Tennesse

Tennessee WORKERS COMPENSATION COLLECTION
PUBLICATIONS AND INFORMATION FOR MEDICAL PROVIDERS

Providing free information for medical providers in the collection of industrial injury medical bills

December 09, 2011: Tennessee: News:
2011 WORKERS’ COMPENSATION
LEGISLATIVE CHANGES

November 08, 2011:Tennessee : Issues:
The Tennessee Medical Fee Schedule Rules
apply whenever an injured employee is
receiving workers’ compensation benefits
under Tennessee law or would be entitled to
receive benefits under Tennessee law, whether
the treatment is in Tennessee or any other
state.

October 21, 2011: Tennessee: News:
2011 Tennessee Workers' Comp Conference
Coming November 17-18, 2011

Medical Control

The employer has the right to direct an injured employee to an initial care provider by using a
medical provider posting. This posting may include a chiropractor, orthopedic or neuroscience
medicine provider when the injury warrants. The injured worker may change physicians with
the approval of the employer/insurer. The employee may select his/her own pharmacy or
select a pharmacy from the Express Scripts pharmacy network. Emergency medical care does
not require preapproval and should be secured at the nearest location

In-patient Hospital Fee Schedule

Chapter 0800-2-19, the In-patient Hospital Fee Schedule, sets out how hospitals should be
reimbursed. Unlike most of our Medical Fee Schedule, this section, for the most part, is not
based on Medicare methods, but reimburses hospitals on a per day or “per diem” basis. This
section also contains definitions and procedures specifically applicable to inpatient hospital
reimbursements.

U & C means the usual and customary amount, which is 80% of billed charges. BR
(By Report) means the procedure is not assigned a maximum fee and requires a
written description. Paid at U & C (80% of billed charges).

When there is no specific methodology in these Rules for reimbursement, the maximum
reimbursement is 100% of Medicare. Whenever there is not Medicare methodology, maximum
reimbursement is Usual & Customary or U & C (80% of billed charges). See Rule 0800-2-18-.
02(a).

When extraordinary services resulting from severe head injuries, major burns, severe
neurological injuries, or any injury requiring an extended period of intensive care, a greater fee
may be allowed up to 150% of the professional service fees normally allowed under these
Rules. This provision does not apply to In-patient Hospital facility fees. See Rule 0800-2-1.

Out-of-State Medical Services

The Tennessee Medical Fee Schedule Rules apply whenever an injured employee is receiving
workers’ compensation benefits under Tennessee law or would be entitled to receive benefits
under Tennessee law, whether the treatment is in Tennessee or any other state.

IV. IN-PATIENT HOSPITAL FEE SCHEDULE
The In-patient Hospital Fee Schedule, Chapter 0800-2-19, is applicable for all inpatient
hospital stays. These are defined as hospital stays which exceed 23 hours and the employee
has been formally admitted. Different rules apply for outpatient services performed in a
hospital setting. For these see Rule 0800-2-18-.07.
See Rule 0800-2-19-.02(6).
A. In-patient Hospital Services Are Reimbursed under a Per Day Methodology
In-patient services are calculated under a per day or “per diem” basis, not under the Medicare
DRG system. This is one of the areas in which the Tennessee Medical Fee
Schedule differs from the Medicare basis used throughout most of the Fee Schedule Rules.
Reimbursement for a compensable workers’ compensation claim shall be the lesser of the
hospital’s usual charges, the PPO or other contracted amount, or the maximum
amount allowed under this In-patient Hospital Fee Schedule.
In-patient hospitals are grouped into the following separate peer groupings:
1. Peer Group 1 Hospitals
2. Peer Group 2 Rehabilitation Hospitals
3. Peer Group 3 Psychiatric Hospitals
See Rule 0800-2-18-.02(2)(b) and 0800-2-19-.01.
B. Maximum Allowable Reimbursement Amounts
The maximum per diem rates to be used in calculating the reimbursement rate is as follows:
Surgical Admissions - $1,800.00 for the first seven (7) days; $1,500.00 per day for each day
thereafter. This includes Intensive Care (ICU) & Critical Care (CCU);
Medical Admissions - $1,500.00 for first seven (7) days; $1,250.00 per day for each day
thereafter;
Rehabilitation Hospitals - $1,000.00 for the first seven (7) days; $800.00 per day thereafter;
Psychiatric Hospitals (applicable to chemical dependency as well) maximum allowable
amount is $700.00 per day.

