STATE OF FLORIDA DIVISION OF ADMINISTRATIVE HEARINGS ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) RECOMMENDED ORDER

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1 STATE OF FLORIDA DIVISION OF ADMINISTRATIVE HEARINGS MACY S CLAIMS SERVICES AND QMEDTRIX SYSTEMS, INC., vs. Petitioners, DEPARTMENT OF FINANCIAL SERVICES, DIVISION OF WORKERS COMPENSATION, and Respondent, FLORIDA HOSPITAL ORLANDO, Intervenor. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Case Nos RECOMMENDED ORDER An administrative hearing was conducted in this case on February 22, 2010, in Tallahassee, Florida, before James H. Peterson, III, Administrative Law Judge with the Division of Administrative Hearings. APPEARANCES For Petitioners: Cindy R. Galen, Esquire Eraclides, Johns, Hall, Gelman, Eikner & Johannessen, L.L.P Bee Ridge Road Sarasota, Florida 34239

2 For Respondent: Mari H. McCully, Esquire Department of Financial Services Division of Workers Compensation 200 East Gaines Street Tallahassee, Florida For Intervenor: John D. Buchanan, Esquire Henry, Buchanan, Hudson, Suber & Carter, P.A. Post Office Box Tallahassee, Florida STATEMENT OF THE ISSUES 1. Whether Florida Hospital Medical Center is entitled to reimbursement in the amount preliminarily determined by the Department of Financial Services, Division of Workers Compensation, in a reimbursement dispute regarding bills submitted by Florida Hospital Medical Center to Macy s Claims Services and Amerisure Mutual Insurance Company for medical services provided to two individuals involved in work-related accidents; and 2. Whether Macy s Claims Services and Amerisure Mutual Insurance Company properly adjusted those bills of Florida Hospital Medical Center in accordance with the requirements of Florida s Workers Compensation law and applicable rules. PRELIMINARY STATEMENT These consolidated cases involve challenges by Macy s Claims Services (Macy s) and Amerisure Mutual Insurance Company (Amerisure) to Workers Compensation Medical Services Reimbursement Dispute Determinations (Dispute Determinations) 2

3 issued by Respondent (the Department), pursuant to Section (7), Florida Statutes (2009) 1/. The Dispute Determinations were rendered by the Department after Florida Hospital Medical Center (Florida Hospital), which has facilities located in Orlando (Florida Hospital Orlando) and in Winter Park (Florida Hospital Winter Park) challenged adjustments made to its medical bills by Macy s and Amerisure. The medical bills were for un-scheduled (emergency) treatment, care and attendance at Florida Hospital rendered in May, 2009, to two employees/claimants one for Macy s (patient R. P. ) and one for Amerisure (patient J. L. ) injured in work-related accidents. Qmedtrix Systems, Inc. (Qmedtrix), reviewed the medical bills on behalf of Macy s and Amerisure and made recommendations for a reduction in payment based upon its determination that Florida Hospital had made billing errors. Thereafter, Macy s and Amerisure paid Florida Hospital a reduced amount and issued Explanations of Bill Review (EOBRs) pursuant to Florida Administrative Code Rule 69L-7.602(5)(q) (2007), 2/ setting forth their reasons for adjustments to the bills. Dissatisfied with the adjustments, Florida Hospital timely petitioned the Department (Reimbursement Dispute Petitions) to resolve the reimbursement dispute pursuant to Section (7)(a), Florida Statutes. 3

4 The Dispute Determinations rendered by the Department found that the bill adjustments were improper and directed Macy s and Amerisure to reimburse Florida Hospital an additional amount as to each bill, in accordance with the medical fee schedules (or maximum reimbursement allowances) established pursuant to Section (12), Florida Statutes, and Florida Administrative Code Rule 69L Both Macy s and Amerisure timely filed petitions for administrative hearings on the Dispute Determinations pursuant to Sections and (1), Florida Statutes, and the petitions were forwarded to the Division of Administrative Hearings (DOAH), where they were assigned DOAH Case numbers and , respectively, and then consolidated for the purposes of determining the rights and duties of the substantially affected parties. After the Notice of Hearing was entered scheduling the final hearing in this matter, Florida Hospital filed a Motion to Intervene as a substantially affected party who, because of communication errors, received late notice of the proceeding. The Motion was granted by Order dated February 16, 2010, allowing Florida Hospital to intervene as a party. At the final hearing held on February 22, 2010, six joint exhibits were received into evidence as Exhibits J-1 through J-6. Macy s and Amerisure (collectively, Petitioners) presented the testimony of one witness, R. W. von Sydow, who is 4

5 employed by Qmedtrix, and offered twelve exhibits, eleven of which were received into evidence as Exhibits P-1 through P- 8, and P-10 through P-12. Although offered, Petitioner s proposed Exhibit P-9 was not received into evidence. The Department presented the testimony of one witness, Arlene Cotton, R.N., an employee of the Department who drafted the Dispute Determinations. The Department offered five exhibits, four of which were received into evidence as R-1 through R-3 and R-5. Respondent s proposed Exhibit R-4 was not received into evidence. Florida Hospital offered one exhibit which was received into evidence as I-1. The live portion of the hearing ended on February 22, The evidentiary portion of the hearing, however, was held open until March 22, 2010, for the taking of depositions and filing of deposition transcripts of three witnesses for Florida Hospital, including: Ross Edmunson, M.D., who is vice-president and director of hospital management at Florida Hospital; James English, the director of revenue management at Florida Hospital; and Steve Dudley, an outside CPA for Florida Hospital. The deposition transcripts for Dr. Edmunson and Mr. English were filed on March 19, The deposition transcript for Steve Dudley was filed on March 23, Although one day late, as there was no objection and there is no evidence of prejudice, the deposition testimony of Mr. Dudley was considered as 5

