual Counseling: 90837 $211.76 per hour.16
Provider requested reconsideration, in response to which Carrier denied additional payment.
Provider filed two requests for MFDR, with different dates of service, for Claimant’s outpatient rehabilitation. On April 19, 2019, Provider requested MFDR in Division File No. (DWC Number) (SOAH Docket No. 454-21-3304.M4-NP; MRD No. M4-19-3844-01) for 35 dates of service from May 7, 2018, to September 4, 2018.17 On September 9, 2019, Provider filed for MFDR in Division File No. (DWC Number) (SOAH Docket No. 454-21-3451.M4-NP; MRD No. M4-20-0042-01) for three further dates of service: September 5, 2018; September 6, 2018; and September 12, 2018.18 For each service date in its MFDR requests, Provider requested 100% of its billed charges of $2,800.19
MFDR Decisions issued June 14, 2019, and October 4, 2019, found that Provider had failed to support its position that additional reimbursement was due.20 Each MFDR Decision set forth certain statements of the Division regarding reimbursements based on hospital charges, as follows:
The Division previously found, as stated in the adoption preamble to the former Acute Care Inpatient Hospital Fee Guideline, that “hospital charges are not a valid indicator of a hospital’s costs of providing services nor of what is being paid by other payors” (22 Texas Register 6271). In formulating the fee guidelines, the division further considered and rejected alternative payment methods that used hospital charges as their basis because they “allow the hospitals to affect their reimbursement by inflating their charges” (22 Texas Register 6268-6269).21
Before the beginning of the hearing, the parties agreed that the operative facts in both cases were the same and the cases could be heard together. At the hearing, Provider offered no exhibits, but presented the testimony of its Insurance Manager, Catherine Zacharias. Carrier offered twelve exhibits, which were admitted, and presented the testimony of Senior Field Specialist and Adjuster, Spencer Spofford.
Ms. Zacharias testified for Provider about its services and billing. She said Provider is a rehabilitation facility. Provider’s brain injury program differs from other types of rehabilitation, in that it requires a minimum of five different disciplines of providers, which Ms. Zacharias said Provider can customize because Provider has twelve different types of providers. According to Ms. Zacharias, Provider customizes individual treatment for its patients and did so for Claimant.
Ms. Zacharias testified that Claimant received hand and shoulder exercises, bicycle therapy for his back injuries, and other therapy. She explained that sometimes chronic pain patients and brain injury patients are in the same therapy group, but not “work hardening” patients. She stated that, although the exercises would typically be done by the entire group at once in this type of group program, Claimant’s issues required personal one-on-one exercises.
Ms. Zacharias testified that Claimant was able to get back to a partial workday as a result of Provider’s services, before he hit his head again, resulting in more significant brain injury. She said that Provider’s health care providers were the ones to determine the best treatment for Claimant; and Provider met all the guidelines for these determinations.
On cross examination, Ms. Zacharias admitted that Provider is only CARF accredited in pain management and outpatient rehabilitation—not brain injury. She explained that “CARF” stands for Certified Accredited Rehabilitation Facility and requires recertification every three years through surveying of every policy and procedure.
Ms. Zacharias testified that Provider uses “cost plus cogs” pricing, which combines all of Provider’s cost factors together. She said Carrier is the only insurance company that has not been able to agree with Provider on pricing—most other carriers are paying Provider 75 percent of what it is asking, not just 50 percent. She said Carrier wanted Provider to break down which treatments were given each day, but Provider was not prepared to separate the services provided because it is multidisciplinary.
Mr. Spofford is Carrier’s handling adjuster for the underlying workers’ compensation claim. He testified that Provider billed $2,800 per day on billing code 97799, which is a generic code for work hardening, chronic pain, and other types of treatment. He explained that $720 per day is the normal daily price for outpatient rehabilitation—not $2,800—although he acknowledged that another brain injury patient in the Dallas area had negotiated a rate of $765 per day for outpatient services.
Mr. Spofford said Provider had not accepted Carrier’s fee schedule payment of $720 per day, so Carrier tried to break the payments down by which type of multidisciplinary therapies were actually provided and use each of those individual modalities’ fee schedules. To do so, Carrier had to match CPT22 codes with the therapies given, then multiply those therapies’ fee schedules by the number of hours. According to Mr. Spofford, Carrier did not question the number of hours Provider billed for; and Carrier paid the same amount per hour as it would have for CARF-certified multidisciplinary rehabilitation therapy, even though Provider is not CARF certified for brain injury.
Mr. Spofford listed Carrier’s hourly reimbursement rates as follows: $141.16 for cognitive rehabilitation services, $90.00 for therapeutic exercises, $160.22 for biofeedback, $42.44 for group therapy, $211.76 for individual counseling, and $125.71 for speech therapy. According to Mr. Spofford, Carrier’s methodology resulted in a different amount paid for each day, between $830 and the “mid-one-thousands,” all of which were above the standard $720 per day (and the $765 per day agreed with the other Dallas provider referred to earlier). Mr. Spofford said the multidisciplinary fee schedule pays at $1000 per day, so some of Carrier’s payments are even above that.
Mr. Spofford observed that there were no separate bills for room and board, which he attributed to Provider’s services being on an outpatient basis; but he noted that Claimant was put up in a hotel near Provider’s facility. Mr. Spofford said no claim was filed for room and board, as would be required for those items to be covered. However, on cross examination, he noted that Carrier is required to reimburse for lodging when a claimant must travel a certain distance or remain at the facility for a certain number of hours; and he conceded he was not aware that room and board was included in Provider’s cost factor and considered in their $2,800 per day.
Mr. Spofford testified that Carrier’s reimbursement rates are correct and reflective of the actual services provided on each specific date; whereas Provider’s request for reimbursement of $2,800 per day was not based upon the specific services provided, which varied day to day. He said the reimbursements using Carrier’s methodology are more than fair and reasonable.
In its Closing Argument, Carrier cited SOAH dockets that have rejected evidence of other payments to the Provider, alone, as satisfying the fairness and reasonableness factor of effective medical cost control.23 Similarly, Carrier cited numerous SOAH dockets that have rejected using other carriers’ payments to other providers, as evidence of the fairness and reasonableness factor of consistency with other reimbursement schemes.24
Provider failed to timely file for MFDR for claims on two service dates. Provider filed its request for MFDR on September 9, 2019, for its claims with service dates including September 5-6, 2018. Provider did not claim any exception applied to the one-year deadline to file a request for MFDR. Therefore, pursuant to 28 TAC § 133.307(c)(1), Provider waived its right to MFDR for these claims. Because Provider did not timely file a request for MFDR for the services provided September 5-6, 2018, Provider is not entitled to any additional reimbursement from Carrier for those claims.
Claimant received interdisciplinary traumatic brain injury rehabilitation services from Provider on 36 dates between May 7, 2018, and September 12, 2018, exclusive of the two dates for which Provider waived its right to MFDR as discussed above. Payment is subject to the general medical reimbursement provisions of 28 TAC § 134.1(e) because the services were not provided through a workers’ compensation health care network.25 The Division has not established a medical fee guideline for the type of services Provider provided Claimant and there was no negotiated contract for the services; therefore, reimbursement must be made in accordance with a fair and reasonable amount as specified in 28 TAC § 134.1(f).26
With its MFDR request, Provider was required to provide documentation to discuss, demonstrate, and justify that the payment amounts being sought were fair and reasonable rates of reimbursement in accordance with 28 TAC § 134.1.27 Provider’s documentation in evidence shows that the Claimant’s treatments varied from day to day by type of therapy and time spent, and that Provider seeks payment of 100% of its billed charges of $2,800 per treatment day.28
It is Provider’s burden to show that the reimbursement amount sought satisfies the Texas Labor Code’s factors describing what is “fair and reasonable”; additionally, it is Provider’s burden to show that the reimbursement amount paid by Carrier does not satisfy the statutory “fair and reasonable” factors. As explained below, Provider has failed to meet its burden on both accounts.
Provider admitted no exhibits and made no argument; so, its position is supported only by Carrier’s exhibits and the testimony of Ms. Zacharias. The record evidence is sparse as to Provider’s billing methodology, citing only the generic billing code for work hardening, chronic pain, and other types of treatment; and including Claimant’s treatment records. Provider’s bills fail to explain why $2,800 per day was a fair and reasonable amount even though the amounts and types of treatment differed by the specific date of service.29 Ms. Zacharias explained that Provider’s pricing combines all the cost factors of its multidisciplinary treatment, so Provider could not separate the services provided. Ms. Zacharias also testified that other insurance companies have paid Provider 75 percent of what it billed.
