Cooking Up Trouble

New Workers' Comp Fee Schedule Leaves Physicians Stewing 

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Cover Story -- July 2002

By Walt Borges
Associate Editor

Many Texas physicians are beginning to wonder aloud whether a recipe the Texas Workers' Compensation Commission (TWCC) cooked up to reduce employers' premiums will instead reduce doctors' willingness to treat injured workers.

The way these physicians see it, TWCC took one full measure of low pay, added slow pay, and blended in no pay. The mixture was then wrapped in thick layers of paperwork and quickly half-baked. The result: an unappetizing concoction that may keep workers' comp insurance low for employers, but will drive many doctors out of the system.

TWCC voted in April to set fee guidelines at 125 percent of Medicare fees, a level that Texas Medical Association leaders say is too low for most physicians.

Evaluating the impact isn't simple. While primary care physicians will see fee increases for their office visits by injured workers, surgeons and most other specialists face substantial decreases in fees that may reduce the number of doctors willing to see injured workers, TMA leaders warn. But some specialists will see substantial fee increases, especially anesthesiologists, whose fees will average 273 percent of Medicaid fees, a bump of more than 10 percent over what they are currently paid.

To complicate matters, tying the fees to Medicare without adequate adjustment for cost factors affecting Texas practices augers a bleak future of falling fees. Over the next four years, Medicare fees are expected to decrease 20 percent, further trimming the economic margin for doctors who are struggling to stay afloat under the administrative burdens of the complex workers' comp rules.

Then there are the political factors. TMA leaders are amazed that TWCC acted, despite pleas for delay from three state senators, numerous critical physicians, a newly appointed TWCC commissioner, and Gov. Rick Perry's chief of staff, Michael D. McKinney, MD. TMA leaders were angered further by what they see as post-vote disinformation from TWCC Executive Director Richard Reynolds, who claimed that he had never received the data from TMA that he had requested.

In a statement released after the vote on April 25, TMA President Fred Merian, MD, said TMA is "extremely disappointed in today's decision and perplexed that the TWCC would adopt a faulty system out of Washington, D.C., instead of the Texas-based approach we have recommended." He called on the commissioners and Governor Perry to reconsider "this significantly flawed decision."

On May 9, Governor Perry responded by asking Texas Attorney General John Cornyn to decide whether the TWCC action fell within the legal requirements of the Labor Code provision governing workers' comp. He asked if using Medicare reimbursement as a benchmark for paying physicians violates Labor Code provisions that prevent TWCC from adopting conversion factors or adjustment factors based solely on those developed for Medicare.

The governor asked the attorney general to determine if provisions of the workers' compensation reform bill (House Bill 2600) passed by the legislature in 2001 require the fee guidelines to "be derived from a conversion factor that is developed independent of the Medicare system."

A spokesperson for General Cornyn said an opinion must be rendered in 180 days, which means it is due on Nov. 6. Election Day is Nov. 5.

But the growing physician dissatisfaction is not just about fee guidelines. Many physicians are equally displeased with how TWCC is establishing new requirements and guidelines for treatment, work releases, preauthorization, and training, adding to administrative burdens that many doctors say exceed similar federal ones.

"The first priority of TMA is to ensure that Texas workers have access to quality medical care," said Robert Gunby, MD, the Dallas gynecologist who chairs TMA's Council on Socioeconomics. "We are extremely concerned that the fee guidelines will affect access because increasing requirements have been placed on physicians who deal with injured workers while their payments are reduced. If physicians leave the system, injured workers will be fed into so-called workers' comp mills where quality care is not often found."

Bernard T. Swift Jr., DO, who practices occupational medicine in San Antonio and believes he could benefit from the new fee guidelines in the short term, agrees. "The fees are simply too low and the administrative burden too high," he says, but he warns that the fee guideline revisions were not uniformly bad for Texas doctors.

"This fee schedule has the potential to create a huge rift among Texas physicians, particularly between the primary care physicians and surgeons," said Dr. Swift. "The problem is that the primary care doctors have been underpaid for years while the administrative burdens and costs have increased. As a primary care physician, I think I can say that we all want a fee increase, but it's still my thought that this is a bad fee schedule. That's because we are tied to a federal fee schedule that can be adjusted at the whim of CMS [Centers for Medicare and Medicaid Services]. In the long term, with the prospect of reduced Medicare fees, it's a bad deal."

Will Doctors Leave the System?

