Fee Schedule Frequently Asked Questions
Arizona Physicians' & Pharmaceutical Fee Schedule
Frequently Asked Questions
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What is the authority under which the schedule of fees is set?
Since 1925, when the Arizona Legislature passed the State's first Workers' Compensation Act ("Act"), the Industrial Commission of Arizona ("Commission") has administered the workers' compensation laws of that Act. The Act includes the authority of the Commission to set a schedule of fees to be charged by physicians, physical therapists, and occupational therapists attending injured employees. See A.R.S. § 23-908(B). The Arizona Legislature amended A.R.S. § 23-908 in 2004 to include the setting of fees for prescription medicines required to treat an injured employee.
What is the methodology used by the Commission to establish its schedule of fees?
The Commission has transitioned to an RBRVS reimbursement system which calculates fee by multiplying resources required to perform a service with a dollar value conversion factor. The RBRVS fee schedule used the following two-step methodology to compute reimbursement values for all service codes included in the 2017 ICA Fee Schedule:
- Assign RVUs to each service code
The first step in transitioning to an RBRVS based fee schedule required the development of RVUs for each service code included in the current Arizona workers’ compensation fee schedule. This was done using one of the four methods stated below:
- RVUs in the Medicare Physician Fee Schedule and BUs in the Anesthesia Base Units schedule. The Medicare Physician Fee Schedule (MPFS) is an RBRVS fee schedule used by CMS to reimburse Medicaid physician cost. It consists of RVUs created by the American Medical Association (AMA). The CY 2017 MPFS was used as the preliminary source of assigning RVUs to all service codes. In addition to the main MPFS, the Anesthesia Base Units schedule, a separate fee schedule maintained by CMS, was used to assign units to all anesthesia service codes included in the Arizona workers’ compensation fee schedule.
After this step, the codes remaining were either Arizona-specific codes, CPT codes without published RVUs, or codes not included in the MPFS. Following are the three alternate methods that were used to assign RVUs to the remaining codes.
- RVUs in the Office of Worker’s Compensation Program Fee Schedule. The second method used the Federal Department of Labor’s Office of Workers’ Compensation Program (OWCP) FY 2015 fee schedule to supply RVUs for all the remaining codes. The OWCP, uses the same measure as the PFS to reimburse medical services based on relative value units (RVUs) and was used to generate RVUs for most of the remaining codes not found in the MPFS.
- Calculated Using Maximum Allowable Rates (Clinical and Diagnostic Laboratory fee schedule). This method was used to assign RVUs to most pathology and laboratory service codes included in the current Arizona fee schedule. The 2016 Clinical and Diagnostic Laboratory (CDL) fee schedule publishes state specific dollar value reimbursements for pathology and laboratory service codes. RVUs were created for these dollar values by dividing them with the current CMS conversion factor.
- Back-filling. Lastly, the back-fill method was used to assign RVUs to all service codes that had a current ICA rate but could not be assigned RVUs using the three methods stated above. This method involved backing into overall RVUs using the current ICA rate. Dividing the current ICA rate by the budget neutral conversion factor delivered RVUs for these remaining codes.
- Conversion factor
Once RVUs were assigned to all service codes, the next step involved using an Arizona-specific conversion factor to calculate dollar value reimbursement rates for those relative unit values. A multiple conversion factor model was identified as most feasible for use in the ICA fee schedule consisting of one conversion factor for Anesthesia services, one for Surgery and Radiology and a third for all remaining service categories including E&M, Pathology and Laboratory, Physical Medicine, General Medicine, Special Services and Category III services.
To arrive at the conversion factor, payments were calculated based on the 2015 workers’ compensation claims and ICA rates to estimate the expected payments, considering all claims were paid according to the ICA rate. These estimated payments were then divided by the total RVUs utilization to calculate the three conversion factors. Below are the three conversion factors computed using this model which were ultimately used in calculating the rates for all service codes to be included in the RBRVS fee schedule.
|RBRVS Conversion Factors|
The above mentioned methodology does not apply to following:
- If a service code could not be assigned an RVU using the methods stated earlier, then the code may be identified as RNE (Relativity Not Established) or BR (By Report).
- Codes specific to Arizona, the value of which may be determined through the hearing process.
- Codes otherwise designated as BR or Not covered.
