# PA PT Assoc. & Waterford PT, Inc. v. Hon. W.G. Oleksiak, Sec'y. of L&I

> Commonwealth Court of Pennsylvania · October 14, 2021

URL: https://www.frixlaw.com/law-library/cases/10747124

## Case

- **Court:** Commonwealth Court of Pennsylvania
- **Decided:** October 14, 2021
- **Precedential status:** Published
- **Opinion:** Opinion
- **Judges:** Leavitt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Pennsylvania Physical Therapy :
Association and Waterford :
Physical Therapy, Inc., :
Petitioners :
:
v. : No. 2 M.D. 2020
: Argued: February 10, 2021
Honorable W. Gerard Oleksiak, :
Secretary of Labor and Industry, :
Department of Labor and Industry, :
Commonwealth of Pennsylvania, :
Respondents :

BEFORE: HONORABLE P. KEVIN BROBSON, President Judge
HONORABLE RENÉE COHN JUBELIRER, Judge
HONORABLE MARY HANNAH LEAVITT, Judge
HONORABLE ANNE E. COVEY, Judge
HONORABLE MICHAEL H. WOJCIK, Judge
HONORABLE ELLEN CEISLER, Judge
HONORABLE J. ANDREW CROMPTON, Judge

OPINION
BY JUDGE LEAVITT FILED: October 14, 2021

The Pennsylvania Physical Therapy Association and Waterford
Physical Therapy, Inc. (collectively, Providers) have filed a petition for review to
challenge the decision of the Department of Labor and Industry (Department) to
reduce the fee allowed to a medical provider to do a physical therapy evaluation of
a workers’ compensation claimant. The Workers’ Compensation Act (Act)1 caps
the fees that an employer must pay to a medical provider for treatment of an
employee’s work injury. To implement the Act, the Department has promulgated a
cost containment regulation2 that sets forth the calculation of the allowable medical

1
Act of June 2, 1915, P.L. 736, as amended, 77 P.S. §§1-1041.4, 2501-2710.
2
34 Pa. Code §§127.1-127.755.
provider fees. In late 2016, the Department issued a notice that effective January 1,
2017, the prior year’s allowable fee for a physical therapy evaluation would be
reduced by approximately $20. Providers objected to this fee amendment as
unlawful under the cost containment regulation. After an administrative hearing, the
Secretary of Labor and Industry, W. Gerard Oleksiak, issued an adjudication
denying Providers’ appeal as unfounded as a matter of law and dismissing their
request for declaratory relief.
Providers then filed a petition for review that invokes this Court’s
original and appellate jurisdiction. For the reasons set forth herein, we reverse the
Secretary’s adjudication and dismiss Providers’ request for a declaratory judgment.
I. Background
The fees allowed to a medical provider for the treatment of a
compensable work injury are tied to the reimbursement rates authorized under the
Medicare program. The Department’s cost containment regulation states as follows:

(a) Generally, medical fees for services rendered under the
[A]ct shall be capped at 113% of the Medicare reimbursement
rate applicable in this Commonwealth under the Medicare
Program for comparable services rendered. The medical fees
allowable under the [A]ct shall fluctuate with changes in the
applicable Medicare reimbursement rates for services rendered
prior to January 1, 1995. Thereafter, for services rendered on
and after January 1, 1995, medical fees shall be updated only in
accordance with §§127.151--127.162 (relating to medical fee
updates).

34 Pa. Code §127.101(a) (emphasis added). The specific provision of the regulation
relevant to the update for the medical fee allowed for a physical therapy evaluation
is set forth in Section 127.153, which states:

2
Medical fee updates on or after January 1, 1995 - outpatient
providers, services and supplies subject to the Medicare fee
schedule.

(a) On and after January 1, 1995, outpatient providers whose
payments under the [A]ct are based on the Medicare fee schedule
under §§ 127.103--127.108 shall be paid as follows: the amount
of payment authorized shall be frozen on December 31, 1994,
and updated annually by the percentage change in the Statewide
average weekly wage.

(b) On and after January 1, 1995, adjustments and
modifications by [the Health Care Financing Administration]
relating to a change in description or renumbering of any
HCPCS[3] code will be incorporated into the basis for
determining the amount of payment as frozen in subsection (a)
for services rendered under the act.

(c) On and after January 1, 1995, payment rates under the [A]ct
for new HCPCS codes will be based on the rates allowed in the
Medicare fee schedule on the effective date of the new codes.
These payment rates shall be frozen immediately, and thereafter
updated annually by the percentage change in the Statewide
average weekly wage.

