STATE OF NORTH CAROLINA



STATE OF NORTH CAROLINA IN THE OFFICE OF

ADMINISTRATIVE HEARINGS

COUNTY OF HAYWOOD 03 INS 1649

Ellen E. Robinson )

Petitioner, )

) DECISION

) by SUMMARY JUDGMENT

NORTH CAROLINA TEACHERS’ )

AND STATE EMPLOYEES’ )

COMPREHENSIVE MAJOR )

MEDICAL PLAN, )

Respondent. )

This contested case seeks a reversal of the Respondent’s denial of payment in excess of the amount allowed under N.C.G.S. §§ 135-40.4 and 135-40.6(1) and Plan medical policy “AD0335-Hospital Inpatient Services” and Medical Policy “AD0480- Out-of-State UCR”, for cost incurred by the Petitioner at a non-contracting Diagnosis Related Grouping (DRG) hospital as well as cost incurred by a non-contracting provider.

FINDINGS OF FACT

1. Petitioner sought emergency medical treatment at Tennessee Medical Center, a non-contracting provider, in Tennessee in March 2003. As a family member of an employee of the State, Petitioner has health coverage with the Respondent Health Plan.

2. The claim involves two different types of reimbursement for two different providers of services. The claim for $5,232.95 involved the rate of reimbursement to a facility, the University of Tennessee Medical Center, and is referred to as the All-Patients Diagnosis Related Grouping (DRG) claim. DRG is the method used to calculate the proper rate of reimbursement to a medical facility. The Other claim was in the amount of $553.55 and involved the reimbursement to the treating physicians. This claim is referred to as the Usual, Customary and Reasonable (UCR) claim as it is the method used to calculate reimbursement to providers.

3. The Respondent paid the applicable DRG and UCR reimbursements. Since these providers did not have a contract with the Respondent to provide services to plan members, the Petitioner received a bill from the providers for the balance due.

4. Petitioner followed the internal appeals procedures for the Respondent and his requests for coverage in excess of the UCR and DRG were denied. On August 4, 2003 the Petitioner was notified in writing that his appeal had been denied and that he had the right to file a petition with the Office of Administrative Hearings. Petitioner filed a timely appeal with the Office of Administrative Hearings on October 1, 2003.

5. Respondent filed a Motion for Summary Judgment with supporting Memorandum of Law and Affidavits. The Respondent filed a Supplemental Motion for Summary Judgment, with additional exhibits, requesting the court dismiss the DRG claim for lack of jurisdiction or in the alternative grant Summary Judgment in favor of Respondent on both claims. At a hearing on 16 November, the Court determined that both claims were properly before the Office of Administrative Hearing and considered the Motion for Summary Judgment.

6. The supporting affidavit established that rather than paying benefits based on the provider’s charges, which vary widely, the Plan makes payments based on the UCR and DRG methods. These methods are used throughout the managed care industry and are recognized by Insurance Carriers and healthcare providers as a way to calculate expenses and reimbursements. Providers who contract with the Plan agree to accept the UCR or DRG as reimbursement and to hold the member harmless for the balance of charges.

7. The North Carolina Legislature determined that the Plan would utilize the UCR system of reimbursement for Provides and the DRG system for hospitals and incorporated these methods of calculating payment in N.C.G.S. §135-40.6(1),§135-40.6(7),(a) §135-40.6(9)(g) and §135-40.4. This is a statutory requirement and not merely a policy decision made by the Plan.

8. N.C.G.S. § 135-40.6(1) and Medical Policy AD0480 state that UCR shall be developed from criteria used for determining reasonable charges for services, including usual preoperative examination and customary post operative care and care of usual complications, and shall be based on the usual charges made by an individual doctor for his or her private patients for a particular service, or the customary charge within the range of usual fees charged by most doctors of similar skill and training in North Carolina for the comparable service, whichever is lower. Benefits are excluded for charges in excess of negotiated rates allowed for preferred providers of institutional and professional medical care and services when such preferred providers are reasonably available to provide institutional and professional medical care.

9. The evidence presented established that the Petitioner sought emergency treatment from a non-contracting provider. The billed charges for this claim were in excess of the UCR allowance for an admission to an out-of-state, non-contracting provider. The Plan paid the provider the UCR amount and Petitioner was responsible to the provider for the balance of the charges.

10. Petitioner appealed the payment. Affidavits submitted by Respondent with the motion established that the Plan conducted a medical review of the claim, to ensure the payment issued was correct. A medical review means that a medical doctor reviews the medical records provided by the hospital and evaluates each procedure performed to see if any of the procedures could be coded differently resulting in a higher payment by the plan to the provider. The medical review indicated that the providers correctly billed the charges at issue in this case and that the allowances were appropriate for the diagnoses and the care rendered in this case. Therefore, no increase in payment was authorized and the Petitioner was responsible for the amount in excess of the UCR and DRG allowance.