As noted in the MFRD Decisions, the Division has stated that reimbursement methodologies that use billed hospital charges, or a percentage thereof, as their basis do not provide acceptable fair and reasonable reimbursement amounts. While traumatic brain injury rehabilitation services are not the same as hospital care, this principle is of similar concern in this dispute. A health care provider’s charges are not evidence of a fair and reasonable rate or of what insurance companies are paying for the same or similar services. Unquestioning payment of a health care provider’s billed charge would leave the determination of the payment amount in the provider’s own hands, contrary to the objective of effective cost control and the standard not to pay more than for similar treatment of an injured individual of equivalent standard of living, both in Texas Labor Code § 413.011(d). In accordance with the Division’s policy, neither the billed charges nor an amount based on a percentage of billed hospital charges can be considered to be a fair and reasonable reimbursement amount without further evidence. In the SOAH dockets cited by Carrier, discussed above, SOAH similarly rejected evidence of other payments to the provider, alone, as satisfying the fairness and reasonableness factor of effective medical cost control.
Neither Provider’s evidence of its billed charges, nor Provider’s evidence of other carriers’ payments to it (which were, at most, 75 percent of its billing, not 100 percent) suffices to find Provider’s requested reimbursement at 100 percent of Provider’s $2,800 daily rate to be fair and reasonable. Therefore, Provider failed to show by a preponderance of the evidence that the daily reimbursement amount it seeks is fair and reasonable.
Provider failed to provide compelling evidence that the amount paid by Carrier was not fair and reasonable. On the contrary, the fairness and reasonableness of Carrier’s payments were supported through numerous exhibits, testimony, and argument. The record evidence explains Carrier’s reimbursement methodology in detail,30 in which, as Mr. Spofford explained, Carrier used Provider’s documentation of services to identify the types of multidisciplinary therapies actually provided on each service date and, using each of those individual modalities’ fee schedules, multiplied the hourly fee by the number of hours to arrive at daily total amounts paid.
The daily amounts paid by Carrier, as listed in Provider’s Request for MFDR and detailed in Carrier’s EOBs,31 exceed the workers’ compensation jurisdictional fee schedule base rate of $720 per day for outpatient rehabilitation, and also exceed the $765 per day rate that Mr. Spofford testified was negotiated by another brain injury treatment provider in the area for outpatient services. Moreover, Carrier’s payments to Provider for CARF-certified treatment, even though Provider lacks CARF certification for multidisciplinary brain injury treatment, are eminently fair and reasonable.
The methodology used by Carrier is consistent with the criteria of Texas Labor Code§ 413.011; ensures that similar procedures provided in similar circumstances receive similar reimbursement; and is based on values assigned for services involving similar work and resource commitments.
Provider failed to meet its burden, because it Provided no compelling evidence that Carrier’s methodology resulted in an unfair or unreasonable reimbursement.
In conclusion, the ALJ finds that Provider waived MFDR for the services provided September 5-6, 2018, by its failure to timely file its request; therefore, Provider is not entitled to any additional reimbursement from Carrier for those services. Additionally, as to Provider’s remaining claims for 36 further dates of service, the ALJ finds that Provider is not entitled to additional reimbursement because Provider failed to show, by the preponderance of the evidence, that: (1) the daily amount Provider seeks is fair and reasonable; and (2) the reimbursements already made by Carrier were not fair and reasonable.
1. (Claimant) suffered a compensable injury on (Date of Injury).
2. On the date of injury, Great American Alliance Insurance Company (Carrier) was the workers’ compensation insurance carrier for Claimant’s employer.
3. On 38 days between May 7 and September 12, 2018, Claimant received outpatient interdisciplinary traumatic brain injury rehabilitation services from North Texas Rehabilitation Center (Provider), an outpatient rehabilitation facility, for the treatment of his injuries.
4. Provider billed Carrier $2,800 per service day, totaling $106,400, citing treatment code 97799, although the actual treatments varied from day to day.
5. Carrier issued explanations of benefits (EOB) for the claims approving a total amount of $35,859.38. The EOBs explained that payment rates were calculated above the workers’ compensation jurisdictional fee schedule base rate of $720/day, using allowances based upon whether the services rendered were cognitive rehabilitation, therapeutic exercises, biofeedback, group therapy, speech therapy, or individual counseling.
6. Provider requested reconsideration; and Carrier denied additional payment.
7. On April 19, 2019, Provider filed a request for medical fee dispute resolution (MFDR) with the Texas Department of Insurance, Division of Workers’ Compensation, Medical Review Division (MRD or Division), for Claimant’s outpatient rehabilitation in Division File No. (DWC Number) (MRD No. M4-19-3844-01) for 35 dates of service from May 7, 2018, to September 4, 2018.
8. On September 9, 2019, Provider filed a request for MFDR with the Division, for Claimant’s outpatient rehabilitation in Division File No. (DWC Number) (MRD No. M4-20-0042-01) for service dates of September 5, 2018; September 6, 2018; and September 12, 2018.
9. Provider failed to timely request MFDR within one year, for its services provided on September 5-6, 2018.
10. Provider timely requested MFDR of Carrier’s denial with the Division, with respect to the 35 dates of service from May 7, 2018, to September 4, 2018, and September 12, 2018.
11. On June 14, 2019, and October 4, 2019, MFDR decisions were issued by the Division, finding that Provider had failed to support its position that additional reimbursement was due in MRD Nos. M4-19-3844-01 and M4-20-0042-01.
12. Provider timely requested hearings before the State Office of Administrative Hearings (SOAH) to contest the MFDR Decisions in favor of Carrier.
13. On August 19, 2021, the Division provided timely notice of hearing to Carrier and Provider in SOAH Docket No. 454-21-3304.M4-NP, concerning MRD No. M4-19-3844-01.
14. On August 31, 2021, the Division provided timely notice of hearing to Carrier and Provider in SOAH Docket Nos. 454-21-3451.M4-NP, concerning MRD No. M4-20-0042-01.
15. In SOAH Joint Order No. 2, issued October 11, 2021, the Administrative Law Judge (ALJ) consolidated SOAH Docket 454-21-3304.M4-NP with SOAH Docket 454-21-3451.M4- NP for docketing and procedural purposes, and set them to be heard and decided together.
16. The notices of hearing, together with Joint Order No. 2, included a statement of the time, place, and nature of the hearing; statements of the legal authority and jurisdiction under which the hearing was to be held; references to the particular sections of the statutes and rules involved; and attachments that incorporated, by reference, the factual matters asserted in the complaints or petitions filed with the state agency.
17. The hearing on the merits was held via Zoom videoconference on January 20, 2022, before SOAH ALJ Heather D. Hunziker. Provider appeared and was represented by Insurance Manager Catherine Zacharias. Carrier appeared and was represented by attorney Steven Tipton. Post-hearing briefing was submitted; and the record closed February 18, 2022.
18. At the beginning of the hearing the parties agreed that the operative facts were the same in both dockets, and that they could be heard and decided together.
19. Provider’s services were not provided through a workers’ compensation health care network.
20. The Division has not established a medical fee guideline for the type of services Provider provided Claimant and there was no negotiated contract for the services.
21. Provider seeks payment of 100% of its billed charges of $2,800 per treatment day.
22. The Division has stated that reimbursement methodologies that use billed hospital charges as their basis or that use a percentage of hospital billed charges as their basis do not provide acceptable fair and reasonable reimbursement amounts; and this principle applies equally to traumatic brain injury rehabilitation services.
23. Carrier’s method of reimbursement: (1) identified the types of multidisciplinary therapy provided on each service date, as noted in Provider’s documentation of services; (2) referred to each individual therapy modality’s fee schedule; and (3) multiplied each therapy’s hourly fee by the number of hours to arrive at daily total amounts paid.
24. The daily amounts paid by Carrier exceed the workers’ compensation jurisdictional fee schedule daily base rate for outpatient rehabilitation and exceed the daily rate negotiated by another provider for similar services.
25. Carrier’s reimbursement methodology would ensure that similar procedures provided in similar circumstances receive similar reimbursement and is based on values assigned for services involving similar work and resource commitments.