Some physicians already are reluctant to see workers' comp patients, according to the preliminary results of TMA's 2002 Physician Survey. A survey of 615 physicians found that less than 50 percent of the doctors in internal medicine, family practice, general practice, and other nonsurgical practices place no limits on the number of workers' comp patients they see. Many physicians refer all their workers' comp patients to other doctors, while a smaller portion limit treatment of workers' comp patients to existing patients or emergency room patients. For surgical specialties, about 70 percent of the respondents said they had no limits on the number of patients seen under workers' comp insurance, and only about 10 percent chose to refer all patients.

Many San Antonio physicians will not accept workers' comp patients, Dr. Swift says.

"In San Antonio, we can find no dermatologists and no pulmonologists to see workers' comp patients," he said. "There are only two or three psychiatrists, and because they all bill off the E&M [evaluation and management] fee schedule, the existing fees are too low, given the significant administrative burdens built into the system.

"The point is not that the sky is going to fall. It is already falling since we currently have access problems in San Antonio caused by low reimbursements," Dr. Swift said.

In Garland, Allen Meril, MD, has the same problem.

"Doctors already have left the system because of the administrative hassles," said Dr. Meril, founder of Patient Advocates of Texas (PAT), which has sued TWCC over earlier fee guideline proposals. "For example, there are no dermatologists left in Garland who will see new workers' comp patients. When we need to refer to a dermatologist, we have to call TWCC to ask them to find a physician. We end up going to Fort Worth to find a dermatologist who will see them."

Dr. Meril says any physician who bills primarily for E&M codes used for office visits "will get a raise" under the new TWCC fee guidelines. But like Medicare, he says, the new TWCC fees are heavily weighted to conservative, nonsurgical treatment.

"For spine surgeons like me, you're looking at 60- to 70-percent cuts in fees," Dr. Meril said. "There's not a business I know that can take 60-percent cuts and stay in business."

In Houston, George Hancock, MD, practices occupational medicine and has a different view.

"The current fee schedule is starving primary care physicians," Dr. Hancock said. "I think the new fee schedule will be very good for physicians whose practices are based on office visits."

Dr. Hancock explains that he hasn't "had a raise in seven years or more, and since they adopted the current fee schedule, expenses have gone up significantly."

For a standard in-office visit, Medicare pays $51 to $53, but TWCC doesn't pay more than $48, Dr. Hancock says. Under the new fee schedule, TWCC would pay him $63.75 for what is currently a $48 visit.

"The new schedule will assist in closing the gap," he said. "The raise is well deserved and long overdue."

Dr. Hancock says the situation may differ for surgeons and physicians whose practices include many surgical procedures, but he says there has been no clear explanation of the impact on those types of practices.

Dr. Hancock says the predicted 20-percent decreases in Medicare fees concern him but don't change the economics for his practice. "If you take 20 percent off the new fee schedule, I'm still better off than I am under the present one," Dr. Hancock said.

Same Old Hassles

Dr. Swift says physicians face the same processing problems when submitting claims to workers' comp insurers as they do submitting claims to commercial insurers.

If trying to determine whether a fee will be adequate at 125 percent of a Medicare fee, physicians should consider whether payments for workers' comp services would be reduced by bundling, Dr. Swift says.

"In this process of bundling, it's unclear where Medicare rules apply," he warned. "They can tell you that you will be paid 125 percent of Medicare, but that's not what you will be paid. There are all these barriers and exclusions to getting paid, so you might get 75 cents on the dollar."

The most common payment problem, Dr. Swift explains, is employers' failure to file the E-1 accident report form that insurers use to process a workers' comp medical bill.

"Employers are required to file a form only when there is at least one day of lost time at work for the patient," he said. "If an employer doesn't file an E-1, when the insurer gets the bill from a physician, it's thrown in the trash."

Dr. Swift says insurance carriers are required to investigate possible claims, but they usually do not when a medical claim arrives. TWCC has not stepped in to order carriers to conduct the investigations, Dr. Swift says.

For 30 percent of the claims submitted to workers' comp insurers by his practice, an E-1 has not been filed, Dr. Swift says.

His billing staff does not know the claim is not being processed for 45 days, when payment by the insurer is due. When no payment arrives, he said, "we have to call the insurer. If we find out that no E-1 was filed, we have to call the employer to get him to file one. And that takes a lot of staff."

Sometimes employers will file the accident report when contacted by doctors, but some employers will not, because there is no requirement for them to do so, says Rich Johnson, TMA's director of medical economics. Those employers may not want to report injuries that would reflect on their business' safety record and bring higher premiums, Mr. Johnson says.

Will Gaines, MD, of the Department of Occupational and Environmental Medicine at Scott and White in Temple, says the carriers' practice and TWCC 's lack of enforcement create a loophole that ensures that doctors don't get paid if they treat injuries and quickly return the patient to work.

