What the statutes means

A worker’s compensation carrier or a self insured employer is allowed to reduce the amount it pays to you if it uses a database that has been certified by the Department of WorkForce Development (DWD). This statue was negotiated in 1992 as a means to forestall the implementation of fee schedules or the mandatory implementation of managed care for worker’s compensation patients.

Database companies collect fee information, based on CPT codes, from all of the providers in a geographic area. The “formula amount” paid by a worker’s compensation carrier is based on the average price for that particular CPT code plus 1.5 standard deviations from that average. This should mean that the only providers facing potential reductions would be those with prices in the top 10% - 15% for a particular CPT code. However, because database companies are allowed to include data that is up to 18 months old, a greater percentage of providers face potential reduction of their fees.

If a worker’s compensation carrier wants to challenge the amount of your charge it must give you a written notice that contains all of the following.

1. The name of the patient-employe and the employer;
2. The date of the procedure in dispute;
3. The amount charged for the procedure;
4. The CPT code for the procedure;
5. The formula amount for the procedure and the name of the certified data base from which that amount was determined;
6. The amount of the fee that is in dispute beyond the formula amount;
7. Notice of your right to challenge their decision if you can explain why the service in a particular case is more difficult or more complicated than in the usual case;
8. Notice of their obligation to answer your challenge within 15 days.
9. Notice that you may not collect any portion of the disputed fee from the patient.

The most successful basis on which to challenge a fee reduction is because of the worker’s compensation carrier failure to name the certified database used to reduce your fee. Disputing the reduction requires you to use the “Reasonableness of Fee Dispute Form” that is included at the end of this chapter. You must file the dispute within 6 months of receiving the EOB with the reduction.

Practical advice

Note: If the carrier pays zero for a service, they are challenging the necessity of your care and you need to use the “Necessity of Treatment Dispute Process”.

Why did Wisconsin adopt this system?

The single largest expense of the worker’s compensation system is the amount paid to health care providers for the treatment of injured workers. Over the years as health care costs have escalated, different states have used different approaches to try to put limits on the amount that is paid. Some states have mandatory managed care as part of worker’s compensation, others have fee schedules. In Wisconsin, the state established the “Reasonableness of Fee” process as an alternative to a fee schedule or managed care.

How does a worker’s compensation carrier collect data?

Under this process a worker’s compensation carrier has two choices when it receives your claim. It may pay the amount you charge or it may use a database to compare your fees to other providers who share the same first three digits of your zip code. The data base companies calculate the “allowable amount” by applying a statistical formula that is part of the worker’s compensation statutes.

The law allows database companies to use data that is up to twelve months old. In addition, the database is only required to update its information every 6 months. That means that the database could be up to 18 months old when your prices are compared to it. The law also has very weak standards as to how the data is collected so it is possible that the database company is using sources that do not accurately reflect all of the chiropractors in the geographic area.

Are there any circumstances in which I can charge the patient or their group health carrier for the amount that my fee was reduced?

Unfortunately, if the amount you are paid is less that what you have charged and the carrier has used a certified database, you must write off the unpaid balance. You are not allowed to charge the patient or their group health insurance for this amount.

How are “reasonable fees” in worker’s compensation calculated?

The database company sorts each CPT code by geographic area. The formula amount is the arithmetic mean of all the fees in the database, plus 1.4 standard deviations from the mean. The formula amount is calculated separately for each 3 digit zip code area of the state. If all of the provider charges in the data base for a certain CPT code were represented by a perfect, bell-shaped curve, the formula amount (that is, the mean plus 1.5 standard deviations) would be at approximately the 93rd percentile of all charges.

Fees less than the formula amount are automatically paid in full. A fee more than the formula amount is considered by the state to be unreasonable unless the health service provider proves to the satisfaction of DWD that a higher fee is justified because the service provided in the disputed case was “more difficult or more complicated than in the usual case”. The “unreasonable’ portion of the fee is the amount above the mean plus 1.5 standard deviations.

