Opinion ID: 1990239
Heading Depth: 2
Heading Rank: 2

Heading: Cost Containment

Text: The cost containment provision of the Act reads, in pertinent part, as follows: [A] provider shall not require, request or accept payment for the treatment, accommodations, products or services in excess of one hundred thirteen per centum of the . . . applicable fee schedule. . . . If the prevailing charge, fee schedule, recommended fee, inflation index charge, DRG payment or any other reimbursement has not been calculated under the Medicare program for a particular treatment, accommodation, product or service, the amount of the payment may not exceed eighty per centum of the charge most often made by providers of similar training, experience and licensure for a specific treatment, accommodation, product or service in the geographic area where the treatment, accommodation, product or service is provided. 77 P.S. § 531(3)(i). The statute thus provides for an eighty percent limitation for treatment, accommodations, products or services that are not calculated under the Medicare program. The parties agree that there is no Medicare calculation governing the costs at issue here. Appellant argues that the Commonwealth Court majority's holding that this provision caps Employer's obligation at eighty percent of the cost of the van rentals and retrofitting of the new van (and now the appropriate cost of the van, per this Court's holding on the first question on appeal) must be reversed. Appellant contends that the Act requires an employer/insurer to pay for medical expenses related to a work injury and does not require an injured worker to pay twenty percent of any portion of any medical benefit. Indeed, appellant notes, Section 306(f.1)(7) of the Act states, in pertinent part, that [a] provider shall not bill or otherwise attempt to recover from the employe the difference between the provider's charge and the amount paid by the employer or the insurer. 77 P.S. § 531(7). Thus, appellant argues that it is unlawful under the Act to require him to pay the difference between what the employer pays and what the provider charges. More fundamentally, appellant also contends that the cost containment provision in Section 306(f.1)(3)(i) applies only to medical providers, and not to car dealers or injured workers. Thus, in appellant's view, the cost containment provision does not limit what a claimant may recover for such costs, nor does it limit the obligation of employers and their compensation carriers. Moreover, appellant contends that the Commonwealth Court's holding that Employer's obligation is capped at eighty percent conflicts with both Villanova University v. Workers' Compensation Appeal Board (Mantle), 783 A.2d 366 (Pa.Cmwlth. 2001), alloc. denied, 568 Pa. 730, 797 A.2d 919 (2002) and Furnival State Machinery/Transamerica Insurance Group v. Workers' Compensation Appeal Board (Slye), 757 A.2d 433, 436 (Pa.Cmwlth. 2000), alloc. denied, 565 Pa. 653, 771 A.2d 1289 (2001), both of which suggest that the cost containment provision governs only what a medical provider may charge. Supporting appellant's argument, amicus curiae PaTLA adds that it is significant that the cost containment section is limited to providers because the Commonwealth has the power to regulate providers by virtue of the fact that they are licensed. PaTLA contends that the cost containment provision by its terms limits charges but does not limit reimbursement. Employer responds by focusing on the broader statutory scheme, and then contrasting appellant's conduct with that scheme. Employer notes that its liability to provide payment for items covered by Section 306(f.1)(1)(i) and (ii) of the Act is set forth at Section 306(f.1)(3)(i), which limits the amount of the charges, in this case, to eighty percent of the prevailing charge in the relevant area. Employer further notes that Section 306(f.1)(5) of the Act contemplates that a provider who disputes the amount charged to the employer shall file an application for fee review with the Department of Labor and Industry. 77 P.S. § 531(5). The statute further directs that the provider shall not bill or otherwise attempt to recover from the employe the difference between the provider's charge and the amount paid by the employer or the insurer. 77 P.S. § 531(7). Employer contends that, by paying the providers of the van rentals and the new van and its modifications directly and in full, appellant simply disregarded the statutory scheme, which envisioned that relevant providers would submit bills for compensable medical expenses to insurers for payment after repricing to fee cap levels pursuant to Section 306(f.1)(5). Thus, Employer argues that appellant's present claim for the remaining twenty percent differential is nothing more than an attempt to extricate himself from the consequences of his own improvident actions. Employer further argues that Section 306(f.1)(3)(i) covers treatment, accommodations, products or services of a provider without limiting the type of provider which is subject to the fee caps. Respecting the statement in Furnival that Section 306(f.1)(3)(i) applies to medical providers only, Employer argues that the statement was purely dictum because the issue in Furnival was whether that Section superseded Section 319 of the Act, which pertains to subrogation. Employer argues that the Villanova case is similarly inapplicable because that case also posed a subrogation issue. Employer contends that both cases held that Section 306(f.1)(3)(i) did