FECA BULLETIN NO. 99-07 Information for Medical Providers

FECA BULLETIN NO. 99-07 Issue Date: January 4, 1999 _____________________________________________________________ Expiration Date: January 3, 2000 _____________________________________________________________ Subject: New Regulations - Subpart I - Information for Medical Providers Background: On November 25, 1998, new final regulations for the FECA program were published. These regulations are effective January 4, 1999. Regulations previously found at 20 CFR 10.410 through 10.413 and 10.450 through 10.457 have been consolidated in Subpart I. Among the changes included in Subpart I are provisions for fee schedules for prescription medications, and inpatient hospital bills. In addition, National Drug Codes (NDCs) and Revenue Center Codes (RCCs) have been added to the list of codes which a provider must specify, the required form for hospitals has been changed from the UB-82 to the UB-92, and the required form for pharmacy bills is the Universal Claim Form. The pharmacy fee schedule is based upon the average wholesale price (AWP), plus a dispensing fee equal to 20% of the AWP. The dispensing fee cannot be less than $2.50, nor greater than $15.00. A private vendor is the source of the AWP information. The data is updated monthly. The highest AWP over the prior two years is the price that will be used to calculate the allowable fee. If the amount charged for a prescription is more than the calculated fee (AWP plus dispensing fee), the calculated fee will be paid. If the amount charged is less than the calculated fee, the amount charged will be paid. The inpatient hospital fee schedule is based on the prospective payment system (PPS) used by the Health Care Financing Administration’s (HCFA’s) Medicare program. Using the ICD-9 diagnosis and procedure codes that are found on the UB-92 billing form, along with other data, the hospitalization is assigned to a Diagnosis-Related Group (DRG), and is priced according to that DRG and other hospital-specific data. The HCFA PPS is based on the premise that similar medical conditions and surgeries require similar inpatient services and resources. Certain inpatient hospital facilities (such as those that provide rehabilitation and psychiatric services) are not covered under the HCFA PPS. For those providers, OWCP will use HCFA-calculated cost to charge ratio (CCR) data to calculate the allowable fee. Both the grouping (assigning the DRG) and pricing of inpatient hospital bills (except for non-PPS facilities, which will be calculated by National Office) will be performed by another Federal agency. The calculated allowable fee may be more or less than the billed amount. Unlike other FECA fee schedules, however, the allowable payment amount will nearly always be the calculated amount. Therefore, if the calculated fee is greater than the billed amount, the amount paid for an inpatient hospitalization may exceed the amount billed. This practice is consistent with the way Medicare processes their bills. Notifications concerning the new fee schedules are being sent to all hospitals and pharmacies to whom payment was made during the last six months, as well as claimants who have received pharmacy reimbursements during the last year. Copies of those notices are attached (Attachments 1 - 3). References: Federal Register, Volume 62, No. 246, published December 23, 1997; 20 CFR, Part 10, Subpart I, published November 25, 1998; FECA Bulletin 98-11; Federal (FECA) Procedure Manual Chapter 5-0206. Purpose: To notify District Offices of changes in regulations regarding medical bills, and provide procedures for implementation of the pharmacy and inpatient hospital fee schedules. Applicability: All staff. Actions: 1. Bills for prescription drugs should continue to be keyed in accordance with FECA Bulletin 98-11. 2. Since pricing for prescription drugs is calculated using the number of units, accuracy of the units (quantity) is critical. 3. The allowable fees for each prescription will be calculated after the bills have been approved for payment and transmitted to the Central system. The allowable fee for a particular drug does not vary by location of the pharmacy. 4. By regulation, the only allowable bases for reconsideration of any fee schedule reductions are: a. The procedure was incorrectly identified by original code; b. The presence of a severe or concomitant condition made treatment especially difficult; or c. The provider possessed unusual qualifications, beyond Board-certification in a specialty. Requests for reconsideration must be made within 30 days of the payment, be in writing, and be accompanied by documentary evidence. Obvious errors may be corrected without going through the full appeals process as described in Federal (FECA) Procedure Manual Chapter 5-0206, but should be processed with an appeal code of 7. 