28 TAC §134.402
The Texas Workers' Compensation Commission (the commission)
adopts amendments to §134.402, concerning the Ambulatory Surgical Center
Fee Guideline with changes to the proposed text published in the December
3, 2004, issue of the
Texas Register
(29 TexReg
11257). The Ambulatory Surgical Center Fee Guideline is one of several rules
that will comprise Subchapter E, regarding Health Facility Fees.
As required by the Government Code §2001.033(1), the commission's
reasoned justification for this rule is set out in this order, which includes
the preamble, which in turn includes the rule. This preamble contains a summary
of the factual basis of the rule, a summary of comments received from interested
parties, names of those groups and associations who commented and whether
they were in support or opposition to adoption of the rule, and the reasons
why the commission disagrees with some of the comments and recommendations.
Changes made to the proposed rule are in response to public comment received
in writing and at a public hearing held on January 6, 2005, and are described
in the summary of comments and responses section of this preamble.
The commission proposed the amendments to address information received
by the commission subsequent to the April 15, 2004 adoption of this rule concerning
certain impacts of the new rule guideline on participants in the Texas workers'
compensation system.
The Texas Workers' Compensation Act (Act) requires that guidelines for
medical services fees be fair and reasonable and designed to ensure the quality
of medical care and to achieve effective medical cost control. The guidelines
may not provide for payment of a fee in excess of the fee charged for similar
treatment of an injured individual of an equivalent standard of living and
paid by that individual or by someone acting on that individual's behalf.
The commission must consider the increased security of payment afforded by
the Act in establishing the fee guidelines (see Texas Labor Code §413.011(d)).
More recent statutory requirements added to §413.011(a) of the Texas
Labor Code also require that the commission use 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. The statute additionally requires the commission to adopt the
most current reimbursement methodologies, models, and values or weights used
by the federal Health Care Financing Administration (HCFA), (now called the
Centers for Medicare and Medicaid Services (CMS)), to achieve standardization,
including applicable payment policies relating to coding, billing, and reporting,
and may modify documentation requirements as necessary to meet the requirements
of §413.053 of the Act (relating to Standards of Reporting and Billing).
Under Texas Labor Code §413.011(b), the commission is required to
develop conversion factors or other payment adjustment factors (PAFs) in determining
appropriate fees when writing these guidelines, taking into account economic
indicators in health care by not adopting conversion factors or other PAFs
based solely on those factors as developed by the CMS. The subsection further
states that it does not directly itself adopt the Medicare fee schedule into
Texas law.
This rule applies to facility services provided by an ambulatory surgical
center (ASC), other than professional medical services. An "ambulatory surgical
center" means such a center that is properly licensed by the Texas Department
of Health under the Texas Ambulatory Surgical Center Licensing Act, which
was first enacted in 1985 by the 69th Texas Legislative Session. Further information
can be obtained at http://www.tdh.state.tx.us/hfc/asc.htm. ASCs located outside
the state of Texas should be licensed by that jurisdiction's licensing body,
if such licensing exists, when providing services to Texas injured workers
under the Act.
At the request of, and based on some preliminary information provided by
some system participants, the commission re-examined two specific areas within §134.402,
regarding the Ambulatory Surgical Center Fee Guideline, for potential amendment.
The two specific areas explored were: (1) amending the ASC List of Medicare
Approved Procedures (Medicare's List) for the inclusion/exclusion of procedures
with appropriate ASC group payment; and (2) exploring reimbursement options
for implantable devices.
The commission requested information on procedures not on Medicare's List
by procedure code to include number of cases, charged and paid amounts by
commercial insurance groups, Medicare, Medicaid and worker's compensation
in all settings (i.e., physician office, ASC, hospital outpatient and inpatient)
for 2003. The commission also requested specific information for implantable
devices by procedure code to include number of cases, charged and paid amounts
by commercial insurance groups, Medicare, Medicaid and workers' compensation
in all settings, and a description of the reimbursement methodologies used
for 2003.
The commission received a limited amount of information in response to
this request. The information provided showed that changes in technology and
other developments in the health care industry have resulted in some procedures
safely being provided to injured workers in ASCs and that continuing to allow
some of these procedures to be provided in ASCs is safe and appropriate, and
could in some instances, be cost-effective. These amendments proposed for
adoption are based on this information, discussions held with, and information
from, ASC Focus Group members, public comment and research and analysis by
the commission staff, including the commission's Medical Advisor. The amendments
also address concerns raised by system participants and members of the ASC
Focus Group regarding whether the current case rate reimbursement adequately
reimburses for devices integral to the surgery.
To help in understanding the full picture, the commission has addressed
the background and basis for the rule, and requirements of the current rule,
including those parts and issues that are not the subject of this rulemaking.
This rule was initially adopted in April 2004 to comply with numerous and
complex statutory mandates in Texas Labor Code §413.011. House Bill 2600
(HB-2600), adopted during the 2001 Texas Legislative Session, amended §413.011
of the Act to add new requirements for commission reimbursement policies and
guidelines. The statute requires the commission to balance the rigorous, and
often competing, statutory requirements in setting reimbursement levels and
guidelines for medical services. The commission's mandate is to:
* Establish fees that are fair and reasonable and sufficiently high to
ensure the quality of medical care and sufficiently low to achieve effective
medical cost control;
* Establish fees that do not exceed those paid by or on behalf of individuals
with an equivalent standard of living to that of injured employees;
* Consider the increased security of payment afforded by the Act in establishing
the fee guidelines;
* Use 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;
* Adopt the most current reimbursement methodologies, models, and values
or weights used by the federal HCFA to achieve standardization, including
applicable payment policies relating to coding, billing, and reporting;
* Modify documentation requirements as necessary to meet the requirements
of §413.053 of the Act (relating to Standards of Reporting and Billing);
and
* Develop conversion factors or other PAFs in determining appropriate fees,
taking into account economic indicators in health care.
Prior to adoption of §134.402, the Texas workers' compensation system
did not have a fee schedule for healthcare provided in outpatient settings,
which includes ASCs. Therefore, those services were reimbursed on a case-by-case
determination of what is fair and reasonable under section §134.1 of
this title (relating to Use of the Fee Guidelines). Reimbursements for all
reasonable and medically necessary medical and/or surgical inpatient services
are currently covered by §134.401 of this title (relating to Acute Care
Inpatient Hospital Fee Guideline). Professional medical services are covered
in §134.202 of this title (relating to Medical Fee Guideline) and Chapter
134, Subchapter F (relating to Pharmaceutical Benefits) of the commission
rules.
Section 413.011 of the Act states that it does not adopt the Medicare fee
schedule; it states, further, that the commission shall not adopt conversion
factors or other PAFs based solely on those factors as developed by CMS. Consistent
with these statutory directives, the reimbursement levels and fee guideline
established by the original rule use the Medicare reimbursement structure
as a baseline, or reference point, for the maximum allowable reimbursement
(MAR) calculations for services provided in an ASC health care facility. However,
the commission did not adopt the Medicare fee schedule nor were MARs based
solely on the Medicare reimbursements. The commission's adoption of the ASC
PAF was based upon due consideration of all of the statutory requirements
for fee guidelines. These statutory criteria, found in §413.011, are
different from the Medical Economic Index (MEI), the Sustainable Growth Rate
(SGR) factors and other indices that Medicare is required by federal law to
consider in establishing its reimbursement rates. The MEI is a weighted average
of price changes for goods and services used to deliver physician services.
The goods and services include physician time and effort as well as practice
expenses. (MedPAC Report to Congress, Medicare Payment Policy, March 2002,
p.77). The adjustments made each year reflect the previous year's changes
in the prices of the needed goods and services. In general, reimbursement
rates would increase in relation to changes in the prices of such goods and
services as measured by the MEI. The SGR formula serves as a restraint on
price increases driven by inflation in that it ties overall expenditures to
a target based on the real level of growth in the gross domestic product.
Additionally, Medicare considers the Consumer Price Index - Urban (CPI-U)
in ambulatory surgery reimbursement rate updates. Thus, Medicare considers
economic factors in establishing reimbursement rates. Although these factors
have been considered in setting Medicare's reimbursement rates, the Medicare
Modernization Act impacted these adjustments. As a result, Medicare ASC group
rates have been rolled back and frozen at the 2002 rates.
In establishing a reimbursement methodology for services provided by ASC
facilities, the current rule uses the required Medicare methodology for determining
reimbursement in the Texas workers' compensation system, providing standardization
of reimbursement structures by aligning the workers' compensation reimbursement
methods and billing procedures with those used by CMS. As an exception and
minimal modification to this standardization, the rule specifically did not
adopt Medicare retroactive payment policy changes for services already provided
within the Texas workers' compensation system.
The challenge in this rule amendment has been for the commission to establish
reimbursement rates, including the PAF, which take the diverse Texas statutory
factors into account and provide an appropriate fee guideline for the Texas
workers' compensation system. The statutory criteria of §413.011 establish
a range within which the commission is directed to exercise administrative
discretion to select conversion factors. The statutory requirement ensures
quality of medical care and requires that fees not be set so low as to deprive
covered workers of access to qualified providers. While the statutory criterion
does not require that fees be set high enough to induce all physicians to
participate, or to prevent every single individual physician from deciding
to stop participating, it does require consideration of potential impacts
on participation by providers generally. The statutory requirement that workers'
compensation not pay more than payers pay on behalf of patients from populations
with equivalent standards of living address a cap on workers' compensation
fees, except and to the extent that special features of workers' compensation
require higher fees. It therefore permits consideration of any special features
of workers' compensation and what additional payment, if any, they warrant.
The statutory requirement to take account of the increased security of workers'
compensation payment permits consideration of what offsetting reductions in
payments, compared with other payer systems that do not pay 100%, is warranted.
Within these limits, the commission must consider how payments may be set
to control medical costs without compromising access to quality medical care
to injured workers. The commission adopted the Medicare reimbursement methodology
and adopted an appropriate PAF that meets the statutory requirements, taking
into account all pertinent information and having given full consideration
to public comment received at the time.
"The underlying question in most state public policy debates about fee
schedules is 'What is the optimal fee level?'" Studies at the time of the
rule's adoption, and to date, in either workers' compensation or Medicare
have yet to determine the optimal fee level. A review of the literature revealed,
"Conceptually, most would agree that the optimal fee level is one that provides
access to quality care in the most cost-efficient manner. According to the
economic model, it is the price that would induce health care providers to
supply services that characterize 'good quality care' - not too much, not
too little, and only those services that produce positive outcomes whose benefits
are more valuable than the costs paid for the services. The optimal fee level,
then, is one that minimizes incentives to over-treat or treat with more costly
services, even though less expensive, equally effective services exist. If,
for example, complex surgeries provide relatively high profit margins (and
therefore greater financial incentives), the optimal balance between cost
and quality would not be achieved. On the other hand, if reimbursements do
not provide a fair and competitive rate of return to providers, access to
particular services would be hampered by financial disincentives, thereby
jeopardizing access to care." (WCRI August 2002, p. 5)
The statutory requirements mirror the factors, concerns, and objectives
(access, quality, outcomes, utilization, cost) mentioned above. The commission
considered each in its initial adoption of the rule and in this adoption of
amendments to the rule.
In developing this rule, and in this subsequent amendment, the commission
carefully and fully analyzed all of the statutory and policy mandates and
objectives and all the facts and evidence gathered and submitted, as well
as all comments received. The commission utilized all of this, and its expertise
and experience, including recommendations from the commission's Medical Advisor
to amend this rule which balances the statutory mandates, including those
to ensure that injured workers receive the quality health care reasonably
required by the nature of their injury as and when needed and to ensure that
fee guidelines are fair and reasonable, with the statutory mandate to achieve
effective medical cost control. Full and objective analysis and consideration
were given to all of the relevant comments received pertaining to the proposed
amendments, as evidenced by the revisions made from the rule as proposed and
the commission's responses to comments in this preamble.
Several research reports have shown that Texas workers' compensation medical
costs continue to exceed those in other states and other health care delivery
systems.
* Policy year 1995 data show that the average medical cost per claim in
Texas exceeds the national average by almost 80% ($4,912 in Texas compared
to $2,735 nationwide). (Texas Research and Oversight Council (ROC) on Workers'
Compensation and Med-FX, LLC., Striking the Balance: An Analysis of the Cost
and Quality of Medical Care in the Texas Workers' Compensation System, A Report
to the 77th Texas Legislature, January 2001, citing National Council on Compensation
Insurance (NCCI), Annual Statistical Bulletin, 1999)
* The average medical payment (paid and incurred) per claim with more than
seven days' lost-time in Texas was the highest of the eight states analyzed
(California, Connecticut, Florida, Georgia, Massachusetts, Minnesota, Pennsylvania,
and Texas). Together these states account for at least 40% of the nation's
workers' compensation benefits. (WCRI, Benchmarking the Performance of Workers'
Compensation Systems: CompScope Multistate Comparisons, July 2000)
* In claims from 1996, the average medical payment per claim in Texas was
$6,495, which is 35% higher than the states' average. (WCRI, July 2000)
* The average of medical payments in Texas per claim with seven or more
days lost time was the highest of the states in the analysis (33% higher than
the states' average and 36% higher than the states' median). (WCRI, The Anatomy
of Workers' Compensation Medical Costs and Utilization: A Reference Book,
December 2000)
* The average of medical payments in Texas for all claims was 47% higher
than the states' average and 53% higher than the states' median. (WCRI, December
2000)
* Of nine states analyzed (California, Colorado, Florida, Georgia, Kentucky,
Minnesota, New Jersey, Oregon, and Texas), Texas has the highest average medical
costs per claim (more than 20% higher than the second-highest state, New Jersey,
and more than 2.5 times higher than the lowest-cost state, Kentucky). (ROC,
January 2001)
* When similar types of injuries were compared in the group health and
workers' compensation systems, Texas had higher than average medical costs
for the top five types of injuries. (ROC, January 2001)
* When compared with group health (a State of Texas employee Preferred
Provider Organization (PPO) group health plan), average workers' compensation
medical costs for State of Texas injured employees were approximately six
times higher per worker ($578 per worker in this group health system compared
to $3,463 per worker in the Texas workers' compensation system, 18 months
post-injury). (ROC, January 2001)
* Texas continues to have the highest average medical payment per claim
among the study states - 78 percent higher than the 12-state median for all
claims and 39 percent higher than the 12-state median for claims with more
than seven days of lost time for 1999/2000. (WCRI, The Anatomy of Workers'
Compensation Medical Costs and Utilization: Trends and Interstate Comparisons,
1996-2000, July 2003)
* Texas continues to have the highest average medical payment per claim
among the study states - 29 percent higher than the 12-state average for claims
with more than seven days of lost time for 1999/2000. (WCRI, The Anatomy of
Workers' Compensation Medical Costs and Utilization: Trends and Interstate
Comparisons, 1996-2000, July 2003)
* Texas continues to have the highest average medical payment per claim
among the study states - 57.2 percent higher than the 12-state average for
all claims for 1999/2000. (WCRI, The Anatomy of Workers' Compensation Medical
Costs and Utilization: Trends and Interstate Comparisons, 1996-2000, July
2003)
* The average medical payment paid per claim for 2001 claims with more
than seven days' lost-time in Texas was the highest of the twelve states analyzed
(California, Connecticut, Florida, Illinois, Indiana, Louisiana, Massachusetts,
North Carolina, Pennsylvania, Tennessee, Wisconsin and Texas). Medical payments
per claim have been growing at double digit-rates since 1998/1999. (WCRI,
Compscope Benchmarks: Multistate Comparisons, 4th Edition, February 2004)
* In claims from 2001, the average medical payment paid per claim in Texas
was $9,314, which is 38.3% higher than the median for the 12 states mentioned
above. (WCRI, February 2004)
* Medical costs and the quantity of medical care in Texas were among the
highest of the four states studied. Despite that, outcomes achieved by Texas
workers, who received more medical care, were much lower than the outcomes
achieved by workers in Massachusetts and Pennsylvania where average medical
costs per claim were 58% and 31% lower respectively than in Texas. (WCRI,
Outcomes for Injured Workers in California, Massachusetts, Pennsylvania and
Texas, December 2003)
The Medicare reimbursement system has primarily progressed from a retrospective
fee for service reimbursement system to a prospective payment system (PPS).
Under the Medicare PPS, facilities receive a fixed amount for treating patients
in certain diagnostic and/or procedural categories. Reimbursement is based
on specific diagnostic and/or procedural groupings, resource utilization,
national and regional averages, and costs specific to the facility. The Medicare
ASC reimbursement methodology prospectively establishes a set payment amount
for each type of facility service that CMS has determined may be reimbursed
in an ASC setting; each of these services falls into one of nine specific
categories, or ASC groups.
Currently for ASC services (which are primarily surgeries and items incident
to surgery), Medicare reimburses using the ASC case rate methodology. Payment
is determined based on the surgeries performed, the associated grouping(s),
payment rates for each surgery, and the geographic wage index of the facility.
This rule amendment applies this Medicare ASC grouping reimbursement methodology
for ASC facility services within the Texas workers' compensation system, and
allows a few surgical procedures in the Texas workers' compensation system
to be performed in an ASC setting, even though not allowed in the Medicare
system.
Medicare reimburses ASCs for the facility fee when a covered surgical procedure
is billed. The coverable surgical procedures are approved by CMS. In general,
items that are bundled or integral to the service performed are included in
the facility fees and are not reimbursed separately. A single payment is made
to an ASC that encompasses all "facility services" furnished by the ASC, as
published by CMS in its Medicare Carriers' Manual. However, additional reimbursement
is made for a number of items and services covered under other Medicare fee
schedules. Examples of such "non-facility" items and services include physician
services and certain durable medical equipment items. Further, Medicare sets
both ASC locality specific (specific to a facility's geographic location,
in accordance with Medicare payment policy) and other Part B fee schedule
reimbursement amounts, such as the physician's fee schedule.
