The Texas Department of Insurance, Division of Workers' Compensation (Division) proposes amendments to §134.402 concerning the Ambulatory Surgical Center (ASC) Fee Guideline. These amendments are necessary to maintain the stability of the ASC reimbursement rates during the period the Division develops a new ASC fee guideline in order to address new changes in Medicare's ASC reimbursement methodology.

With Labor Code §413.011, the Texas Workers' Compensation Act (Act) establishes the requirements for Division fee guidelines for medical services. The statute requires the Division 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, the statute requires that fee guidelines be fair and reasonable and designed to ensure the quality of medical care and to achieve effective medical cost control. The Division is to adopt the most current reimbursement methodologies, models, and values or weights used by the Centers for Medicare and Medicaid Services (CMS) in order to achieve standardization. Additionally, Labor Code §413.0511(b)(1) requires consultation with the Medical Advisor in developing, reviewing, and maintaining guidelines. 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).

The current version of §134.402 was developed pursuant to the requirements of the Act and was based on the Medicare ASC reimbursement methodology in place at the time. The Medicare methodology in place at that time prospectively established a set payment amount for each type of facility service that CMS determined would be reimbursed in an ASC setting. These services were divided into nine specific categories or ASC groups. Beginning in January of 2008, the list of procedures eligible for payment under the Medicare ASC payment system will be greatly expanded. In addition, the limited fee schedule based on nine disparate payment groups will move to a payment system incorporating relative payment weights for groups of procedures with similar resource and clinical characteristics, based on the Ambulatory Payment Classifications that are key elements of the Outpatient Prospective Payment System. Medicare's new ASC payment system makes significant changes in the methodology used to determine ASC reimbursement, such as including reimbursement for high cost devices and surgically implanted devices in the procedure reimbursement amount.

Currently §134.402 provides for ASCs to be paid at 213.3% of the Medicare ASC reimbursement amount. In addition, §134.402 requires surgically implanted devices to be reimbursed separately at the amount actually paid for the device by the ASC.

Section 134.402 currently provides that coding, billing, reporting, and reimbursement of ASC facility services covered by the rule are to be accomplished by applying the Medicare policies in effect on the date a service is provided. This provision was included to prevent the Texas workers' compensation system from falling out of synchronization with Medicare and to achieve the standardization goals established in §413.011 of the Act. However, with the significant changes in Medicare's ASC reimbursement system, if this provision of §134.402 remains in place, the result will be application of the 213.3% payment adjustment factor to the new Medicare ASC reimbursement system. In some instances this may result in unreasonable reimbursements. If 213.3% is applied to the new methodology, the reimbursement for some typical workers' compensation ASC services would range between 199% to 362% of 2007 Medicare rates. For example, reimbursement for CPT code 64476 (injection to the lumbar or sacral area, each additional level), could decrease from $710 to $663, or 199% of 2007 Medicare rates; and reimbursement for CPT code 29826 (shoulder arthroscopy), could increase from $1,088 to $1,848, or 362% of 2007 Medicare rates. Additionally, for surgically implanted device intensive procedures, some reimbursements would increase up to 5709% of the 2007 Medicare rates. For example, reimbursement for CPT code 61886 (implant of neurostimulator arrays), could increase from $1,088 to $29,114, or 5709% of 2007 Medicare rates. Additional separate reimbursement of implantables as currently required by §134.402 would push this rate even higher. This could lead to shifting sites of service for financial rather than clinical reasons to the detriment of injured employees and the Texas workers' compensation system overall.

The proposed amendments to §134.402 extend the use of the current 2007 Medicare reimbursement methodology for services provided on or after January 1, 2008 through August 31, 2008. This will allow time for the Division and system participants to thoroughly research Medicare's new reimbursement methodology so that it can be integrated into the Texas workers' compensation system in a manner that provides reasonable reimbursement for all services in the system, while assuring system participants of a timeline for implementation of the new Medicare methodologies. Future amendments to §134.402 will later be coordinated with the proposal of new §134.403, Hospital Facility Fee Guideline - Outpatient, in order to maintain the consistency established in the Medicare reimbursement systems for outpatient and ASC services.

Consistent with the statutory directives in Labor Code §413.011, the reimbursement levels and fee guideline established in current §134.402 use the Medicare reimbursement structure as a baseline, or reference point, for the maximum allowable reimbursement calculations for services provided in an ASC health care facility. However, the ASC fee guideline was not based solely on the Medicare reimbursements. In setting the ASC fees in this rule, Medicare fees were used as a reference and commercial market payments were considered as indicative of economic indicators in health care, as also required by the statute. The adoption of the ASC payment adjustment factor (PAF) of 213.3% was based upon due consideration of all of the statutory requirements for fee guidelines and the current Medicare reimbursement methodology for ASC services.

