IN THE DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA FIFTH DISTRICT STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY,

Transcription

1 IN THE DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA FIFTH DISTRICT CASE NO.: 5D L.T. CASE NO.: 08-SC-17057; 08-SCm15504 SOCC, PL d/b/a SOUTH ORANGE WELLNESS AND INJURY CENTER a/a/o MICHELLE BADILLO, Appellant, V, STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellee. ANSWER BRIEF OF APPELLEEÿ STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY Respectfully submitted by, Carlos D. Cabrera, Esquire Florida Bar No John L. Morrow, Esquire Florida Bar No CONROY, SIMBERG, GANON, KREVANS, ABEL, LURVEY, MORROW & SCHEFER, P.A Hollywood Boulevard Second Floor Hollywood, Florida Phone: (954) Fax: (954)

2 CASE NO. 5D TABLE OF CONTENTS TABLE OF AUTHORITIES... iii PREFACE... 1 POINT ON APPEAL... 2 STATEMENT OF THE CASE AND FACTS... 3 SUMMARY OF THE ARGUMENT ARGUMENT THE TRIAL COURT WAS CORRECT 1N ENTERING FINAL SUMMARY JUDGMENT IN FAVOR OF STATE FARM AND AGAINST SOCC ON THE GROUNDS THAT STATE FARM IS ENTITLED TO APPLY NCCI EDITS AS A MATTER OF LAW AND THAT SOCC IMPROPERLY UNBLrNDLED THE BILLING OF ITS SERVICES RENDERED TO BADILLO AND GARCIA. I. Standard of Review li. The Trial Court Properly Held that STATE FARM was Entitled to Apply NCCI Edits as a Matter of Law A. The Legislature Adopted The Medicare Payment System In Enacting the Florida PIP Statute B. A Bill Not Submitted on the Proper Form and in Compliance with Accepted Billing Guidelines is Not Reasonable C. The Office of Inspector General Endorses and Adopts NCCI Edits D. SOCC's Bills Failed to Comply with NCCI Guidelines and Thus were Not Properly Submitted Pursuant to Section (5)(d) IIi. The Trial Court Properly Found that the Charges at Issue in this Case were Improperly Unbundled W. SOCC's Arguments are Without Merit... 28

3 CASE NO. 5Dli-783 A. The Charges at Issue are Not Payable Under the Worker's Compensation Fee Schedule Because STATE FARM Has Already Paid for the Treatment Under Medicare Part B B. STATE FARM Did Not Change Any CPT Codes, Therefore It had No Obligation to Contact SOCC before Issuing Its Payment C. The OIG Supports STATE FARM'S Application of NCCI Edits D. SOCC Mischaracterizes the NCCI Edits Applied by STATE FARM as Utilization Limits E. The PIP Statute incorporates NCCI by Its Reference to Medicare...34 CONCLUSION CERTIFICATE OF SERVICE CERTIFICATE OF COMPLIANCE ii

4 CASE NO. 5D TABLE OF AUTHORITIES Cases Barco v. Sch. Bd. of Pinellas County, 975 So. 2d 1116 (Fla. 2008)... 14, 32 Blish v. Atlanta Cas. Co., 736 So. 2d 1151 (Fla. 1999) Borden v. East-European Ins. Co., 921 So. 2d 587 (Fla. 2006) Derius v. Allstate Indem. Co., 723 So. 2d 271 (Fla. 4th DCA 1998) Este v. Sharp Electronics Corp., 409 So. 2d 217 (Fla. 4th DCA App 1982) Fla. State Racing Comm'n v. Bourquardez, 42 So. 2d 87 (Fla. 1949) Monticello Ins. Co. v. Baecher, 252 Va. 347 S.E. 2d 490 (1996) Perrin v. United Statesÿ 444 U.S. 37 (1979) Progressive Express ins. Co. v. Physical Med. Ctr., Inc., 2005 WL (Fla. 13th Jud. Cir. Ct. Oct. 27, 2005) Rollins v. Pizzarelli, 761 So. 2d 294 (Fla. 2000) Sharp v. United States, 14 F.3d 583 (Fed. Cir. 1993) State Farm Mut. Auto. Ins. Co. v. Sestile, 821 So. 2d 1244 (Fla. 2d DCA 2002) iii

5 CASE NO. 5D Thager v. State, 335 So. 2d 815 (Fla. 1976) United Auto. Ins. Co. v. Rodriguez, 808 So. 2d 82 (Fla. 2001)... 12, 13 Volusia Count,/v. Aberdeen at Ormond Beach, L.P., 760 So. 2d 126 (Fla. 2000) Young v. Progressive Southeastern Ins. Co., 753 So. 2d 80 (Fla. 2000) Statutes Florida Statute Florida Statute Florida Statute Florida Statute Florida Statute Florida Statute (1)(t) (15)... 3, , 10, (5) (5)(a)(1)... 13, 14, (5)(a)(2) Florida Statute (5)(a)(2)(f)... 14, 28 Florida Statute (5)(a)(4)... 31, 32, 34 Florida Statute (5)(b)... 16, 24 Florida Statute (5)(b)(1)... 23, 24, 27 Florida Statute (5)(b)(1)(d) Florida Statute (5)(b)(1)(e)... 3, 10, 11, 24, 29, 33 Florida Statute (5)(d)... 4, 16, 18, 19, 23, 24, 30 iv

