The New Jersey Workers’ Compensation Court recently issued an opinion in the matter of Burn Surgeons of St. Barnabas v. Shop Rite concerning the payment of medical treatment in the context of a New Jersey workers compensation case. The decision is important, inasmuch as there is no fee schedule governing the payment of such benefits. Rather, the current system employs a “usual, customary and reasonable” (UCR) analysis.

In the Burn Surgeon case, respondent, Shop Rite Market was insured by New Jersey Manufacturers Insurance Company (NJM). NJM had authorized the Burn Surgeons of St. Barnabas (provider) to provide medical treatment to worker injured in a compensable work-related accident. NJM proceeded to have the surgeons’ bills re-priced down for payment at 62.5% of the original bill for each of the two surgeons.

The injured worker underwent two (2) grafting procedures performed by two surgeons, each of whom billed for the total amount of grafting performed as co-surgeons, rather than the amount each completed. At the trial of the case, one of the provider’s surgeons testified that he believed this would not be in the best interest of the patient, although he conceded that one (1) surgeon could have completed the grafting procedures, which were recommended by the American Burn Association. The court held that it was inappropriate for the provider to bill for co-surgeons when each surgeon performed some part of the whole surgery. In addition, the court found that each surgeon participating in the procedure should have issued a separate operative report.

Burn Surgeons was the exclusive provider of burn care in Northern New Jersey. Therefore, it went on to argue that no geographic comparison could be made to determine the UCR rate. It further requested that the court disregard any payments made by Medicare, Medicare HMO, Medicaid, and Blue Cross/Blue Shield. Noting that there is no fee schedule in workers’ compensation, the court looked at Coalition for Quality Healthcare v. New Jersey Department of Banking, 358 N.J. Super. 123 (App. Div. 2003), which held that paid fees were a more accurate measure of “reasonable and prevailing fees” under PIP. The Coalition court further held that “market payments” included payments made by “government programs, participating provider agreements and other contractual arrangements between physicians and health care plans.” Noting that there was no fee schedule in workers’ compensation, the court found that the holdings in Coalition were applicable to workers’ compensation as well. Accordingly, the court held that paid fees are an accurate measure of the usual, customary, and reasonable rate.

Both parties in this case had used the Ingenix database, which looks at “paid” fees to determine the UCR rate. The court discussed how current procedural terminology (CPT) codes and their associated modifiers created by Centers for Medicare and Medicaid Services (CMS) have been universally adopted by the medical billing industry. NJM used the Ingenix database to determine the UCR rate, along with current CPT and CMS guidelines. The court determined this method to be reasonable.

The judge also rejected the provider’s argument that it was entitled to additional monies due to the difficulty of the procedures, severity of the injured worker’s condition, and expertise of its physicians. The court found that these considerations were contemplated and built into the CPT codes when same were established.

Also of note, the court found it was inappropriate for the provider’s billing clerks to unilaterally assign modifications. As outlined by both the American Medical Association and the American Burn Association, the attending physician was responsible for determining the correct codes or modifiers to be used.

At the end of the day, NJM had paid 73.5% of the invoiced amount for the surgeries, which was actually 17.2% higher than what other insurance carriers had normally paid, as well as 55% higher than what insurance companies and Medicare/Medicaid HMO combined usually paid. Overall, NJM paid 72.2% of the total amount billed by Burn Surgeons. In light of the fact that NJM actually paid more than what the normal carriers and government programs paid, the court found that no additional monies were owed to Burn Surgeons, and their Petition for additional payments was denied.

What It Means to You

 The economic downturn has caused medical providers to be more aggressive with bill collection. Inasmuch as the New Jersey workers’ compensation system provides a vehicle within which a provider can challenge as inadequate the money they have received for any particular form of treatment, these providers are now intervening into underlying workers’ compensation cases. When doing so, they are seeking to obtain additional monies for treatment which was authorized and rendered to the injured worker.

Under the Burn Surgeon case, when determining the amount of money to be paid for authorized medical treatment in a work-related injury, the insurance carrier should utilize universally adopted databases, codes, and modifiers in order to determine whether the payments conform to UCR standards.

Furthermore, an insurance carrier should review the operative reports when multiple surgeons are involved to decide whether they should be billed as co-surgeons or simply surgeons performing parts of a larger surgery. If an application is filed by a medical provider, the insurance carrier should provide copies of past invoices paid for the same procedure(s) to counsel in order to help establish the UCR rate.