§ 127.1. Purpose.

 The following words and terms, when used in this chapter, have the following meanings, unless the context clearly indicates otherwise:

   ASC—Ambulatory Surgery Center—A center that operates exclusively for the purpose of furnishing outpatient surgical services to patients. These facilities are referred to by HCFA as ASCs and by the Department of Health as ASFs. For consistency with the application of Medicare regulations, these facilities are referred to in this chapter as ASCs.

   ASF—Ambulatory Surgical Facility—An ASC.

 Accredited speciality board—A speciality board recognized by the American Board of Medical Specialties, the American Osteopathic Association or by the Chiropractic Council on Education.

   Act—The Workers’ Compensation Act (77 P. S. § §  1—1041.4).

   Act 44—The act of July 2, 1993 (P. L. 190, No. 44).

   Actual charge—The provider’s usual and customary charge for a specific treatment, accommodation, product or service.

   Acute care—The inpatient and outpatient hospital services provided by a facility licensed by the Department of Health as a general or tertiary care hospital, other than a specialty hospital, such as rehabilitation and psychiatric provider.

   Approved teaching program—A hospital teaching program which is accredited in its field by the appropriate approving body to provide graduate medical education or paramedical education services, or both. Accreditation for medical education programs shall be as recognized by one of the following:

     (i)   The Accreditation Council for Graduate Medical Education of the American Medical Association.

     (ii)   The Committee on Hospitals of the Bureau of Professional Education of the American Osteopathic Association.

     (iii)   The Council on Dental Education of the American Dental Association.

     (iv)   The Council of Podiatric Medicine Education of the American Podiatric Association.

     (v)   An appropriate approving body of paramedical educational and training programs.

   Audited Medicare cost report—The Medicare cost report, settled by the Medicare fiscal intermediary through the conduct of either a field audit or desk review resulting in the issuance of the Notice of Program Reimbursement.

   Bureau—The Bureau of Workers’ Compensation of the Department.

   Burn facility—A facility which meets the service standards of the American Burn Association.

   CCO—Coordinated Care Organization—An organization certified under Act 44 by the Secretary of Health for the purpose of providing medical services to injured employes.

   CDT-1—The Current Dental Terminology, as defined by the American Dental Association.

   CPT-4—The physician’s ‘‘Current Procedural Terminology, Fourth Edition,’’ as defined and published by the American Medical Association.

   Capital related cost—The health care provider’s expense related to depreciation, interest, insurance and property taxes on fixed assets and moveable equipment.

   Charge master—A provider’s listing of current charges for procedures and supplies utilized in the provider’s billing process.

   Commissioner—The Insurance Commissioner of the Commonwealth.

   DME—Durable medical equipment—The term includes iron lungs, oxygen tents, hospital beds and wheelchairs (which may include a power-operated vehicle that may be appropriately used as wheelchair) used in the patient’s home or in an institution, whether furnished on a rental basis or purchased.

   DRG—Diagnostic related groups.

   Department—The Department of Labor and Industry of the Commonwealth.

   Direct medical education cost—The salaries and other expenses related to the provider’s resident and intern graduate medical education approved teaching program. This amount includes the allocable overhead costs associated with the provider’s maintenance and administration of the resident and intern programs.

   Disproportionate share hospital—A hospital providing acute care that serves a significantly disproportionate share of low-income patients.

   Fully prospective—Inpatient capital-related cost of an acute care provider included in the DRG payment based on a blend of hospital-specific data and Federal data and excluded from cost report settlements.

   HCFA—The Health Care Financing Administration.

   HCPCS—HCFA Common Procedure Coding System—The procedure codes and associated nomenclature consisting of numeric CPT-4 codes, and alpha-numeric codes, as developed both Nationally by HCFA and on a Statewide basis by local Medicare carriers.

   Health care provider—A person, corporation, facility or institution licensed, or otherwise authorized, by the Commonwealth to provide health care services, including physicians, coordinated care organizations, hospitals, health care facilities, dentists, nurses, optometrists, podiatrists, physical therapists, psychologists, chiropractors, or pharmacists, and officers, employes or agents of the person acting in the course and scope of employment or agency related to health care services.

   Hold harmless—Inpatient capital-related cost of an acute care provider which can either be included fully in the DRG payment or partially included in both the DRG and cost-reimbursed payment.

     (i)   One hundred percent hold harmless means inpatient capital-related cost included fully in the DRG payment at 100% of the Federal capital rate.

     (ii)   Blended hold harmless means inpatient capital-related cost included in the DRG payment for assets acquired after December 31, 1990, and cost-reimbursed for assets acquired before December 31, 1990.

     (iii)   Capital-exceptional hospital means a provider receiving payment from Medicare based on cost because payments at either the fully prospective rate or the hold harmless rates are less than or equal to 70% of the provider’s payments based on cost.

   ICD-9-CM—(ICD-9) The International Classification of Diseases—Ninth Edition—Clinical Modification

   Indirect medical education cost—The expenses related to the use of additional ancillary services and consumption of provider resources related to the provision of a graduate medical education approved teaching program.

   Insurer—A workers’ compensation insurance carrier, including the State Workmen’s Insurance Fund, an employer who is authorized by the Department to self-insure its workers’ compensation liability under section 305 of the act (77 P. S. §  501), or a group of employers authorized by the Department to act as a self-insurance fund under section 802 of the act (77 P. S. §  1036.2).

   Interim rate notification—The letter, from the Medicare intermediary to the provider, informing the provider of their interim payment rate and its effective date.

   Life-threatening injury—As defined by the American College of Surgeons’ triage guidelines regarding use of trauma centers for the region where the services are provided.

   Medicare carrier—An organization with a contractual relationship with HCFA to process Medicare Part B claims.

   Medicare intermediary—An organization with a contractual relationship with HCFA to process Medicare Part A or Part B claims.

   Medicare Part A—Medicare hospital insurance benefits which pay providers for facility-based care, such as care provided in inpatient general and tertiary hospitals, specialty hospitals, home health agencies and skilled nursing facilities.

   Medicare Part B—Medicare supplementary medical insurance which pays providers for physician services, outpatient hospital services, durable medical equipment, physical therapy and other services.

   NPR—Notice of program reimbursement—The letter of notification from the Medicare intermediary to the provider regarding the final settlement of the Medicare cost report.

   New provider—A provider which began administering patient care after receiving initial licensure on or after August 31, 1993.

   Notice of biweekly payment rates—The letter of notification from the Medicare intermediary to the provider, informing the provider of their biweekly payment rate for direct medical education and paramedical education costs.

   Notice of per resident amount—The letter of notification from the Medicare intermediary to the provider, informing the provider of the annual payment amount per resident or intern full-time equivalent.

   PRO—Peer Review Organization—An organization authorized by the Secretary for the purpose of determining the necessity or frequency of medical treatment administered to workers with work-related injuries.

   Paramedical education cost—The education cost related to providers’ nongraduate medical education programs including nursing school programs, radiology and laboratory technology training programs and other allied health professional approved teaching programs.

   Pass-through costs—Medicare reimbursed costs to a hospital that ‘‘pass through’’ the prospective payment system and are not included in the DRG payments.

   Provider—A health care provider.

   RCC—Ratio of cost-to-charges—The computed ratio using the Medicare cost report.

   Secretary—The Secretary of the Department.

   Specialty hospital—A health care facility licensed and approved by the Department of Health as a hospital providing either a comprehensive inpatient rehabilitation program or an acute psychiatric inpatient program.

   Transition fee schedule—The Medicare payment amounts as determined by the Medicare carrier, based on the transition rules requiring a blend of the full fee schedule (full implementation of the Resource Based Relative Value Scale, RBRVS) and the original provider fee schedule.

   Trauma center—A facility accredited by the Pennsylvania Trauma Systems Foundation under the Emergency Medical Services Act (35 P. S. § §  6921—6938).

