Adopted amended §134.402(e) establishes that regardless of billed amount, reimbursement methods shall be determined in the following order. The first method is in adopted §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 adopted §134.402(e)(2), which states that if no contracted fee schedule exists that complies with Labor Code §413.011, the MAR amount is as described under subsection (f) of the section, including reimbursements for implantables. The last method is addressed in adopted §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 of this title.

Adopted 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.

Adopted new §134.402(f)(1) allows two payment structures. The first reimbursement for non-device intensive procedures is 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 a non-device intensive procedure is 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.

Adopted new §134.402(f)(2) allows a 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.

Adopted 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 used in a device intensive procedure. Adopted 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, and include with the billing a certification that the amount billed represents the actual cost as specified in the text. Adopted new §134.402(g)(2) states that 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) 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 Disputes), if that process is properly requested, notwithstanding §133.307(d)(2)(B). Adopted 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.

Adopted 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.

Adopted 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. Adopted new §134.402(i)(1) states that the agreement may occur before or during preauthorization. Adopted 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. Adopted 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. Adopted 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). Adopted 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.

Adopted 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.

§134.402: Some commenters support the proposed rule. Agency Response: The Division appreciates the supportive comments.

§134.402: Some commenters commend the Division for allowing stakeholders the opportunity to be involved in this beneficial rulemaking process, for looking at the big picture, and understanding where ASCs fit into the delivery of health care and the benefits ASCs can provide to injured employees, employers, insurance carriers and other providers.

Agency Response: The Division appreciates the supportive comments and agrees that system participant input is an important component in exploring and understanding options for the development and operation of the Texas workers' compensation system.

§134.402: A commenter opines that the rule proposal will increase competition. The commenter suggests it may bring some doctors back into the workers' compensation system due to scheduling efficiencies appreciated in ASCs, which are less evident in hospital outpatient surgical departments. With surgery that can be accomplished sooner, an injured employee should be eligible for either rehabilitation services, or to return to work sooner, all of which are advantages to using the ASC site of service.

Agency Response: The Division acknowledges that the rule enhances access to surgical venue choices for injured employees. These choices may lead to increased competition with the potential for quality and outcome improvements.

§134.402(a)(1): A commenter asks if there will be a grace period applied to the new rule since such a short time frame from adoption to applicability date is extremely difficult.

Agency Response: The Division clarifies that previous §134.402(a)(2) contained a provision that prevents an extension beyond August 31, 2008, necessitating the implementation of these amendments by September 1, 2008.

§134.402(b)(5): A commenter supports the definition of "surgical implant provider." Agency Response: The Division appreciates the supportive comments.

§134.402(b)(5): A commenter believes the definition of "surgical implant provider" is overly broad and could lead to overpayment and abuses, but the commenter also recognizes this definition is consistent with other Division fee guidelines.

Agency Response: The Division disagrees the definition is overly broad and could lead to overpayment and abuses. However, the Division agrees that the definition is consistent with Division definitions relating to implantable devices. The Division is concerned with any potential abuse and will monitor the use of surgically implanted devices throughout the workers' compensation system. The Division will closely monitor implant costs. This may include a data call to capture specific implantable information, such as the invoice cost and facility charge. In addition, the Division may request other specific implantable information, such as the lot number, model number, or serial number of the device or other identifier used by a manufacturer. The latter identifiers are consistent with medical device tracking requirements imposed on a manufacturer when tracking is ordered by the Food and Drug Administration for a class II or class III medical device pursuant to 21 U.S.C. §360i (e) and 21 C.F.R. §821.1 et. seq. Additionally, insurance carriers have the ability to audit health care providers and surgical implant providers in part under the authority of §133.230 and §133.307 of this title.

§134.402(b)(5): Some commenters believe the definition of "surgical implant provider" invites billing abuse and suggest it is so broad as it could be used to apply to all forms of durable medical equipment that is in any way applied to the body, when often such type of equipment is potentially reusable by the facility for many other patients. The commenters are opposed to the insurance carrier being forced to pay up to $1,000 of a mark-up up each time the facility uses the equipment for a workers' compensation claim, and state this violates Labor Code §413.011(f) since it fails to achieve effective medical cost control.

Agency Response: The Division clarifies the components of an implantable device are generally tailored for the use by a specific patient and are not maintained or reused by a facility. The insurance carrier, through the bill review and audit processes, may address any potential insurance carrier uncertainty about the billing of an implantable. Reimbursement for the implantable and the appropriate add-on amount will be made to the entity that submitted the CMS-1500 form with the required documentation and certification. Additionally, a cap of $2,000 is identified in the rule to discourage unbundling of items that exceed the $1,000 per billed item cap. This definition and the associated processes are consistent with adopted §134.403 and §134.404 of this title.

§134.402(b)(7) and (c): Some commenters state the Division lacks the statutory authority to recognize implant providers as health care providers, and state that it is inaccurate and unlawful. A "surgical implant provider" does not meet the definition of "health care provider" found in Labor Code §401.011, and the Texas Legislature has not recognized "surgical implant provider" as a stakeholder in the Texas workers' compensation system as it has with pharmaceutical processing agents under Labor Code §413.0111.