34 Pa. Code §127.153 (emphasis added). Notably, where a “Medicare payment
mechanism” for a particular “service” does not exist, the payment to the provider is
capped at “80% of the usual and customary charge” or the actual charge, “whichever
is lower.” 34 Pa. Code §127.102.
In short, the 1995 Medicare fee schedule is the foundation of the
Pennsylvania system for setting the payment allowed to a medical provider to treat
a compensable work injury. Thereafter, the “frozen” 1995 Medicare fee schedule is
adjusted annually for inflation in accordance with the “percentage change in the
Statewide average weekly wage.” 34 Pa. Code §127.153(a). When a new outpatient

3
See infra note 5 for the definition of HCPCS.
3
service code is added to the Medicare fee schedule, payments under the Act are based
on the rate allowed “in the Medicare fee schedule on the effective date of the new
codes.” 34 Pa. Code §127.153(c). When a new outpatient service is added to the
Medicare payment mechanism, the payment to the provider is no longer based on
80% of the usual and customary charge. 34 Pa. Code §127.103(c). On the other
hand, “a change in description or renumbering” of any codes in the Medicare fee
schedule is simply “incorporated” into the schedule that was “frozen” as of
December 21, 1994, “and updated.” 34 Pa. Code §127.153(a)-(b).
As an accommodation to medical providers and employers (and their
insurers), the Department produces the Pennsylvania Workers’ Compensation
Medical Fee Schedule (Fee Schedule) and updates it based on the Statewide average
weekly wage as published by the Department in the Pennsylvania Bulletin. 34 Pa.
Code §127.152(b). The Fee Schedule is posted on the Department’s webpage.4 The
Department uses the codes of the Health Care Financing Administration developed
for Medicare for the services listed in the Fee Schedule.5 The Fee Schedule sets

4
See https://www.dli.pa.gov/Businesses/Compensation/WC/HCSR/MedFeeReview/Fee%20Sche
dule/Pages/Part%20B/Fee-Schedule-95937-97016.aspx/ (last visited October 13, 2021).
5
The cost containment regulation contains the following definitions:
HCFA – The Health Care Financing Administration.
HCPCS – HCFA Common Procedure Coding System – The procedure codes and
associated nomenclature consisting of numeric CPT-4 codes, and alpha-numeric
codes, as developed both Nationally by HCFA and on a Statewide basis by local
Medicare carriers.
34 Pa. Code §127.3. It defines “CPT-4” as:
The physician’s “Current Procedural Terminology, Fourth Edition,” as defined and
published by the American Medical Association.
Id. The Health Care Financing Administration is now called the Centers for Medicare and
Medicaid Services (CMS). See https://www.federalregister.gov/agencies/centers-for-medicare-
medicaid-services (last visited October 13, 2021).
4
forth the allowable medical fee, as determined under the cost containment
regulation, for each code.
Historically, the Medicare fee schedule contained one code for a
physical therapy evaluation, 97001, and a second code for a physical therapy re-
evaluation, 97002. In 2016, the Center for Medicare and Medicaid Services (CMS)
deleted the code for physical therapy evaluation, 97001, and replaced it with three
codes: 97161, 97162, and 97163. Likewise, it deleted the code for physical therapy
re-evaluation, 97002, and replaced it with code 97164. The codes for these related
physical therapy services, referred to herein as the 2017 codes, have been numbered
sequentially, both before and after 2016.
The Department decided that CMS’s 2017 codes for physical therapy
evaluations and re-evaluations constituted “new codes” for the purposes of 34 Pa.
Code §127.153. Accordingly, the Department used the “rates allowed in the
Medicare fee schedule in effect on the effective date of the new codes.” 34 Pa. Code
§127.153(c). This reduced the payment under the Act for a physical therapy
evaluation by approximately $21. In Area One of Pennsylvania, for example, the
fee allowed for a physical therapy evaluation was reduced from $119.20 to $98.06,
which became the new fee for each of the three “new” physical therapy evaluation
codes. See infra note 9. The update to the Department’s Fee Schedule with respect
to a physical therapy evaluation and re-evaluation became effective on January 20,
2017.
A. Administrative Appeal and Adjudication
Providers challenged the Department’s action by filing a “Petition for
Appeal of Agency Action and Request for Declaratory Order” pursuant to the
General Rules of Administrative Practice and Procedure (GRAPP), 1 Pa. Code