6 testimonial evidence in this proceeding, as were the deposition testimonies of Dr. Edmunson and Mr. English. The proceedings were recorded and a transcript was ordered. The two-volume Transcript was filed March 23, The parties were given until April 22, 2010, to file their respective Proposed Recommended Orders. The parties timely filed their respective Proposed Recommended Orders, which were considered during the preparation of this Recommended Order. FINDINGS OF FACT 1. Florida Hospital is a full-service, not-for-profit hospital system located in Orlando, Florida, that operates a smaller satellite hospital in Winter Park, Florida. Florida Hospital is a health care provider within the meaning of Section (1)(h), Florida Statutes. 2. Macy s and Amerisure are carriers within the meaning of Sections (4) and (38), Florida Statutes. 3. The Department has exclusive jurisdiction to resolve disputes between carriers and health care providers regarding payments for services rendered to injured workers, pursuant to Sections (7) and (11)(c), Florida Statutes. 4. Qmedtrix is a medical bill review company. 3/ Case No R. P., an employee of Macy s, slipped and fell at work on May 20, 2009, and presented to Florida Hospital Winter Park 6

7 for evaluation and treatment where medical personnel documented vomiting, brain attack, and brain trauma. After evaluation and treatment, patient R. P. was diagnosed with a bruise to the head and released the same day. 6. On September 16, 2009, Florida Hospital submitted its bill for services provided to R. P. totaling $5, to Macy s for payment, utilizing Form DFS-F5-DWC-90, also known as UB-04 CMS-1450, identifying the charges billed for each line item by revenue code and HCPS or CPT codes. 7. Macy s forwarded the bill to its workers compensation medical bill review agent, Qmedtrix. 8. Qmedtrix reviewed the bill by comparing the procedure codes and diagnosis codes reported by Florida Hospital with examples in the CPT book for billing of emergency department services. 9. Florida Hospital reported ICD diagnosis code 920, which reads contusion of face, scalp, or neck. Use of this code means R. P. presented with a bruise or hematoma, but not a concussion. Florida Hospital also reported ICD diagnosis code ( head injury, unspecified ) which also means that R. P. did not present with a concussion, loss of consciousness, or intracranial injuries. 7

8 10. Florida Hospital s bill included a charge of $2,417 with CPT code for emergency department services. The bill also included separate charges for a head CT, and various lab tests, drugs, and IV solutions. 11. According to Mr. von Sydow, the bill was sent through Qmedtrix s computer program for review, and was flagged for review by a physician. Mr. von Sydow further testified that one of Qmedtrix s medical director s suggested that the CPT code of be reduced. The medical director, who Mr. von Sydow said reviewed the bill, however, did not testify and no documentation of his recommendation was submitted at the final hearing. Qmedtrix determined that Florida Hospital should have used CPT code when billing for the emergency services rendered instead of CPT code Qmedtrix found that, while the hospital billed $2,417 with CPT code 99285, its usual charge for an emergency department visit billed with CPT code is $1, Macy s paid Florida Hospital a total of $2,683.55, which amount included $1, for the emergency department visit based on [approximately] 75 percent of Florida Hospital s usual charge for CPT code The payment was accompanied by an EOBR. 8

9 13. The EOBR Macy s (or its designated entity) 4/ issued to Florida Hospital for services rendered to R. P. identifies the amount billed by Florida Hospital as to each line item in a column designated Billed, and has columns designated as BR Red, PPO Red, Other Red, and Allowance, each containing an amount for each line item in the Billed column. There is also a column entitled Reason Code which sets forth codes, as required by Florida Administrative Code Rule 69L-7.602(5)(o)3., that are supposed to explain the reason for adjustment of any line item. 5/ The reason code set forth adjacent to the $2, billed by Florida Hospital for emergency department services is 82, which means Payment adjusted: payment modified pursuant to carrier charge analysis. There is also another code, P506 listed in the Reason Code column adjacent to the same line item, which, according to the key provided on the EOBR, means [a]ny questions regarding this Qmedtrix review, please call (800) P506, however, is not a reason code listed in Florida Administrative Code Rule 68L (5)(o) The EOBR does not advise that the bill was adjusted because of a determination that Florida Hospital should have used CPT code when billing for the emergency services rendered instead of CPT code as originally billed. 9

