TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
ON REMAND
NO. 03-17-00666-CV
Facility Insurance Corporation, Appellant
v.
Patients Medical Center, Appellee
FROM THE 200TH DISTRICT COURT OF TRAVIS COUNTY
NO. D-1-GN-13-003388, THE HONORABLE LORA J. LIVINGSTON, JUDGE PRESIDING
MEMORANDUM OPINION
This appeal concerns a medical fee dispute under the Texas Workers’
Compensation Act (TWCA), see generally Tex. Lab. Code §§ 401.001–419.007, between the
insurance carrier Facility Insurance Corporation (the Carrier) and the provider Patients Medical
Center (the Provider) for medical services the Provider provided to an injured worker (the
Claimant). After the Provider initiated the process for medical fee dispute resolution (MFDR),
an MFDR officer with the Texas Department of Insurance, Division of Workers’ Compensation
(the Division) adjudicated the dispute and awarded the Provider $20,495.78 in additional
reimbursement. The Carrier requested a contested case hearing before the State Office of
Administrative Hearings (SOAH). After the SOAH hearing, the administrative law judge (the
ALJ) signed a Decision and Order (the SOAH Order) concluding that the Carrier “failed to carry
its burden that Provider is not entitled to $20,495.78” in additional reimbursement.
The Carrier sought judicial review, raising multiple issues. The district court
affirmed the SOAH Order, and the Carrier appealed to this Court. We reversed on a single
issue—determining that the ALJ improperly shifted the burden of proof from the Provider to the
Carrier in the contested case hearing before SOAH—and remanded the case to the Division for
further proceedings. See Facility Ins. Corp. v. Patients Med. Ctr., 574 S.W.3d 436, 444 (Tex.
App.—Austin 2018), rev’d and remanded, 623 S.W.3d 336 (Tex. 2021). But the Texas Supreme
Court reversed our ruling, holding that “in a worker’s compensation proceeding, the burden of
proof in a contested case hearing before SOAH is on the party seeking review of the Division’s
initial MFDR decision.” Patients Med. Ctr. v. Facility Ins. Corp., 623 S.W.3d 336, 343 (Tex.
2021); see also id. at 338 n.2, 341 (noting that rules authorized party to “seek review of the
[MFDR] decision” by requesting contested case hearing and that burden of proof is on “‘the
party seeking relief’” (quoting 28 Tex. Admin. Code §§ 133.307(f) (MDR of Fee Disputes),
148.14(b) (Burden of Proof))). 1 The Texas Supreme Court remanded the case to this Court to
consider the Carrier’s other appellate issues that we did not initially reach:
(1) whether the ALJ erred in failing to apply a contractual fee rate; (2) whether
[the Provider] failed to submit a timely, complete medical bill; (3) whether [the
Provider] waived its entitlement to MFDR by failing to request reconsideration of
[the Carrier]’s denial of the “corrected bill”; and (4) whether the ALJ incorrectly
determined [the Provider]’s entitlement to and the amount of reimbursement.
Id. at 340 n.6, 343.
1 We cite to the versions of Division rules that were in effect during the time frame
relevant to the underlying MFDR proceeding. All citations to Title 28 of the Texas
Administrative Code are to rules promulgated by the Texas Department of Insurance.
2
On remand, although we overrule the first three issues, see Texas Comm’n on
Env’tl Quality v. Maverick County, 642 S.W.3d 537, 550 (Tex. 2022) (noting that appellate court
could reach issues “not strictly necessary to each court’s disposition of the case” and
“particularly in a complex administrative appeal”), we reverse the SOAH Order in part based on
the Carrier’s fourth issue and remand the case to the Division for further proceedings consistent
with this opinion, see Tex. Gov’t Code § 2001.174(2); Freightliner Corp. v. Motor Vehicle Bd.
of Tex. Dep’t of Transp., 255 S.W.3d 356, 366 (Tex. App.—Austin 2008, pet. denied) (“Courts
are legislatively empowered to limit the scope of a remand to the part of an order that contains
error.”). We affirm the SOAH Order in all other respects. See Tex. Gov’t Code § 2001.174(1).
BACKGROUND
The Texas Supreme Court has provided an overview of the legal framework for
MFDR proceedings, see Patients Med. Ctr., 623 S.W.3d at 338; see also Vista Med. Ctr. Hosp.
v. Texas Mut. Ins., 416 S.W.3d 11, 15–18 (Tex. App.—Austin 2013, no pet.), and both our initial
opinion and the Texas Supreme Court’s opinion in this appeal provide the procedural and factual
background of this case, see Patients Med. Ctr., 623 S.W.3d at 338–40; Facility Ins., 574 S.W.3d
at 439–41. Accordingly, we limit our background discussion here to what is necessary to resolve
this appeal and refer readers to those opinions for additional factual and legal background.
On August 19, 2009, Dr. Chris Fuke with the Provider submitted a
Pre-authorization Request/Procedure Order to perform two procedures on the Claimant: “Spinal
cord stimulator-revision” and “Programming,” coded as Current Procedural Terminology (CPT)
3
63660 and 95972, respectively. 2 The request also stated, “Please consider the following
procedures for pre-authorization. I am also faxing[.] See attached documentation . . . .”
(Ellipsis in original.) The appellate record, however, does not include any “attached
documentation” to the preauthorization request.
On September 22, the Carrier’s agent UniMed Direct faxed the Provider an
August 24 report by Dr. Lisa Gill that recommended approving the request. 3 Dr. Gill was an
“anesthesiologist reviewer,” and “one of [UniMed Direct’s] physician advisers, who—who
renders the decision on these approvals.” In the report, Dr. Gill described the Claimant’s
“history of condition” as “hav[ing] an spinal cord stimulator (SCS) in that worked well but the
leads were removed in 10/08 due to migration” and noted that “[t]he MD is requesting
replacement of the leads.” In the report’s conclusion, Dr. Gill explained: “The [Claimant] had
good relief with her last SCS and poor relief (pain 10/10) now that it is out. The leads had
moved so were pulled. The generator remains. The MD wants to replace the leads, hook them
back up, and reprogram the unit to get maximum coverage. This is a very reasonable tx plan.”