The following changes have adopted by the Commission and implemented in the 2017/2018 Fee Schedule:
- The RBRVS based fee schedule adopts surgical global periods published by CMS, replacing those published by Optum.
- The RBRVS based fee schedule continues to assign RVUs to consultation services, recognizing the functional importance of these services. However, these consultation service codes will observe the bundling principles used by CMS.
- The Fee Schedule was updated to the 2017 CPT-® (which became effective January 1, 2017). The Commission adopted the reference deletions, additions, general guidelines, identifiers, modifiers, terminology changes associated with the adopted codes, and Appendix D Summary of CPT Add-on Codes 2017, and Appendix E Summary of CPT Codes Exempt from Modifier -51 2017 to ensure that the 2017/2018 Fee Schedule is current and reflects the latest changes to those editions of the CPT®-4. To the extent that a conflict may exist between the adopted portions of the CPT®-4, CMS guidelines, and a code or guideline unique to Arizona, the Arizona code or guideline would control.
How often is the Arizona Fee Schedule reviewed by the Commission?
The Commission reviews all of the codes on an annual basis.
When does the annual review of the Fee Schedule take place? Is there an opportunity to participate in the review process?
Annual updates to the Fee Schedule become effective October 1st of each year. The public is afforded an opportunity to participate in the process. In early spring of each year, the Commission provides an analysis of issues along with staff recommendations for the fee schedule (to be effective the following October 1st). This document is posted on the Commission's website and is intended to serve as a foundational document for public comment and future discussions that may arise during the public hearing process. Following the posting of a Notice of Hearing on the Commission's website, a public hearing is held to receive public comment. Written comments are welcomed in advance of the public hearing. Thereafter, at a later duly noticed public meeting, the Commission will take official action on the Fee Schedule, which will be incorporated in the Fee Schedule to become effective October 1st of that year.
What fees are covered under the Arizona Fee Schedule?
Under A.R.S. § 23-908(B), the Commission is required to establish a schedule of fees to be charged by physicians and physical therapists or occupational therapists attending injured employees. The Commission is also required to establish a schedule of fees for prescription medicines required to treat an injured employee.
For purposes of the Fee Schedule, the term "physician" includes chiropractors and naturopaths.
Fees for certain products, supplies, and services are not included in the Fee Schedule. This includes fees for ambulance services, durable medical equipment, prosthetics, orthotics, and supplies when used outside a physician's office. If a product, supply, or services are not included in the Fee Schedule, there will not be a code for those items in the Fee Schedule (e.g., codes from Medicare's Healthcare Common Procedure Coding System, HCPCS).
What is the appropriate fee for products, supplies, or services not covered under the Fee Schedule? Is it "usual, customary, and reasonable (UCR)"?
If a product, supply, or service is not covered under the Arizona Fee Schedule, then the Commission has no jurisdiction to set a fee or resolve a fee dispute related to the service. Additionally, while the obligation of a payer under the Arizona Workers' Compensation Act is to provide medical benefits that are reasonably required, neither the Arizona Workers' Compensation Act, A.R.S. § 23-901 et seq., nor the Arizona Physicians' Fee Schedule make reference to the phrase "usual, customary and reasonable." You may wish to consult an attorney for further assistance regarding this issue.
May a provider bill for services using a code that has not been adopted by the Commission?
A provider is not precluded from billing for a service for which there is no corresponding code in the current Fee Schedule. But, for such a code, since there is no reimbursement value set forth in the Fee Schedule, reimbursement for the service performed is subject to negotiation between the parties. See Section (B) (4) of the Fee Schedule Introduction. As an alternate to billing under a code that has not yet been adopted, some providers will use an otherwise applicable code or an "unlisted service or procedure" code in the current fee schedule.
May a provider covered by the Fee Schedule negotiate a fee that is different than the Fee Schedule?
Yes. Nothing in the Fee Schedule precludes an entity covered under the Fee Schedule from entering into a separate contract that addresses fees for service.
Does the Fee Schedule apply to services provided by out-of-state providers?
The Fee Schedule applies to fees charged by covered entities attending employees that are entitled to receive workers' compensation benefits under the Arizona Workers' Compensation Act.
Does the Fee Schedule apply to fees charged by chiropractors and naturopaths?
Does the Fee Schedule apply to fees charged by nurse practitioners, physician assistants, or certified nurse anesthetists?