1. SOAH has jurisdiction over these proceedings, including the authority to issue a decision and order, pursuant to Texas Labor Code § 413.0312(e) and Texas Government Code ch. 2003.
2. Adequate and timely notice of the hearing was provided in accordance with Texas Government Code §§ 2001.051-.052.
3. As the party seeking relief from the MFDR decisions, Provider had the burden of proving by a preponderance of the evidence that it had not been reimbursed a fair and reasonable amount by Carrier for the services provided and was entitled to additional reimbursement. 28 Tex. Admin. Code § 148.14(b); 1 Tex. Admin. Code § 155.427.
4. A requestor shall timely file the request with the Division’s MFDR section or waive the right to MFDR. The request for MFDR must be filed no later than one year after the date(s) of service in dispute. 28 Tex. Admin. Code § 133.307(c)(1)(A).
5. The exceptions to the one-year filing deadlines set out in 28 Texas Administrative Code § 133.307(c)(1)(B) do not apply to Provider’s claims for services provided Claimant on September 5-6, 2018.
6. Provider waived the right to MFDR as to dates of service September 5-6, 2018; therefore, Provider is not entitled to any additional reimbursement for medical services provided to Claimant on these dates. 28 Tex. Admin. Code § 133.307(c)(1)(A).
7. Because Provider’s services were not provided through a workers’ compensation health care network, payment is subject to the Division’s general medical reimbursement provisions. 28 Tex. Admin. Code § 134.1(e).
8. Due to the absence of an applicable fee guideline or a negotiated contract, Provider’s reimbursement must be made at fair and reasonable rates as specified in the Department’s rules. 28 Tex. Admin. Code § 134.1(e)(3) (emphasis added).
9. Carrier’s reimbursement methodology was consistent with the criteria of Texas Labor Code § 413.011; would ensure that similar procedures provided in similar circumstances receive similar reimbursement; and was based on values assigned for services involving similar work and resource commitments. Therefore, the methodology used by Carrier resulted in a fair and reasonable amount. 28 Tex. Admin. Code § 134.1.
10. Provider failed to show by a preponderance of the evidence that the daily reimbursement amount it seeks is fair and reasonable, and that Carrier’s reimbursements were not fair and reasonable. Tex. Lab. Code § 413.011(d); 28 Tex. Admin. Code § 134.1.
11. Provider failed to show by a preponderance of the evidence that it is entitled to additional reimbursement for the services at issue in this proceeding.
Provider is not entitled to additional reimbursement for services provided September 5-6, 2018, because Provider waived its claims for such services; and, as to its claims for all other service dates, Provider is not entitled to additional reimbursement because it was reimbursed fairly and reasonably.
Texas Labor Code § 413.0312(g) and 28 TAC § 133.307(h) require the non-prevailing party to reimburse the Division of Workers’ Compensation for the cost of services provided by SOAH. Texas Labor Code § 413.0312(i) requires that SOAH identify the non-prevailing party and any costs for services provided by SOAH in its final decision. For purposes of Texas Labor Code § 413.0312, North Texas Rehabilitation Center is the non-prevailing party. The costs associated with this decision are set forth in Attachment A to this Decision and Order and are incorporated herein for all purposes.
SIGNED April 11, 2022.
Heather Hunziker
Administrative Law Judge
State Office of Administrative Hearings
1 SOAH Joint Order No. 3, issued January 27, 2022, held the record open for replies to closing arguments until February 18, 2022. Carrier filed its closing brief on February 4, 2022 (Closing Argument), and its reply brief on February 18, 2022; however, Provider filed no closing brief or response. Therefore, Carrier’s reply brief was not considered by the ALJ. Similarly, Carrier’s “Objections to Admission of [exhibits in Provider’s response], and Motion to Disregard and Strike” filed February 24, 2022, is denied for mootness.
2 See 28 Tex. Admin. Code (TAC) ch. 133. All citations in this Decision reflect the law applicable on the date of service for each claim.
3 28 TAC § 133.307.
4 Tex. Labor Code § 413.031(c); 28 TAC § 133.307(a)(2).
5 28 TAC § 133.307(a)(2) (emphasis added).
6 28 TAC § 133.307(c)(1).
7 28 TAC § 133.307(c)(1)(A). Provider did not assert an exception under 28 TAC § 133.307(c)(1)(B).
8 28 TAC § 133.307(c)(2)(O).
9 28 TAC § 148.14(b); 1 TAC § 155.427. Burden of proof in worker’s compensation insurance reimbursement cases determining fair and reasonable reimbursement was previously analyzed in great depth, in SOAH Docket No. 454-11-2417.M4 (consolidating 113 cases with the same basic legal issues and evidence) (affirmed as to burden of proof, reversed and rendered by the trial court in Zurich American Ins. Co. v. Houston Community Hospital, Cause No. D-1-GN-14-001325 in the 201st Judicial District Court of Travis County).
10 Carrier Exs. A-1 at 1, B-1 at 1.
11 Carrier Exs. A-3 at 7-41, B-3 at 9-11.
12 Carrier Exs. A-5, B-5.
13 Carrier Exs. A-4, B-4.
14 Carrier Exs. A-4, B-4.
15 CARF means Certified Accredited Rehabilitation Facility.
16 Carrier Exs. A-4, B-4.
17 Carrier Ex. A-1 at 1-2.
18 Carrier Ex. B-1 at 1.
19 Carrier Exs. A-1 at 1-2, B-1 at 1.
20 Carrier Exs. A-6, B-6.
21 Carrier Exs. A-6 at 295, B-6 at 35.
22 This acronym was not defined.
23 Carrier cites SOAH Consolidated Dockets No. 453-03-0143.M4, 453-03-3098.M4, 453-05-1535.M4 and 453-05-1536.M4, Vista Healthcare, Inc. v. Twin City Fire Insurance Co., Decision and Order (June 12, 2007). Closing Argument at 7-8.
24 Carrier cites SOAH Docket No. 453-01-179.M4, Decision and Order (January 23, 2002); Consolidated Dockets No. 453-03-0143.M4, 453-03-3098.M4, 453-05-1535.M4 and 453-05-1536.M4, Vista Healthcare, Inc. v. Twin City Fire Insurance Co., Decision and Order (June 12, 2007); and SOAH Consolidated Dockets No. 453-03-0515.M4, 453-03-0516.M4, and 453-03-2818.M4, Decision and Order (June 27, 2007). Closing Argument at 8-9.
25 28 TAC § 134.1(e).
26 28 TAC § 134.1(e)(3).
27 28 TAC § 133.307(c)(2)(O).
28 Carrier Exs. A-1, A-5, B-1, B-5.
29 Compare Carrier Exs. A-3 with A-5; B-3 with B-5.
30 See Carrier Exs. A-2, B-2 (Carrier’s Responses to Requests for Dispute Resolution, explaining in detail how Carrier applied its methodology in its EOBs); Carrier Exs. A-4, B-4 (Carrier’s EOBs).
31 Carrier Exs. A-1, B-1, A-4, B-4.
Columbia Mutual Insurance Co. (Columbia) challenges the Medical Fee Dispute Findings and Decision (MFD Decision) issued by the Texas Department of Insurance, Division of Workers’ Compensation (Division). The MFD Decision ordered Columbia to reimburse the Texas Institute for Surgery (Provider) the additional sum of $1,804.48 for implantables used during outpatient surgery provided to an injured worker. After reviewing the evidence presented and the applicable law, the Administrative Law Judge (ALJ) concludes that Columbia met its burden of proof to show that the MFD Decision incorrectly calculated the reimbursement amount. Accordingly, Columbia owes no additional reimbursement.
There are no disputed issues of notice or jurisdiction. Therefore, those matters are set out in the Findings of Fact and Conclusions of Law without further discussion here.
A Zoom videoconference hearing was held on February 8, 2022, before ALJ Srinivas Behara of the State Office of Administrative Hearings (SOAH). Columbia was represented by attorney Dan C. Kelley. Provider did not appear. Columbia presented the testimony of one witness, Anne M. Geanes. The hearing and record closed the same day.
