Texas: Performance Based Oversight Committee Update

Stuart Colburn   By Stuart D. Colburn, Esq., Shareholder, Downs Stanford

The Division of Workers’ Compensation (DWC) is holding stakeholder meetings regarding Performance Based Oversight (PBO). 

The Division is seeking stakeholder input to add additional measures.  Currently, the Division measures carriers on four criteria:  timeliness of initial payment of temporary income benefits, timeliness of payment of medical benefits, timeliness in submitting EDI data, and timeliness of submitting medical EDI data. 

The Committee is exploring other options that would correlate with the key regulatory goals found in the statute.

Stakeholders are discussing safety as a PBO measure.  However, the safety measures and audits the Division currently collects and performs are in the process of being reviewed.  A significant limitation is that only commercial carriers are assessed – not political entities or certified self-insureds. 

One possible new PBO measure is the carriers’ return to work coordination services.  However, this criteria could only be graded pass/fail (did the carrier offer job coordination services or they did not). 

Stakeholders have been discussing the accuracy of medical benefits.  Medical providers believe carriers are not paying the appropriate reimbursement amounts.  This criteria has taken additional importance since informal networks are no longer allowed as of January 1, 2011.  The Division is currently seeking ways to determine if their data can easily show a carrier inappropriately reducing medical reimbursement.  According to preliminary information, insurance companies did not pay MAR 78% of the time.  However, the data is raw, may or may not be accurate (or there may be valid reasons for the exceptions).  The Committee will continue to discuss these measures.

Some medical providers suggest carriers should be assessed on return to work measures.  There are several problems with this potential measure.  A small group was convened to discuss this matter in depth.  First, return to work was intensely studied as a possible measure for doctors.  It was suggested DWC use State Mandated Return to Work Guidelines published by the Reed Group to assess the DWC-73.  Still, medical providers strongly oppose such a measure.  The medical community balked, arguing they were not responsible for returning injured workers back to work. 

Medical providers suggested DWC judge carriers on the same measure.  However, carriers do not have any control over the doctor who releases a claimant to return to work or the employer to issue a bonafide job offer.  Issues such as termination, abandonment of job, and other concerns are important considerations.  Median return back to work statistics differ across the state, indicating a geographical bias.  Furthermore, in some portions of the state, hearing officers routinely find in favor of the injured workers on disability and bonafide job offers. 

It was argued insurance carriers have “influence” on return to work through the use of higher premiums.  However, this factor has severe limitations.  Possible influence is not direct influence.  Premiums have more influence on guaranteed cost policies but little to no effect on deductible policies.  Texas law requires every carrier to offer three separate deductible plans.  Employers with higher deductibles are subject to their own cost controls and are not swayed by premiums.  Higher premiums on guaranteed cost policies would force employers to change carriers, not necessarily return an injured worker back to light duty.  Finally, self-insureds and political entities do not pay “premiums.”  Premiums are not a tool to control RTW outcomes to use as a PBO measure.

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