   UR—Utilization Review.

   URO—Utilization Review Organization—An organization authorized by the Secretary for the purpose of determining the reasonableness or necessity of medical treatment administered to workers with work-related injuries.

   Unbundling—The practice of separate billing for multiple service items or procedures instead of grouping the services into one charge item.

   Urgent injury—As defined by the American College of Surgeons’ triage guidelines regarding use of trauma centers for the region where the services are provided.

   Usual and customary charge—The charge most often made by providers of similar training, experience and licensure for a specific treatment, accommodation, product or service in the geographic area where the treatment, accommodation, product or service is provided.

   Workers’ Compensation judge—As defined by section 401 of the act (77 P. S. §  701) (definition of ‘‘referee’’) and as appointed by the Secretary.

Subchapter B. MEDICAL FEES AND FEE REVIEW

CALCULATIONS

Sec.

§ 127.101. Medical fee caps—Medicare.

 (a)  Generally, medical fees for services rendered under the act shall be capped at 113% of the Medicare reimbursement rate applicable in this Commonwealth under the Medicare Program for comparable services rendered. The medical fees allowable under the act shall fluctuate with changes in the applicable Medicare reimbursement rates for services rendered prior to January 1, 1995. Thereafter, for services rendered on and after January 1, 1995, medical fees shall be updated only in accordance with § §  127.151—127.162 (relating to medical fee updates).

 (b)  Medicare coinsurance and deductibles may not be used to reduce the allowable fee under the act.

 (c)  If a provider’s actual charges for services rendered are less than the maximum fee allowable under the act, the provider shall be paid only the actual charges for the services rendered.

 (d)  The Medicare reimbursement mechanisms that shall be used when calculating payments to providers under the act are set forth in § §  127.103—127.128.

 (e)  Medical fee caps based on Medicare will apply to all health care providers licensed in this Commonwealth who treat injured workers, regardless of whether the health care provider participates in the Medicare Program.

 (f)  An insurer may not make payment in excess of the medical fee caps, unless payment is made pursuant to a contract with a CCO certified by the Secretary of Health.

   Third-Party Insurers

 (a)  When services are rendered by outpatient providers who are reimbursed under the Medicare Part B Program pursuant to the Medicare fee schedule, the payment under the act shall be calculated using the Medicare fee schedule as a basis. The fee schedule for determining payments shall be the transition fee schedule as determined by the Medicare carrier.

 (b)  The insurer shall pay the provider for the applicable Medicare procedure code even if the service in question is not a compensated service under the Medicare Program.

 (c)  If a Medicare allowance does not exist for a reported HCPCS code, or successor codes, the provider shall be paid either 80% of the usual and customary charge or the actual charge, whichever is lower.

 (d)  When calculating payment for all services rendered on and before December 31, 1995, all rate increases, periodic adjustments and modifications incorporated into the Medicare Part B Fee Schedule shall be used. The effective date of these changes under Medicare shall also be the effective date of the fee changes under the act, as provided in §  127.151 (relating to medical fee updates prior to January 1, 1995—generally).

 (e)  Fee updates subsequent to December 31, 1994, shall be in accordance with § §  127.152 and 127.153 (relating to medical fee updates on and after January 1, 1995—generally; and medical fee updates on and after January 1, 1995—outpatient providers, services and supplies subject to the Medicare fee schedule).

   Payments to physicians for services rendered under the act shall be calculated by multiplying the Medicare Part B reimbursement for the services by 113%.

 (a)  Payments for services rendered by chiropractors shall be made for those services permitted by the Chiropractic Practice Act (63 P. S. § §  625.101—625.1106).

 (b)  Payments for spinal manipulation procedures by chiropractors shall be based on the Medicare fee schedule for HCPCS codes 98940—98943, multiplied by 113%.

 (c)  Payments for physiological therapeutic procedures by chiropractors shall be based on the Medicare fee schedule for HCPCS codes 97010—97799, multiplied by 113%.

 (d)  Payments shall be made for documented office visits and shall be based on the Medicare fee schedule for HCPCS codes 99201—99205 and 99211—99215, multiplied by 113%.

 (e)  Payment shall be made for an office visit provided on the same day as another procedure only when the office visit represents a significant and separately identifiable service performed in addition to the other procedure. The office visit shall be billed under the proper level HCPCS codes 99201—99215, and shall require the use of the procedure code modifier ‘‘-25’’ (indicating a Significant, Separately Identifiable Evaluation and Management Service by the Same Physician on the Day of a Procedure).

   The provisions of this §  127.105 amended January 16, 1998, effective January 17, 1998, 28 Pa.B. 329. Immediately preceding text appears at serial pages (203453) to (203454).

 (a)  Payments for spinal manipulation procedures by Doctors of Osteopathic Medicine shall be based on the Medicare fee schedule for HCPCS codes M0702—M0730 (through 1993) or HCPCS codes 98925—98929 (1994 and thereafter), multiplied by 113%.

 (b)  Payment shall be made for an office visit provided on the same day as a spinal manipulation only when the office visit represents a significant and separately identifiable service performed in addition to the manipulation. The office visit shall be billed under the proper level HCPCS codes 99201—99215, and shall require the use of the procedure code modifier ‘‘-25’’ (indicating a Significant, Separately Identifiable Evaluation Management Service by the Same Physician on the Day of a Procedure).

 (c)  Payments for other services provided by Doctors of Osteopathic Medicine shall be calculated as provided for in §  127.104 (relating to outpatient providers subject to the Medicare fee schedule—physicians).

   Payments to outpatient physical therapy centers and independent physical therapists not reimbursed in accordance with §  127.118 (relating to RCCs—generally) shall be calculated by multiplying the Medicare Part B reimbursement for the services by 113%.

   Payments for durable medical equipment, home infusion therapy and the applicable HCPCS codes related to the infusion equipment, supplies, nutrients and drugs, shall be calculated by multiplying the Medicare Part B Fee Schedule reimbursement for the equipment or therapy by 113%.

 Payments for supplies provided over those included with the billed office visit shall be made at 80% of the provider’s usual and customary charge when the provider supplies sufficient documentation to support the necessity of those supplies. Supplies included in the office visit code by Medicare may not be fragmented or unbundled in accordance with §  127.204 (relating to fragmenting or unbundling of charges by providers).

 (a)  Payments to providers of inpatient acute care hospital services shall be based on the sum of the following:

   (1)  One hundred thirteen percent of the DRG payment.

   (2)  One hundred percent of payments that are reimbursed on the prospective payment system, as listed in subsection (b).

   (3)  One hundred percent of pass-through costs.

   (4)  One hundred percent of applicable cost outliers or 100% of applicable day outliers.

 (b)  In calculating the payment due, the following payments, which are reimbursed on a prospective payment basis by the Medicare Program, shall be multiplied by 100%:

   (1)  The prospective portions of capital-related costs relating to payments to the following:

     (i)   Fully-prospective hospitals.

     (ii)   Hold-harmless hospitals reimbursed at 100% of the Federal rate (100% hold harmless).

     (iii)   Blended hold-harmless hospitals.

   (2)  Direct medical education costs.

   (3)  Indirect medical education costs.

 (c)  In calculating the payment due, the following costs, which are reimbursed on a cost basis by the Medicare Program, shall be multiplied by 100%:

   (1)  The cost portions of capital-related costs relating to the following:

     (i)   Blended hold-harmless hospitals.

     (ii)   Capital-exceptional hospitals.

   (2)  Paramedical education costs.

   (3)  Cost outliers or day outliers.

 (a)  Payments to providers of inpatient hospital services, whose Medicare Program payments are based on DRGs, shall be calculated by multiplying the established DRG payment on the date of discharge by 113%.