On September 23, Dr. Fuke performed surgery on the Claimant and signed the
Operative Note describing the procedure. The Operative Note lists three procedures
performed—“Spinal cord stimulator lead and generator revision,” “Fluoroscopic guidance for the
2 In the American Medical Association’s Current Procedural Terminology (2004), which
was included in the record, CPT 63660 is described as “Revision or removal of spinal
neurostimulator electrode percutaneous array(s) or plate/paddle(s)” and CPT 95972 is described
as “complex brain, spinal cord, or peripheral (except cranial nerve) neurostimulator pulse
generator/transmitter, with intraoperative or subsequent programming, first hour.”
3 UniMed Direct is “the bill review company who processes the bills” for “the third-
party administrator for [the Carrier].” At the SOAH hearing, UniMed Direct’s employee
Ian Bladuell testified that the report is “summarizing what the physician wants to do” and is the
reviewing doctor’s “conclusion after reviewing what’s submitted for preauthorization.”
4
above procedure,” and “Epidural blood patch”—and narratively describes the placement,
adjustment, and anchoring of leads and the dissection and placement of the generator.
On September 30, the Provider sent a medical bill to UniMed Direct, listing
nineteen items that totaled $94,640.48. In November, UniMed Direct sent the Provider a check
for $2,354.75 with an explanation of benefits (the 2010 EOB) that denied most of the billed
items. The only item that was not denied was for “revise/remove neuroelectrode” code 63660,
but UniMed reduced the amount from $2,558.75 to $2,354.05, stating as the reason:
“A2-contractual adjustment any reduction is in in accordance with the Focus/AETNA Worker’s
Comp Access LLC contract. For questions regarding reductions please call 1-800-238-8288.”
(Capitalization removed.) The reasons listed next to the denied items were either “workers
compensation state fee schedule adjustment. Fee guideline MAR reduction” or “payment
denied/reduced for exceeded precertification/authorization.” (Capitalization removed.)
On March 11, 2010, the Provider sent UniMed Direct the original bill with “1st
Request for Reconsideration–Not Duplicate” handwritten on it and accompanying
documentation, including the Operative Note. In a cover letter, the Provider explained:
Our facility is requesting for the above claim to be reviewed and reconsidered.
We have received a small payment of $2,354.75; being informed that 2 of the
procedures performed were denied, as well as all the implants. I have obtained a
copy of all of the invoices for implants and ask that you review those. According
to our vendor the implants were used for Revision/removal of NeuroElectroders
therefore at least some of our implants should have been considered and not
denied in its entirety.
5
On March 25, UniMed Direct responded with an explanation of review, reasserting its original
payment decision and again listing itemized reasons for denial of payment. 4
On April 19, the Provider sent a “2nd level of Reconsideration” to UniMed
Direct. Across the bill was handwritten “2nd Level of Appeal” and under the remarks section of
the bill was handwritten “Corrected Bill.” The cover letter states:
Our facility received our 1st level response from our appeal, we are now
submitting the 2nd level, after reviewing the billed charges it was determined that
line charges for CPT Code 360 were billed incorrectly. On this corrected bill you
will find that there are (3) line items for this Rev Code; we understand that only
one procedure was allowed CPT code 63660 since our Aetna Network was used
on re pricing this claim, the allowed amount of the corrected charges are:
CPT Code:63660
$3,411.68 @ 92% =$3,138.75 less the amount previously paid $2,354.75 leaving
a balance of $784.00 in which we are seeking reimbursement for.
The attached “Corrected Bill” increased the “Total Charges” for each of three items—
“revise/remove neuroelect 63660,” “revise/remove neurorecei 63688,” and “treat epidural spine
les 62273”—from the $2,558.75 listed on the original bill to $3,411.68 and omitted a fourth
item—“analyze neurostim, compl 95972”—from the original bill. (Capitalization removed.) On
the line for “revise/remove neuroelect 63660”—the only item the Carrier paid after receiving the
original bill—was handwritten “@92% $3,138.75.” Finally, the bill code “0131” on the
“Corrected Bill” was crossed out and “137” and “CORRECTED” were handwritten instead. On
April 30, UniMed Direct sent the Provider another explanation of review, reasserting its original
4 These reasons included: “Payment denied/reduced for exceeded
precertification/authorization. UMD recommends $0.00”; “Payment is included in the allowance
for another service/procedure. Included in global reimbursement. UMD recommends $0.00”;
“Original audit decision is being maintained. Upon review, it was determined that this treatment
was processed properly. $0.00”; and “Reconsideration no additional payment. Original payment
decision is being maintained. Upon review, it was determined that this claim was processed
properly.” (Capitalization removed.)
6
payment decision and raising the additional explanation code “29 The time limit for filing has
expired. $0.00.” The Provider did not request reconsideration of the “Corrected Bill.”
On September 22, 2010, the Provider requested MFDR and asserted that the
Carrier owes a remaining $92,285.73, as reflected on the original bill. On November 3, the
Division sent the Carrier a fax requesting additional information, including “[a] copy of the
contract between the informal/voluntary network and [the Provider]” and “[d]ocumentation to
support that [the Provider] was notified in accordance with 28 Tex. Admin. Code § 133.4.” On
November 19, Aetna Worker’s Comp Access submitted to the Division a March 14, 2008
Hospital Services Agreement (the Aetna Contract) between the Provider and Aetna Health, Inc.
In the cover letter to the Division, Aetna’s representative stated, “In response to the [Division]’s
inquiry regarding compliance with 28 Tex. Admin. Code 133.4, [the Provider] has been made
aware of their participation status with [Aetna Worker’s Comp Access] since April 15, 2008.”
On March 13, 2013, the MFDR officer signed her findings and decisions. As to
the Aetna Contract, the MFDR officer found:
Review of the submitted information found insufficient documentation to support
that the disputed services were subject to a contractual fee arrangement between
the parties to this dispute. Nevertheless, on November 3, 2010, the Division
requested the respondent to provide a copy of the referenced contract as well as
documentation to support notification to the healthcare provider, as required by
28 Texas Administrative Code § 133.4, that the healthcare provider had been
given access to the contracted fee arrangement. Review of the submitted
information finds that the documentation does not support notification to the
healthcare provider in the time and manner required. The Division concludes
that, pursuant to § 133.4(g), the insurance carrier is not entitled to pay the health
care provider at a contracted fee.
