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Shaw Chiropractic
A Medical-Legal Newsletter for Personal Injury Attorneys
by Dr. Steven W. Shaw

"Usual, Customary and Reasonable" Fees: Who decides What They Are?

The newest ploy by insurance carriers to reduce the value of your client’s case is to suggest that the medical specials were inflated by fees which are above the usual, customary and reasonable schedules (UCR). The truth is that this may be new territory for the personal injury attorney but for physicians it is an old trick used by the insurance industry which is being revisited again to undermine the value of your client’s case as well as to discredit the treating physician’s integrity. In this newsletter, I will address the commonly used tactics by carriers and the best way to protect your client’s interests.

Many insurance companies use the UCR reduction justification on every claim even if they haven’t referenced a UCR schedule. I recall in the early 80's when I was charging $65 per visit and my friend, another chiropractor, was charging $105 for the same services. Prudential Insurance Company would reduce my visit fee by $5 siting UCR reductions. My friend who billed using the same codes received a UCR reduction as well. However, his reduction was not $45 dollars as one would reasonably expect. Rather, it was the same $5 by which my fees were reduced. The point is that the adjuster who pays the bills is supervised by people who reward them for reducing bills and penalize them for paying bills regardless of the appropriateness of the fee. As one adjuster told me during an appeal process. "Doc, you’ve got to throw me a bone and let me save face with my supervisor." He also recommended that I raise my fees so that he had room to impress his boss while keeping me out of his hair.

Some carriers have developed their own "UCR" schedules. These schedules are often nothing more than an internal management decision to set fees. These internal "UCR" fees schedules usually have no survey basis and therefore when challenged are reversed and payment made. Sometimes they adamantly defend the UCR schedule but indicate that they can not send any information about their schedule indicating that it is proprietary. This is unacceptable and would probably be of interest to the insurance commissioner who would likely frown on unsupported fee setting by a carrier.

Most insurance companies use outside sources of claims review and reduction. Frequently used companies include MedData or AccuData. Companies like these use fee schedules based upon their own surveys which are supposed to be independent. However, if their only clients are the insurance companies how independent can they be? In fact, neither you nor I could have access to their "independent" surveys to determine if the survey process takes into consideration many important factors.

To challenge erroneous fee reductions you must challenge the UCR schedules used by the carriers. To do this you must demand the questions below be addressed in writing. By doing so you will convince the adjustor that you are familiar with their game. More importantly, you will inform the adjustor that you also have UCR fee schedules which arrive at significantly different figures. You will inform them that your data is from an independent source and scientifically collected to represent valid results. The questions below will undermine their survey data and hopefully end the matter quickly.

1. What was the sample size for each CPT code?
2. What types of physicians were surveyed?
3. When was the survey last updated?
4. Are there geographic conversion tables available?
5. Were Medicare/Medicaid fees included in the survey?
6. What percentile was considered to be UCR?
7. Who funded the survey?
8. Who owns the survey company?
9. Are the survey results available to any willing purchaser?
10. How were the surveys performed and distributed?
11. What was the method of data interpretation?
12. Was any of the survey data excluded and why?
13. How was it determined which doctors would be surveyed?

We have found that often times there is an appeal process which generally allows for increased reimbursement although still less the charged fees. Recently, some carriers have sent letters to the clients indicating that if the physician tries to collect the fee difference they will "protect their rights" by reporting the doctor to the insurance commissioner or at least represent them at a hearing. We have accepted the carriers challenge and offered support our patients by fighting the carrier using the nationally accepted fee schedules of Fee Facts and PMIC.

Before you begin to challenge the carriers I recommend you make sure that the physicians fees are within UCR guidelines. There are several publications available which do factually independent fee surveys. The two that we use in our offices are FEE FACTS and PMIC. Fee Facts is published semi-annually by Data Management Ventures Inc of Atlanta Georgia and is available by subscription for about $100.00. They survey rehabilitation professionals from around the country and determine the appropriate fees based upon the geographic territory. PMIC (Practice Management Information Corporation) uses a much larger sampling of data and does not limit their surveys to rehabilitation specialists. Their publication is titled PHYSICIAN FEES: A Comprehensive Guide For Fee Schedule Review And Management 1997. They publish their book annually and give the 50th, 75th and 90th percentile for every Current Procedural Terminology (CPT) code in the annually revised CPT manual. PMIC takes these fees and uses regional conversion factor to adjust for geographic variations in physician fees. PMIC also shows what the Medicare Allowable Charge (MAC) should be although this has no bearing on the non-Medicare patient schedules.

Regardless, your clients need to understand that in the absence of a managed care contract a physician or any other professional has the right to set their own fees. One would hope that they are reasonable although these days I am not sure what reasonable really means. I encourage you to challenge adjusters with the questions above and to assure that your client’s injuries are not diminished. Don’t allow an overzealous adjustor reduce your client’s case settlement value by accusing the doctor of overcharging or over treating if in fact the surveys say otherwise. Call me if you need more information on this topic.

I have summarized the most commonly used procedure codes used by our offices along with their respective UCR schedules. They have been organized into a easily usable laminated master. This laminated master can be used when corresponding with insurance companies on behalf of your clients. Along with the master I have included some sample paragraphs which we have used when corresponding with adjustors who need to be educated on UCR and coding guidelines. If you would like a copy please contact my office at 1-800-232-OUCH (6824).