NORTH CAROLINA INDUSTRIAL COMMISSION

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MEDICAL FEE SCHEDULE

Section 14: Hospital and Ambulatory Surgical Center

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Proper Reimbursement of Medical Bills

The N.C. Industrial Commission updated the hospital fee schedule, effective April 1, 2013. For details, see the NCIC's March 22, 2013 notice to insurance carriers, self-insured groups and administrators, and managed care organizations.

Beginning July 27, 2009, for service dates on and after that date, the following inpatient hospital billing band and outpatient and ambulatory surgical center reimbursement rates shall come into effect:

  • The lower end cap of the DRG band for reimbursement of inpatient hospital bills will be adjusted from 77.07% to 75% of charges for hospitals other than critical access hospitals. (Critical access hospitals are defined by federal law and are the smallest hospitals in the State, located in rural areas.)
  • The reimbursement rate for outpatient hospital bills will be adjusted from 95% of charges to 79% of charges for hospitals other than critical access hospitals.  For critical access hospitals, the outpatient reimbursement rate will be reduced from 95% to 87% of charges.
  • The reimbursement rate for ambulatory surgical centers will be adjusted from 100% of charges to 79% of charges.

Former Chairman Buck Lattimore's July 12, 2005 memo states:

It has come to the attention of the Industrial Commission that certain insurance carriers, self-insurers, and third-party administrators are requesting invoices for inpatient hospital bills. N.C. Gen. Stat. §97-26 states the Commission may consider any and all reimbursement methodologies including, but not limited to, the use of current procedural terminology (“CPT”) codes and diagnostic-related groupings (“DRGs”). In utilizing the DRG methodology for reimbursement, providers are entitled to 77.07% to 100% of billed charges. No additional reductions shall be taken for supplies or equipment as the Durable Medical Equipment Supply Fee Schedule applies only to items billed on a CMS (HCFA) 1500 not UB-92 [now UB-04]. However, per Rule 407, when a responsible party seeks an audit of hospital charges, and has paid the hospital charges in full, the payee hospital, upon request, shall provide all reasonable access and copies of appropriate (medical) records (not invoices) without charge or fee, to the person(s) chosen by the payor to review and audit the records. In conclusion and adherence to N.C. Gen. Stat. §97-26, all inpatient medical bills are subject to DRG reimbursement methodology with no additional reductions being allowed. All outpatient medical bills must be paid at 95% of billed charges with no additional reductions being allowed. Medical services being performed at ambulatory surgical centers (ASCs) are to be paid at 100% of billed charges. Medical services billed on a CMS (HCFA) 1500 are reduced according to the fee established in the Medical Fee Schedule for the current procedural terminology (“CPT”) codes and the Health Care Procedure Coding System (HCPCS) codes. If a Health Care Procedure Coding System (HCPCS) code is billed on the CMS (HCFA) 1500, and does not have a fee assigned in the Medical Fee Schedule, the provider is entitled to 20% above invoice cost for the Health Care Procedure Coding System (HCPCS) code only.

Please see former Chief Medical Fee Examiner Jennifer Gudac's June 26, 2002 memo on Hospital Billing Procedures and Proper Reimbursement.

Effective November 1, 1995, payers applying the Commission’s Medical Fee Schedules for physicians and other non-hospital providers pursuant to the Commission’s permission and parameters dated January 19, 1995 (effective February 15, 1995), are hereby granted permission to pay charges for OUTPATIENT hospital services without prior submission of the providers’ bills to the Commission for analysis. Hospital OUTPATIENT facility fees and outpatient ancillary charges shall be paid at 5% less than charges billed, when billed at the amounts provided (before any discounts) under the Blue Cross and Blue Shield of North Carolina Contracting Hospital Agreement and the State of North Carolina Teacher’s State Employee’s Comprehensive Medical Plan (SEHP) Hospital Reimbursement Contract with the provider currently in effect, which we understand to be the rates presently charged by all North Carolina Hospitals as their “normal” charges. Compensation payers will pay as provided by N.C.G.S. §97-26 (b). This permission to process outpatient hospital bills is subject to being approved as a medical bill processor by the North Carolina Industrial Commission.

