PART 2. TEXAS DEPARTMENT OF INSURANCE, DIVISION OF WORKERS' COMPENSATION
CHAPTER 134. BENEFITS--GUIDELINES FOR MEDICAL SERVICES, CHARGES, AND PAYMENTS
SUBCHAPTER E. HEALTH FACILITY FEES
The Texas Department of Insurance, Division of Workers' Compensation (Division) proposes amendments to 28 TAC §134.402 concerning Ambulatory Surgical Center Fee Guideline. These amendments are necessary to comply with the requirements of Labor Code §413.011 and §413.012. The current rule was originally adopted in 2004 to comply with statutory mandates enacted in 2001 by House Bill (HB) 2600, 77th Legislature, Regular Session. HB 2600 amended §413.011 to add new requirements for workers' compensation reimbursement policies and guidelines. Prior to adoption of the 2004 fee guideline, the Texas workers' compensation system did not have a fee schedule for health care provided in ambulatory surgical centers (ASCs). Therefore, those services were reimbursed on a case-by-case basis determination of what was fair and reasonable under what was then 28 TAC §134.1 of this title (relating to Use of the Fee Guidelines, repealed effective May 2, 2006).
Section 134.402 was amended in 2005 to address certain impacts of the new rule on participants in the Texas workers' compensation system. In 2007 the Centers for Medicare and Medicaid Services (CMS) significantly revised the Medicare ASC reimbursement methodology. The Division amended 28 TAC §134.402 in December 2007 to maintain the stability of the ASC reimbursement process while researching and preparing to implement the new Medicare ASC reimbursement methodology. The December 2007 amendments continued the use of reimbursement structures and amounts of the Medicare ASC 2007 rates for ASC facility services provided on January 1, 2008 through August 31, 2008. This continuation has afforded additional time for the Commissioner of Workers' Compensation (Commissioner) to determine and establish the appropriate ASC reimbursement methodology. The amendments to the rule are needed to align with revised Medicare reimbursement methodologies, develop the most suitable reimbursement structure, and utilize appropriate conversion factors or other payment adjustment factors geared to the Texas workers' compensation system.
Labor Code §413.011 establishes the requirements for Division fee guidelines for medical services. The statute requires the Commissioner to adopt health care reimbursement policies and guidelines that reflect reimbursement structures found in other health care delivery systems with minimal modifications as necessary to meet occupational injury requirements. In addition, §413.011(a) requires the Commissioner to adopt the most current reimbursement methodologies, models, and values or weights used by the 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 Labor Code §413.053 (relating to Standards of Reporting and Billing).
Under Labor Code §413.011(b), the Commissioner is required to develop conversion factors or other payment adjustment factors in determining appropriate fees when developing these guidelines, taking into account economic indicators in health care by not adopting conversion factors or other payment adjustment factors 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.
Labor Code §413.011(d) requires that guidelines for medical services 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. Notwithstanding §413.016 or any other provision of title 5 of the Labor Code, §413.011(d-1) provides that an insurance carrier may pay fees to a health care provider that are inconsistent with the fee guidelines adopted by the Division if the insurance carrier or a network under Chapter 1305, Insurance Code, arranging for out-of-network services under Insurance Code §1305.006: (1) has a contract with the health care provider, that includes a specific fee schedule; and (2) complies with the notice requirements established under §413.011(d-2).
Additionally, Labor Code §413.012 requires the Commissioner to review and revise the medical policies and fee guidelines every two years to reflect fair and reasonable fees. Labor Code §413.0511(b)(1) also requires consultation with the Medical Advisor in developing, reviewing, and maintaining guidelines. Section 413.041 of the Labor Code requires health care practitioners and health care providers to submit to the Division financial disclosure information including ASC ownership interests.
These requirements have been taken into consideration in the development of this proposal. This proposed section does not apply to political subdivisions with contractual relationships under Labor Code §504.053(b)(2).
As part of the development of this proposed amended section, the Division posted an informal working draft of the proposed amended section on its website in January 2008 and also held a stakeholder meeting on February 15, 2008.
MEDICARE
CMS regulates the Medicare and Medicaid programs. CMS has established a Medicare prospective payment system (PPS) for hospital/facility-based services, which include inpatient and outpatient hospital care, ambulatory surgical services, and other facility-based services such as, but not limited to, rehabilitation, psychiatric, and long term care units. Medicare requires a deductible and co-pay from the patient until the patient reaches a certain level of expenditures. When setting reimbursement amounts, Medicare considers and includes this deductible and co-pay for facility services. CMS has directed extensive research in determining facility reimbursements in the Medicare system. Reimbursements are based on a facility's expected cost to provide a service rather than charged amounts, thus reimbursements differ by facility type. CMS establishes a predetermined amount of reimbursement which bundles or packages services. CMS updates reimbursements periodically based on a variety of factors, including weights (e.g., intensity), clinical issues, costs, inflation, and federal budget constraints. Reimbursement is based on national average costs with adjustments for geographic and facility specific factors. In addition, billed claims are subject to clinical coding edits Medicare has developed.
In setting the payment rates in the Outpatient Payment Prospective System (OPPS), CMS covers hospitals' operating and capital costs for services they furnish. Ambulatory Payment Classifications (APCs) were adopted by CMS in August 2000. There are more than 800 APCs based on clinically similar items and services requiring similar amounts of resources. An outpatient visit may include multiple APCs, each APC having a predetermined rate. CMS determines the payment rate for each service by multiplying the APC relative weight for the service by a conversion factor. The relative weight for an APC measures the resource requirements of the service and is based on the median cost of the services in that APC. There are numerous other factors that comprise a reimbursement for a hospital outpatient setting.
On August 2, 2007, CMS published a final rule establishing a revised Medicare payment system for ASCs that applies to services provided on or after January 1, 2008 and expanded access to procedures in the ASC setting by allowing ASC payment to approximately 790 additional procedures in calendar year (CY) 2008. This compares to the nine specific reimbursement categories or ASC groups that were the previous Medicare ASC reimbursement system and are the current Texas workers' compensation ASC reimbursement groups. Also, on November 27, 2007, CMS published a final rule containing CY 2008 payment rates for ASCs based in part on the rates Medicare pays hospital outpatient departments (HOPDs). CMS changed the ASC payment system beginning January 1, 2008 because the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 also called Medicare Modernization Act (MMA) (Pub. L. 108-173, 117 Stat. 2066) required CMS to revise the ASC payment system no later than January 1, 2008.