7
The MFDR officer also made findings that some of the Carrier’s reasons for denial were
supported as to some items but not others and made various adjustments, reducing the amount
due from $92,285.73 to $20,495.78.
The Provider did not contest the $20,495.78 amount, but on April 2, the Carrier
requested a contested case hearing before SOAH. At the SOAH hearing, the documents
described above were admitted into evidence and Paul Hanson, the Provider’s chief financial
officer, and Ian Bladuell, an employee with UniMed Direct, testified as witnesses. On
August 28, the ALJ signed the SOAH Order. Among other findings and conclusions, the ALJ
found that “[t]he initial bill, with all fields completed, was received by Carrier within 95 days
from the date of service but contained a procedure coding error” and concluded that it “was a
complete medical bill as defined by 28 Texas Administrative Code § 133.2” and that “Carrier
failed to carry its burden that [the Provider] is not entitled to $20,495.78 in additional
reimbursement.” The Carrier sought judicial review of the SOAH Order, and the district
court affirmed.
DISCUSSION
On remand, the Carrier reasserts its four appellate issues challenging the SOAH
Order that were not addressed in our initial opinion and in the Texas Supreme Court opinion.
Our review of the SOAH Order is governed by the “substantial evidence rule.” See Tex. Gov’t
Code § 2001.174; Tex. Lab. Code § 410.255(b). Under that standard, we must reverse or remand
the case for further proceedings “if substantial rights of the appellant have been prejudiced
because the administrative findings, inferences, conclusions, or decisions are” “in violation of a
constitutional or statutory provision,” “in excess of the agency’s statutory authority,” “made
8
through unlawful procedure,” “affected by other error of law,” “not reasonably supported by
substantial evidence considering the reliable and probative evidence in the record as a whole,” or
“arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of
discretion.” Tex. Gov’t Code § 2001.174(2). When applying the substantial evidence rule, “a
court may not substitute its judgment for the judgment of the state agency on the weight of the
evidence on questions committed to agency discretion.” Id. § 2001.174. “The true test is not
whether the agency reached the correct conclusion, but whether some reasonable basis exists in
the record for the action taken by the agency.” Maverick County, 642 S.W.3d at 544 (quoting
Texas Health Facilities Comm’n v. Charter Med.–Dall., Inc., 665 S.W.2d 446, 452 (Tex. 1984)).
Complete Medical Bill
We begin with the Carrier’s second appellate issue. The Carrier argues that the
Provider’s September 2009 bill, which was the subject of the SOAH Order, did not qualify as a
“complete medical bill” because it had an incorrect service code. Thus, according to the Carrier,
the Provider forfeited the right to reimbursement on that claim because it did not submit a
“complete medical bill”—i.e., the “Corrected Bill”—until after the 95-day deadline. See Tex.
Lab. Code § 408.027(a) (providing that provider’s failure to timely submit claim for payment
within 95 days after date of health care services constitutes forfeiture of provider’s right to
reimbursement). The Division rules define “[c]omplete medical bill” as:
A medical bill that contains all required fields as set forth in the billing
instructions for the appropriate form specified in § 133.10 of this chapter (relating
to Required Billing Forms/Formats), or as specified for electronic medical bills in
§ 133.500 of this chapter (relating to Electronic Formats for Electronic Medical
Bill Processing.
9
28 Tex. Admin. Code § 133.2(2) (Definitions). In the SOAH Order, the ALJ made the following
relevant findings of fact and conclusion of law: “The initial bill, with all fields completed, was
received by Carrier within 95 days from the date of service but contained a procedure coding
error”; “The initial bill was complete”; and “The medical bill Provider sent on
September 30, 2009, was a complete medical bill as defined by 28 Texas Administrative Code
§ 133.2.”
In challenging the SOAH Order on appeal, the Carrier does not argue that any
“required fields” in the Provider’s medical bill were left blank. Instead, the Carrier limits its
challenge to arguing that “[a] bill with incorrect coding or charge amounts is not complete”
because the Division’s Medical Contested Case Hearing Decision Manual-Medical Fee Disputes
(Decision Manual) “states that to be entitled to payment, a medical bill with even one coding
error is not a complete bill, and must be corrected within the 95-day deadline.” (Capitalization
removed.) In the SOAH proceeding, the Carrier submitted excerpts from the Decision Manual as
an exhibit, which state, as relevant here:
Complete Bill Required
The bill must be complete, with any corrections submitted during the 95-day
period. M4-08-3413-01. There is no provision allowing for the resubmission of
an incomplete or improperly submitted bill after the 95-day period.
M4-09-1662-01. HCP shall include correct billing codes from the applicable
Division fee guidelines in effect on the date or dates of service when submitting
medical bills. See Rule 133.20(c).
Incomplete Bill – Incorrectly Coded
MFDR found that HCP did not submit a timely request for reimbursement to IC.
Although the first bill for $68.25 was submitted within 95 days from the date of
service, it was incorrectly coded. Approximately six months after the date of
service, HCP submitted a corrected bill which was properly coded. IC denied the
bill, citing § 408.027, and the fact that the corrected bill was not submitted within
95 days. HO affirmed the decision of MFDR that HCP failed to timely request
reimbursement pursuant to § 408.027.
10
M4-08-3413-01.
The Carrier asserts that the decisions in the Decision Manual “are the agency’s expression of its
interpretation and application of its rules, which the ALJ was bound to follow and to which the
courts are bound to defer.” 5
We need not decide, however, whether the September 2009 original bill
constituted a “complete medical bill,” notwithstanding any coding errors. Even if the ALJ erred
in concluding that the original bill was complete, the conclusion would not have prejudiced the
Carrier’s substantial rights as explained below, and therefore we are not authorized to reverse or
remand the ALJ’s decision on this ground. See Tex. Gov’t Code § 2001.174(2).
