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Answers to frequently asked questions about the workers’ compensation Physician and Non-Physician Practitioner Fee Schedule

Topics covered in this FAQ include:

The basics
Conversion factors
Physician reports
Medical record review
Consultations
Physical therapy ground rules
Surgery ground rules
Fee schedule updates
Durable medical equipment (DME) – dispensed by physician

About the basics:

Q. Did the workers' compensation physician fee schedule change because of Senate Bill 863?

A. Yes. Senate Bill 863, passed on Aug. 31, 2012 and signed into law by Governor Brown on Sept. 18, 2012, required the Administrative Director of the Division of Workers' Compensation to adopt a new physician fee schedule based on the resource-based relative value scale (RBRVS) used in the Medicare Physician Fee Schedule.

Q. When is the new RBRVS-based fee schedule effective?

A. It is effective for services rendered on or after January 1, 2014.

Q. Are my old 1999 OMFS book, update pages, and Table A still in effect?

A. The previous physician fee schedule (title 8, CCR §§9789.10, 9789.11) including the 1999 OMFS book, update pages, and Table A continue to be applicable to services rendered prior to January 1, 2014.

Q. Where can I buy the new fee schedule?

A. The new fee schedule is not for sale. All of the regulations, documents, and data files that constitute the fee schedule are available for free download via the DWC website, the Medicare website, or the Medi-Cal website, with the exception of the Current Procedural Terminology® 2014, which must be purchased from the American Medical Association.

Q. Is DWC going to publish a table of fees?

A. DWC does not plan to publish a table of prices for the RBRVS-based physician fee schedule that is effective as of January 1, 2014. Publishing a fee table could be misleading to the public. The regulations set forth a clear formula for the base maximum allowable fee for a procedure, but then ground rules may be applicable that affect the actual payment rate. Therefore a chart of fees by procedure code could be misleading since the actual maximum payable amount may be different, for example it may receive a 10% bonus if performed by a physician in a Health Professional Shortage Area, or it may be subject to a multiple procedure payment reduction (MPPR).

Q. I have heard that the new physician fee schedule is set at the 2012 Medicare rates, is that true?

A. No. In setting the benchmark for the maximum fees, the statute states that maximum reasonable fees paid shall not exceed 120 percent of the estimated annualized aggregate fees prescribed in the Medicare payment system for physician services as it appeared on July 1, 2012, before application of the adjustment factors for inflation and relative value scale adjustment. On July 1, 2012, the Sustainable Growth Rate (SGR) formula (which by statute mandates large Medicare physician fee reductions) was not in effect due to Congressional action to temporarily suspend the SGR. In selecting July 1, 2012 as the benchmark for "120% of Medicare" the legislature ensured that the SGR reduction would not affect workers' compensation. The workers' compensation physician fee schedule regulations provide a four-year transition between the pre-2014 budget neutral conversion factors and 120% of July 2012 Medicare, updated for inflation. Title 8, CCR §9789.12.5.

Q. How do I calculate the maximum fee for a procedure?

A. The formulas to calculate the maximum fee for a procedure are set forth in the regulations. Title 8, California Code of Regulations §9789.12.2 sets forth the formulas for services other than anesthesia. Title 8, California Code of Regulations §9789.18.1 sets forth the formulas for anesthesia services.

Q. Can you provide an example of how to calculate the maximum fee for an evaluation and management service provided in 2014?

A. Here is an example of how to determine the maximum reasonable fee for CPT® 99205 (new patient, comprehensive Hx & exam, high-complexity decision making) for a service provided in the physician's office in 2014:

Step 1: Determine if place of service is "facility" or "non-facility" (§9789.12.2(d)) - POS code 11 "Office" is "non-facility"

Step 2: Select formula for non-facility site of service calculation (§9789.12.2(a))

Non-facility site of service fee calculation:

[(Work RVU * Statewide Work GAF) +
(Non-Facility PE RVU * Statewide PE GAF) +
(MP RVU * Statewide MP GAF)] * Conversion Factor (CF) = Base Maximum Fee

Key: RVU = Relative Value Unit
GAF = Average Statewide Geographic Adjustment Factor
Work = Physician Work
PE = Practice Expense
MP = Malpractice Expense