How long do I have to file a dispute over the reasonableness of my fees?

You have 6 months after the insurer first refuses to pay in which to file a request for a reasonableness of fee dispute with DWD. However, the DWD will not review the dispute unless, at least 20 days before submitting a fee dispute to them, you explain to the insurer, in writing, why the procedure was more difficult or complicated than usual. Within 15 days of receiving the justification for a higher fee the insurer must either pay the fee or explain its continuing refusal to pay.

When a fee dispute is submitted to DWD, they will notify the insurer that it has 20 days to the bill or file a written answer. If the insurer does neither, a default judgment will be ordered. If the insurer misses any deadline for responding, it must pay 12-percent annual interest from the date of the missed deadline to the date of actual payment. Within 90 days of receiving the insurer’s answer, DWD will issue an order resolving the dispute. Either party may appeal the order directly to circuit court.

If the fee dispute involves a claim for which an application for hearing is filed under s. 102.17, Stats., or an injury for which the insurer disputes the cause of the injury, the extent of the disability, or other issues which could result in an application for hearing being filed, DWD may delay resolution of the fee dispute until a hearing is held or an order is issued resolving the dispute between the injured employee and the insurer. (Note: this also applies to necessity of treatment disputes.)

Statute excerpts

DWD 80.72 Health service fee dispute resolution process.

Purpose. The purpose of this section is to establish the procedures and requirements for resolving a dispute under s. 102.16 (2), Stats. between a health service provider and an insurer or self-insured employer over the reasonableness of a fee charged by the health service provider relating to the examination or treatment of an injured worker, and to specify the standards that health service fee data bases must meet for certification by the department.

(2) Definitions. In this section:
(a) ADA means American dental association
(b) Applicant means the person requesting certification of a data base.
(c) Certified means approved by the department for use in determining the reasonableness of fees.
(d) CPT code means the current edition of the American Medical Association’s Physicians Current Procedural Terminology.
(e) Data base means a list of fees for procedures compiled and sorted by CPT code, ICD-9-CM code, ADA code, DRG code, or other similar coding which is systematically collected, assembled, and updated, and which does not include procedures charged under medicare.
(f) DRG means a diagnostic related group established by the federal health care financing administration.
(g) Dispute means a disagreement between a health service provider and an insurer or self-insured employer over the reasonableness of a fee charged by health service provider where the insurer or self-insured employer refuses to pay part or all of the fee.
(h) Fee or health service fee means the amount charged for a procedure by a health service provider.
(i) Formula amount means the mean fee for a procedure plus 1.4 standard deviations from that mean as shown by data from a certified data base.
(j) CD-9-CM means the commission on professional and hospital activities international classification of diseases, 9th revision, clinical modification.
(k) Procedure or health service procedure means any treatment of an injured worker under s. 102.42, Stats.
(l) Provider or health service provider includes a physician, podiatrist, psychologist, optometrist, chiropractor, dentist, physicians assistant, therapist, medical technician, or hospital.
(m) Self-insurer means an employer who has been granted an exemption from the duty to insure under s. 102.28 (2), Stats.

(3) Justification of disputed fees. (a) In a case where liability or the extent of disability is not in issue, and a health care provider charges a fee which an insurer or self-insurer refuses to pay because it is more than the formula amount, the insurer or self-insurer shall, except as provided in sub. (6) (b), mail or deliver written notice to the provider within 30 days after receiving a completed bill which clearly identifies the providers name, address and phone number; the patient-employe; the date of service; the health service procedure; and the amount charged for each procedure. The notice from the insurer or self-insurer to the provider shall specify:
1. The name of the patient-employe and the employer;
2. The date of the procedure in dispute;
3. The amount charged for the procedure;
4. The CPT code, ADA code, ICD-9-CM code, DRG code or other certified code for the procedure;
5. The formula amount for the procedure and the certified data base from which that amount was determined;
6. The amount of the fee that is in dispute beyond the formula amount;
7. The providers obligation under par. (c), if the fee is beyond the formula amount, to provide the insurer or self-insurer with a written justification for the higher fee, at least 20 days prior to submitting the dispute to the department. The notice must clearly explain that the only justification for a fee more than the formula amount is that the service provided in this particular case is more difficult or more complicated than in the usual case;
8. The insurers or self-insurers obligation under par. (d) to respond within 15 days of receiving the providers written justification for charging a fee beyond the formula amount.
9. That pursuant to s. 102.16 (2) (b), Stats., once the notice required by this subsection is received by a provider, a health service provider may not collect the disputed fee from, or bring an action for collection of the disputed fee against, the employe who received the services for which the fee was charged.