A provider’s delivery of a “complete medical bill” triggers a carrier’s obligation
to take final action within a certain time period. See 28 Tex. Admin. Code § 133.240(a)
(Medical Payments and Denials) (“An insurance carrier shall take final action after conducting
bill review on a complete medical bill, or determine to audit the medical bill . . . not later than the
45th day after the date the insurance carrier received a complete medical bill.”). But here it is
undisputed that the Carrier took final action on the September 2009 bill and on the March 2010
request for reconsideration by making a $2,354.75 payment and denying the rest of the charges.
See id. §§ 133.2(4) (“Final action on a medical bill—(A) sending a payment that makes the total
reimbursement for that bill a fair and reasonable reimbursement . . . and/or (B) denying a charge
on the medical bill.” (emphasis added)), .250(f) (Reconsideration for Payment of Medical Bills)
(“The insurance carrier shall take final action on a reconsideration request within 21 days of
receiving the request for reconsideration. The insurance carrier shall provide an explanation of
5 The Carrier relies entirely on these excerpts and does not rely upon statutory or rule
language to argue that the Provider’s bill was not a “complete medical bill.”
11
benefits for all items included in a reconsideration request in the form and format prescribed by
the Division.”). And it is the Carrier’s “final action” on a medical bill, regardless of whether the
bill is a “complete medical bill,” that triggers the Provider’s right to request reconsideration and
MFDR. See id. §§ 133.240(h) (“If dissatisfied with the insurance carrier’s final action, the health
care provider may request reconsideration of the bill . . . .”), (i) (“If dissatisfied with the
reconsideration outcome, the health care provider may request medical dispute resolution . . . .”),
.250(a) (“If the health care provider is dissatisfied with the insurance carrier’s final action on a
medical bill, the health care provider may request that the insurance carrier reconsider its action.”
(emphasis added)), (h) (“If the health care provider is dissatisfied with the insurance carrier’s
final action on a medical bill after reconsideration, the health care provider may request medical
dispute resolution in accordance with § 133.305 . . . .” (emphasis added)), .305(a)(3)(A), (4)(A)
(MDR—General) (defining “Medical dispute resolution” to include “process for resolution of”
“a medical fee dispute” and defining “Medical fee dispute” to include “a health care provider
(provider) . . . dispute of an insurance carrier (carrier) reduction or denial of a medical bill”
(emphasis added)). 6
If the medical bill is not complete, the Division’s rules provide a mechanism by
which the Carrier may satisfy its obligations without taking final action. See id. § 133.200(a), (c)
6 At the time of the Provider’s billing of the Carrier for the provided health care services,
Chapter 133 of Title 28 of the Texas Administrative Code contained multiple references to a
medical bill being complete or incomplete. See 28 Tex. Admin. Code §§ 133.2(2) (Definitions),
.20(f), (g) (Medical Bill Submission by Health Care Provider), .200(a), (c) (Insurance Carrier
Receipt of Medical Bills from Health Care Providers), .230(b)(1), (4) (Insurance Carrier Audit of
a Medical Bill), .240(a), (j), (k) (Medical Payments and Denials), .250(e) (Reconsideration for
Payment of Medical Bills), .501(b)(2), (3), (c)(3), (4) (Electronic Medical Bill Processing).
These references primarily concerned the triggering of deadline obligations to provide notice or
final action, and none bestow rights such that the ALJ’s conclusion that the bill was complete
would have prejudiced the Carrier’s substantial rights were it erroneous.
12
(Insurance Carrier Receipt of Medical Bills from Health Care Providers) (requiring carriers to
take certain action upon receipt of “a medical bill that is not complete as defined in § 133.2” and
providing that “[t]he proper return of an incomplete medical bill in accordance with this section
fulfills the insurance carrier’s obligations with regard to the incomplete bill”). Here, however,
the Carrier admits that it did not follow Rule 133.200 regarding the proper response to an
incomplete medical bill and instead took final action on receiving the original medical bill. 7
In sum, a provider has the right under the relevant rules to seek reconsideration
and MFDR when it is dissatisfied with a carrier’s “final action on a medical bill.” And the rules
do not require that the medical bill be complete for a carrier to take “final action” on the medical
bill. Because it is undisputed that (1) the Carrier took final action on both the September 2009
medical bill and the March 2010 request for reconsideration, (2) the Provider requested MFDR
based on dissatisfaction with the Carrier’s final actions, and (3) the September 2009 medical bill
and the March 2010 request for reconsideration were timely filed, we conclude that the Provider
did not forfeit its right to reimbursement for failure “to timely submit a claim for payment,”
regardless of whether the September 2009 medical bill was “complete.” See Tex. Lab. Code
§ 408.027(a). 8 Accordingly, we overrule the Carrier’s second issue.
7 In its appellate reply brief, the Carrier notes, “The [Provider] responds that upon receipt
of the original bill, the Carrier did not follow the rules regarding the proper response to an
incomplete bill. That is true.”
8 Moreover, as we have previously noted, Section 408.027(a) “applies to ‘claim[s] for
payment’” while the rules “apply to ‘medical bill[s].’” Facility Ins. Co. v. Vista Hosp. of Dall.,
No. 03-18-00663-CV, 2019 WL 6603168, at *6 (Tex. App.—Austin Dec. 5, 2019, pet. denied)
(mem. op.). The Carrier does not discuss the distinction between the terms “claim” and “medical
bill” such that the former would require a “complete medical bill” to constitute a “claim.”
13
Corrected Bill
In its third issue, the Carrier argues that “[a]s defined by Medicare and [the
Division] rules and [Division] authority interpreting those rules, the ‘Corrected’ bill was a
new bill.” Thus, the Carrier argues, because the Provider submitted a “Corrected Bill” on
April 19, 2010—a bill denied by the Carrier as untimely—“[a]ny fee dispute had to be directed
to the ‘Corrected’ bill.” Moreover, the Carrier argues, because the “Corrected Bill” is a new bill,
“[t]he [Provider] was not entitled to [MFDR] in the absence of a Request for Reconsideration,”
and it is undisputed that the [Provider] did not request reconsideration of the Carrier’s denial of
the “Corrected Bill.”