5
§§31.1-35.251. The petition requested a declaratory order under 1 Pa. Code §35.19,
and it appealed the actions of staff under 1 Pa. Code §35.20.6 In their petition,
Providers contended that CMS’s replacement of the single code for a physical
therapy evaluation with three codes did not constitute a new code for purposes of the
cost containment regulation; rather, the code “stratification” will allow the
complexity of the patient’s condition to be identified. However, the service of a
physical therapy evaluation remains the same.
A hearing officer was appointed. At the hearing, both Providers and
the Department’s Bureau of Workers’ Compensation (Bureau) presented evidence.
Providers’ first witness, Dr. Carole Galletta, was accepted as an expert
on HCPCS codes and medical provider payments related to physical therapy
services. Dr. Galletta explained that CMS, which is part of the United States
Department of Health and Human Services, establishes the codes used in the
Medicare fee schedule. Periodically, CMS reviews and updates the codes, which
are published in the Federal Register. In 2016, CMS adopted four codes for physical
therapy evaluations and re-evaluations to replace the two codes that had been in use
since 1998. Notes of Testimony, 1/31/2018, at 38-39 (N.T. __); Reproduced Record
at 145a-46a (R.R. __). Specifically, the former code for a physical therapy
evaluation, 97001, was deleted and replaced with codes 97161 through 97163. This
code grouping “stratifie[s] by complexity” the service of a physical therapy
evaluation. N.T. 40; R.R. 147a. See also R.R. 429a.
Dr. Galletta testified that CMS’s “new” codes did not change the health
care service, i.e., a physical therapy evaluation. She explained that the stratified

6
This provision states: “Actions taken by a subordinate officer under authority delegated by the
agency head may be appealed to the agency head by filing a petition within 10 days after service
of notice of the action.” 1 Pa. Code §35.20.
6
codes require more information from the provider about the complexity of the
patient’s condition and plan of care. However, both before and after January 1, 2017,
a physical therapy evaluation has consisted of the same elements: taking the patient’s
history, doing an examination, making a clinical decision, and developing a plan of
care.
Dr. Galletta testified that the service of a physical therapy evaluation
was introduced to the Medicare fee schedule in 1998 and used a single code without
regard to the patient’s condition. A stroke victim will produce a different evaluation
than a patient recovering from a fractured ankle, but this difference could not be
conveyed with the single code, 97001. Codes 97161 through 97163 allow the
provider to specify the complexity of the patient’s presentation as low, moderate, or
high complexity and thereby assist in tracking the patient’s progress.
Dr. Galletta next testified about CMS’s code for a physical therapy
re-evaluation, the number for which changed from 97002 to 97164. As before, the
code for a physical therapy re-evaluation follows in sequence the code for a physical
therapy evaluation. Dr. Galletta noted that the description for code 97164 is virtually
identical to that used for code 97002.
Dr. Galletta testified that CMS’s code changes for a physical therapy
evaluation and re-evaluation constituted a “renumbering” and not the introduction
of a “new code” within the meaning of 34 Pa. Code §127.153(c). She explained that
the medical provider or physical therapist will do the same work to do an evaluation,
regardless of the designation of the patient’s condition. The more extensive
descriptions in codes 97161-97163 will assist the provider in choosing which of the
three codes to use to identify the complexity of the patient’s condition.

7
Providers next presented Colleen Chancler, the President of the
Physical Therapy Association and a physical therapist with Good Shepherd Penn
Partners at the Hospital of the University of Pennsylvania. She testified that a
provider’s physical therapy evaluation consists of a diagnosis, a prognosis, and a
plan of care. This was not changed by CMS’s revisions to the codes for physical
therapy evaluations and re-evaluations.
On behalf of the Department, Patricia Clemens, Chief of the Healthcare
Services Review Division (Division) of the Bureau, testified. She explained that the
Division is tasked with implementation of the cost containment regulation, including
the updates to the Fee Schedule on the Department’s website.
Clemens testified that in late 2016, she reviewed CMS’s codes for
physical therapy evaluations and re-evaluations and learned that these codes have
“extensive criteria that [were] outlined, as well as definitions provided for users [of]
a code.” N.T. 115; R.R. 222a. The prior codes did not include these “specific
elements, the criteria, the definitions, [or] the stratifying of [evaluations].” N.T. 118;
R.R. 225a. Clemens testified that both the American Medical Association and CMS
described CMS’s revised codes as “new codes.” N.T. 115, 125; R.R. 222a, 232a.
Accordingly, the Division recommended that the Department treat CMS’s revised
codes for physical therapy evaluations and re-evaluations as “new” codes for
purposes of the updating provision in the cost containment regulation at 34 Pa. Code
§127.153(c).
Finally, Scott Weiant, Director of the Bureau, testified. Weiant
explained that he was responsible for the final decision on how to handle CMS’s
revised codes for physical therapy evaluations and re-evaluations in the
Department’s Fee Schedule. Weiant testified that “numerous stakeholders”