At this time, all inpatient hospital bills (not nursing home bills) must be submitted to the Commission for processing unless the provider has agreed to accept a different amount or reimbursement methodology.

It is anticipated that, in the future, payers willing to duplicate the DRG grouping and pricing capability of the Commission’ Medical Section will be allowed to handle inpatient hospital bills as well. Your comments on this, whether you desire to do this, preparation time necessary to prepare for the testing, workable arrangement for submitting random data samples for audit, etc., will be appreciated.

Hospitals

It is the duty of the hospital through its admitting office to attempt to determine whether an injury case is to be handled under workers’ compensation. If an inquiry made at the time of admission indicates the person was injured on the job, it is likely that it will be a workers’ compensation case.

When the patient’s condition becomes such that further inpatient care becomes only a matter of personal convenience, the executive officer of the hospital should notify the Commission at once.

No bill will be approved unless it contains a brief history of the case sufficient to show the nature of the injury and the treatment rendered.

The Commission will not approve charges for blood used in transfusions if the patient obtains replacement. An explanatory statement by the hospital must appear on the face of the bill.

Patients will be approved for ward or semi-private services only, except (1) when the condition of the patient requires other accommodations and the attending physician or surgeon so recommends in writing; (2) where the request for other accommodations is made by the employer in writing’ or (3) where semi-private or ward service is not available, private service will be approved. NO bill for other than semi-private or ward service will be approved unless it bears a statement identifying the source of authorization for such accommodations. If the patient for personal reasons alone desires a private room and the patient and the hospital agree, the hospital may collect the difference between its regular semi-private and regular private service directly from the patient.

Hospital Charges

Hospital are to bill at the amounts provided under the Blue Cross and Blue Shield of North Carolina Contracting Hospital Agreement and the State of North Carolina Teacher’s State Employee’s Comprehensive Medical Plan Hospital Reimbursement Contract.

Reimbursement Rates for Various Claims

  • Outpatient hospital claims are to be reimbursed at 95% of charges.
  • Ambulatory surgical services are to reimbursed at 100%.
  • Inpatient bills are to be calculated by the North Carolina Industrial Commission unless the provider agrees to accept a different amount or reimbursement methodology.
  • Contracts with payors could subject providers to different reimbursement procedures other than described above.

Explanation of Inpatient Service Reimbursement

Beginning July 1, 1995 the Industrial Commission began approving inpatient hospital services according to the DRG fee schedule duplicating State Health Plan contract amounts.

Shortly after the institution of the DRG methodology by the Industrial Commission, a legislative change was made allowing the Commission to deviate slightly from the reimbursement system provided by State Health Plan. The change involved the imposing of end caps for inpatient allowances when DRG allowances fall below charges or when DRG allowances exceed charges. The legislative document that explains this provision is Senate Bill 914. This document also explains how the end caps are calculated on an annual basis.

The following will explain just how the end caps work when approving inpatient bills for Workers’ Compensation claims.

For services rendered during the period beginning April 1, 1996 and ending December 31, 1997 the low cap is 90% and the high cap is 100%. In other words if a calculated DRG allowance falls below 90% of the hospital’s charges then the reimbursement allowance will be 90% of the charges and not the DRG. If the DRG allowance exceeds the hospital charges, the reimbursement allowance will be 100% of the charges and no more. The only time the DRG allowance will be used for reimbursement is if and when it falls between the 90% and 100% mark.

For services rendered during the period January 1, 1998 through August 31, 1998, the end caps are 90.67% and 100%. Apply these percentages in the same manner as the preceding paragraph.

For services rendered during the period September 2, 1999 through January 11, 2000, the end caps are 81.35% and 100%. The 81.35% floor allowance has been imposed in accordance with Industrial Commission rule-making procedures and after a public hearing was conducted on July 22, 1999.

For services rendered during the period January 12, 2000 through December 31, 2000, the end caps are 82.28% and 100%. The 82.28% floor allowance has been imposed in accordance with Industrial Commission rule-making procedures and after a public hearing that was conducted on December 17, 1999.