10 15. Upon receipt of the payment and the EOBR, Florida Hospital timely filed a Petition for Resolution of Reimbursement Dispute with the Department pursuant to Section (7)(a), Florida Statutes, and Florida Administrative Rule 69L-31, contending that payment should be at 75 percent of its total charges, and citing the Florida Workers Compensation Reimbursement Manual for Hospitals, 2006 Edition (Hospital Manual). 16. Qmedtrix timely filed a response to Florida Hospital s petition on behalf of Macy s pursuant to Section (7)(b), Florida Statutes, and Florida Administrative Code Rule 69L-31, asserting that correct payment should be determined based on, first, whether the hospital in fact billed its usual charge for the services and, second, whether the hospital s charges are in line with the charges of other hospitals in the same community, citing One Beacon Insurance v. Agency for Health Care Administration, 958 So. 2d 1127 (Fla. 1st DCA 2007) for the proposition that SB-50 amended section [revealing] legislative intent to eliminate calculation of a usual and customary charge based on the fees of any one provider in favor of a calculation based on average fees of all providers in a given geographic area. 17. Qmedtrix s response on behalf of Macy s also contended that upcoding and unbundling were additional grounds for 10

11 adjustment or disallowance that were not identified on the EOBR. The response explained that upcoding refers to billing with a procedure code that exaggerates the complexity of the service actually provided; that CPT codes through describe emergency department services; that the CPT book includes examples of proper billing with these codes; that the hospital billed $2,417 with CPT code 99285; and that the CPT book describes an emergency department visit for a healthy, young adult patient who sustained a blunt head injury with local swelling and bruising without subsequent confusion, loss of consciousness or memory deficit as an example of proper billing with CPT code The response requested a determination by the Department that Macy s payment equaled or exceeded the amount usual and customary for CPT code On November 13, 2009, the Department, through its Office of Medical Services (OMS) issued a determination (Determination in ) which found, in pertinent part: The petitioner asserts that services provided by Florida Hospital Medical Center to the above-referenced injured employee on May 20, 2009, were incorrectly reimbursed. Florida Hospital Medical Center billed $5, and the carrier reimbursed $2, The petition does not address a contract and does not reflect a contract discount in the calculation of requested reimbursement. The Carrier Response to Petition for Resolution of Reimbursement Dispute disputes 11

12 the reasonableness of the hospital s usual and customary charges, maintains the petitioners charges should be based on the average fee of other hospitals in the same geographic area, references a manual not incorporated by rule, and provides CPT codes that the respondent alleges are correct. There are no rules or regulations within Florida s Workers Compensation program prohibiting a provider from separately billing for individual revenue codes. The carrier did not dispute that the charges listed on the Form DFS-F5-DWC-90 (UB-92) or the charges listed on the itemized statement did not conform to the hospital s Charge Master. Nor did the carrier submit the hospital s Charge Master in the response or assert that the carrier performed an audit of the Charge Master to verify the accuracy of the billed charges. Therefore, since no evidence was presented to dispute the accuracy of the Form DFS-F5-DWC-90 or the itemized statement as not being representative of the Charge Master, the OMS finds that the charges billed by the hospital are the hospital s usual and customary charges. Rule 69L-7.602, F.A.C., stipulates the appropriate EOBR codes that must be utilized when explaining to the provider the carrier s reasons for disallowance or adjustment. The EOBR submitted with the petition conforms to the EOBR code requirements of Rule 69L-7.602(5)(q), F.A.C. Only through an EOBR is the carrier to communicate to the health care provider the carrier s reasons for disallowance or adjustment of the provider s bill. Pursuant to s (12), F.S., a three member panel was established to determine statewide reimbursement allowances for treatment and care of injured workers. Rule 69L-7.501, F.A.C., incorporates, by reference, the applicable reimbursement schedule created by the panel. Section 12

13 440.13(7)(c), F.S., requires the OMS to utilize this schedule in rendering its determination for this reimbursement dispute. No established authority exists to permit alternative schedules or other methodologies to be utilized for hospital reimbursement other than those adopted by Rule 69L-7.501, F.A.C., unless the provider and the carrier have entered into a mutually agreeable contract. Rule 69L-7.501, F.A.C., incorporates, by reference, the Florida Workers Compensation Reimbursement Manual for Hospitals, 2006 Edition (Hospital Manual). Since the carrier failed to indicate any of the services are not medically necessary, the OMS determined proper reimbursement applying the above referenced reimbursement guidelines. Therefore, the OMS has determined that the carrier improperly adjusted reimbursement to Florida Medical Center for services rendered to the abovereferenced injured employee on May 20, Based on the above analysis, the OMS has determined that correct reimbursement equals $4, ($5, x 75% [Hospital Manual]=$4,160.40). The carrier shall reimburse Florida Hospital Medical Center $4, for services rendered to the above-referenced employee; and submit proof of reimbursement of the amount determined by the OMS within thirty (30) days of the date the Determination is received The difference between what Petitioner Macy s paid Florida Hospital for services rendered to R. P., and the amount the Department determined that Petitioner Macy s is required to pay for such services, equals $1,