THE GOVERNMENT ACCOUNTABILITY OFFICE REPORT
CMS based the revised ASC payment system on the OPPS after the Government Accountability Office (GAO) studied ASC costs and found that the relativity of costs among ASC procedures was comparable to their relativity of costs in HOPDs. According to the statutorily mandated GAO report entitled, "Medicare: Payment for Ambulatory Surgical Centers Should Be Based on the Hospital Outpatient Payment System" (GAO-07-86) released in November 2006, ASCs experience greater efficiencies in providing surgical services than HOPDs, resulting in surgical procedures being less costly when performed in an ASC facility setting. The GAO determined that the APC groups in the OPPS accurately reflect the relative costs of the procedures performed in ASCs. The GAO's analysis of the cost ratios showed that the ASC-to-APC cost ratios were more tightly distributed around their median cost ratio than were the OPPS-to-APC ratios. The report's analysis demonstrated that the APC groups reflect the relative costs of procedures performed by ASCs as they do for procedures performed in HOPDs and, therefore, that the APC groups could be used as the basis for an ASC payment. The GAO report concluded that, as a group, the costs of procedures performed in ASCs have a relatively consistent relationship with the costs of the APC groups to which they are assigned under the OPPS. The GAO's analysis also found that the procedures in the ASC setting have lower costs than those same procedures in HOPDs. The GAO reported that the median cost ratio among all ASC procedures was 0.39, whereas the median cost ratio among all OPPS procedures was 1.04. When the ASC median cost ratio is weighted according to Medicare ASC utilization, the ASC median cost increases to 0.84. This weighted ratio may be more indicative of the relationship between ASC and HOPD costs than a direct one-to-one comparison of APCs.
Based on its findings from the study, the GAO recommended that CMS implement a payment system for procedures performed in ASCs based on the OPPS, taking into account the lower relative costs of procedures performed in ASCs compared to HOPDs in determining ASC payment rates. CMS followed the GAO's recommendations.
CMS CY 2008 REVISED ASC PAYMENT SYSTEM
Under the OPPS-based revised ASC payment system, CMS pays for hospital outpatient services on a rate-per-service basis that varies according to APC group to which the service is assigned. CMS uses the Healthcare Common Procedure Coding System (HCPCS) Level I and Level II codes and descriptors to identify and group the services within each APC group. The OPPS includes payment for most hospital outpatient services except those identified in the CMS CY 2008 OPPS/ASC final rule published on November 27, 2007 that updated the OPPS for CY 2008 and provided the CY 2008 ASC conversion factor and payment rates. Medicare now uses the same APCs for ASCs as are used for HOPDs. Because ASCs provide only surgical services and hospitals provide many other types of outpatient procedures, such as emergency room services, HOPDs will utilize more APCs than ASCs.
In accordance with the MMA, the revised Medicare ASC payment system must be "budget neutral" which means that in CY 2008 Medicare expenditures under the revised Medicare ASC payment system must approximate the expenditures that would have occurred in the absence of the revised Medicare ASC payment system. In the CY 2008 OPPS/ASC final rule, CMS estimates that ASCs should be paid about 65 percent of the OPPS payment rates for the same surgical procedures in a HOPD.
The standard Medicare ASC payment for most ASC covered surgical procedures is calculated by multiplying the ASC conversion factor ($41.401 for CY 2008) by the ASC relative payment weight set (based on the OPPS relative payment weight) for each separately payable procedure.
The complete lists of ASC covered surgical procedures and ASC covered ancillary services, the applicable payment indicators, payment rates for each covered surgical procedure and ancillary service before adjustment for regional wage variations, the wage adjusted payment rates, and wage indices are available on the CMS web site at http://www.cms.hhs.gov/ascpayment/.
CMS is providing a four-year transition to the fully implemented revised ASC rates. Payments during the four-year transition to the fully implemented revised ASC payment rates will be based on a blend of the CY 2007 ASC payment rates and the revised ASC payment rates at 75/25 in CY 2008, 50/50 in CY 2009, and 25/75 in CY 2010 with payment at 100 percent of the revised ASC payment rates in 2011. Payment for covered surgical procedures added for ASC payment in CY 2008 or later and payment for covered ancillary services that are not paid separately under the existing ASC payment system will not be subject to a transition. For additional explanation, see http://www.cms.hhs.gov/ascpayment/.
IMPLANTABLE DEVICES
Prior to implementation of the revised Medicare ASC payment system, ASCs received separate payment for implantable devices. Under the revised system, CMS uses a modified payment methodology to establish the ASC payment rates for procedures that are designated as "device intensive." Device intensive procedures are specified ASC covered surgical procedures that, under the OPPS, are assigned to certain device dependent APCs. Device dependent APCs are groups of procedures that require the insertion or implantation of expensive devices. Payment for the high cost devices is packaged into the procedure payments under the OPPS. For the device dependent APCs, CMS develops estimates of the "device offset percentage," the proportion of the procedures' costs that are attributable to the cost of the device. Under the revised ASC payment system, CMS identifies the covered surgical procedures for which the device offset percentage of the APC to which they are assigned under the OPPS is greater than 50 percent of the APCs median cost and designates those surgical procedures as device intensive. CMS pays the same amount for the device-related portion of the procedure under the revised ASC payment system as under the OPPS for HOPDs. However, in the Medicare system payment for the service portion of the ASC rate will be adjusted by the ASC conversion factor.
For example: If the OPPS payment for a device intensive procedure is $7,000 and the device offset percentage is 75 percent, the device portion is $5,250 ($7,000 x 0.75 = $5,250). The remaining $1,750 ($7,000 - $5,250 = $1,750) is the service portion of the procedure, the non-device cost that the facility incurs when the device is implanted. Under the revised ASC payment system, CMS will pay the same amount for the device portion of the procedure ($5,250) as under the OPPS, but will adjust the service portion to approximately 65 percent of $1,750, or $1,137 ($1,750 x 0.65 = $1,137). This is consistent with other OPPS surgical procedures when ASCs are reimbursed for performance of these procedures. Thus, the Medicare ASC rate will be calculated by adjusting the OPPS service portion by the Medicare ASC conversion factor and that will be added to the full device portion of the OPPS rate to establish the full Medicare ASC payment rate for the procedure. Using the example, the resulting ASC reimbursement would be $6,387 ($5,250 + $1,137 = $6,387).
Because payment for procedures is based on the OPPS, which packages payment for implantable devices in the payment for the surgical procedures to implant them, in the Medicare system ASCs will no longer bill separately under the Durable Medical Equipment, Prosthetics/Orthotics, and Supplies (DMEPOS) fee schedule for any implantable devices.
Procedure payments, into which payment for devices is packaged, including those for device intensive procedures, are subject to the adjustment for geographic differences in wage. Because the labor-related share is 50 percent under the revised ASC payment system, the local wage index adjustment is applied to 50 percent of the national payment rate for the procedure involving the device. Payment rates for each covered surgical procedure before adjustment for regional wage variations, the wage adjusted payment rates, and wage indices are available on the CMS web site at http://www.cms.hhs.gov/ascpayment/.
Pass-through status under the OPPS is granted to new implantable devices that meet explicit OPPS criteria, including demonstrated substantial clinical improvement for patients. Under the OPPS, devices with pass-through status are paid separately for two to three years at hospital charges adjusted to cost. CMS provides separate payment to ASCs at contractor-priced rates for devices that are included in device categories with pass-through status under the OPPS when the devices are an integral part of a covered surgical procedure. Payment for these devices is not subject to the wage adjustment, while payment for procedures used to implant pass-through devices is subject to the wage adjustment.
In the Medicare system, ASCs will bill separately for devices that have pass-through status under the OPPS when provided integral to covered surgical procedures and will be paid separately under the revised ASC payment system. CMS has instructed ASCs in the Medicare system to use the appropriate Level II HCPCS codes to report the devices.
