Reasonableness of Fees

Reasonableness Of Fees under the Wisconsin Worker’s Compensation Act

Section 102.16 (2), Wis. Stats., provides for the establishment of a formula to determine whether a fee charged by a health care provider is reasonable.  It also prohibits a health services provider from collecting the disputed fee from the employee after the provider is notified of the fee dispute.  Section 80.72 of the Wisconsin Administrative Code establishes procedures for resolving reasonableness of fee disputes.

The “Formula Amount”

Since July 1, 1992, the Department has certified databases which list fees procedures charged by providers. The databases are primarily complied and sorted by Current Procedural Terminology code (CPT code), or other similar coding which is systematically collected, assembled and updated, and which does not include procedures charged under Medicare.  Each certified database lists a dollar amount (called the “formula amount”) for each code.  The formula amount for health care services provided on and after April 17, 2012 is the arithmetic mean of all the fees in the database, plus 1.2 standard deviations from the mean, in a particular region of the state, for a specific code.  For example, if all provider charges in the database for a certain medical procedure were represented by a perfect, bell-shaped curve, the formula amount (that is, 1.2 standard deviations from the mean) would be approximately the 88.5th percentile.  For health care services provided from March 30, 2004 through April 16, 2012 the formula amount is the arithmetic mean, plus 1.4 standard deviations from the mean.

A fee less than the formula amount is reasonable.  A fee more than the formula amount is unreasonable unless the health service provider proves to the satisfaction of the department that a higher fee is justified because the service provided in the disputed case was “more difficult or more complicated than in the usual case.”

After a fee dispute is submitted to the department, the insurer or self-insured employer shall provide the department with information on fees charged by other health service providers for comparable services.  The insurer or self-insured employer shall obtain the information on comparable fees from a database that is certified by the department.  If the insurer or self-insured employer does not provide the information required, the department shall determine that the disputed fee is reasonable and order that it be paid.  If the insurer or self-insured employer provides the information required, the department shall use that information to determine the reasonableness of the disputed fee.

The department shall determine that a disputed fee is reasonable and order that the disputed fee be paid if that fee is at or below the mean fee for the health service procedure for which the disputed fee was charged, plus 1.2 standard deviations from that mean, as shown by data from a data base that is certified by the department.  Unless the health service provider proves to the satisfaction of the department that a higher fee is justified because the service provided in the disputed case was more difficult or more complicated to provide than in the usual case, the department shall determine that a disputed fee is unreasonable and order that a reasonable fee be paid if the disputed fee is above the mean fee for the health service procedure for which the disputed fee was charged, plus 1.2 standard deviations from that mean, as shown by data from a database that is certified by the department

If an insurer or self-insured employer, that disputes the reasonableness of a fee charged by a health service provider, cannot provide information on fees charged by other health service providers for comparable services because the data base to which the insurer or self-insured employer subscribes is not able to provide accurate information for the health service procedure at issue, the department may use any other information that the department considers to be reliable and relevant to the disputed fee to determine the reasonableness of the disputed fee.

The department may use only a hospital radiology database that has been certified by the department to determine the reasonableness of a hospital fee for radiology services.

The department may set aside, reverse or modify a determination within 30 days after the date of the determination for any reason.  The department may set aside, reverse or modify a determination within 60 days after the date of the determination based on grounds of a mistake.  A health service provider, insurer or self-insured employer that is aggrieved by a determination of the department may seek judicial review of that determination in the same manner that compensation claims are reviewed under s. 102.23.Stats.

Submitting Disputed Fees

For the department to determine whether or not a fee is reasonable under s. 102.16 (2), Stats., a provider shall file a written request (Reasonableness of Fees Dispute Resolution Form WKC-9498 ) to the department to resolve the dispute within 6 months after an insurer or self-insurer first refuses to pay.  The provider must also furnish a copy of the request and all attachments to the insurer or self-insured employer.

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

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

The insurer or self-insurer shall file an answer with the department, and send a copy to the provider, within 20 days from the date of the department's notice of dispute. The answer shall include:

  1. Copies of any prior correspondence relating to the fee dispute which the provider has not already filed.
  2. Information from a certified data base on fees charged by other providers for comparable services or procedures which clearly demonstrates that the fee in dispute is beyond the formula account for the service or procedure.
  3. An explanation of why the service provided in the disputed case is not more difficult or complicated than in the usual case.

The department shall examine the material submitted by all parties and issue its order resolving the dispute.

The department shall send a copy of the order to the provider, the insurer-or self-insurer and the employee. If the fee dispute involves a claim for which an application for hearing is filed under s. 102.17, Stats., or an injury for which the insurer or self-self-insured disputes the cause of the injury, the extent of disability, or other issues which could result in an application for hearing being filed, the department may delay resolution of the fee dispute until a hearing is held or an order is issued resolving the dispute between the injured employee and the insurer or self-insurer.

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