 (b)  For discharges on and before December 31, 1994, the DRG payments, using the Medicare DRG methodology, shall be based on the most recently published tables of payments, relative values, wage indices, geographic adjustment factors, rural and urban designations and other applicable Medicare payment adjustments published in the Federal Register. The effective date for these changes under the Medicare Program shall also be the effective date for the changes under the act.

 (c)  If the amount of the DRG reimbursement changes during a patient’s stay, the applicable reimbursement rate on the date of discharge shall be used to calculate payment under the act.

 (d)  If a patient was admitted prior to August 31, 1993, the act’s medical fee caps may not apply.

 (a)  An additional payment shall be made to providers of inpatient hospital services for the capital-related costs reimbursed under the Medicare Part A Program.

 (b)  Hospitals, which have a hospital-specific capital rate lower than the Federal capital rate (fully-prospective), shall be paid for capital-related costs as follows: the hospital’s capital rate, as determined by the Medicare intermediary, shall be multiplied by the DRG relative weight on the date of discharge.

 (c)  Hospitals, which have a hospital-specific capital rate equal to or higher than the Federal capital rate (hold-harmless), shall be paid for capital-related costs as follows:

   (1)  Hospitals paid at 100% of the Federal capital rate shall receive the Federal capital rate, as determined by the Medicare intermediary, multiplied by the DRG relative weight on the date of discharge.

   (2)  Hospitals paid at a rate greater than 100% of the Federal capital rate shall be paid on the basis of the most recent notice of interim payment rates as determined by the Medicare intermediary. Hospitals shall receive the new Federal capital rate multiplied by the DRG relative weight on the date of the discharge plus the old Federal capital rate as determined by the Medicare intermediary.

 (d)  Capital-exceptional hospitals, or new hospitals within the first 2 years of participation in the Medicare Program, shall be paid for capital-related costs as follows: the most recent interim payment rate for capital-related costs, as determined by the Medicare intermediary, shall be added to the DRG payment on the date of discharge.

 (a)  Providers of inpatient hospital services shall receive an additional payment in recognition of the costs of medical education as provided pursuant to an approved teaching program and as reimbursed under the Medicare Program. For providers with an approved teaching program in place prior to January 1, 1995, the medical education add-on payment shall be based on the following calculations:

   (1)  Payments for direct medical education costs shall be based on figures from the latest audited Medicare cost report and calculated as follows: the medical education cost (Worksheet E, Part IV, Column 1, Line 18) shall be divided by total hospital DRG payments (Worksheet E, Part A, Column 1). This amount shall then be multiplied by the DRG payment on the date of discharge.

   (2)  Payments for indirect medical education costs shall be calculated as follows: the add-on percentage, identified in the provider’s latest Medicare interim rate notification, multiplied by the DRG payment on the date of discharge.

   (3)  Payments for paramedical education costs shall be calculated by determining the ratio of Medicare paramedical education costs to Medicare DRG payments. This ratio shall then be multiplied by the DRG payment on the date of discharge. The necessary ratio shall be computed as follows:

     (i)   If the most recently audited Medicare cost report is for a fiscal year beginning on or after October 1, 1991, and uses HCFA Form 2552-92, then the ratio shall be determined by taking the sum of Lines 14 and 15 on Worksheet E, Part A and dividing it by Line 1.

     (ii)   If the most recently audited Medicare cost report is for a fiscal year beginning before October 1, 1991, and uses HCFA Form 2552-89, then the ratio shall be determined by taking the sum of medical education costs from Worksheet D, Part I, Column 5, Line 101 and Worksheet D, Part II, Column 5, Line 101 and dividing the sum by total charges from Worksheet D, Part II, Column 7, Line 101; multiplying this amount by Medicare charges from Worksheet D, Part II, Column 9, Line 101; and dividing this amount by DRG payments from Worksheet E, Part A, Line 1.

 (b)  If a hospital loses its right to receive add-on payments for medical education costs under the Medicare Program, it shall also lose its right to receive the corresponding add-on payments for medical education costs under the act, commencing with services rendered on or after January 1 of the year succeeding the change in status. The hospital shall notify the Bureau in writing of this change in status on or before November 30 of the year in which the hospital has lost the right to receive a medical education add-on payment.

 (c)  On and after January 1, 1995, if a hospital begins receiving add-on payments for medical education costs under the Medicare Program, it shall also gain the right to receive add-on payments for medical education costs under the act, commencing with services rendered on or after January 1 of the year succeeding the change in status.

   (1)  The hospital shall notify the Bureau in writing of this change in status on or before November 30 of the year in which the hospital has gained the right to receive a medical education add-on payment. The notification shall include the following:

     (i)   Documentation that the medical education costs are incurred as the result of an approved teaching program, as accredited by the appropriate approving body.

     (ii)   The notice of per resident amount for direct medical education.

     (iii)   The interim rate notification for indirect medical education.

     (iv)   The notice of biweekly payment rates received from the Medicare Intermediary.

     (v)   A complete copy of the most recently audited Medicare cost report as of November 30 of the year in which the hospital gained the right to receive additional payments for medical education costs.

   (2)  If the hospital gained the right to receive a medical education add-on payment on or after January 1, 1995, the payment shall be based on the following calculations:

     (i)   Payments for direct medical education costs shall be based on the notice of biweekly payment amount. This amount shall be annualized, multiplied by the ratio of Part A reasonable cost to total reasonable cost from Worksheet E-3, Part IV, Line 15, and divided by total hospital DRG payments from the most recently audited Medicare cost report (Worksheet E, Part A, Column 1, Line 1). This amount shall then be multiplied by the DRG payment on the date of discharge.

     (ii)   Payments for indirect medical education costs shall be calculated as follows: the add-on percentage, identified in the provider’s most recent Medicare interim rate notification for the calendar year in which the approved teaching program commenced, multiplied by the DRG payment on the date of discharge.

     (iii)   Payments for paramedical education costs shall be based on the notice of biweekly payment amount. This amount shall be annualized, multiplied by the ratio of Part A reasonable cost to total reasonable costs from Worksheet E-3, Part IV, Line 15, and divided by total hospital DRG payments from the most recently audited Medicare cost report (Worksheet E, Part A, Column 1, Line 1). This amount shall be multiplied by the DRG payment on the date of discharge.

 (a)  Payments for cost outliers shall be based on the Medicare method for determining eligibility for additional payments as follows: the billed charges will be multiplied by the aggregate ratio of cost-to-charges obtained from the most recently audited Medicare cost report to determine the cost of the claim. This cost of claim shall be compared to the applicable Medicare cost threshold. Cost in excess of the threshold shall be multiplied by 80% to determine the additional cost outlier payment.

 (b)  Payments to acute care providers, when the length of stay exceeds the Medicare thresholds (‘‘day outliers’’), shall be determined by applying the Medicare methodology as follows: the DRG payment plus the capital payments shall be divided by the arithmetic mean of length of stay for that DRG as determined by HCFA to arrive at a per diem payment rate. This rate shall be multiplied by the number of actual patient days for the claim which are in excess of the outlier threshold as determined by HCFA and published in the Federal Register. The result is added to the DRG payment.

 (c)  When the calculations under both subsections (a) and (b) are greater than zero, the outlier payment shall be limited to the lesser of the cost outlier computed in accordance with subsection (a) or the day outlier computed in accordance with subsection (b).

 (a)  An additional payment shall be made to providers of inpatient hospital services designated by the Medicare Program as disproportionate-share hospitals.

 (b)  Payments to disproportionate-share hospitals shall be calculated as follows: the add-on percentage identified in the provider’s latest Medicare interim rate notification shall be multiplied by the DRG payment on the date of discharge and then multiplied by 113%.

 (c)  A provider requesting additional payments under the act based on its Medicare designation as a disproportionate-share hospital shall provide evidence of this designation to the insurer.

 (d)  If a hospital loses its right to receive additional payments as a disproportionate-share hospital under the Medicare Program prior to January 1, 1995, it shall also lose its right to receive additional payments under the act.