The Division’s rule at 28 Texas Administrative Code § 134.403 (Division Rule 134.403) applies to medical services provided in an outpatient acute care hospital. Absent a contracted fee schedule, reimbursement to a provider shall be the maximum allowable reimbursement (MAR) amount, including any applicable outlier payment amounts and reimbursement for implantables.1 An “implantable” is an object or device that is surgically implanted, embedded, inserted, or otherwise applied, and related equipment necessary to operate, program, and recharge the implantable.2 MAR for implantables is calculated as follows:
(f) The reimbursement calculation used for establishing the MAR shall be the Medicare facility specific amount, including outlier payment amounts, determined by applying the most recently adopted and effective Medicare Outpatient Prospective Payment System (OPPS) reimbursement formula and factors as published annually in the Federal Register. The following minimal modifications shall be applied.
(1) The sum of the Medicare facility specific reimbursement amount and any applicable outlier payment amount shall be multiplied by:
(A) 200 percent; unless
(B) a facility or surgical implant provider requests separate reimbursement in accordance with subsection (g) of this section, in which case the facility specific reimbursement amount and any applicable outlier payment amount shall be multiplied by 130 percent.
(2) When calculating outlier payment amounts, the facility’s total billed charges shall be reduced by the facility’s billed charges for any item reimbursed separately under subsection (g) of this section.
(g) Implantables, when billed separately by the facility or a surgical implant provider in accordance with subsection (f)(1)(B) of this section, shall be reimbursed at the lesser of the manufacturer’s invoice amount or the net amount (exclusive of rebates and discounts) plus 10 percent or $1,000 per billed item add-on, whichever is less, but not to exceed $2,000 in add-on’s per admission.3
Unresolved disputes “over the amount of payment due for services determined to be medically necessary and appropriate for treatment of a compensable injury” may be resolved by a contested case hearing at SOAH.4 As the party seeking relief from the MFD Decision, Columbia has the burden of proof.5
On June 4, 2019, Provider performed surgery on an injured worker to repair a tendon in the left middle finger.6 The surgery used two implantables—an anchor and k-wire—to fixate bone and soft tissue.7 After the procedure, Provider timely submitted a bill to Columbia, itemizing charges in a document titled “Patient Account Detail.” Provider highlighted a portion of the Patient Account Detail to show Columbia the specific implantables charges in the amount of $2,202.00.8 In addition, Provider’s request for reimbursement to Columbia contained copies of the “implant log” and manufacturer invoices, demonstrating the specific implantables used and their costs from the manufacturer in the amount of $450.00.9
Based on the erroneous determination that Provider did not submit separate reimbursement request for implantables, the MFD Decision applied Division Rule 134.403(f)(1)(A), which mandates that “the sum of the Medicare facility specific reimbursement amount and any applicable outlier payment amount shall be multiplied by 200%.” However, there is no evidentiary support that the 200% multiplier should have applied under the circumstances. The undisputed evidence demonstrates that Provider made a separate request for reimbursement implantables. The charges for the implantables were separately billed, and thus, under Division Rule 134.403(f)(1)(B), that reimbursement should have been calculated at 130% of the facility- specific reimbursement amount plus any applicable outlier payment. Because Columbia has met its burden of proof that the correct reimbursement at 130% was made, no additional reimbursement of $1,804.48 remains due.
1. On June 4, 2019, Texas Institute for Surgery (Provider) performed outpatient acute care services on an injured worker (Claimant) to repair a tendon in the worker’s finger.
2. The services involved use of an anchor and k-wire, which are “implantables” used to fixate bone and soft tissue.
3. Provider timely submitted a bill to Claimant’s insurance carrier, Columbia Mutual Insurance Co. (Columbia), itemizing charges in a document titled Patient Account Detail. Provider highlighted a portion of the Patient Account Detail to show Columbia the specific implantables charges. The total charge for implantables was $2,202.00.
4. Provider’s request for reimbursement to Columbia contained copies of the implant log and manufacturer invoices, demonstrating the specific implantables used and the implantables’ costs. The total invoice cost of implantables from the manufacturer was $450.00.
5. The total billed charges were $21,218.38. Provider’s total billed charges less Provider’s billed charges for items reimbursed separately totaled $19,016.38. Provider’s cost-to- charge ratio is 0.281.
6. Provider sought separate reimbursement for implantables when Respondent submitted its bill for payment to Columbia, and therefore reimbursement should have been calculated at 130% of the facility specific amount as set forth in 28 Texas Administrative Code Section 134.403(f)(1)(B).
7. Carrier reimbursed $21,693.42 to Provider for services to Claimant. This amount was based on a rate of 130% of the facility specific reimbursement amount.
8. Accordingly, for the date of service, the correct total reimbursement to Provider was $3,851.32, calculated as follows: $2,581.79 (Ambulatory Payment Classification payment for the appropriate Current Procedural Terminology (CPT) code 26356) multiplied by 130%, plus $495.00 (which is the implant cost of $450.00 plus 10% of the implant cost).
9. Provider filed a request for medical fee dispute resolution with the Texas Department of Insurance, Division of Workers’ Compensation (Division) on December 17, 2019, requesting additional reimbursement.
10. On January 10, 2020, the Division issued its Medical Fee Dispute Resolution Findings and Decision, finding that Provider was entitled to an additional $1,804.48 in reimbursement.
11. On September 2, 2021, Columbia requested a hearing at the State Office of Administrative Hearings (SOAH) to contest the Division’s determination.
12. On September 2, 2021, the Division issued a Notice of Hearing. The notice, along with SOAH Order No. 2, informed the parties of the date, time, and location of the hearing; the factual matters to be considered; the legal authority under which the hearing would be held; and the statutory provisions applicable to the matters to be considered.
13. A Zoom videoconference hearing was held on February 8, 2022, before ALJ Srinivas Behara of SOAH. Columbia was represented by attorney Dan C. Kelley. Provider did not appear. The hearing and record closed the same day.
14. Columbia adequately reimbursed Provider for services provided to Claimant.
1. SOAH has jurisdiction over this proceeding, including the authority to issue a decision and order. Tex. Lab. Code § 413.031 and Tex. Gov’t Code ch. 2003.
2. Adequate and timely notice of the hearing was provided. Tex. Gov’t Code §§ 2001.051-.052.
3. Columbia had the burden of proof in this proceeding by a preponderance of the evidence.
4. When implantables are separately invoiced, the Maximum Allowable Reimbursement is calculated by multiplying the sum of the Medicare facility-specific reimbursement amount and any applicable outlier payment amount by 130%. 28 Tex. Admin. Code § 134.403(f)(1)(B).
5. The Medical Fee Dispute Resolution Findings and Decision concluding that City owes an additional $8,282.08 is not consistent with 28 Texas Administrative Code § 134.403(f).
Columbia Mutual Insurance Co. is not required to pay Texas Institute for Surgery (Provider) the additional reimbursement of $1,804.48 for services provided to Claimant.
Texas Labor Code § 413.0312(g) and 28 Texas Administrative Code § 133.307(h) require the nonprevailing party to reimburse the Division for the cost of services provided by SOAH. Texas Labor Code § 413.0312(i) requires SOAH to identify the nonprevailing party and any costs for services provide by SOAH in its final decision. For purposes of Texas Labor Code § 413.0312, Texas Institute for Surgery is the nonprevailing party. The costs associated with this decision are set forth in Attachment A to this Decision and Order and are incorporated herein for all purposes.
SIGNED March 21, 2022
Srinivas Behara
Administrative Law Judge
State Office of Administrative
1 28 Tex. Admin. Code § 134.403(e)(2).
2 28 Tex. Admin. Code § 134.403(b)(2).
3 28 Tex. Admin. Code § 134.403(f),(g).
4 Tex. Labor Code §§ 413.031(c), .0312(a), (e).
5 28 Tex. Admin. Code § 148.14(b).
6 Pet. Ex. 4 at 42.
7 Pet. Ex. 4 at 43.
8 Pet. Ex. 1.
9 Pet. Ex. 2 at 3-8.
Texas Public School Workers’ Compensation Project (Carrier) challenges the Texas Department of Insurance, Division of Workers’ Compensation (the Division or DWC) Medical Fee Dispute Resolution (MFDR) Findings and Decision of July 3, 2020 (Decision) granting reimbursement to Baylor Scott & White Marble Falls (Hospital). The Administrative Law Judge (ALJ) finds that Hospital is entitled to reimbursement. Therefore, the ALJ upholds the determination by DWC and orders that Carrier reimburse Hospital $27,148.52.1
There are no issues of notice or jurisdiction in this proceeding. Therefore, these matters are addressed in the Findings of Fact and Conclusions of Law without further discussion here.