6 CASE NO. 5D PREFACE In this Answer Brief, the Appellant, SOCC, PL d/b/a/ SOUTH ORANGE WELLNESS AND INJURY CENTER a/a/o MICHELLE BADILLO and a!a/o CARMEN GARCIA shall be referred to as "SOCC.''l The Appellee, STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY shall be referred to as "STATE FARM." Citations to Record on Appeal shall be made by citing to the volume followed by the page number, as follows: (V, p. ÿ. For this Court's ease of reference, STATE FARM has included an Appendix with the research materials cited herein that are difficult to obtain. Citations to the appendix shall be made by citing to the symbol "A" followed by the tab and page number; as follows: (A-). 1 At the trial level, SOCC filed two independent lawsuits, one for each respective assignor, Case Nos and 08-SC However, these cases were consolidated into Case No. 08-SC

7 CASE NO. 5D POINT ON APPEAL THE TRIAL COURT WAS CORRECT 1N ENTERING FINAL SUMMARY JUDGMENT IN FAVOR OF STATE FARM AND AGAINST SOCC ON THE GROUNDS THAT STATE FARM IS ENTITLED TO APPLY NCCI EDITS AS A MATTER OF LAW AND THAT SOCC IMPROPERLY UNBUNDLED THE BILLING OF ITS SERVICES RENDERED TO BADILLO AND GARCIA. 2

8 STATEMENT OF THE CASE AND FACTS CASE NO. 5Dll-783 This case arises from two separate lawsuits that were consolidated at the trial level that sought damages for STATE FARM'S failure to pay personal injury protection (PIP) benefits under Florida Statute While the facts of each lawsuit are different, the legal issues in both cases are the same. Specifically, this appeal arises from a final summary judgment in favor of STATE FARM and against SOCC on the grounds that SOCC improperly "unbundled''2 medical services when submitting its bills to STATE FARM. (VII, p ). The facts relevant to each assignor are as follows: Miehelle Badilln SOCC, a medical provider, treated Michelle Badillo (STATE FARM's insured), for injuries sustained in a March 5, 2008 motor vehicle accident. (I, p. 1-12). Ms. Badillo assigned to SOCC the rights and benefits under STATE FARM's 2 Under the Florida No-Fault Statute, an insurer is not required to pay a claim or charges "for any treatment or service that is upcoded, or "that is unbundled when such treatment or services should be bundled..." Fla. Stat (5)(b)(1)(e) (emphasis added). Florida Statute (15) defines "unbundling" as "an action that submits a billing code that is properly billed under one billing code, but that has been separated into two or more billing codes, and would result in payment greater in amount than would be paid using one billing code". As an example, a whole egg can be charged at 10. If the egg is "unbundled", or broken down into components, the charges could be 5 for the shell; 5 for the egg white, and 5 for the yolk. Under this example, the comprehensive, or allowable charge, would be 10 for the whole egg, which would mean the unbundled charges for the same egg for a total of 15 would be prohibited. 3

9 CASE NO. 5D1!-783 policy of Personal Injury Protection (PIP) insurance to receive payment from STATE FARM and sue in "the evem of any alleged nonpayment. (I, p.!-12). On March 12, 2008, SOCC billed STATE FARM for services rendered to Ms. Badillo under CPT3 Code (Range of Motion) and CPT Code (Chiropractic Manipulative Treatment; 3-4 regions). (ii, p ). On March 12, 2008, STATE FARM paid "the amounts billed for CPT Code but declined to pay the separate bill for CPT Code on the ground that, in paying for the comprehensive treatment, chiropractic manipulative treatment, it had already paid for the necessarily included component service, range of motion. (II, p ). Along with payment, STATE FARM provided SOCC with an Explanation of Review which alerted the provider that CPT Code was flagged by the National Correct Coding Initiative (NCCI) Comprehensive edit database with a superscript of '0', which indicates that the line item is disallowed, even if an appropriate NCCI modifier was present. (II, p ). STATE FARM further advised that the provider was to "review the bill to ensure the proper procedure code and modifier were reported." (II, p ). The Explanation of Review provided as the source, 3 The Florida No-Fault statute requires all statements and bills for medical services to be submitted in a properly completed Centers for Medicare and Medicaid Services (CMS) 1500 forms, among others, and shall follow the Physicians' Current Procedural Terminology (CPT), among others. See Fla. Stat (5)(d). 4

10 CASE NO. 5Dti overview, asp. (II, p ). In 1996, the CMS developed and implemented the National Correct Coding Initative in order to "promote correct coding of health care services by providers and to prevent Medicare payment for improperly coded services." Medicare's National Correct Codinÿ Initiative, Department of Health and Human Services Office of Inspector General report 0EI , p. i (September 2003) (hereinafter "OIG NCCI Report"). (A-l). The NCCI policies are based "on coding conventions defined in the AMA's Current Procedural Terminology (CPT) Manual, national and local Medicare policies and edits, coding guidelines developed by national societies, standard medical and surgical practice, and/or current coding practices". National Correct Coding Initiative Policy Manual for Medicare Services, CMS, p. viii, (version 13.3, 2006). (A-2). The manual specifically mentions unbundling, or fragmenting a single procedure into component part codes, as an example of incorrect coding that the NCCI seeks to rectify, and that physicians should not "unbundle services that are integral to a more comprehensive code." (A-l). It further provides pairs of codes that "should not be billed together by a provider for the same beneficiary on the same date of service." OIG NCCI Report at i. (A-l). These code pairs represent comprehensive and component codes, which should not be billed together. (A-l). 5