 (e)  Loss of the disproportionate-share designation on and after January 1, 1995, will not result in the loss of this designation for purposes of determining payments under the act.

 (f)  If a hospital gains the disproportionate-share designation on and after January 1, 1995, it will not be paid according to that designation under the act.

 (a)  Payments for Medicare-dependent small rural hospitals, sole-community hospitals and Medicare-geographically reclassified hospitals, shall be calculated as follows: the hospital’s payment rate identified on the latest Medicare interim rate notice shall be multiplied by the DRG payment on the date of discharge and then multiplied by 113%.

 (b)  A provider requesting additional payments under the act based on one of the special designations in subsection (a) shall provide evidence of this Medicare designation to the insurer.

 (c)  If a hospital loses its designation as a Medicare-dependent small rural hospital, sole-community hospital or Medicare-geographically reclassified hospital under the Medicare Program prior to January 1, 1995, it shall also lose the designation and the right to receive additional payments under the act.

 (d)  Loss of one of the special designations in subsection (a) on and after January 1, 1995, will not result in the loss of the designation for purposes of determining payments under the act.

 (e)  If a hospital gains designation as a Medicare-dependent small rural hospital, sole-community hospital or Medicare-geographically reclassified hospital under the Medicare Program on and after January 1, 1995, it will not be paid according to that designation under the act.

 The following services shall be paid on a cost-reimbursed basis for medical treatment rendered under Act 44:

   (1)  Outpatient services of general acute care providers and specialty hospitals reimbursed by Medicare using the HCFA Form 2552 or any successor form.

   (2)  Inpatient services provided in specialty hospitals and distinct part rehabilitation and psychiatric units of general acute care hospitals, which are exempt from the DRG reimbursement methodology and are reimbursed by Medicare using the HCFA Form 2552 or any successor form.

   (3)  Services provided in Comprehensive Outpatient Rehabilitation Facilities reimbursed by Medicare using the HCFA Form 2088 or any successor form.

   (4)  Services provided in outpatient therapy centers electing cost reimbursement for Medicare using the HCFA Form 2088 or any successor form.

 Payments for services listed in §  127.117 (relating to outpatient acute care providers, specialty hospitals and other cost reimbursed providers not subject to the Medicare fee schedule) shall be based on the provider’s specific Medicare departmental RCC for the specific services or procedures performed. For treatment rendered on and before December 31, 1994, the provider’s latest audited Medicare cost report, with an NPR date preceding the date of service, shall provide the basis for the RCC.

 (a)  Payments for services listed in §  127.117(1) (relating to outpatient acute care providers, specialty hospitals and other cost reimbursed providers not subject to the Medicare fee schedule) shall be calculated as follows: the provider charge shall be multiplied by the applicable RCC, which then shall be multiplied by 113%.

 (b)  The RCC to be used for providers receiving payment for outpatient services under the RCC methodology shall be the same RCC used by the Medicare Program for determining reimbursement. For providers with audited cost reports using HCFA Form 2552-89 or earlier, Worksheet C, Part II, Column 10 is to be used. For providers with audited cost reports using HCFA Form 2552-92, Worksheet C, Part II, Column 8 is to be used.

 (c)  Payments for inpatient services listed in §  127.117(2) shall be calculated as follows:

   (1)  Inpatient routine services shall be reimbursed based on the inpatient routine cost per diem from the most recently audited Medicare cost report, HCFA Form 2552-89 or 2552-92, Worksheet D-1, Part II, Line 38. The routine cost per diem shall be updated by the TEFRA (Tax Equity and Fiscal Responsibility Act of 1982) target rate of increase as published by HCFA in the Federal Register. The applicable update shall be applied cumulatively based on the annual update factors published subsequent to the date of the audited cost report year end and prior to December 31, 1994.

   (2)  Inpatient ancillary services shall be reimbursed based on the provider charge multiplied by the applicable RCC, which then shall be multiplied by 113%.

 (d)  The RCC to be used for providers receiving payment for inpatient services under the RCC methodology shall be the same RCC used by the Medicare Program for determining reimbursement. For inpatient ancillary costs, using the most recently audited cost report (either the 2552-89 or the 2552-92 HCFA Forms) Worksheet C, Part I, Column 8 is to be used to obtain the RCC.

 (e)  Services related to clinical laboratory and provider based physicians shall be reimbursed in accordance with § §  127.103 and 127.104 (relating to outpatient providers subject to the Medicare fee schedule—generally; and outpatient providers subject to the Medicare fee schedule—physicians).

 (a)  Except as noted in subsection (c), payments for services listed in §  127.117(3) and (4) (relating to outpatient acute care providers, specialty hospitals and other cost reimbursed providers not subject to the Medicare fee schedule) relating to CORFs and outpatient physical therapy centers, shall be calculated as follows: the provider’s charge shall be multiplied by the applicable RCC which then shall be multiplied by 113%.

 (b)  In situations where the most recent audited Medicare cost report is for the fiscal year ending on or after April 30, 1993, and where the CORF or outpatient physical therapy center is reimbursed by Medicare using the HCFA Form 2088-92, the RCC to be used for the calculation in subsection (a) shall be the same RCC used by the Medicare Program for determining reimbursements at Worksheet C, Column 2.

 (c)  In situations where the most recent audited cost report is for the fiscal year ending before April 30, 1993, and where the CORF or outpatient physical therapy center is reimbursed by Medicare using the HCFA 2088 form, the payment method to be used shall be as follows:

   (1)  For providers whose basis of Medicare apportionment is gross charges, the RCC shall be developed by dividing the total departmental cost for each therapy department on line 4 of Schedule C and by the total charges for each therapy department on line 1 of Schedule C. Payments then shall be calculated in accordance with subsection (a).

   (2)  For providers whose basis of Medicare apportionment is therapy visits, the payment rate shall be based on the average cost per visit, developed by dividing the total departmental cost for each therapy department on line 4 of Schedule C by the total visits for each therapy department on line 1 of Schedule C. Payments for services shall then be calculated as follows: the average cost per visit shall be multiplied by the billed number of visits and then multiplied by 113%.

   (3)  For providers whose basis of Medicare apportionment is weighted units, the payment rate shall be based on the average cost per weighted unit, developed by dividing the total departmental cost for each therapy department on line 4 of Schedule C by the total weighted units for each therapy department on line 1 of Schedule C. Payments for services shall then be calculated as follows: the average cost per weighted unit shall be multiplied by the billed units and then multiplied by 113%.

 (a)  Cost-reimbursed providers shall receive an additional payment in recognition of the costs of medical education as provided pursuant to an approved teaching program, and as reimbursed under the Medicare Program. For providers with an approved teaching program in place prior to January 1, 1995, the medical education add-on payment shall be calculated as follows, using figures from the most recently audited Medicare cost report:

   (1)  The hospital’s outpatient medical education to Medicare outpatient cost ratio shall be determined by taking the outpatient medical education cost from Supplemental Worksheet E-3, Part IV, Column 1, Line 19, and dividing it by the Medicare outpatient cost from Supplemental Worksheet E-3, Part IV, Column 1, Line 13.03. This ratio shall then be multiplied by the provider’s charges, multiplied by the applicable RCC.

   (2)  The hospital’s inpatient medical education to Medicare inpatient cost ratio shall be determined by taking the inpatient medical education cost from Supplemental Worksheet E-3, Part IV, Column 1, Line 18, and dividing it by the Medicare inpatient cost from Supplemental Worksheet E-3, Part IV, Column 1, Line 12.05. This ratio shall then be multiplied by the provider’s charges, multiplied by the applicable RCC.

   (3)  Payments for the cost of indirect medical education are included in the RCC payment and are not to be calculated as a separate item.