However, as we have noted above, the Carrier took “final action” on both the
September 2009 medical bill and the March 2010 request for reconsideration, and under the
Division rules the Provider is entitled to request MFDR if dissatisfied with the Carrier’s “final
action” on a medical bill and request for reconsideration. See 28 Tex. Admin. Code
§§ 133.240(h), (i), .250(h), .337(b)(1). The Carrier argues that “there is no statute, rule or
mechanism allowing the ALJ to resurrect the original bill and wish away the new corrected one.”
The Provider responds that the “rules do not state that an untimely claim extinguishes a prior,
timely-filed claim.”
Although the Carrier may be correct that the “Corrected Bill” is a “new bill,” the
Carrier does not cite authority for the proposition that a provider’s untimely corrected bill filed
after a carrier has taken “final action” on an original bill and request for reconsideration prevents
a provider from seeking MFDR of the original bill. 9 See Maverick County, 642 S.W.3d at 547
9 Rule 133.20 states that providers “shall not resubmit medical bills to insurance carriers
after the insurance carrier has taken final action on a complete medical bill and provided an
14
(noting that agency finding and conclusions “are presumed to be supported by substantial
evidence, and the burden is on the contestant to prove otherwise” (quoting Charter Med.–Dall.
665 S.W.2d at 453)). Thus, even though the Provider would likely not be entitled to MFDR of
the Carrier’s denial of the “Corrected Bill” as there was no request for reconsideration of that
bill, the Carrier has not met its appellate burden to demonstrate that the Provider was not entitled
to MFDR of the Carrier’s denial of the original bill and request for reconsideration. 10 We
overrule the Carrier’s third appellate issue.
explanation of benefits except in accordance with § 133.250” but “may correct and resubmit as a
new bill an incomplete bill that has been returned by the insurance carrier.” See 28 Tex. Admin.
Code § 133.20(f), (g) (Medical Bill Submission by Health Care Provider). The Carrier cites this
rule to support its denial of the “Corrected Bill” but does not explain how it obviates the
Provider’s right to MFDR of the Carrier’s final action on the original bill and request
for reconsideration.
In its briefing on remand, the Carrier argues that “[b]y rule, the corrected bill [Bill Type
137] not only withdrew and replaced the original bill, its submission constitutes an admission
and declaration that the original bill was not a ‘complete’ bill [and] that the corrected bill
constituted a ‘new’ bill (restarting all the regulatory deadlines).” The Carrier does not explain
how “[b]y rule” the untimely corrected bill withdrew the original bill. At the SOAH hearing,
Bladuell testified that “bill type 137” can be “interpreted as the replacement bill for the original
submission,” and with its closing argument before SOAH, the Carrier submitted an excerpt from
“UB-04/CMS-1450 Reference Material” of a chart “Type of Bill Codes” that notes code 137 is
“Hospital” “Outpatient” “Replacement of Prior Claim.” However, the cover letter also described
the “Corrected Bill” as a “2nd level of Reconsideration” and on the bill was handwritten “2nd
Level of Appeal.” Given the substantial evidence standard of review, we conclude that there was
a reasonable basis for the ALJ to conclude that the original bill was not withdrawn such that
MFDR of the original bill following the Carrier’s “final action” would be improper.
10 The Carrier also relies on the excerpts from the Decision Manual and its cited
decisions. However, in those decisions, the parties seeking MFDR sought to rely on their
corrected bills, not the original bills, to establish their entitlement to reimbursement. Here, on
the other hand, as the Provider notes, “The [Division] did not consider [the Provider’s] corrected
claim, nor did the ALJ.”
15
AETNA Contract
The Carrier’s first issue states: “Did the ALJ have the legal and factual grounds
to (impliedly) avoid the Aetna-Patients Medical Center network fee arrangement that both
Hospital and Carrier acknowledged and invoked in the billing, payment and dispute resolution
process?” For the relevant time here, the Texas Labor Code permitted providers and carriers to
contract for terms and medical fee schedules in what were called informal or voluntary networks.
See Tex. Lab. Code § 413.011(d-1)–(d-6). The Carrier asserts that the Aetna Contract provides
for an “agreed rate of reimbursement” of “92% of the ‘Allowable’ as defined in the contract.”
The Division rules, however, provide that “[t]he insurance carrier is not entitled to
pay a health care provider at a contracted fee negotiated by an informal network or voluntary
network if: (1) the notice to the health care provider does not meet the requirements of Labor
Code § 413.011 and this section.” 28 Tex. Admin. Code § 133.4(g) (Written Notification to
Health Care Providers of Contractual Agreements for Informal and Voluntary Networks). Rule
133.4 requires that “[e]ach informal network or voluntary network, or the insurance carrier, or
the insurance carrier’s authorized agent, as appropriate, shall notify each affected health care
provider of any person that is given access to the informal or voluntary network’s fee
arrangement with that health care provider within the time and manner provided by this section.”
Id. § 133.4(c). The notice “may be provided through a website link,” but “only if the website:
(A) contains the information stated in paragraphs (1), (2)(A) and (2)(B) of this subsection; and
(B) is updated at least monthly with current and correct information.” Id. § 133.4(d)(4).
Paragraph (2) requires that the body of the notice must include: (A) “name, physical address,
and telephone number of any person that is given access to the informal or voluntary network’s
fee arrangement”; and (B) “the start date and any end date during which any person has been
16
given access to the health care provider’s contracted fee arrangement.” Id. § 133.4(d)(2). Rule
133.4 also requires that “[t]he informal or voluntary network, insurance carrier, or the insurance
carrier’s authorized agent, as appropriate, shall document the information provided in the notice
as required by subsection (d) of this section, the method of delivery, to whom the notice was
delivered, and the date of delivery.” Id. § 133.4(e). Finally, Rule 133.4 provides that “[f]ailure
to provide documentation upon the request of the Division or failure to provide notice that
complies with the requirements of Labor Code § 413.011 and this section creates a rebuttable
presumption . . . in a medical fee dispute that the health care provider did not receive the
notification.” Id.