Medicare requires the use of the uniform Healthcare Common Procedure Coding
System (HCPCS) for reporting professional services, procedures and supplies
including those, which are separately reimbursable. Most services, procedures
and supplies have a corresponding HCPCS code, that are specific and available
for ASC facilities to use to bill the items for separately reimbursable items.
There may be a few miscellaneous HCPCS codes available for ASC facilities
to use to bill the items that do not have a code specifically describing the
item, and Medicare allows reimbursement of 100% of the cost with an invoice
submitted upon bill submission. Separately reimbursed surgically implanted
devices previously addressed through the commission's 2002 MFG are now reimbursed
separately in accordance with this rule amendment.
The term "benchmarking" as used with respect to fees in the health care
industry is often misunderstood. As commonly used in the industry, and in
this preamble, a benchmark is nothing more than a relevant point of reference.
Saying that something is a benchmark does not mean that it is the standard
or goal which one should strive to achieve. Nor does it mean that it, in and
of itself, establishes the presumptive starting point, without evaluation
of relevant similarities and differences.
There has been considerable discussion in the previous ASC rulemaking effort,
as well as this rule amendment, related to whether use of Medicare fees as
a benchmark in workers' compensation is appropriate. The commission determined
that it is, for several reasons. Because of HB-2600's extensive emphasis on
the Medicare system, it is appropriate to benchmark to the Medicare reimbursement
system. HB-2600 requires the commission to adopt the most current reimbursement
methodologies, models, and values or weights used by the federal CMS to achieve
standardization, including applicable payment policies relating to coding,
billing, and reporting; the commission may modify documentation requirements
as necessary to meet the requirements of §413.053 of the Act (relating
to Standards of Reporting and Billing). The statute also states that this
section of the law does not adopt the Medicare fee schedule, and that the
commission shall not adopt conversion factors or other payment adjustment
factors based solely on those factors as developed by the federal CMS. Use
of Medicare as a benchmark, or point of reference, does not violate these
statutory provisions. As required by the statute, the commission has considered
economic indicators in health care and the requirements of §413.011(d).
The commission has also considered and adopted minimal modifications to the
Medicare reimbursement methodology, both in the current rule and in these
adopted rule amendments.
Although the Medicare system was established primarily to serve the needs
of the elderly population, the program is a main component of the national
health care system and has become a standard and benchmark for development
and operation for many commercial and governmental health care programs. Medicare's
payment policies largely define "main stream medicine." Furthermore, as noted
by WCRI, workers' compensation policymakers have been showing increased interest
in Medicare as a benchmark. (WCRI: Benchmarks for Designing Workers' Compensation
Medical Fee Schedules, 1995-96, May 1996)
Complete information concerning all Medicare reimbursement methodologies
for facilities can be found at the CMS website (www.cms.hhs.gov), Code of
Federal Regulations, and the Federal Register.
Some Texas workers' compensation system participants continue to question,
misinterpret, or misrepresent the data, reports and recommendations provided
by Ingenix, Inc. (Ingenix) which were the basis for the PAF adopted by the
commission in the original rule. Although the Ingenix report did not address
the issues presented by this rule amendment, proposal and adoption, the Ingenix
report and recommendations are discussed here to assist in understanding the
full picture. As previously described upon initial adoption of this rule,
the commission entered into a professional services agreement in June 2001,
with Ingenix. Ingenix is a professional firm specializing in actuarial and
health care information services, and assisted the commission in developing
this and other new fee guidelines, which address fees for health care services
provided in inpatient and outpatient facilities. Ingenix reviewed Medicare
payment policies and reimbursement methodologies in reference to the Texas
workers' compensation system to make recommendations to the commission for
achieving standardization and adoption of the most current reimbursement methodologies,
models, and values or weights used by the CMS, including applicable payment
policies relating to coding, billing, and reporting, as mandated by Texas
Labor Code §413.011. Ingenix also considered the additional statutory
mandates of §413.011, which are described in earlier sections of this
preamble.
Again, as detailed previously in the April 2004 adoption preamble, Ingenix
analyzed hospital inpatient and outpatient, and ASC services separately. In
general, the following steps were performed for each service type. The specific
process used, as well as the methodology, data, and data sources is detailed
in the Ingenix Final Report, which has been and remains available for review
from the commission.
Ingenix considered certain economic indicators in health care, which it
took into account in developing its recommendations concerning conversion
factors or PAFs to be adopted by the commission. Ingenix recognized that the
Medicare system reviews cost inputs in the overall health care industry, including
ASCs, and updates ASC reimbursement on an annual basis. Further, in defining
the market, Ingenix utilized commercial payer information that is reflective
of the current reimbursement for the various payer types such as health maintenance
organizations, preferred provider organizations, point of service plans, and
traditional fee for service health plans (indemnity). Commercial reimbursement
reflects, for the most part, negotiated rates based on both carriers' and
providers' business plans. The combined Medicare market data and commercial
market data reflects the actual reimbursement for services provided in the
health care market; Ingenix considered all of these economic indicators of
health care in its analysis and resulting recommendations.
To ensure that its recommended PAFs would not result in fees that exceed
those paid by or on behalf of individuals with an equivalent standard of living
to that of injured employees, Ingenix interpreted the statutory term, "equivalent
standard of living," as including families with working or self-employed individuals
and families that include Medicare enrollees. Medicaid enrollees were excluded
since eligibility for Medicaid coverage generally occurs because of a significantly
lower economic circumstance. This interpretation is supported by "A Standard
of Living Comparison Between the Working Population, the Medicare Population,
and the Managed Care Population," published in March of 1997 (addendum to
report April 2001) and previously considered by the commission in establishing
reimbursement levels. The commission has recognized that Medicare recipients
have a similar standard of living as the general working population. In the
study prepared by Research and Planning Consultants, the standard of living
of the population covered by the Medicare program was found to exceed that
of the population covered by the Act. The study further found that the standard
of living of the population covered by managed care plans was at least as
high as the population covered by the Act. Consequently, Medicare reimbursement
is an appropriate standard for comparison to workers' compensation reimbursement.
Although Medicare is an appropriate benchmark, the commission also used
other benchmarks. As required by the statute, the commission developed conversion
factors or other PAFs in determining appropriate fees, taking into account
economic indicators in health care. This includes the commercial private payer
market and the median of that market. As stated by WCRI, it would be difficult
to justify a fee schedule as a major cost containment tool if it exceeded
what providers elect to receive, on average, in the free market. (WCRI: Benchmarks
for Designing Workers' Compensation Medical Fee Schedules, 1995-1996, May
1996)
Reimbursement rates used in the market to pay providers include an additional
amount to account for the fact that providers are not always reimbursed fully
for all services. Ingenix stated, that because of the workers' compensation
benefit structure and the financial stability of workers' compensation payers,
providers are expected to receive payment of the proper reimbursement amounts
for their goods and services that are medically necessary for the treatment
of injured employees and this security of payment alleviates the need to increase
reimbursement rates for possibilities of non-payment in the market.
Recognizing the statutory mandate that the commission establish guidelines
that provide the assurance of quality medical care together with achieving
effective medical cost control, Ingenix observed that "reimbursement levels
must therefore must be sufficiently high to ensure access to quality care,
sufficiently low to achieve medical cost control, and not in excess of fees
paid by or on behalf of individuals with an equivalent standard of living."
Ingenix's recommended range for ASC reimbursement within the Texas workers'
compensation system successfully achieved these goals.
In developing the recommended range, Ingenix used the following process:
* Estimate the number of covered lives and utilization for Medicare and
for each type of commercial insurance contract;
* Determine historical Texas payment levels for Medicare and for commercial
insurance by type of contract;
* Adjust the Medicare and commercial contract history to a workers' compensation
mix of services;
* Trend forward the historical payment levels;
* Project the 2004 payment level currently in place for commission payers;
and
* Establish a recommended range for reimbursement as a percent of Medicare.
Additionally, Ingenix reviewed and analyzed the current market using Medicare,
commercial, and commission historical medical claims reimbursement information.
Ingenix also reviewed other states' workers' compensation facility reimbursement
in comparison to Medicare reimbursement, but was unable to develop comparisons
because each state approached its reimbursement methodology differently. Taking
into account relevant health care economic indicators, Ingenix made recommendations
concerning Medicare reimbursement methodologies and PAFs to be used in determining
appropriate reimbursement and estimated system impact. Ingenix further provided
recommendations regarding minimal modifications to Medicare reimbursement
methodologies and payment policies necessary to meet occupational injury requirements.
Historical commission medical claims data provided a Texas workers' compensation
mix of services for use in the analysis. This utilization pattern was applied
to the commercial market (health maintenance organization, preferred provider
organization, point of service, and indemnity plans) and Medicare reimbursement
levels, establishing an estimated reimbursement for a workers' compensation
case mix. This reimbursement was expressed as a percent of charges and as
a percent of Medicare reimbursement. Information considered by Ingenix in
the development of its analysis included:
* Commission historical claims data available for the years 1999 through
2002;
* The Mercer/Foster Higgins National Survey of Employer-Sponsored Health
Plan 2001, which summarized enrollment and market share information for commercial
managed care plans in Texas;
* Texas commercial indemnity and managed care reimbursement rates from
Ingenix Employer Group for the years 1999, 2000 and 2001;
* Ingenix proprietary national managed care payer data regarding volume
of services, charged and allowed reimbursement amounts to estimate the level
of ASC business compared to outpatient, and ASC allowed-to-charge ratios compared
to outpatient allowed-to-charge ratios, from 2001 data;
* National Center for Health Statistics and Bureau of the Census data to
estimate the covered lives in the 2002 Texas commercial insurance/managed
care market;
* Data published in 2001 by InterStudy Publications, which provided national
commercial managed care reimbursement rates;
* Data published by the American Hospital Association from 1997-2001, which
provided hospital outpatient charges per service;
* Source Book of Health Insurance Data for 2002; and
* Medicare reimbursement amounts, from 1999 for hospital outpatients and
2001 for ASCs.
ASC market reimbursement percentages were based on a mix of services that
were equivalent to the Texas workers' compensation mix of services and reimbursement
rates trended forward to 2003, and ultimately 2004. Ingenix also trended forward
the Medicare ASC reimbursement rates to 2004. Ingenix concluded, as a result
of its market analysis, that if current reimbursement trends continue, in
2004 Texas workers' compensation ASC claims will be reimbursed at approximately
320% of 2004 Medicare reimbursement. Ingenix also projected that 2004 commercial
market reimbursement for the same mix of claims would be approximately 274%
(not including indemnity plans) to 293% (including indemnity plans) of 2004
Medicare reimbursement.
In setting the recommended PAF range, Ingenix considered whether to include
indemnity experience in the commercial market experience. While Ingenix found
no difference in standards of living between people with commercial indemnity
experience and injured workers, there are several reasons to consider excluding
indemnity experience:
* Commercial indemnity represents only about 4% to 5% of the combined Medicare
and commercial market. Removing commercial indemnity from the analysis removes
experience that is higher than 95% of the payment levels for people of a similar
standard of living.
* Payments for commercial indemnity plans are disproportionately higher
than payments for the rest of the market, indicating that commercial indemnity
payments are atypical of the commercial market experience.
* Statutory requirements set forth in §413.011 mandate that payment
be made no higher than would be paid by or for people with similar standards
of living.
* No cost controls are in place in the commercial indemnity market, and
the Texas workers' compensation law mandates that in setting the fee structure,
consideration be given to cost control.
Although commercial indemnity plans provide coverage for individuals with
standards of living similar to the rest of the commercial market, including
the data from these plans would increase the PAF because more weight would
be placed on commercial reimbursement rates, thus reducing the impact of the
lower Medicare payments. In contrast, the indemnity market share currently
represents a small, decreasing fraction of the overall market, with payment
levels far exceeding those in other commercial policy types, suggesting that
they are uncharacteristic of the commercial market and, therefore, should
be excluded. Excluding indemnity plans would decrease the PAF because less
weight would be placed on commercial reimbursement rates, thus increasing
the impact of the lower Medicare payments.
In order to provide the most comprehensive range of fair and reasonable
reimbursement rates, and address the statutory requirement for cost control
and prohibition against paying higher than would be paid by or for persons
with similar standards of living, Ingenix excluded the indemnity experience
at the lower end of the range and included it at the higher end of the range.
Ingenix initially recommended a 2003 range of 230% (not including indemnity
plans) to 250% (including indemnity plans). Upon the commission's request
for 2004 projections, Ingenix recommended the 2004 PAF range of 237% (not
including indemnity plans) to 264% (including indemnity plans) of Medicare
for ASC reimbursement. However, Ingenix's recommended reimbursement range
did not contain an explicit reduction for security of payment or for extraordinary
encouragement of medical cost control related to reimbursement rates. Consequently,
Ingenix indicated that if the commission were to choose a different balance
of the statutory objectives, implementation of the ASC rule with PAFs outside
the recommended ranges (i.e., 90% of the 237% low endpoint, up to 110% of
the 264% of the high endpoint within the ASC recommended range) would be appropriate
and meet the statutory standards.
Subsequent to the rule adoption on April 15, 2004, ASCs expressed concerns
regarding various components of the rule and their relationship to the overall
reimbursement. These concerns included the site of service limitations tied
to the Medicare List incorporated into the rule, as well as concerns regarding
implant reimbursement. At the August 19, 2004 public meeting, the commissioners
directed agency staff to revisit the sites of service and implant issues in
light of new information submitted by system participants.
The commission requested public input on these two issues by:
* Posting a notice on the commission's website;
* Mailing the same notice in a letter to all Texas licensed ASCs;
* Providing the notice in all insurance carrier representative boxes;
* Requesting utilization and reimbursement data for CPT codes not currently
on the ASC list of Medicare approved procedures (Medicare's List);
* Requesting utilization and reimbursement data for implantables; and
* Establishing a commission email address specifically for electronic submission
of information.
The notice, "Public Request for ASC Information" was posted August 27,
2004. The notice stated the commission was exploring two specific areas within §134.402
for potential amendment: (1) amending Medicare's List for the inclusion/exclusion
of procedures with appropriate ASC group payment; and (2) exploring reimbursement
options for implantable devices. The commission requested information that
would help determine if such considerations can be safely, appropriately and
economically performed in an ASC setting, given the agency's rules and statutory
mandates.
The commission received approximately 50 responses representing 20 separate
entities. The responses were summarized and presented to an ASC Focus Group
comprised of representatives from ambulatory surgical center providers, implant
device supplier, insurance carriers, and self-insured businesses. Meeting
on October 13, 2004, the ASC Focus Group reviewed and discussed the information
received and the issues in general. However, the ASC Focus Group did not reach
a consensus.
Despite a lack of consensus from the ASC Focus Group, agency experts and
other staff conducted in-depth analyses of the new information received to
that point and drafted a preliminary version of possible rule amendments to
serve as a primary topic of discussion for a follow-up ASC Focus Group meeting.
The follow-up ASC Focus Group meeting was held on October 27, 2004 to discuss
draft amendments to the rule in anticipation of formally proposing amendments
in November 2004. Again, no consensus was reached. Some ASC Focus Group members
recommended: a higher PAF, allowances for procedures to be performed in an
ASC facility that are not on Medicare's List, a higher reimbursement for surgically
implanted devices whether reimbursed separately or included in the ASC case
rate by Medicare, and a retroactive effective date of September 1, 2004. Conversely,
other ASC Focus Group members expressed concerns that such recommendations
will increase administrative burdens and medical costs, and will ultimately
negate the cost control measures of the existing rule (required under the
Act).
Following the second ASC Focus Group meeting, the commission staff posted
a pre-proposal draft rule for informal public input on the commission's website
from November 2, 2004 through November 10, 2004. The commission reviewed the
input and other available information, sought clarification, proposed amendments
at the November 2004 public meeting, and now adopts these rule amendments.
The commission believes that the adopted rule will provide an effective
regulatory framework for ambulatory surgical centers under the Texas workers'
compensation system.
The commission is required by Texas Labor Code §413.011 to apply exceptions
or minimal modifications necessary for adaptation of the Medicare methodology
to the Texas workers' compensation system. Medicare payment policies may retroactively
alter payment amounts of previously paid claims and require the Medicare system
participants to re-adjudicate claims and reconcile payments. The commission
determined that such retroactive payment policies would create undue administrative
burdens if applied to the Texas workers' compensation system. The adopted
rule requires the use of the most current Medicare policies in effect when
the services were provided, including Medicare's site of service restrictions,
with the exception of retroactive payment policies (no change from the rule
adopted April 2004). The adopted amendments add minimal modifications to that
exception by including procedures to the ASC List of Medicare Approved Procedures,
and separate reimbursement for surgically implanted devices.
Texas Labor Code §413.011 requires the commission to adopt necessary
conversion factors or PAFs to take the diverse statutory requirements into
account in establishing a fee guideline that uses the federal Medicare reimbursement
methodology. Additionally, the commission must take into account economic
indicators in health care and the requirements found in subsection (d) of §413.011.
The statute also states that the commission shall not adopt a PAF based solely
on those PAFs developed by CMS. The commission adopted a multiplier, or PAF,
of Medicare reimbursement rates for the reimbursement of ASC facility services
to satisfy the statutory requirements.
The rate adopted establishes fair and reasonable reimbursement that is
designed to ensure continued access to quality care, along with appropriate
medical cost control. Ingenix also stated that in certain instances, going
outside the recommended range to meet statutory requirements would be appropriate.
Given the data available for analysis, Ingenix indicated that anywhere down
to 90% of the low endpoint and up to 110% of the high endpoint of the recommended
ASC range would be an appropriate "extended range." Ingenix noted that points
in the extended range satisfactorily balance the complex statutory objectives,
and the rate adopted in this rule is within the Ingenix extended range. To
further address cost containment efforts provided by the statute, the commission
adopted a PAF within the extended range.