14 20. The Determination in did not directly address Macy s allegation of the alleged billing error of upcoding. 21. The Determination in provided a 21-day notice for request of an administrative hearing and, as noted in the Preliminary Statement above, Macy s timely requested a hearing. Case No J. L., an employee of Major League Aluminum, was injured in a work-related accident on the evening of May 3, 2009, and visited the emergency department of Florida Hospital Orlando. After evaluation and treatment, J. L. was diagnosed with a bruise to the knee and released the next morning. 23. On September 23, 2009, Florida Hospital submitted its bill for services provided to J. L. totaling $2,851 to Amerisure, Major League Aluminum s workers compensation insurer, for payment, utilizing Form DFS-F5-DWC-90, also known as UB-04 CMS-1450, identifying the charges billed for each line item by revenue code and HCPS or CPT codes. 24. Amerisure forwarded the hospital bill to its medical bill review agent, Qmedtrix for review. Qmedtrix s medical bill review in this case, as in the companion case, entailed comparing the procedure codes and diagnosis codes reported by the hospital with examples in the CPT book. 14

15 25. The hospital reported ICD diagnosis code , which reads contusion of... knee. The hospital also reported ICD diagnosis codes ( lumbago ), E888.1 ( fall on or from ladders or scaffolding ) and ( injury, other and unspecified... knee, leg, ankle, and foot. ). 26. Florida Hospital billed $1,354 with CPT code 9924 for emergency department services and also billed for X-rays and various drugs and IV solutions. Comparing procedure codes and diagnosis codes reported by the hospital with examples in the CPT book, Qmedtrix concluded that billing with CPT code was not appropriate, but that billing with CPT code was. 27. Qmedtrix also found that, while the hospital billed $1,354 with CPT code 99284, the average charge in the community for a visit to the emergency department billed with CPT code is $ Qmedtrix determined the usual and customary charge in the community from its own database compiled by entering all of particular hospital bills into Qmedtrix s database, along with data from the American Hospital Directory. Qmedtrix derives the average charge in the community based upon zip codes of the hospitals. 29. Amerisure paid Florida Hospital a total of $1,257.15, which amount included $ for the emergency department visit codes based on 75 percent of what Qmedtrix determined to be the 15

16 average charge in the community for CPT code The payment was accompanied by an EOBR. 30. The EOBR Petitioner Amerisure (or its designated entity) 6/ issued to Florida Hospital for services rendered to J. L. identifies the amount billed by Florida Hospital as to each line item in a column designated Billed Charges, and has columns designated as FS/UCR Reductions, Audit Reductions, Network Reductions, and Allowance, each containing an amount for each line item in the Billed Charges column. There is also a column entitled Qualify Code which sets forth reason codes that are supposed to explain the reason for adjustment of any line item. 7/ The code set forth adjacent to the $1, billed by Florida Hospital for emergency department services is 82, which means Payment adjusted: payment modified pursuant to carrier charge analysis. 31. The EOBR does not advise that the bill was adjusted because of a determination that Florida Hospital should have used CPT code when billing for the emergency services rendered instead of CPT code as originally billed. 32. Upon receipt of the payment and the EOBR, Florida Hospital timely filed a Petition for Resolution of Reimbursement Dispute with the Department pursuant to Section (7)(a), Florida Statutes, and Florida Administrative Code Rule 69L-31, 16

17 contending that payment should be at 75 percent of its total charges, and citing the Hospital Manual. 33. Qmedtrix timely filed a response to Florida Hospital s petition on behalf of Amerisure pursuant to Section (7)(b), Florida Statutes, and Florida Administrative Code Rule 69L-31, asserting that correct payment should be determined based on, first, whether the hospital, in fact, billed its usual charge for the services and, second, whether the hospital s charges are in line with the charges of other hospitals in the same community, citing One Beacon, supra. 34. Qmedtrix s response on behalf of Amerisure contended upcoding as an additional ground for adjustment or disallowance that was not identified on the EOBR. As in the companion case, the response explained upcoding, that CPT codes through describe emergency department services, and that the CPT book includes examples of proper billing with these codes. The response further stated that the hospital billed $1,354 with CPT code 99284, and that the CPT book describes an emergency department visit for a patient with a minor traumatic injury of an extremity with localized pain, swelling, and bruising as an example of proper billing with CPT code The response requested a determination by the Department that Amerisure s payment equaled or exceeded the usual and customary charge for CPT code

18 35. On October 20, 2009, the Department s OMS issued a determination (Determination in ) which found, in pertinent part: The petitioner asserts that services provided by Florida Hospital Medical Center to the above-referenced injured employee on May 3, 2009, and May 4, 2009, were incorrectly reimbursed. Florida Hospital Medical Center billed $2, and the carrier reimbursed $1, The petition does not address a contract and does not reflect a contract discount in the calculation of requested reimbursement. The Carrier Response to Petition for Resolution of Reimbursement Dispute disputes the reasonableness of the hospital s usual and customary charges, maintains the petitioners charges should be based on the average fee of other hospitals in the same geographic area, and references a manual not incorporated by rule. There are no rules or regulations within Florida s Workers Compensation program prohibiting a provider from separately billing for individual revenue codes. Therefore, the charges, as billed by the hospital, did not constitute billing errors. The carrier did not dispute that the charges listed on the Form DFS-F5- DWC-90 (UB-92) or the charges listed on the itemized statement did not conform to the hospital s Charge Master. Nor did the carrier submit the hospital s Charge Master in the response or assert that the carrier performed an audit of the Charge Master to verify the accuracy of the billed charges. Therefore, since no evidence was presented to dispute the accuracy of the Form DFS-F5- DWC-90 or the itemized statement as not being representative of the Charge Master, the OMS finds that the charges billed by the hospital are the hospital s usual and customary charges. 18