8
provided comments, including the Pennsylvania Physical Therapy Association and
the Insurance Federation of Pennsylvania. N.T. 189; R.R. 296a. He considered the
opinions of his legal counsel and other experts, including Clemens. Ultimately, he
concluded that CMS’s revised codes for a physical therapy evaluation and re-
evaluation were new codes. Accordingly, the Bureau did not apply 34 Pa. Code
§127.153(b) to calculate the payment amount for physical therapy evaluations and
re-evaluations in codes 97161-97164 using the statewide average weekly wage.
The Hearing Officer issued a proposed adjudication, recommending
that Providers’ appeal be granted and that a declaratory order be issued. The Hearing
Officer found that the 2017 codes did not introduce a new “service,” which
continued, as before, to be a physical therapy evaluation. Proposed Adjudication at
24; R.R. 584a (emphasis added). The stratification of one physical therapy
evaluation code into three codes related to the patient, not to the work required by
the medical provider to do the evaluation. “Both prior to, and after January 1, 2017,
a physical therapy evaluation included the taking of a personal history, an
examination, clinical decision making, and a plan of care.” Id. The Hearing Officer
found that the “change in description” in the codes did not identify a new service for
which a new rate should be introduced in accordance with 34 Pa. Code §127.153(c).
Id.
The Bureau filed exceptions to the Hearing Officer’s proposed
adjudication, contending that the Hearing Officer erred by not deferring to the
Bureau’s interpretation of the cost containment regulation. The Bureau also argued
that the Hearing Officer erred in recommending a declaratory order because this
would deny due process of law to the insurers that must pay for physical therapy
services.

9
The Secretary of Labor and Industry sustained the Bureau’s exceptions
to the Hearing Examiner’s proposed adjudication. The Secretary adopted the
Hearing Officer’s proposed finding of fact that “Dr. Carole Galletta, currently [a]
payment specialist for the [Pennsylvania Physical Therapy Association], was
accepted as an expert witness in CPT codes and medical reimbursement as it relates
to the practice of physical therapy.” Adjudication, 12/6/2019, at 6; Finding of Fact
No. 22. However, the Secretary rejected most of the Hearing Officer’s findings of
fact as unnecessary to the legal question presented or because they stated conclusions
of law. The Secretary made three additional findings, which are:

27. [The Bureau] calculated the 2017 medical fee caps for CPT
[c]odes 97161, 97162, 97163, and 97164 as new codes using 34
Pa. Code §127.153(c).
28. A chart containing the 2016 and 2017 CPT codes and
descriptions for physical therapy evaluations and re-evaluations
is attached to this Adjudication as Appendix A[] and incorporated
by reference.
29. Other examples of changes in descriptions between the 2016
and 2017 CPT code books include the following:

• CPT code 62287: The 2017 version deleted the words
“with the use of an endoscope” from the description of
services[.]

• CPT code 97602: The 2017 version added “larval therapy”
to the description of services.

Adjudication, 12/6/2019, at 7-8; Additional Findings of Fact Nos. 27-29 (citations
to transcript and exhibits omitted).
In holding that CMS’s three codes for physical therapy evaluations
were new codes, the Secretary focused on the change in code descriptions. The

10
physical therapy evaluation went from “bare-bones” in 2016 to a very extensive and
lengthy description. Adjudication, 12/6/2019, at 17. The Secretary reasoned that
the detailed descriptions for codes 97161 to 97163 effected a complete rewrite and,
thus, constituted new codes.
In rejecting the Hearing Officer’s proposed adjudication, the Secretary
explained that it had placed too much emphasis on the nature of the service provided.
The Secretary acknowledged that the word “services” appears in the title of Section
127.153 of the cost containment regulation, but he found that the pivotal term in the
actual text of Section 127.153(b) is “change in description” not “services.”
Accordingly, the Secretary denied Providers’ appeal.
The Secretary also denied Providers’ request for a declaratory order to
revise the Department’s Fee Schedule for the stated reason that Providers did not
name any insurers in their complaint. In this regard, he relied upon the
Administrative Agency Law, which provides that “[n]o adjudication of a
Commonwealth agency shall be valid as to any party unless he shall have been
afforded reasonable notice of a hearing and an opportunity to be heard.” 2 Pa. C.S.
§504.
B. Petition for Review
Providers petitioned for this Court’s review, invoking our appellate and
original jurisdiction, to challenge the Department’s updates to the Fee Schedule with
respect to the fees allowed for a physical therapy evaluation and re-evaluation. In
their appeal of the Secretary’s adjudication, Providers argue that the Secretary erred
in his application of the cost containment regulation and in holding that a declaratory
order was not available under GRAPP. Alternatively, Providers request a
declaratory judgment from this Court that the Department’s reduction in the

