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Workers Compensation Legislation

The 77th Texas Legislature enacted a comprehensive law giving workers an independent review process for workers compensation claims if they are told their treatment is not "medically necessary."(1) The law requires the new independent review process to be the same as the existing process for other health insurance treatment denials. The Texas Workers' Compensation Commission (TWCC), in December of 2001, finalized regulations that turned over the review of workers comp denials to the same independent review companies currently authorized by the Texas Department of Insurance (TDI) to perform other insurance reviews.(2)

Like the HMO independent review process, TWCC will rotate these workers' compensation cases among the three IROs. In the past the commission has received about 3,000 requests for review a year, according to Bob Shipe of the Texas Workers' Compensation Commission's governmental relations division.(3) By contrast, TDI receives about 500 requests for review of HMO denials each year, giving about 150 cases to each review organization. The new workers compensation claim reviews could result in a sudden ten-fold increase in the number of cases coming before the existing reviewers.

But the fee structure makes this unlikely. Under the HMO system, the $650/$450 independent review fee must be paid by the insurance company every time a consumer requests review. In the comp system, independent reviews of "preauthorization" or "concurrent" denials must be paid by the insurance company (the employee has not yet received any services, or the insurer denies continued care beyond a specified limit), but if the service has already been delivered, the "non-prevailing party" (either the comp insurer or the medical provider) must pay the fee. Regulations require providers to pay the fee for a retrospective review first and get reimbursed if they prevail (the independent reviewer finds the treatment to be medically necessary).(4) The statute mandates that the injured worker never pays for the review.

Workers compensation regulations, like many group health insurance plans, require certain kinds of procedures to be pre-authorized every time.(5) But even so, more than half of workers compensation disputes in the past have involved services already delivered. The up-front fee may discourage many health providers from requesting reviews, Shipe said.
HB 2600 required TWCC to post de-identified independent review decisions on its web site so that all providers and workers can understand the medical basis for determinations of medical necessity.(6) Three months into the new program, no decisions have been posted. Only 68 reviews had been requested and 21 decisions completed. Given the previous volume, we would expect 8 to 10 requests for review to arrive every day. The low volume of requests so far is no doubt partially due to the implementation of a totally new system. Even so, initial startup appears slow.

Medical conditions filed under workers compensation differ substantially from the types of conditions we have identified elsewhere in this report. Workers compensation claims are far more likely to involve soft tissue damage and back problems, and the most common treatments include various therapies, durable medical equipment and "work hardening," a therapy designed to bring an injured worker slowly back to the kind of tasks required for the job. By contrast, our review of HMO independent review found the largest categories of reviews related to substance abuse, mental health, and the number of days required for inpatient care (for a wide range of illnesses).

Since the volume of reviews and type of conditions may be significantly different for workers compensation than for HMO based care, adequate oversight is critical.

Regulations and the law set out a number of consumer protections that could be a model for the HMO independent review process. In addition to the requirement that TWCC post IRO decisions on the internet (without confidential information that could be used to identify the patient), workers compensation insurance companies must adjust their behavior based on the IRO decisions. If an independent reviewer determines that care is medically necessary, and the insurer based its initial denial on a particular peer review, the insurer cannot use that same basis and rationale to deny subsequent similar claims.(7)

Further, as we recommend here for all HMO reviews (see page 17), the regulations state that TWCC will monitor IRO decisions and outcomes, and establish this monitoring system through a Memorandum of Understanding with the Texas Department of Insurance.

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Footnotes:


1 77th Texas Legislature, H.B. 2600, Article 6, Sec. 6.04, Medical Dispute Resolution, effective January 1, 2002.

2 26 Texas Register December 28, 2001, Final rules and response to comment, Chapter 133. General Medical Provisions.

3 Shipe, Bob, Texas Workers Compensation Commission, interview with Consumers Union, Feb. 22, 2002.

4 28 Texas Administrative Code, Title 2, Article 133.308(q)

5 Treatments that require preauthorization include inpatient hospital admission other than emergency, spinal surgery, chemical dependency and weight loss programs, chronic pain management, durable medical equipment costing over $500, outpatient or ambulatory surgery, all myelograms, discograms, or surface electromyograms, all chemonucleolysis and much more. TWCC Fast Facts, "Preauthorization, Concurrent Review, and Voluntary Certification," February 1, 2002.

6 77th Texas Legislature, H.B. 2600, Article 6, Sec. 6.04, Sec. 413.031 (c).

7 28 Texas Administrative Code, Title 2, Article 133.308(o)(6).