At the time of the adoption of the Division's ASC fee guideline, outpatient hospital and ASC payments were not standardized in the Medicare system, or in the market in general. Medicare's new ASC schedule is a move toward standardizing the reimbursement methodologies of these two types of facilities by changing the ASC methodology to be more like that of the outpatient hospital reimbursement methodology. This is a significant change in the Medicare ASC schedule and the current PAF in §134.402 is not compatible with this new methodology. Time is needed to reevaluate all of the data and information, and to analyze the effects of the new Medicare ASC reimbursement methodology on workers' compensation reimbursements in order to make the appropriate recommended transition to the new Medicare reimbursement methodology for ASCs. The proposed rule amendments will continue the use of reimbursement structures and amounts at the Medicare ASC 2007 rates for services provided on January 1, 2008 through August 31, 2008. This will maintain the stability of the ASC reimbursement rates during the period a new ASC fee guideline utilizing the new Medicare ASC methodology is being developed.

A proposed amendment to §134.402(a)(2) states that the section shall not apply to facility services provided by an ASC on or after September 1, 2008. Proposed amendments to §134.402(a)(3) change a reference from "Texas Workers' Compensation Commission (commission)" to "Texas Department of Insurance, Division of Workers' Compensation (Division)" and change "commission" to "Division." A proposed amendment to §134.402(a)(4) adds the words "except as provided in subsection (b) of the section" to a provision in the paragraph that requires use of revised Medicare components for compliance with the section. The proposed amendment to subsection (a)(4) also changes "commission" to "Division."

Proposed amendments to §134.402(b) insert the word "and" between the words "billing" and "reporting," and also remove the word "and reimbursement." The proposed amendment to subsection (b) also removes the words "reimbursement methodologies, models, and values or weights including its" and the word "payment." The proposed amendment to subsection (b) also adds the requirement that for reimbursement of facility services covered in the rule, Texas workers' compensation system participants shall apply the reimbursement provisions of the 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.

A proposed amendment to §134.402(e)(3)(D) changes "commissioner" to "Division."

Proposed amendments to §134.402(f) changes a reference from "§133.302 and §133.303 of this title (relating to Preparation for an Onsite Audit and Onsite Audits)" to "§133.230 of this title (relating to Insurance Carrier Audit of a Medical Bill)" and changes the reference to §133.307 of this title from "(relating to Medical Dispute Resolution of a Medical Fee Dispute)" to "(relating to MDR of Fee Disputes)."

Jaelene Fayhee, Commissioner of Workers' Compensation Special Assistant, has determined that for each year of the first five years the proposed sections will be in effect, there will be no fiscal impact to state and local governments as a result of the enforcement or administration of the rule. There will be no measurable effect on local employment or the local economy as a result of the proposal.

Ms. Fayhee has also determined that for each year of the first five years the sections are in effect, the public benefit anticipated as a result of the proposed sections is that it will not yet be necessary for system participants to change current reimbursement processes and systems. The system benefits from a measured and controlled implementation of new and significant Medicare reimbursement methodology changes.

Injured employees will benefit from continued access to ASC services and stability of the system.

All system participants will benefit by maintaining the consistency of current administrative and reimbursement processes until a measured and controlled implementation of the new Medicare reimbursement processes are integrated into the Texas workers' compensation system.

There will be no economic cost to persons required to comply with the sections because the amendment continues the current ASC reimbursement system. No changes in processes or systems will be required. Because reimbursements for ASC services will remain the same, some services will not be increased or decreased in accordance with the new Medicare ASC reimbursement methodology changes.

There will be no difference in the cost of compliance between a large and small business as a result of the proposed sections. Based upon the cost of labor per hour, there is no disproportionate economic impact on small or micro-businesses. Even if the proposed sections would have an adverse effect on small or micro-businesses, it is neither legal nor feasible to waive the provisions of the proposed sections for small or micro-businesses because the Labor Code requires equal application of these provisions to all affected individuals.

The Division 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 received no later than 5:00 p.m. on November 26, 2007. Comments may be submitted via the Internet through the Division's Internet website at http://www.tdi.state.tx.us/wc/rules/proposedrules/toc.html or by mailing or delivering your comments to Victoria Ortega, Legal Services, MS-4D, Texas Department of Insurance, Division of Workers' Compensation, 7551 Metro Center Drive, Suite 100, Austin, Texas 78744.

If substantial written comments are received, the Division will schedule a public hearing in the Tippy Foster Room, Division of Workers' Compensation, 7551 Metro Center Drive, Austin, Texas to consider the proposal of this rule. Any request for a public hearing must be submitted separately to the Office of General Counsel by 5:00 p.m. on November 26, 2007. If a hearing is held, written and oral comments presented at the hearing will be considered.

The amendments are proposed under the Texas Labor Code §§408.021, 413.002, 413.007, 413.011, 413.012, 413.013, 413.014, 413.015, 413.016, 413.017, 413.019, 413.031; 413.0511, 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 413.002 requires the Division to monitor health care providers, insurance carriers and claimants to ensure compliance with Division rules. Section 413.007 sets out information to be maintained by the Division. Section 413.011 mandates that the Division by rule establish medical reimbursement policies and guidelines. Section 413.012 requires review and revision of the medical policies and fee guidelines at least every two years. 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 413.0511 requires the Medical Advisor to make recommendations regarding the adoption of rules and policies to develop, maintain, and review guidelines as provided by § 413.011. 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 sections are affected by this proposal: Labor Code §§408.021, 413.002, 413.007, 413.011, 413.012, 413.013, 413.014, 413.015, 413.016, 413.017, 413.019, 413.031; 413.0511, 402.0111, and 402.061.