The PAF multiplier for ASCs is considerably higher than the 125% multiplier
provided in §134.202, the commission's Medical Fee Guideline, which covers
reimbursement of professional medical services provided within the Texas workers'
compensation system. There are several reasons for this. Unlike professional
medical services, whose cost inputs are continuously updated by CMS, Medicare
has not significantly revised ASC cost inputs since 1994. Moreover, the percentage
of Medicare patients who receive ASC services (surgeries) is significantly
less than the percentage of Medicare patients who receive professional medical
services (typically, physician services). Finally, Medicare reimbursements
for professional medical services are generally within the range of payments
made by commercial payers; however, Medicare reimbursements for ASC services
are well below the range of payments made by most commercial payers for those
services. Thus, while the resulting multipliers are different in the two contexts,
they are consistent with one another to the extent that the commission has
determined that reimbursement for the two types of services is appropriate
at the low end of the range of reimbursement provided within the commercial
market.
The commission will in the future propose fee guidelines for outpatient
facility services, and amendments to the current inpatient fee guideline.
Inpatient hospital services are currently reimbursed under the existing commission
rules that provide for per diem payments. Ingenix has noted that the current
inpatient methodology is reasonably standardized but does not reflect the
recent statutory requirement to use Medicare reimbursement methodologies.
Ingenix also noted, at the time of its October 2003 report, that outpatient
hospital and ASC payments were not standardized in the commission system,
or the market in general, and the lack of detail in the available data makes
it difficult to determine the current mix of services that are being delivered.
Consequently, Ingenix recommended that the commission adopt a separate PAF
for each setting (inpatient hospital, outpatient hospital, and ASC), based
on Medicare reimbursement methodology and policies in accordance with the
statutory mandates, resulting in standardization of all three facility fee
guidelines, once adopted or revised. Because the relationship of the Medicare
reimbursement to the commercial market varies between inpatient, outpatient,
and ASC services, it is likely that the PAF proposed for the inpatient hospital
and outpatient hospital facility fee guidelines will differ from the PAF adopted
for ASCs in this rule.
In setting the ASC fees in this rule, the commission used Medicare fees
as a reference and considered commercial market payments as indicative of
economic indicators in health care, as required by the statute. The commission
determined "fair and reasonable" is not based solely on the market value of
services provided to injured employees. Fair and reasonable compensation in
the Texas workers' compensation system is a balance of all the required components
of the Act. These are rigorous statutory requirements, which are not easily
balanced. In balancing the statutory mandates and objectives, the commission
considered numerous issues, with the goal of establishing fair and reasonable
fees that will assist in achieving effective medical cost control.
To help in understanding the full picture, the commission has addressed
the background and basis for the rule, and requirements of the current rule,
including those parts and issues that are not the subject of this rulemaking.
Rule 134.402 establishes reimbursements for ASC health facility services.
The rule provides a standardized reimbursement method and billing procedures
by aligning the workers' compensation reimbursement structure with the structure
used by the CMS. The rule provides minimal modifications within this CMS structure
to meet occupational injury requirements.
No amendments to (a) were proposed, other than the effective date for these
amendments. Subsection (a) of the adopted rule provides for the reimbursement
of health care facility services, as defined by the CMS, other than professional
medical services, provided in an ASC on or after September 1, 2004. Paragraph
(a)(2) provides for an amended effective date of April 1, 2005 for the amendments
in paragraphs (e)(2), (e)(3), and (e)(4), and subsection (f). Subsection (a)
also provides that the policies and reimbursement methodologies in effect
for Medicare on the date a service is provided are the policies and reimbursement
methodologies to be used in the Texas workers' compensation system. Subsection
(a) requires use of the most recent payment policies adopted by the Medicare
program for compliance with commission rules, decisions, and orders is required.
This will prevent the Texas workers' compensation system from falling out
of synchronization with Medicare and will achieve the standardization goals
established in Texas Labor Code §413.011. However, specific provisions
contained in the Act and commission rules shall take precedence over any conflicting
provision adopted or utilized by CMS in administering the Medicare program.
Pursuant to §408.021 of the Texas Labor Code, injured employees are entitled
to all health care reasonably required by the nature of the injury as and
when needed to cure or relieve the effect naturally resulting from the compensable
injury, promotes recovery or enhances the ability of the employer to return
to or retain employment. To the extent that this entitlement may differ from
the entitlement of the Medicare recipients, the decision of the commission
through its dispute resolution process must take precedence over the provisions
adopted or utilized by CMS in administering the Medicare program. Subsection
(a)(3) states that: "Specific provisions contained in the Texas Workers' Compensation
Act (Act), or Texas Workers' Compensation Commission (commission) rules, including
this rule, shall take precedence over any conflicting provision adopted by
utilized by CMS in administering the Medicare program. Exceptions to Medicare
payment policies for medical necessity may be provided by commission rule.
Independent Review Organization (IRO) decisions regarding medical necessity
are made on a case-by-case basis. The commission will monitor IRO decisions
to determine whether commission rulemaking action would be appropriate."
There is a change from the text of subsection (a) as proposed. The adopted
revision of paragraph (a)(2) changes the effective date of these rule amendments
from March 1, 2005 to April 1, 2005, thereby allowing system participants
adequate time to prepare for these rule amendments. The commission again clarifies
nothing in these amendments would have retroactive effect.
No changes to subsection (b) were proposed. Subsection (b) requires system
participants to utilize the Medicare reimbursement methodologies, models,
and values or weights, including its coding, billing, and reporting payment
policies for coding, billing, reporting, and reimbursement of health facility
services provided in the Texas workers' compensation system. This allows for
the basic Medicare program provisions to be applied with any additions or
exceptions necessary for the adaptation to the Texas workers' compensation
system. The Medicare program is not a static system. Medicare policies change
frequently. To achieve standardization it is necessary to use the Medicare
billing and reimbursement policies as they are modified by CMS. Adoption of
policies in effect on a particular date would require participants in the
Texas workers' compensation system to bill and reimburse in a manner different
from the current Medicare system and the standardization required by the statute
would be eliminated. However, Medicare also makes some policies retroactive,
which is not workable for the workers' compensation system that has approximately
250 insurance carriers. Therefore, the rule, in compliance with the statute,
did not adopt the retroactivity aspect of Medicare payment policies, and instead
requires the use of the Medicare policies in effect on the day that a service
was provided.
No changes from the text of subsection (c) were proposed. Subsection (c)
establishes the method to be used for determining the MAR for ASC health facility
services in the Texas workers' compensation system. In establishing the PAF
for the rule, which is 213.3% of Medicare, the commission previously considered
the statutory requirements and objectives and utilized Medicare data, current
commission reimbursement levels, and available commercial payer information.
As stated in the April 2004 adoption preamble, the adopted PAF is the low
limit of the extended range of acceptable fair and reasonable reimbursements
included in the Ingenix report and reflects the commission's statutory responsibility
related to effective medical cost control and fair and reasonable reimbursement.
The adopted PAF is in the range of commercial reimbursement. Ingenix estimated
that 2004 ASC reimbursement under current commission rules (requiring fair
and reasonable reimbursement) equals approximately 320% of 2004 Medicare reimbursement.
Additionally, Ingenix estimated commercial (HMO/PPO/POS/Indemnity) payer reimbursement
equal to a range of 168% to 564%. This commercial range produces a weighted
average of approximately 274% (not including indemnity plans) to 293% (including
indemnity plans) of Medicare reimbursement. With Medicare added to the commercial
market, the weighted average for ASC services trended to 2004 is 237% (not
including indemnity plans) to 264% (including indemnity plans) of Medicare
reimbursement. This identified range (237% to 264%) was extended in the Ingenix
report to 213.3% to 290.4% to recognize the potential for the commission to
emphasize a different balance of the statutory objectives than that emphasized
by Ingenix.
There are no changes from the text of subsection (d) as proposed. Adopted
subsection (d) provides that the reimbursement for ASC services is the lesser
of the MAR amount regardless of billed amount, or the facility's and payer's
workers' compensation negotiated and/or contracted amount that applies to
the billed service(s).
There are changes from the text of subsection (e) as proposed, which reformatted
and expanded the current rule. Subsection (e) addresses the exceptions and
minimal modifications to the Medicare payment policies.
As adopted, amended paragraph (e)(1) reformatted the language, which states
that Texas will not incorporate any retroactive portions of Medicare payment
policy changes.
There are changes from the text of paragraph (e)(2) as proposed. Amended
paragraph (e)(2) supplements Medicare's List with additional procedures, and
the associated group assignments (e.g., Medicare Group 1-9). These additions
were proposed following review and approval by the commission Medical Advisor.
After receiving the various recommended procedures for an ASC setting from
the public request for information, staff compared the list with the procedures
that were currently allowed in an ASC setting and the number of times that
these procedures were performed. Additional information was received and considered
regarding those procedures commonly performed for the workers' compensation
population in ASCs. As a result of the review of recommended procedures, discussions
during the focus group meetings, and input from the Medical Advisor, staff
believes that the adopted list reflects those items that can not only safely
be performed in an ASC setting, but also are appropriate for that setting.
To prevent unnecessary charges, the adopted list excludes procedures that
are bundled within another primary procedure. To determine the appropriate
reimbursement group for these procedures, staff assigned groups, which were
consistent with the reimbursement groups for similar procedures, including
ASC input where available. In order to ensure the proper administrative actions
by ASCs and insurance carriers, the individual procedures are referenced by
the applicable American Medical Association's Current Procedural Terminology
(CPT) codes. Subparagraph (e)(2)(F) has been changed from proposal to reflect
Medicare's proposed inclusion of CPT code 29873 in payment group 3, rather
than the rule's proposed payment group of 4. The CPT code has not been deleted
because the likely CMS implementation date will occur after the effective
date of this rule revision. Proposed subparagraph (e)(2)(K) has been deleted.
After additional consideration of comments, fluoroscopy has been deleted from
the list of commission-approved procedures because it does not qualify as
a surgical procedure and is a radiological code. Further, proposed CPT code
76000 is noted as commonly miscoded according to the Ingenix 2004 CPT Expert,
consequently including only one fluoroscopic code is likely to encourage inappropriate
coding in order to obtain additional reimbursement. Fluoroscopy is a service
furnished by ASC staff in connection with a covered surgical procedure. The
Medicare ASC reimbursement methodology includes most diagnostic or therapeutic
items or services in the group case rate. Additionally, Medicare Hospital
Outpatient Prospective Payment System (HOPPS) generally bundles fluoroscopic
services with a more extensive surgical procedure. This means no additional
reimbursement is provided for these procedures.
There are no changes to the text of paragraph (e)(3) as proposed. Amended
paragraph (e)(3) allows a service that is not included on Medicare's List,
or on the commission's List at paragraph (e)(2), to be performed in an ASC
by prospective agreement between the carrier, the doctor, and the ASC, occurring
before, during, or after preauthorization. This will allow ASCs the opportunity
to present to carriers the cost effectiveness of performing certain procedures
in an ASC setting, which currently are not on Medicare's List or on the commission's
List at paragraph (e)(2). Details that must be included in an agreement are
specified to minimize disputes, which add costs to the system and drain the
commission's resources. Flexibility in the process is provided to allow use
of the timing and manner of negotiation that suits the particular case.
There are no changes to the text of paragraph (e)(4) as proposed. Amended
paragraph (e)(4) allows a separate reimbursement for surgically implanted,
inserted, or otherwise applied devices at the lesser of the manufacturer's
invoice amount or the net amount (exclusive of rebates and discounts) actually
paid for such device to the manufacturer by the ASC. Reimbursement for the
cost of medical supplies related to the surgical procedure is included in
the group case rate payment and is not included under this provision. The
ASC is required to certify that the billed amount meets this standard, using
specific certification language provided in the proposed paragraph.
The amendment providing reimbursement for implantables is a targeted approach
to address situations where the cost of an implantable, by itself, exceeds
the ASC group case rate or the MFG rate allowed in the workers' compensation
system. Assuring sufficient reimbursement for these specific items enhances
access to ASC services for injured workers. Although the Medicare system includes
limited additional reimbursement for implantables, it was generally accepted
in the ASC Focus Group meetings that orthopedic procedures were performed
relatively infrequently in an ASC setting for the Medicare population. The
limited Medicare reimbursement for high-cost, high-tech implantables associated
with orthopedic procedures was cited as a primary reason for this suppressed
utilization. The information provided by some of the ASC Focus Group members
highlighted the high-cost of surgically implanted devices due to technology
advances and medical cost inflation. The amended rule enhances consistency
of reimbursement for surgically implanted devices by implementing a cost-based
reimbursement, similar to the inpatient hospital methodology.
This fee guideline requires that provider billing must include a certification
statement that the amount sought represents its actual costs (net amount,
exclusive of rebates and discounts). This information should facilitate the
billing process by providing cost information with the original billing. Consequently,
processing times should improve, and confusion related to implant costs should
decrease, which should additionally decrease the opportunity for disputes.
The implant cost certified by the ASC is subject to insurance carrier or commission
audit and verification.
There are no changes to the text of subsection (f) as proposed. Amended
subsection (f) references that insurance carriers may conduct audits under §133.302
and §133.303 (relating to Preparation for an Onsite Audit and Onsite
Audits) if they wish to challenge whether the certified amount referenced
in subsection (e)(4) of these proposed amendments actually reflects the standard
given in that subsection. Also, it is reiterated that the Medical Dispute
Resolution process under §133.307 (relating to Medical Dispute Resolution
of a Medical Fee Dispute) may be a forum where disputes concerning the certified
amount under subsection (e)(4) are argued.
The ability to audit is an important check and balance feature related
to reimbursement of the invoice cost. The audit allows the carrier to verify
the actual cost of an item and auditing and assists the commission in the
statutory requirements related to effective medical cost control. Additionally,
members of the ASC Focus Group agreed that auditing was an acceptable trade
off when combined with additional reimbursement.
Former subsection (f) concerning severability is now subsection (g), and
there are no changes to the text of subsection (g) as proposed.
Comments generally supporting amendments to §134.402 as proposed were
received from the following groups: Central Park Surgery Center; Clear Fork
Surgery Center; East Houston Surgery Center; Medtronics; Northeast Baptist
Surgery Center; NorthStar Surgical Center; Surgery Center of Duncanville;
Symbion; Texarkana Surgery Center; and Texas Mutual Insurance Company.
Comments generally opposing or concerned with amendments to §134.402
as proposed were received from the following groups: Alamo Heights Surgery
Center; Ambulatory Surgery Association of Texas; Ambulatory Surgery Center
of Tyler; American Insurance Association; Calallen Orthopaedics L.L.P.; Christus,
Santa Rosa Surgery Center; Corpus Christi Outpatient Surgery; Dallas Anesthesiology
Association; Dallas Surgical Partners; Denton Surgicare; Doctors Outpatient
Surgicenter; Flahive, Ogden & Latson; Garland Eye Associates, P.A.; Genesee
Affiliates; Grapevine Surgicare; Heath SurgiCare; Insurance Council of Texas;
Kirby Surgery Center; MacArthur Surgery Center; Mary Shiels Hospital; Memorial
Herman Surgery Center Northwest; Memorial Northwest Otolaryngology; Metroplex
Surgicare; North Texas Surgery Center; Northwest Houston Surgical Association;
Park Cities Surgery Center; Property Casualty Insurers Association of America;
San Marcos Surgery Center; Shannon Surgery Center; Smith & Nephew; South
Austin Surgery Center; Southwest Podiatry, LLP; Specialty Surgery and Pain
Center; Surgery Center of Arlington; Surgery Center of Lewisville; Texan Surgery
Center; Texas Ambulatory Surgery Center Society; Texas Association of Business;
Texas Mutual Insurance Company; Texas Sports Medicine and Orthopeadic Group;
The Austin Diagnostic Clinic; The Urology Institute; United Surgery Center
Southeast; United Surgical Partners International; and Valley View Surgery
Center.
Comments neither generally supporting nor opposing amendments to §134.402
as proposed, but suggesting changes or asking questions were received from
the following groups: Ambulatory Surgery Association of Texas; Alamo Heights
Surgery Center; Ambulatory Surgery Center of Tyler; Calallen Orthopaedics,
L.L.P.; Central Park Surgery Center; Christus; Santa Rosa Surgery Center;
Clear Fork Surgery Center; Corpus Christi Outpatient Surgery; Dallas Anesthesiology
Associates; Dallas Surgical Partners; Denton Surgicare; Doctors Outpatient
Surgicenter; East Houston Surgery Center; Foundation West Houston Surgery
Center; Foundation Surgery Affiliates; Garland Eye Associates, P.A.; Genesee
Affiliates; Grapevine Surgicare; HealthSouth Corporation; Heath Surgicare;
Heritage Eye Center; Insurance Council of Texas; La Vista Solutions, LLC;
MacArthur Surgery Center; Mary Shiels Hospital; Medtronics; Memorial Herman
Surgery Center Northwest; Memorial Northwest Otolaryngology; Metroplex Surgicare;
Mirage Medical Group; North Texas Surgery Center; Northeast Baptist Surgery
Center; NorthStar Surgical Center; Northwest Houston Surgical Association;
Orthopedic Surgery Pavilion; Park Cities Surgery Center; San Marcos Surgery
Center/Kirby Highland Lakes Surgery Center; Shannon Surgery Center; Smith &
Nephew; South Austin Surgery Center/San Marcos Surgery Center; Southwest Podiatry,
LLP; Special Surgery of Houston; Specialty Surgery and Pain Center; Surgery
Center of Arlington; Surgery Center of Duncanville; Surgery Center of Lewisville;
Surgical & Diagnostic Center; Symbion; Texan Surgery Center; Texarkana
Surgery Center; Texas Ambulatory Surgery Center Society; Texas Association
of Business; Texas Mutual Insurance Company; Texas Sports Medicine and Orthopeadic
Group; The Austin Diagnostic Clinic; The Clinic for Special Surgery; The Urology
Institute; United Surgery Center Southeast; United Surgical Partners; United
Surgical Partners International; Valley Baptist Medical Center; Valley View
Surgery Center; and Whitley Penn.
Summaries of the comments and commission responses to the proposed rule
amendments are as follows:
Subsection (a)
COMMENT: Commenters recommended the rule amendments be retroactive to the
original rule effective date, September 1, 2004. Commenters stated that this
practice of implementing retroactive changes is often used by the Centers
for Medicare and Medicaid Services (CMS) when adjustments are made to Medicare's
physician fee schedule. This would allow ASCs to more easily transition and
recover some of the costs associated with the original rule change.