Agency Response: The Division disagrees with the comment. The Division clarifies that the definition for "surgical implant provider" does not expressly define such an entity as being a health care provider. Rather, §134.402(c) states that a surgical implant provider is subject to Chapter 133 of this title (relating to Benefits - Medical Benefits) and is considered a health care provider for purposes of §§134.402, 134.403 and 134.404 and Chapter 133. It has been the Division's position in the past that a company that supplies medical equipment is a facility that provides "health care," and thus can meet the definition of "health care provider" under the Labor Code for purposes of Chapter 133. This interpretation was expressed in the adoption order for §133.1 (concerning Definitions for Chapter 133, Benefits - Medical Benefits) published in the Texas Register on March 10, 2000. (25 TexReg 2115 at 2118.) Subsequently, the statute changed to include surgical supplies as a form of health care pursuant to Labor Code §401.011(19)(F).

§134.402(b)(7): Some commenters recommend that the rule clarify in the definition of surgical implant provider that the definition does not pertain to or include an implant manufacturer.

Agency Response: The Division declines to make the change. The Division determines the definition for surgical implant provider is appropriate and that it maintains consistency with provisions contained in the Division's recently adopted hospital fee guidelines. This consistency is necessary to prevent confusion as to its application between fee guidelines.

§134.402(b)(7): Some commenters are concerned about the lack of rule language prohibiting device manufacturers from direct billing, and reference similarly stated concerns in response to the hospital outpatient and inpatient facility fee guideline proposals. One commenter states device manufacturers have no reason to work with insurance carriers in the discussion of what is reasonable and what should be paid, and suggests such activity could even cause abuse of that process.

Agency Response: The Division disagrees and believes that removing or restricting manufacturers from billing insurance carriers directly may inadvertently restrict business decisions available to facilities. This restriction could hinder injured employees' access to implantable devices. Additionally, the Division disagrees there is no incentive for any implantable supplier to refuse to negotiate with insurance carriers in respect to what is reasonable and should be paid for implantables. Providers and insurance carriers are free to negotiate reimbursement above or below fee guidelines in the Texas workers' compensation system. As with any negotiation, it is assumed that negotiating parties must find mutually beneficial common ground based on their particular business needs. Although contracting does not appear to be a common occurrence in the current system, as the system matures, opportunities for negotiations and agreements may evolve. The consistent definitions and concepts included in all of the facility fee guidelines concerning implantables may facilitate those contracting opportunities. The Division sees no need to hinder the potential for innovative arrangements between system participants.

§134.402(d)(3): A commenter recommends clarification be provided as to how Medicare program changes occur, when and how they become effective in the workers' compensation system.

Agency Response: The Division clarifies that use of updated or revised Medicare components in the Texas workers' compensation system is not a new concept and §134.402(d)(3) requires use of the most recent payment policies adopted by the Medicare program for compliance with Division rules, decisions and orders for services rendered on or after the effective date, or after the effective date or the adoption date of the revised Medicare component, whichever is later. Further, the Division clarifies this is a standard provision that has been applied to other recently amended Division fee guideline rules in order to prevent the Texas workers' compensation system from falling out of synchronization with Medicare. Texas worker's compensation system participants have been supportive of this in previous rule efforts stating that without the provision, retrospective payments and refunds would make payment within the Texas workers' compensation system uncertain and unmanageable and would result in insurance carriers and hospitals incurring costs associated with making additional payments or refunding payments.

§134.402(d)(3): Some commenters encourage the Division to allow for a CPI-U increase even if Medicare should freeze this provision at some point in time. The commenters further indicate it may be difficult to address this by rule, and suggest a PAF adjustment in future years may be the solution. One commenter further states such CPI-U adjustment could be accomplished in a manner similar to the current conversion factor annual adjustment for professional services as outlined in §134.203 of this title (relating to Medical Fee Guideline for Professional Services).

Agency Response: The Division declines to make the change. The proposed and adopted rule automatically includes the CMS provisions for increases in ASC reimbursement based on the CPI-U that will begin in 2010. CMS utilizes different reimbursement methodologies and benchmarks for establishing inflation factors for outpatient hospital and ASC facility services. The Division adopts the CMS methodologies for updating reimbursement and consequently maintains a parallel relationship between both the CMS and the Texas workers' compensation system and the hospital outpatient and ASC facility reimbursements.

§134.402(d)(3): A commenter opposes any automatic annual inflation adjustment outside the Medicare methodology, as it is inconsistent with the Division's hospital outpatient fee guideline. The commenter advises that the Division review of fee guidelines is required every two years, and such review and revision, if necessary, can take into account whether an inflation adjustment is necessary considering all other relevant factors.

Agency Response: The Division agrees and no changes to the rule are necessary. Inflation adjustments are currently included in the CMS methodologies and the Division has incorporated these annual revisions into the adopted rule by adopting the Medicare reimbursement structure. Future rule review and, if necessary, revision will consider all the requirements of the Labor Code including those related to reimbursement and annual adjustments. §134.402(e)(2): Some commenters request clarification as to whether the reimbursement methodology related to the fee schedule and MAR is mandatory or discretionary and whether the statements made in an agency appellate brief contradict the methodology.

Agency Response: The Division clarifies §134.402 is mandatory for payment purposes. Labor Code §408.027(f) provides that "Any payment made by an insurance carrier under this section shall be in accordance with the fee guidelines authorized under this subtitle."