DIVISION DATA
In maintaining a medical billing database, the Division requires insurance carriers to submit billing and reimbursement information to the Division on a regular basis. The Division implemented a new reporting format in late 2006 to facilitate collection of medical billing and reimbursement data from insurance carriers in conjunction with new electronic billing reporting requirements. The new electronic reporting format is the International Association of Industrial Accident Boards and Commission's 837 format. Insurance carriers submitted CY 2005 and 2006 charged and paid data in this new format, and the Division has based the primary components of its analysis on CY 2006 information. In developing an analysis of the data for the amendment of 134.402 of this title, CY 2006 data was determined to be the most complete set of mature claims data available. The Division reviewed the CY 2006 claims data to have an improved understanding of the types of ASC facility services provided to injured employees and to understand the billing and reimbursement calculations associated with those services. The Division was also able to review charge and payment activity for specific types of services.
Although an important component of the Texas workers' compensation system, ASC facility services account for a proportionally smaller portion of the medical benefits paid in the Texas workers' compensation system than hospital or doctor services. For example, based on a Deloitte Consulting, LLP (Deloitte) analysis of division data payments to ASCs for CY 2006 services totaled approximately $21.4 million. Based on this observation, the Division estimated ASC reimbursement at less than three percent of total medical payments. Data used in the recent adoption of §134.403 (relating to Hospital Facility Fee Guideline--Outpatient) and §134.404 (relating to Hospital Facility Fee Guideline--Inpatient) estimated payments to hospitals for CY 2006 services totaled approximately $205 million, which represents approximately 21 percent of total medical payments. These hospital payments were split relatively evenly between inpatient services ($93 million) and outpatient services ($111 million). A similar Division review of reimbursement data for CY 2006 doctor services estimated payments at approximately $625 million, or nearly 65 percent of total medical payments .
In CY 2006, 338 ASCs had approximately 13,700 Texas workers' compensation admissions, whereas 177 ASCs had ten or fewer admissions. Forty-one ASCs had more than 100 admissions each, representing 64 percent of ASC charges and 62 percent of ASC reimbursements. Seventy-six ASCs had almost 80 percent of the admissions. This concentration is also evident in the services provided in the ASC facility setting. Ninety-five percent of all Texas workers' compensation ASC services were grouped to only 40 APCs. Further, the five most utilized APCs accounted for approximately 70 percent of the Texas workers' compensation system ASC encounters.
DELOITTE CONSULTING, LLP
In March 2008, the Division entered into a professional services agreement with Deloitte, a subsidiary of Deloitte Touche Tohmatsu. Deloitte is one of the leading providers of complex consulting services, with a long history of service to most of the state governments across the country. Deloitte provides technology integration services, supporting the implementation of new legislation, designing operations to support refined business processes, and developing tools to support management decisions, and is often an advisor to some of the largest government agencies in the United States. Deloitte is experienced in deploying ASC and APC fee schedule reimbursement methodologies and is experienced in the workers' compensation area. Deloitte has access to industry and national normative databases that allows it to develop comparative analyses and assess differentials with the Division's internal data.
Specifically, the agreement sought Deloitte's expertise to perform actuarial services that indexes the Texas workers' compensation ASC facility reimbursement to Medicare's 2008 ASC facility reimbursement. Additionally, Deloitte was to index other health care systems' ASC reimbursement with Medicare reimbursement for ASC services.
Texas Workers' Compensation ASC Reimbursement Comparison to Medicare
The Division provided Deloitte detailed ASC utilization, charge, and payment data for CY 2005 and 2006 from the Division medical billing data base. The data set included over 29,000 bills attributable to more than 20,000 injured employees. Deloitte found the data set to be credibly populated and appropriate for use in the analysis. Data for the two calendar years were reviewed at a high level and determined to be consistent. The final analysis focused on the services provided during CY 2006.
As a preliminary review, Deloitte grouped and repriced the CY 2006 according to the CY 2006 Medicare and the §134.402 reimbursement methodologies. Analysis indicated that overall claims were paid at a rate of 213.6 percent of the Medicare ASC rate. This figure is consistent with the Division's stated reimbursement rate of 213.3 percent of Medicare and indicated a high level of data confidence for the majority of 2006 claims.
Almost 98 percent of the Texas workers' compensation claims are for ASC services that are not classified by Medicare as device intensive. Deloitte grouped and repriced these claims according to the new Medicare ASC reimbursement methodology. The resulting analysis estimates that CY 2006 ASC services provided and reimbursed in the Texas workers' compensation system were paid at approximately 189 percent of CY 2008 Medicare ASC reimbursement. This ratio establishes a reference point for the Division in establishing appropriate ASC reimbursement.
The remaining two percent of Texas workers' compensation claims involved services that Medicare identifies as device intensive. Device intensive procedures are identified as procedures including an implantable device where the device costs are on average more than 50 percent of the total Medicare procedure reimbursement. Deloitte estimated that these claims were reimbursed at approximately 112 percent of the CY 2008 Medicare ASC rate. Deloitte noted that the low figure for reimbursement of device intensive procedures may be related to the high proportion of these claims' overall costs associated with the implantable device rather than the procedure. This may be a result of the relative inconsistency in reporting implantables for separate reimbursement in the existing Texas workers' compensation reimbursement methodology.
Comparison of Commercial and Medicare ASC Payment Rates
Deloitte also provided detailed information regarding reimbursement of ASC services by commercial payors outside the Texas workers' compensation system. The source of the commercial data for this analysis was the 2006 Medstat Market Scan Databases (Medstat). Medstat captures person-specific clinical utilization, expenditures and enrollment across patient types from large employers, health plans, government and public organizations, Blue Cross Blue Shield plans, and third party administrators. Medstat links paid claims and encounter data to detailed patient information across sites and types of providers and over time. This data represents a broad spectrum of insured employees and their dependents. Texas Medstat data for CY 2006 includes claim information for over one million members.
Deloitte analyzed the Medstat data in a similar fashion to the Texas workers' compensation data set. ASC services were identified and the data set processed to eliminate non-groupable claims, claims with negative allowed amounts, and claims where the patient age was less than 18. After applying Medicare grouping and pricing methodologies, Deloitte estimated the average commercial reimbursement for ASC services to be approximately 236 percent of Medicare reimbursement. Deloitte estimated the average ASC reimbursement for Preferred Provider Organizations (PPO) to be 265 percent of Medicare reimbursement, and Health Maintenance Organizations (HMO) to be 148 percent of Medicare reimbursement. Various other payor types such as traditional indemnity, high deductible, basic medical and major medical coverage payment rates were estimated at approximately 217 percent of Medicare ASC reimbursement.
SETTING PAYMENT ADJUSTMENT FACTORS
In proposing payment adjustment factors (PAFs) for use in §134.402 of this title, the Division conducted extensive research to understand ASC facility reimbursement in the current Texas workers' compensation system, including: reimbursement rates, the reimbursement rates as compared to Medicare reimbursement, and the reimbursement rates as compared to non-workers' compensation reimbursement for ASC facility services, all of which are requirements of the Labor Code at §413.011.