11. The Respondent did not contest that the patient needed treatment or that the treatment provided was appropriate.

12. The charges paid by the Respondent were correctly calculated based on Usual, Customary and Reasonable (UCR) rate and the All Patients Diagnosis Related Grouping (DRG).

Conclusions of Law

1. Motion for Summary Judgment is appropriate as there exists no material issue of fact for this Court to resolve. “Summary judgment is appropriate when the movant proves that an essential element of claim is nonexistent or that the opposing party cannot produce evidence to support an essential element of his claim.” Holloway v. Wachovia Bank & Trust Co., 339 N.C. 338, 452S.E.2d 233, 240 (1994).

2. To avoid summary judgment, the nonmovant “must come forward with facts, not mere allegations, which controvert the facts set forth in the moving party’s case.” Graham v. Hardee’s Food Systems, Inc., 121 N.C.App. 382, 386, 465 S.E.2d 558, 560 (1996). “A mere scintilla of evidence supporting the case is insufficient” to overcome summary judgment. Shaw v. Stroud, 13 F.3d 791, 798 (4th Cir. 1994)(citations omitted), cert. Denied, 513 U.S. 813, 115 S.Ct. 67 (1994).

3. The method of reimbursement for UCR and DRG claims are prescribed by North Carolina General Statute. The factors regarding the method of calculation and the actual calculations themselves were set forth in detail in the affidavits submitted with Respondent’s Motion. The only “evidence” contradicting these facts is the affidavit of Ellen Robinson which does not address the method or rate of calculation for the reimbursement.

4. Statements throughout Counsel of Petitioner’s brief, as well as the affidavit, reflect a lack of understanding of how the UCR and DRG systems are calculated and applied throughout the Country. The UCR and the DRG systems are used throughout the healthcare industry nationwide. The system of calculation uses procedure codes and ratios for specific charges. The base rates are updated annually to insure that they reflect the current year’s charges. The Respondent uses the procedure codes submitted by the Petitioner’s treating physicians and the hospital to determine the reimbursement.

5. The calculations for the Petitioner were verified for accuracy and were done correctly and a detailed accounting was provided to the Court in the affidavit of Jill Bell found at Exhibit B of Respondent’s original Motion. Petitioner has failed to offer any evidence to counter these detailed affidavits or accountings.

6. N.C.G.S. § 135-40.6(1) and Plan Medical Policy “AD0335- Hospital Inpatient Services” govern the method used to determine the amount of reimbursement for inpatient hospital services.

7. The Health Plan was correct when it refused to pay the amount in excess of the amount authorized by N.C.G.S. § 135-40.6(1) and Medical Policy “AD0335- Hospital Inpatient Services”, as well as the amount in excess of the UCR.

8. The Health Plan’s authority to covers cost in excess of the UCR and DRG are limited by the North Carolina Legislature and are not discretionary for the Plan.

9. The North Carolina Legislature determined that the Plan would utilize the DRG system of reimbursement for hospitals effective no later than 1 January 1995. N.C.G.S. §135-40.4. This is a statutory requirement and not merely a policy decision made by the Plan. At the time this case arose, the Statute did not make any allowance for paying amounts in excess of the DRG in cases which arise due to an emergency.

10. The DRG and UCR systems are used throughout the insurance industry and are the standard method of calculating charges for non-contracting providers.

11. Further, N.C.G.S. § 135-40. Part 3 and Medical Policy AD0335 state that the Plan will not pay charges for in hospital benefits for each single confinement, when charges by a hospital, for room, accommodations, including bed, board and general nursing care, exceed the DRG or UCR amount. Billed charges in excess of these allowances are the members’ responsibility when services are provided by a non contracting hospital or provider. Neither the Statute nor the policy provided for an exception for medical emergencies at the time Petitioner sought care.

CONCLUSION

The Respondent did not act erroneously when it followed the requirements of the N.C.G.S. §135-40, part 3 and applied the proper UCR and DRG allowances to the Petitioner’s billed charges for care rendered by non-contracting providers. The Motion for Summary Judgment is hereby granted in favor of the Respondent.

NOTICE

The agency making the final decision in this contested case is required to give each party an opportunity to file exceptions to this decision issued by the Undersigned, and to present written arguments to those in the agency who will make the final decision. N.C. Gen. Stat. § 150B-36(a).

The agency is required by G.S. 150B-36(b) to serve a copy of the final decision on all parties and to furnish a copy to the parties’ attorney of record and to the Office of Administrative Hearings.

The agency that will make the final decision in this contested case is the North Carolina Teachers’ and State Employees’ Major Medical Plan.

This the 22nd day of December, 2004

___________________________

Beryl E. Wade

Administrative Law Judge

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