19 Rule 69L-7.602, F.A.C., stipulates the appropriate EOBR codes that must be utilized when explaining to the provider the carrier s reasons for disallowance or adjustment. The EOBR submitted with the petition conforms to the EOBR code requirements of Rule 69L-7.602(5)(q), F.A.C. Only through an EOBR is the carrier to communicate to the health care provider the carrier s reasons for disallowance or adjustment of the provider s bill. Pursuant to s (12), F.S., a three member panel was established to determine statewide reimbursement allowances for treatment and care of injured workers. Rule 69L-7.501, F.A.C., incorporates, by reference, the applicable reimbursement schedule created by the panel. Section (7)(c), F.S., requires the OMS to utilize this schedule in rendering its determination for this reimbursement dispute. No established authority exists to permit alternative schedules or other methodologies to be utilized for hospital reimbursement other than those adopted by Rule 69L-7.501, F.A.C., unless the provider and the carrier have entered into a mutually agreeable contract. Rule 69L-7.501, F.A.C., incorporates, by reference, the Florida Workers Compensation Reimbursement Manual for Hospitals, 2006 Edition (Hospital Manual). Since the carrier failed to indicate any of the services are not medically necessary, the OMS determined proper reimbursement applying the above referenced reimbursement guidelines. Therefore, the OMS has determined that the carrier improperly adjusted reimbursement to Florida Medical Center for services rendered to the abovereferenced injured employee on May 3, 2009, and May 4, Based on the above analysis, the OMS has determined that correct reimbursement equals $2,

20 ($2, x 75% [Hospital Manual]=$2,138.25). The carrier shall reimburse Florida Hospital Medical Center $2, for services rendered to the above-referenced employee; and submit proof of reimbursement of the amount determined by the OMS within thirty (30) days of the date the Determination is received The difference between what Petitioner Amerisure paid Florida Hospital for services rendered to J. L. and the amount the Department determined that Petitioner Amerisure is required to pay for such services equals $ The Determination in did not directly address Amerisure s allegation of the alleged billing error of upcoding. 38. The Determination in provided a 21-day notice for request of an administrative hearing and, as noted in the Preliminary Statement above, Amerisure timely requested a hearing. Alleged Upcoding for Emergency Department Services 39. The Petitioners responses in both cases allege that Florida Hospital upcoded its bill for emergency department evaluation and management services. Neither EOBR submitted to Florida Hospital, however, reported alleged upcoding as an explanation for the Petitioners adjustment or disallowance of reimbursement. 20

21 40. While the Dispute Determinations by the Department do not directly address the carrier s allegation of the alleged billing error of upcoding raised in the Petitioners responses, they found that Rule 69L-7.602, F.A.C., stipulates the appropriate EOBR codes that must be utilized when explaining to the provider the carrier s reasons for disallowance or adjustment[, and that] [o]nly through an EOBR is the carrier to communicate to the health care provider the carrier s reasons for disallowance or adjustment of the provider s bill. 41. According to Mr. von Sydow, who was offered by Petitioners as an expert in billing, coding, reimbursement, and payment issues, 8/ the reason codes that workers compensation carriers are to use pursuant to Florida Administrative Code Rule 69L-7.602, do not mention upcoding, and therefore an EOBR could not be generated with a reason code explaining reduction or disallowance based on upcoding. 42. The following reason codes, however, are included in Florida Administrative Code Rule 69L-7.602: 23 Payment disallowed: medical necessity: diagnosis does not support the services rendered. 40 Payment disallowed: insufficient documentation: documentation does not substantiate the service billed was rendered. 41 Payment disallowed: insufficient documentation: level of evaluation and 21

22 management service not supported by documentation. 43. Neither EOBR submitted to Florida Hospital includes reason code 23, 40, or 41. And neither EOBR explains or otherwise suggests that that Florida Hospital s level of billing was not supported by medical necessity, services rendered, or sufficient documentation. 44. In fact, Petitioners did not disallow reimbursement and do not contend that reimbursement should be denied for any services rendered by Florida Hospital to R. P. and J. L. on the grounds that the billed services were not medically necessary for the injured employees compensable injuries. 45. In addition, Petitioners did not adjust or disallow payment for any of the billed procedures on the grounds that the procedures were not provided. 46. In sum, the EOBR s did not give Florida Hospital notice that alleged upcoding was an issue. 47. Even if Petitioner s EOBR s gave Florida Hospital notice that it was asserting upcoding as a reason to reduce or adjust the hospital s bill, the evidence does not support a finding that Florida Hospital utilized the wrong code in its billing for emergency department evaluation and management services. 22

23 48. The CPT 2009 Current Procedural Terminology Professional Edition, (Copyright 2008), (CPT book), is adopted by reference in Florida Administrative Code Rule 69L-7.602(3)(d) and Florida Administrative Code Rule 60L-7.020(2). The CPT book sets forth the procedure codes for billing and reporting by hospitals and physicians. 49. The CPT book sets forth CPT codes ranging from through used to report evaluation and management services provided in a hospital s emergency department, described as follows: 99281: Emergency department visit for the evaluation and management of a patient, which requires these 3 key components: A problem focused history; A problem focused examination; and Straightforward medical decision making. Counseling and/or coordination of care with other providers or agencies and provided consistent with the nature of the problem(s) and the patient s and/or family s needs. Usually, the presenting problem(s) are self limited or minor : Emergency department visit for the evaluation and management of a patient, which requires these 3 key components: An expanded problem focused history; An expanded problem focused examination; and Medical decision making of low complexity. Counseling and/or coordination of care with other providers or agencies and provided consistent with the nature of the 23