For services rendered during the period January 1, 2001 through December 31, 2001, the end caps are 77.07% and 100%. The 77.07% floor allowance has been imposed in accordance with Industrial Commission rule-making procedures and after a public hearing that was conducted on December 19, 2000.

A revision in N.C. Gen. Stat. §97-26, froze the corridors of 77.07% and 100% until June 30, 2001. The Commission held a public hearing in April. Based on the April public hearing, the Commission adopted to continue the same reimbursement methodology with continuation of the end caps at 77.07% and 100%. These percentages officially became effective July 15, 2002 and will continue through the year 2002 and thereafter until the Commission commits to a new reimbursement methodology.

State Health Plan Contract Conditions That Are
Emulated by the N.C. Industrial Commission

The State Health Plan contract includes a list of inpatient services that will not be reimbursed based on DRG allowances. The list includes rehabilitative care and psychiatric care. These services will be reimbursed at the rate of 5% off room and board and 8% off the ancillary charges.

The State Health Plan contract states that hospitals will not be reimbursed for interim bills.

In accordance with State Health Plan there are some revenue codes that are non-covered as well as another group of revenue codes that should not be billed on the UB-04. This latter group includes professional fees that should be billed using CPT codes on a CMS (HCFA) form 1500. A copy of this list is enclosed.

Unrelated, Duplicated or Non-supported Charges

Inpatient bill charges that appear unrelated to the workers’ compensation injury, charges that appear to be duplicated in error, or potentially erroneous charges that cannot be supported by documentation are all situations that should be handled directly between the payor and the hospital before submitting the UB-04 to the Commission for calculation. If the parties are unable to resolve the discrepancy, the UB-04 is to be submitted to the Commission for authorized approval. Once the payor issues payment authorized by the Commission, the payor may then audit the hospital records without the hospital charging for said records. See North Carolina Industrial Commission Rule 407.

Protocol for Submission of Hospital Claims

To expedite hospital claims payment; it is always good protocol to submit medical records and itemized statements along with the UB-04 form. According to Industrial Commission rules, the payor is entitled to one free copy of the medical records. Any information submitted with the bill to substantiate the claim as workers’ compensation and to verify services rendered can only enhance the payment process.

Late Penalty

North Carolina General Statute 97-18 (i) reads: “If any bill for service rendered under G.S. 97-25 by any provider of health care is not paid within 60 days after it has been approved by the Commission and returned to the responsible party, or within 60 days after it was properly submitted in accordance with the provisions of this Article, to an insurer or managed care organization responsible for direct reimbursement pursuant to G.S. 97-26 (g), there shall be added to such unpaid bill an amount equal to ten per centum (10%) thereof, which shall be paid at the same time as but in addition to, such medical bills, unless such late payment is excused by the Commission.

Special Hospitals

Inpatient and outpatient hospital bills for all Veterans Hospitals, Military Hospitals, and Cherokee Hospital are to be approved in full per the NCIC Rules. These hospitals bill their physicians’ charges on Form UB-04, which also must be approved in full.

Ambulatory Surgery

When processing hospital bills for outpatient surgery, if a revenue code of 490 (ambulatory surgery) appears on the UB-04, key bill in under revenue code 490, which will approve entire bill in full.

Ambulatory surgery services performed at a licensed Ambulatory Surgical Center should be coded as 490FF, and approved in full.

Emergency Physician Charges

Professional services such as emergency room physician charges should be billed using the HCFA 1500 Form and processed according to the fee assigned to the CPT code(s) used.

CRNA Professional Charges

*According to the North Carolina UB-04 Manual, the revenue code 964 is the appropriate code for CRNA professional charges. Revenue code 370 is not appropriate for these professional charges. The Commission’s procedures identify 964 as one of the revenue codes that should be billed on the HCFA 1500. Therefore, hospitals should bill CRNA professional charges on a HCFA 1500 making these charges subject to Fee Schedule rates.