Yes. Certified Registered Nurse Anesthetists are reimbursed at 85% of the Fee Schedule. Physician Assistants and Nurse Practitioners are reimbursed at 85% of the Fee Schedule except if services are provided “incident to” a physician’s professional services. In that instance, reimbursement is required to be made at 100% of the Fee Schedule. See Section C of the Introduction, Reimbursement of Mid-Level Providers for additional information.
Does the Fee Schedule apply to fees charged by Physical Therapy Assistants?
The Fee Schedule applies to Physical Therapist and not Physical Therapy Assistants. Please see questions 5 and 6.
Does the Fee Schedule apply to fees charged by hospitals or outpatient surgery facilities?
No. See also answers to questions 5 and 6.
Does the Fee Schedule apply to charges for materials and supplies used in the physician's office?
A physician is not entitled to be reimbursed for supplies and materials normally necessary to perform the service. A physician may charge for other supplies and materials using code 99070. A physician may use an applicable HCPCS code in lieu of code 99070 if the HCPCS code more accurately describes the materials and supplies provided by the physician. Examples of those items that are and are not reimbursable are listed below. Documentation showing actual costs associated with providing supplies and materials plus fifteen percent (15%) to cover overhead costs will be adequate justification for payment. This provision does not apply to retail operations involving drugs or supplies. Administration of drugs to patients in a clinical setting is covered under code 99070. Prescription drugs provided to patients as a part of the overall treatment regimen but outside of the clinical setting are not included under this code.
Examples of supplies that are not separately reimbursable:
Eye patches, injections, or debridement trays
Applied eye wash or eye drops
Band-Aids® and dressings for simple wound occlusion
Sterile trays for laceration repair and more complex surgeries
Tape for dressing
Examples of material and supplies that are generally reimbursable include:
Cast and strapping materials
Applied dressings beyond simple wound occlusion
Taping supplies for sprains
Reusable patient-specific electrodes
Dispensed items, including canes, braces, slings, ACE® wraps, TENS electrodes, crutches, splints, back support, dressings, hot or cold packs.
Does the Fee Schedule apply to charges for ambulance services, durable medical equipment, prosthetics, orthotic supplies, or surgical implants?
No. See also answers to questions 5 and 6.
Does the Fee Schedule apply to fees charged for independent medical examinations?
Does the Pharmaceutical Fee Schedule permit a Payer to choose the publication source for determining Average Wholesale Price?
No. Average wholesale price shall be determined from pricing published in a nationally recognized pharmaceutical publication designed by the Commission. The Commission has selected Medi-Span.
What publication is required to be used for purposes of determining Average Wholesale Price?
Average wholesale price shall be determined on the date a drug is dispensed from pricing published in the most recent issue, as updated in the most recent update, of a nationally recognized pharmaceutical publication designated by the Commission. The Commission has selected Medi-Span.
An entity responsible for payment of prescription drugs may select the following as an alternative to the foregoing if the selection is made no later than October 1st of each year. This selection shall be communicated in writing to the Commission and remain in effect until the following October 1st: AWP shall be determined on the date a drug is dispensed from pricing published in the most recent issue, as updated quarterly, of the publication designed by the Commission. For purposes of this paragraph, quarterly means the first day of the month on January, April, July, and October. Click here.
Does the Pharmaceutical Fee Schedule apply to repackaged medicines dispensed by a physician?
The Fee Schedule applies to the dispensing of prescription drugs, regardless of whether the drug is dispensed by a retail establishment or by a physician. The reimbursement rate is based on a discount from AWP plus a dispensing fee. The dispensing fee does not apply to an OTC medication that is not dispensed pursuant to a prescription order.
What is the Average Wholesale Price for repackaged drugs?
For purposes of the Fee Schedule, "average wholesale price" is the average wholesale price (AWP) established by a wholesaler who sells that brand name or generic drug to a pharmacy. For a repackaged or compounded drug, this would be the AWP of the underlying drug product used in the repackaging or compounding. If information pertaining to the original labeler of the underlying drug product is not provided or unknown, then discretion is vested in the payer to select the AWP to use (as published in Medi-Span) when making payment for the repackaged or compounded drug. Stated another way, the NDC number upon which reimbursement is based is not the NDC of the repackager. Instead, reimbursement is based upon the underlying drug product from the original labeler.
