803 KAR 25:091. Workers' compensation
hospital fee schedule.
RELATES TO: KRS 216B.105, 342.020,
STATUTORY AUTHORITY: KRS 342.020, 342.035(1),
NECESSITY, FUNCTION, AND CONFORMITY: KRS
342.035(1) and 342.260(1) require the Commissioner of the Department of
Workers' Claims to promulgate administrative regulations to adopt a medical fee
schedule for fees, charges and reimbursements under KRS 342.020. KRS 342.020
requires the employer to pay for hospital treatment, including nursing,
medical, and surgical supplies and appliances. This administrative regulation establishes
hospital fees for services and supplies provided to workers' compensation patients
pursuant to KRS 342.020.
Section 1. Definitions. (1)
"Ambulatory surgery center" means a public or private institution
(a) Hospital based or freestanding;
(b) Operated under the supervision of an
organized medical staff; and
(c) Established, equipped, and operated
primarily for the purpose of treatment of patients by surgery, whose recovery
under normal circumstances will not require inpatient care.
(2) "Hospital" means a facility;
surgical center; or psychiatric, rehabilitative, or other treatment or
specialty center that is licensed pursuant to KRS 216B.105.
practitioner" means a provider of medical services who is an employee of
the hospital and who is paid by the hospital.
(4) "Independent practitioner"
means a physician or other practitioner who performs services that are covered
by the Kentucky Workers' Compensation Medical Fee Schedule for Physicians, incorporated
by reference in 803 KAR 25:089, on a contract basis and who is not a regular
employee of the hospital.
(5) "New hospital" means a
hospital that has not completed its first fiscal year.
Section 2. Applicability. This
administrative regulation shall apply to all workers' compensation patient
hospital fees for each hospital for each compensable service or supply.
Section 3. Calculation of Hospital's Base
and Adjusted Cost-to-charge Ratio; Reimbursement. (1)(a) The commissioner shall
calculate cost-to-charge ratios and notify each hospital of its adjusted
cost-to-charge ratio on or before February 1 of each calendar year.
(b) A hospital's base cost-to-charge
ratio shall be based on the latest cost report, or HCFA-2552, which has been
supplied to the Cabinet for Health and Family Services, Department of Medicaid
Services, pursuant to 907 KAR 1:815 and utilized in 907 KAR 1:820 and 1:825 on
file as of October 31 of each calendar year.
(c) The base cost-to-charge ratio shall
be determined by dividing the net expenses for allocation as reflected on
Worksheet A, Column 7, Line 95, plus the costs of hospital-based physicians and
nonphysician anesthetists reflected on lines 12 and 35 of Worksheet A-8, by the
total patient revenues as reflected on Worksheet G-2 of the HCFA-2552. The
adjusted cost-to-charge ratio shall be determined as set forth in paragraph (d)
of this subsection.
(d)1. The base cost-to-charge ratio shall
be further modified to allow for a return to equity by multiplying the base
cost-to-charge ratio by 132 percent except that a hospital with more than 400 licensed
acute care beds as shown by the Cabinet for Health and Family Services, Office
of Inspector General's Web site or a hospital that is designated as a Level I
trauma center by the American College of Surgeons shall have a return to equity
by multiplying its base cost-to-charge ratio by 138 percent.
2. If a hospital's base cost-to-charge
ratio falls by ten (10) percent or more of the base for one (1) reporting year,
the next year's return to equity shall be reduced from 132 percent to 130
percent or 138 percent to 135 percent as determined by subparagraph 1. of this
a. This reduction shall be subject to an appeal
pursuant to Section 4 of this administrative regulation.
b. Upon written request of the hospital
seeking a waiver and a showing of extraordinary circumstances, the commissioner
shall waive the reduction for no more than one (1) consecutive year.
c. The determination of the commissioner
shall be made upon the written documents submitted by the requesting hospital.
(e)1. Except as provided in subparagraph
2 of this paragraph, a hospital’s adjusted cost-to-charge ratio shall not exceed
fifty (50) percent, including the return to equity adjustment.
2. The adjusted cost-to-charge ratio
shall not exceed sixty (60) percent for a hospital that:
a. Has more than 400 licensed acute care
beds as shown by the Cabinet for Health and Family Services, Office of
Inspector General's Web site;
b. Is designated as a Level I trauma
center by the American College of Surgeons;
c. Services sixty-five (65) percent or
more patients covered and reimbursed by Medicaid or Medicare as reflected in
the records of the Cabinet for Health and Family Services, Department of
Medicaid Services; or
d. Has a base cost-to-charge ratio of
fifty (50) percent or more.
(2)(a) Except as provided in paragraph (b) of
this subsection, the
reimbursement to a hospital for services or supplies furnished to an employee that
are compensable under KRS 342.020 shall be calculated by multiplying the
hospital's total charges by its adjusted cost-to-charge ratio after removing
any duplicative charges, billing errors, or charges for services or supplies
not confirmed by the hospital records.
(b) If part of a bill for services or
supplies is alleged to be noncompensable under KRS 342.020 and that part of the
bill is challenged by the timely filing of a medical fee dispute or motion to
reopen, the noncontested portion of the bill shall be paid in accordance with
paragraph (a) of this subsection.
Section 4. Appeal of Assigned Ratio. (1) A
hospital may request a review of its assigned ratio. A written appeal to request
a review shall be filed with the commissioner no later than thirty (30)
calendar days after the ratio has been assigned and the hospital notified of
its proposed cost-to-charge ratio.