 (b)  If the cost-reimbursed provider loses its right to receive add-on payments for medical education costs under the Medicare Program, it shall also lost its right to receive add-on payments for medical education costs under the act, commencing with services rendered on or after January 1 of the year succeeding the change in status. The provider shall notify the Bureau in writing of this change in status on or before November 30 of the year in which the provider has lost the right to receive a medical education add-on payment.

 (c)  On and after January 1, 1995, if the cost-reimbursed provider begins receiving add-on payments for medical education costs under the Medicare Program, it shall also gain the right to receive add-on payments for medical education costs under the act, commencing with services rendered on or after January 1 of the year succeeding the change in status.

   (1)  The provider shall notify the Bureau in writing of this change on or before November 30 of the year in which the provider has gained the right to receive a medical education add-on payment. The notification shall include the following:

     (i)   Documentation that the medical education costs are incurred as the result of an approved teaching program, as accredited by the appropriate approving body.

     (ii)   The notice of per resident amount.

     (iii)   The notice of biweekly payment rates received from the Medicare intermediary.

     (iv)   A complete copy of the most recently audited Medicare cost report as of November 30 of the year in which the provider gained the right to receive additional payments for medical education costs.

   (2)  If the provider gained the right to receive a medical education add-on payment on or after January 1, 1995, the payment shall be based on the notice of biweekly payment amount. This amount shall be annualized and divided by the sum of the hospitals’ inpatient and outpatient cost from Supplemental Worksheet E-3, Part IV, Column 1, Line 12.05 and Line 13.03. This ratio shall then be multiplied by the provider’s charges, multiplied by the applicable RCC, multiplied by applicable updates and added to the charge master payment rates.

   Payments to providers of skilled nursing care who file Medicare cost reporting forms HCFA 2540 (freestanding facilities) or HCFA 2552 (hospital based facilities), or any successor forms, shall be calculated as follows: the most recent Medicare interim per diem rate shall be multiplied by the number of patient days and then multiplied by 113%.

   Payments to providers of home health care who file an HCFA Form 1728 (freestanding facilities) or an HCFA Form 2552 (hospital-based facilities), or any successor forms, shall be calculated as follows: the per visit limitation as determined by the Medicare Program multiplied by 113%. If the usual and customary charge per visit is lower than this calculation, then payment shall be limited to the usual and customary charge per visit. Payment at 113% of the Medicare limit shall represent payment for the entire service including all medical supplies and other items subject to cost reimbursement by the Medicare Program.

 (a)  Payments to providers of outpatient and end-stage renal dialysis shall be calculated as follows: the Medicare composite rate, per treatment, shall be multiplied by 113%.

 (b)  Hospital outpatient ancillary services paid outside of the Medicare composite rate shall be reimbursed in accordance with §  127.119 (relating to payments for services using RCCs).

   Payments to providers of outpatient surgery in an ASC, shall be based on the ASC payment groups defined by HCFA, and shall include the Medicare list of covered services and related classifications in these groups. This payment amount shall be multiplied by 113%. For surgical procedures not included in the Medicare list of covered services, payments shall be based on 80% of the usual and customary charge.

 (a)  New providers who are receiving payments in accordance with §  127.103 or §  127.120 (relating to outpatient providers subject to the Medicare fee schedule—generally; and RCCs—comprehensive outpatient rehabilitation facilities (CORFs) and outpatient physical therapy centers) shall bill and receive payments beginning with the treatment of their first workers’ compensation patient.

 (b)  New providers who are receiving payments in accordance with §  127.117 (relating to outpatient acute care providers, speciality hospitals and other cost-reimbursed providers not subject to the Medicare fee schedule) shall receive payments calculated as follows:

   (1)  Commencing with the date the provider begins treating its first patient until the completion and filing of the first Medicare cost report, payment shall be based on the aggregate RCC using the most recent Medicare interim rate notification.

   (2)  Within 30 days of the filing of the first cost report a new provider shall submit to the Bureau a copy of the detailed charge master in effect at the conclusion of the first cost report year and a copy of the filed cost report. Upon receipt of the filed cost report, payments shall be made in accordance with §  127.119 (relating to payments for services using RCCs), using the filed RCCs. The detailed charge master will be frozen in accordance with §  127.155 (relating to medical fee updates on and after January 1, 1995—outpatient acute care providers, specialty hospitals and other cost reimbursed providers).

   (3)  Upon receipt of the NPR, payments shall be made in accordance with §  127.119.

 (c)  A new provider shall submit a copy of the audited Medicare cost report and NPR to the Bureau within 30 days of receipt by the provider.

 (a)  When a merger, acquisition or change in ownership results in the elimination of the assets of a merged or acquired entity, and consolidation of the assets into the surviving entity, payments shall be determined by reference to the relevant cost reports and other relevant data of the surviving entity, except as noted in subsection (b).

 (b)  If services were provided at the merged or acquired provider that were not provided at the surviving provider (prior to merger or acquisition) and therefore were not reported as a cost center on its most recently audited Medicare cost report, the per diem rates and RCCs to be used for determining payment for these services shall be obtained from the most recently audited cost report of the merged or acquired provider.

 (a)  Acute care provided in a trauma center or a burn facility is exempt from the medical fee caps, and shall be paid based on 100% of usual and customary charges if the following apply:

   (1)  The patient has an immediately life-threatening injury or urgent injury.

   (2)  Services are provided in an acute care facility that is one of the following:

     (i)   A level I or level II trauma center, accredited by the Pennsylvania Trauma Systems Foundation under the Emergency Medical Services Act (35 P. S. § §  6921—6938).

     (ii)   A burn facility which meets the service standards of the American Burn Association.

 (b)  Basic or advanced life support services, as defined and licensed under the Emergency Medical Services Act, provided in the transport of patients to trauma centers or burn facilities under subsection (a) are also exempt from the medical fee caps, and shall be paid based on 100% of usual and customary charges.

 (c)  If the patient is initially transported to the trauma center or burn facility in accordance with the American College of Surgeons’ (ACS) triage guidelines, payment for transportation to the trauma center or burn facility, and payments for the full course of acute care services by all trauma center or burn facility personnel, and all individuals authorized to provide patient care in the trauma center or burn facility, shall be at the provider’s usual and customary charge for the treatment and services rendered.

 (d)  The determination of whether a patient’s initial and presenting condition meets the definition of a life-threatening or urgent injury shall be based upon the information available at the time of the initial assessment of the patient. A decision by ambulance personnel that an injury is life-threatening or urgent shall be presumptive of the reasonableness and necessity of the transport to a trauma center or burn facility, unless there is clear evidence of violation of the ACS triage guidelines.

 (e)  The exemptions in subsections (a) and (b) also apply when a patient has been transferred to a trauma center or burn facility pursuant to the ACS High-Risk Criteria for Consideration of Early Transfer.

 (f)  The exemptions also apply, and continue for the full course of treatment, when a patient is transferred from one trauma center or burn facility to another trauma center or burn facility.

 (g)  The medical fee cap exemptions may not continue to apply for payments for acute care treatment and services for life-threatening or urgent injuries following a transfer from a trauma center or burn facility to any other provider.

 (h)  Trauma centers and burn facilities shall provide the Bureau with evidence of their status including changes in status. An insurer may request evidence that an acute care facility’s status as a trauma center or burn facility, was in effect on the dates services were rendered to an injured worker.

 (a)  When injured employes are treated outside of this Commonwealth by providers who are licensed by the Commonwealth to provide health care services, the applicable medical fee cap shall be as follows:

   (1)  If the provider is both licensed by and has a place of business within this Commonwealth, the medical fees shall be capped based on the Medicare reimbursement rate applicable under the Medicare Program for services rendered at the provider’s primary place of business in this Commonwealth, subject to §  127.152 (relating to medical fee updates on and after January 1, 1995—generally).

   (2)  If the provider is licensed by the Commonwealth to provide health care services but does not have a place of business within this Commonwealth, medical fees shall be capped based on the Medicare reimbursement rate applicable in Harrisburg, Pennsylvania, under the Medicare Program for the services rendered subject to §  127.152.