Step 3: Open the CMS' 2014 Medicare National Physician Fee Schedule Relative Value File (Zip Folder "RVU14A", then the file "PPRRVU14_V1219" (Link is set forth in §9789.19)) to identify the Non-Facility RVUs for Practice Expense, and the RVUs for Work and Malpractice

Work RVU Column F 3.17
Non-facility PE Column G 2.35
Malpractice Column K 0.26

Step 4: Identify the Average Statewide Geographic Adjustment Factors to use (set forth in §9789.19)

Statewide GAFs (Other than anesthesia) Average Statewide Work GAF: 1.040
Average Statewide Practice Expense GAF: 1.1606
Average Statewide Malpractice Expense GAF: 0.6636

Step 5: Identify the 2014 Conversion Factor to use (set forth in §9789.19). The "Evaluation and Management" code is not "anesthesia", "surgery" or "radiology"; rather it falls within the "other services"

CFs adjusted for MEI & Relative Value Scale adjustment factor Anesthesia Conversion Factor: $33.8190
Surgery Conversion Factor: $55.2913
Radiology Conversion Factor: $53.1039
Other Services Conversion Factor: $38.3542

Step 6: Apply the formula for non-facility site of service calculation (§9789.12.2(a))

[(Work RVU * Statewide Work GAF) +
(Non-Facility PE RVU * Statewide PE GAF) +
(MP RVU * Statewide MP GAF)] * Conversion Factor (CF) = Base Maximum Fee

[(3.17 * 1.040) +
(2.35 * 1.1606) +
(0.26 * 0.6636)] * $38.3542 = $237.67

Step 7: Apply relevant ground rules, if any, to the Base Maximum Fee to determine the payable fee. For example, if the physician's office is located in a Health Professional Shortage Area (HPSA), the ground rule in 8 CCR §9789.12.6 would mean that the HPSA 10% bonus payment would be added to the Base Maximum Fee determined in Step 6.

Q. Are the ground rule adjustments always applied at the end of the calculation using the formulas?

A. No. Sometimes the ground rules will be applied during early steps of the calculation. For example, under title 8, CCR §9789.15.4, when the Multiple Procedure Payment Reduction (MPPR) applies to physical therapy, chiropractic, and acupuncture services, it is only an adjustment to the Practice Expense RVUs. Similarly, pursuant to title 8, CCR §9789.17.1, the radiology MPPR applies only to the Professional Component and the Technical Component.

Q. Are Nurse Practitioners and Physician Assistants paid at 85% of the maximum allowable fee?

A. If the Nurse Practitioner or Physician Assistant provides a service “incident to” a physician service, then the service is paid at 100% (unless some other ground rule reduces or increases the payment amount). It is only where the Nurse Practitioner or Physician Assistant service is NOT “incident to” a physician service that the service is paid at 85% of its usual value. Consult title 8, CCR §§9789.15.1, 9789.15.2 for rules relating to the payment methodology for Nurse Practitioners and Physician Assistants, including the “incident to” rules.

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About conversion factors:

Q. Where can I find the conversion factors to use?

A. The conversion factors are set forth in the Update Table in title 8, CCR §9789.19. Each year there will be a new Update Table to update the conversion factors.

Q. I am confused. Why are there different conversion factors in section 9789.12.5 and section 9789.19?

A. Labor Code section 5307.1 requires a four year transition period between the old fee schedule and the fully implemented new schedule based upon the RBRVS. The section 9789.12.5(b) (2) sets forth the conversion factors during the four-year transition period before adjustment for inflation and the Medicare relative value scale adjustment. Section 9789.19 sets forth the conversion factors after adjustment for inflation and Medicare relative value scale adjustment. Therefore the conversion factors set forth in section 9789.19 are the conversion factors to use in calculating maximum fees.

Q. What are the conversion factors for services rendered in 2014?

A. The conversion factors for services rendered in 2014 are:

Anesthesia Conversion Factor $33.8190
Surgery Conversion Factor $55.2913
Radiology Conversion Factor $53.1039
Other Services Conversion Factor $38.3542

Q. Where can I find background information about how the conversion factors were developed?

A. The study conducted by the RAND Corporation, Implementing a Resource-Based Relative Value Scale Fee Schedule for Physician Services, July 2013, Wynn, Liu, Mulcahy et al. provides the analytical background for development of the conversion factors.