11
allowable fee for a physical therapy evaluation or re-evaluation was unlawful and
should be recalculated in accordance with 34 Pa. Code §127.153(b).
The Department filed a preliminary objection to Providers’ petition for
review addressed to this Court’s original jurisdiction. It argues, inter alia, that the
Court lacks jurisdiction because the subject matter of Providers’ petition for review
is subject to this Court’s appellate jurisdiction.
The merits of the Department’s preliminary objection, as well as the
merits of the Secretary’s adjudication, have been briefed and argued before this
Court en banc on September 16, 2020, and on February 10, 2021.
II. Appeal of the Secretary’s Adjudication
On appeal,7 Providers raise two arguments with respect to the
Secretary’s adjudication. First, they argue that the Secretary erred in treating CMS’s
revisions to the codes for physical therapy evaluations and re-evaluations as new
codes instead of modifications to existing codes. Second, they argue that the
Secretary erred in holding that declaratory relief was not available because the
insurers responsible for the payment of fees for physical therapy evaluations were
not joined as parties in the administrative proceeding. We address these issues
seriatim.

7
This Court’s review determines whether constitutional rights were violated, an error of law was
committed, or the findings of fact made by the agency are not supported by substantial evidence.
Section 704 of the Administrative Agency Law, 2 Pa. C.S. §704. Regarding questions of law, our
scope of review is plenary and our standard of review is de novo. Sedgwick Claims Management
Services, Inc. v. Bureau of Workers’ Compensation, Fee Review Hearing Office, 185 A.3d 429,
433 n.2 (Pa. Cmwlth. 2018).
12
A. Appeal of Staff Decision
Providers’ appeal turns on whether the Department correctly applied
the cost containment regulation to CMS’s revisions to the codes for physical therapy
evaluations and re-evaluations. The relevant provision states as follows:

(b) On and after January 1, 1995, adjustments and
modifications by [CMS] relating to a change in description or
renumbering of any HCPCS code will be incorporated into the
basis for determining the amount of payment as frozen in
subsection (a) for services rendered under the [A]ct.

(c) On and after January 1, 1995, payment rates under the [A]ct
for new HCPCS codes will be based on the rates allowed in the
Medicare fee schedule on the effective date of the new codes.
These payment rates shall be frozen immediately, and thereafter
updated annually by the percentage change in the Statewide
average weekly wage.

34 Pa. Code §127.153(b), (c) (emphasis added). Providers argue that CMS did not
introduce new codes to the Medicare fee schedule, but, rather, made “modifications”
to existing service codes. CMS simply “renumbered” the prior codes for a physical
therapy evaluation and changed the “description” so that medical providers can more
precisely report the findings of the patient’s evaluation. 34 Pa. Code §127.153(b).
We agree.
To argue in support of the Secretary’s contrary conclusion, the
Department emphasizes CMS’s expanded descriptions of the codes. CMS’s
description for codes 97001 and 97002 for physical therapy evaluations and re-
evaluations stated as follows:

The work of the physician or other qualified health care
professional consists of face-to-face time with the patient (and
caregiver, if applicable) delivering skilled services. For the

13
purpose of determining total time of a service, incremental
intervals of treatment at the same visit may be accumulated.
***

97001 Physical therapy evaluation

97002 Physical therapy re-evaluation

Adjudication, 12/6/2019, Appendix A at 1. Codes 97161-97163 are still titled
“Physical Therapy Evaluations.” The revised description states as follows:

[A] patient history and examination with development of a plan
of care, conducted by the physician or other qualified health care
professional, which is based on the composite of the patient’s
presentation.

Id. The revised description explains that the code will identify the patient’s
condition as: low complexity (97161), moderate complexity (97162), or high
complexity (97163). Id. at 2-3. To assist in making that choice, each code
description contains the following components:

CPT code ▪ A history with no personal factors and/or comorbidities that
97161 impact the plan of care;
▪ An examination of the body system(s) using standardized tests
and measures addressing 1-2 elements from any of the following:
body structures and functions, activity limitations, and/or
participation restrictions;
▪ A clinical presentation with stable and/or uncomplicated
characteristics; and
▪ Clinical decision making of low complexity using standardized
patient assessment instrument and/or measurable assessment of
functional outcome.

Typically, 20 minutes are spent face-to-face with the patient
and/or family.

14
CPT code ▪ A history of present problem with 1-2 personal factors and/or
97162 comorbidities that impact the plan of care;
▪ An examination of body systems using standardized tests and
measures in addressing a total of 3 or more elements from any of
the following: body structures and functions, activity limitations,
and/or participation restrictions;
▪ An evolving clinical presentation with changing characteristics;
and
▪ Clinical decision making of moderate complexity using
standardized patient assessment instrument and/or measurable
assessment of functional outcome.