5. The presence of a severe or concomitant medical condition which made treatment especially difficult will generally not be a relevant factor in pharmacy bills, nor will the qualifications of the pharmacy provider. Most frequently, the basis of an appeal would be: a. Incorrect NDC code (appeal code 1 or 4); b. Incorrect number of units (quantity)(appeal code 1 or 4); or c. Incorrect data entry by OWCP (appeal code 7). 6. To process a request for reconsideration of a pharmacy fee schedule reduction: a. Determine whether there is a valid basis for appeal; b. If the basis for appeal is valid, calculate the allowable fee. The allowable fee per unit may be obtained by contacting OWCP’s Branch of Medical Standards and Rehabilitation, telephone number (202) 693-0035. The per unit price should be multiplied by the quantity, and then to that amount add 20 percent of the product, no less than $2.50, no more than $15.00. The end result is rounded up to the nearest whole dollar. If the calculated fee amount is less than the amount already paid, no additional amount is payable, and the provider should be so informed at the appropriate signature level. If the calculated amount is greater than the amount already paid, a new payment should be entered on the system, with the calculated allowable amount as the bill total and the line charge amount, the prior paid amount as an ineligible amount, ineligible code C, bypass code 1, 2, or 3 as appropriate, and an appropriate appeal code. c. If the basis for an appeal is not valid, the request should be denied at the appropriate signature level. 7. The allowable fee for inpatient hospital bills (with the exception of those keyed with a locator 4 code of 911) will be calculated after the bills have been keyed into special software and transmitted to the clearinghouse, and before the bills are loaded onto the Sequent systems in each district office. The allowable fee amount cannot be changed in bill resolution, but ineligible amounts and ineligible codes may be added. 8. New procedures for processing inpatient hospital bills are outlined in FECA Bulletin 99-21. 9. Generally, the only allowable basis for appeals of inpatient hospital bill payment amounts is coding error. The location and individual characteristics of the hospital are already factored into the price calculation. Severe or concomitant medical conditions are already part of the process for assigning the DRG, and the length of stay is factored into the pricing. 10. To process a reconsideration of an inpatient hospital fee reduction, take the following steps: a. Determine whether the basis for the appeal is valid; b. If the basis for the appeal is not valid, deny at the appropriate signature level; c. If the basis for the appeal is valid, the bill should be rekeyed in the special inpatient hospital software, with the previously paid amount as a prior paid amount. The bill will then be forwarded for the usual processing (grouping and pricing). The presence of a prior paid amount will cause the bill to be loaded on the Sequent system as an indirect payment, which will cause edit 210 to suspend the bill. Upon reviewing the bill, the calculated DRG amount should be compared to the prior paid amount. If the prior paid amount is greater than the DRG amount, no additional payment is due. The bill should be internally denied, and the provider informed at the appropriate signature level. If the DRG amount is greater than the prior paid amount, an ineligible code of C should be added, and change the direct pay flag to Y (if direct pay) or override the edit 210 failure (if it is a claimant reimbursement with adequate proof of payment), enter an appropriate appeal code and bypass code, and recycle the bill. 11. The CA-91 Payment Notice is being revised to include general information concerning fee schedule appeals. A copy of the added text is shown as Attachment 4. Note that the reader is directed to contact the servicing district office for specific information on a fee reduction. Training on these procedures should be completed as soon as possible, no later than January 15, 1999. Disposition: Retain until incorporated in the Federal (FECA) Procedure Manual. THOMAS M. MARKEY Director for Federal Employees’ Compensation Distribution: List No. 3--Folioviews Groups A, B, C, and D (All FECA Employees) Attachment 1 IMPORTANT NOTICE FOR HOSPITAL PROVIDERS This notice applies to inpatient hospital payments made by the Office of Workers' Compensation Programs (OWCP) on behalf of injured federal workers