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By SCF
Arizona
 Maricopa
County Superior Court Judge Edward Burke ruled this month that
SCF Arizona paid a “reasonable amount” to two ambulatory
surgical centers, rejecting their demand that the state’s
leading workers’ compensation carrier pay 100 percent of
their billed charges. In a case of first impression, Judge Burke
refused to require SCF to pay full billed charges to two surgery
centers even though the parties had no contract.
“This court finds that [Canyon Surgery Center and El Dorado Surgery
Center] have received the reasonable value of their services
from SCF, if not more,” Burke wrote in his decision.
He further found that though the two health care providers produced
evidence that their charges were in line with what other ambulatory
surgery centers charge,
the correct standard for determining the “reasonable value” is
not what they charge, but what amount they are actually paid on their billed
charges.
“Because there is no regulation of what the [ambulatory surgical centers]
can charge, and as is the case in selling a home, the fair market value is not
the seller’s asking price, but what a seller actually accepts from a willing
buyer,” Burke wrote.
SCF retained attorneys Mark Worischeck and Debora Verdier from the Phoenix
law firm of Sanders & Parks, P.C., to represent it. Sanders & Parks,
P.C., specializes in complex litigation and represents a number of insurers,
both locally
and nationally.
“One thing we learned in trying these issues is that ‘charges’ in
the medical billing context are fictional and bear no relationship to the reasonable
value of the services. Only a small fraction of those payors who lack insurance
or bargaining power actually pay ‘charges,’” said Worischeck.
The Industrial Commission of Arizona’s Medical Fee Schedule does not
include ambulatory surgical centers. Nor are the charges of such centers regulated.
Thus,
ambulatory surgical centers are permitted to charge as much as they wish.
“This decision reinforces the need for checks and balances within the medical
system in order to ensure fair pricing,” said Don Smith, SCF Arizona’s
president & CEO.
The case started almost five years ago after SCF began subjecting the bills
received from the surgery centers with which SCF did not have contracts to
a review for
reasonableness. SCF reviews all medical bills it receives to ensure injured
workers are receiving the best possible and most appropriate treatment, as
well as to
be proactive in managing the high cost of medical fees.
Because the number of procedures being performed in surgery centers was increasing,
SCF retained Qmedtrix, a third-party bill review organization, to review the
bills from these non fee scheduled providers to determine the “reasonable
and accurate healthcare reimbursement.”
“As the guardian for the premiums SCF policyholders pay, it is our obligation
to review all bills submitted to us on behalf of injured workers and to question
those that appear to be out of line and to arrive at a reasonable solution,” Smith
said.
Despite already having received payment of $3.59 million for their services
rendered to injured workers insured by SCF, the companies sued SCF seeking
an additional
$4.69 million. In so doing, the companies asked the court to rule that their
billed charges were reasonable, even though they testified that in 85 percent
of cases they accept twenty-five cents on the dollar and SCF paid almost twice
that amount.
“The way medical services are coded and billed is very complex. Such complexities
foster a situation where a medical provider can ‘game the system’ to
allow for higher reimbursement, while still staying within the industry coding
and building guidelines. Thus, subjecting medical bills to a review for reasonableness
is necessary to control escalating health care costs,” Worischeck said.
An advisory jury heard the case last summer and recommended that SCF pay 70
percent of the billed charges. SCF challenged the jury’s recommendation as lacking
evidentiary support. Burke found that the jury’s recommended verdict was
arbitrary and that the two centers had failed to prove that their charges represent “the
fair market value” of their services.
“The only thing the court knows for certain is that the jury found that
100 percent of plaintiff’s billed charges are not the reasonable value
of their services,” Judge Burke wrote.
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