RESPONSE: The commission disagrees with commenters' recommendation to apply
a retroactive date to this amended rule. Many commenters requested that these
amendments be retroactive to September 1, 2004, which was the effective date
of the original rules. The commission declines to make this change. The commission
notes that the Texas Constitution states that "no bill of attainer, ex post
factor law, retroactive law, or any law impairing the obligation of contracts,
shall be made" [Tex. Const., Art. I, Sec.16]. As a matter of policy, the commission
believes that system participants involved in the ASC reimbursement rate issue
need to be able to know what rates are in effect at any given time so that
informed decisions can be made regarding matters like whether appeals are
pursued during billing processing and during medical dispute processes. Also,
it is likely that retroactive application of these amendments would lead to
increased disputes due to retroactive adjustments.
Subsection (b)
COMMENT: Commenter recommended that the American Academy of Orthopedic
Surgeons (AAOS) Complete Global Surgery Data be the standard for application
of the multiple procedure rule.
RESPONSE: The commission disagrees there is a need to recognize AAOS Complete
Global Surgery Data to be the standard for application of the multiple procedure
rule. Adoption of AAOS Complete Global Surgery Data would contradict the CMS
National Correct Coding Initiatives (NCCI) and would apply a different set
of rules to ASCs and surgeons paid under the MFG.
Subsection (d)
COMMENT: Commenter recommended adding "billed amount" since requiring carriers
to pay more than the billed amount does not achieve the objective of cost
control. Commenter recommended deleting the "lesser of" provision and requiring
reimbursement to be either the MAR or a negotiated rate.
RESPONSE: The commission disagrees with the recommendations. The CMS prospective
payment methodology is based on a case rate concept, which recognizes that
at times reimbursement will likely be different than the billed amount. Sometimes
this reimbursement will be less than, sometimes more than, the billed amount.
This concept encourages the efficient delivery of care without an unnecessary
utilization of resources. The commission disagrees that the "lesser of" provision
should be deleted from the rule. This provision facilitates cost control by
setting an upper limit on reimbursement.
Subsection (e)(2)
COMMENT: Commenter generally supported the added procedures codes, and
stated, "we are pleased to see that TWCC added some non-covered codes that
the Medicare methodology did not have."
RESPONSE: The commission agrees that the proposed amendments of subsection
(e) are an appropriate amendment to the rule.
COMMENT: Commenters recommended CPT code 76005 be added to the commission's
List of procedures to be performed in an ASC, and be placed in Medicare's
Group 9. Other commenters recommended CPT code 76005 be added and placed in
Medicare's Group 1, in part due to the CMS NCCI edits, and because it requires
the use of the most costly piece of ASC equipment, a C-arm, which is commonly
used on injured workers. CPT code 76005 is defined as "fluoroscopic guidance
and localization of needle or catheter tip for spine or paraspinous diagnostic
or therapeutic injection procedures (epidural, transforaminal epidural, subarachnoid,
paravertebral facet joint, paravertebral facet joint nerve or sacroiliac joint),
including neurolytic agent destruction." Commenter recommended CPT code 76005
be used in lieu of proposed CPT code 76000. Other commenters opposed the proposed
inclusion of CPT code 76000 and suggested that for consistency in both training
and administration of the rule, the procedure should remain global. Commenters
advised that CPT code 76000 is a radiological procedure, which would only
be performed in an ASC as a part of a more extensive surgical procedure, and
should not be subject to ASC facility reimbursement. Commenter advised that
most diagnostic or therapeutic items or services, such as this code, are considered
inclusive of the ASC facility fee, and further noted that NCCI edits deem
76000 as global to over 700 other procedures. Commenter opined that radiological
services that are not global to other procedures should remain reimbursable
per §134.202.
RESPONSE: The commission declines to replace CPT code 76000 with CPT code
76005 or add CPT code 76005 to the commission's List. After full consideration
of comments received and after researching the matter further, CPT code 76000,
which was proposed to be added, (fluoroscopy) has now been deleted from the
commission's List because it does not qualify as a surgical procedure and
is a radiological code. Further, CPT code 76000 is noted as commonly miscoded
according to the Ingenix 2004 CPT Expert, consequently, including only one
fluoroscopic code is likely to encourage inappropriate coding in order to
obtain additional reimbursement. Fluoroscopy is a service furnished by ASC
staff in connection with a covered surgical procedure. The Medicare ASC reimbursement
methodology includes in the group case rate, most diagnostic or therapeutic
items or services (such as CPT code 76000). Additionally, Medicare HOPPS generally
bundles fluoroscopic services with a more extensive surgical procedure. This
means no additional reimbursement is provided for these procedures. Regarding
commenter's opinion that radiological procedures should remain reimbursable
according to §134.202, the commission clarifies that the proposed radiological
procedure has been deleted from the adopted rule.
COMMENT: Commenters opposed the inclusion of any proposed surgical procedure
not approved by CMS (Medicare) to be performed in an ASC setting, and advised
such deviations compromise the CMS methodology as applied to Texas through §413.011
of the Act. Commenter further recommended that Medicare's determination be
given presumptive weight. Commenter indicated Medicare's List prohibition
was intended to discourage the shift of services from physician offices to
ASCs, and commenter recommended the commission should also strive toward patient
safety and prevention of shifting procedures to a different setting that results
in greater reimbursement amounts.
RESPONSE: The commission disagrees that supplementing Medicare's List to
meet Texas workers' compensation system needs negatively impacts the Medicare's
List methodology. The additions to Medicare's List impact only a limited number
of CPT codes, maintain the CMS criteria as presumptive weight for over 2400
CPT codes, and are intended to facilitate certain procedures that previously
have been provided in an ASC setting. The commission disagrees that Medicare's
List was only developed to discourage a shift of services from physician offices
to ASCs, as the CMS methodology considers many other factors in modifying
its list. The commission agrees that patient safety and quality care is a
significant factor in the workers' compensation system. The additions to commission's
List have previously been performed in the ASC setting, and were reviewed
and approved for inclusion by the commission's Medical Advisor.
COMMENT: One commenter suggested inclusion/exclusion of procedures to the
commission's List beyond what's on the current Medicare's List will become
a recurring theme for the commission each time CMS updates their list or when
health care providers demand further changes. Commenters additionally advised
that CMS has an established procedure for timely updating their list, and
CMS is required to do so every two years. CMS is currently in the process
of an update for services provided on or after July 1, 2005.
RESPONSE: The commission disagrees that careful consideration of "minimal
modifications" to the rule under §413.011 of the Act, with the public's
input, is inappropriate in this rulemaking or would be inappropriate in the
future. Each time CMS updates its list, the rule includes such updates as
stated in paragraph (4) of subsection (a) of the rule. Further, the commission
has a responsibility to abide by the statutory requirement of reviewing and,
if necessary, revising its medical policies and fee guidelines. The commission
believes that these amendments are needed now, given the uncertainty of content
and timing for any pending changes to CMS.
COMMENT: Commenters observed that the rule as proposed would have the unintended
consequences of unbundling Medicare's List as established by CMS for the sole
purpose of seeking a higher reimbursement. Commenters recommended the commission
adhere to and not modify CMS' scheduled updates and methodology, which prevents
unbundling.
RESPONSE: The commission disagrees that the creation of a commission's
List within the rule will result in the unbundling of procedures. Although
members of the ASC Focus Group recommended additional reimbursement for some
procedures currently bundled into a primary procedure code, the commission
did not include any of these procedures in the commission's List. The commission
does not encourage unbundling, and clarifies that the minimal modifications
made to Medicare's List do not encourage inappropriate unbundling and subsequent
overpayment.
COMMENT: Commenters opposed additions or deletions from Medicare's List,
stating the commission provided no reasonable basis, objective or consistent
criteria for them. Commenter further stated that without providing the criteria
for selection, it would appear the commission had insufficient expertise to
make such modifications.
RESPONSE: The commission disagrees that it provided no reasonable basis/criteria
for selection of additions or deletion from Medicare's List. The commission
also disagrees that it has insufficient expertise to make such modifications.
The supplements to Medicare's List in paragraphs (2) and (3) of subsection
(e) of the rule constitute what the commission considers "minimal modifications
to those reimbursement methodologies as necessary to meet occupational injury
requirements." The commission's proposal preamble cited that by the expansion
of the number of services allowable in an ASC setting, the commission increases
the injured worker's ASC access to procedures that are not on Medicare's List.
In addition, by allowing the procedures to be performed in an ASC setting,
the commission increases flexibility for system participants and promotes
provision of services in a setting that ultimately lowers costs to the system
and system participants. The site of service flexibility enhances the cost
containment efforts of the commission to meet the requirements of the Act.
This is especially important considering the documented high medical cost
per claim in the Texas workers' compensation system, which also was outlined
in the commission's previous April 2004 adoption preamble of §134.402.
The commission compiled and evaluated information submitted by ASCs, carriers,
and ASC Focus Group members. The commission also conducted its own research,
which was evaluated with the input and expertise of the commission's Medical
Advisor. Further, the commission clarifies that it sought the expertise of
system participants through a data call, and then established an ASC Focus
Group that was comprised of health care providers, including physicians and
ASCs, and insurance carriers. Additionally, a device manufacturer participated
in the ASC Focus Group meetings and assisted the commission with recommended
amendments to the rule as proposed. Reasons for individual amendments to the
rule are given throughout this preamble and the December proposal preamble
for these amendments.
COMMENT: Commenters opined that the proposed deviations from the Medicare's
List constitute more than a "minimal modification," are unrelated to any conditions
specific to occupational injuries as required by statute, and are consequently
beyond the statutory authority granted the commission.
RESPONSE: As previously stated, the commission disagrees that supplementing
Medicare's List to meet workers' compensation system needs constitute more
than a "minimal modification." The commission's List impacts only a limited
number of CPT codes, maintains the CMS criteria as presumptive weight for
over 2400 CPT codes, and is intended to facilitate certain procedures that
previously have been provided in an ASC setting. The additions to the commission's
List have previously been performed in the ASC setting, and were reviewed
and approved for inclusion by the commission's Medical Advisor. The commission
further disagrees with commenters' statement regarding "occupational injuries"
as a statutory criterion. The statute directs the commission to use health
care reimbursement policies and guidelines that reflect the standardized reimbursement
structures found in other health care delivery system, including Medicare,
with minimal modifications to those reimbursement methodologies as necessary
to meet occupational injury requirements. This the commission has done, as
detailed throughout this preamble.
COMMENT: Commenter suggested the proposed commission's List is contrary
to the commission's requirement to control medical costs because the significant
advantage for access to ASCs is to ensure the service can be performed safely
in that environment and is less costly. A commenter indicated there has been
no showing of any injured worker not having received a medically necessary
procedure because it is not deemed appropriate to be performed in an ASC setting,
and such expansion of ASC services is not necessary to ensure injured workers'
access to medical care.
RESPONSE: The commission disagrees that the commission's List is contrary
to the commission's requirement to control medical costs. Each procedure is
grouped into a prospectively determined case rate, which inherently controls
costs. By adopting Medicare's List and the multiplier, the ASC reimbursement
was projected in the initial proposal of §134.402 to decrease overall
ASC reimbursement by approximately $31 million. The reimbursement for the
additional CPT codes is unlikely to unduly impact overall system costs because
of their relatively infrequent use in the system. For those procedures added
to the commission's List, access is anticipated to increase due to scheduling
and other patient/doctor conveniences afforded by allowing an ASC to perform
these procedures.
COMMENT: Commenter specifically opposed the inclusion of procedure codes
11750, 11760, 20526, 20552, and 64405 (subparagraphs A, B, C, D, and I of
(e)(2) of the rule proposal) noting that CMS indicates these procedures are
most commonly performed in a doctor's office setting, which the commenter
agrees with, and stated that inclusion will guarantee inappropriate migration
from the doctor's office to the ASC setting, which in turn will cause increased
medical costs to the system without incremental benefit to the injured worker.
Commenter stated, "The more significant events may be performed in an outpatient
setting."
RESPONSE: The commission disagrees. In general, prior to the implementation
of this rule in September 2004, there were no restrictions regarding site
of service. Further review of the commission's medical billing database indicated
these procedures were performed in several settings, including ASCs. This
history suggests that it is unlikely that these procedures will automatically
or inappropriately shift from the doctor's office to an ASC setting. The amendments
continue to allow these procedures to be performed in an ASC; however, reimbursement
is now standardized according to this fee guideline. The rates reimbursed
prior to September 1, 2004, were on average 50% more than the current reimbursement
rate.
COMMENT: A commenter noted CMS' current proposal to include procedure code
29873 to its list.
RESPONSE: The commission agrees and recognizes that CMS is proposing to
add this procedure to its list. The commission has also determined that it
is appropriate for this procedure to be performed in an ASC setting, and thus
the rule has been changed from proposal to adoption to reflect Medicare's
inclusion of CPT code 29873 in payment group 3. The CPT code has not been
deleted from the commission's List because it is likely CMS implementation
date will occur after the effective date of this rule revision.
COMMENT: Commenter generally supports addition of the procedure codes that
the Medicare methodology does not include.
RESPONSE: The commission agrees that the additional CPT codes included
in the rule amendment are an appropriate minimal modification to Medicare's
List in order to meet the reimbursement requirements for occupational injuries
as well as the other factors of §413.011 of the Act.
COMMENT: Commenter stated the proposed modifications do not cover the ASC's
costs.
RESPONSE: The commission disagrees that the assigned group number does
not cover the costs associated with the proposed modifications because the
commission has received no independent cost data to determine actual costs
in Texas ASCs. Unlike hospitals, ASCs do not publicly report operating expenses
and revenues. Additionally, any cost information provided by an ASC is unique
to that facility and not necessarily indicative of the cost structure or profitability
of any other ASC facility. Without this cost-based information, the commission
has relied on Ingenix's expertise in analyzing market reimbursement, and the
commission has set reimbursement within the range recommended by Ingenix.
Through this rule amendment, the commission clarifies that the additional
procedures are those that have been commonly performed in ASCs prior to this
rule's implementation, and further clarifies that the rate of reimbursement
is 213.3% over that of Medicare's established rate. Additionally, ASC Focus
Group members, which included numerous ASC representatives, recommended the
procedures. Several of the additional codes are currently commonly performed
in other settings with no, or minimal, facility reimbursement. Based on this
information and the ASC comments of efficiency and low cost, the additional
reimbursement ($710 (Group 1 rate of $333 x 213.3 %) at a minimum per procedure)
is not appropriate.
COMMENT: Commenter opposed the grouping of the 11 proposed procedures for
inclusion and suggested that the 11 codes should be grouped to a higher group.
Commenter recommended that if additional procedures are added to the commission's
List they be grouped to a higher group.
RESPONSE: The commission disagrees that the additional codes should be
regrouped. The groupings are based on the relationship to the other codes
on Medicare's List and in general, are reflective of the relative time and
resources necessary for the procedure. Additionally, unlisted codes are included
to allow flexibility for certain procedures, and are grouped with similar
procedures to discourage inappropriate use of the unlisted codes to increase
reimbursement. The commission disagrees that the proposed 11 procedures should
be grouped to a higher group. The commission clarifies that if further additional
codes should be added, they will be grouped using the same concept.
COMMENT: Numerous commenters recommended other common codes be included
in the commission's List (but not provided in written public comment) as recommended
by various ASCs prior to rule proposal, and commenters recommended the commission
adopt the previously recommended Texas Ambulatory Surgical Center Society's
group assignments.
RESPONSE: The commission disagrees that other CPT codes should be included
in the commission's List at this time. As previously stated in this preamble,
and prior to proposal of this rule amendment, the commission requested and
received from the public those procedures they requested to be added and indicated
were commonly performed in an ASC setting. The commission evaluated the entire
list of suggested procedures and removed those procedures that were already
on Medicare's List; procedures that Medicare (CMS) determined could only safely
be performed in an inpatient hospital setting; and in general, those procedures
that had not been or had rarely been performed in the workers' compensation
system in calendar year 2002. The commission discussed and received general
support from the ASC Focus Group members as to the process for procedure removal
from the broader list of suggestions. The commission then evaluated remaining
procedure suggestions and further removed those, which through NCCI edits,
are considered as bundled to a primary surgical procedure. The commission
disagrees with the recommendations for group assignments provided by the Texas
Ambulatory Surgical Center Society. The commission, with the input of the
commission's Medical Advisor, utilized the previously described general concept
in assigning groups to maintain consistency with Medicare's List. The final
results are rule amendments, which satisfy the criteria of §413.011 of
the Act.
COMMENT: Commenter recommended the specific procedure codes 62290, 72295,
20600, 20605, 20610, 72275, 27096, 24220, 27648, and 23350 be added to the
commission's List. Commenter suggested these additional codes would assure
mistakes are kept to a minimum, allowing them to be performed in an ASC setting
would decrease the reimbursement allowance, which would benefit insurance
carriers. Commenter further stated if these codes were to remain allowed to
be performed just in a hospital outpatient surgery department setting, it
would cause an increase in system expenditures.
RESPONSE: The commission disagrees with commenter's recommendation of additional
procedures codes 62290, 72295, 20600, 20605, 20610, 72275, 27096, 24220, 27648,
and 23350 to be included on the commission's List through this rule amendment.
The previously described vetting process by the commission was thorough. Additionally,
the commission disagrees that there is any proof or validity to the commenter's
statement that the addition of these codes would necessarily reduce mistakes,
and reduce ASC's monetary allowance. There is no set reimbursement for specific
hospital outpatient surgical procedures that would support commenter's assertion
that reimbursement for services provided in a hospital outpatient setting
are more expensive than adding these procedures to the commission's List,
and thereby reducing their costs to the system.