covered under the Federal Employees' Compensation Act (FECA). The program provides coverage for work-related injuries and diseases for civilian employees of the Federal government. State and private sector employees are not covered by this Act. FEE SCHEDULE FOR INPATIENT HOSPITAL BILLS - EFFECTIVE JANUARY 4, 1999 Charges for inpatient hospitalization will be subject to a fee schedule, as described in the Federal regulations at 20 C.F.R. 10.810, published on November 25, 1998. The allowable amount will be calculated using formulae based on Medicare's Prospective Payment System (PPS) and Diagnosis-Related Groups (DRGs), with adjustments that reflect FECA-specific factors. These formulae always result in payments greater than Medicare's allowable per diem rate. Hospitals not subject to the PPS will be reimbursed according to formulae based on the cost-to-charge ratio. Under the regulations governing the FECA, the program's payment constitutes the maximum payment. The hospital provider is not permitted to bill the injured employee for the difference between the OWCP allowable amount and the charged amount.  Non-covered items, such as television and telephone charges, are always the responsibility of the patient. There is no deductible amount. If the provider disagrees with a fee reduction, a reconsideration request may be made within 30 days of the payment. The request should be sent to the district office that has jurisdiction over the employee's claim. BILLING INFORMATION Claims for inpatient hospital services must be submitted on a completed Form UB-92. The UB-92 must contain the provider’s name, address, Tax Identification Number (TIN), and Medicare Number. In addition, the injured worker's name and OWCP claim number, the type of bill (Locator 4), the period covered by the statement (Locator 6), covered days (Locator 7), birth date (Locator 14), sex (Locator 15), discharge status (Locator 22), total charges (Locator 47), and the discharge diagnoses and procedures (if any) must be present on the UB-92. Bills not submitted properly will be returned or denied. Attachment 2 IMPORTANT NOTICE FOR PHARMACY PROVIDERS This notice applies to payments for pharmaceutical drugs made by the Office of Workers' Compensation Programs (OWCP) on behalf of injured federal workers covered under the Federal Employees' Compensation Act (FECA). The program provides coverage for work-related injuries and diseases for civilian employees of the Federal government. State and private sector employees are not covered by this Act. FEE SCHEDULE FOR PHARMACY BILLS - EFFECTIVE JANUARY 4, 1999 All charges for medications will be subject to a fee schedule, as described in the Federal regulations at 20 C.F.R. 10.809, published on November 25, 1998. The maximum allowable amount will be calculated based on the Average Wholesale Price (AWP) for the medication, plus a calculated dispensing fee, not to exceed $15.00. Dispensing fees should not be billed separately. Payment will be the lesser of the calculated fee or the billed amount. Charges that exceed the calculated fee will be reduced to the maximum allowable. Under the regulations governing the FECA, the program's payment constitutes the maximum payment. The pharmacy provider is not permitted to bill the injured employee for the difference between the OWCP allowable amount and the charged amount. Non-covered items are always the responsibility of the patient. There is no co-pay amount. If the provider disagrees with a fee reduction, a reconsideration request may be made within 30 days of the payment. The request should be sent to the district office that has jurisdiction over the employee's claim. BILLING INFORMATION All claims for prescription payments must be coded using National Drug Codes (NDCs), and must also contain the prescription number, refill number, decimal quantity, and date filled. The pharmacy's Tax Identification Number (TIN), full name and address, and the name and OWCP case file number of the injured employee must appear on the claim. Bills not submitted properly will be returned or denied. Bills must be submitted either in electronic format through an intermediary (preferred), or on the paper Universal Claim Form. For information about electronic billing, contact William Cole at (202) 693-0041. Attachment 3 IMPORTANT NOTICE CONCERNING PAYMENTS FOR MEDICATIONS This notice applies to payments for pharmaceutical drugs made by the Office of Workers' Compensation Programs (OWCP) on behalf of injured federal workers covered under the Federal Employees' Compensation Act (FECA). The program provides coverage for work-related injuries and diseases for civilian employees of the Federal government. State and