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About physician reports:

In the case on ongoing treatment, how often is the payor required to pay the primary treating physician for preparing a PR-2?

Pursuant to California Code of Regulations, Title 8, section 9785(f)(8), in the case of continuing treatment, a primary treating physician should prepare a PR-2 no less than once every 45 days.

Must a payor pay for preparation of a PR-2 more than once in a 45-day period?

Yes. Pursuant to California Code of Regulations, Title 8, section 9785(f)(8), in the case of continuing treatment, a primary treating physician should prepare a PR-2 no less than once every 45 days. In addition, California Code of Regulations, Title 8, sections 9785(f)(1)-(7) provide additional circumstances in which the primary treating physician must prepare a PR-2 (and the payor must pay for it).

Pursuant to section 9785(f), a primary treating physician must submit a PR-2 to the claims administrator within 20 days of each of the following occurring:

9785(f)(1): The employee’s condition undergoes a previously unexpected significant change.

9785(f)(2): A significant change to the treatment plan, such as:

  • An extension of the duration or frequency of treatment
  • A new need for hospitalization or surgery
  • A new need for referral to or consultation by another physician
  • A change in methods of treatment or in required physical medicine services
  • A need for rental or purchase of durable medical equipment or orthotic devices

9785(f)(3): The employee’s condition permits return to modified or regular work.

9785(f)(4): The employee’s condition requires him or her to be off work or requires changes to work restrictions or modifications.

9785(f)(5): The employee is released from care.

9785(f)(6): The primary treating physician concludes that the employee’s permanent disability precludes or likely will preclude the employee from returning to the usual occupation he or she worked in at the time of injury.

9785(f)(7): When requested by the claims administrator as “necessary” to administer the claim, pursuant to Labor Code section 3207.

9785(f)(8): When continuing medical treatment is provided, a progress report shall be made no later than forty-five days from the last report of any type under this section even if no event described in paragraphs (1)-(7) has occurred. The report should be submitted within 20 days of the examination if an examination occurs in connection with the report submitted pursuant to this section (absent good cause for a delay in reporting).

In addition, pursuant to California Code of Regulations, Title 8, section 9785(e)(4), a primary treating physician is required to obtain reports of any secondary treating physicians and report or comment upon said reports within 20 days of receipt (absent good cause for a delay in reporting).

Is there any minimum number of days required between PR-2 reports in order for the payor to be required to pay for it?

No.

Is there any limit on the number of PR-2 reports that can be billed within a 45-day period?

No. For example, in the case of continuing treatment, if the primary treating physician has two office visits with the patient, one week apart, the physician should prepare a PR-2 and bill for it for each such visit. Within a 45-day period, the primary treating physician can bill for as many PR-2’s as are medically necessary. The purpose of the 45-day rule in California Code of Regulations, Title 8, section 9785(f)(8) is to make sure that in the case of continuing treatment, that the patient’s progress is monitored no less than once every 45 days.

Q. Are treating physician's reports separately payable under the new fee schedule?

A. The Primary Treating Physician's Progress Report (PR-2), the Primary Treating Physician's Permanent and Stationary Report (PR-3 or PR-4), and a Psychiatric Report Requested by the WCAB or the Administrative Director (other than medical-legal report) are separately reimbursable pursuant to title 8, CCR §9789.14. Other treating physician reports are not separately reimbursable as the appropriate fee is included within the fee for the underlying evaluation and management service.

Q. What codes are used to bill the PR-2, the PR-3 or the PR-4?

A. The PR-2 is billed using WC002; the PR-3 is billed using WC003 and the PR-4 is billed using WC004.

Q. What are the maximum fees for the PR-2, the PR-3 and the PR-4?

A. The maximum fees are set forth in title 8, CCR §9789.19:

WC002 PR-2 $11.91
WC003 PR-3 $38.68 for first page
$23.80 each additional page. Maximum of six pages absent mutual agreement ($157.68)
WC004 PR-4 $38.68 for first page
$23.80 each additional page. Maximum of seven pages absent mutual agreement ($181.48)

Q. Can I use CPT 99080 to bill a report?

A. No. CPT 99080 is no longer used for workers' compensation reports (title 8, CCR §9789.19). Section 9789.14 sets forth the new workers' compensation codes to use for reports.