 (a)  Payments shall be made for special reports (CPT code 99080) only if these reports are specifically requested by the insurer. Office notes and other documentation which are necessary to support provider codes billed may not be considered special reports.

 (b)  Payments for special reports shall be at 80% of the provider’s usual and customary charge.

 (a)  Payments for prescription drugs and professional pharmaceutical services shall be limited to 110% of the average wholesale price (AWP) of the product.

 (b)  Pharmacists and insurers may reach agreements on which Nationally recognized schedule shall be used to define the AWP of prescription drugs. The Bureau in resolving payment disputes, may use any of the Nationally recognized schedules to determine the AWP of prescription drugs. The Bureau will provide information by an annual notice in the Pennsylvania Bulletin as to which of the Nationally recognized schedules it is using to determine the AWP of prescription drugs.

 (a)  Insurers may enter into agreements with pharmacists authorizing pharmacists to bill the cost of prescription drugs directly to the insurer.

 (a)  When a prescription is filled at a physician’s office, payment for the prescription drug shall be limited to 110% of the average wholesale price of the product.

 (b)  Physicians may not bill, or otherwise hold the employe liable, for the difference between the actual charge for the prescription drug and 110% of the AWP of the product.

MEDICAL FEE UPDATES

§ 127.151. Medical fee updates prior to January 1, 1995—generally.

 (a)  Changes in Medicare reimbursement rates prior to January 1, 1995, shall be reflected in calculations of payments to providers under the act.

 (b)  The effective date for these rate changes under the Medicare Program shall also be the effective date for the fee changes under the act. The new rates shall apply to all treatment and services provided on and after the effective date of the rate change.

 (a)  Changes in Medicare reimbursement rates on and after January 1, 1995, may not be included in calculations of payments to providers under Act 44.

 (b)  Medical fee updates on and after January 1, 1995, shall be calculated based on the percentage changes in the Statewide average weekly wage, as published annually by the Department in the Pennsylvania Bulletin. These updates shall be effective on January 1 of each year, and they shall be cumulative.

 (a)  On and after January 1, 1995, outpatient providers whose payments under the act are based on the Medicare fee schedule under § §  127.103—127.108 shall be paid as follows: the amount of payment authorized shall be frozen on December 31, 1994, and updated annually by the percentage change in the Statewide average weekly wage.

 (b)  On and after January 1, 1995, adjustments and modifications by HCFA relating to a change in description or renumbering of any HCPCS code will be incorporated into the basis for determining the amount of payment as frozen in subsection (a) for services rendered under the act.

 (c)  On and after January 1, 1995, payment rates under the act for new HCPCS codes will be based on the rates allowed in the Medicare fee schedule on the effective date of the new codes. These payment rates shall be frozen immediately, and thereafter updated annually by the percentage change in the Statewide average weekly wage.

 (a)  On and after January 1, 1995, inpatient acute care providers, whose payments under the act are based on DRGs plus add-ons under § §  127.110—127.116 shall be paid as follows: the amount of payment authorized and based on the DRG shall be frozen on December 31, 1994, and updated annually by the percentage change in the Statewide average weekly wage.

 (b)  The DRG grouper in effect for Medicare DRG payments as of December 31, 1994, shall remain in effect and be frozen for purposes of determining payments under the act. Additions, deletions or modifications to the ICD-9 codes used to determine the DRG shall be mapped to the appropriate DRG within the frozen grouper.

 (c)  The relative values of DRGs in effect on December 31, 1994, shall be frozen for purposes of calculating payments under the act. The introduction of modified or new DRGs, on and after January 1, 1995, may not be utilized for purposes of calculating payments under the act.

 (d)  On and after January 1, 1995, add-on payments based on capital-related costs as set forth in §  127.112 (relating to inpatient acute care providers—capital-related costs) shall be frozen at the rates in effect on December 31, 1994, and updated annually by the percentage change in the Statewide average weekly wage.

 (e)  On and after January 1, 1995, add-on payments based on medical education costs as set forth in §  127.113 (relating to inpatient acute care providers—medical education costs) shall be frozen based on the calculations made using the Medicare cost report and Medicare interim rate notification in effect on December 31, 1994. These frozen rates shall be applied to the updated DRG rates in subsection (a).

   (1)  Hospitals which lose the right to receive add-on payments based on medical education costs under the Medicare Program on and after January 1, 1995, shall also lose their right to receive these payments under the act as set forth in §  127.113. Commencing with services rendered on or after January 1 of the year succeeding the change in status, the add-on payment that has been computed and included in the Medicare fee cap as frozen on December 31, 1994, shall be eliminated from the calculation of the reimbursement.

   (2)  Hospitals which gain the right to receive add-on payments based on medical education costs under the Medicare Program on and after January 1, 1995, shall receive payments based on the rates calculated in §  127.113(c). These payments shall be frozen immediately, and thereafter shall be applied to the updated DRG rates in subsection (a).

 (f)  On and after January 1, 1995, add-on payments based on cost outliers as set forth in §  127.114 (relating to inpatient acute care providers—outliers) shall continue to float with changes made pursuant to the Medicare Program, using the most recently audited cost reports to calculate the additional payment. These payments may not receive fee updates based on changes in the Statewide average weekly wage.

 (g)  On and after January 1, 1995, add-on payments based on day outliers as set forth in §  127.114 shall be frozen based on the arithmetic and geometric mean length of stay in effect for discharges on December 31, 1994. These frozen rates shall be applied to the updated DRG rates in subsection (a).

 (h)  On and after January 1, 1995, add-on payments based on the designation under the Medicare Program as a disproportionate share hospital, shall be frozen based on the designation and calculation in effect on December 31, 1994. These frozen rates shall be applied to the updated DRG rates in subsection (a).

 (i)  On and after January 1, 1995, payments based on designations under the Medicare Program as a Medicare-dependent small rural hospital, sole-community hospital and Medicare-geographically reclassified hospital shall be frozen based on the designations and calculations in effect on December 31, 1994. These rates shall be updated annually by the percentage change in the Statewide average weekly wage.

 (a)  As of January 1, 1995, providers identified in §  127.117 (relating to outpatient acute care providers, specialty hospitals and other cost-reimbursed providers not subject to the Medicare fee schedule) shall be paid as follows: as of December 31, 1994, the provider’s actual charge by procedure as determined from the detailed charge master, shall be multiplied by the ratio of cost-to-charges, based on the most recently audited Medicare cost report. Except as noted in subsection (b), this amount shall be frozen for purposes of calculating payments under the act and updated annually by the percentage change in the Statewide average weekly wage.

 (b)  Subsection (a) does not apply in situations where the charge master does not contain unique charges for each item of pharmacy, but instead actual charges are based on algorithms or other mathematical calculations to compute the charge. For purposes of effectuating the freeze, the providers’ RCC for pharmacy (drug charges to patients) shall be frozen based on the last audited Medicare cost report as of December 31, 1994. On and after January 1, 1995, the providers’ actual charges shall be multiplied by the frozen RCC and then by 113% to determine reimbursements. These payments may not receive fee updates based on changes in the Statewide average weekly wage.

 (c)  For purposes of effectuating the freeze in reimbursements as provided in subsection (a), the Bureau will calculate the appropriate fee caps for cost-reimbursed providers who are identified in §  127.117. In order to accomplish this task, the Bureau will utilize information obtained from a complete copy of the provider’s detailed charge master by procedure/service codes, HCPCS codes and by applicable Medicare revenue code with rates effective as of September 1, 1994, and RCCs from the most recently audited Medicare cost report in effect as of December 31, 1994.

   (1)  The charge information obtained for purposes of subsection (c) calculations, will remain in the possession of the Bureau. Unless the Bureau obtains the written permission of the provider, the charge information will not be released to anyone other than an authorized representative of the provider.