24 problem(s) and the patient s and/or family s needs. Usually, the presenting problem(s) are of low to moderate severity : Emergency department visit for the evaluation and management of a patient, which requires these 3 key components: An expanded problem focused history; An expanded problem focused examination; and Medical decision making of moderate complexity. Counseling and/or coordination of care with other providers or agencies and provided consistent with the nature of the problem(s) and the patient s and/or family s needs. Usually, the presenting problem(s) are of moderate severity : Emergency department visit for the evaluation and management of a patient, which requires these 3 key components: A detailed history; A detailed examination; and Medical decision making of moderate complexity. Counseling and/or coordination of care with other providers or agencies and provided consistent with the nature of the problem(s) and the patient s and/or family s needs. Usually, the presenting problem(s) are of high severity, and require urgent evaluation by the physician but do not pose an immediate significant threat to life or physiologic function : Emergency department visit for the evaluation and management of a patient, which requires these 3 key components: 24

25 A comprehensive history; A comprehensive examination; and Medical decision making of high complexity. Counseling and/or coordination of care with other providers or agencies and provided consistent with the nature of the problem(s) and the patient s and/or family s needs. Usually, the presenting problem(s) are of high severity and pose an immediate significant threat to life or physiologic function. 50. Mr. von Sydow testified that a Qmedtrix medical director, reviewed Florida Hospital s bill for services rendered to R. P., but not the medical records, and recommended that the hospital s charge for emergency department services under CPT be re-priced to Qmedtrix s determination of the usual and customary charge for CPT Mr. von Sydow acknowledged the need for physician review for some cases (as opposed to review by non-physician coders) by testifying, The more complicated the medicine, the more likely it is that he [a medical director at Qmedtrix] wants to see it. 51. Despite Qmedtrix s original determination to reprice the bill from CPT code to CPT code (reflected in the reduced payment but not explained in the EOBR), Mr. von Sydow opined that the correct CPT code for emergency department services provided to patient R. P. was 99283, as opposed to billed by the hospital. Mr. von Sydow testified that his 25

26 opinion was based upon his own review of the medical records, without the assistance of a medical director or medical expert, and review of examples for the CPT codes for emergency department services from the CPT book, and various provisions of ICD-9 and CPT book coding resources. 52. Aside from the fact that Mr. von Sydow s opinion differed from the purported recommendation of a Qmedtrix medical director, Mr. von Sydow is not a physician. Moreover, Qmedtrix failed to provide the testimony of the medical director, or anyone else with medical expertise to evaluate the medical records and services provided or to validate either the opinion of Mr. von Sydow or the original recommendation to reprice Florida Hospital s use of CPT Code in its bill for emergency department services rendered to patient R. P. 53. Mr. von Sydow offered similar testimony and examples to explain Qmedtrix s re-pricing of Florida Hospital s bill from CPT code to CPT code for emergency services rendered to patient J. L. on behalf of Amerisure. According to Mr. von Sydow, an internal Qmedtrix coder (not a medical director) reviewed the bill for emergency services rendered to J. L. and determined it should be re-priced to the usual and customary charge, as determined by Qmedtrix, using that CPT code

27 54. While knowledgeable of the various codes and their uses, given the manner in which preliminary diagnostics under emergency circumstances drives Florida Hospital s determination of the appropriate CPT code for billing emergency department services, without the testimony of a medical expert familiar with the medical records generated in these cases in light of the facts and circumstances surrounding the emergency care rendered to patients R. P. and J. L., Mr. von Sydow s testimony was unpersuasive. 55. Ross Edmundson, M.D., an employee, vice-president, and medical manager for Florida Hospital, explained that, unlike other settings, hospitals generally do not have the medical histories of patients presenting for emergency hospital services. When a patient comes to Florida Hospital for emergency services, they are triaged by a nurse to determine the level of urgency, then a doctor sees the patient, conducts a differential diagnosis to rule out possible causes, obtains the patient s history, and then performs a physical examination. 56. While emergency room physicians at Florida Hospital do not decide which CPT code is utilized for the evaluation and management services provided by its emergency department, the various tests and procedures they undertake to evaluate and treat emergency department patients do. 27

28 57. James English, the director of revenue management for Florida Hospital explained the process through his deposition testimony. 58. Florida Hospital, like over 400 other hospitals, uses the Lynx System a proprietary system for creating and maintaining medical records electronically. The program captures each medical service, supply, and physician order that is inputted into the electronic medical record. The hospital s emergency evaluation and management CPT code is generated from the electronic record. A point collection system in the Lynx System translates physician-ordered services, supplies it to a point system, and then assigns the CPT code that is billed based upon the total number of points that are in the system at the time the patient is discharged from the emergency department. The level of the evaluation and management CPT code (99281 to 99285) that is reported on Florida Hospital s bill is a direct reflection of the number and types of medical services that a patient receives from his or her arrival through discharge. 59. In light of evidence showing the manner in which emergency services are provided and the importance of medical records in generating the appropriate billing code for emergency evaluation and management services, it is found that Petitioners failed to provide an adequate analysis of the medical records of either R. P. or J. L. to show that the appropriate CPT codes 28