On May 27, 2020, Hospital filed a request for medical fee dispute resolution with the DWC. On July 3, 2020, the DWC issued a decision granting Hospital’s request for additional reimbursement. On September 11, 2020, Carrier timely requested a hearing before the State Office of Administrative Hearings (SOAH) to contest the decision. A hearing was convened before ALJ Meitra Farhadi on January 20, 2022, by Zoom videoconferencing. Carrier appeared and was represented by attorney John Molinar. Hospital appeared and was represented by attorney Alan Barker. The record closed upon conclusion of the hearing on January 20, 2022.
“An employee who sustains a compensable injury is entitled to all health care reasonably required by the nature of the injury as and when needed.”2 Specifically, the employee is entitled to health care that: “(1) cures or relieves the effects naturally resulting from the compensable injury; (2) promotes recovery; or (3) enhances the ability of the employee to return to or retain employment.”3
Texas Labor Code § 413.014 authorizes the Division to adopt rules regarding preauthorization. An insurance carrier is liable for all reasonable and necessary medical costs of both inpatient hospital admissions and outpatient surgical or ambulatory surgical services when those services have been preauthorized.4 If the inpatient hospital admission or outpatient surgical or ambulatory services are the result of an emergency, however, preauthorization is not required.5 A medical emergency is “the sudden onset of a medical condition manifested by acute symptoms of sufficient severity, including severe pain, that the absence of immediate medical attention could reasonably be expected to result in: (i) placing the patient’s health or bodily functions in serious jeopardy, or (ii) serious dysfunction of any body organ or part.”6
A preauthorization request can be sent by telephone, facsimile, or electronic transmission and must include, among other things, the estimated date of the proposed health care.7 The insurance carrier must contact the requestor by telephone, facsimile, or electronic transmission within three working days of receipt of a request for preauthorization to approve or deny the request, and must also send written notification of the decision to the injured employee and requestor.8 An approval must include, among other things, the specific health care and the specific period of time to complete the treatments.9 The insurance carrier cannot condition an approval or change any elements of the request unless the condition or change is mutually agreed to by the health care provider and insurance carrier and is documented.10
If a health care provider is denied or paid a reduced amount for the medical service rendered, the provider is entitled to review by the Division.11 If a dispute remains after that review, a party may request a contested case hearing at SOAH.12 As the party requesting a hearing at SOAH to challenge an adverse MFDR decision, Carrier has the burden of proof to show by a preponderance of the evidence that Hospital is not entitled to reimbursement.13 The hearing before SOAH is a de novo review of the issues involved.14
At the hearing, Carrier had eight exhibits admitted into evidence, and Hospital admitted ten exhibits into evidence. Neither party presented any witnesses.
This case arises out of the hospital admission on June 11, 2019, of an injured worker (Claimant) whose workers’ compensation insurance was provided by Carrier. Due to a fall on (Date of Injury), Claimant’s orthopedic doctor recommended that Claimant undergo surgery for a compensable injury sustained to Claimant’s left shoulder. On June 7, 2019, after a peer-to-peer discussion between Claimant’s doctor and a physician advisor working for Carrier’s Injury Management Organization (IMO), a preauthorization determination letter was issued. The preauthorization covered Open Reduction Internal Fixation (ORIF) of the left shoulder with possible Reverse Shoulder Arthroplasty (RSA) to be done on an outpatient basis.15 If an RSA was done, an inpatient stay would be necessary. Hospital had requested both inpatient and outpatient authorization; however, the IMO utilization review (UR) nurse advised Hospital not to request authorization for an inpatient stay until it was certain that Claimant would be admitted. The UR nurse advised Hospital that if RSA was performed, Hospital should fax the authorization request for an inpatient stay and then call to notify IMO as well.16
On Tuesday, June 11, 2019, Claimant underwent surgery from 10:15 a.m. to 12:50 p.m. After commencing the operation, Claimant’s doctor decided to proceed with the RSA procedure in lieu of the ORIF procedure.17 At 2:06 p.m. Hospital left a voicemail for the adjuster with IMO regarding the need for inpatient admission following the surgery.18 On the same date, Hospital also submitted an online request to IMO seeking preauthorization for an inpatient hospital stay.19 In response, IMO issued an amended preauthorization determination letter authorizing medical necessity for an inpatient stay for three days for an RSA on an inpatient basis.20 The amended preauthorization was effective for dates of service from June 12, 2019 through August 12, 2019.21
Hospital billed Carrier for the treatment.22 Carrier, through its administrator Creative Risk Funding (CRF), denied reimbursement on the basis that the services were not preauthorized.23
Carrier contends it is not liable for services provide prior to the June 12, 2019, effective date of the amended preauthorization for inpatient hospital services. Carrier further asserts that the medical evidence demonstrates that Claimant’s surgery was not an emergency. Specifically, the IMO preauthorization letter mentions a peer-to-peer discussion with Claimant’s surgeon, in which he explained his surgical plan to perform the ORIF procedure to repair Claimant’s left shoulder fracture, with the possibility that he would need to convert to the RSA procedure if the fracture was irreparable.24 Carrier argues that Hospital knew that if the RSA was done, it would need authorization for the inpatient stay. Further, Carrier stated that such a contingency could have been addressed from a preauthorization standpoint had Hospital included a hospital stay for the RSA procedure in its initial request.
Hospital contends that the RSA was a medically necessary procedure, and that the Hospital took the conservative route to only obtain the outpatient authorization. However, Hospital argued that it would have been inappropriate to stop the surgery and wait for the inpatient authorization before performing the approved RSA procedure. Hospital contends that IMO erred by dating the inpatient authorization to commence on June 12, 2019, instead of June 11, 2019.
Carrier is liable for treatments and services requiring preauthorization if preauthorization is sought by the claimant or health care provider and either obtained from the insurance carrier or ordered by the commissioner. As applicable to this case, preauthorization must be obtained from the insurance carrier prior to receiving health care listed in 28 Texas Administrative Code § 134.600(p). Among the health care listed in 28 Texas Administrative Code § 134.600(p) is non-emergency healthcare including both inpatient hospital admissions and outpatient surgical services.
The preponderance of the evidence demonstrates that Hospital sought preauthorization for ORIF of the left shoulder with possible RSA to be done on an outpatient basis as well as approval for inpatient admission. Carrier approved the ORIF of the left shoulder with possible RSA to be done on an outpatient basis, but the IMO UR nurse advised Hospital not to request inpatient until they were certain it would be required. The evidence further demonstrated that it was not until the operation had begun that Claimant’s doctor decided it would be necessary to proceed with the RSA procedure in lieu of the ORIF procedure. As requested by the IMO UR nurse, once the RSA surgery was done and it was confirmed that Claimant would need inpatient admission, Hospital both called and faxed the inpatient request to IMO. IMO approved the request but failed to date it correctly—dating the amended preauthorization to be effective June 12, 2019.
Hospital obtained preauthorization which included the possibility of RSA. RSA necessitates an inpatient hospital admission. Although the preauthorization was not amended to specify the inpatient admission until the need for RSA was confirmed during surgery; the preponderance of the evidence established that the RSA was approved, and that if the RSA was performed an inpatient stay would be required. Carrier cannot now change an element of the request.25
In addition, although the RSA surgery itself was not a medical emergency; upon performing it, the inpatient admission of Claimant could arguably be considered a medical emergency. Carrier did not present any evidence that an RSA surgery does not present an emergency medical situation requiring inpatient hospital admission.
For these reasons, the ALJ concludes that Carrier has not met its burden of showing that Hospital did not receive preauthorization for the June 11, 2019, RSA surgery and resulting inpatient hospital stay. Therefore, the MFDR Decision correctly determined that Hospital is entitled to reimbursement from Carrier. The ALJ makes the following findings of fact and conclusions of law in support of this decision.
1. An injured worker (Claimant) suffered a compensable injury on (Date of Injury).
2. Texas Public School Workers’ Compensation Project (Carrier) was the responsible workers’ compensation insurer for Claimant.
3. On June 7, 2019, after a peer-to-peer discussion between Claimant’s doctor and a physician advisor working for Carrier’s Injury Management Organization (IMO), a preauthorization determination letter was issued. The preauthorization covered Open Reduction Internal Fixation (ORIF) of the left shoulder with possible Reverse Shoulder Arthroplasty (RSA) to be done on an outpatient basis.