11 CASE NO. 5D On October t, 2008, SOCC sent a demand letter to STATE FARM seeking the principal sum of $150.00, which was received on October 7, (I, p. 1-12). STATE FARM responded by advising SOCC that it had paid the proper amount. (II, p ). Thereafter, SOCC filed suit against STATE FARM for failure to pay. (I, p. 1-12). Carmen Garcia SOCC also treated Carmen Garcia (STATE FARM's insured), for injuries received in a June 1, 2008, motor vehicle accident. (1V, p ). Ms. Garcia assigned to SOCC the rights to receive payment from STATE FARM and sue in the event of any alleged nonpayment under STATE FARM's policy of Personal Injury Protection (PIP) insurance. (IV, p ). On July 10, 16, 17, 18, 23 and 30, 2008, SOCC billed STATE FARM for services rendered to Ms. Garcia under both CPT Code , 2 units (Massage Therapy/Therapeutic Procedure) and CPT Code (Manual Therapy Technique). (IV, p ). STATE FARM paid the amount billed for the comprehensive treatment, manual therapy (CPT Code 97140), but declined to pay the separate charge for the necessarily included component treatment, massage therapy (CPT Code ). (IV, p ). Along with payment, STATE FARM provided SOCC with Explanations of Review which alerted the provider that CPT Code was flagged by the National Correct Coding Initiative 6

12 CASE NO. 5Dll-783 (NCCI) Comprehensive edit database with a superscript of ÿ0', which indicates that the line item is disallowed even if an appropriate NCC1 modifier was present. (IV, p ). STATE FARM further advised that the provider was to "review the bill to ensure "the proper procedure and modifier were reported." (IV, p ). The Explanation of Review provided as the source, overview, asp. (IV, p ). On October 10, 2008, SOCC sent a demand letter to STATE FARM seeking the principal sum of $500, which was received on October 13, (IV, p ). STATE FARM responded by advising SOCC "that it paid the proper amount. (IV, p ). Thereafter, SOCC filed suit against STATE FARM for failure to pay. (IV, p ). Disposition Below In November 2009, STATE FARM filed its motions for summary judgment in the Badillo and Garcia cases. (II, p ) (IV, p ). In support of its motions, STATE FARM filed the Affidavit of Denisha M. Torres-Lich, a Registered Health Information Administrator, who possesses specialized knowledge of coding based on the AMA and CPT Guidelines (II, p ). In Ms. Torres-Lich's Affidavit, she opined that SOCC improperly unbundled the

13 CASE NO. 5Dll-783 specific component CPT codes at issue pursuant to the NCCI edits. (II, p ). SOCC also filed its own summary judgment motion contending that the NCCI edits did not apply. (II, p ). In support of its motion, SOCC filed the affidavit of Bharon Joag, a Certified Professional Coder, which sets forth his opinion that the NCCI edits did not apply to the personal injury protection statute. (II, p ). 4 On March 24, 2010, the trial court entered a detailed Final Judgment in favor of STATE FARM and against SOCC, which set forth the undisputed facts of each case, SOCC's portion, STATE FARM's portion, and its Findings of Fact and Conclusions of Law. (VII, p ). No transcript of the hearing on "the summary judgment motion is available. In its Final Judgment, the trial court concluded that STATE FARM is entitled to apply NCCI edits as a matter of law because "Medicare Part B includes the National Correct Coding Initiative." It explained that, "[i]n essence, the legislature adopted the Medicare pay system and excluded out only those two sections that they did not want to apply to Florida law," and "[t]his means that all other Medicare guidelines, rules, and regulations should apply to subsection 5." 4 SOCC also filed the Affidavit of Jeffrey Shebovsky, D.C., and Julie Sepe, employees of SOCC, setting forth how they billed STATE FARM for the subject services. (II, p , ) 8

14 CASE NO. 5Dll-783 Accordingly, the NCCI amount for comprehensive and component codes billed for treatment performed on the same day to the same patient is the allowable amount under the participating physician's fee schedule for Medicare Pat B and therefore the amount payable under the PIP statute. (VII, p. 1286). In addition, the triad court concluded as a matter of law that SOCC improperly unbundled its services, in Badillo, when it billed for range of motion (under CPT Code 95859) separately from chiropractic manipulation treatments (under CPT 98941) and in Garcia, when it billed for manual therapy (under CPT Code 97140) and again for massage therapy (under CPT Code 97124). The trial court also certified the following question to this Court: (VII, p. 1289). Whether STATE FARM properly denied payment of Plaintiff Provider's unbundled component treatment charge, when it paid the more comprehensive treatment charge, pursuant to the National Correct Coding Initiative Comprehensive Edits Database (NCCI Edits) under Florida's No Fault (PIP) Statute, and when it did not contact the provider to discuss the same. This appeal followed. 9

15 CASE NO. 5D SUMMARY OF THE ARGUMENT The trial court was correct in emering final summary judgment in STATE FARM'S favor on the ground that STATE FARM was entitled to apply NCCI edits as a matter of law. The trial court was further correct in entering final judgment on the ground that SOCC improperly unbundled its services in violation of Florida Statute (5)(b)(1)(e) when it billed STATE FARM. Florida Statute (2008) dictates that bills submitted by a medical provider should be adjusted in "the same manner as if they were being adjusted by the Centers for Medicare and Medicaid Services (CMS). CMS implemented the National Correct Coding Initiative (NCCI) in January 1996 to promote national correct coding methodologies and to prevent improper coding leading to inappropriate payments in Medicare claims. The NCCI developed a database with the NCCI edits which are provided to carriers to evaluate claims when a provider bills for more than one service for the same beneficiary on the same date of service. Under the NCCI edits (which sets forth a list of comprehensive and necessarily included component codes), the codes at issue here for Michelle Badillo and Carmen Garcia were improperly billed. The code combination billed was disallowed and the use of a modifier was not permitted in order to bypass the edits. By virtue of billing these two codes on the same date of service for the same patient, SOCC improperly unbundled the services at issue in violation of Florida 10