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About medical record review:

Q. Can I be reimbursed for reviewing the injured worker's medical records using CPT 99358 (Prolonged evaluation and management service before and/or after direct patient care; first hour) and CPT 99359 (each additional 30 minutes)?

A. No. CPT Code 99358 and CPT Code 99359 are both listed as status code "B" in column D of the Medicare Physician Fee Schedule Relative Value File. Status code "B" means: "Bundled Code. Payment for covered services are always bundled into payment for other services not specified…." Title 8, CCR §9789.12.8.

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About consultations:

Q. Are physician consultations covered under the new fee schedule?

A. Physician consultations are covered by the new fee schedule under title 8, CCR §9789.12.12. The regulations specify that consultation services shall be billed using the evaluation and management visit codes and the hospital care codes. The fee schedule follows the Medicare rule that the CPT consultation codes will not be used.

Q. Are consultation reports separately payable under the new fee schedule?

A. Under title 8, CCR §9789.12.12 subdivision (c) the following consultation reports are separately reimbursable: 1) consultation reports requested by the Workers' Compensation Appeals Board or the Administrative Director, 2) consultation reports requested by the Qualified Medical Evaluator or Agreed Medical Evaluator. Other consultation reports are not separately payable; reimbursement is "bundled" into the evaluation and management code.

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About physical therapy ground rules:

Q. Is there new physical therapy ground rule for multiple procedures?

A. Yes. The fee schedule has a Multiple Procedure Payment Reduction (MPPR). This replaces the old "cascade" formula. The MPPR applies when more than one of the following services is furnished to a patient on the same day: codes on the Medicare "Always Therapy" code list, acupuncture codes, chiropractic codes. For details on the applicability and operation of the MPPR, see title 8, CCR §9789.15.4.

Q. How is the Physical Therapy/Acupuncture/Chiropractic MPPR different than the old "cascade"?

A. Under the old "cascade" the highest value procedure or modality was paid at 100% of listed relative value, the second was paid at 75%, the third was paid at 50%, and the fourth was paid at 25%. Under the new MPPR, full payment (100% of listed Practice Expense, Work, and Malpractice Expense) is made for the code with the highest Practice Expense value. For subsequent procedures, the Practice Expense component is reduced 50%, and the Work and Malpractice Expense components are paid at 100%. Title 8, CCR §9789.15.4. It is important to note that the 50% reduction applies only to the Practice Expense RVUs, not to the Work and Malpractice Expense RVUs.

Q. Is there a limit on the number of procedures in a visit or a limit related to the amount of time in a visit?

A. The fee schedule provides caps that are presumed reasonable limitations on reimbursement for services provided at one visit unless pre-authorization and a pre-negotiated fee arrangement has been obtained.

  • When billing for treatment consisting of physical medicine modalities only, no more than two codes on a visit
  • When billing for physical medicine modality, procedure, or acupuncture codes, no more than 60 minutes on the same visit
  • Where modalities and procedures are billed, no more than 4 codes total on the same visit.

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About the surgery ground rules:

Q. Are the values for the surgery codes based upon a "global package"?

A. Yes. Under the "global surgical package" concept the various services associated with the surgical procedure are bundled into a single payment covering the operation and related services.

Q. What is the "global period"?

A. The surgical procedures are assigned a global period of zero, 10, or 90 days. The global period for each procedure is specified in the 2014 Medicare National Physician Fee Schedule Relative Value File, column O entitled "Glob Days".

Q. What do the zero, 10, or 90 day global days mean?

A. Codes with "000" in the Global Days column are minor procedures or endoscopies with a zero day global period and the global fee covers only services provided on the day of the procedure. Evaluation and Management services on the day of the procedure are generally not payable.

Codes with "010" in the Global Days column are minor procedures or endoscopies that have a 10 day global period, meaning that services on the day of the procedure and during the following 10-day period are included in the global fee. Evaluation and Management (E&M) services on the day of the procedure are generally not payable

Codes with "090" in Global Days column are major surgeries with a 90-day global period. Services the day before the procedure, the day of the procedure, and during the following 90 days are included in the global surgery fee.