4. If an RSA was performed, an inpatient stay would be necessary.
5. Baylor Scott & White Marble Falls (Hospital) had requested both inpatient and outpatient authorization; however, the IMO utilization review (UR) nurse advised Hospital not to request authorization for an inpatient stay until it was certain that Claimant would be admitted. The UR nurse advised Hospital that if RSA was performed, Hospital should fax the authorization request for an inpatient stay and then call to notify IMO as well.
6. On Tuesday, June 11, 2019, Claimant underwent surgery from 10:15 a.m. to 12:50 p.m. at Hospital. After commencing the operation, Claimant’s doctor decided to proceed with the RSA procedure in lieu of the ORIF procedure. At 2:06 p.m. Hospital left a voicemail for the adjuster with IMO regarding the need for inpatient admission following the surgery. On the same day, Hospital also submitted an online request to IMO seeking preauthorization for an inpatient hospital stay.
7. On June 13, 2019, IMO issued an amended preauthorization determination letter authorizing medical necessity for an inpatient stay for three days for an RSA on an inpatient basis. The amended preauthorization was effective for dates of service from June 12, 2019 through August 12, 2019.
8. Hospital billed Carrier for the surgery and inpatient admission. Carrier, through its administrator Creative Risk Funding, denied reimbursement on the basis that the services were not preauthorized.
9. On May 27, 2020, Hospital filed a request for medical fee dispute resolution with the Texas Department of Insurance, Division of Workers’ Compensation (DWC or the Division).
10. On July 3, 2020, the DWC issued its Medical Fee Dispute Resolution Findings and Decision granting Hospital’s request for reimbursement.
11. Carrier timely requested a hearing at the State Office of Administrative Hearings (SOAH) to contest the Division’s determination.
12. On August 20, 2021, the Division issued a notice of the hearing. 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 factual matters asserted.
13. On December 1, 2021, the SOAH Administrative Law Judge (ALJ) issued Order No. 2 with a statement of the time and place of the hearing and instructions for participating in the hearing.
14. A hearing was convened before ALJ Meitra Farhadi on January 20, 2022, by Zoom videoconferencing. Carrier appeared and was represented by attorney John Molinar. Hospital appeared and was represented by attorney Alan Barker. The record closed upon conclusion of the hearing on January 20, 2022.
1. SOAH has jurisdiction over this proceeding, including the authority to issue a decision and order. Tex. Lab. Code § 413.031 and Tex. Gov’t Code ch. 2003.
2. Adequate and timely notice of the hearing was provided. Tex. Gov’t Code §§ 2001.051 and 2001.052.
3. Carrier had the burden of proof in this proceeding by a preponderance of the evidence. 1 Tex. Admin. Code § 155.427; 28 Tex. Admin. Code § 148.14(b), (e).
4. A medical fee dispute is a dispute over the amount of payment for services that have been determined to be medically necessary and appropriate for treatment of an injured employee’s compensable injury. 28 Tex. Admin. Code § 133.305(a)(4).
5. The Division may adopt rules regarding preauthorization and the insurance carrier is not liable for treatments and services requiring preauthorization unless preauthorization is sought by the claimant or health care provider and obtained from either the insurance carrier or ordered by the commissioner. Tex. Lab. Code § 413.014.
6. An insurance carrier may not condition an approval or change any elements of the request unless the condition or change is mutually agreed to by the health care provider and insurance carrier and is documented. 28 Tex. Admin. Code § 134.600(n).
7. Carrier impermissibly conditioned or changed an element of the preauthorization request. 28 Tex. Admin. Code § 134.600(n).
8. Hospital is entitled to reimbursement by Carrier of $27,148.52, plus any applicable interest.
THEREFORE, IT IS ORDERED that Texas Public School Workers’ Compensation Project is required to pay the sum of $27,148.52, plus any applicable interest, to Baylor Scott & White Marble Falls for the services at issue in this case.
Texas Labor Code § 413.0312(g) and 28 Texas Administrative Code § 133.307(h) require the nonprevailing party to reimburse the Division for the cost of services provided by SOAH. Texas Labor Code § 413.0312(i) requires SOAH to identify the nonprevailing party and any costs for services provide by SOAH in its final decision. For purposes of Texas Labor Code § 413.0312, Texas Public School Workers’ Compensation Project is the nonprevailing party. The costs associated with this decision are set forth in Attachment A to this Decision and Order and are incorporated herein for all purposes.
SIGNED March 16, 2022.
MEITRA FARHADI
ADMINISTRATIVE LAW JUDGE
STATE OFFICE OF ADMINISTRATIVE HEARINGS
1 This is the amount in dispute identified in the MFDR Decision. See Respondent Ex. 10; Petitioner Ex. 8.
2 Tex. Lab. Code § 408.021(a).
3 Id.
4 28 Tex. Admin. Code § 134.600(c)(1)(B), (p)(1)-(2).
5 28 Tex. Admin. Code § 134.600(c)(1)(A).
6 28 Tex. Admin. Code § 133.2(5)(A).
7 28 Tex. Admin. Code § 134.600(f)(9).
8 28 Tex. Admin. Code § 134.600(i)-(j).
9 28 Tex. Admin. Code § 134.600(l)(1)-(2).
10 28 Tex. Admin. Code § 134.600(n).
11 Tex. Lab. Code § 413.031(a).
12 Tex. Lab. Code § 413.0312(e).
13 28 Tex. Admin. Code § 148.14(b), (e).
14 See Vista Med. Ctr. Hosp. v. Texas Mut. Ins. Co., 416 S.W.3d 11, 17-18 (Tex. App.—Austin 2013, no pet.).
15 Petitioner Ex. 1 at 1.
16 Respondent Ex. 1 at 2.
17 Respondent Ex. 2 at 1-3.
18 Respondent Ex. 1 at 1.
19 Petitioner Ex. 2 at 1-3.
20 Petitioner Ex. 3 at 1.
21 Id.
22 Petitioner Ex. 4.
23 Petitioner Ex. 5.
24 Petitioner Ex. 1.
25 28 Tex. Admin. Code § 134.600(n).
This case involves ambulatory surgical services rendered by Laser Surgery Holding Company, Ltd. (Provider) to an injured employee covered by the workers’ compensation insurance system. The Texas Department of Insurance, Division of Workers’ Compensation (Division) conducted medical fee dispute resolution (MFDR) and declined to order Texas Mutual Insurance (Carrier) to reimburse Provider in the amount of $70,000.1 The Administrative Law Judge (ALJ) concludes that Provider is not entitled to additional reimbursement and affirms the MFDR Decision.
There are no disputed issues regarding notice or jurisdiction in this proceeding. Therefore, those matters are addressed in the findings of fact and conclusions of law without further discussion here.
On November 13, 2019, the Division received Provider’s request for MFDR.2 On December 11, 2019, the Division issued its MFDR decision, denying reimbursement.3 Provider requested a hearing at the State Office of Administrative Hearings (SOAH) to contest the Division’s determination. On August 18, 2021, the Division issued a Notice of Hearing.
On December 7, 2022, ALJ Sarah Starnes convened a hearing on the merits via the Zoom government videoconferencing platform before SOAH in Austin, Texas. Provider was represented by its practice manager, BT. Carrier appeared through attorney BJ. The record closed on February 4, 2022, the date the parties filed their final written closing arguments.
A healthcare provider must request preauthorization from an injured worker’s insurance carrier prior to providing ambulatory surgical services to the worker.4 The request can be made by the health care provider or its designated representative, including office staff or a referral health care provider or health care facility that requests preauthorization.5 The insurance carrier is generally not liable for treatments or services requiring preauthorization unless preauthorization was sought and obtained from the insurance carrier.6
A preauthorization request can be sent by telephone, facsimile, or electronic transmission and must include, among other things, the estimated date of the proposed health care.7 The insurance carrier must contact the requestor by telephone, facsimile, or electronic transmission within three working days of receipt of a request for preauthorization to approve or deny the request, and must also send written notification of the decision to the injured employee and requestor.8 An approval must include, among other things, the specific health care and the specific period of time to complete the treatments.9 The insurance carrier cannot condition an approval or change any elements of the request unless the condition or change is mutually agreed to by the health care provider and insurance carrier and is documented.10
If a health care provider is denied or paid a reduced amount for the medical service rendered, the provider is entitled to review by the Division.11 If a dispute remains after that review, a party may request a contested case hearing at SOAH.12 As the party requesting a hearing at SOAH to challenge an adverse MFDR decision, Provider has the burden of proof to show by a preponderance of the evidence that Provider is entitled to additional reimbursement.13 The hearing before SOAH is a de novo review of the issues involved.14
This case involves ambulatory surgical services—specifically, a replacement of a spinal cord stimulator—performed by Provider for an injured worker on July 1, 2019. Carrier had preapproved the procedure, but the preapproval specified that the surgery had to be performed between April 26 and June 26, 2019. When Provider submitted its claim for $70,000 reimbursement, Carrier denied the claim because the surgery had been performed outside of the approved dates.