(b) If the provider and the insurer or self-insurer agree on the facts in sub. (3) (a) 1. to 6., the provider may submit the dispute to the department at any time. If the provider believes there is a factual error in the notice provided by the insurer or self-insurer, it must raise the issue as provided in par. (c)

(c) If, after receiving notice from the insurer or self-insurer, the provider believes a fee beyond the formula amount is justified, or if it does not agree with the factual information provided in the notice under par. (a), then, at least 20 days prior to submitting a dispute to the department, the provider must submit a written justification to the insurer or self-insurer noting the factual error or explaining the extent to which the service provided in the disputed case was more difficult or more complicated than in the usual case, or both.

(d) If the provider submits a written justification under par. (c), the insurer or self-insurer has 15 days after receiving the notice to notify the provider that it accepts the provider’s explanation or to explain its continuing refusal to pay the fee. If the insurer or self-insurer accepts the provider’s justification, the fee must be paid in full, or in an amount mutually agreed to by the provider and insurer or self-insurer, within 30 days from the date the insurer or self-insurer received written justification under par. (c).

(e) If only a portion of the fee is in dispute, the insurer or self-insurer shall, within the 30-day notice period specified in par.(a), pay the remainder of the fee which is not in dispute.

(4) Submitting disputed fees.

(a) For the department to determine whether or not a fee is reasonable under s. 102.16 (2), Stats., a provider shall file a written request to the department to resolve the dispute within 6 months after an insurer or self-insurer first refuses to pay as provided in sub. (3) (a), and provide a copy of the request and all attachments to the insurer or self-insured employer.

(b) A request by a provider shall include copies of all correspondence in its possession related to the fee dispute.

(c) The department shall notify the insurer or self-insurer when a request to settle the dispute is submitted that the insurer or self-insurer has 20 days to file an answer or a default judgment will be ordered.

(d) The insurer or self-insurer shall file an answer with the department, and send a copy to the provider, within 20 days from the date of the department’s notice of dispute. The answer shall include: 1. Copies of any prior correspondence relating to the fee dispute which the provider has not already filed. 2. Information from a certified data base on fees charged by other providers for comparable services or procedures which clearly demonstrates that the fee in dispute is beyond the formula amount for the service or procedure. 3. An explanation of why the service provided in the disputed case is not more difficult or complicated than in the usual case.

(e) The department shall examine the material submitted by all parties and issue its order resolving the dispute within 90 days after receiving the material submitted under par. (d). The department shall send a copy of the order to the provider, the insurer or self-insurer and the employee. If the fee dispute involves a claim for which an application for hearing is filed under s. 102.17, Stats., or an injury for which the insurer or self-insurer disputes the cause of the injury, the extent of disability, or other issues which could result in an application for hearing being filed, the department may delay resolution of the fee dispute until a hearing is held or an order is issued resolving the dispute between the injured employe and the insurer or self-insurer.

(f) The department may develop and require the use of forms to facilitate the exchange of information.

(5) Department initiative.

The department may initiate resolution of a fee dispute when requested to do so by an injured worker, an insurer or a self-insurer. The department shall direct the parties to follow the process provided for in subs. (3) and (4), except where the department specifically determines that extraordinary circumstances justify some modification to expedite or facilitate a fair resolution of the dispute.

(6) Interest on late payment.