The Division also considered economic indicators for hospitals that are particularly relevant to the analysis process. Medicare margins and market basket information reflect the general increasing costs of care over time.
Deloitte reviewed Texas workers' compensation facility utilization and reimbursement. The reports prepared by Deloitte did not recommend a PAF, however, Deloitte did estimate that for CY 2006 ASC facility services were paid in the Texas workers' compensation system on average 189 percent of CY 2008 Medicare ASC facility services. In reviewing this reimbursement rate, the Division must consider the rate and the failure of CMS to adjust its reimbursement method for ASCs for an extended period of time. Although the Division adjusted for this situation when adopting the current rate, neither the existing §134.402 of this title nor the Medicare methodology actively considered medical inflation on an annual basis. CMS will utilize the Consumer Price Index for all Urban Consumers (CPI-U) (U.S. city average) to adjust its ASC reimbursement rates in CY 2010 and going forward. The CPI-U has increased approximately 15 percent since the adoption of the current rule in May of 2004. If the Texas workers' compensation rate of 189 percent of 2008 Medicare reimbursement had been adjusted to reflect the change in the CPI-U since the original adoption of the rule in 2004, the equivalent rate would currently be approximately 217 percent of the 2008 Medicare ASC rate.
The Division, however, must consider additional factors in setting the PAFs. The ratio of Medicare reimbursement to reimbursement made by other payors is an important comparison. Using commercially available data, Deloitte estimated commercial payor reimbursement for ASC services at approximately 236 percent of Medicare. The disparity between Texas workers' compensation system and commercial market is particularly evident in the five most frequently used APCs for musculoskeletal surgeries. These five APCs account for nearly 30 percent of all Texas workers' compensation system ASC encounters. Commercial reimbursement for the same APCs is approximately 290 percent of Medicare, compared to 172 percent of Medicare in the Texas workers' compensation system. Although Texas workers' compensation system payments exceed the Medicare payment, the existing payments have not been competitive with the commercial market. In some instances, this dissonance may direct Texas workers' compensation surgeries to more expensive settings.
In proposing a revised PAF, the Division noted and considered the recommendations made by system participants. Those recommendations range from approximately 110 percent to 262 percent of the Medicare ASC facility services rate.
The Division also recognized the importance of surgically implanted devices to Texas injured employees. In establishing hospital facility reimbursement rates (see §134.403 and §134.404 of this title), the Division established methodologies to allow separate reimbursement of implantables to insulate facilities from potential losses directly related to the high costs of surgically implanted devices. This concept is replicated in the proposed amended ASC reimbursement methodologies to assure that costs of implantable devices are not a barrier to injured employee's access to services in an ASC facility setting.
The Division is proposing to adopt minimal modifications to Medicare's reimbursement methodology to reflect use of separate reimbursement for surgically implanted devices in non-device intensive procedures to ensure injured employees have access to care, including surgery where surgically implanted devices are medically necessary. The modification establishes two PAFs for the proposed amended rule, which are 235 percent and 153 percent of Medicare ASC reimbursement rate. The lower proposed PAF maintains the offset ratio the Division used in establishing the lower PAF adopted in the hospital outpatient facility reimbursement methodology (see §134.403 of this title).
Additionally, the Division is proposing a specific reimbursement methodology for device intensive procedures that utilizes the higher PAF and allows separate reimbursement for the surgically implanted device either at the Medicare estimated cost, or the actual cost of the item plus an administrative fee. These device intensive procedures are specifically identified by Medicare and have device costs that are at least 50 percent of the Medicare APC reimbursement. In certain APCs, the device portion of the APC may be as high as approximately 88 percent of the Medicare APC rate. This methodology impacts a small number of APCs that warrant special consideration due to the disproportionate allocation of the device payment relative to other APCs.
The proposed amendments not only comply with the requirements of Labor Code §413.011, they also provide the Texas workers' compensation system with a rate that:
* is within the commercial market range;
* is less than the current preferred provider organization rate, but more than the current health maintenance organization rate;
* accounts for inflation based on the CPI-U since the initial adoption of §134.402;
* provides an increase over current reimbursement, improving the availability of ASC services to injured employees; and
* maintains injured employee access to surgical implanted devices through separate reimbursement when appropriate for those devices.
The proposed amendments additionally comport with the Commissioner's authority under the Labor Code to audit and investigate both health care providers and insurance carriers as might be used in auditing implantable devices. Considering the value of implantable devices in returning the injured employee to work, the Commissioner may pursue audits to monitor, review, and study the utilization, billing, and reimbursement of implantable devices.
Upon consideration of all these factors and statutory requirements, the Division determines that proposed amended rates of 235 and 153 percent of the Medicare ASC reimbursement are the appropriate PAFs to be utilized in the Texas workers' compensation system along with the other identified proposed amendments for reimbursement of ASC facility services.
DESCRIPTION OF THE PROPOSED AMENDMENTS
Proposed amended §134.402(a) describes the applicability of the section. Proposed amended §134.402(a)(1) states that the section applies to facility services provided on or after September 1, 2008 by an ASC, other than professional medical services. Proposed amended §134.402(a)(2) notes that the section does not apply to professional medical services billed by a health care provider not employed by the ASC, except for a surgical implant provider as described in the section; and, that it is not applicable to services provided through a workers' compensation health care network certified pursuant to Insurance Code Chapter 1305, except as provided in Insurance Code Chapter 1305.
Proposed amended §134.402(b) provides definitions for words and terms that are used in the section. Proposed new §134.402(b)(1) defines the term "Ambulatory Surgical Center" to mean a health care facility appropriately licensed by the Texas Department of State Health Services. Proposed new §134.402(b)(2) defines the term "ASC device portion" to mean the portion of the ASC payment rate that represents the cost of the implantable device, and says that it is calculated by applying the CMS OPPS device offset percentage to the OPPS payment rate. Proposed new §134.402(b)(3) defines the term "ASC service portion" to mean the Medicare ASC payment rate less the device portion. Proposed new §134.402(b)(4) defines the term "Device intensive procedure" to mean an ASC covered surgical procedure that has been designated by CMS as device intensive in TABLE 56-ASC COVERED SURGICAL PROCEDURES DESIGNATED AS DEVICE INTENSIVE FOR CY 2008, as published in the November 27, 2007 publication of the Federal Register , or its successor. Proposed amended §134.402(b)(5) defines the term "Implantable" to mean an object or device that is surgically implanted, embedded, inserted, or otherwise applied, and related equipment necessary to operate, program, and recharge the implantable. Proposed new §134.402(b)(6) defines the term "Medicare payment policy" to mean reimbursement methodologies, models, and values or weights including its coding, billing, and reporting payment policies as set forth in the CMS payment policies specific to Medicare. Proposed new §134.402(b)(7) defines the term "Surgical implant provider" to mean a person that arranges for the provision of implantable devices to a health care facility and that seeks reimbursement for the implantable devices provided directly from an insurance carrier.
Proposed amended §134.402(c) clarifies that a surgical implant provider is subject to Chapter 133 and is considered a health care provider for purposes of the section and the sections in Chapter 133 of this title .