Provider requested MFDR from the Division, and the MFDR Decision issued on December 11, 2019. The MFDR Decision agreed with Carrier that, because the services had been rendered outside the preauthorized period, no payment was due to Provider.15
At the hearing, Carrier had four exhibits admitted into evidence and presented testimony from two witnesses: ASt, the review agent who issued the preauthorization for the injured worker’s surgery; and JT, Carrier’s Senior Manager of Provider Network and Medical Operations, who addressed why Provider’s reimbursement claim was denied. Provider had one exhibit admitted into evidence and presented testimony from Mr. T.
Ms. S has been employed by Carrier for fourteen years. She is a licensed vocational nurse and is currently a medical care coordinator, but was formerly a preauthorization nurse and was responsible for preauthorization of the surgical procedure at issue.
Ms. S testified that on April 23, 2019, CU, acting as an authorized representative for Provider, sent a preauthorization request for a procedure to remove and replace a spinal cord stimulator for the injured worker. The request from Mr. U included the correct procedure codes and other information to support the procedure, but the request did not include a specific period of time during which Provider would complete the procedure. Instead, according to Ms. S, the request stated only “TBD” where the procedure date was supposed to be given.
Ms. S called Mr. U to discuss the incomplete preauthorization request, and he stated that he was submitting the request on behalf of Dr. AP, the physician who would perform the procedure. Ms. S testified that on the phone, she and Mr. U agreed to a time period for the procedure—April 26-June 26, 2019. That is the date range she included in the preapproval letter she prepared on April 26, 2019. Specifically, the preapproval letter stated:
Per Physician Advisor, and per mutual agreement with C at Dr. P’s, authorization is given for Outpt Spinal Cord Stimulator Replacement 63663 x 2, 63685, 95972, per Dr. P, to be done at Laser Surgery Center between 4/26/19-6/26/19. If a change in the facility is necessary, please contact the Preauthorization department prior to completion of services. Treatment(s) or procedure(s) are to be completed within the agreed upon period of time.16
The preapproval letter was faxed to Mr. U on April 26, 2019, according to Ms. S, and she received fax confirmation that it was received on the same date. A copy was also mailed to Dr. P that day.
On cross-examination, Ms. S explained that Mr. U worked for the company that provided the battery and other hardware used in the surgery, and that it is typical for such companies to submit the preauthorization requests for procedures to be performed by a physician.
Mr. U expressly stated that he was seeking preauthorization on behalf of Dr. P, and no one else from Provider’s office ever sought preauthorization for the procedure or responded to the preauthorization letter.
Ms. T has been Carrier’s Senior Manager of Provider Network and Medical Operations since December 2016. She supervises eleven employees and is the point of contact for utilization review agents who issue preauthorization decisions.
According to Ms. T, the preauthorization letter here was required to include a specific time period during which the approved procedure had to be performed. Dr. P performed the preapproved surgery, but the surgery was performed on July 1, 2019, several days outside the period that had been approved. Ms. T testified that Provider did not request or obtain an extension of the preauthorization. When Provider later sent the bill for Dr. P’s surgery, Carrier denied payment because the procedure had not been performed during the agreed-upon time frame, and therefore preauthorization was absent.
Mr. T denied that Provider ever agreed with Carrier to limit the dates of service, and he contended that Mr. U lacked authority to bind Provider to any such agreement. He argued that Carrier cannot point to any signed agreement or other writing where Provider agreed the surgery would be performed before June 26, 2019.
Mr. T described Mr. U at various points as a “rep. of the Stimulator supplier” and a “Patient Therapy Access Specialist,”18 and denied that Mr. U requested preauthorization on Provider’s behalf. According to Mr. T, Provider had asked Mr. U to confirm that the correct procedure codes were listed on the preauthorization request before sending it on to Carrier. He did not consider Mr. U to be acting as Provider’s representative in this process. Rather, he asserted that Mr. U was “merely forwarding” Provider’s preauthorization request to Carrier, although Mr. U’s phone number was listed on the cover sheet as the contact number for the preauthorization.
Mr. T agreed that Provider learned of the preauthorization from Mr. U on the same day it was issued via an “Authorization Confirmation” email that Mr. U sent to Provider on April 26, 2021, informing Provider that the surgery had been approved. Mr. T acknowledged receiving the “Authorization Confirmation” and further acknowledged that it included the preauthorization number and the date range approved for the procedure. However, Mr. T insisted “we never agreed to that” and therefore Provider considered the time limit to be “superfluous.” Mr. T testified that, upon learning that there was a putative date restriction on the preauthorization, he asked Mr. U why he had agreed to those dates. Mr. U responded that Ms. S had told him Carrier would not approve the procedure without a date range for the surgery. Mr. T testified that, in response, he told Mr. U “Okay, if that is the case you can put whatever date you want.”
Though he admitted receiving notice of the preauthorization from Mr. U, Mr. T denied that he received the copy of the preauthorization letter that Carrier mailed to Provider, or seeing any copy of the letter prior to performing the surgery at issue. He claimed that the letter was forwarded to Provider by Mr. U for the first time on November 10, 2021, after the surgery and after Carrier had denied reimbursement. However, on cross-examination he agreed that the authorization code provided in the April 26, 2019 preauthorization letter had been included when the claim for reimbursement was submitted to Carrier. He did not explain how Provider could have included the authorization number if it had not yet seen the preauthorization letter.
Mr. T explained that the injured worker’s surgery had originally been scheduled in June 2019, but had to be rescheduled at the patient’s request to July 1, 2019. The Carrier has not contested the need for or expense of the surgery, Mr. T noted, and the patient would be suffering today if the surgery had not been performed. Therefore, he believes it is unfair to deny Provider reimbursement for performing the surgery.
The preponderance of the evidence shows that Mr. U was acting as Carrier’s designated representative when he submitted the preauthorization request for Provider, and that in his capacity as representative he agreed that Provider would perform the authorized surgery between April 26 and June 26, 2019. The distinction Mr. T would draw between authorizing Mr. U to request preauthorization for Provider (which he denies) and authorizing him to “merely forward” the request for Provider (which he admits) is not supported by the evidence.
At Provider’s behest, Mr. U sent Provider’s preauthorization request to Carrier. That request was required to include an estimated date for the proposed surgery.19 When the Carrier’s representative, Ms. S, raised that issue with Mr. U and told him the request could not be approved without a date by which the surgery would be complete, Mr. T told Mr. U to “put whatever date [he] want[ed]” for the procedure. Mr. U followed this direction when he agreed with Ms. S that the surgery would be performed between April 26 and June 26, 2019. Mr. U also promptly emailed the Carrier’s preauthorization approval to Provider on the same day it was issued. Provider has relied on that preauthorization obtained by Mr. U in seeking reimbursement from Carrier. Despite Mr. T’s testimony that Provider “never agreed” to any date limitation, the preponderant evidence shows that Provider knew about the date limitation in the preauthorization and authorized Mr. U to agree to it.
Provider argues that including a date limitation constitutes an impermissible condition or change to its request for preauthorization. The ALJ does not agree. While Mr. U’s initial request had given only “TBD” as the date of the procedure, the evidence shows that Mr. U and Ms. S subsequently agreed to change that element of the request in their phone conversation and mutually agreed to the date range included in the preauthorization letter. Mr. T acknowledged that Mr. U had spoken with Ms. S and agreed with her on a date range for performing the patient’s surgery, and the Division’s rules clearly contemplate that such discussions can be had by telephone.20 Ms. S’s note stating that “per mutual agreement with C at Dr. P’s” the surgery would “be done at Laser Surgery Center between 4/26/19-6/26/19” is sufficient to meet the requirement in the Division’s rule that such agreements be “documented.”21
Alternatively, if, as Mr. T seems to contend, Mr. U lacked authority to obtain preauthorization or agree to preauthorization terms on Provider’s behalf, then Provider performed the surgery without any valid preauthorization at all. Other than the April 26, 2019 preauthorization letter that Mr. Uribe requested and obtained for Provider—which included a date limitation—there is no preauthorization for the surgery for which Provider is seeking reimbursement.