Q. Are there any services paid in addition to the global fee?

A. Yes, there are some procedures paid in addition to the global fee.

  • Initial evaluation by the surgeon to determine need for major procedure (those with 90 day global period)
  • Visits during the global period unrelated to the diagnosis for which the surgical procedure is performed
  • Diagnostic tests and procedures
  • Clearly distinct surgical procedures during the postoperative period
  • Treatment for postoperative complications which require return trip to operating room

Q. Are supplies, surgical trays, etc. payable in addition to the global fee?

A. Supplies are bundled into the surgical global fee unless specifically identified as excluded from the global fee package. For example, casting supplies and splints are payable separately. Title 8, CCR §9789.16.1(a)(3)(I).

Q. Where can I find the maximum fees for casts and splints?

A. The Medicare document "CMS Pub 100-04 Medicare Claims Processing: Casting and Splint Supplies" contains the cast and splint codes and payment limits in Attachments A and B. A link to the document is set forth in the Update Table, title 8, CCR §9789.19.

Q. Labor Code §5307.1 requires the Administrative Director to include ground rules in the fee schedule that differ from Medicare as appropriate. How does the fee schedule address this requirement?

A. The fee schedule provides that the Primary Treating Physician's Progress Report (PR-2) is separately reimbursable during the global period. Title 8, CCR §9789.16.4(b). Also, the fee schedule provides that a physician may separately bill one or more E&M codes for medically necessary services that exceed the number of visits that are listed for the global surgery code in the Medicare Physician Fee Schedule "Physician Time File" (8 CCR §9789.16.4(a)).

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About fee schedule updates:

Q. How often will the fee schedule be updated?

A. The procedure codes, relative value weights, and conversion factors will be updated annually. In addition, there will be mid-year changes as necessary. Labor Code §5307,1 subdivision (g) states: "Notwithstanding any other law, the official medical fee schedule shall be adjusted to conform to any relevant changes in the Medicare and Medi-Cal payment systems no later than 60 days after the effective date of those changes…." to conform to relevant Medicare and Medi-Cal changes.

Q. Will the fee schedule be updated for inflation?

A. Yes, pursuant to Labor Code §5307.1, subdivisions (a)(2)(A)(ii) and (g) the conversion factors will be updated for inflation using the Medicare Economic Index and will also be updated for any Medicare relative value scale adjustment factor.

Q. Will there be a formal rulemaking action to adopt every fee schedule update to conform to relevant Medicare and Medi-Cal changes?

A. No. Labor Code §5307.1 provides that the fee schedule updates are to be adopted by issuing an Administrative Director order. They are exempt from both the Administrative Procedure Act and the Labor Code formal rulemaking procedures.

Q. How can I access the update orders?

A. The orders are posted on the Division of Workers' Compensation website.

Q. How is Medi-Cal relevant to the physician fee schedule? Are physicians going to be paid for procedures at Medi-Cal rates?

A. No, physicians are not going to be paid at Medi-Cal rates for procedures. The "Medi-Cal Rates" file has been adopted for physician-administered drugs, biologicals, vaccines, and blood products. Title 8, §9789.13.2. The Medi-Cal Rates file is updated monthly by the Department of Health Care Services; however the DHCS website does not maintain the historical files. Therefore the Division of Workers' Compensation will post copies of the Medi-Cal Rates file on the official medical fee schedule website. There will be a monthly Administrative Director update Order adopting the new Medi-Cal Rates file.

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About durable medical equipment (DME) – dispensed by physician:

Q. Can a physician bill for dispensed durable medical equipment?

A. Yes, a physician can bill and be reimbursed for medically necessary durable medical equipment dispensed to his or her patient.  However, DME is not covered in the Physician and Non-Physician Practitioner’s Fee Schedule. The maximum reasonable fee for DME (except for a “dangerous device”) is capped at the rate in the workers’ compensation DMEPOS fee schedule established pursuant to Labor Code section 5307.1, and title 8, California Code of Regulations section 9789.60.  The workers’ compensation DMEPOS maximum is 120% of the Medicare DMEPOS rate for California.