Proposed amended §134.402(d) requires that for coding, billing, and reporting of facility services covered in the section, Texas workers' compensation system participants shall apply Medicare payment policies in effect on the date a service is provided with any additions or exceptions specified in this section. Proposed amended §134.402(d)(1) provides for the inclusion of specific provisions contained in the Labor Code or the Texas Department of Insurance, Division of Workers' Compensation (Division) rules, including Chapter 134, as taking precedence over any conflicting provision adopted or utilized by the CMS in administering the Medicare program. Proposed amended §134.402(d)(2) provides for the inclusion of Independent Review Organization decisions regarding medical necessity made in accordance with Labor Code §413.031 and §133.308 of this title (relating to MDR by Independent Review Organizations), which are made on a case-by-case basis, as taking precedence in that case only, over any Division rules and Medicare payment policies. Proposed new §134.402(d)(3) provides for the stated inclusion that whenever a component of the Medicare program is revised and effective, use of the revised component shall be required for compliance with Division rules, decisions, and orders for services rendered on and after the effective date, or after the effective date or the adoption date of the revised Medicare component, whichever is later.
Proposed amended §134.402(e) establishes that regardless of billed amount, reimbursement methods shall be determined in the following order. The first method is in proposed amended §134.402(e)(1), which states that reimbursement is the amount for the service that is included in a specific fee schedule in a contract that complies with the requirements of Labor Code §413.011. The second method is provided in proposed §134.402(e)(2), which states that if no contracted fee schedule exists that complies with Labor Code §413.011, the maximum allowable reimbursement (MAR) amount is as described under subsection (f) of the section, including reimbursements for implantables. The last method is addressed in proposed amended §134.402(e)(3) and provides that if no contracted fee schedule exists that complies with Labor Code §413.011, and an amount cannot be determined by application of the formula to calculate the MAR as outlined in subsection (f) of the section, then reimbursement shall be determined in accordance with §134.1 (relating to Medical Reimbursement).
Proposed amended §134.402(f) requires that the reimbursement calculation used for establishing the MAR shall be the Medicare ASC reimbursement amount determined by applying the most recently adopted and effective Medicare Payment System Policies for Services Furnished in Ambulatory Surgical Centers and Outpatient Prospective Payment System reimbursement formula and factors as published annually in the Federal Register. Reimbursement shall be based on the fully implemented payment amount as in ADDENDUM AA, ASC COVERED SURGICAL PROCEDURES FOR CY 2008, as published in the November 27, 2007 publication of the Federal Register, or its successor.
Proposed new §134.402(f)(1) allows two payment structures. The first reimbursement for non-device intensive procedures is proposed to be the Medicare ASC facility reimbursement amount multiplied by 235 percent. In the alternative, if an ASC facility or surgical implant provider requests separate reimbursement for an implantable, reimbursement for the non-device intensive procedure is proposed to be the sum of two parts. The first part is the lesser of the manufacturer's invoice amount or the net amount (exclusive of rebates and discounts) plus 10 percent or $1,000 per billed item add-on, whichever is less, but not to exceed $2,000 in add-on's per admission. The second part is the Medicare ASC facility reimbursement amount multiplied by 153 percent.
Proposed new §134.402(f)(2) allows a proposed reimbursement for device intensive procedures to be the sum of the ASC device portion, and the ASC service portion multiplied by 235 percent. It also provides that if an ASC facility or surgical implant provider requests separate reimbursement for an implantable, reimbursement for the device intensive procedure shall be the sum of the lesser of the manufacturer's invoice amount or the net amount (exclusive of rebates and discounts) plus 10 percent or $1,000 per billed item add-on, whichever is less, but not to exceed in $2,000 in add-on's per admission and the ASC service portion multiplied by 235 percent.
Proposed amended §134.402(g) states that a facility, or surgical implant provider with written agreement of the facility, may request separate reimbursement for an implantable. Proposed amended §134.402(g)(1) provides that the facility or surgical implant provider requesting reimbursement for the implantable shall bill for the implantable on the Medicare-specific billing form for ASCs; attach a copy of the manufacturer's invoice, or vendor's invoice to the ASC facility or surgical implant provider; and include with the billing a certification that the amount billed represents the actual cost as specified in the text. Proposed new §134.402(g)(2) states that an insurance carrier may use the audit process under §133.230 (relating to Insurance Carrier Audit of a Medical Bill) to seek verification that the amount certified under paragraph (1) properly reflects the requirements of this subsection. Such verification may also take place in the Medical Dispute Resolution process under §133.307 (relating to MDR of Fee Dispute), if that process is properly requested, notwithstanding §133.307(d)(2)(B). Proposed new §134.402(g)(3) provides that nothing in the rule precludes an ASC or insurance carrier from utilizing a surgical implant provider to arrange for the provision of implantable devices and that implantables provided by such a surgical implant provider shall be reimbursed according to the subsection.
Proposed new §134.402(h) establishes that for medical services provided in an ASC, but not addressed in the Medicare payment policies as outlined in subsection (f) of the section, and for which Medicare reimburses using other Medicare fee schedules, reimbursement shall be made using the applicable Division Fee Guideline in effect for that service on the date the service was provided.
Proposed new §134.402(i) provides that if Medicare prohibits a service from being performed in an ASC setting, the insurance carrier, health care provider, and ASC may agree, on a voluntary basis, to an ASC facility setting. Proposed new §134.402(i)(1) states that the agreement may occur before or during preauthorization. Proposed amended subsection (i)(2) also sets forth that 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. Proposed amended subsection (i)(3) provides that the agreement between the insurance carrier and the ASC must be in writing and include the reimbursement amount; any other provisions of the agreement; and names, titles, and signatures of both parties, with dates. Proposed amended subsection (i)(4) states that copies of the agreement are to be kept by both parties and that the agreement does not constitute a voluntary network established in accordance with Labor Code §413.011(d-1). Proposed amended (i)(5) provides that copies of the agreement are to be kept by both parties and that upon request of the Division, the agreement information shall be submitted in the form and manner prescribed by the Division.
Proposed new §134.402(j) establishes the severability of this section and states, if a court of competent jurisdiction holds that any provision of the section is inconsistent with any statutes of this state, are unconstitutional, or are invalid for any reason, the remaining provisions of the section shall remain in full effect.
Mr. Matthew Zurek, Executive Deputy Commissioner for Policy and Research, has determined that for each year of the first five years the proposed amended section will be in effect, there will be minimal fiscal implication for state government as a result of enforcing or administering the proposed amendments.
Increased costs may include expenses associated with the preparation of training materials and presentation of training programs for Division staff and other system participants, and costs associated with monitoring the Medicare payment policies. There will be no fiscal implications for local governments as a result of enforcing or administering the proposed amendments because they do not enforce or administer the rule.
Local government and state government as a covered regulated entity will be impacted in the same manner as persons required to comply with the proposed amendments, as described later in this preamble.
Mr. Zurek has also determined that for each year of the first five years the sections are in effect, the proposed amendments will not have a measurable effect on local employment or the local economy as a result of the proposed amendments.