I am a physician and I have been subpoenaed to provide telephonic court testimony. How do I bill for my services?
If the physician wishes to submit an invoice, the invoice must be sent to the Industrial Commission’s Administrative Law Judge Division. The address of this Division is located on the subpoena that the physician received.The physician is entitled to bill under code AZ099 (this code is found in the Special Services section of the current Fee Schedule here). The invoice must include the name of the injured worker and the date that the physician provided testimony.
What are the new Arizona Treatment Guidelines and do they affect the Fee Schedule?
The treatment guidelines are a set of twelve rules published in Title 20, Chapter 5 of Arizona’s Administrative Code (see A.A.C.R20-5-1301through R20-5-1312). Please click here to view the Treatment Guidelines.
The Treatment Guidelines became effective October 1, 2016 and apply to the management of chronic pain and the use of opioids for all stages of pain management.
The Arizona Physicians and Pharmaceutical Fee Schedule is not affected by the Treatment Guidelines. However, because of the new Treatment Guidelines two new codes were added to the 2016/2017 Arizona Physician’s and Pharmaceutical Fee Schedule related to the Treatment Guidelines. These codes are to reimburse medical providers for time spent in telephone consultations with Peer Reviewers.
AZ-099-001 = Peer to Peer interprofessional telephone consultations between treating physician or medical provider and Peer Reviewer ; 5-10 minutes or medical consultative discussion and review. $75
AZ-99-002 = Peer to Peer interprofessional telephone consultations between treating physician or medical provider and Peer Reviewer; 11-30 minutes of medical consultative discussion and review. $100o
The Treatment Guidelines discuss the use of the Official Disability Guidelines (ODG) and Appendix A, the ODG Drug Formulary. Do we need to access to the ODG to access the Arizona Physician’s and Pharmaceutical Fee Schedule?
No. The Industrial Commission of Arizona has adopted the Work Loss Data Institute’s Official Disability Guidelines (ODG) – Treatment in Workers Compensation as the standard reference for evidence based medicine for the management of chronic pain and the use of opioids for all stages of pain management within the context of Arizona’s workers compensation system.
Appendix A, the ODG Drug Formulary may be accessed at no cost on the Industrial Commission website at https://www.azica.gov/official-disability-guidelines.
ODG is a separate online publication which has to be purchased through Work loss Data Institute (http://www.worklossdata.com/). It is not necessary to have access to ODG in order to access the Arizona Physicians and Pharmaceutical Fee Schedule.
Where can the explanations regarding Add-on Codes and Codes Exempt from Modifier -51 be found?
Previously the AMA Professional Edition CPT® (current procedural terminology) used the symbols * and ** throughout the CPT® to indicate codes which were add-on codes or codes that are exempt from Modifier -51. These codes are now indicated on Appendix D Summary of CPT Add-on codes 2017 and Appendix E Summary of CPT codes EXEMPT from Modifier -51 for 2017.
The 2017/2018 Arizona Physicians’ and Pharmaceutical Fee Schedule has a new format. Why is there NF RVU and FAC RVU for the same CPT code? What RVU and rate do I use?
Facility/Non-Facility – This designation identifies where services are provided. The Facility pricing amount generally covers services to inpatients or in a hospital outpatient clinic setting, but can include other settings. Off-site hospital-owned sites are also considered as “facilities” in the context of payment. Non-Facility services are generally provided in a freestanding physician’s office.
How do I find out which Arizona employers are allowed to direct care?
The Industrial Commission of Arizona website maintains a list of self-insured employers who meet the criteria and are able to direct medical care for their injured workers. The following link will take you to the list for authorized self-insured employers who may direct medical care: https://www.azica.gov/divisions/administration/self-insurance-and-tax-office.
Does the Industrial Commission of Arizona handle payment disputes between medical providers and payers?
No, the Industrial Commission of Arizona does not have a formal payment dispute or payment resolution process.
Are medical providers able to charge for meeting with nurses, and if yes, where do I find the billing codes?
Medical providers may bill for time spent with nurse case manager for an accepted Arizona workers compensation claim. The Arizona specific billing codes are listed in the Arizona Physicians’ and Pharmaceutical Fee Schedule under the Special Services section, which may be found at https://www.azica.gov/2017-arizona-physicians-fee-schedule.
We encourage you to send your comments and questions regarding the Fee Schedule to: [email protected]