   (2)  The Bureau will provide the calculated fees to insurers.

 (d)  Cost-reimbursed providers adding new services requiring the addition of new procedure codes within previously reported Medicare revenue codes and frozen RCCs shall receive payment based on the charge associated with the new code multiplied by the frozen RCC.

 (e)  Cost-reimbursed providers adding new services requiring the addition of new procedure codes outside of the previously reported Medicare revenue codes and frozen RCC, shall receive payment as follows:

   (1)  Prior to the completion of the audited cost report which includes the new services, payment shall be based on 80% of the provider’s usual and customary charge.

   (2)  Upon completion of the first audited cost report which includes the new services, payment shall be based on the charge associated with the new code multiplied by the audited RCC including those charges. Payment rates shall be frozen immediately and updated annually by the percentage change in the Statewide average weekly wage.

 (f)  On and after January 1, 1995, add-on payments based on medical education costs as set forth in §  127.121 (relating to cost-reimbursed providers—medical education costs) shall be frozen based on the calculations made using the Medicare Cost Report. These rates shall be updated annually by the percentage change in the Statewide average weekly wage.

   (1)  Cost-reimbursed providers that lose their right to receive add-on payments based on medical education costs under the Medicare Program on and after January 1, 1995, shall also lose their right to receive these payments under the act as set forth in §  127.121. Commencing with services rendered on or after January 1 of the year succeeding the change in status, the add-on payment that has been computed and included in the Medicare fee cap as frozen on December 31, 1994, including annual updates attributable to those medical education add-on payments, shall be eliminated from the calculation of the reimbursement. The new reimbursement rate shall be frozen immediately and shall be updated annually by the percentage change in the Statewide average weekly wage.

   (2)  Cost-reimbursed providers that gain the right to receive add-on payments based on medical education costs under the Medicare Program on and after January 1, 1995, shall receive payments based on the rates calculated in §  127.121. These rates shall be frozen immediately and shall be updated annually by the percentage change in the Statewide average weekly wage.

 (g)  On and after January 1, 1995, payments to comprehensive outpatient rehabilitation facilities, as set out in §  127.120 (relating to RCCs—comprehensive outpatient rehabilitation facilities (CORFs) and outpatient physical therapy centers), shall be frozen and updated as follows:

   (1)  For providers whose basis of Medicare apportionment is gross charges, payment rates will be frozen on December 31, 1994, and updated annually by the percentage change in the Statewide average weekly wage.

   (2)  For providers whose basis of Medicare apportionment is visits or weighted units, the computed payment rate as of December 31, 1994, shall be frozen and updated annually by the percentage change in the Statewide average weekly wage.

 On and after January 1, 1995, payments to skilled nursing facilities shall be as follows: the amount of the payment set forth in §  127.122 (relating to skilled nursing facilities) shall be frozen on December 31, 1994, and updated annually by the percentage change in the Statewide average weekly wage.

 On and after January 1, 1995, payments to home health care providers shall be as follows: the amount of the payment set forth in §  127.123 (relating to hospital-based and freestanding home health care providers) shall be frozen on December 31, 1994, and updated annually by the percentage change in the Statewide average weekly wage.

 On and after January 1, 1995, payments to providers of outpatient and end-stage renal dialysis shall be as follows: the amount of the payment set forth in §  127.124 (relating to outpatient and end-stage renal dialysis payments) shall be frozen on December 31, 1994, and updated annually by the percentage change in the Statewide average weekly wage.

 On and after January 1, 1995, payments to providers of outpatient surgery in ASCs shall be as follows: the amount of the payment in §  127.125 (relating to ASCs) shall be frozen on December 31, 1994, and updated annually by the percentage change in the Statewide average weekly wage.

 Trauma centers and burn facilities shall continue to receive their usual and customary charges on and after January 1, 1995, in accordance with §  127.128 (relating to trauma centers and burn facilities—exemption from fee caps).

   Payments for prescription drugs and professional pharmaceutical services shall continue to be limited to 110% of the average wholesale price on and after January 1, 1995.

 On and after January 1, 1995, if the Commissioner adopts new allowances for services provided under the act, those new allowances will be frozen immediately, and thereafter updated annually by the percentage change in the Statewide average weekly wage.

   This section cited in 34 Pa. Code §  127.101 (relating to medical fee caps—Medicare).

BILLING TRANSACTIONS

§ 127.201. Medical bills—standard forms.

 (a)  Requests for payment of medical bills shall be made either on the HCFA Form 1500 or the UB92 Form (HCFA Form 1450), or any successor forms, required by HCFA for submission of Medicare claims. If HCFA accepts a form for submission of Medicare claims by a certain provider, that form shall be acceptable for billing under the act.

 (b)  Cost-based providers shall submit a detailed bill including the service codes consistent with the service codes submitted to the Bureau on the detailed charge master in accordance with §  127.155(b) (relating to medical fee updates on and after January 1, 1995—outpatient acute care providers, specialty hospitals and other cost-reimbursed providers), or consistent with new service codes added under §  127.155(d) and (e).

 (a)  Until a provider submits bills on one of the forms specified in §  127.201 (relating to medical bills—standard forms) insurers are not required to pay for the treatment billed.

 (b)  Insurers may not require providers to use any form of medical bill other than the forms required by §  127.201.

   Forms

 (a)  Providers who treat injured employees are required to submit periodic medical reports to the employer, commencing 10 days after treatment begins and at least once a month thereafter as long as treatment continues. If the employer is covered by an insurer, the provider shall submit the report to the insurer.

 (b)  Medical reports are not required to be submitted in months during which treatment has not been rendered.

 (c)  The medical reports required by subsection (a) shall be submitted on a form prescribed by the Bureau for that purpose. The form shall require the provider to supply, when pertinent, information on the claimant’s history, the diagnosis, a description of the treatment and services rendered, the physical findings and the prognosis, including whether or not there has been recovery enabling the claimant to return to pre-injury work without limitations. Providers shall supply only the information applicable to the treatment or services rendered.

 (d)  If a provider does not submit the required medical reports on the prescribed form, the insurer is not obligated to pay for the treatment covered by the report until the required report is received by the insurer.

   Medical Reports

   An employeer is only responsible to pay reasonable and necessary medical bills when submitted in the manner prescribed by the act and regulations, which includes the requirement that provider file periodic reports with the employer on an approved form. Budd Co. v. W.C.A.B. (Kan), 858 A.2d 170, 180 (Pa. Cmwlth. 2004), appeal denied 862 A.2d 1257 (Pa. 2004).

   The Commonwealth Court remanded to the Workers’ Compensation Appeal Board with instructions that the Board remand to the Workers’ Compensation Judge to give the health care provider an opportunity to submit his medical bills on the forms mandated by Act 44, where the regulations reinforce the obligation of the provider to submit his bill on the proper form before payment will be made and, moreover, the regulations require that medical reports be submitted before payment is due. AT&T v. Workers’ Compensation Appeal Board (Dinapoli), 728 A.2d 381 (Pa. Cmwlth. 1999).

 A provider may not fragment or unbundle charges except as consistent with Medicare.

 Bills submitted by providers for payment shall state the provider’s actual charges for the treatment rendered. A provider’s statement of actual charges will not be construed to be an unlawful request or requirement for payment in excess of the medical fee caps. The insurer to whom the bill is submitted shall calculate the proper amount of payment for the treatment rendered.

   Calculation

   The Workers’ Compensation Judge erred in awarding medical expenses in the amount of $40,000 without reducing them to the applicable fee caps even though this regulation did not become effective until November 11, 1995, after the health care provider had submitted his bills, where the court was remanding the case so that the provider could submit his bills on the required forms; because this regulation is procedural, as it does not alter any substantive rights, the court instructed the employer and its insurance carrier to calculate the proper amount of payment for the treatment rendered. AT&T v. Workers’ Compensation Appeal Board (Dinapoli), 728 A.2d 381 (Pa. Cmwlth. 1999).