COMMENT: Commenter recommended the commission completely remove the Medicare
site of service restrictions from the rule by allowing any and all ASC certified
procedures to be performed in ASCs. Commenter recommended, for those procedures
without assigned Medicare groupers, a provisional grouper assignment be allowed
from 2 to 5, depending on the complexity of the procedure. Commenter's reason
for this recommendation is that the adoption of Medicare's site of service
restrictions in rule 134.402 does not meet the statutory requirement of setting
fair and reasonable fee guidelines. Commenter further stated the commission
rules should not re-distribute or re-direct patient flow preferentially from
one type of site to another.
RESPONSE: The commission disagrees that alternative inclusion of all procedures
and groupings for currently ungrouped procedures be applied in the Texas workers'
compensation system. To do so would be contrary to the standardization requirements
of the Act regarding Medicare methodology. Additionally, the commission's
limited list assures that procedures are performed in settings appropriate
to the complexity of the procedure and the safety of the patient. This standardization
promotes consistency within the workers' compensation system, eliminating
unnecessary administrative burdens and the potential for disputes based on
site of service issues - all of which would be problems associated with the
commenter's suggestion. The commission disagrees that incorporating the site
of service restrictions does not meet "the statutory requirement of setting
fair and reasonable fee guidelines." Section 413.011(a) of the Act states,
"to achieve standardization the commission shall adopt the most current reimbursement
methodologies, models and values, or weights used by the Health Care Financing
Administration (now called the Centers for Medicare and Medicaid Services
(CMS)) including applicable payment policies relating to coding, billing,
and reporting, and may modify documentation requirements as necessary to meet
the requirements of Section 413.053." Additionally, §413.011(d) states,
"guidelines for medical services fees must be fair and reasonable and designed
to ensure the quality of medical care and to achieve effective medical cost
control...." Adoption of these rule amendments is consistent with these requirements
of the Act. The commission disagrees that commission rules should not re-distribute
or re-direct patient flow from one site to another, because re-directing services
between sites is an essential tool the commission must use to assure services
are provided safely and in appropriate settings and to assure effective medical
cost control. There is nothing "preferential" about such commission actions,
however. They are, rather, a function of the commission's following its statutory
mandates as set out by the Texas Legislature.
COMMENT: Commenters opposed the inclusion of procedure codes 27599, 29999,
and 64999 (subparagraphs E, G, and J of (e)(2) of the rule proposal) stating
that their inclusion would lead to unbundling, and increase the abuse of "unlisted
procedure codes," rather than use of more appropriate codes. Commenter provided
an example of an injection being billed as code 64999, which is defined as
"unlisted procedure, nervous system," and potentially reimbursed at a much
higher rate. Commenter suggested inclusion of the codes at issue would result
in increased audit and dispute costs to the system.
RESPONSE: The commission disagrees that inclusion of procedure codes 27599,
29999, and 64999 (subparagraphs E, G, and J of (e)(2) of the rule proposal)
will lead to unbundling and increase the abuse of unlisted procedure codes.
The commission clarifies that unlisted codes are included to allow flexibility
for certain procedures, and are grouped with similar procedures to discourage
inappropriate use of the unlisted codes to increase reimbursement. The commission
disagrees that audit and dispute costs will increase. Adding these procedures
assures their reimbursement when provided in an ASC setting, and eliminates
confusion when these services are provided as a secondary procedure, or in
lieu of a procedure already on Medicare's List.
COMMENT: Commenters expressed concern regarding procedure code 29873 (subparagraph
F of (e)(2) of the rule proposal) and its proposed group assignment of 4 because
CMS is currently in the process of proposing the same code for Medicare's
List inclusion, only in group 3, and not group 4. A commenter recommended
the commission defer to CMS' expertise and not deviate from the methodology
used by CMS for group assignment, as it would set the stage for future deviations.
RESPONSE: The commission agrees with commenters' concerns and recommendations
regarding the proposed inclusion of CPT code 29873 and corresponding group
assignment. The commission recognizes that CMS is proposing to add this procedure
to its list. The rule has been changed from proposal to reflect Medicare's
proposed inclusion of CPT code 29873 in payment group 3.
COMMENT: Commenter asked if the codes proposed to be added to the commission's
List would be assigned a Medicare group and paid from the established Medicare
fees. Commenter additionally asked if the cost of grafting, anchors and screws
would be paid separate from the procedure code 29873.
RESPONSE: The commission clarifies the additional procedure codes for inclusion
in the commission's List, (e)(2) of the adopted rule, do have an assigned
Medicare case rate group, which is multiplied by 213.3% for a reimbursement
of Texas workers' compensation claims. The reimbursement of grafts, anchors
and screws is reimbursed separately as clarified further in (e)(4) of the
adopted rule.
COMMENT: Commenters opposed any payment that is based on Medicare fee schedules
for ASCs and stated that the CMS ASC Grouper System is outdated.
RESPONSE: The commission disagrees that payments should not be based in
part on Medicare. The commission is required by §413.011 of the Act to
adopt the most current Medicare program reimbursement, methodologies, models,
and values or weights, including its coding, billing, and reporting payment
policies. The Medicare ASC reimbursement system model adopted by the commission
fulfills these requirements.
COMMENT: Commenter specifically recommended procedure code 64999 (subparagraph
J of (e)(2) of the proposed rule) be considered for higher reimbursement than
the proposed group 1 category, as the reimbursement does not cover the cost
of supplies and use of the ASC facility. Commenter advised that as an example,
in the use of a Spine Cath, the catheter alone cost in excess of $1,000.00,
yet it would be less expensive to have this procedure performed in an ASC
than in a hospital outpatient surgery department setting.
RESPONSE: The commission disagrees that procedure code 64999 should be
regrouped. The commission clarifies that such supplies as referenced by commenter
are integral to the procedure and are consequently included in the group rate
reimbursement. The groupings are based on the relationship to the other codes
on Medicare's List and in general, are reflective of the relative time and
resources necessary for the procedure. The commission clarifies that unlisted
codes such as 64999 are included to allow flexibility for certain procedures,
and are grouped with similar procedures to discourage inappropriate use of
the unlisted codes to increase reimbursement.
COMMENT: Commenter opposed the commission's recommended group payment codes
for the proposed additional list codes, and indicated a detailed explanation
of the methodology used to assign these specific groups is lacking.
RESPONSE: The commission clarifies that the groupings are based on the
relationship to the other codes on the Medicare's List and in general, are
reflective of the relative time and resources necessary for the procedure.
Unlisted codes, e.g., 64999, are included to allow flexibility for certain
procedures, and are grouped with similar procedures to discourage inappropriate
use of the unlisted codes solely to increase reimbursement.
COMMENT: Commenter opposed the inclusion of procedure code 63030 to the
commission's List because of the increased safety risk of the surgery to the
injured worker/patient if performed in any setting other than a hospital setting.
Commenter additionally stated such inclusion would increase the number of
fee disputes. Commenter asserted that this procedure has the potential for
additional spinal procedures to be performed (e.g., 63035), with risk of complications,
and consequently risk to the patient.
RESPONSE: The commission disagrees that CPT code 63030 should not be included
on the commission's List. As previously stated in this preamble, and prior
to proposal of this rule amendment, the commission requested and received
from the public those procedures they requested to be added and indicated
were commonly performed in an ASC setting. The commission evaluated the entire
list of suggested procedures and removed those procedures that were already
on Medicare's List, procedures that Medicare determined could only safely
be performed in an inpatient hospital setting, and in general, those procedures
that had not been or had rarely been performed in the system in calendar year
2002. The commission discussed and received general support from the ASC Focus
Group members as to the process for procedure removal from the broader list
of suggestions. The commission then evaluated remaining procedure suggestions
and further removed those, which through NCCI edits, are considered as bundled
to a primary surgical procedure. The commission, with the input of the commission's
Medical Advisor, utilized the previously described general concept in assigning
groups to maintain consistency with Medicare's List. The commission disagrees
that medical disputes will significantly increase as a result of this addition
to the Medicare List. During preauthorization and according to subsection
(e)(3) of the rule, health care providers and carriers have the responsibility
to discuss all procedures to be performed during a single operative session.
The commission recognizes that any surgical procedure has a risk for complications.
Health care providers have a responsibility to consider the risk for complications
when determining a particular setting for a particular patient.
COMMENT: Commenters stated proposed amendments that establish a separate
list of codes for ASC reimbursements, and the additional carve-out for implant
reimbursements, are more than a "minimal modification." Commenters stated
the proposed amendments far exceed the minimal modifications authority granted
to the commission by §413.011(a) of the Texas Labor Code. Commenters
stated that Medicare ASC payment policies determine which procedures may be
performed in an ASC and include those bundled items (certain implants) in
the base fee as opposed to those unbundled items, which are reimbursed according
to Medicare's DMEPOS fee schedule.
RESPONSE: The commission disagrees. As previously stated, the supplements
to Medicare's List in paragraphs (2), (3) and (4) of subsection (e) of the
proposed rule, constitute what the commission considers "minimal modifications
to those reimbursement methodologies as necessary to meet occupational injury
requirements." Although the commission has supplemented the Medicare ASC methodology,
this methodology is still maintained as the primary framework of the guideline.
The statute directs the commission to use 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.
The remainder of §413.011 of the Act gives further criteria, which are
met by these rule recommendations.
The commission also disagrees that the commission's List will enable ASCs
to unbundle procedures. The commission discouraged unbundling by removing
those suggested procedures, which through NCCI edits were considered as bundled
to a primary surgical procedure. In general, prior to the implementation of
this rule in September 2004, there were no restrictions regarding site of
service and consequently any preauthorized service could be performed in an
ASC. Further review of the commission's medical billing database indicated
these procedures were performed in several settings, including ASCs. This
history suggests that it is unlikely that these procedures will automatically
or inappropriately shift from the doctor's office to the ASC setting. The
amendments continue to allow these procedures to be performed in an ASC; however,
reimbursement is now standardized according to this fee guideline.
Subsection (e)(3)
COMMENT: Commenter recommended the elimination of CMS site of service restrictions
from rule 134.402, to allow physicians to decide where best to treat their
patients and to avoid administrative burden and contentious situations. Such
restrictions in the commission's rule are not within the agency's statutory
authority because it is "not fair and reasonable," and because the agency
does not have the authority to "redirect patient flow." Commenter recommended
allowing any and all procedures to be performed in ASCs. Commenter further
recommended assigning a grouper for procedures without CMS assigned groupers
as follows: "Group 2 - No break in skin (e.g., joint manipulation; or fracture
dislocation reduction); Group 3 - Percutaneous; Group 5 - Open or endoscopic
surgery (e.g., all repair, revision or reconstruction procedures, including
fracture ORIF and dislocation open reductions); Group 4 - All other open or
endoscopic surgery."
RESPONSE: The commission disagrees that CMS site of service restrictions
(Medicare List) should be eliminated, for reasons previously stated in this
preamble. Eliminating Medicare's List is contrary to the standardization and
Medicare methodology requirements of the Act. Additionally, a restrictive
list assures that procedures are performed in settings appropriate to the
complexity of the procedure and the safety of the patient. These minimal modifications
promote consistency within the workers' compensation system, eliminating administrative
burdens and the potential for disputes based on site of service issues - all
of which would be problems associated with the commenters' suggestions. The
commission further disagrees that the sites of service restrictions do not
meet "the statutory requirement of setting fair and reasonable fee guidelines."
The commission clarifies that §413.011(a) states, "to achieve standardization
the commission shall adopt the most current reimbursement methodologies, models
and values, or weights used by the Health Care Financing Administration (now
called CMS) including applicable payment policies relating to coding, billing,
and reporting, and may modify documentation requirements as necessary to meet
the requirements of Section 413.053." Additionally, §413.011(d) states,
"guidelines for medical services fees must be fair and reasonable and designed
to ensure the quality of medical care and to achieve effective medical cost
control...." Adoption of these rule amendments is consistent with these requirements
of the Act. The commission disagrees that commission rules should not re-distribute
or re-direct patient flow from one site to another because re-directing services
between sites is an integral part of the Medicare methodology and is an essential
tool the commission must use to assure services are provided safely and in
appropriate settings and to assure effective medical cost control.
The commission disagrees with commenter's recommendation to provide groupings
for procedures without CMS or commission assigned groups. The commission clarifies
that subsection (e)(3) allows the carrier and ASC to negotiate the reimbursement
amount for procedures without CMS or commission assigned groups. The agreed
upon reimbursement amount could conceivably be based on the alternative groupings
mentioned above.
COMMENT: Commenter recommended that any procedure identified by Medicare
as an office-based procedure, which is billed as the primary procedure in
an ASC, must have prior authorization between the ASC and the insurance carrier,
otherwise it is not billable. The secondary procedure (e.g., nail bed repair
after repairing the smashed finger) would not require preauthorization.
RESPONSE: The commission clarifies that Medicare does not restrict procedures
to an "office only" category. Additionally, by statute §413.014, any
outpatient surgical or ambulatory surgical services, as defined by commission
rule 134.600, must be preauthorized.
COMMENT: Commenters opposed the process outlined in (e)(3) of the proposed
rule for negotiation of procedures not on Medicare's or the commission's Lists.
RESPONSE: The commission disagrees. The negotiation process allows the
health care provider and carrier to reach agreement for special circumstances
not envisioned in the development of the commission's List. This additional
flexibility increases access to care for injured workers when parties agree
to site of service and reimbursement. Nothing in these amendments forces parties
to enter into such an agreement.
COMMENT: Commenters stated the following about the proposed negotiation
process: will further complicate and delay the preauthorization and retrospective
review audit; carrier staff are not trained in the appropriate reimbursement
for ASC services; carrier staff would be put in the position of "second-guessing"
CMS; a facility would need to seek an ASC agreement, and then preauthorization;
and, site of service decision requires an initial determination if the procedure
is medically necessary (normally a preauthorization request does not contain
all of the information needed to make a decision on both issues) compounded
by a three-day timeframe to make the decision. Commenters further stated that
the proposed process would: compromise CMS methodology and standards; could
potentially delay treatment; and, cause more time for carriers to process
requests. Commenter stated that the proposed amendment is not an appropriate
format or methodology to establish the medical necessity of a procedure or
reimbursement rate.
RESPONSE: The commission disagrees that the proposed negotiation process
will complicate and delay preauthorization and retrospective review. The process
is designed to enhance flexibility and encourage communication between health
care providers and carriers when reviewing requests for procedures not on
Medicare's or the commission's Lists. Although not required, system participants
are allowed the flexibility to request, approve, and utilize alternate sites,
as determined to be appropriate, by agreement between the health care provider
and carrier. Further, the commission disagrees that CMS methodology and standards
are compromised. Adoption of these rule amendments maintains the concept of
the Medicare List while allowing deviations from Medicare's and the commission's
Lists when determined to be medically appropriate and financially prudent.
This is consistent with the medical necessity and effective cost control concepts
of the Act, as well as the "minimal modifications" concept in §413.011.
The commission disagrees that the training of carrier staff is a significant
problem since carriers, prior to September 1, 2004, evaluated all ASC services
(including items not on Medicare's or the commission's Lists) and determined
fair and reasonable reimbursement. Since the opportunity for negotiation is
voluntary, the carrier may choose to develop its internal processes and training
to supplement existing procedures based on past experience. Section (e)(3)
provides considerable flexibility on both the timing of, and process for,
negotiation.
COMMENT: Commenter stated that the proposed amendment regarding negotiation
would increase medical disputes and appeals.
RESPONSE: The commission disagrees that the proposed amendment would increase
medical disputes and appeals because negotiated agreements allow reconciliation
of potential disagreements prior to the provision of services. As previously
stated, entering into such agreements are voluntary.
COMMENT: Commenter stated that the proposed amendment regarding negotiation
would increase administrative costs; increase costs to employers, and ultimately
the workers' compensation system.
RESPONSE: The commission disagrees that the process will increase administrative
costs, costs to employers, or the workers' compensation system since medically
necessary services, if not provided in an ASC setting, will be provided in
an alternate office or hospital setting. Any difference in administrative
costs is likely to be minimal and is potentially offset by the ability to
negotiate reimbursement.
COMMENT: Commenters also stated the proposed negotiation process could
potentially cause the migration of procedures performed in a doctor's office,
or in a hospital, to an ASC setting, resulting in overuse of ASC facilities
due to financial incentives, and all without any additional benefits to the
injured worker.
RESPONSE: The commission disagrees that an agreement between the health
care provider, ASC, and carrier that includes the procedure, setting, and
reimbursement will result in inappropriate use of ASC facilities. The purpose
of this adopted amendment is to encourage negotiation and mutual agreement
for medically appropriate and financially prudent decisions, all benefiting
the injured worker. This is consistent with the medical necessity and effective
cost control concepts of the Act.
COMMENT: Commenter disagreed that the proposed negotiation process is a
"minimal modification" in Medicare payment policies and stated it is outside
the commission's rulemaking authority.
RESPONSE: As previously stated, the commission disagrees that allowing
the negotiation of a procedure, setting, and reimbursement as provided in
(e)(3) of the rule proposal, is outside the commission's rulemaking authority.
The statute directs the commission to use health care reimbursement policies
and guidelines that reflect the standardized reimbursement structures found
in other health care delivery systems, including Medicare, with minimal modifications
to those reimbursement methodologies as necessary to meet occupational injury
requirements. The commission has maintained the Medicare methodologies as
the primary framework for ASC reimbursement. The commission does not anticipate
that these agreements will significantly impact the site of service provisions.
Additionally, any agreements reached are anticipated to be consistent with
the medical necessity and effective cost control concepts of the Act.
COMMENT: Commenter recommended the addition of language to offset the additional
time it will take health care providers' staff to get ungrouped procedures
approved and reimbursed. The recommended language is "Prompt payment within
15 days of preauthorized and contracted procedures being performed and billed...."
to be inserted at (e)(3)(B) of the rule.
RESPONSE: The commission disagrees with the recommended language. Section
408.027 of the Act, Payment of Health Care Provider, specifies the applicable
timeframes. However, negotiated agreements could include other specified timeframes
and should be noted in the agreement between the carrier and the ASC, as per
amended rule (e)(3)(B)(ii).
Subsection (e)(4)
COMMENT: Commenters opposed a separate reimbursement for implants, including
some who opposed a separate reimbursement except when Medicare allows a separate
implant payment, because such payments are not necessary to provide injured
workers with reasonable access to quality medical care.