TABLE 1: Non-covered UB-04 Revenue Codes According to North Carolina State Employees Health Plan.
UB-04 Revenue Codes Health Service Codes Description
18x HA149 Other—Not Covered Leave of Absence
221 HA149 Other—Not Covered Special Charges
222 HA149 Other—Not Covered Special Charges
223 HA149 Other—Not Covered Special Charges
229 HA149 Other—Not Covered Special Charges
512 HA149 Other—Not Covered Clinic
53X HA149 Other—Not Covered Osteopathic Service
56X HA149 Other—Not Covered Medical Social Services
990 HA 149 Other—Not Covered Patient Convenience Items
991 HA149 Other—Not Covered Patient Convenience Items
992 HA 149 Other—Not Covered Patient Convenience Items
993 HA149 Other—Not Covered Patient Convenience items
994 HA149 Other—Not Covered Patient Convenience items
995 HA149 Other—Not Covered Patient Convenience items
996 HA149 Other—Not Covered Patient Convenience items
998 HA149 Other—Not Covered Patient Convenience items
999 HA149 Other—Not Covered Patient Convenience items

Please note the enclosed information regarding North Carolina Workers’ Compensation and reimbursement of hospital claims. This article has been updated to clarify the issue of non-covered revenue codes. The previous article contained an excerpt from the State Health Plan, which has led to confusion in denying all codes from 900-989. Not every code in the 900 group is considered non-covered. Please review the list for specific codes that would fall into non-covered category, and those that should be billed on a professional bill.

TABLE 2:
The following revenue codes are professional fees and should not be billed on the UB-04. If billed on the UB-04 the charge will be denied as non-covered. The provider may bill for these services on a HCFA 1500.
UB-04 Revenue Codes Health Service Codes Description
900 HA149 Other—Not Covered Psychiatric/Psychological Services
902 HA149 Other—Not Covered Psychiatric/Psychological Services
903 HA149 Other—Not Covered Psychiatric/Psychological Services
909 HA149 Other—Not Covered Psychiatric/Psychological Services
910 HA149 Other—Not Covered Psychiatric/Psychological Services
911 HA149 Other—Not Covered Psychiatric/Psychological Services
914 HA149 Other—Not Covered Psychiatric/Psychological Services
915 HA149 Other—Not Covered Psychiatric/Psychological Services
916 HA149 Other—Not Covered Psychiatric/Psychological Services
919 HA149 Other—Not Covered Psychiatric/Psychological Services
940 HA149 Other—Not Covered Other Therapeutic Services
941 HA149 Other—Not Covered Other Therapeutic Services
96X HA149 Other—Not Covered Professional Fees
97X HA149 Other—Not Covered Professional Fees
981 HA149 In-state Provider Professional Fees
982 HA149 Other—Not Covered Professional Fees
983 HA149 Other—Not Covered Professional Fees
984 HA149 Other—Not Covered Professional Fees
985 HA 149 Other—Not Covered Professional Fees
986 HA149 Other—Not Covered Professional Fees
987 HA149 Other—Not Covered Professional Fees
988 HA149 Other—Not Covered Professional Fees
989 HA149 Other—Not Covered Professional Fees

Other Services

Special Duty Nursing

When deemed urgent and necessary by the attending physician, special duty nurses may be employed. Such necessity must be stated in writing when more than seven days of nursing services are required.

Board charges for the special nurses are included in the allowed fees.

Except in unusual cases where the treating physician certifies it is required, fees for practical nursing services by members of the immediate family of the injured will not be approved unless written authority for the rendition of such services for pay is first obtained form the Industrial Commission. In cases where such written authorization is given, the Industrial Commission will establish a fee commensurate with the services rendered.

Registered Nurses and Licensed Practical Nurses

The usual fee charged by nurses will ordinarily be approved by the commission. One nurse attending two or more patients will be limited to one and one-half the regular fee.

X-Ray Examination

All x-ray examinations must be justified by sound medical indications. Routine admission chest films in the hospital will be approved if the taking of such films is a requirement of the particular hospital submitting such a bill. No approval for such studies as GE series, barium enema, gallbladder series, etc., will be made unless such examinations are deemed essential to a differential diagnosis by the attending physician and so stated.

Upon request, films should be submitted to the Medical Department of the Commission for review by the Medical Advisory Committee.

Home Health Care Agency

Home health care agencies must bill on the UB-04 for Workers’ Compensation Cases-Reports, codes and breakdowns of charges must be submitted with bill to the Employer/Self-Insurers or Insurance Company.


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