Mr. Zurek has also determined that for each year of the first five years the sections are in effect, the public benefit anticipated is a reimbursement system with a well-known, standardized structure for delivery of quality medical care with effective cost control, that will provide positive benefits to all participants in the system: injured employees, employers, insurance carriers, and health care providers. The Division does not anticipate an increase in disputes as a result of this proposed amended rule because the Medicare reimbursement methodologies are well known and well documented. If an increase in dispute activity were to occur, it would likely be transient in nature. Reimbursement for some services will increase and some may decrease based on the new APC relativities. Aggregate medical costs will likely increase in the system, as these proposed amendments establish a reimbursement methodology and amount for services that are currently reimbursed in the aggregate at lower fees under the existing reimbursement methodology. Additionally, in establishing the fee guidelines, providers benefit from the increased security of payment afforded by the Labor Code.
Adoption of the most current Medicare ASC policies allows a broader range of services to be provided by ASCs. This may foster competition between various health care providers. This could lead to downward price pressures as well as quality improvements. A number of other factors could affect the impact including the frequency of injury, severity of injury, change in the practice of medicine for injured workers in Texas, distribution of services provided, current billing practices, and random fluctuations.
Use of standardized coding, reporting, billing, and reimbursement methodologies in the rules as proposed is expected to maintain consistency and standardization in the Texas workers' compensation system with the typical billing requirements used in Medicare and the group health systems.
Insurance carriers should not experience a significant increase in medical benefit costs as a result of increased unit prices. ASC costs directly related to historical Texas workers' compensation utilization are expected to increase approximately 23 percent in CY 2008, 38 percent in CY 2009, with increases in CY 2010 and CY 2011 limited to the annual increases made in the CPI-U which are incorporated in the Medicare ASC reimbursement rules. ASC reimbursement accounts for less than five percent of total Texas workers' compensation system medical benefit payments. Medical benefit impact is anticipated to average less than a one percent increase in medical benefit costs by the end of CY 2009. Any realignment of services to an ASC from a more expensive site of service as a result of the new reimbursement could potentially offset a portion of the increase.
Medical services are a significant portion of benefit costs employers pay through workers' compensation insurance premiums or directly through self-insurance programs. These amendments are unlikely to significantly impact overall medical costs, and employers should not see any increase in premium costs directly as a result of the proposed amendments. Improved access to ASC services for injured employees may provide indirect benefits to the employer. Benefits could include improved recovery and return to work outcomes that should be favorably reflected in the cost of doing business. In addition, the amended rule facilitates the appropriate use of all the resources available to health care providers.
Because the reimbursement methodology is based on the relative costs required to provide a service, reimbursements under the proposed amendments are more closely related to the resources required to provide the services. The alignment of ASC reimbursement with the most current Medicare ASC system yields more consistent reimbursement results and makes the Texas workers' compensation system more comparable to other health care systems and should discourage overutilization of services. This will benefit injured employees by preventing unnecessary treatment and delayed return to work.
Injured Employees
There will be no economic costs to injured employees, as this proposed rule does not impose any requirements on injured employees. Injured employees will have access to an expanded number of services that may be performed in the ASC setting. Additionally, injured employees will benefit from access to timely and quality medical care.
Employers
Employers who purchase workers' compensation insurance should experience no direct economic impact from the requirement to comply with these proposed rule amendments because there is no additional administrative requirement for the employer. However, employers are subject to premium rates that may be impacted by overall system costs. Since ASC services account for less than five percent of overall Texas workers' compensation medical benefit costs, the change in reimbursement structure is anticipated to increase overall reimbursement by less than two percent. The change in reimbursement structure and the expansion of services allowed to be performed in ASC settings is anticipated to increase ASC reimbursement. Some costs may be offset if services are shifted from other health care provider settings to a less costly ASC setting. Therefore, even though ASC facility reimbursement rates are proposed to be increased, the relatively small ASC volume combined with possible net savings from relocation of services to the less costly ASC setting, it is unlikely that premium costs will be negatively impacted in any significant amount.
Insurance Carriers
Insurance carriers have already incurred the start up costs for processing reimbursements on a basis consistent with Medicare, to comply with the previously adopted ASC rule and §134.403 of this title, so there should be minimal additional adjustment costs to process ASC claims under this proposal.
Most workers' compensation insurance carriers, including the 178 that qualify as small businesses in CY 2006, will experience an increase in medical benefit costs as a result of increased unit prices. These increases are dependent on an insurance carrier's specific mix of workers' compensation injuries, the severity of those injuries, health care providers rendering the services and past business practices.
Self-insured employers who self-administer and perform their own medical bill review should not experience significant costs related to compliance. These employers have already incurred the start up costs for processing reimbursements on a basis consistent with Medicare in order to comply with the current rule adopted in 2004 and in §134.403 of this title which uses the same grouping methodology, so there should be minimal additional adjustment costs to process ASC claims under this proposal.
Self-insured employers who outsource claims adjusting and/or medical bill review costs may be impacted based on their vendor relationships. If the vendor reprices bills for ASC services for commercial and/or workers' compensation patients, the costs should be minimal.
According to Division records, there are no self-insured employers that would be considered small or micro businesses. Therefore, there are no small or micro business self-insured employers impacted by these proposed amendments
Because the reimbursement methodology is based on the relative costs required to provide a service, reimbursements under the proposed amendments are more closely related to the resources required to provide the services. The alignment of ASC reimbursement with the Medicare system makes the Texas workers' compensation system more comparable to other health care systems and should discourage overutilization of services. Additionally, the adoption of the most current Medicare ASC reimbursement methodology better aligns all facility reimbursement structures and sets a general hierarchy of reimbursement relative to costs.
Health Care Providers
There are approximately 380 ASCs in Texas, of which approximately 127 are small businesses and approximately 187 are micro businesses.
Surgical implant providers that choose to directly bill a workers' compensation insurance carrier for the cost of implants may experience costs associated with Chapter 133 of this title. It is necessary that the sections in Chapter 133 apply to a billing party, because those sections provide the processes for bill auditing and dispute resolution.
Use of standardized coding, reporting, billing, and reimbursement methodologies in the rule as proposed is expected to decrease fee disputes within the workers' compensation system after a period of time for system participants to become familiar with the system.
Although some ASCs may not currently participate in the Medicare system, there are no additional requirements for these ASCs to bill for services provided in the Texas workers' compensation system. ASCs are instructed to bill their usual and customary charges; therefore ASCs are not required to calculate Medicare reimbursement in order to bill for services.
Doctors practicing in ASCs may derive organizational and operational benefits as a result of the proposed amended rule. The expanded list of services allowed in an ASC facility setting provides doctors with additional flexibility in scheduling their use of ASC facilities. Increased facility reimbursement for the previously approved procedures should allow doctors to schedule procedures that were not profitable for the ASC. The combination of these two factors may provide opportunities for doctors to coordinate their practice and further integrate care of injured employees with their group health practice patterns.
The Division estimates that the proposed amendment will result in an aggregate increase in ASC facility payments when applied to historical workers' compensation system ASC claim costs. Aggregate increase for ASC facility payments is approximately $5 million or 23 percent in CY 2008 and $14.9 million or 38 percent in CY 2009 when applied to historical workers' compensation ASC payments.