RESPONSE: The commission disagrees that the additional reimbursement for
all surgically implanted devices is unnecessary to maintain or improve access
to care. The amendment providing reimbursement for implantables is a targeted
approach to address situations where the cost of an implantable, by itself,
exceeds the ASC group case rate or the MFG rate allowed in the workers' compensation
system. Assuring sufficient reimbursement for these specific items enhances
access to ASC services for injured workers.
COMMENT: Commenters stated that the Medicare reimbursement rates for ASCs
includes the costs of implantables, and that this was considered by the Texas
Legislature when enacting HB-2600. Commenters stated that the rule amendment
will result in over-reimbursing ASC services and increasing system costs without
any additional benefit to injured workers permitting the ASC to unbundle its
services - a practice forbidden by Medicare payment policies.
RESPONSE: The commission agrees that the Medicare system includes limited
additional reimbursement for implantables. It was generally accepted in the
ASC Focus Group meetings that orthopedic procedures were performed relatively
infrequently in an ASC setting for the Medicare population. The limited Medicare
reimbursement for high-cost, high-tech implantables associated with orthopedic
procedures was cited as a primary reason for this suppressed utilization.
The information provided by some of the ASC Focus Group members highlighted
the high cost of surgically implanted devices due to technology advances and
medical cost inflation. As previously stated, the reimbursement for implantables
is a targeted approach to address situations where the cost of an implantable,
by itself, exceeds the ASC group case rate or the MFG rate allowed in the
workers' compensation system. Assuring sufficient reimbursement so that the
ASC's cost of providing services involving these specific items is covered
will enhance access to ASC services, which benefits injured workers. Consequently,
the commission disagrees that this amendment will result in an over-reimbursement
for an otherwise bundled or separately reimbursed item to ASCs for those orthopedic
procedures involving surgically implanted devices.
COMMENT: Commenters stated that ASC fees set at 213.3% of Medicare plus
a separate reimbursement for all implants would raise ASC fees above hospital
inpatient fees for the same surgeries.
RESPONSE: The commission disagrees that separate reimbursement for implantables
would necessarily reimburse more than hospital inpatient reimbursement for
the same surgeries. Both hospital inpatient and ASC settings will now reimburse
surgically implanted devices based on a "invoice cost" methodology. The hospital
surgical per diem of $1,118 is not directly comparable to an ASC group rate.
Overall, a two-day inpatient surgical stay (per diem with invoice cost plus
10% of implantables) is very similar to reimbursement in an ASC (when compared
to the ASC Group 9 most expensive case rate with invoice cost of implantables).
In general, in this comparison, services in groups 1 through 8 would likely
be reimbursed less than a two-day inpatient surgical stay.
COMMENT: Commenter stated that logic used by the commission to arrive at
this figure for implantable reimbursement is flawed and based on the commission's
Rule 134.401, concerning Acute Care Inpatient Hospital Fee Guideline. Commenter
summarized that rule's adoption preamble (22 TexReg 6268-69, July 4, 1997)
included the percentage of billed charges approach in determining fees is
ineffective; explained that the percent of billed charges does not achieve
effective cost control because each hospital determines its own charges and
can raise them far above costs, inflation, or what other payers pay. Further,
hospital charges are not a valid indicator of a hospital's costs, and if reimbursement
levels are based on a percentage of billed charges, a hospital or ASC can
independently affect its reimbursement without its costs being verified.
RESPONSE: The commission disagrees and clarifies that billed charges are
not a component of the adopted reimbursement methodologies for §134.402,
Ambulatory Surgical Center Fee Guideline. The implant reimbursement is based
on cost, certified by the ASC and subject to insurance carrier or commission
verification and audit.
COMMENT: Commenter did not support the proposed "prosthetic device" reimbursement
methodology, stating it is inconsistent with the requirements of Labor Code §413.011.
Commenter said that continuing to reimburse ASCs for prosthetic devices under
the provisions of §134.202 would provide a consistent reimbursement structure
for such devices.
RESPONSE: The commission disagrees that the reimbursement methodology is
inconsistent with §413.011 of the Act because the amended rule establishes
fair and reasonable reimbursement based on Medicare methodologies to assure
access to quality health care and enhance effective medical cost control.
Subsequent to the original adoption of this rule, information was submitted
to the commission which included cost information and taken with information
previously submitted, led the commission to believe that there were some inadequacies
regarding separately reimbursed devices under the provisions of §134.202.
The commission disagrees that continuing to utilize the §134.202 methodology
for surgically implanted devices in ASCs is appropriate. The amended rule
enhances consistency of reimbursement for surgically implanted devices by
implementing a cost-based reimbursement, similar to the inpatient hospital
methodology.
COMMENT: Commenter opined that the methodology change from a fee schedule
for separately reimbursed surgically implanted devices to an "actual cost-driven"
methodology will increase costs incrementally because some items are currently
being reimbursed in the system at 125% (DMEPOS) fee schedule.
RESPONSE: The commission agrees that a change in reimbursement methodologies
will result in additional reimbursement for surgically implanted devices.
As previously stated, this change was necessary as a targeted approach to
address situations where the cost of an implantable, by itself, exceeds the
ASC group case rate or the MFG rate allowed in the workers' compensation system.
Assuring sufficient reimbursement so that the ASC's cost of these specific
items is covered will enhance access to ASC services, which benefits injured
workers. Subsequent to the original adoption of this rule, information was
submitted to the commission which included cost information and taken with
information previously submitted, led the commission to believe that there
were some inadequacies regarding separately reimbursed devices under the provisions
of §134.202.
COMMENT: Commenter stated that under the proposed amendments, costs will
increase since certain implantables, (i.e., pins, rods, screws, and plates),
which were previously reimbursed as part of the group case rate will now be
reimbursed separately at the lesser of the manufacturer's invoice amount or
the net amount. Commenter stated that a separate reimbursement of cost or
cost plus payment is inconsistent with effective medical cost control, inconsistent
with the requirements of the Act, and constitutes a major change in Medicare
payment policy of paying 125% of the Medicare DMEPOS Fee Schedule only for
selected implants.
RESPONSE: The commission disagrees with commenters' assertions for reasons
previously stated concerning the targeted approach to amending reimbursements
for surgically implanted devices. The commission disagrees that the amended
reimbursement methodology is inconsistent with effective medical cost control,
and other requirements of the Act. The amended methodology impacts only surgically
implanted devices. Without a change in reimbursement methodology, these cases
could potentially be diverted to more costly settings, and if provided in
a hospital setting, would likely be paid at a cost plus 10% basis, which is
more than the amended methodology. The commission further disagrees that the
change in methodology is a major change in Medicare payment policy of paying
125% of the Medicare DMEPOS Fee Schedule. The amendments better establish
consistency of reimbursement for surgically implanted devices between the
hospital and ASC settings. Subsequent to the original adoption of this rule,
information was submitted to the commission which included cost information
and taken with information previously submitted, led the commission to believe
that there were some inadequacies regarding separately reimbursed devices
under the provisions of §134.202.
COMMENT: Commenter stated that allowing an ASC to obtain payment for whatever
cost it incurs for an implant: removes any incentive for the ASC to negotiate
for lower costs; creates an environment of fraud and abuse; and creates an
opportunity for suppliers to inflate costs of implants in a way audits may
not detect.
RESPONSE: The commission disagrees that the amended rule relating to reimbursement
of surgically implanted devices removes incentives for an ASC to negotiate
lower costs. Such negotiations for lower cost expenditures are a common business
practice that ASCs are likely to integrate into all aspects of their procurement
process. The commission disagrees that the amended provisions will create
an environment of fraud and abuse or an opportunity for suppliers to inflate
costs. ASCs are required by commission rule 134.600 to obtain preauthorization
approval for procedures and services performed in an ASC, including surgically
implanted devices to be included as a component of certain requested surgical
procedures. To further establish effective medical cost control and deter
fraud, the commission additionally, through this amended rule, requires an
ASC to certify that the amount of the surgically implanted device(s) represents
the ASC's actual cost (net amount, exclusive of rebates and discounts). The
certification is subject to verification and audit by the insurance carrier
or the commission.
COMMENT: Commenters were pleased with proposed implant reimbursement and
the addition of non-covered codes, and stated it is a step in the right direction
and an improvement over the current guideline.
RESPONSE: The commission agrees that the adopted amendments regarding reimbursement
for surgically implanted devices and the addition of commission-approved codes
is an appropriate modification of the rule, given information submitted to
the commission since the original rule 134.402 was adopted.
COMMENT: Commenters recommend that surgically implanted devices and supplies
be reimbursed at a "reasonable amount" that includes case processing, accounting,
collections, and cost of capital. Commenter defined "case processing" as the
clerical, procedural steps in ordering and acquiring a device for an implant,
including: obtaining preauthorization; the pricing for the facility's charge
master; the staff time of a nurse or physician spent in ordering the device;
costs associated with shipping, handling and for the expense of returning
excess inventory if incurred; and staff time managing the inventory of devices.
Commenter described "accounting" as staff time spent processing Accounts Paid
and Accounts Receivable that are associated with the purchase of, and payment
for, the devices. Commenter stated that staff time must be spent on performing
follow-up work with carriers to receive payment for devices. Commenter defined
"cost of capital" as the management of inventory in order to keep adequate
supplies available for physicians, which commenter says can be a considerable
cost. Commenter continued that this cost is a function of both the purchase
price of the device and the amount of waiting time required for the "high-tech"
device to be paid for by a carrier.
RESPONSE: The commission disagrees with commenters' recommendation to include
additional factors in determining the reimbursement for surgically implanted
devices and supplies. Setting the Medicare ASC group case rate at 213.3% and
reimbursing the purchase price of the device is adequate to compensate for
case processing, accounting, collections, and cost of capital. This fee guideline
requires that provider billing must include a certification statement that
the amount sought represents its actual costs (net amount, exclusive of rebates
and discounts). This information should facilitate the billing process by
providing cost information with the original billing. Consequently, processing
times should improve, and confusion related to implant costs should decrease,
which should additionally decrease the opportunity for disputes.
COMMENT: Commenter recommended reimbursement at cost plus 10%, with an
upper limit of at least $750-$1,000 per invoiced item to account for the true
acquisition costs of higher cost devices.
RESPONSE: The commission disagrees with the commenters' recommended reimbursement
of cost plus 10% with an upper limit of at least $750-$1,000 per invoiced
item. Setting the Medicare ASC group case rate at 213.3%, and reimbursing
the actual cost of the device is adequate to compensate for acquisition cost
because administrative and acquisition costs are included in the case rate.
COMMENT: Commenters recommended surgically implanted devices and supplies
(SIDS) be reimbursed at cost plus 25% to cover the expense of shipping, ordering,
stocking and maintaining items for an indeterminate amount of time in inventory.
ASCs are the only medical venue not allowed to cover some of these additional
costs.
RESPONSE: The commission disagrees with the commenters' recommended reimbursement
of cost plus 25%. As previously stated, setting the Medicare ASC group case
rate at 213.3% and reimbursing the actual cost of the device is adequate to
compensate for the expense of shipping, ordering, stocking and maintaining
items for an indeterminate amount of time in inventory.
COMMENT: Commenter recommended a specific language change to state, "or
other device suppliers," and "all bills for such devices" to permit other
suppliers of devices that may perform purchasing and billing services on behalf
of ASCs to be reimbursed for those devices.
RESPONSE: The commission disagrees that other device suppliers should be
allowed to bill the carrier for surgically implanted devices. Addition of
this language would add complexity to the billing and reimbursement process,
would be difficult to administer, and would not be standardized throughout
the industry. Adding complexity would likely lead to increased auditing requirements
resulting in delayed payments and potentially increase disputes. In addition,
the Act limits the definition of health care provider, which precludes recommended
language addition in this rule.
COMMENT: Commenter recommended a revision to add language, "Extraordinary
Supplies greater than $100" due to the high costs of implants and other "extraordinary"
supplies that should be recognized by the commission as a financial burden,
and in order to ensure a process for reimbursement of these costs. All items
can be processed in a manner in which invoices can be attached as verification
of costs and reimbursed accordingly.
RESPONSE: The commission disagrees. Surgically implanted devices were specifically
identified as a potential cost barrier for ASC provision of certain orthopedic
cases, often with costs exceeding the group rate. "Supplies" were not identified
in ASC Focus Group meetings as a cost driver or barrier. Setting the Medicare
ASC group case rate at 213.3% is adequate to compensate for ASC supply costs.
Subsection (f)
COMMENT: Commenter opposed an ASC covering the costs associated with an
audit initiated by an insurance carrier for implant billing and recommends
that insurance carriers should pay for audits unless the ASC is proven fraudulent.
RESPONSE: The commission disagrees that reimbursement for health care provider
audit costs should be addressed in this rule. As noted in the adopted rule,
requirements for carrier on-site audits are addressed in §133.302 and §133.303,
which are not open for comment in this rulemaking action.
COMMENT: Commenter is opposed to insurance carriers auditing the books
of ASCs to determine if the billing reflects the true net cost of implants,
and stated the audit potentially costs more than the amount recoverable.
RESPONSE: The commission disagrees that carriers should not be allowed
audit authority. The ability to audit is an important check and balance feature
related to reimbursement of the invoice cost. The audit allows the carrier
to verify the actual cost of an item and auditing assists the commission in
the statutory requirements related to effective medical cost control. Additionally,
members of the ASC Focus Group agreed that auditing was an acceptable trade
off when combined with additional reimbursement.
COMMENT: Commenter stated proposal creates an environment for fraud and
abuse, allows an opportunity for inflated implant costs, (e.g., creative accounting/pricing),
and has a potential for resulting kickbacks. An audit would not detect these
discrepancies, and is of no overall benefit to the injured worker.
RESPONSE: The commission disagrees that the ability to audit implant costs
is of no value to the workers' compensation system and therefore, the injured
worker. As previously stated, the audit provisions are an important check
and balance feature of the workers' compensation system. Although it is unlikely
that audits will expose every instance of fraud, abuse, or "creative" accounting/pricing,
audits are a valuable component to ensure system compliance with commission
statute and rules.
General
COMMENT: Commenter supported the commission's decision to make amendments
to the rule.
RESPONSE: The commission agrees that the adopted amendments are an appropriate
modification of the rule.
COMMENT: Commenters opposed the proposed rule and recommended its withdrawal.
Commenters stated the proposed rule will result in unnecessary and inappropriate
additional medical costs; will not increase access to quality care or improve
injured workers access to outpatient surgery services; will lead to more medical
disputes and appeals to SOAH which will cause substantial expenses for the
commission and the system, and is of no benefit to carriers or employers.
RESPONSE: The commission disagrees with the recommendation to withdraw
the rule because the adopted amendments are an appropriate modification of
the rule. The commission disagrees that the adopted rule will result in unnecessary
and inappropriate additional medical costs. The extensive analysis provided
by Ingenix indicated that the PAF is well within the range of commercial reimbursement
levels for ASCs. There is no indication that there are issues of access to
quality medical care within the ASC commercial market. The commission disagrees
that the rule amendments do not increase injured workers access to outpatient
surgery services, both hospital outpatient and ASC services. Improving the
overall reimbursement for ASCs with regard to implantables increases the economic
viability of procedures requiring those implantables and as such increases
access and availability. The commission disagrees that rule amendments will
lead to more medical disputes and appeals to SOAH and clarifies that with
consistency in the reimbursement methodology, the number of fee disputes should
ultimately decrease. The commission is confident that this rule amendment
will ultimately reduce the number of disputes requests and any associated
appeals of commission decisions to the SOAH level. With the established fee
guideline, amended as described in this preamble, reimbursement for all system
participants should be predictable and consistent. Rule 134.402, with these
amendments, balance all relevant factors under the Act. The commission anticipates
that aggregate medical costs will decrease in the system and there will be
fewer ASC dispute requests and decreased probability of ongoing or new litigation
associated with ASC services. The commission disagrees that the rule amendments
are of no benefit to carriers or employers. For reasons previously stated
throughout this preamble, appropriate reimbursement improves the workers'
compensation system and ultimately benefits all system participants.
COMMENT Commenters expressed concern that amendments were proposed in response
to complaints from several physician-owned ASCs that are not satisfied with
the current reimbursement rate and lobbied their legislators and the commission
for further payment increases. Commenter stated that proposal is a windfall
for ASCs, implant suppliers, and surgeons at the expense of injured workers
and employers. Commenters stated that it is a display of bad judgment and
distorted priorities for the commission to respond to these "squeaky wheels"
and devote its limited time, staff resources, and rulemaking process to respond
to the greed of a small number of health care providers.
RESPONSE: The commission clarifies that the existing rule was initially
reviewed as a response to ASC stakeholder concerns. The commission reviewed
those concerns and formed an ASC Focus Group comprised of ASCs, carriers,
implant device manufacturer, and employer. The commission carefully considered
the ASC Focus Group input regarding ASC issues with specific focus on Medicare's
List of approved procedures and reimbursement for surgically implanted devices.
These rule amendments reflect input from the ASC Focus Group, stakeholders
and public commenters to establish the most appropriate reimbursement to facilitate
access to quality ASC care while still adhering to the statutory mandate for
cost control. The commission disagrees that the rule amendment is a windfall
for ASCs, implant suppliers, and surgeons at the expense of injured workers
and employers. Although reimbursement to ASCs will increase as a result of
these amendments, the added reimbursement of implantables is consistent with
the cost plus reimbursement provided in the hospital inpatient setting. Assuring
sufficient reimbursement enhances access to ASC services, which benefits injured
workers. The commission disagrees that the rulemaking activity was an ineffective
use of staff time for an inappropriate purpose, for reasons stated throughout
this preamble.
COMMENT: Commenters sought clarification as to what sort of "stability"
was referenced in the proposal preamble, which stated, "insurance carriers
will benefit from the amended rule as proposed with new commission approved
procedures and assigned groupings, which lends certainty and 'stability' to
the system." Commenters stated no facts or analysis were included in the proposal
preamble that showed ASCs are currently financially unstable as a result of
being paid 213.3% of Medicare rates for treating injured workers. Commenters
further stated that unsubstantiated assertions by ASC owners do not constitute
credible evidence of a reasoned justification.