16 CASE NO. 5D Statute (5)(b)(1)(e) and STATE FARM, therefore, had no obligation to pay the unbundled portion of the bills in dispute. In addition, none of the arguments raised by SOCC in its Initial Brief have any merit. First, SOCC's contention that the bills should have been paid under workers' compensation is wrong because the subject CPT Codes were not denied. Rather, "the component services were properly paid when STATE FARM paid the comprehensive CPT Code. Second, STATE FARM was not required to first contact SOCC before "changing" the component CPT Codes because STATE FARM never "changed" any codes. STATE FARM simply paid "the comprehensive code, which included the component code. Finally, SOCC's argument that application of the NCCI edits to the PIP statute results in limiting the number of treatments a provider can give to a patient is erroneous. The application of NCCI as a tool to discover unbundling does not result in a limitation on the treatment; at best, NCCI is a "payment limitation", which is properly authorized by the PIP statute. Based on all of the foregoing, the trial court correctly determined "that the NCCI edits apply to Florida's No-Fault Statute and that SOCC improperly unbundled its services. Accordingly, the Court should affirm the trial court's final judgment in STATE FARM'S favor. 11

17 CASE NO. 5D!t-783 ARGUMENT THE TRIAL COURT WAS CORRECT IN ENTERING FINAL SUMMARY JUDGMENT IN FAVOR OF STATE FARM AND AGAINST SOCC ON THE GROUNDS THAT STATE FARM IS ENTITLED TO APPLY NCCI EDITS AS A MATTER OF LAW AND THAT SOCC IMPROPERLY UNBUNDLED THE BILLING OF ITS SERVICES RENDERED TO BADILLO AND GARCIA. L Standard of Review An order granting summary judgment is reviewed under "the de novo standard of review. See Volusia Count,/v. Aberdeen at Ormond Beach, L.P., 760 So. 2d 126 (Fla. 2000). IL The Trial Court Properÿl Held that STATE FARM was Entitled to Apply NCCI Edits as a Matter of Law. The express language of the PIP statute demonstrates that insurers are permitted to use NCCI edits as a tool to determine whether charges billed for treatment to their insureds are reasonable as well as to uncover attempted unbundling or double billing. A. The Legislature Adopted The Medicare Payment System In Enacting the Florida PIP Statute. The Florida legislature intended to allow insurers to use the NCCI edits when it reenacted the PIP statute in The Supreme Court of Florida has repeatedly stated "that legislative intent "is the polestar that guides a court's inquiry under the Florida No-Fault Law. United Auto. Ins. Co. v. Rodriguez, 808 So. 2d 12

18 CASE NO. 5D , 85 (Fla. 2001); Blish v. Atlanta Cas. Co., 736 So. 2d 1151 (Fla. 1999). To discern legislative intent, the Court must "look ÿprimarily' to the actual language used in the statute." Borden v. East-European Ins. Co., 921 So. 2d 587 (Fla. 2006). "Where the wording of the Law is clear and amenable to a logical and reasonable interpretation, a court is without power to diverge from the intent of the Legislature as expressed in the plain language of the Law." i dd. The section of the PIP statute dealing with charges for treatment of insured begins with the language: Any physician, hospital, clinic, or other person or institution lawfully rendering treatment to an injured person for a bodily injury covered by personal injury protection insurance may charge the insurer and injured party only a reasonable amount pursuant to this section for the services and supplies rendered... Fla. Stat (5)(a)(1) (emphasis added). Thus, the starting point for reimbursement of all claims or charges submitted to an insurer is that they must be "reasonable".5 In determining the reasonableness of a claim, the insurer is entitled to look to "various federal and state medical fee schedules... and other 5 Significantly, Florida courts have held that in lawsuits challenging an insurer's reimbursement under the PIP statute, an insured (or its assignee) "bears the burden of proving the reasonableness of healthcare charges." Progressive Express Ins. Co. v. Physical Med. Ctr., Inc., 2005 WL (Fla. 13th Jud. Cir. Ct. Oct. 27, 2005) (citing State Farm Mut. Auto. Ins. Co. v. Sestile, 821 So. 2d 1244 (Fla. 2d DCA 2002)); Derius v. Allstate Indem. Co., 723 So. 2d 271 (Fla. 4th DCA 1998) ("In a lawsuit seeking benefits under [Section ], both reasonableness and necessity are essential elements of a plaintiff's case," and the burden of proof is on the insured). 13

19 CASE NO. 5Dll-783 information relevant to the reasonableness of the reimbursement." Section (5)(a)(1). Section (5)(a)(2) also provides that an "insurer may limit reimbursement to 80 percent of the following schedule of maximum charges." The schedules that follow are derived from Medicare. Indeed, the schedule for "other services" set forth in subsection (5)(a)(2)(f) provides that an insurer may pay "200% of the allowable amount under the participating physicians schedule of Medicare Part B.''6 The word "allowable," in common usage, means "permissible: not forbidden: not unlawful or improper." Sharp v. United States, 14 F.3d 583,587 (Fed. Cir. 1993) (citing Webster's Third New International Dictionary (1986)). "A fundamental canon of statutory construction is that unless otherwise defined, words will be interpreted as taking their ordinary, contemporary, common meaning." Perrin v. United States, 444 U.S. 37, 42 (1979); see also Barco v. Sch. Bd. Of Pinellas County, 975 So. 2d 1116, 1122 (Fla. 2008) (it is appropriate to refer to dictionary definitions to determine ordinary meanings); Rollins v. Pizzarelliÿ 761 So. 2d 294, 298 (Fla. 2000) ("When necessary, the plain mad ordinary meaning 'can be ascertained by reference to a dictionary"). Thus, the statutory reference to an 6 It should be noted that SOCC concedes that the codes at issue were all reimbursable under either the Medicare Part B fee schedule and/or the workers compensation fee schedule. Specifically, in its summary judgment motion, SOCC uses the 200% calculation and applies the fee schedules to arrive at the amounts it claims are due. (II, p (ÿ[ÿ 5,6, and 33)). 14