The Division projects a similar impact on future aggregate claim costs, assuming that there is not a significant shift in the distribution of claims. A number of other factors could affect the impact including frequency of injury, severity of injury, changes in the practice of medicine for injured workers in Texas, in part due to adoption of evidence-based treatment guidelines, distribution of services provided, current billing practices, and random fluctuations.
There will be no difference in the cost of compliance between a large, small or micro business as a result of the proposed amendments. Based upon the cost of labor per hour, there is no disproportionate economic impact on small or micro-businesses. Even if the proposed amendments would have an adverse effect on small or micro-businesses, it is neither legal nor feasible to waive the provisions of the proposed amendments for small or micro-businesses because the Labor Code requires equal application of these provisions to all affected entities and individuals.
The Division also considered not adopting the proposed amendments, implementing different requirements or standards for the affected small and micro-businesses, and exempting small and micro-businesses from the requirements of the proposed amendments.
Not adopting the proposal amendments. The Division rejected this approach because it would not comply with the requirements of Labor Code §413.011, which establishes the requirements for Division fee guidelines for medical services including adopting the most current reimbursement models and values or weights used by CMS.
Implementing different requirements or standards for the affected small or micro-businesses. The Division rejected this because the statutory framework of the Workers' Compensation Act and Division rules require a standardized reimbursement structure in order to maintain consistent access to care for injured employees.
Exempting small and micro-businesses from the requirements of the proposed amendments. The Division rejected this approach because it would neither comply with the requirements of Labor Code §413.011 nor the requirement to maintain a standardized reimbursement structure.
The Department has determined that no private real property interests are affected by this proposal and that this proposal does not restrict or limit an owner's right to property that would otherwise exist in the absence of government action and, therefore, does not constitute a taking or require a takings impact assessment under the Government Code §2007.043.
To be considered, written comments on the proposal must be submitted
no later than 5:00 p.m. on July 14, 2008. Comments may be submitted
via the Internet through the Division's Internet website at
The Commissioner will consider the proposed new section in a public
hearing at 1:30 p.m. on July 1, 2008, in Room 1.107A, 7551 Metro Center
Drive, Austin, Texas 78744. Written and oral comments presented at
the hearing will be considered.
The amendments are proposed under the Texas Labor Code §§408.021,
408.027, 408.031, 413.002, 413.007, 413.011, 413.012, 413.0511, 413.013,
413.014, 413.015, 413.016, 413.017, 413.019, 413.031; 413.041, 413.053,
402.0111, and 402.061. Section 408.021 entitles injured employees
to all health care reasonably required by the nature of the injury
as and when needed. Section 408.027 sets out the process for payment
of health care providers. Section 408.031 provides that an injured
employee may receive benefits under a workers' compensation network
established under Chapter 1305 of the Insurance Code. Section 413.002
requires the Division to monitor health care providers, insurance
carriers and claimants to ensure compliance with rules adopted by
the Commissioner of workers' compensation, including fee guidelines.
Section 413.007 sets out information to be maintained by the Division.
Section 413.011 mandates that the Division establish medical policies
and guidelines by rule. Section 413.012 requires the Division to review
and revise the medical policies and fee guidelines at least every
two years to reflect fair and reasonable fees. Section 413.013 requires
the Division by rule to establish programs related to health care
treatments and services for dispute resolution, monitoring, and review.
Section 413.014 requires preauthorization by the insurance carrier
for health care treatments and services. Section 413.015 requires
insurance carriers to pay charges for medical services as provided
in the statute and requires that the Division ensure compliance with
the medical policies and fee guidelines through audit and review.
Section 413.016 provides for refund of payments made in violation
of the medical policies and fee guidelines. Section 413.017 provides
a presumption of reasonableness for medical services fees that are
consistent with the medical policies and fee guidelines. Section 413.019
provides for payment of interest on delayed payments refunds or overpayments.
Section 413.031 provides a procedure for medical dispute resolution.
Section 413.041 requires health care practitioners and health care
providers to submit certain financial disclosure information to the
Division. Section 413.0511 requires the Medical Advisor to make recommendations
regarding the adoption of rules and policies to develop, maintain,
and review guidelines as provided by Section 413.011. Section 413.053
establishes the standards of reporting and billing. Section 402.00111
provides that the Commissioner of workers' compensation shall exercise
all executive authority, including rulemaking authority, under the
Labor Code and other laws of this state. Section 402.061 provides
that the Commissioner of workers' compensation has the authority to
adopt rules as necessary to implement and enforce the Texas Workers'
Compensation Act.
The following statutes are affected by this proposal: Labor Code §§408.021,
408.027, 408.031, 413.002, 413.007, 413.011, 413.012, 413.013, 413.014,
413.015, 413.016, 413.017, 413.019, 413.031, 413.041 , 413.0511, and
413.053.
§134.402.Ambulatory Surgical Center Fee Guideline.
(a) Applicability of this rule is as follows:
(1) This section applies to facility services provided
on or after September 1, 2008 by an ambulatory surgical center
(ASC), other than professional medical services.
(2) This section does not apply to:
(A) professional medical services billed
by a health care provider not employed by the ASC, except for a surgical
implant provider as described in this section; or
(B) medical services provided through
a workers' compensation health care network certified pursuant to
Insurance Code Chapter 1305, except as provided in Insurance Code
Chapter 1305.
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(b) Definitions for words and terms,
when used in this section, shall have the following meanings, unless
clearly indicated otherwise.
(1) "Ambulatory Surgical Center" means
a health care facility appropriately licensed by the Texas Department
of State Health Services.
(2) "ASC device portion" means the
portion of the ASC payment rate that represents the cost of the implantable
device, and is calculated by applying the Centers for Medicare and
Medicaid Services (CMS) Outpatient Prospective Payment System (OPPS)
device offset percentage to the OPPS payment rate.
(3) "ASC service portion" means the
Medicare ASC payment rate less the device portion.
(4) "Device intensive procedure" means
an ASC covered surgical procedure that has been designated by CMS
as device intensive in TABLE 56-ASC COVERED SURGICAL PROCEDURES DESIGNATED
AS DEVICE INTENSIVE FOR CY 2008 or its successor.
(5) "Implantable" means an object or
device that is surgically:
(A) implanted,
(B) embedded,
(C) inserted,
(D) or otherwise applied, and
(E) related equipment necessary to
operate, program, and recharge the implantable.
(6) "Medicare payment policy" means
reimbursement methodologies, models, and values or weights including
its coding, billing, and reporting payment policies as set forth in
the Centers for Medicare and Medicaid Services (CMS) payment policies
specific to Medicare.
(7) "Surgical implant provider" means
a person that arranges for the provision of implantable devices to
a health care facility and that then seeks reimbursement for the implantable
devices provided directly from an insurance carrier.
(c) A surgical implant provider is
subject to Chapter 133 of this title and is considered a health care
provider for purposes of this section and the sections in Chapter 133.
(d) [
(1) Specific provisions contained in
the Labor Code or the Texas Department of Insurance, Division of Workers'
Compensation (Division) rules, including this chapter, shall take
precedence over any conflicting provision adopted or utilized by the
CMS in administering the Medicare program.