(a) Except as provided in par. (b), in addition to any amount paid or awarded in a fee dispute, where an insurer or self-insurer fails to respond as required in subs. (3) and (4) or as directed under sub. (5), the insurer or self-insurer shall pay simple interest on the payment or award to the provider at an annual rate of 12 percent, to be computed by the insurer or self-insurer, from the date that the insurer or self-insurer first missed deadline for response, to the date of actual payment to the provider

(b) If the insurer or self-insurer notifies the provider within 30 days of receiving a completed bill under sub. (3) (a), that it needs additional documentation from the provider regarding the bill or treatment, the insurer or self-insurer shall have 30 days from the date it receives the providers response to this request for additional documentation to comply with the notice requirement in sub. (3) (a). Examples of additional documentation include requests for a narrative description of services provided or medical reports.

(c) For the purpose of calculating the extent to which any claim is overdue, the date of actual payment is the date on which a draft or other valid instrument which is equivalent to payment is postmarked in the U.S. mail in a properly addressed, postpaid envelope, or, if not so posted, on the date of delivery.

(7) Certification of data bases. (a) Before the department may certify a data base under s. 102.16 (2), Stats., and sub. (8), it shall determine that all of the following apply:

1. The fees in the data base accurately reflect the amounts charged by providers for procedures rather than the amounts paid to or collected by providers, and do not include any medicare charges.
2. The information in the data base is compiled and sorted by CPT code, ICD-9-CM code, ADA code, DRG code or other similar coding accepted by the department.
3. The information in the data base is compiled and sorted into economically similar regions within the state, with the fee based on the location at which the service was provided.
4. The information in the data base can be presented in a way which clearly indicates the formula amount for each procedure.
5. The applicant authorizes and assists the department to audit or investigate the accuracy of any statements made in the application for certification by any reasonable method including, if the applicant did not collect or compile the data itself, providing a means for the department to audit or investigate the process used by the person who collected or compiled the data.
6. The information in the data base is up-dated and published or distributed by other methods at least every 6 months.

(b) Before the department may certify a data base under s. 102.16 (2), Stats., it shall consider all of the following:

1. The coverage of the data base, including the number of CPT codes, ICD-9, CMT codes or DRGs for which there are data; the number of data entries for each code or DRG; the number of different providers contributing to a code or DRG entry; and the extent to which reliable data exist for injuries most commonly associated with worker’s compensation claims;
2. The sources from which the data are collected, including the number of different providers, insurers or self-insurers;
3. The age of the data, and the frequency of the updates in the data;
4. The method by which the data are compiled, including the method by which mistakes in charges are identified and corrected prior to entry and the extent to which this occurs; and the conditions under which charges reported to the applicant may be excluded and the extent to which this occurs;
5. The extent to which the data are representative of the entire geographic area for which certification is sought;
6. The length of time the applicant has been in business and doing business in Wisconsin;
7. The length of time the data base has been in existence;
8. Whether the data base has been certified by any organization or government agency.

(8) Application for certification; decertification.

(a) To obtain certification from the department, an applicant shall submit a complete description of the items covered in sub. (7) to the department. The department may require the submission of other information which it deems relevant.

(b) The applicant shall clearly identify any trade secrets under s. 19.36 (5), Stats. The department shall treat any information marked as trade secrets as confidential and shall use it solely for the purpose of certification and shall take appropriate steps to prevent its release.

(c) Notwithstanding par. (b), the department may create a technical advisory group consisting of individuals with special expertise from both the public and private sectors to assist the department in reviewing and evaluating an application.

(d) The department shall certify a data base for one year at a time. The department may extend the one-year certification period while an application for renewal is under review by the department.

(e) If the department determines that an applicant has misrepresented a material fact in its application or that it no longer meets the requirements in sub. (7), the department may decertify a data base after providing the applicant with notice of the basis for decertification and an opportunity to respond.

(9) Applicability. This section first applies to health service procedures provided on July 1, 1992 and shall take effect on July 1, 1992.