   Retroactive Application

 (a)  Changes to a provider’s codes by an insurer may be made if the following conditions are met:

   (1)  The provider has been notified in writing of the proposed changes and the reasons in support of the changes.

   (2)  The provider has been given an opportunity to discuss the proposed changes and support the original coding decisions.

   (3)  The insurer has sufficient information to make the changes.

   (4)  The changes are consistent with Medicare guidelines, the act and this subchapter.

 (b)  For purposes of subsection (a)(1), the provider shall be given 10 days to respond to the notice of the proposed changes, and the insurer must have written evidence of the date notice was sent to the provider.

 (c)  Whenever changes to a provider’s billing codes are made, the insurer shall state the reasons why the provider’s original codes were changed in the explanation of benefits required by §  127.209 (relating to explanation of benefits paid).

 (d)  If an insurer changes a provider’s codes without strict compliance with subsections (a)—(c), the Bureau will resolve an application for fee review filed under §  127.252 (relating to application for fee review—filing and service) in favor of the provider under §  127.254 (relating to downcoding disputes).

   Billing Codes

   The insurer’s argument that it can summarily deny any application for medical fee reimbursement as incomplete if the application contains a billing code that the insurer believes should be different than the one used, and when that occurs, it is not required to contact the provider or provide a reason for denial, was disingenuous, where its assertion was contrary to the plain language of this regulation and the only reason it gave for denying payment was that the therapy billed for was unproven. Philadelphia v. Medical Fee Review Hearing Office, 737 A.2d 356 (Pa. Cmwlth. 1999).

 (a)  Payments for treatment rendered under the act shall be made within 30 days of receipt of the bill and report submitted by the provider.

 (b)  For purposes of computing the timeliness of payments, the insurer shall be deemed to have received a bill and report 3 days after mailing by the provider. Payments shall be deemed timely made if mailed on or before the 30th day following receipt of the bill and report.

 (c)  If an insurer requests additional information or records from a provider, the request may not lengthen the 30-day period in which payment shall be made to the provider.

 (d)  If an insurer proposes to change a provider’s codes, the time required to give the provider the opportunity to discuss the proposed changes may not lengthen the 30-day period in which payment shall be made to the provider.

 (e)  The 30-day period in which payment shall be made to the provider may be tolled only if review of the reasonableness or necessity of the treatment is requested during the 30-day period under the UR provisions of Subchapter C (relating to medical treatment review). The insurer’s right to suspend payment shall continue throughout the UR process. The insurer’s right to suspend payment shall further continue beyond the UR process to a proceeding before a workers’ compensation judge, unless there is a UR determination made that the treatment is reasonable and necessary.

 (f)  The nonpayment to providers within 30 days shall only apply to that particular treatment or portion thereof in dispute. If a portion of the treatment is not in dispute, payment shall be made within 30 days.

 (g)  If a URO determines that medical treatment is reasonable or necessary, the insurer shall pay for the treatment. Filing a petition for review before a workers’ compensation judge, does not further suspend the obligation to pay for the treatment once there has been a determination that the treatment is reasonable or necessary. If it is finally determined that the treatment was not reasonable or necessary, and the insurer paid for the treatment in accordance with this chapter, the insurer may seek reimbursement from the Supersedeas Fund under section 443(a) of the act (77 P. S. §  999(a)).

   The provisions of this §  127.208 amended January 16, 1998, effective January 17, 1998, 28 Pa.B. 329. Immediately preceding text appears at serial pages (203479) to (203480).

   Payment for Medical Treatment

   Once it is determined that an employer is liable for an injury under the Workers’ Compensation Act, the employer is required to pay claimant’s medical bills within 30 days of receipt. Westinghouse Electric v. W.C.A.B. (Weaver), 823 A.2d 209, 218 (Pa.Cmwlth 2003).

   Suspension of Payment

   The Workers’ Compensation Judge did not err by failing to order the employer to pay the chiropractor’s bills up to the date of his decision, where this regulation permits a suspension of an employer’s obligation to continue paying medical bills during the utilization review process. Musko v. Workers’ Compensation Appeal Board (Calgon Carbon Corp.), 729 A.2d 657 (Pa. Cmwlth. 1999).

 (a)  Insurers shall supply a written explanation of benefits (EOB) to the provider, describing the calculation of payment of medical bills submitted by the provider. If payment is based on changes to a provider’s codes, the EOB shall state the reasons for changing the original codes. If payment of a bill is denied entirely, insurers shall provide a written explanation for the denial.

 (b)  All EOBs shall contain the following notice: ‘‘Health care providers are prohibited from billing for, or otherwise attempting to recover from the employe, the difference between the provider’s charge and the amount paid on this bill.’’

 (a)  If an insurer fails to pay the entire bill within 30 days of receipt of the required bills and medical reports, interest shall accrue on the due and unpaid balance at 10% per annum under section 406.1(a) of the act (77 P. S. §  717.1).

 (b)  If an insurer fails to pay any portion of a bill, interest shall accrue at 10% per annum on the unpaid balance.

 (c)  Interest shall accrue on unpaid medical bills even if an insurer initially denies liability for the bills if liability is later admitted or determined.

 (a)  A provider may not hold an employe liable for costs related to care or services rendered in connection with a compensable injury under the act. A provider may not bill for, or otherwise attempt to recover from the employe, the difference between the provider’s charge and the amount paid by an insurer.

 (b)  A provider may not bill for, or otherwise attempt to recover from the employe, charges for treatment or services determined to be unreasonable or unnecessary in accordance with the act or Subchapter C (relating to medical treatment review).

   A claimant is never liable for the difference between that charged by the health care provider and that paid by the employer. Jaquay v. Workers’ Compensation Appeal Board, 717 A.2d 1075 (Pa. Cmwlth. 1998).

REVIEW OF MEDICAL FEE DISPUTES

§ 127.251. Medical fee disputes—review by the Bureau.

 A provider who has submitted the required bills and reports to an insurer and who disputes the amount or timeliness of the payment made by an insurer, shall have standing to seek review of the fee dispute by the Bureau.

 (a)  Providers seeking review of fee disputes shall file the original and one copy of a form prescribed by the Bureau as an application for fee review. The application shall be filed no more than 30 days following notification of a disputed treatment or 90 days following the original billing date of the treatment which is the subject of the fee dispute, whichever is later. The form shall be accompanied by documentation required by §  127.253 (relating to application for fee review—documents required generally).

 (b)  Providers shall serve a copy for the application for fee review, and the attached documents, upon the insurer. Proof of service shall accompany the application for fee review and shall indicate the person served, the date of service and the form of service.

 (c)  Providers shall send the application for fee review and all related attachments to the address for the Bureau listed on the application form.

 (d)  The time for filing an application for fee review will be tolled if the insurer has the right to suspend payment to the provider due to a dispute regarding the reasonableness and necessity of the treatment under Subchapter C (relating to medical treatment review).

   The provisions of this §  127.252 amended January 16, 1998, effective January 17, 1998, 28 Pa.B. 329. Immediately preceding text appears at serial pages (203481) to (203482).

   Burden

   Although insurer bears the burden of proving that it properly reimbursed provider, the provider must first show that it filed a timely application for fee review. The provider has the burden of proving the existence of a dispute as to liability. Thomas Jefferson University Hospital v. Bureau of Workers’ Compensation Medical Fee Review Office, 794 A.2d 933 (Pa. Cmwlth. 2002).

   Time

   Where there is a dispute as to liability, but the provider has actual knowledge of a decision regarding liability, the provider must file its application within 30 days of notification of that decision, or 90 days from the original billing date. Thomas Jefferson University Hospital v. Bureau of Workers’ Compensation Medical Fee Review Office, 794