20 CASE NO. 5Dll-783 "allowable amount" under the participating physicians schedule refers to the "permissible" amount or "not forbidden" amount for that fee schedule. As the trial court properly concluded, with limited and inapplicable exceptions discussed below, ÿ'the legislature adopted the Medicare pay system." The amount paid to Medicare providers as the "allowable amount" is calculated based on NCCI edits. As the Centers for Medicare and Medicaid Services has stated: On December 19, 1989, the Omnibus Budget Reconciliation Act of 1989 (P.L ) was enacted. Section 6102 of P.L amended Title XVIII of the Social Security Act (the Act) by adding a new section 1848, "Paymem for Physicians' Services". This section of the Act provided for replacing the previous reasonable charge mechanism of actual, customary, and prevailing charges with a resource-based relative value scale (RBRVS) fee schedule that began in With the implementation of the Medicare Physician Fee Schedule, it was important to assure that uniform payment policies and procedures were followed by all carriers so that the same service would be paid similarly in all carrier jurisdictions. Accurate coding and reporting of services by physicians is a critical aspect of assuring proper payment. The Centers for Medicare and Medicaid Services (CMS) developed the National Correct Coding Initiative (NCCI) to promote national correct coding methodologies and to control improper coding that leads to inappropriate payment of Part B. Claims. "NCCI Policy Manual for Medical Services," Version 13.3, p. viii, xi; (A-2). 15

21 CASE NO. 5D11m783 In sum, in enacting the Medicare pay scheme, the Legislature intended Florida PIP payments to be based on the federal Medicare pay scheme] That necessarily includes the correct coding requirements contained in the NCCI edits. B. A Bill Not Submitted on the Proper Form and in Compliance with Accepted Billing Guidelines is Not Reasonable. The use of NCCI edits also is supported by additional sections of the Florida PIP Statute. Section (5)(b) identifies claims or charges that an insurer is not obligated to pay. Among them are charges "with respect to a bill or statement that does not substantially meet the applicable requirements of paragraph (d)." Fla. Stat (5)(b)(1)(d). Section (5)(d) provides, in relevant part: 7 STATE FARM notes that the Second and Fourth Districts have issued two recent decisions construing the Florida PIP statute. See Nationwide Mut. Fire Ins. Co. v. AFO Imaging, Inc., --- So. 3d ---, 36 Fla. L. Weekly D1463b (Fla. 2nd DCA, July 6, 2011); Kinÿsway Amigo Ins. Co. v. Ocean Health, Inc., --- So. 3d ---, 36 Fla. L. Weekly D1062 (Fla. 4th DCA, May 18, 2011). Both decisions are inapplicable to the question at hand. In Nationwide, the Second District ruled "that an insurer could not apply what it called a "distinct and separate component" of Medicare Part B, namely, the OPPS Medicare fee schedule, when paying MR! claims, instead of paying those claims pursuant to the participating physicians fee schedule for Medicare Part B. If anything, this decision supports STATE FARM'S position here because it presupposes that the Medicare regime, and specifically, the participating physicians schedule, applies to Florida PIP claims. As noted above, Medicare applies NCCI edits when paying the "allowable amount" under the participating physicians fees schedule. In ÿ, the Fourth District ruled that an insurer must elect in its insurance policy to depart from the default "reasonable" payment obligation of section (5)(a)(1). While STATE FARM does not believe such an "election" is required under the plain language of the PIP statute, the Court need not address that issue, which has no bearing on the resolution of this case. Rather, this case concerns proper billing and coding procedures and the statute's express unbundling prohibition. 16

22 CASE NO. 5D1 t-783 All statements and bills for medical services rendered by any physician, hospital, clinic, or other person or institution shall be submitted to the insurer on a properly completed Centers for Medicare and Medicaid Services (CMS) 1500 form, LIB 92 forms, or any other standard form approved by the office or adopted by the commission for purposes of this paragraph. All billing.s for such services rendered by providers shall to the extent applicable, follow the Physicians' Current Procedural Terminology ÿ or Healthcare Correct Procedural Coding System (HCPCS)s, or ICD-9 in effect for the year in which services are rendered and comply with the Centers for Medicare and Medicaid Services (CMS) 1500 form instructions and Healthcare Correct Procedural Coding System (HCPCS)... In determininÿ compliance with applicable CPT and HCPCS codinÿ guidance shall be provided by the Physician's Current Procedural Terminology (CPT) Editorial Panel or the Healthcare Correct Procedural Coding System (HCPCS) in effect for the year in which services were rendere& the Office of the Inspector General (OIG)9, Physicians' 8 The HCPCS was established in 1978 to provide "a standardized coding system for describing the specific items and services provided in the delivery of health care". "New CMS Coding Changes will Heal Beneficiaries", Medicare News, Dept. of Health & Human Services (Oct. 6, 2004) SGenInfo/Dowloads/HCPC SRe form.pdf. "Such coding is necessary for Medicare, Medicaid, and other health insurance programs to ensure that insurance claims are processed in an orderly and consistent manner. Initially, use of the codes was voluntary, but with the implementation of the Health Insurance Portability and Accountability Act of 1996 (HIPPA) use of the HCPCS for transactions involving health care information became mandatory." Id. 9 The Office of the Inspector General (OIG) is part of the Federal Governments Department of Health and Human Services which includes Medicare. The OIG's mission, as mandated by Public Law (as amended), is to protect the integrity of Department of Health and Human Services (HHS) programs, as well as the health and welfare of the beneficiaries of those programs. The OIG has a responsibility to report both to the Secretary and to the Congress, about program and management problems and recommendations to correct them. 17