Provider correctly notes that the Division’s rules prohibit an insurance carrier from withdrawing a preauthorization once it has been issued.22 Mr. T contends Carrier has tried to do so here by denying reimbursement for the injured worker’s July 1, 2019 surgery. Contrary to Provider’s argument that open-ended preauthorization could be given, the Division’s rules unambiguously state that the approval had to include a “specific period of time to complete the treatments” for which preauthorization was sought.23 There is no evidence that authorization was ever given for a surgery performed after June 26, 2019. Carrier has not withdrawn its preauthorization but has instead held Provider to the express terms of its approval.24
For these reasons, the ALJ concludes that Provider has not met its burden of showing there was preauthorization for the surgery performed on July 1, 2019. Therefore, the MFDR Decision correctly determined that Provider is not entitled to reimbursement from Carrier. The ALJ makes the following findings of fact and conclusions of law in support of this decision.
1. On July 1, 2019, Laser Surgery Holding Company, Ltd. (Provider) performed ambulatory surgical services—specifically, replacement of a spinal cord stimulator—for an injured worker covered by the workers’ compensation insurance system.
2. Texas Mutual Insurance (Carrier) was the responsible workers’ compensation insurer for the injured worker.
3. On April 23, 2019, Provider requested preauthorization for the surgery from Carrier. The preauthorization request was submitted by CU, acting as Provider’s designated representative.
4. The preauthorization request did not include a specific period of time during which Provider would complete the procedure, prompting Carrier’s review agent to call to Mr. U to address the need to provide a time period for the surgery.
5. Mr. U and the review agent agreed by phone that the surgery would be performed between April 26 and July 26, 2019, and the review agent documented their agreement.
6. Carrier issued a preauthorization letter that approved the surgery “to be done at Laser Surgery Center between 4/26/19-6/26/19,” and specified that the treatment or procedures had to be completed “within the agreed upon period of time.”
7. The preapproval letter was faxed to Mr. U on April 26, 2019, and he forwarded it to Provider the same day. Carrier also mailed a copy to Provider that day.
8. Provider knew about the date limitation in the preauthorization letter and had authorized Mr. U to agree to it.
9. Other than Mr. U, no one with Provider’s office ever sought preauthorization for the injured worker’s surgery or responded to the preauthorization letter.
10. Provider did not request or obtain an extension of the preauthorization.
11. When Provider submitted its claim for $70,000 reimbursement, it relied on the preauthorization number in the April 26, 2019 preapproval letter.
12. Carrier denied the claim because the surgery had been performed outside of the approved dates.
13. Carrier has not withdrawn its preauthorization but has instead held Provider to the express terms of its approval.
14. Carrier requested a Medical Fee Dispute Resolution (MFDR) from the Texas Department of Insurance, Division of Workers’ Compensation (Division).
15. On December 11, 2019, the Division issued an MFDR Decision denying Provider’s claim for reimbursement.
16. Provider timely requested a hearing at the State Office of Administrative Hearings (SOAH) to contest the MFDR Decision.
17. On August 18, 2021, the Division issued a notice to the parties with a statement of the nature of the hearings; 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 either a short, plain statement of the factual matters asserted or an attachment that incorporated by reference the factual matters asserted in the complaint or petition filed with the state agency.
18. On September 20, 2021, the Administrative Law Judge (ALJ) issued Order No. 2 with a statement of the time and place of the hearing and instructions for participating in the hearing.
19. On December 7, 2021, ALJ Sarah Starnes convened a hearing on the merits via the Zoom government videoconferencing platform before SOAH in Austin, Texas. Provider was represented by its practice manager, BT. Carrier appeared through attorney BJ. The record closed on February 4, 2022, the date the parties filed their final written closing arguments.
1. SOAH has jurisdiction over this proceeding, including the authority to issue a decision and order. Tex. Lab. Code § 413.031; Tex. Gov’t Code ch. 2003.
2. Adequate and timely notice of the hearing was provided to the parties. Tex. Gov’t Code §§ 2001.051-.052.
3. A medical fee dispute is a dispute over the amount of payment for services that have been determined to be medically necessary and appropriate for treatment of an injured employee’s compensable injury. 28 Tex. Admin. Code § 133.305(a)(4).
4. A healthcare provider must request preauthorization from an injured worker’s insurance carrier prior to providing ambulatory surgical services to the worker. Tex. Labor Code § 413.014(c)(5); 28 Tex. Admin. Code § 134.600(f), (p)(2).
5. When an insurance carrier approves a preauthorization request, the approval must include the specific health care, the approved number of treatments, and specific period of time to complete the treatments. 28 Tex. Admin. Code § 134.600(l).
6. An insurance carrier may not condition an approval or change any elements of the request unless the condition or change is mutually agreed to by the health care provider and insurance carrier and is documented. 28 Tex. Admin. Code § 134.600(n).
7. Carrier has not impermissibly conditioned or changed an element of the preauthorization request. 28 Tex. Admin. Code § 134.600(n).
8. Because Provider did not obtain preauthorization to perform ambulatory surgical services for the injured worker after June 26, 2019, Provider is not entitled to reimbursement. 28 Tex. Admin. Code § 134.600(c)(1)(B), (p)(2).
9. Provider has failed to meet its burden of proof to show that the MFDR Decision was incorrect. The MFDR Decision is affirmed.
IT IS ORDERED that Carrier is not required to reimburse Provider the requested $70,000.
Texas Labor Code § 413.0312(g) and 28 Texas Administrative Code § 133.307(h) require the nonprevailing party to reimburse the Division for the cost of services provided by SOAH. Texas Labor Code § 413.0312(i) requires SOAH to identify the nonprevailing party and any costs for services provided by SOAH in its final decision. For purposes of Texas Labor Code § 413.0312, Provider is the nonprevailing party. The costs associated with this decision are set forth in Attachment A to this Decision and Order and are incorporated herein for all purposes.
SIGNED March 4, 2022.
Sarah Starnes
Administrative Law Judge
State Office of Administrative Hearings
1 This is the amount in dispute identified in the MFDR Decision. Ex. R-1 at 5.
2 Ex. R-1 at 10.
3 Ex. R-1 at 5-7.
4 Tex. Labor Code § 413.014(c)(5); 28 Tex. Admin. Code § 134.600(f), (p)(2).
5 28 Tex. Admin. Code § 134.600(a)(9).
6 Tex. Labor Code §§ 401.011(8), 413.014(d).
7 28 Tex. Admin. Code § 134.600(f)(9).
8 28 Tex. Admin. Code § 134.600(i)-(j).
9 28 Tex. Admin. Code § 134.600(l)(1)-(2).
10 28 Tex. Admin. Code § 134.600(n).
11 Tex. Labor Code § 413.031(a).
12 Tex. Labor Code § 413.0312(e).
13 28 Tex. Admin. Code § 148.14(b), (e).
14 See Vista Med. Ctr. Hosp. v. Texas Mut. Ins. Co., 416 S.W.3d 11, 17-18 (Tex. App.—Austin 2013, no pet.).
15 Ex. R-1 at 5-6.
16 Ex. R-1 at 31.
17 Mr. T testified at the hearing and also had a sworn statement admitted into evidence as Exhibit P-1.
18 Petitioner’s Closing Arguments at 3; Ex. R-1 at 1.
19 28 Tex. Admin. Code § 134.600(f)(9).
20 28 Tex. Admin. Code § 134.600(f)(i) (request for reauthorization and carrier’s approval can be sent “by telephone, facsimile, or electronic transmission . . . .”) (Emphasis added).
21 Ex. R-1 at 31; 28 Tex. Admin. Code § 134.600(n).
22 29 Tex. Admin. Code § 134.600(l).
23 28 Tex. Admin. Code § 134.600(l)(2).
24 Provider’s written closing arguments raised additional arguments citing to provisions of the Division’s rules on concurrent utilization review. See, e.g., 28 Tex. Admin. Code § 134.600(a)(3), (q). These arguments are inapt as this claim does not involve a patient’s ongoing care. Provider’s briefs also cited at length to other statutes, rules, and secondary sources. To the extent those authorities are relevant, they have been addressed in the Discussion section of this Decision and Order.