In addition to requesting a copy of the Aetna Contract, the Division requested
from the Carrier “Documentation to support that [the Provider] was notified in accordance with
28 Tex. Admin. Code § 133.4.” However, the appellate record does not include documentation
showing “the information provided in the notice as required by subsection (d) of this section, the
method of delivery, to whom the notice was delivered, and the date of delivery.” See id.
§ 133.4(e). Instead, the cover letter responding to the request merely states, “In response to the
[Division]’s inquiry regarding compliance with 28 Tex. Admin. Code 133.4, [the Provider] has
been made aware of their participation status with AWCA since April 15, 2008.” Accordingly,
the MFDR officer found that “[r]eview of the submitted information finds that the
documentation does not support notification to the healthcare provider in the time and manner
required” and concluded that “pursuant to § 133.4(g), the insurance carrier is not entitled to pay
the health care provider at a contracted fee.” And in the SOAH Order, the ALJ concluded that
the “Carrier failed to carry its burden that [the Provider] is not entitled to $20.495.78 in
additional reimbursement.”
17
Because the Texas Supreme Court has determined that the Carrier had the burden
of proof in the contested case hearing before SOAH, see Patients Med. Ctr., 623 S.W.3d at 343,
our inquiry on this issue under the substantial evidence rule is whether “some reasonable basis
exists in the record,” see Maverick County, 642 S.W.3d at 544 (quoting Charter Med.–Dall.,
665 S.W.2d at 452), for the ALJ to impliedly conclude that the Carrier did not meet its burden to
demonstrate that any alleged notice provided to the Provider satisfied Rule 133.4 such that the
Aetna Contract applied. 11
The Carrier argues that the rules “only required the contract be supplied to the
[Division], and that Aetna provide documentation of the website where the [Provider] could have
reviewed to determine if this Carrier had access to the network contract,” and asserts that “Aetna
documented the time and manner of its notice relevant to this [Provider] and this outpatient
encounter.” But this assertion does not accurately convey what the rules require. Although the
record includes the Aetna Contract, which includes a website link, 12 the record does not
11 The Carrier argues that the Provider “offered no evidence the contract did not apply or
that payer access information had not been available to it.” But as determined by the Texas
Supreme Court, the Carrier, not the Provider, had the burden of proof in the contested case
hearing. See Patients Med. Ctr. v. Facility Ins. Corp., 623 S.W.3d 336, 343 (Tex. 2021). In
arguing that the ALJ erred in placing the burden of proof on the Carrier, the Carrier appears to
concede that the Provider did not need to offer proof if the Carrier bore the burden: “The ALJ’s
presumptive adoption of everything the [MFDR officer] found, and the reversal of the burden of
proof to the Carrier to disprove every finding and conclusion of the [MFDR officer], relieved the
[Provider] of doing or saying anything related to this avoidance of its contract—a claim that it
had never made. The [Provider] was relieved of even having to claim at the [contested case
hearing] it did not have the required notice, even though all its actions and words
said otherwise.”
12 The Aetna Contract states, “Authorized Agent; Contractual Fee Arrangement.
Participating Provider understands and agrees that Company is the authorized agent for a number
of workers’ compensation carriers, including The Hartford (and its affiliates, including Specialty
Risk Services), Amerisure, Utica National Insurance Company (and any other carriers listed at
http://awca.aetna.com), for the purposes of developing a network of workers’ compensation
18
demonstrate that the Carrier was listed on the website link as having been given access to the
network’s fee arrangement. See 28 Tex. Admin. Code § 133.4(d)(2), (4) (providing that notice
may be provided through website link but “only if” website contains “name, physical address,
and telephone number of any person that is given access to the informal or voluntary network’s
fee arrangement” and “the start date and any end date during which any person has been given
access”). Given the Carrier’s failure to provide documentation that it was required to keep in
response to the Division’s request as required under Rule 133.4, the presumption is that the
Provider did not receive notice that met the requirements of Rule 133.4. See id. § 133.4(e).
The Carrier asserts that even if it failed to provide the necessary documentation,
“that would only have created a rebuttable presumption the [Provider] did not receive
notification of the time and manner of that information.” The Carrier argues, “The Carrier’s
witness testified the Carrier had access to and had applied the Aetna contract, and that the
[Provider] was clearly aware of it.” But even if the Provider was “aware” of the Aetna Contract,
the Carrier is only entitled to the contracted fee if the notice to the Provider satisfied Rule 133.4.
See id. § 133.4(g). And the Carrier does not identify any evidence that the provided notice—i.e.,
the website link in the Aetna Contract—satisfied the requirement of containing the “name,
physical address, and telephone number of any person that is given access to the informal or
voluntary network’s fee arrangement with a health care provider.” See id. § 133.4(d)(2), (4). 13
Accordingly, we overrule the Carrier’s first appellate issue.
providers and negotiating fee arrangements with such providers on the carrier’s behalf. The
contractual fee arrangement is between the Participating Provider and AWCA.”
13 The Carrier also argues, “The [Provider] had not disputed application of the Aetna
network contract, and in any event, waived any such claim.” But the MFDR concerned the
Carrier’s denial of the Provider’s billing statement that did not apply the contractual rate, and
19
Reimbursement Calculation
In the Carrier’s final appellate issue, it challenges the MFDR officer’s
reimbursement calculations and the ALJ’s conclusion that the Carrier did not meet its burden in
the contested case hearing before SOAH to show that the Provider is not entitled to the
reimbursement amount. The Carrier argues that “[w]hile there are numerous errors [in the
reimbursement calculations], the fundamental and most egregious error is the failure to exclude
from the outlier calculations all the charges for implants and other items that were associated
with surgical services for which the Carrier is not liable” and that “the Carrier has no liability for
items ancillary to services that were not preauthorized.” As we noted in our initial decision:
As outlined in great detail in Carrier’s brief, a critical component of the formula
used in the [MFDR officer]’s calculation of the reimbursement amount is the so-
called “sum of all packaged costs,” which the [MFDR officer]—without any
explanation—declared to be $20,649.75. This “packaged costs” amount was
determinative in the [MFDR officer’s] conclusion that Provider was entitled to so-
called “outlier payments,” which comprised the largest component of the total
reimbursement awarded.