RESPONSE: The commission clarifies the term stability referenced in the
proposal preamble was used in the context of describing the proposed rule
amendments as a process of continuing and augmenting the ASC Fee Guideline,
adopted and implemented September 1, 2004, when previously there was none.
As previously discussed, stability and standardization through the implementation
of this guideline promotes consistency within the workers' compensation system.
COMMENT: Commenters stated that the amended rule proposal is inconsistent
with the statutory authority of §413.011(d) because it would result in
an ASC receiving a fee in excess of the fee charged for similar treatment
of an injured individual of an equivalent standard of living (i.e., a Medicare
patient) and paid by that individual or by someone acting on that individual's
behalf.
RESPONSE: The commission disagrees that the adopted amendments would allow
an ASC to receive a fee in excess of the fee charged for similar treatment
of an injured individual of an equivalent standard of living, and disagrees
that the amendments are inconsistent with the statutory authority of §413.011(d).
The cap on workers' compensation fees is addressed in the statutory requirement
that workers' compensation not pay in excess of what is paid on behalf of
patients from populations with equivalent standards of living, except and
to the extent that special features of workers' compensation require higher
fees. It therefore permits consideration of any special features of workers'
compensation and what additional payment, if any, they warrant. For example,
the statutory requirement to take account of the increased security of workers'
compensation payment permits consideration of what offsetting reductions in
payments, compared with other payer systems that do not pay 100%, is warranted.
Within these limits, the commission must consider how payments may be set
to control medical costs without lowering the access to quality of medical
care to injured workers that would affect quality care. The commission has
determined these amendments meet the statutory standards.
COMMENT: Commenters argued that in accordance with §413.011(b), no
reasoned justification was provided in the proposal preamble to prove: that
the economic indicator (i.e., injured workers' access to quality health care)
was necessary for this fee guideline to pay more than Medicare; that occupational
injuries required these modifications; and failed to prove the full impact
assessments of the proposed rule.
RESPONSE: The commission disagrees that the commission has not previously
provided reasoned justifications as to why the economic indicator of injured
workers' access to quality care was necessary for this fee guideline to pay
more than Medicare, that occupational injuries required these modifications,
and the assertion that the commission has failed to prove the full impact
assessments of the rule. As previously stated and also addressed in the adoption
preamble of April 2004 (28 TexReg 4191), the adopted PAF is the result of
careful analysis by Ingenix and consideration by the commission. The commission
considered the requirement of the Act in adopting the PAF by thoroughly analyzing
Medicare reimbursement and commercial reimbursement for ASCs. This included
both the reimbursement rates and market share. These factors combined allowed
Ingenix to provide the commission with an appropriate range of PAFs. The PAF
itself is well within the range of reimbursement accepted by ASCs in the commercial
market. Additionally, the PAF was well within the estimated range of payments
previously paid (i.e., prior to rule implementation) within the Texas workers'
compensation system.
The commission clarifies that access to care for occupational injuries
requires these rule amendments. The amendments increase flexibility for system
participants and promote provision of services that ultimately lowers costs
to the system and system participants. Improving the economic viability of
providing certain procedures in an ASC setting by definition improves access
to care balanced with cost control.
With regard to the alleged failed proof of the proposed rules' full impact,
the commission anticipates that aggregate medical costs will decrease in the
system with fewer ASC dispute requests, that there will be decreased probability
of on-going or new litigation associated with ASC services, and that appropriate
reimbursement improves the workers' compensation system and benefits all system
participants, as discussed throughout this preamble.
COMMENT: Commenters opposed the amended rule as proposed for reasons that
it exceeds the Act under §413.011(a), which provides for health care
reimbursement policies and guidelines that reflect the standardized reimbursement
structures found in other health care delivery systems, including Medicare,
with minimal modifications to those reimbursement methodologies as necessary
to meet occupational injury requirements. Commenters further stated that the
proposed rule makes major modifications, rather than minimal modifications,
to these payment policies that significantly increase medical costs to the
system.
RESPONSE: The commission disagrees that the rule amendments exceed the
Act under §413.011(a). The supplements to Medicare's List in paragraphs
(2), (3), and (4) of subsection (e) of the proposed rule constitute what the
commission considers "minimal modifications to those reimbursement methodologies
as necessary to meet occupational injury requirements." These modifications
increase flexibility for system participants and promote provision of services
in a setting that ultimately lowers costs to the system and system participants,
therefore enhancing the cost containment efforts of the commission to meet
the requirements of the Act. This is especially important considering the
documented high medical cost per claim in the Texas workers' compensation
system, which also was outlined in the commission's previous April 2004 adoption
preamble of §134.402, and the December proposal preamble of §134.402.
Improving the economic viability of providing certain procedures in an ASC
setting by definition improves access to care balanced with cost control.
Thus the commission has maintained the statutory requirement to use health
care policies and guidelines that reflect the standardized reimbursement structures
found in other health care delivery systems, including Medicare, with minimal
modifications to those reimbursement methodologies as necessary to meet occupational
injury requirements.
COMMENT: Commenter sought clarification as to what "fair and reasonable"
rates are, and if there are fair and reasonable guidelines.
RESPONSE: The commission clarifies that the terminology "fair and reasonable"
is contained within the Act, §413.011(d) and refers to the statutory
requirement of the commission to ensure all fee guidelines are fair and reasonable.
COMMENT: Commenter was concerned that the commission found, in the 1997
Hospital Fee Guideline and in a number of other contexts, that payments based
on a percentage of billed charges cannot achieve effective cost control because
the amount of the billed charges is entirely within the control of the health
care provider. Commenter stated that by basing the 213.3% of Medicare plus
an implant reimbursement on payment made by commercial payers based on the
percentage-of-billed-charges method, Ingenix has essentially recommended an
ASC fee payment based on the percentage-of-billed-charges method.
RESPONSE: The commission disagrees. As previously stated, billed charges
are not a component of the adopted reimbursement methodology for §134.402,
Ambulatory Surgical Center Fee Guideline. The guideline bases the MAR calculation
on the Medicare prospectively determined group case rate, not on billed charges
from the ASC. Additionally, reimbursement associated with surgically implanted
devices according to subsection (e)(4) is based on the actual certified cost
paid by the ASC to the manufacturer, not on the ASC billed charges.
COMMENT: Commenter stated the costs to the system will be even more substantial
than reflected in the fiscal note of the proposal preamble. Commenter expressed
concern with the proposal preamble statement that the commission expects there
to be a 8.7 to 13.5 million dollar cost increase per year once the proposed
amendments are adopted, when actually it would be a lot more because some
of the less honest ASCs and doctors will try to "game the system" when the
proposed CPT codes are added.
RESPONSE: The commission clarifies that the estimated increases are a reasonable
projection based on the information available to the commission. The commission
agrees that providers' business models, in general attempt to maximize reimbursement.
The commission's Compliance and Practices Division, its Fraud Unit, and the
carrier's audit opportunities provide a means to minimize fraud and abuse
in the Texas workers' compensation system.
The following comments are a listing of other issues raised by commenters.
Because the PAF has not changed since the rule was originally adopted, these
comments are beyond the scope of this rulemaking action and do not require
a new, separate response under the Administrative Procedures Act. The reasons
for selection of the particular PAF were explained thoroughly in the adoption
preamble to the original rule (see 28 TexReg 4191, April 30, 2004). Subsequent
to the adoption of that rule, information was submitted to the commission,
which in the aggregate, taken with information previously submitted during
the original rulemaking process, led the commission to believe that there
were some inadequacies regarding reimbursements to ASCs that needed to be
addressed. Stakeholder and Focus Group meetings were held and extensive discussions
were conducted on these issues. The commission requested additional information
from concerned entities. After careful analysis of available data, amendments
to the rule were proposed and comments on that proposal were given full consideration.
These amendments are the result of that process. The commission has determined,
for all the reasons given elsewhere in this preamble that these amendments
provide for appropriate compensation to ASCs in the Texas workers' compensation
system. However, to assist persons in understanding the actions that led to
the rule as it was originally adopted in April 2004, the commission has chosen
to respond to the individual comments.
COMMENT: Commenters opposed the rule amendments and stated the most "glaring"
problem with the proposed rule changes is the failure to address the payment
adjustment factor (PAF). Commenters stated that the proposed modification
will not allow adequate payment, would not cover ASC costs, and that injured
workers would suffer.
RESPONSE: The commission disagrees that the PAF is inappropriate and should
be addressed in the amended rule. The rationale for the PAF was outlined extensively
in the §134.402 Adoption Preamble. The adopted PAF is the result of careful
analysis by Ingenix and consideration by the commission. The commission considered
the requirements of the Act in adopting the PAF by thoroughly analyzing Medicare
reimbursement and commercial reimbursement for ambulatory surgery center services.
This included both the reimbursement rates and market share. These factors
combined allowed Ingenix to provide the commission with an appropriate range
of PAFs. The PAF is well within the range of reimbursements accepted by ambulatory
surgery centers in the commercial market. Additionally, the PAF is within
the estimated range of payments currently made within the Texas workers' compensation
system.
The commission disagrees that the PAF does not cover ASC costs. The commission
has received no independent cost data to determine actual costs in Texas ASCs.
Unlike hospitals, ASCs do not publicly report operating expenses and revenues.
Additionally, any cost information provided by an ASC is unique to that facility,
and not necessarily indicative of the cost structure or profitability of any
other ASC facility. Without this cost-based information, the commission has
relied on Ingenix's expertise in analyzing market reimbursement, and the commission
has set reimbursement within the range recommended by Ingenix. The commission
disagrees that the injured worker would suffer as a result of the PAF. The
commission has maintained the 213.3% PAF and made other minimal modifications
which increase reimbursement in an effort to assure sufficient reimbursement
for ASC services and to enhance access to ASCs which benefits injured workers.
COMMENT: Commenter stated of the three places services can be performed,
the ASC is the least expensive. Commenters opposed the low reimbursement rate
and stated it was a "determination" against ASCs, and the first step to ensure
that ASCs would not be able to compete with hospital outpatient departments.
Commenter stated the commission does not monitor and/or hold hospitals accountable
for costs.
RESPONSE: The commission agrees that the ASC should be the least intense
venue for facility reimbursement and all health care providers should be reimbursed
commensurate with actual costs based on resource consumption. Unlike hospitals,
ASCs do not publicly report operating expenses and revenues. Cost information
provided by an ASC is unique to that facility, and not necessarily indicative
of the cost structure or profitability of any other ASC facility. Lacking
independent cost data to determine actual costs in Texas ASCs, the commission
has relied on market-based reimbursement to establish the PAF. The commission
disagrees that the PAF will make ASCs non-competitive with hospital outpatient
departments. For reasons previously stated, the Ingenix report indicated that
the adopted PAF was well within the range of commercial reimbursement accepted
by ASCs.
The commission disagrees that hospitals are not accountable for costs.
The commission has adopted §134.401, which regulates reimbursement for
inpatient hospital services. The commission has not yet adopted hospital outpatient
fee guidelines. Ingenix estimated 2002 hospital outpatient reimbursement in
the workers' compensation system at approximately 150% of Medicare reimbursement,
which was significantly less than the estimated ASC reimbursement in 2002
at 320% of Medicare. This indicated a greater need to address ASC reimbursement
than hospital outpatient reimbursement.
It should also be noted that sometimes a procedure may be most cost-effectively
performed in a doctor's office (when it is medically appropriate to do so),
and this is something the commission considered in adopting these amendments.
COMMENT: Commenter stated their ASC workers' compensation business had
declined 12% since September 1, 2004, the date of this rule's implementation,
and assumed the decline was due to cases being shifted to a more expensive
setting (i.e., hospital outpatient departments) than an ASC. In addition,
commenter stated that 20% of procedures by volume performed on workers' compensation
patients are not currently reimbursed under the existing rule.
RESPONSE: The commission recognizes that business models may change as
the result of implementation of new reimbursement methodologies. The commission
has not received enough data to validate the commenter's assertion of a systemic
decline in services provided in ASCs. However, since some services provided
by ASCs prior to September 1, 2004, are not on Medicare's List, a decline
in services is likely and appropriate. Additionally, there is no information
to indicate the change of setting for those services. It should also be noted
that sometimes a procedure may be most cost-effectively performed in a doctor's
office (when it is medically appropriate to do so), and this is something
the commission considered in adopting these amendments. Consequently, the
commission cannot evaluate the commenter's assertion of movement to a more
expensive setting.
COMMENT: Commenters stated the ASCFG is being revisited less than seven
months after it was adopted and at a time when the commission has failed to
complete "more important" rulemaking tasks it was given by the Legislature
in 2001 and earlier.
RESPONSE: The commission disagrees that the rulemaking activity was an
ineffective use of staff time for an inappropriate purpose, for reasons stated
throughout this preamble.
COMMENT: Commenter recommended withdrawal of the proposed rule and that
a new rule be proposed that establishes reimbursement at 100% of Medicare
Hospital Outpatient Prospective Payment System (HOPPS) for ASCs and Hospital
Outpatient. According to the commenter, this would comply with statutory requirements
and fill "major gaps" in fee guidelines; and facility fees would be reimbursed
for only those procedures Medicare authorizes ASCs to perform. Commenter stated
this would be preferable to the proposed rule because there is no urgent need
to amend the current rule, as there is no documented problem with injured
workers' access to outpatient surgery facilities. Commenter also stated that
by adopting HOPPS: ASCs and hospital will both be reimbursed equally for providing
the same service which increases the fairness and reasonableness of the payment
system; would not create a change in ASC billing practices; and, software
to determine the payment due under the suggested methodology is available
and easily obtained. Commenter states that HOPPS has been implemented with
little difficulty and contains 808 APCs, making it much more precise in differentiating
between procedures in the payment due than is the Medicare ASC payment mechanism.
RESPONSE: The commission disagrees because the statute requires the use
of the most current Medicare reimbursement methodologies. The ASC group reimbursement
methodology is the most current Medicare payment methodology for ASCs. The
HOPPS system is not currently designed for ASC use and is not consistent with
statutory requirements.
COMMENT: Commenters recommended the PAF be established at the highest level
the commission is empowered to do so, which is the upper end (250% - 290%
of Medicare) of the Ingenix range, (213% - 290% of Medicare). Commenter stated
this would enable ASCs to cover their costs and remain in the workers' compensation
system, which would result in quality providers reentering the workers' compensation
system, thereby improving access to quality care.
RESPONSE: The commission disagrees with commenters' recommendation, as
the PAF itself was not a proposed amendment to this rule. Nevertheless, the
commission addressed this concern in the adoption preamble of April 2004 (28
TexReg 4191) and the adopted PAF is the result of careful analysis by Ingenix
and consideration by the commission.
COMMENT: Commenters recommended use of Medicare rates as the benchmark
for ASC fees, just as it did for the MFG, rather than using the methodology
employed by Ingenix. Commenters stated the Medicare ASC fees meet the statutory
criteria for workers' compensation fees for the same reasons that the Medicare
professional fees meet those statutory criteria. Those reasons as provided
by commenters included: March 2003 MedPAC reports indicate fees are high enough
to be fair and reasonable and the number of ASCs providing services in the
Medicare system has increased since the current Medicare ASC fee schedule
was adopted; health care providers voluntarily choose to accept Medicare fee
levels; Medicare fees ensure access to quality care as studies show the majority
of health care providers accept Medicare payment levels; Medicare fees achieve
effective medical cost control because they are the lowest in common use for
a population with an equivalent standard of living; and the security of payment
afforded by the workers' compensation system is greater than Medicare's because
the workers' compensation system pays 100% of the appropriate reimbursement
amount, while Medicare pays only 80%.
RESPONSE: The commission disagrees with commenters' recommendation, as
the PAF itself was not a proposed amendment to this rule. Nevertheless, the
commission addressed this concern in the adoption preamble of April 2004 (28
TexReg 4191) and the adopted PAF is the result of careful analysis by Ingenix
and consideration by the commission.
COMMENT: Commenter was concerned that the administrative expense factors
that supported a 125% conversion factor (CF) in the 2002 MFG adoption preamble
support a much smaller CF (i.e., PAF) for ASC fees for several reasons: (1)
additional reports and administrative functions required when treating workers'
compensation patients create increased administrative costs for professionals,
but is not the case for ASCs who are not required to file any reports beyond
those required for Medicare; (2) additional training requirements for professionals
practicing in the workers' compensation system caused some additional administrative
expenses, but is not the case for ASCs as they are not required to receive
any additional training to participate in the workers' compensation system;
(3) the commission's claim that there will be reduced medical fee disputes
as a result of this rule implementation; and (4) lack of electronic billing
and payment increases administrative costs of workers' compensation as opposed
to Medicare, but the commission previously stated that increased security
of payment in the workers' compensation system offsets any additional costs.
RESPONSE: The commission clarifies that differing methodologies were used
for the commission's rule 134.202, the 2002 Medical Fee Guideline (MFG), and
this adopted rule. As previously stated in the initial rule 134.402 adoption
preamble, the adopted PAF multiplier for ASCs is considerably higher than
the 125% multiplier provided in the MFG, which covers reimbursement of professional
medical services provided within the Texas workers' compensation system. There
are several reasons for this. Unlike professional medical services, whose
cost inputs are continuously updated by CMS, Medicare has not significantly
revised ASC cost inputs since 1994. Moreover, the percentage of Medicare patients
who receive ASC services (surgeries) is significantly less than the percentage
of Medicare patients who receive professional medical services (typically,
physician services). Medicare reimbursements for professional medical services
are generally within the range of payments made by commercial payers; however,
Medicare reimbursements for ASC services are well below the range of payments
made by most commercial payers for those services. The methodology used by
Ingenix in developing its recommendation stands alone and is not dependent
on the methodologies used in previous reimbursement guidelines. The Medicare
rate is the benchmark on which the reimbursement rate is built, but is neither
a ceiling nor a floor. Development of the PAF is a balance of all the components
of the Act. Thus, while the resulting multipliers are different in the two
contexts, they are consistent with one another to the extent that the PAF
adopted by the commission in each context is at the low end of the range of
reimbursement provided within the commercial market.
