Arizona Physicians' & Pharmaceutical Fee Schedule
Frequently Asked Questions
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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.
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.
- 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.
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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
Surgery/Radiology | $82.38 |
All Other | $64.63 |
Anesthesia | $58.10 |
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.
The Commission reviews all of the codes on an annual basis.
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.
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.
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.
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.
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.
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.
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).
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
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.
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.
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.
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.
No, the Industrial Commission of Arizona does not have a formal payment dispute or payment resolution process.
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]
Rev 10/2017