Facility Ins., 574 S.W.3d at 444 n.8. Among other challenged calculation concerns, the Carrier
specifically argues, “The ALJ erred by including the charges and costs for a spinal cord
stimulator/generator (C1820) in any calculations, including outlier calculations.”
before SOAH, the Provider argued: “The evidence presented does not support that the required
notification of the contracted fee arrangement claimed by the carrier was timely and
appropriately provided to the healthcare provider as required by 28 Texas Administrative Code
§ 133.4. Therefore, pursuant to § 133.4(g), the insurance carrier is not entitled to pay the health
care provider at a contracted fee.” At the SOAH hearing, the Carrier’s counsel asked the
Provider’s chief financial officer Hanson, “[D]o you have any reason to believe that contract—
the Aetna contract in evidence didn’t apply,” to which Hanson responded, “No.” But on cross
examination, the Provider’s counsel asked, “Do you have any reason to believe the contract did
apply? Do you know whether the contract applied one way or the other?” Hanson responded,
“No. Because, again, I wasn’t here when they registered the patient, so I don’t know what the
circumstance was.” Hanson also testified that he was not aware of any notification from the
Carrier that “it was a participant in the contract.”
20
In its original bill, the Provider billed the Carrier, as relevant for this issue, the
following four charges, among other charges:
• “generator neuro rechg ba,” code C1820, for $47,250, 14
• “revise/remove neurorecei,” code 63688, for $2,558.75,
• “revise/remove neuroelect,” code 63660, for $2,558.75, and
• “analyze neurostim, compl,” code 95972, for $2,558.75.
(Capitalization removed.) During the SOAH proceedings, the Carrier submitted excerpts from
the American Medical Association’s Current Procedural Terminology (2004) (AMA’s CPT),
which described some of these CPT Codes. AMA’s CPT explains that “Codes 63650-63688
apply to both simple and complex neurostimulators”; that “[f]or insertion of neurostimulator
pulse generator, see 61885, 63685, 63688, 64590,” “[f]or revision or removal of neurostimulator
pulse generator or receiver, see 61888, 63688, 64595,” and “[f]or initial or subsequent electronic
analysis and programming of neurostimulator pulse generators, see codes 95970-95975”; and
that “Codes 95972 and 95973 describe intraoperative (at initial insertion/revision) or subsequent
electronic analysis of an implanted complex brain, spinal cord or peripheral (except cranial
nerve) neurostimulator pulse generator system, with programming.” AMA’s CPT defines code
63660 as “Revision or removal of spinal neurostimulator electrode percutaneous array(s) or
plate/paddle(s)”; code 63688 as “Revision or removal of implanted spinal neurostimulator pulse
generator or receiver”; and code 95972 as “complex brain, spinal cord or peripheral (except
cranial nerve) neurostimulator pulse generator/transmitter, with intraoperative or subsequent
programming, first hour.” The excerpts from the AMA’s CPT did not include a definition of
14 In its corrected bill, however, the Provider dropped this charge.
21
code C1820, but Bladuell testified at the SOAH hearing that C1820 is “a charge for an implant,
which would have been the generator.”
In determining what rule to apply to calculate the reimbursement amount due, the
MFDR officer found:
This dispute relates to facility services performed in an outpatient hospital setting
with reimbursement subject to the provisions of 28 Texas Administrative Code
§ 134.403, which requires that the reimbursement calculation used for
establishing the maximum allowable reimbursement (MAR) shall be the Medicare
facility specific amount, including outlier payment amounts, determined by
applying the most recently adopted and effective Medicare Outpatient Prospective
Payment System (OPPS) reimbursement formula and factors as published
annually in the Federal Register with the application of minimal modifications as
set forth in the rule. Per § 134.403(f)(1), the sum of the Medicare Facility specific
reimbursement amount and any applicable outlier payment amount shall be
multiplied by 200 percent, unless a facility or surgical implant provider requests
separate reimbursement of implantables. Review of the submitted documentation
finds that separate reimbursement for implantables was not requested.
....
Under the [OPPS], each billed service is assigned an Ambulatory Payment
Classification (APC) based on the procedure code used, the supporting
documentation and the other services that appear on the bill. A payment rate is
established for each APC. . . . Payment for ancillary and supportive items and
services, including services that are billed without procedure codes, is packaged
into payment for the primary service.
See 28 Tex. Admin. Code § 134.403 (Hospital Facility Fee Guideline—Outpatient). The
Provider did not challenge the finding that “separate reimbursement for implantables was not
requested,” and the Carrier does not challenge the application of Rule 134.403, assuming that the
contractual fee arrangement does not apply, which we have concluded above that it does not.
The MFDR officer also found that the denial reason for code 63688 “is supported” and denied
22
reimbursement for that coded billing item, which the Provider has not challenged. 15 As to code
C1820, however, the MFDR officer concluded that “[p]er Medicare policy, payment for the
surgical implantable supply item is included in the reimbursement for surgical services that had
been preauthorized by the insurance carrier”; that “[r]eview of the submitted information finds
no documentation to support [the Carrier’s] denial reason”; and that “code C1820 will therefore
be reviewed per applicable Division rules and fee guidelines,” presumably by being packaged
into payment for the primary services.
The Carrier argues, however, that “[t]here is no preauthorized or billed surgical
procedure to which C1820 could attach” because the two primary surgical services relied on by
the MFDR officer—codes 63660 and 95972—“did not require a new generator.” 16 Although
“removal of the already implanted generator (CPT 63688) was billed,” the Carrier argues that it
cannot be a surgical procedure to which C1820 could attach because it was “found not to be
preauthorized by the [MFDR officer]—a finding unchallenged by the [Provider].” And the
Carrier notes that “implantation of a new generator (CPT 63685) was not preauthorized
or billed.”
Other than to state that this “surgical implantable supply item” was “included in
the reimbursement for surgical services that had been preauthorized by the insurance carrier,” the
15 As to code 63688, the MFDR officer’s finding states, “the carrier is liable for all
reasonable and necessary medical costs relating to the health care listed in subsection (p) only in
the case of an emergency of ‘preauthorization of any health care listed in subsection (p) . . . that
was approved prior to providing the health care.’ §134.600(p)(2) states that the non-emergency
health care requiring preauthorization includes ‘outpatient surgical or ambulatory surgical
services.’ No documentation was found to support a medical emergency, nor was any
documentation found to support that this surgical service had been preauthorized.”