C. Trauma care

Trauma care at any licensed Level 1 Trauma Center only shall be reimbursed at a maximum
rate of $3,000.00 per day for each day of patient stay. Actual trauma care determines trauma
rates for admissions and re-admissions. The person must have
required admission or re-admission to a trauma center and the person could not have been
treated in a non-trauma facility. Trauma must be the primary diagnosis. Reimbursement for
trauma inpatient hospital services shall be limited to the lesser of the maximum allowable as
calculated by the appropriate per diem rate, or the hospital’s
billed charges minus any non-covered charges.
A list of all trauma centers in the state may be accessed at this website:
http://www2.tennessee.gov/health/ems/TraumaCenterInspections.htm
D. Surgical implants
These shall be reimbursed separately and in addition to the per diem hospital charges
pursuant to Rule 0800-2-18-.10 of the Medical Fee Schedule Rules. Additional reimbursement
may be made in addition to the per diem for implantables (i.e. rods, pins, plates and joint
replacements, etc.). Maximum reimbursement for implantables
billed at $100.00 or less per item shall be limited to eighty percent (80%) of billed charges.
Maximum reimbursement for implantables over $100.00 is limited to the hospital’s cost plus
fifteen percent (15%) of the invoice amount, up to a maximum of invoice plus $1,000.00 per
item. This is not cumulative. Implantables shall be billed using the appropriate HCPCS codes,
when available. Billing for implantables which have an invoice amount over $100.00 shall be
accompanied by an invoice. E. Non-covered charges
Non-covered items are: convenience items, charges for services not related to the work
injury/illness services that were not certified by the payer or their representative as medically
necessary.
F. Amounts in Addition to Per Diem Charges
The following items are not included in the per diem reimbursement to the facility and may be
reimbursed separately. All of these items must be listed with the applicable
CPT/HCPCS codes.
Durable Medical Equipment --- Items $100.00 or less, the maximum amount is 80% of billed
charges; over $100.00, the maximum amount is the manufacturer’s invoice amount
plus 15% of invoice, with the 15% capped at $1,000.00. This is NOT cumulative, but is per
item.
Orthotics and Prosthetics --- capped at 115% of the national Medicare allowable amount.
Implantables --- Items $100.00 or less, maximum is 80% of billed charges; over $100.00, the
maximum amount is the manufacturer’s invoice amount plus 15% of invoice, with the 15%
capped at $1,000.00. This is NOT cumulative, but is per item.
Ambulance Services --- capped at the lesser of the billed charges, or the average rate paid for
ambulance services within the same geographic area.
Take-home Medications and Medical Supplies --- Over-the-counter medications may be
reimbursed up to the usual and customary amount, 80% of billed charges. Prescription
drugs are reimbursable up to the lesser of the normal charge for the drug, or the AWP fee.
Medical Supplies shall be reimbursed pursuant to current Medicare guidelines up to 100% of
the Medicare allowable amount.
Radiology Services – technical component paid per medical fee schedule according to
applicable Medicare guidelines
Lab/Pathology Services --- maximum is the usual and customary amount, which is 80% of
billed charges.
The above-listed items are reimbursed in accordance with the Medical Cost Containment
Program Rules (Chapter 0800-2-17) and Medical Fee Schedule Rules (Chapter 0800-2- 18)
payment limits. Items not listed in the Rules shall be reimbursed at the usual and
customary rate as defined in Rule 080 0-2-17-.03(80), unless otherwise indicated in the
Medical Fee Schedule Rules. In-patient hospital per diem rates are all inclusive (with the
exception of those items listed above).
G. Reimbursement Calculations Explanation:
1. Each admission is assigned an appropriate DRG.
2. The applicable Standard Per Diem Amount (“SPDA”) is multiplied by the length
of stay (“LOS”) for that admission.
3. The Workers’ Compensation Reimbursement Amount (“WCRA”) is the total amount of
reimbursement to be made for that particular admission. Reimbursement Formula: LOS X
SPDA = WCRA
Example: DRG 222: Knee Procedures W/O CC
Hospital Peer Group: 1-Surgical admission:
Maximum rate per day: $1,800 first seven (7) days/$1,500 per day each day thereafter
Number billed days: 9
Billed charges: $15,600
Maximum Allowable Payment: $15,600
See Rule 0800-2-19-.03.
H. Stop-Loss Method
Stop-loss is an independent reimbursement factor established to ensure fair and reasonable
compensation to the hospital for unusually costly services rendered during
treatment to an injured worker.
To be eligible for stop loss payment, the total Allowed Charges for a hospital admission must
exceed the hospital maximum payment, as determined by the hospital maximum
payment rate per day, by at least $15,000. Amounts for items set forth in rule 0800-2- 19-.03
(2)(d)(4) such as implantables, radiology, pathology services, DME, etc., shall
NOT be included in determining the total Allowed Charges for stop-loss
calculations.
This stop-loss threshold is established to ensure compensation for unusually extensive
services required during an admission. Once the allowed charges reach the stop-loss threshold,
reimbursement for all additional charges shall be made based on a stop-loss payment factor of
80%. The additional charges are multiplied by the Stop-Loss
Reimbursement Factor (SLRF) and added to the maximum allowable payment.
The stop-loss formula: (Additional Charges x SLRF) + Maximum Allowable Payment =
WCRA
Example: DRG 222: Knee Procedures W/O CC
Hospital Peer Group: 1 – Surgical admission
Maximum rate per day: $1,800 for first 7 days; 1,500 for 2 additional days Number Billed
Days: 9
Total Billed Charges (minus amounts for implants, radiology, etc.): ...... $53,650.00
Maximum allowable payment for Normal DRG stay.................................... $15,600.00
Versus: billed charges ................................................................................... $53,650.00
Amount Payable Before Stop-Loss,
Lower of Charge vs. Maximum Allowable................................................... $15,600.00
Total difference, charges over and above maximum payments .................... $38,050.00
Difference over and above $15,000 Stop-loss is........................................... $23,050.00
Payable under Stop-loss (80% of $23,050.00)...............................................$18,440.00
Amounts due hospital for implants, radiology, etc..........…………………....$3,525.00
Total Payment
Due Hospital: .........................................15,600 + 18,440.00 + 3,525.00 = $37,565.00
See Rule 0800-2-19-.03(4).
I. Pre-admission Utilization Review
Payers are required to initiate utilization review for all inpatient admissions (length of stay
exceeding 23 hours) in the form of pre-admission review. If the duration of the inpatient stay
is longer than the number of days certified by pre-admission review, then
the payer shall implement concurrent review until discharge. For emergency inpatient
admissions, the payer shall begin retrospective review within one (1) business day of notice
of the admission. Review of outpatient stays is not required, but may be initiated
if a dispute regarding medical necessity exists.
The timeframes and other requirements of Chapter 0800-2-6 shall apply to all utilization
reviews of inpatient and outpatient admissions.

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