29 were not utilized by Florida Hospital in billing for those services. 60. On the other hand, both Petitions for Resolution of Reimbursement Dispute filed by Florida Hospital with the Department attached appropriately itemized bills utilizing Form DFS-F5-DWC-90, also known as UB-04 CMS-1450, identifying the charges billed for each line item by revenue code and HCPS or CPT codes. In addition, medical records for the evaluation and treatment provided by Florida Hospital for both patients R. B. and J. L. supporting the itemized bills were submitted to the Department. These documents were also received into evidence at the final hearing. 61. Florida Hospital s bills at issue correctly identified the hospital s usual charges for each individual and separately chargeable item, service or supply, with the corresponding code assigned to such billable items as maintained in Florida Hospital s charge master. 62. In addition, Petitioners concede the compensability of both patients work-related injuries and do not dispute whether any service or supply rendered and billed by Florida Hospital for these two cases were medically necessary. 9/ Unbundling 63. As noted above, in Case No , Qmedtrix s response to Florida Hospital s petition for resolution of 29

30 reimbursement dispute contended unbundling as a ground for adjustment or disallowance of reimbursement. 64. At the final hearing, Arlene Cotton, the nurse who issued the Dispute Determinations, explained that reason code 63 regarding unbundling is inapplicable to hospital billing, as there is no rule that requires hospitals to bundle bill for its services. Mr. von Sydow agreed that reason code 63 was inapplicable. 65. In addition, footnote 2 of Petitioners Proposed Recommended Order states, they did not pursue the allegations of unbundling. 66. Therefore, it is found that Petitioners did not prove and otherwise abandoned their claim of unbundling as a ground to adjust or disallow reimbursement to Florida Hospital. Usual and Customary Charges 67. The Dispute Determinations issued by the Department found that correct payment in both cases equaled 75% of billed charges, citing Rule 69L-7.501, F.A.C., [which] incorporates, by reference, the Florida Workers Compensation Reimbursement Manual for Hospitals, 2006 Edition (Hospital Manual). 68. Both Section (12)(a), Florida Statutes, and the Hospital Manual provide that hospital services provided to patients under the workers compensation law shall be reimbursed at 75 percent of usual and customary charges. 30

31 69. The Department interprets the term usual and customary charges as set forth in the Hospital Manual and Section (12)(a), Florida Statutes, quoted above, to mean a hospital s usual charges of the hospital, whereas Petitioners contend that usual and customary charges means the average fee of all providers in a given geographical area. 70. While apparently not contending that Petitioners failed to raise the issue of usual and customary charges in their EOBR s, 10/ at the final hearing, the Department argued that nowhere in [either Macy s or Amerisure s] response is the issue of customary charges raised. A review of the responses filed by Qmedtrix to Florida Hospital s reimbursement dispute petitions filed with the Department reveal that both raise the issue of usual and customary charges. Paragraphs 3 and 4 of Mr. von Sydow s letter attached to both responses state: As you may know, the proposed adoption of Medicare s Outpatient Prospective Payment System as a methodology for reimbursing hospitals 60% and 75% of usual and customary charges follows from the decision of the First District Court of Appeals in One Beacon Insurance v. Agency for Health Care Administration, No. 1D (Fla. 1 st DCA 2007) (SB-50 amended section to remove all reference to the charges of any individual service provider; this amendment reveals the legislative intent to eliminate calculation of a usual and customary charge based on the fees of any one provider in favor of a calculation based on average fees of all providers in a given geographical area). 31

32 This court decision requires DFS to define payment rates for out patient service that are uniformly applicable to all hospitals in a given geographic area. 71. In addition, at the final hearing, the Department argued that the petitions for administrative hearing did not raise as a disputed issue of fact or law whether or not usual and customary charges should apply in this case. 72. Indeed, a review of the request for relief set forth in the petitions for administrative hearings filed by Petitioners do not mention the issue of usual and customary charges. Rather, the relief requested by both petitions for administrative review of the Dispute Determinations, as summarized in the Joint Prehearing Stipulation, is: Petitioner[s] seeks reversal of OMS Determination(s) and the matters remanded for the Department to: direct payment based upon the actual treatment required/provided and pursuant to the correct CPT code; find that the hospital upcoded and that Petitioner properly reimbursed (or exceeded amount due); and determine that the hospital has the burden of proof to substantiate its billing and the use of the chosen CPT code. 73. Contrary to the Department s argument, however, both petitions for administrative hearing raise the issue of usual 32

