July 17, 2007
TO: ALL WORKERS' COMPENSATION SYSTEM PARTICIPANTS
RE: PREAUTHORIZATION OF INPATIENT HOSPITALADMISSIONS AND PHYSICAL THERAPY SERVICES
The purpose for preauthorization of health care treatment and services is to ensure appropriate reimbursement for those services in accordance with applicable law. HB 7, 79 th Legislature, Regular Session, amended Labor Code §413.014 to add subsection (e) which provides that an insurance carrier may not retrospectively review the medical necessity of a treatment or service that has received preauthorization.
The Medical Dispute Resolution (MDR) section of the Texas Department of Insurance, Division of Workers' Compensation (Division) has received a number of disputes regarding the retrospective denial of physical therapy services that were preauthorized but payment was later denied due to lack of medical necessity. MDR has also received a number of disputes regarding the retrospective denial of related ancillary charges for services provided within a preauthorized hospital stay, such as nasal cannulas, gloves, fluoroscopy, and anesthesia.
Division rules address appropriate preauthorization and reimbursement. 28 Tex. Admin. Code §134.600(a)(7), defines preauthorization as the prospective approval obtained from the insurance carrier by the requestor or injured employee prior to providing the healthcare treatment or services. Section 134.600(c) provides that a carrier is liable for all reasonable and necessary medical costs relating to the health care of a preauthorized treatment or service listed in §134.600(p). A carrier may audit a medical bill for medical fee reasons such as bundling or not documented, but a carrier may not deny reimbursement of a preauthorized treatment or service, including any related ancillary service or supply, based on medical necessity. See, §§133.230(a) and 133.240(b).
Further, §134.600(f) requires a preauthorization request and approval to include:
Section 134.600(n) requires both the provider and the carrier to agree to any conditions or changes to a preauthorization request. For hospital stays, extensions of treatment beyond previously approved principal procedures and length of stay should be concurrently requested. A carrier may not be liable for treatment beyond preauthorized or concurrently authorized health care found in
§ 134.600(p).
System participants should review the Division's treatment guidelines and Medicare payment policies concerning units of time, in order to be more specific during the preauthorization request, review, and approval process for professional services, particularly for physical therapy. To help avoid future disputes, providers should be more specific in their requests concerning units of time for physical therapy preauthorization. In turn, carriers should document the number of preauthorized physical therapy units.
The Division will initiate appropriate enforcement actions for non-compliance with applicable statutes and rules, including an administrative penalty not to exceed $25,000 per day per occurrence.
If there are any questions regarding the information in this bulletin, please contact Amy Rich at 512-804-4809 or email Medical Dispute Resolution at MDRInquiry@tdi.state.tx.us.
Albert Betts
Commissioner of Workers' Compensation
Texas Department of Insurance
For more information, contact:
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