23 CASE NO. 5D Compliance Guidelines, and other authoritative treatises designated by rule by the Agency for Healthcare Administration... For purposes of paragraph (4)(b), an insurer shall not be considered to have been furnished with notice of the amount of covered loss or medical bills due unless the statements or bills comply with this paragraph, and unless the statement or bills are properly completed in their entirety with all relevant information being provided therein. Fla. Stat, (5)(d) (emphasis added). Read in concert with section 5(b), in order for a bill to be reasonable and payable, a bill must be submitted on proper forlns and in compliance with accepted coding guidelines. Moreover, to determine whether a provider has properly submitted a bill to a PIP insurer, the statute mandates that guidance "shall" be provided by the Office of Inspector General. Of critical importance to this case are the commas preceding and following the phrase "the Office of the Inspector General (OIG)". These commas indicate that the O1G is one of the enumerated sources insurers "shall" consult, in addition to the CPT, HCPCS, the Physicians Compliance Guidelines, and "other authoritative treatises" designated by the Agency for Healthcare Administration. See Fla. State Racing Comm'n v. Bourquardez, 42 So. 2d 87 (Fla. 1949) ("The legislature is presumed to know meaning of words and the rules of grammar, and the only way the court is advised of what the legislature intends is by giving the The O1G's duties are carried out through a nationwide network of audits, investigations, inspections and other mission-related functions performed by OIG components. "Medicare's National Correct Coding Initiative", Dept. of Health and Human Services, Office of Inspector General, (Sept. 2003) (OEI ). 18

24 CASE NO. 5D generally accepted construction, not only the phraseology of an act but to the manner in which it is punctuated"). Therefore, if the OIG, in any of its rules, publications, or reports, endorsed or adopted the use of the NCCI edits, then section (5)(d) requires STATE FARM to apply the NCCI edits to determine whether it was reasonable for SOCC to submit charges, in Badillo, for manipulation (under CPT Code 95859) separate and apart from the charges for chiropractic manipulation treatments for 3-4 areas (under CPT 98941) and in Garcia, when SOCC billed for manual therapy (under CPT Code 97140) separate and apart from massage therapy (under CPT Code 97124). C. The Office of Inspector General Endorses and Adopts NCCI Edits. As discussed above, the NCCI was created by the CMS, which is an agency of the Department of Health and Human Services (HHS). The OIG also is an agency of HHS, whose mission is "to protect the integrity of [HHS] programs as well as the health and welfare of program beneficiaries." ( The OIG functions as a watchdog and comments, as a neutral observer, on the effectiveness of programs implemented by the various HHS agencies. The NCCI, as a program implemented by CMS, falls within the purview of the OIG. 19

25 CASE NO. 5Dll-783 The OIG specifically adopted and endorsed the NCC[ edits in its Supplemental Compliance Program Guidance for Hospitals': CMS developed the National Correct Coding initiative... to promote correct coding methodologies. The NCCI identifies certain codes that should not be used together because they are either mutually exclusive or one is a component of another. If a hospital uses code pairs that are listed in the NCCI and those codes are not detected by the editing routines in the hospital's billing system, the hospital may submit duplicate or unbundled claims. Intentional manipulation of code assignments to maximize payments and avoid NCCI edits constitutes fraud. Unintentional misapplication of NCCI coding and billing guidelines may also give rise to overpayments or civil liability for hospitals that have developed a pattern of inappropriate billing. To minimize risk, hospitals should ensure that their coding software includes up-todate NCCI edit files. Supplemental Compliance Program Guidance for Hospitals. Vol. 70, No. 19, Fed. Reg. 4858, (2005); (A-3). The OIG further referenced and endorsed the use of the NCCI edits in the "OIG Compliance Program for Individual and Small Group Physician Practices": The creation of compliance program guidances is a major initiative of the OIG in its effort to engage the private health care community in preventing the submission of erroneous claim and in combating fraudulent conduct. a. Coding and Billing: A major part of any physician practice's compliance program is the identification of risk areas associated with coding and billing. The following risk areas associated with billing have been 20

26 CASE NO. 5D among the most frequent subjects of investigations and audits by the OIG, including: Unbundling (billing for each component of the service instead of billing or using an all-inclusive code);iv O 18 Failure to properly use coding modifiers; Clustering; and o Upcoding the level of service provided,2 i7 Unbundling is the practice of a physician billing for multiple components of a service that must be included in a single fee. For example, if dressings and instmmems are included in a fee for a minor procedure, the provider may not also bill separately for the dressings and instruments. is A modifier, as defined by the CPT-4 manual, provides the means by which a physician practice can indicate a service or procedure that has been performed has been altered by some specific circumstance, but not changed in its definition or code. Assuming the modifier is used correctly and justification for payment for those services. For correct use of modifiers, the physician practice should reference the appropriate sections of the Medicare Provider Manual. See Medicare Carrier Manual Section For general information on "the correct use of modifiers, a physician practice can consult the National Correct Coding Initiative (NCCI). See Appendix F for information on how to download the NCCI edits. The NCCI coding edits are updated on a quarterly basis and are used to process claims and determine payments to physicians. 21