not limit subrogation of payments made by an employer or insurance company on the basis that an injury or disability was not compensable, because Section 319 specifically states that such payor shall be subrogated . . . to the amount so paid. 77 P.S. § 671. Employer asserts that payments made by appellant to the providers herein do not satisfy the criteria for subrogation since appellant is not an employer or an insurance company, and Employer here accepted liability for appellant's injury from the outset. Finally, Employer insists that appellant's interpretation of Section 306(f.1)(3) as limited to medical providers in the strictest sense is inconsistent with the humanitarian purpose of the Act, a purpose appellant cites in arguing for his expanded interpretation of Section 306(f.1)(1)(i) and (ii). Employer argues that the majority below was correct that, if the fee cap provisions do not apply, there is no basis for any reimbursement whatsoever under the Act because there was no medical provider involved. Employer explains that if appellant's interpretation of the Act is accurate, he should be deemed liable for one hundred percent of the van-related costs. Supporting Employer's argument, amicus curiae PDI notes that reasonable and necessary medical expenses were made subject to a fee schedule based upon Medicare reimbursement for the first time in 1993. The only caveat to the imposition of the reimbursement schedule was the situation where a particular treatment, accommodation, product or service was not calculated under the Medicare program. In that case, the amount of the payment may not exceed eighty percent of the charge most often made by providers of similar training, experience and licensure for a specific treatment, accommodation, product or service, in the geographic area where the treatment or service is provided. PDI states that compliance with these medical reimbursement provisions are mandatory and are placed upon the provider of the service. The Act provides a procedure to submit medical expenses for utilization review to address disputes respecting the reasonableness or necessity of medical expenses. PDI further notes that appellant sought and purchased his new van for retrofitting without consideration of the medical fee reimbursement requirements of the Act. Since retrofitting is not a product or service specifically identified in the Medicare reimbursement schedule, PDI argues, the eighty percent provision must be deemed applicable here. In light of the statutory mandate that a provider may not hold employees liable for costs related to care or service arising from a work injury, PDI posits that the providers of the services violated the terms of the Act. Our analysis begins and ends with the plain language of the cost containment provision. Section 306(f.1)(3)(i) of the Act provides, in pertinent part, as follows: For purposes of this clause, a provider shall not require, request or accept payment for the treatment, accommodations, products or services in excess of . . . eighty per centum of the charge most often made by providers of similar training, experience and licensure for a specific treatment, accommodation, product or service in the geographic area where the treatment, accommodation, product or service is provided. 77 P.S. § 531(3)(i) (emphasis added). Section 109 of the Act defines provider as a health care provider. 77 P.S. § 29. Section 109, in turn, defines health care provider as follows: any person, corporation, facility or institution licensed or otherwise authorized by the Commonwealth to provide health care services, including, but not limited to, any physician, coordinated care organization, hospital, health care facility, dentist, nurse, optometrist, podiatrist, physical therapist, psychologist, chiropractor or pharmacist and an officer, employe or agent of such person acting in the course and scope of employment or agency related to health care services. Id. Obviously, an automobile dealer does not provide health care services within the meaning of this definition. Unlike Employer and the Majority below, we see no tension between the determination that a van is an orthopedic appliance within the meaning of Section 306(f.1)(1) of the Act and the determination that the source of the van is not a provider within the meaning of Section 306(f.1)(3)(i) of the Act. Unlike subsection (3)(i), subsection (1) does not speak solely in terms of providers. While the first part of subsection (1) requires employers to provide payment for reasonable surgical and medical services and services rendered by physicians or other health care providers, 77 P.S. § 531(1)(i), the second part of subsection (1) states that [i]n addition to the above service, the employer shall provide payment for, inter alia, orthopedic appliances, 77 P.S. § 531(1)(ii) (emphasis added). Thus, whereas the provision of the Act requiring employers to pay for orthopedic appliances does not require the existence of a health care provider, the cost containment provision of the Act clearly does. Because appellant acquired his orthopedic appliance from an entity that is not a health care provider, the cost containment provision does not apply. Accordingly, Employer is liable for the entirety of all relevant costs in this instance. For the foregoing reasons, the decision below is reversed, and the matter is remanded to the WCJ for proceedings consistent with this Opinion. Justice SAYLOR and BAER, Justice TODD and Justice McCAFFERY join the opinion.