Typically, 30 minutes are spent face-to-face with the patient and/or
family.
CPT code ▪ A history of present problem with 3 or more personal factors
97163 and/or comorbidities that impact the plan of care;
▪ An examination of body systems using standardized tests and
measures in addressing a total of 4 or more elements from any of
the following: body structures and functions, activity limitations,
and/or participation restrictions;
▪ A clinical presentation with unstable and unpredictable
characteristics; and
▪ Clinical decision making of high complexity using standardized
patient assessment instrument and/or measurable assessment of
functional outcome.

Typically, 45 minutes are spent face-to-face with the patient and/or
family.

Id.
As the Secretary aptly observed, “[t]he 2016 descriptions fill about a ½
page, single column, while the revised 2017 descriptions take up three pages, single
column.” Adjudication, 12/6/2019, at 17. There is no disputing this observation.
Nevertheless, the title for this outpatient service remains “physical therapy
evaluation” and, as before, the service requires “face-to-face time with the patient.”

15
Adjudication, 12/6/2019, Appendix A. The brevity or prolixity of the code
description is not dispositive.
First, nothing in the cost containment regulation states that the “change
in [code] description” is subject to a word limit in order to constitute an “adjustment”
or “modification”8 to an existing code. 34 Pa. Code §127.153(b). Rather, the
regulation states, without qualification, that “a change in description … will be
incorporated” into the Department’s existing Fee Schedule. 34 Pa. Code
§127.153(b). The length or extent of the change to the code description is irrelevant.
Second, both before and after January 1, 2017, a physical therapy
evaluation has required face-to-face time with the patient. Dr. Galletta testified that
this face-to-face time requires a patient history, an examination, a diagnosis, and a
plan of care. The Secretary expressly accepted Dr. Galletta as an expert witness on
CMS’s procedure codes and medical reimbursement as related to the practice of
physical therapy. Adjudication, 12/6/2019, at 6; Finding of Fact No. 22. In sum,
the elements of a physical therapy evaluation, whether coded under 97001 or 97161-
97163, have not changed.
The Department contends that the 2017 codes “added service
component requirements that were not required under the 2016 Medicare codes for
physical therapy evaluations and re-evaluations[.]” Department Brief at 4. It further
contends that CMS’s revised codes involve “the history, the scope of the

8
Neither “adjustment” nor “modification” is defined in the cost containment regulation. Where a
term is not defined, the courts use the common understanding of the word. Municipality of Mt.
Lebanon v. Gillen, 151 A.3d 722, 728 (Pa. Cmwlth. 2016). The common understanding of
“adjustment” is “a correction or modification to reflect actual conditions,” and the common
understanding of “modification” is “the making of a limited change in something.” MERRIAM-
WEBSTER’S COLLEGIATE DICTIONARY 16, 798 (11th ed. 2003). Likewise, the regulation does not
define “new;” its common understanding is “having recently come into existence: Recent,
Modern.” Id. at 834.
16
examination, the methods applied in the clinical decision-making process, and the
actual expected time involved with the patient.” Id. at 14. This argument is
unavailing.
“Typical times” are included in the new code descriptions. These times
are averages that provide a frame of reference to assist the medical provider in
assigning a level of complexity to the patient’s condition. They do not impose a
time requirement for the evaluation. The Bureau presented no evidence that more
work is required for a physical therapy evaluation under the 2017 codes than before.
The suggestion is illogical in light of the fact that the Department reduced the
payment rates for these so-called “new” and more challenging evaluations. It is also
illogical because all three codes for a physical therapy evaluation are reimbursed at
the identical rate.9
Likewise, CMS’s code change for a physical therapy re-evaluation
constituted a modification for purposes of the cost containment regulation. The re-
evaluation was renumbered, and the description changed to state:

Re-evaluation of physical therapy established plan of care,
requiring these components:

9
Exhibit 13, offered by Providers at the January 31, 2018, hearing, sets forth the allowable fee
amounts for physical therapy evaluations:
2016 [Department] Fee Current 2017 [Department] Projected 2017
Schedule amount for [a Fee Schedule amount for [Department]
Physical Therapy (PT)] PT Evaluation – Based on Evaluation fee-
evaluation [] Bureau decision to use If Bureau would have
127.153(c)[] applied 127.153(b)[]
Area 01 $119.21 $98.06 $121.24
Area 02 $107.77 $89.85 $109.60
Area 03 $107.77 $89.85 $109.60
Area 04 $107.77 $89.85 $109.60
N.T. 55; R.R. 162a, R.R. 461a.
17
• An examination including a review of history and use of
standardized tests and measures is required; and

• Revised plan of care using a standardized patient
assessment instrument and/or measurable assessment of
functional outcome.

Typically, 20 minutes are spent face-to-face with the patient
and/or family.