16The MFDR officer calculated a reimbursement amount for one other primary service,
code 62273, which AMA’s CPT describes as “Injection, epidural, of blood or clot patch.”
Because this code is not relevant to the billing of code C1820, we do not discuss it here.
23
MFDR officer does not explain to which preauthorized surgical service the C1820 implant
applied. At the SOAH hearing, the following exchange occurred between the Carrier’s counsel
and Bladuell:
Q Okay. Now, I’d refer you to finding and decision, section 4—or finding
number 4 in the [MFDR officer’s] findings and decision. And it refers to CPT
C-1820. Do you know what that is?
A That’s a—I think that’s a charge for an implant, which would have been
the generator.
Q And what was the charge for that generator?
A It appears to be $47,250.
Q Okay. And the—in respect to an implantable such as that generator, do
the rules specifically require the provider to ask for preauthorization to purchase
the generator?
A If it’s an implant for surgery that indicates that’s going to be implanted
into the patient, it would not require preauth, because once we preauthorize the
service, which would require an implant, the implant falls within that.
Q Okay. So in order for someone to be entitled to reimbursement for the
implant—in this case, the generator—they had to have requested and received
preauthorization for the procedure that required the implantation?
A That is correct.
Q In this case, did the hospital—or did the doctor ever request
preauthorization for the CPT code related to the implantation of a new generator?
A They did not.
Q And if they didn’t ask for a preauthorization, I assume it was never given;
is that correct?
A That’s correct.
Q Did the hospital bill for the procedure “insertion of a new generator”?
And for the record, that would be CPT code 63685, based on—
24
A They didn’t. They did not.
Q And so your—your testimony is they did not request preauthorization for,
or bill for, the procedure where they were implanting the generator?
A That is correct.
The exchange continued:
Q . . . And you agree that there was no specific award of the C-1820,
correct?
A Correct
Q But did the Division, in their calculations for outlier payments, include the
charges for and cost of the neurostimulator?
A That’s what it appears that they’re stating on their decision.
Q Okay. So it certainly had an effect on the outlier payments. It increased
them substantially; did it not?
A Yes.
As noted by Bladuell, the MFDR officer appears to have included the $47,250 in calculating the
outlier payment when the MFDR officer concluded that “[t]he sum of all packaged costs is
$20,649.75,” although it is unclear exactly how she calculated this number. In its written closing
argument before SOAH, the Carrier explained:
Based upon the Cost-to-Charge Ratio (CCR) used in the Decision (0.2379) and
reversing that calculation, the [MFDR officer] would have started with total
packaged charges of $86,800.13 [i.e., $20,649.75 ÷ 0.2379]. This total is only
$7,840.35 shy of the total charges of $94,640.48. The $7,740.35 the [MFDR
officer] carved out corresponds to the sum of the charges for three surgical
services on the bill, ($2,558.75 x 3) + $164.00 = $7,840.25. . . . Improperly using
the original bill which had been replaced, the [MFDR officer] carved out the
billing for 63660, 95972 and 62273. The $164.00 comes from HCPCS code
J2405 for a separately payable Ondansetron injection. CPT 63688 was also on
25
that bill, but the [MFDR officer] did recognize it as a non-covered charge. It had
been determined not to be preauthorized. These calculations are $0.10 off the
[MFDR officer]’s. Note that during testimony Mr. Bladuell had not determined
exactly how the [MFDR officer] had come to her $20,649.75 number. The above
mathematical explanation is as close as we can come.
Thus, according to this explanation, the $47,250 would have been utilized in calculating the total
packaged charges of $86,800.13 before applying the CCR. The Provider did not present
evidence or provide an alternative explanation of how the $20,649.75 amount for the “sum of all
packaged costs” was derived without utilizing the $47,250 amount that was billed for C1820.
Nevertheless, the ALJ concluded that the “Carrier failed to carry its burden that Provider is not
entitled to $20,495.78 in additional reimbursement.”
Based upon the Carrier’s evidence and argument, we conclude that the Carrier
met its appellate burden to demonstrate that substantial evidence did not support the ALJ’s
conclusion that the Carrier failed to carry its burden regarding the calculation of the amount of
additional reimbursement due. See Tex. Gov’t Code § 2001.174(2). Accordingly, we sustain the
Carrier’s fourth issue.
The Carrier also challenged the calculated reimbursement amount based on other
specified coded billing items, including for codes 95972, 62273, C1778, and C1883. But
because we do not have the power to render the decision that the ALJ should have rendered in
the SOAH Order, see id.; Freightliner Corp., 255 S.W.3d at 367 (“Although courts are
empowered to affirm, reverse, or remand agency decisions, we do not find a power in this type of
situation to render a decision that the agency should have rendered.”), we need not address the
Carrier’s other challenges to the reimbursement calculations within this issue to reverse and
remand the case for further proceedings. Our remand is limited to the Carrier’s fourth issue on
26
appeal, and we leave it to the agency to decide how to conduct its review of the remanded issue.
See Freightliner Corp., 255 S.W.3d at 362 (“Although courts may not be authorized to dictate
how an agency conducts its review of remanded issues or decides them, the express power to
affirm in part necessarily means that courts have some control over what issues the agency can
reconsider on remand subject to the limitations of judicial authority over agencies.”).
CONCLUSION
For these reasons, we (1) reverse the SOAH Order in part insofar as it concludes
that “Carrier failed to carry its burden that Provider is not entitled to $20,495.78 in additional
reimbursement” and orders reimbursement in that amount, (2) affirm the SOAH Order in all
other respects, and (3) remand the case to the Division for further proceedings consistent with
this opinion. See Tex. Gov’t Code § 2001.174(2).
__________________________________________
Melissa Goodwin, Justice
Before Justices Goodwin, Triana, and Kelly
Affirmed in Part; Reversed and Remanded in Part on Remand
Filed: September 8, 2022
27