27 CASE NO. 5D Upcoding is billing for a more expensive service than the one actually performed. For example, Dr. X intentionally bills at a higher evaluation and management (E&M) code than what he actually renders to the patient. "OIG Compliance Program for Individual and Small Group Physician Practices." Federal Register 65:194 (Oct. 5, 2000)p , 59439; (A-4). OIG'S guidance with respect to modifiers further demonstrates its endorsement of the NCCI edits. As explained in an information sheet for providers: When programs such as the National Correct Coding Initiative (CCI) are developed, CMS recognizes that there will be exceptions to "the basic rules, in order to identify when a coding combination meets "the exception criteria, modifiers are used. Provider Education, Medicare Part B. (A-5). Thus, modifiers are only used to explain why a treatment falls within an exception to the rule that a component service may not be unbundled from a comprehensive service. OIG NCCI Report, at i ("Under certain circumstances, a provider may include a modifier which would allow both services in a comprehensive/component code pair or a mutually exclusive code pair to be paid."). (A-I). The concepts of unbundling and modifiers are therefore intertwined, such that the reference to "the NCCI edits in the OIG Compliance Program for Individual and Small Group Physician Practices 22

28 CASE NO. 5D guidelines is a clear indication that the OIG endorses use of the NCCI edits to ensure compliance with proper billing practices. Finally, the OIG'S adoption and endorsement of the NCC[ edits is evidenced in the OIG NCC[ Report, in which the OIG approvingly concludes that "the automated National Correct Coding Initiative appears to effectively prevent Medicare payments for nearly all services that meet the criteria for denial based on the CCI edits." Idÿ at iii; see also id, at 6 ("Medicare carriers are required to apply [the NCC][] edits to Part B services they process for payment."). Hence, it is clear from these publications that the OIG has endorsed and adopted the NCCI in its published guidelines. Pursuant to section (5)(d), the NCCI edits therefore may be used as guidance for insurers to determine whether claims and charges have been properly submitted. Those that have not been properly submitted are not deemed reasonable and an insurer is under no obligation to pay them, pursuant to section (5)(b)(1). D. SOCC'S Bills Failed to CompLy with NCCI Guidelines and Thus were Not Properly Submitted Pursuant to Section (5)(d). SOCC'S bills for which it seeks reimbursement failed to comply with NCCI'S guidelines. Not only did SOCC fail to follow the strictures of the statute but tried to charge more than the maximum amount allowed by law. STATE FARM paid SOCC for the comprehensive code in Badillo and Garcia's respective claims. As a result of SOCC'S failure to properly submit its bills for the dates of 23

29 CASE NO. 5D service in question, the trial court was correct in entering final judgment in STATE FARM'S favor. III. The Trial Court Properly Found that the Charÿes at Issue in this Case were Improperly Unbundled. Section (5)(b) provides independent ground for affirming the trial court. As discussed, the purpose of NCCI edits is to determine whether a provider has billed and coded correctly - as opposed to engaging in improper unbundling of bundled CPT codes. Section (5)(b)(1) provides that an insurer is not required to pay treatment or services that are upcoded or unbundled when such treatment or service should be bundled: For any treatment of service that is upcoded, or that is unbundled when such treatment or services should be bundled, in accordance with [section (5)(d)]. To facilitate prompt payment of lawful services, an insurer may change codes that it determines to have been improperly or incorrectly coded or unbundled, and may make payment based on the changed codes, without affecting the right of the provider to dispute the change by the insurer, provided that before doing so, the insurer must contact the health care provider and discuss "the reasons for the insurer's change and the health care provider's reason for the coding, or make a reasonable good faith to do so, as documented in the insurer's file... Fla. Stat (5)(b)(1)(e) (emphasis added). "Unbundling" is defined in the statute as "an action that submits a billing code that is properly billed under one billing code, but that has been separated into two or more billing codes, and would 24

30 CASE NO. 5Dll-783 result in payment greater in amount than would be paid using one billing code." Fla. Star (15). The NCCI system requires that physicians report services correctly and mandates that physicians must not unbundle and that a physician should not fragment a procedure into component parts. Id. This is further demonstrated by the requirements of the CMS: The CMS developed the National Correct Coding Initiative (NCCI) to promote national correct coding methodologies and to control improper coding leading to inappropriate payment in Part B claims. The CMS developed its coding policies based on coding conventions defined in the American Medical Association's CPT manual, national and local policies and edits, coding guidelines developed by national societies, analysis of standard medical and surgical practices, and a review of current coding practices. The CMS annually updates the National Correct Coding Initiative Coding Policy Manual for Medicare Services (Coding Policy Manual). The Coding Policy Manual should be utilized by all carriers as a general reference tool that explains the rationale for NCCI edits. Carriers implemented NCCI edits within their claim processing systems for dates of service on or after January 1, 1996, The purpose of the NCCI edits is to prevent improper payment when incorrect code combinations are reported. The NCCI contains two tables of edits. The Column One/Column Two Correct Coding Edits1 table and the 10 The NCCI edits explains the Column One/Column Two Correct Coding Edits: The columnl/colunm2 correct coding table contains two types of code pair edits. One type contains a column 2 (component) code which is an integral part of the column 1 (comprehensive) code. If two codes 25

31 CASE NO. 5Dll-783 Mutually Exclusive Edits table include code pairs that should not be reported together for a number of reasons explained in the Coding Policy Manual. "National Correct Coding Initiative Edits: Overview." <https//: In simplest terms, the purpose of the NCCI edits is to sort codes in order to identify codes that have been unbundled. The obvious reason why "this is done is of a code pair edit are billed by the same provider for the same beneficiary for the same date of service without an appropriate modifier, the column 1 code is paid, and not column 2. What exactly does "column 1" mean in the column i/column2 correct coding edits table and in "the mutually exclusive edits table? Answer: Formerly known as the "comprehensive code" within the column l/column 2 correct coding edits table, the column 1 code generally represents the major procedure or service when reported with the column 2 code. When reported with the column 2 code, "column 1" generally represents the code with the greater work RVU of the two codes.. However, within the mutually exclusive edits table, "colunm 1" code generally represents the procedure or service with the lower work RVU, and is the payable procedure or service when reported with the column 2 code. Each code pair (columnl/column2 correct coding edits and mutually exclusive code edits) is assigned a correct coding modifier indicator of either a "0", "1", or "9". The "0" indicator means that no modifiers associated with the CCI are allowed to be used with this code pair, there are no circumstances in which both procedures of the code pair should be paid. The "1" indicator means that the modifiers associated with the CCI are allowed with this code pair when appropriate. "What is the columnl/column2 correct coding edit table?" id/3373/-/what-is-the-column- 1/column-2-correct-coding-edit-table%3F. 26

