Stuart D. Colburn on Texas Health Facility Fees: Rules 134.403 and 134.404

Stuart D. Colburn on Texas Health Facility Fees: Rules 134.403 and 134.404

Stuart D. Colburn's Expert Commentary discusses the Texas Division of Workers' Compensation amendments to the Hospital Inpatient Fee Guidelines and creation of new Hospital Outpatient Fee Guidelines.  The two fee guidelines significantly increase reimbursement rates for hospitals; allow specified carve-outs for implantables, and replace the stop/loss methodology with the CMS outlier methodology.  The new fee guidelines for acute care hospitals pertain to admissions on or after March 1, 2008.  Carriers and employers are projected to experience a 29.1% increase for inpatient fees and a 4.3% decrease in outpatient fees for a total estimated increase of $22.4 million or 11% increase.

The Division maintained the stop/loss proposals and payment adjustment factors from the original proposal.  The DWC did take steps to address implantables.  Now, implant related equipment necessary to operate, program, and recharge the actual implantable device is reimbursable.  A $1,000.00 add-on charge can extend to multiple implantable items recognizing the additional administrative costs but discouraging  unbundling of implantables.  The Division capped the add-on fee at $2,000.00 in add-ons per admission.  The outpatient medical fee guidelines should significantly reduce the number of “fair and reasonable” disputes currently before the Division and courts.  

Hospital reimbursements are a significant component of all medical costs.  According to 2005 data, WC carriers paid hospitals $205 million which represented 20% of all medical payments.  Inpatient services cost $93 million and outpatient services were paid at $111 million.  There were 10,000 inpatient discharges by 578 hospitals.  One-third of those inpatient admissions were made to 23 hospitals.  Four hundred eleven hospitals had ten or fewer admissions in 2005.

The Division’s newly adopted Hospital Fee Guidelines increased hospital reimbursements while the new Medical Fee Guidelines increased reimbursements for professional medical services.  Thus, the Division approved an increase in medical expenses totaling more than $100 million for non-network medical care.  There is no guarantee employers and carriers will receive a corresponding decrease in medical costs through the use of disability management tools such as the Official Disability Guidelines (ODG) or the Medical Disability Advisor’s (MDA) Return to Work Guidelines. Employers and carriers hope they will receive medical cost containment from the judicious use of the ODG for medical treatment.  Even if there is a dollar for dollar savings, Texas more than ever will have one of the highest costs for reimbursement of medical services in the nation.

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© Copyrighted 2008 by Downs Stanford, PC. All rights reserved. Reprinted with permission.