private sector employees are not covered by this Act. FEE SCHEDULE FOR PHARMACY BILLS - EFFECTIVE JANUARY 4, 1999 All charges for medications will be subject to a fee schedule, as described in the Federal regulations at 20 C.F.R. 10.809, published on November 25, 1998. The maximum allowable amount will be calculated based on the Average Wholesale Price (AWP) for the medication, plus a calculated dispensing fee, not to exceed $15.00. Dispensing fees should not be billed separately. Payment will be the lesser of the calculated fee or the billed amount. Charges that exceed the calculated fee will be reduced to the maximum allowable. Under the regulations governing the FECA, the program's payment constitutes the maximum payment. The pharmacy provider is not permitted to bill the injured employee for the difference between the OWCP allowable amount and the charged amount. If the injured employee has already paid for the medication in full, and reimbursement is being made to that employee, the reimbursement amount will not exceed the OWCP allowable amount. The employee should seek reimbursement for any remaining balance from the pharmacy provider. Non-covered items are always the responsibility of the patient. There is no co-pay amount. If the provider (or a reimbursed employee) disagrees with a fee reduction, a reconsideration request may be made within 30 days of the payment. The request should be sent to the district office that has jurisdiction over the employee's claim. BILLING INFORMATION All claims for prescription payments must be coded using National Drug Codes (NDCs), and must also contain the prescription number, refill number, decimal quantity, and date filled. The pharmacy's 9-digit Federal Tax Identification Number (TIN), full name and address, and the name and OWCP case file number of the injured employee must appear on the claim. Bills not submitted properly will be returned or denied. Bills must be submitted either in electronic format through an intermediary (preferred), or on the paper Universal Billing Form.  For reimbursement to injured employees, a Form CA-915, claimant reimbursement form, is preferred. This form is used in addition to the Universal Billing Form. Direct billings from pharmacies involve less paperwork than reimbursements to injured employees. If your pharmacy is not already billing OWCP directly for medications prescribed for your work-related conditions, you may wish to discuss this matter with them. Many pharmacies are willing to bill OWCP directly. Attachment 4 FEE SCHEDULE APPEAL RIGHTS The accompanying card shows charged amounts, reduction amounts, and paid amounts. Unless a different explanation is shown on the accompanying card, any reduction shown was made under the schedule of maximum allowable charges used by the Office of Workers' Compensation Programs (OWCP). The fee schedule applies to professional medical services, medicinal drugs, and inpatient hospital services, in accordance with 20 CFR 10.805 through 10.813. For additional information about the reduction, contact the servicing OWCP Office shown on the accompanying card. A provider may not seek from the patient any additional charge or fee in excess of the charge allowed by OWCP. A provider who collects or attempts to collect any additional amount from the patient may be excluded from participating in the Federal Employees' Compensation Program and other Federal programs.By regulation, the ONLY circumstances which will justify reevaluation of the amount paid are: (1) the service was incorrectly identified by code; or (2) the presence of a severe or concomitant medical condition made treatment especially difficult; or (3) the provider possesses unusual qualifications (beyond Board certification). PROVIDER: If you disagree with the fee schedule reduction, you may take the following action within 30 days: (1) make written request for reconsideration of the fee determination, (2) identify the service in question, (3) attach documentary evidence relevant to one of the three circumstances described above, (4) attach a copy of this notice to your request, and (5) submit to the servicing OWCP Office, ATTENTION: FEE SCHEDULE APPEAL. REIMBURSED PATIENT: If you paid the medical provider more than the OWCP reimbursement amount, take the following actions in the order presented: (1) show this notice to the medical provider and request a refund or credit of the difference; (2) ask the medical provider to submit an appeal as described above on your behalf; (3) request in writing that the servicing OWCP Office contact the medical provider concerning the amount you paid in excess of the fee schedule.

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