33 and customary charges. Page 9 of Macy s petition, in pertinent part states: Petitioner submits that in issuing the above findings OMS failed to consider the holding in One Beacon Insurance v. Agency for Health Care Administration (wherein the Court determined that reimbursement should not be based solely upon a mathematical equation [as found within the Reimbursement Manual] and applying it to the fee charged by a particular provider; and that by eliminating the reference to any one facility s charges, the legislature intended that the charges be based on average fees of all providers in a geographical area as opposed to the fees of the particular provider in question). 74. Likewise, review of Amerisure s petition for administrative hearing reveals that the issue of usual and customary charges was raised. Pages 7 and 8 of Amerisure s petition state, in pertinent part: Further, if the Hospital is permitted to utilize incorrect revenue codes it would be impossible to determine whether the charges are consistent with the Hospital s own [usual and customary] charges for the service, procedure or supplies in question and, further, whether such charges are consistent with charges by other like facilities (in the same geographical area) for the same services, procedures, or supplies. See One Beacon Insurance, supra. 75. In addition, Amerisure s petition on page 12 states with regard to the Department s determination: Such finding was issued without consideration of... the amounts charged for the same services in the Orlando area where this hospital is located. 33

34 76. Petitioners further preserved the issue of usual and customary charges in the first paragraph of their statement of position on page 3 of the Joint Prehearing Statement, as follows: Petitioners, Macy s and Amerisure, take the position that the Determinations must be reversed as the Department has the duty to scrutinize the bills in question in order to determine, first, whether the hospital, in fact, charged its usual charge for the services provided, and second, whether the billed charges are in line with the customary charges of other facilities in the same community (for the same or similar services) and that the Department failed to do so. As such, Petitioners contend that payment for services provided by Florida Hospital should have been based upon 75% of usual and customary charges, not 75% of billed charges. 77. Therefore, it is found that Petitioners have preserved the issue of usual and customary charges for consideration in this administrative proceeding. 78. Although preserved, Petitioners failed to demonstrate that their interpretation of usual and customary charges should prevail. 79. The Department has consistently interpreted the term usual and customary charges as used in the Hospital Manual, Section (12)(a), Florida Statutes, and rules related to hospital reimbursement under the workers compensation law as 34

35 the usual and customary charges of the hospital reflected on the hospital s charge master. 80. The Hospital Manual requires each hospital to maintain a charge master and to produce it when requested for the purpose of verifying its usual charges.... (Emphasis added). 81. Petitioners did not conduct or request to conduct an audit to verify whether the charges billed by Florida Hospital corresponded with the Florida Hospital s charge master. In fact, Mr. von Sydow conceded at the final hearing that Florida Hospital s bills at issue were charged in accordance with Florida Hospital s charge master. 82. Nor did Petitioners institute rule challenge proceedings against the Department regarding the Hospital Manual, incorporated by reference into Florida Administrative Code Rule 38F Instead, Petitioners assert that they should be able to reduce Florida Hospital bills based upon a different interpretation of the phrase usual and customary charges to mean the average charge in the community as determined by Qmedtrix. 84. Qmedtrix is not registered with the Florida Department of State, Division of Corporations, and does not employ any 35

36 Florida-licensed insurance adjuster, physician, or registered nurse. 85. Qmedtrix earns 12 to 15 percent of savings realized by carriers utilizing their bill review services. For example, if a bill is reduced by $100, Qmedtrix is paid $12. 11/ 86. Qmedtrix uses a proprietary bill review system called BillChek. According to Qmedtrix s website: BillChek reviews out-of-network medical charges for all bill types in all lines of coverage, including group health, auto, medical, and workers compensation. BillChek is a unique specialty costcontainment service that determines an accurate and reasonable reimbursement amount for non-network facility and ancillary medical charges. BillChek incorporates historical data to help determine reasonable payment recommendations across all sectors of the health care industry. All BillCheck recommendations are backed by extensive medical and legal expertise, and supported by Qmedtrix s experienced Provider Relations and Dispute Resolution teams. 87. According to the testimony of Mr. von Sydow, Qmedtrix collects and maintains data from various sources, including Florida s Agency for Health Care Administration (AHCA), the American Hospital Directory (AHD.com), and HCFA 2552 s (data reported to the Centers of Medicare and Medicaid Services on HCFA 2522) in order to construct a database of health care providers usual charges. Mr. von Sydow advised that AHD.com data was a principle source for constructing the database. He 36

37 also advised that AHCA data was included in the database even though Qmedtrix found the AHCA data defective. 88. Examples of data downloaded from AHD.com for Florida Hospital showing a profile of the facility was received into evidence as P-5. The data did not, however, show usual charges for the CPT codes for emergency department services at issue in this case. 89. Petitioners also introduced into evidence Exhibits P-6 and P-7, which contained AHD.com data showing average charges for Florida Regional Medical Center and Florida Hospital, respectively, for Level 1 through Level 5 emergency room visits (corresponding to CPT codes through 99285). Mr. von Sydow explained that the data was part of the information Qmedtrix used to construct the average charge in the community. Petitioners failed to provide similar AHD.com data for other hospitals in the area Qmedtrix determined to be the community. 90. In addition, Petitioners introduced AHCA s Florida Health Finder Web-site, as Exhibit P-8, which ostensibly included average charges for all hospitals in Florida for the subject emergency department CPT codes (99281 through 99285). Mr. von Sydow explained, however, [w]e find that [the AHCA data] is not refreshed very often, unfortunately, and some other defects in the scrubbing of the data by the agency, which they know, I will say. But this is incorporated in our database to a 37