32 CASE NO. 5D to prevent a medical provider from charging more than they are allowed to charge. Going back to the example of the whole egg, the whole egg can be charged at 10 as the allowable amount under Medicare Part B, but instead it is billed and broken down into component charges for the shell 5 ; egg white 5 and yolk 5. The comprehensive charge (the allowable amount) is 10 but unbundled the same egg costs 15, or more than the allowable amount. Therefore, in determining the allowable amount to be paid under Medicare Part B, the NCCI edits are applicable to prevent providers from billing unbundled services. Based on the express language of (5)(b)(1), the insurer is entitled to determine whether the medical provider submitted its bills with unbundled services when it should have been bundled. By including an "unbundling" prohibition in the statute, the Florida legislature clearly intended to prevent reimbursement for duplicative charges by prohibiting providers from unbundling claims for treatments performed as a component of a more comprehensive treatment. It would be a curious result indeed if the Florida legislature gave insurers the right not to pay an unbundled claim or charge but did not intent to allow them to use tools such as NCCI edits to help determine whether a claim has been improperly unbundled. Based on all of the foregoing, the trial court correctly concluded that the Florida No-Fault statute does not allow a provider to unbundle services when it should have been bundled for services rendered on the same date of service. Here, 27

33 CASE NO. 5Dll-783 SOCC not only failed to follow the strictures of the statute but tried to charge more than the maximum amount allowable by law. STATE FARM paid the provider for the comprehensive code in Badillo and Garcia's respective claims, but correctly declined to pay for the unbundled component amount, because to have done so would have been to accede to double billing, thereby wasting the insureds' benefits. Because the trial court correctly held that SOCC engaged in improper unbundling, this Court should affirm the trial court's final summary judgment in STATE FARM's favor and against SOCC. IV. SOCC'S Arguments are Without Merit. A. The Charges at Issue are Not Payable Under the Worker's Compensation Fee Schedule Because STATE FARM Has Already Paid for the Treatment Under Medicare Part B. In its Initial Brief, SOCC raises several arguments that have no merit. First, SOCC argues that if the NCCI edits disallow payment under Medicare Part B, STATE FARM should have paid under worker's compensation. In support of this argument, SOCC cites to Florida Statute (5)(a)(2)(f): For all other medical service, supplies, and care, 200 percent of "the allowable amount under "the participating physicians schedule of Medicare Part B. However, if such services, supplies, or care is not reimbursable under Medicare Part B, the insurer may limit reimbursement to 80 percent of the maximum reimbursable allowance under workers' compensation, as determined under s and rules adopted thereunder which are in effect at the time such services, supplies, or care is provided. Services, supplies, or care that is not reimbursable under 28

34 CASE NO. 5D Medicare or workers' compensation is not required to be reimbursed by the insurer. Based on this clear language, in order for the service to be paid under workers compensation, the service must not be reimbursable under Medicare Part B. Here, SOCC billed a CPT code which was for a particular service that was reimbursable under Medicare Part B. As a result, the section SOCC relies on is inapplicable. Furthermore, since the service is reimbursable under Medicare Part B, the unbundling prohibition applies. To accept SOCC'S position would essentially gut the intent of the unbundling prohibition. Surely, this was not the intent of the legislature. B. STATE FARM Did Not Change Any CPT Codes, Therefore It had No Obligation to Contact SOCC Before Issuing Its Payment. SOCC also argues that if its coding was improper, it used the modifier of (- 59) to indicate it was a separate and distinct service performed and that STATE FARM, by not paying that code, "changed" the codes and never contacted SOCC as required under (5)(b)(1)(e)]1 This argument also has no merit because 11 Florida Statute (5)(b)(1)(e)provides: For any treatment or service that is upcoded, or that is unbundled when such treatment or services should be bundled, in accordance with paragraph (d). To facilitate prompt payment of lawful services, an insurer may change codes that it determines to have been improperly or incorrectly upcoded or unbundled, and may make payment based on the changed codes, without affecting 29

35 CASE NO. 5Dll-783 STATE FARM did not change any codes. Rather, it simply paid for the comprehensive treatment and denied payment for the component treatment that was unbundled and improperly billed. Because STATE FARM did not change a code, there was no obligation that STATE FARM contact SOCC to discuss the reasons for changing a code. C. The O1G Supports STATE FARM'S Application of NCCI Edits. SOCC next argues that the reference to "the OIG in (5)(d) does not compel the use of NCCI edits in the Florida No-Fault statute. This argument, however, misconstrues the statutory provision. As discussed above, (5)(d) directs providers and the court that, in "determining compliance with applicable CPT and HCPCS coding, guidance shall be provided by...the Office of Inspector General..." Fla. Stat (5)(d) (emphasis added). As further discussed above, the OIG clearly requires the use of the NCCI edits to prohibit providers from unbundling and overbilling. the right of the provider to dispute the change by "the insurer, provided that before doing so, the insurer must contact "the health care provider and discuss the reasons for the insurer's change and the health care provider's reason for the coding, or make a reasonable good faith effort to do so, as documented in the insurer's file. 30