Adjudication, 12/6/2019, Appendix A at 3. As before, “face-to-face” time with the
patient is key. The Department does not argue, as it did for codes 97161 to 97163,
that the description for code 97164 was so expansive that it constituted a new code.
The cost containment regulation was promulgated under Section
306(f.1) of the Act. 25 Pa.B. 4873 (November 11, 1995). Section 306(f.1)(1)(i) of
the Act requires an employer to pay for “services rendered by physicians or other
health care providers.” 77 P.S. §531(1)(i). The phrase “health care service” appears
repeatedly. See, e.g., Section 306(f.1)(1) and (3) of the Act, 77 P.S. §531(1), (3).
However, the Secretary gave no consideration to Section 306(f.1) of the Act.
Section 306(f.1)(3)(i) of the Act states that the medical 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] Medicare
reimbursement mechanism … [that] pertains to the specialty service involved[.]” 77
P.S. §531(3)(i) (emphasis added). The cost containment regulation must be
construed in accordance with the statute that authorized it. See Slippery Rock Area
School District v. Unemployment Compensation Board of Review, 983 A.2d 1231,
1241 (Pa. 2009) (all regulations “must be consistent with the statute under which
they were promulgated”) (quotation omitted). The term “new code,” as used in 34
Pa. Code §127.153(c), is synonymous with “new service.” Here, the relevant health

18
care service consisted of a physical therapy evaluation or re-evaluation, which have
been covered in the Medicare fee schedule since 1998. That CMS called the revised
codes “new” is reasonable insofar as the number “97161” is not “97001.” It is a new
number. Another way to express this change is as a “renumbering.” 34 Pa. Code
§127.153(b). CMS’s code revisions used the same service identifiers: physical
therapy evaluation and re-evaluation.
We hold that CMS’s elimination of codes 97001 and 97002 and their
replacement with codes 97161 to 97164 constituted “adjustments and modifications”
to the existing and long-standing codes for the outpatient service of a physical
therapy evaluation or re-evaluation. 34 Pa. Code §127.153(b). As such, these codes
should have been incorporated into the Department’s Fee Schedule using the
statewide average weekly wage to update the 2016 fees. Accordingly, we reverse
the Secretary’s adjudication that codes 97161 to 97164 constituted new codes for
purposes of the cost containment regulation and remand the matter to the Secretary
to revise the allowable fees for the three physical therapy evaluation codes and one
re-evaluation code in accordance with 34 Pa. Code §127.153(b). As required by the
Act, the updates that are “equal to the percentage change in the Statewide average
weekly wage … shall be cumulative.” Section 306(f.1)(3)(ii) of the Act, 77 P.S.
§531(3)(ii).
B. Request for Declaratory Relief from the Secretary
In their request for declaratory relief from the Secretary, Providers
sought an order declaring that the allowable fee for a physical therapy evaluation
was improperly calculated for 2017 and should be recalculated in accordance with
Section 127.153(b). The Secretary denied this request for the stated reason that due

19
process10 required the joinder of every potentially affected employer or insurer,
which cannot be done under GRAPP.
Section 35.19 of GRAPP states as follows:

Petitions for the issuance, in the discretion of an agency, of a
declaratory order to terminate a controversy or remove
uncertainty, shall state clearly and concisely the controversy or
uncertainty which is the subject of the petition, shall cite the
statutory provision or other authority involved, shall include a
complete statement of the facts and grounds prompting the
petition, together with a full disclosure of the interest of the
petitioner.

1 Pa. Code §35.19. In Network for Quality M.R. Services in Pennsylvania v.
Department of Public Works, 833 A.2d 271, 276 (Pa. Cmwlth. 2003), this Court
observed that the providers could petition the agency for a declaratory judgment
regarding the alleged illegality of the reimbursement scheme. “The purpose of
awarding declaratory relief is to finally settle and make certain the rights or legal
status of parties.” Geisinger Clinic v. Di Cuccio, 606 A.2d 509, 519 (Pa. Super.
1992).
Here, the Secretary held that the “basic due process elements of notice
and an opportunity to be heard” required all potentially affected employers and
insurers to participate in Providers’ action. Adjudication, 12/6/2019, at 9. This is

10
The Due Process Clause of the Fourteenth Amendment states as follows:
No state shall make or enforce any law which shall abridge the privileges or
immunities of citizens of the United States; nor shall any State deprive any person
of life, liberty, or property, without due process of law; nor deny to any person
within its jurisdiction the equal protection of the laws.
U.S. CONST. amend. XIV, §1. The Pennsylvania Constitution also provides this protection. PA.
CONST. art. I, §9.
20
because they will have to pay a fee for physical therapy evaluations higher than
required as of January 20, 2017.
The Pennsylvania Supreme Court has explained that “[t]he procedural
rules applicable to administrative agencies, [GRAPP], do not provide for
compulsory joinder of third parties.” Pennsylvania Human Relations Commission
v. School District of Philadelphia, 732 A.2d 578, 581 (Pa. 1999). However, under
GRAPP, persons with an interest can file a petition to intervene in an administrative
agency proceeding. Specifically, Section 35.28 of GRAPP states:

(a) Persons. A petition to intervene may be filed by a person
claiming a right to intervene or an interest of such nature that
intervention is necessary or appropriate to the administration of
the statute under which the proceeding is brought. The right or
interest may be one of the following:

(1) A right conferred by statute of the United
States or of this Commonwealth.

