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ADVISORY 2003-09

SUBJECT: Determining Fair and Reasonable Reimbursement for Ambulatory Surgical Center Care

On June 18, 2003, a District Court in Travis County issued a decision in the case of East Side Surgery Center and The Clinic for Special Surgery v. Texas Workers' Compensation Commission and the State Office of Administrative Hearings, Cause No. GN202229. That court said: "IT IS THEREFORE ORDERED, ADJUDGED AND DECREED that the Court declares 28 Texas Administrative Code 133.304(i) is invalid as applied to Ambulatory Surgical Centers. Further, the Court grants a permanent injunction prohibiting Defendants from applying 28 Texas Administrative Code 133.304(i) in setting fees for Ambulatory Surgical Centers' (ASC) services." The Commission will appeal this decision to the Third Court of Appeals in Austin. After consultation with the Office of the Attorney General, it is our understanding that, until all avenues for further judicial review and appeal are exhausted by the Commission, this decision is superseded and thus, Rule 133.304(i) remains fully in effect.

Establishing Fair and Reasonable Reimbursement in an ASC Medical Dispute Resolution Request. The Medical Dispute Resolution (MDR) section of the Medical Review Division continues to evaluate the efforts of the parties in establishing a fair and reasonable reimbursement for ASC services. The MDR section notes that the most common documentation utilized by the ASCs to support their requests for fair and reasonable reimbursement is sample payments in the form of Explanation of Benefits (EOB) or audit summaries. The MDR section will review such documentation to see if it:

  • Reflects similar payments for similar treatment to that of the disputed billing;
  • Reflects the service for injured individuals of an equivalent standard of living (e.g. Medicare, managed care, preferred provider organization, workers' compensation injured employees, etc.)
  • Is contemporary, but usually not older than one year before the date of service in dispute;
  • Offers additional explanation if evidence is older than one year;
  • Reflects a "fair and reasonable" payment not exceeding the typical / most dominant payment for all individuals of an equivalent standard of living in Texas; and
  • Provides sufficient quantity and quality of examples of other payments, when utilized to support these criteria.

The MDR section also recognizes that the EOBs may not provide the information necessary to establish similar treatment. If so, the ASCs may submit a billing statement, Form UB-92 with each EOB sample. The MDR section will review insurance carrier documentation and information submitted in the dispute process including but not limited to information concerning what hospital inpatient payments are for similar treatments, under the criteria information noted above, to determine whether payment amounts requested are "fair and reasonable" under Commission rules 134.1(f) and 133.1(a)(8).

Confidentiality Requirements. The information submitted by the parties is kept confidential within the Commission to the extent allowed by the Texas Public Information Act. The Commission recognizes the requirements of the Health Insurance Portability and Accountability Act (HIPAA) upon system participants in non-workers' compensation cases and therefore, requires that the name, address, date of birth, social security number or employer name (of the other individuals not related to the injured employee involved in the medical dispute) be redacted.

Additional Evidence of Fair and Reasonable Reimbursements. In some medical dispute cases, sample contracts are provided indicating the minimal expected reimbursement. In this case, the MDR section will determine whether the criteria information mentioned above and whether the following information has been provided:

  • The parties to the contract;
  • The effective dates of the contract; and
  • Confirmation of coverage for the services provided on the date(s) of service in dispute.

Responding to Medical Dispute Resolution. The Commission rules 133.307 and 133.308 require insurance carriers to respond to all medical disputes. Without a timely response, no EOB for the services in dispute, or the respondent's position statement, the reviewer may not know the actual bases of the insurance carrier's position in the dispute. Failure to respond in a timely manner will result in a decision based solely upon the documentation and information provided by the requestor.

Signed on this 11th day of July, 2003

Richard F. Reynolds, Executive Director

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