COMMENT: Commenters were concerned that the reasons and explanations for
rejecting the MFG methodology were flawed when provided by the commission
in the April 2004 adoption preamble of §134.402. Commenters further provided
varying thoughts for these concerns, including: (1) Medicare's failure to
update 1994 cost data does not support setting ASC fees at 213.3% of Medicare
fees plus a reimbursement for implants, when a recent study shows that Medicare
ASC fees are not too low, and may be too high. (2) The fact that more Medicare
patients receive professional services than ASC services does not distinguish
Medicare from workers' compensation. (3) ASC fees based on fees paid by commercial
payers fail to achieve effective cost control. (4) The methodology used to
set the ASC fees are factually wrong and logically flawed because the Ingenix
methodology ignores other states' workers compensation ASC fee schedules,
some of which are at much lower percentages of Medicare ASC fees. (5) The
Ingenix methodology relies, in effect, solely on commercial insurers' ASC
payments. But commercial insurers are not required, as the commission is required,
to achieve effective medical cost control. They do not have to achieve cost
control because, unlike the commission, they can and do expect the higher
costs to be passed on to employers and employees. (6) Ingenix excluded indemnity
payer types when calculating averages, thereby lowering their reimbursement
recommended range. (7) Commenter stated that according to a new national survey
by Mercer Human Resources Consulting, employers' costs are rising by double
digits, forcing employers to shift costs to employees. ["Shifting Burden Helps
Employers Cut Health Costs," The Wall Street Journal (Dec. 8, 2003)]
RESPONSE: The commission disagrees that the rationale used in developing
the ASC PAF is flawed. The methodology used by Ingenix to develop their recommendation
stands alone and is not dependent on the methodologies used in previous reimbursement
guidelines. The Medicare rate is the reference point from which the reimbursement
rate is built, but is neither a ceiling nor a floor. Development of the PAF
is a balance of all the components of the Act.
The commission disagrees with commenters' concerns. The adopted PAF is
the result of careful analysis by Ingenix, which confirmed a significant misalignment
of ASC reimbursement in the Texas workers' compensation system. The adopted
PAF is the lower limit of the extended range of acceptable fair and reasonable
reimbursements included in the Ingenix report and reflects the commission's
statutory responsibility related to effective medical cost control and fair
and reasonable reimbursement. The adopted PAF remains in the range of commercial
reimbursement. Ingenix estimated that 2004 ASC reimbursement under current
commission rules (requiring fair and reasonable reimbursement) equals approximately
320% of 2004 Medicare reimbursement. Additionally, this review estimated commercial
(HMO/PPO/POS/Indemnity) payer reimbursement equal to a range of 168% to 564%.
This commercial range produces a weighted average of approximately 274% (not
including indemnity plans) to 293% (including indemnity plans) of Medicare
reimbursement. With Medicare added to the commercial market, the weighted
average for ASC services trended to 2004 is 237% (not including indemnity
plans) to 264% (including indemnity plans) of Medicare reimbursement. This
identified range (237% - 264%) is extended in the Ingenix report to 213.3%
- 290.4% to recognize the potential for the commission to place special emphasis
on the requirements of the Act. The adopted rate is well within the range
of commercial reimbursements at which ASCs provide services.
The Ingenix analysis thoroughly analyzed Medicare reimbursement and commercial
reimbursement for ambulatory surgery center services. This included both the
reimbursement rates and market share by payer type for persons with a similar
standard of living, and allowed Ingenix to provide the commission with a recommended
acceptable range of PAFs. This Ingenix recommendation reflects the weighted
average reimbursement for individuals with a similar standard of living. The
commission carefully considered the Ingenix analysis and recommendation and
the requirements of the Act in adopting the PAF, which is well within the
range of reimbursements accepted by ambulatory surgery centers in the commercial
market and within the "fair and reasonable" reimbursements currently accepted
by ASCs participating in the Texas workers' compensation system. Further,
the commission clarifies that the methodology Ingenix used (as fully described
in the April 2004 adoption preamble of §134.402) to develop its recommendation
stands alone and is not dependent on the methodologies used in previous reimbursement
guidelines proposed or adopted by the commission. The Medicare rate is the
reference point from which the reimbursement rate is built, but is neither
a ceiling nor a floor. Development of the PAF is a balance of all the components
of the Act. Ingenix concluded that, if there are additional administrative
burdens for facilities, they are more than offset and accounted for in the
rates within the Ingenix range.
The commission clarifies that Ingenix removed indemnity reimbursement,
which was extraordinarily high as compared to commercial reimbursement generally,
from the calculation. Removing this potential aberration resulted in a decrease
at the lower end of the PAF. The commission clarifies that the adopted PAF
falls within the acceptable range of reimbursements recommended by Ingenix.
Additionally, Ingenix suggested that the commission could use its discretion
to consider a different balance of the statutory objectives -- for instance,
by placing greater emphasis on cost containment or increased security of payment
within the Texas workers' compensation system -- and deviate up to 10% at
either end of the recommended range. In response to the high medical costs
per claim in Texas and the desire by the Legislature and the commission to
reverse the cost per claim trends, the commission adopted an appropriate PAF.
The commission agrees that it is appropriate to review other states' ASC reimbursement
methodologies; however, due to each state's unique system requirements, those
methodologies are not determinative of reimbursement in Texas. Analysis of
Medicare reimbursement methodologies in other states showed PAFs to be within
a range from at or near the Medicare rate to over 250% of the Medicare rate.
Commission staff surveyed several other states that use the Medicare ASC reimbursement
methodology. The reimbursement in those states as a percentage of Medicare
ranged from 100% to 255%. The adopted PAF is well within this range of other
states' reimbursement for ASC's.
The commission disagrees that commercial indemnity was not included as
part of the recommendation, or on the other hand that commercial indemnity
was the only type considered; on the contrary, it was included in one portion
of the recommended range which yielded the 264% PAF. When indemnity reimbursement
is excluded from the weighted market calculation, the lower limit of the Ingenix
recommendation becomes 237% of Medicare. The indemnity market share currently
represents a small, decreasing fraction of the overall market, with payment
levels far exceeding those in other commercial policy types, suggesting that
they are uncharacteristic of the commercial market. In order to provide the
most comprehensive range of fair and reasonable reimbursement rates, and address
the statutory requirement for cost control and prohibition against paying
higher than would be paid by or for persons with similar standards of living,
Ingenix recommended, and the commission agreed, that it was appropriate to
exclude the indemnity experience at the lower end of the range and include
it at the higher end of the range. In all scenarios, Medicare reimbursement
and market share were included in the weighted average to establish a range.
The commission agrees that health care costs throughout all sections of
the health care system are rising, and that some employers are re-visiting
options relating to employee contributions to group health plans.
COMMENT: Commenters recommended varying increases in the PAF of the Medicare
fee schedule for additional reasons, including: (1) Medicare's ASC rates will
remain frozen until 2009. (2) Cases have been turned away from ASCs since
this rule implementation causing a 42% difference that is annualized over
the year, which will cost the workers' compensation system over $500,000 in
additional costs. This figure represents a 60% reduced ASC reimbursement,
and not the 30% the commission estimated. (3) Other states have found 100%
of Medicare as a reasonable reimbursement rate. A commenter additionally stated
that consultants have found, based on Florida's Agency for Health Care Administration
(AHCA) discharge data, that there is no material difference in the total number
of ASCs performing each procedure and the number of ASCs performing each procedure
on Medicare patients indicating any lack of access for Medicare patients.
RESPONSE: The commission disagrees that future changes in the Medicare
ASC reimbursement system should prevent the commission from adopting the most
current Medicare ASC reimbursement system as required by the Act. Because
the commission is also required to meet other provisions of the Act regarding
fair and reasonable reimbursement during its required reviews of guidelines,
regardless of any current or potential future changes in Medicare reimbursement,
the commenters' reference to the future potential Medicare revisions is irrelevant.
The commission disagrees that the overall difference in reimbursement is 42%
and this change has added over $500,000 in costs to the system, since the
commission has not been provided information to document or support the commenters'
assertions. Anecdotally, carriers generally make the opposite assertion that
similar services are being provided at a lower reimbursement in the hospital
outpatient setting than the ASC setting in many instances. The commission
disagrees that other states reimbursement at 100% of Medicare is an indicator
of the appropriate reimbursement rate for the Texas workers' compensation
system. The commission has surveyed several states and found a wide range
of ASC reimbursement rates from 100% of Medicare to over 250% of Medicare,
each with unique statutory requirements. The rate adopted by the commission
reflects the requirements of the Act and is appropriate for use in the Texas
workers' compensation system.
COMMENT: Commenter recommended a rate of 250% of Medicare is necessary
for cases to remain as they were done in an ASC rather than the surgery department
in a hospital.
RESPONSE: The commission disagrees with commenters' recommendation, as
the PAF itself was not a proposed amendment to this rule. Nevertheless, the
commission addressed this concern in the adoption preamble of April 2004 (28
TexReg 4191) and the adopted PAF is the result of careful analysis by Ingenix
and consideration by the commission.
COMMENT: Commenter opined that the new system of payment for ASCs that
Congress directed CMS to consider is based on Medicare APC fee schedule, and
commenter recommends the commission use this new system.
RESPONSE: The commission clarifies that the Act requires "... the commission
shall adopt the most current reimbursement methodologies, models, and values
or weights used by the federal Health Care Financing Administration, including
applicable payment policies related to coding, billing, and reporting, ..."
The commission has adopted the most current Medicare ASC reimbursement methodology.
If and when, Medicare implements a revised ASC reimbursement methodology,
the commission would move to implement that methodology to maintain standardization
as required by the Act.
COMMENT: Commenter stated that Ingenix did not compare its recommended
conversion factors with conversion factors in other states because each state
approached its reimbursement methodology differently. This statement is inconsistent
with the Workers' Compensation Research Institute (WCRI) analysis and the
commission's handling of the same issue in the 2002 MFG.
RESPONSE: The commission clarifies that there is no WCRI ASC reimbursement
analysis. The Ingenix report and commission research found a wide range of
reimbursement rates for ASC services provided in other states' workers' compensation
systems as previously noted elsewhere in this preamble.
COMMENT: Commenter advised that changes to Medicare fees, as a result of
recent federal legislation (e.g., Medicare Prescription Drug Bill, The Secretary
of Health and Human Services' revised payment schedule), will require the
commission to again re-examine ASC fees in the near future.
RESPONSE: The commission agrees as it is required to review guidelines
bi-annually and will continue to proactively monitor changes as evidenced
by this rule revision.
COMMENT: Commenter states the problem is that since SB-1 in 1989, ASCs
have never been regulated by the workers' compensation system. As time went
on, more care was shifted to the ASC setting, more ASCs were established,
and physicians found them a good way to supplement their income. As a result
of ASCs not being regulated, the ASCs profited. The insurance industry is
at fault for paying ASC bills with very little scrutiny, until over time they
had to change this practice and the commission in not passing a rule years
ago to avoid what we are facing today.
RESPONSE: The commission acknowledges commenter's historical perspective
in the development of ASC fee guidelines, but does not see anything here that
warrants a change to those amendments. These changes are necessary and appropriate,
given information provided to the commission and the balance of statutory
mandates that apply.
The amendment is adopted under Texas Labor Code §402.061,
which authorizes the commission to adopt rules necessary to administer the
Act; Texas Labor Code §408.021, which entitles injured employees to all
health care reasonably required by the nature of the injury as and when needed;
Texas Labor Code §413.002, which requires the commission's Medical Review
Division monitor health care providers, insurance carriers and claimants to
ensure compliance with commission rules; Texas Labor Code §413.007, which
sets out information to be maintained by the commission's Medical Review Division;
Texas Labor Code §413.011, which mandates that the commission by rule
establish medical policies and guidelines; Texas Labor Code §413.012,
which requires review and revision of the medical policies and fee guidelines
at least every two years; Texas Labor Code §413.013, which requires the
commission by rule to establish programs related to health care treatments
and services for dispute resolution, monitoring, and review; Texas Labor Code §413.014,
which requires express preauthorization by the insurance carrier for health
care treatments and services; Texas Labor Code §413.015, which requires
insurance carriers to pay charges for medical services as provided in the
statute and requires that the commission ensure compliance with the medical
policies and fee guidelines through audit and review; Texas Labor Code §413.016,
which provides for refund of payments made in violation of the medical policies
and fee guidelines; Texas Labor Code §413.017, which provides a presumption
of reasonableness for medical services fees that are consistent with the medical
policies and fee guidelines; Texas Labor Code, §413.019, which provides
for payment of interest on delayed payments refunds or overpayments; and Texas
Labor Code §413.031, which provides a procedure for medical dispute resolution.
The amendment is adopted under the Texas Labor Code §§402.061,
408.021, 413.002, 413.007, 413.011, 413.012, 413.013, 413.014, 413.015, 413.016,
413.017, 413.019, and 413.031.
The previously cited sections of the Texas Labor Code are affected by this
rule action. No other code, statute, or article is affected by this rule action.
§134.402.Ambulatory Surgical Center Fee Guideline.
(a)
Applicability of this rule is as follows:
(1)
This section applies to facility services provided by an
ambulatory surgical center (ASC), other than professional medical services.
(2)
This section applies to facility services provided by an
ASC on or after September 1, 2004. The provisions of subsection (e)(2), (3),
and (4), and subsection (f) of this section apply to facility services provided
by an ASC on or after April 1, 2005.
(3)
Specific provisions contained in the Texas Workers' Compensation
Act (Act) or Texas Workers' Compensation Commission (commission) rules, including
this rule, shall take precedence over any conflicting provision adopted or
utilized by the Centers for Medicare and Medicaid Services (CMS) in administering
the Medicare program. Exceptions to Medicare payment policies for medical
necessity may be provided by commission rule. Independent Review Organization
(IRO) decisions regarding medical necessity are made on a case-by-case basis.
The commission will monitor IRO decisions to determine whether commission
rulemaking action would be appropriate.
(4)
Whenever a component of the Medicare program is revised
and effective, use of the revised component shall be required for compliance
with commission rules, decisions and orders for services rendered on or after
the effective date of the revised component.
(b)
For coding, billing, reporting, and reimbursement of facility
services covered in this rule, Texas workers' compensation system participants
shall apply the Medicare program reimbursement methodologies, models, and
values or weights including its coding, billing, and reporting payment policies
in effect on the date a service is provided with any additions or exceptions
in this section.
(c)
To determine the maximum allowable reimbursement (MAR)
for a particular service, system participants shall apply the Medicare payment
policies for these services and the Medicare ASC reimbursement amount multiplied
by 213.3%.
(d)
In all cases, reimbursement shall be the lesser of the:
(1)
MAR amount regardless of billed amount; or
(2)
facility's and payer's workers' compensation negotiated
and/or contracted amount that applies to the billed service(s).
(e)
Exceptions and modifications to the Medicare payment policies
are as follows:
(1)
Whenever Medicare requires a payment policy change to be
retroactive, that change shall only apply to services provided on or after
the date of that change.
(2)
In addition to the ASC List of Medicare Approved Procedures,
the following procedures will be reimbursed when provided in an ASC at the
reimbursement rate provided by this section as if they were on that list (using
the same Medicare group assignment values):
(A)
11750 - Group 1
(B)
11760 - Group 1
(C)
20552 - Group 1
(D)
20526 - Group 1
(E)
27599 - Group 1
(F)
29873 - Group 3
(G)
29999 - Group 4
(H)
63030 - Group 6
(I)
64405 - Group 1
(J)
64999 - Group 1
(3)
If a service is not included on the ASC List of Medicare
Approved Procedures or listed in subsection (e)(2) of this section, the insurance
carrier (carrier), health care provider, and ASC may agree to an ASC setting
as follows:
(A)
The agreement may occur before, during, or after preauthorization.
(i)
A preauthorization request may be submitted for an ASC
setting only if an agreement has already been reached and a copy of the signed
agreement is filed as a part of the preauthorization request.
(ii)
A preauthorization request or approval for a non-ASC facility
setting may be revised to an ASC setting by written agreement of the carrier
and the health care provider during or after preauthorization.
(B)
The agreement between the carrier and the ASC must be in
writing, in clearly stated terms, and include:
(i)
the reimbursement amount;
(ii)
any other provisions of the agreement; and
(iii)
names, titles and signatures of both parties with dates.
(C)
Copies of the agreement are to be kept by both parties.
(D)
Upon request of the Commission, the agreement information
shall be submitted in the form and manner prescribed by the Commission.
(4)
The carrier shall reimburse all surgically implanted, inserted,
or otherwise applied devices at the lesser of the manufacturer's invoice amount
or the net amount (exclusive of rebates and discounts) actually paid for such
device to the manufacturer by the ASC. Provider billing shall include a certification
that the amount sought represents its actual cost (net amount, exclusive of
rebates and discounts). That certification shall include the following sentence:
"I hereby certify under penalty of law that the following is the true and
correct actual cost to the best of my knowledge."
(f)
A carrier may use the audit process under §133.302
and §133.303 of this title (relating to Preparation for an Onsite Audit
and Onsite Audits) to seek verification that the amount certified under subsection
(e)(4) of this section properly reflects the actual cost standard contained
in that subsection. Such verification may also take place in the Medical Dispute
Resolution process under §133.307 of this title (relating to Medical
Dispute Resolution of a Medical Fee Dispute), if that process is properly
requested.
(g)
Where any terms or parts of this section or its application
to any person or circumstance are determined by a court of competent jurisdiction
to be invalid, the invalidity does not affect other provisions or applications
of this section that can be given effect without the invalidated provision
or application.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on February 18, 2005.
TRD-200500769
Susan Cory
General Counsel
Texas Workers' Compensation Commission
Effective date: March 10, 2005
Proposal publication date: December 3, 2004
For further information, please call: (512) 804-4287