***
1 Pa. Code §35.28(a)(1). Section 35.28 “does not require the agency to grant
intervention.” Shawnee Tabernacle Church v. Pennsylvania State Ethics
Commission, 76 A.3d 117, 126 (Pa. Cmwlth. 2013) (emphasis in original).
Any employer, insurer, or other interested person could have
participated in the hearing initiated by Providers by filing a petition to intervene
under 1 Pa. Code §35.28. This satisfies the due process concerns expressed by the
Secretary. Simply, “[p]rocedural due process does not require notice and a hearing
in every conceivable situation involving administrative action.” Conestoga National
Bank of Lancaster v. Patterson, 275 A.2d 6, 9 (Pa. 1971). The Pennsylvania
Supreme Court has explained that “[d]ue process is flexible and calls for such
procedural protections as the particular situation demands.” Pennsylvania Coal

21
Mining Association v. Insurance Department, 370 A.2d 685, 691 (Pa. 1977). It was
incumbent upon employers and insurers to participate in the hearing on Providers’
administrative appeal.
The Secretary’s due process concern is one-sided. The Department’s
action effected an immediate reduction in payments to medical providers for doing
a physical therapy evaluation. It did so without a formal hearing that named the
medical providers of this service as respondents.
We reject the Secretary’s reasoning in this regard, but we conclude that
Providers’ request for a declaratory order is redundant of their administrative appeal
and unnecessary. This Court’s reversal of the Secretary’s adjudication will require
the Department to correct the Fee Schedule. The corrected Fee Schedule will allow
Providers to submit supplemental invoices to employers and insurers, if they choose
to do so. Some may not. Any disputes on the supplemental invoices will be handled
in accordance with the existing procedures for resolving disputes between an
employer or insurer and a provider over reasonable and necessary treatment of a
compensable work injury.11
III. Conclusion
CMS’s revisions to the codes for physical therapy evaluations and re-
evaluations in the Medicare fee schedule did not constitute “new codes” within the
meaning of 34 Pa. Code §127.153(c). CMS’s modifications or adjustments relating

11
Section 306(f.1)(5) of the Act provides, in relevant part, as follows:
A provider who has submitted the reports and bills required by this section and who
disputes the amount or timeliness of the payment from the employer or insurer shall
file an application for fee review with the department no more than thirty (30) days
following notification of a disputed treatment or ninety (90) days following the
original billing date of treatment.
77 P.S. §531(5).
22
to changes in the description and renumbering of physical therapy services should
have been “incorporated” into the Department’s existing Fee Schedule under 34 Pa.
Code §127.153(b).
Accordingly, this matter is remanded to the Secretary to recalculate the
allowable fees for physical therapy evaluations and re-evaluations in accordance
with 34 Pa. Code §127.153(b).12

____________________________________________
MARY HANNAH LEAVITT, President Judge Emerita

12
We dismiss both Providers’ request for declaratory judgment addressed to our original
jurisdiction and the Department’s preliminary objections thereto as moot.
23
IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Pennsylvania Physical Therapy :
Association and Waterford :
Physical Therapy, Inc., :
Petitioners :
:
v. : No. 2 M.D. 2020
:
Honorable W. Gerard Oleksiak, :
Secretary of Labor and Industry, :
Department of Labor and Industry, :
Commonwealth of Pennsylvania, :
Respondents :

ORDER

AND NOW, this 14th day of October, 2021, the adjudication of the
Honorable W. Gerard Oleksiak, Secretary of Labor and Industry, Department of
Labor and Industry, Commonwealth of Pennsylvania, dated December 6, 2019, is
REVERSED and the above-captioned matter is REMANDED to the Department of
Labor and Industry to correct its 2017 Workers’ Compensation Fee Schedule in
accordance with 34 Pa. Code §127.153(b) for codes 97161 to 97164.
The petition for review addressed to this Court’s original jurisdiction
seeking a declaratory judgment and the preliminary objection filed thereto is
DISMISSED as moot.
Jurisdiction relinquished.

____________________________________________
MARY HANNAH LEAVITT, President Judge Emerita

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10747124. Public record. Not legal advice.