Q. What is a “dangerous device”?

A. Labor Code section 5307.1 subdivision (e)(6) states that “dangerous device” has the meaning set forth in Business and Professions Code section 4022, which states in part:

“[D]angerous device” means any … device unsafe for self-use in humans…, and includes the following:
***
(b) Any device that bears the statement: “Caution: federal law restricts this device to sale by or on the order of a ____,” “Rx only,” or words of similar import, the blank to be filled in with the designation of the practitioner licensed to use or order use of the device.
(c) Any other … device that by federal or state law can be lawfully dispensed only on prescription ….

Q. How is the maximum fee for a “dangerous device” dispensed by a physician calculated?

A. Labor Code §5307.1 subdivision (e)(4) provides that the fee is the lesser of the DMEPOS allowed amount or an amount calculated by applying a formula to the documented paid cost:

For a dangerous device dispensed by a physician, the reimbursement to the physician shall not exceed either of the following:

A. The amount allowed for the device pursuant to the official medical fee schedule adopted by the administrative director.

B. One hundred twenty percent of the documented paid cost, but not less than 100 percent of the documented paid cost plus the minimum dispensing fee allowed for dispensing prescription drugs pursuant to the official medical fee schedule adopted by the administrative director, and not more than 100 percent of the documented paid cost plus two hundred fifty dollars ($250).

Q. The Physician Fee Schedule adopts the National Correct Coding Initiative Medically Unlikely Edits (MUE) for practitioner services.  Many DME codes appear on the Medically Unlikely Edits (MUE) table with a “zero”; does that mean those DME items cannot be reimbursed when dispensed by the physician?

A. No. A medically necessary piece of DME may not be denied based upon the Practitioner Services MUE. The physician fee schedule regulations adopt the NCCI and the Medically Unlikely Edits (MUE) for practitioner services for use for services “billed under the Physician Fee Schedule”. The regulation at title 8, California Code of Regulations section 9789.12.13 subdivision (a) states in pertinent part:

The National Correct Coding Initiative Edits (“NCCI”) adopted by the CMS shall apply to payments for medical services under the Physician Fee Schedule. Except where payment ground rules differ from the Medicare ground rules, claims administrators shall apply the NCCI physician coding edits and medically unlikely edits to bills to determine appropriate payment.” [Emphasis added.]

The Healthcare Common Procedure Coding System (HCPCS) DME codes are not contained in the Physician Fee Schedule Relative Value File, and are therefore not billed “under the Physician Fee Schedule.” The Practitioner MUE Edits therefore do not apply.

Q. Doesn’t the Physician Fee Schedule cover all of the services that may be reimbursed to a physician?  If DME is not listed on the Physician Fee Schedule Relative Value File, doesn’t that mean the physician cannot be paid for that item?

A. No.  The Physician Fee Schedule regulations allow a physician to bill under other portions of the Official Medical Fee Schedule for medically necessary services and goods that are provided to the employee.  The physician may be paid for the medically necessary service or goods, with payment capped by the relevant fee schedule. Title 8, California Code of Regulations section 9789.12.1 subdivision (c) states:

Physicians and non-physician practitioners shall utilize other applicable parts of the OMFS to determine maximum fees for services or goods not covered by the Physician Fee Schedule, such as pharmaceuticals (section 9789.40), pathology and clinical laboratory (section 9789.50) and durable medical equipment, prosthetics, orthotics, supplies (section 9789.60), except: 1) where such services or goods are bundled into the Physician Fee Schedule payment, and/or 2) as otherwise specified in the Physician Fee Schedule.

Q. Do the Medicare ground rules on DME apply to the California workers’ compensation system?

A.  The DWC has not adopted all Medicare ground rules, only those rules adopted in the DWC regulations will apply for workers’ compensation.  Medicare has a variety of rules regarding DME that have not been adopted for California workers’ compensation. For example, Medicare has established a DME competitive bidding program for certain items of DME, and a requirement that every DME supplier, including a physician, be “an enrolled Medicare DMEPOS supplier” in order to bill for DME.  These Medicare rules have not been adopted for California workers’ compensation. For California workers’ compensation patients, a physician may dispense, and be paid for, medically necessary DME.

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September 2014