(2) The determination of the commissioner
shall be made upon the written documents submitted by the requesting hospital.
Section 5. Calculations of New Hospitals,
Hospitals that do not file Worksheets A and G-2 of HCFA-2552 and ASC's within
the Commonwealth of Kentucky.
(1)(a) A new hospital shall be assigned a
cost-to-charge ratio equal to the average adjusted cost-to-charge ratio of all
existing in-state acute care hospitals until it has been in operation for one
(1) full fiscal year.
(b) A hospital that does not file
Worksheets A and G-2 of HCFA 2552 shall be assigned a cost-to-charge ratio as
1. A psychiatric, rehabilitation, or
long-term acute care hospital shall be assigned a cost-to-charge ratio equal to
125 percent of the average adjusted cost-to-charge ratio of all in-state acute
2. An ambulatory surgery center shall be
assigned a cost-to-charge ratio equal to:
a. 120 percent of the average adjusted
cost-to-charge ratio of all acute care hospitals located in the same county as
the ambulatory surgery center;
b. 120 percent of the average adjusted
cost-to-charge ratio of all acute care hospitals located in counties contiguous
to the county in which the ambulatory surgery center is located, if an acute
care hospital is not located in the county of the ambulatory surgery center; or
c. The adjusted
cost-to-charge ratio of the base hospital if:
(i) The center is
(ii) It is a
licensed ambulatory surgery center pursuant to 902 KAR 20:106; and
(iii) It is a
Medicare provider based entity; and
3. All other hospitals not specifically
mentioned in subparagraphs 1 or 2 of this paragraph shall be assigned a
cost-to-charge ratio equal to:
a. The average adjusted cost-to-charge
ratio of all acute care hospitals located in the same county as the facility;
b. If there are no hospitals in the
county, the average of all acute care hospitals located in contiguous counties.
(2) An assigned cost-to-charge ratio
shall remain in full force and effect until a new cost-to-charge ratio is
assigned by the commissioner.
Section 6. Calculation for Hospitals and
Ambulatory Surgery Centers Located Outside the Commonwealth of Kentucky. (1) A
hospital or ambulatory surgery center located outside the boundaries of
Kentucky shall be deemed to have agreed to be subject to this administrative
regulation if it accepts a patient for treatment who is covered under KRS
(2) The base cost-to-charge ratio for an
out-of-state hospital shall be calculated in the same manner as for an in-state
hospital, using Worksheets A and G-2 of the HCFA 2552.
(3) An out-of-state ambulatory surgery center
having no contiguous Kentucky counties shall be assigned a cost-to-charge ratio
equal to 120 percent of the average adjusted cost-to-charge ratio of all
existing in-state acute care hospitals.
(4) An out-of-state ambulatory surgery
center having one (1) or more contiguous Kentucky counties shall be assigned a
cost-to-charge ratio in accordance with Section 5(1)(b)2.b. of this administrative
Section 7. Reports to be Filed by
Hospitals. Each bill submitted by a hospital pursuant to this administrative
regulation shall be submitted on a statement for services, Form UB-04 (Formerly
UB-92), as required by 803 KAR 25:096.
Section 8. Billing and Audit Procedures.
(1) A hospital providing the technical component of a procedure shall bill and
be paid for the technical component.
(2)(a) An independent practitioner
providing the professional component shall bill for and be paid for the
(b) An independent practitioner billing
for the professional component shall submit the bill to the insurer on the
appropriate statement for services, HCFA 1500, as required by 803 KAR 25:096.
Section 9. Miscellaneous. (1) A new
hospital shall file a letter with the commissioner setting forth the start and
end of its fiscal year within ninety (90) days of the date it commences operation.
(2)(a) An independent practitioner who
does not receive direct compensation from the contracting hospital shall use
the statement for services defined by 803 KAR 25:096 if billing for professional
services and shall be compensated pursuant to the Kentucky Workers'
Compensation Medical Fee Schedule for Physicians, incorporated by reference in 803
(b) An independent practitioner who is
directly compensated for services by the contracting hospital shall not bill
for the service, but shall be compensated pursuant to the practitioner's
agreement with the hospital.
(c) The hospital may bill for the
professional component of the service under the Kentucky Workers' Compensation
Medical Fee Schedule for Physicians if the independent practitioner is directly
compensated for services by the contracting hospital.
(3) A hospital-based practitioner shall
not bill for a service he performs in a hospital if the service is regulated by
803 KAR 25:089, but he shall receive payment or salary directly from the
Section 10. Incorporation by Reference.
(1) The following material is incorporated by reference:
(a) Form UB-04, 10-23-06; and
(b) HCFA 1500, 12-90.
(2) This material may be inspected,
copied, or obtained, subject to applicable copyright law, at the Department of
Workers' Claims, Prevention Park, 657 Chamberlin Avenue, Frankfort, Kentucky
40601, Monday through Friday, 8 a.m. to 4:30 p.m. (19 Ky.R. 1026; 1396; 1755;
eff. 2-2-93; 21 Ky.R. 1569; 1884; 2130; eff. 2-9-1995; 23 Ky.R. 2619; 2988;
eff. 2-10-1997; TAm eff. 8-9-2007; 35 Ky.R. 1907; 2304; 2435; eff. 6-5-2009; 37
Ky.R. 1080; 2005; eff. 3-4-2011; TAm eff. 10-25-11.)