(2) Independent Review Organization
decisions regarding medical necessity made in accordance with Labor
Code §413.031 and §133.308 of this title (relating to MDR
by Independent Review Organizations), which are made on a case-by-case
basis, take precedence in that case only, over any Division rules
and Medicare payment policies.
(3) Whenever a component of the Medicare
program is revised and effective, use of the revised component shall
be required for compliance with Division rules, decisions, and orders
for services rendered on and after the effective date, or after the
effective date or the adoption date of the revised Medicare component,
whichever is later.
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(e) Regardless of billed amount, reimbursement shall be:
(1) the amount for the service that
is included in a specific fee schedule set in a contract that complies
with the requirements of Labor Code §413.011; or
(2) if no contracted fee schedule exists
that complies with Labor Code §413.011, the maximum allowable
reimbursement (MAR) amount under subsection (f) of this section, including
any reimbursement for implantables.
(3) If no contracted fee schedule exists
that complies with Labor Code §413.011, and an amount cannot
be determined by application of the formula to calculate the MAR as
outlined in subsection (f) of this section, reimbursement shall be
determined in accordance with §134.1 of this title (relating
to Medical Reimbursement).
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(f) The reimbursement calculation used
for establishing the MAR shall be the Medicare ASC reimbursement amount
determined by applying the most recently adopted and effective Medicare
Payment System Policies for Services Furnished in Ambulatory Surgical
Centers and Outpatient Prospective Payment System reimbursement formula
and factors as published annually in the Federal Register. Reimbursement
shall be based on the fully implemented payment amount as in ADDENDUM
AA, ASC COVERED SURGICAL PROCEDURES FOR CY 2008, published in the
November 27, 2007 publication of the Federal Register, or its successor.
The following minimal modifications apply:
(1) Reimbursement for non-device intensive procedures shall be:
(A) The Medicare ASC facility reimbursement
amount multiplied by 235 percent; or
(B) if an ASC facility or surgical
implant provider requests separate reimbursement for an implantable,
reimbursement for the non-device intensive procedure shall be the sum of:
(i) the lesser of the manufacturer's
invoice amount or the net amount (exclusive of rebates and discounts)
plus 10 percent or $1,000 per billed item add-on, whichever is less,
but not to exceed $2,000 in add-on's per admission; and
(ii) the Medicare ASC facility reimbursement
amount multiplied by 153 percent.
(2) Reimbursement for device intensive procedures shall be:
(A) the sum of:
(i) the ASC device portion; and
(ii) the ASC service portion multiplied by 235 percent; or
(B) If an ASC facility or surgical
implant provider requests separate reimbursement for an implantable,
reimbursement for the device intensive procedure shall be the sum of:
(i) the lesser of the manufacturer's
invoice amount or the net amount (exclusive of rebates and discounts)
plus 10 percent or $1,000 per billed item add-on, whichever is less,
but not to exceed $2,000 in add-on's per admission; and
(ii) the ASC service portion multiplied by 235 percent.
[
(g) A facility, or surgical implant
provider with written agreement of the facility, may request separate
reimbursement for an implantable.
(1) The facility or surgical implant
provider requesting reimbursement for the implantable shall:
(A) bill for the implantable on the
Medicare-specific billing form for ASCs;
(B) attach a copy of the manufacturer's
invoice, or vendor's invoice to the ASC facility or surgical implant
provider; and
(C) include with the billing a certification
that the amount billed represents the actual cost (net amount, exclusive
of rebates and discounts) for the implantable. The 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," and shall be signed by an authorized representative
of the facility or surgical implant provider who has personal knowledge
of the cost of the implantable and any rebates or discounts to which
the facility or surgical implant provider may be entitled.
(2) An insurance carrier may use the
audit process under §133.230 of this title (relating to Insurance
Carrier Audit of a Medical Bill) to seek verification that the amount
certified under paragraph (1) of this subsection properly reflects
the requirements of this subsection. Such verification may also take
place in the Medical Dispute Resolution process under §133.307
of this title (relating to MDR of Fee Dispute), if that process is
properly requested, notwithstanding §133.307(d)(2)(B) of this title.
(3) Nothing in this rule precludes
an ASC or insurance carrier from utilizing a surgical implant provider
to arrange for the provision of implantable devices. Implantables
provided by a surgical implant provider shall be reimbursed according
to this subsection.
(h) For medical services provided in
an ASC, but not addressed in the Medicare payment policies as outlined
in subsection (f) of this section, and for which Medicare reimburses
using other Medicare fee schedules, reimbursement shall be made using
the applicable Division Fee Guideline in effect for that service on
the date the service was provided.
(i) If Medicare prohibits a service
from being performed in an ASC setting, the insurance carrier, health
care provider, and ASC may agree, on a voluntary basis, to an ASC
setting as follows:
(1) The agreement may occur before, or during, preauthorization.
(2) A preauthorization request may
be submitted for an ASC facility 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.
(3) The agreement between the insurance
carrier and the ASC must be in writing, in clearly stated terms, and include:
(A) the reimbursement amount;
(B) any other provisions of the agreement; and
(C) names, titles and signatures of both parties with dates.
(4) Copies of the agreement are to
be kept by both parties. This agreement does not constitute a voluntary
network established in accordance with Labor Code §413.011(d-1).
(5) Upon request of the Division, the
agreement information shall be submitted in the form and manner prescribed
by the Division.
(j) [
This agency hereby certifies that the proposal has
been reviewed by legal counsel and found to be within the agency's
legal authority to adopt.
Filed with the Office of the Secretary of State on May 30, 2008.
TRD-200802809
Norma Garcia
General Counsel
Texas Department of Insurance, Division of Workers' Compensation
Earliest possible date of adoption: July 13, 2008
For further information, please call: (512) 804-4715
(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. This section shall not apply to facility services provided by
an ASC on or after September 1, 2008.]
(3) Specific provisions contained
in the Texas Workers' Compensation Act (Act) or Texas Department of
Insurance, Division of Workers' Compensation (Division) 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 Division rule. Independent
Review Organization (IRO) decisions regarding medical necessity are
made on a case-by-case basis. The Division will monitor IRO decisions
to determine whether Division rulemaking action would be appropriate.]
(4) Except as provided in subsection
(b) of this section, whenever a component of the Medicare program
is revised and effective, use of the revised component shall be required
for compliance with Division rules, decisions and orders for services
rendered on or after the effective date of the revised component.]
(b)] For coding, billing,
and reporting, of facility services covered in this rule, Texas workers'
compensation system participants shall apply the Medicare
payment [program coding, billing, and reporting
] policies in effect on
the date a service is provided with any additions or exceptions specified
in this section, including the following paragraphs. [For
reimbursement of facility services covered in this rule, Texas workers'
compensation system participants shall apply the reimbursement provisions
of this section and the Medicare program reimbursement methodologies,
models, and values or weights that were in effect on the earlier of
the date a service is provided or December 31, 2007.]
(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 Division,
the agreement information shall be submitted in the form and manner
prescribed by the Division.]
(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 §133.230 of this title (relating to Insurance Carrier Audit
of a Medical Bill) 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 MDR of 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.