"The commission wants to put people back to work," he said. "But if a worker comes in and we treat him and put him back to work quickly, it's as if there has been no injury," Dr. Gaines said. "We don't get paid."

HB 2600 requires physicians who routinely were admitted to the TWCC list of approved doctors for comp patients to now undergo more stringent training. Some physicians question whether the new requirements are just another hassle that will influence their decisions on whether to treat injured workers.

Dr. Hancock says that a lot of paperwork, reports, and regulations are associated with Texas workers' comp, but he does not think the required training will be an additional burden. "As someone who is involved in administration, I see physicians who don't always follow the rules. A one- or two-day training course is really not that intensive and time consuming. Physicians make the same commitment to take CME courses."

The Politics of Workers' Comp

Texas adopted its workers' compensation system in 1917 as part of a political bargain between business and labor that kept workers from suing -- and sometimes bankrupting -- their employers for damages stemming from workplace injuries. In exchange for giving up the right to sue their employers for compensation, workers were covered by the first no-fault insurance system, were guaranteed rapid access to benefits that covered medical costs and some income losses, and were protected from termination or other retaliation for asserting their rights.

From the start, Texas was unique, allowing employers to opt out of the system. Today, Texas is the only state that does not mandate that employers join a universal workers' comp system, a situation that many critics believe undermines the economic foundation of the Texas system.

In 1989, the legislature enacted major reforms in the workers' comp system to reduce premiums that were driving employers from the system. The reforms created an administrative dispute resolution system that drove lawyers representing workers out of the system and used medical impairment guidelines as the basis for determining benefits. The reforms also instituted a designated doctor system that used a TWCC-chosen physician to resolve medical disputes between a worker's doctor and the employer's doctor.

The reforms adopted by the legislature in 2001 focused on the costs of medical care. Although TMA's studies that showed that overutilization of services rather than fees prompted the medical cost increases of the 1990s, TMA signed on to HB 2600 and reluctantly to its approach to setting fees.

Other amendments to the Labor Code authorized TWCC to base fees on the guidelines developed by the Health Care Financing Administration (now CMS), with modification by conversion factors. HB 2600 specifically prohibited TWCC from adopting the Medicare fee guidelines verbatim or basing the Texas conversion factors solely on similar Medicare conversion factors.

HB 2600 was unpopular with many physicians, but TMA leaders hoped implementation of the bill would create a system that was better for physicians and their patients than the existing one. But first they had to navigate TWCC and its rule-making process.

The commission is composed of six members -- three representing employers and three representing workers. In recent years, labor leaders and employee groups have charged that governors have appointed as workers' representatives commissioners who are not always friendly to workers, so the commission currently leans toward the interests of employers and insurers and away from the interests of workers, their lawyers, and their physicians.

"There's little chance in the current system that an injured worker will be fully compensated for his injury," said Rick Levy, JD, general counsel of the Texas AFL-CIO. "But he will get a full share of bureaucratic headaches and heartaches."

The commission staff is headed by Richard Reynolds,a former state representative, insurance lobbyist, member of the State Board of Insurance, and TWCC chair who was appointed to represent employers. His hiring by the commission was strongly opposed by organized labor, which complained that choosing an executive director with a known bias was unwise.

In the wake of HB 2600, TWCC struggled to prepare a number of guidelines, and its first attempt in October 2001 met with substantial objections from TMA and other stakeholders. Legal action by PAT also challenged TWCC's hiring of consultant Milliman USA to prepare the proposal, arguing that TWCC had violated governmental procedures for contracting. The proposal, with average fees of approximately 140 percent of Medicare, was quickly pulled down, and Mr. Reynolds requested TMA input on guidelines and payment procedures. TMA provided written comments and met with Mr. Reynolds several times to provide input.

In December 2001, the commission stunned TMA by proposing that fees for specialists be set at 120 percent, with the exception of anesthesia, which was set at 257 percent.

TMA's Workers' Compensation Task Force contended the proposal did not meet the statutory requirements that the fees be "fair and reasonable" and were in conflict with a number of other state laws. The task force also believed that the proposal did not meet the requirement that fee guidelines not be based solely on Medicare fees.

In March, Dr. McKinney, the governor's chief of staff, suggested in a letter to TWCC Chair Rebecca Olivares that the stakeholders group for workers' comp, a body that seeks to solve problems through consensus, be allowed to complete its work before the fee guidelines were adopted. "We feel that adoption of your staff's recommendation for a payment rate of 125 to 135 percent of Medicare is at best premature and will set back the efforts under way through the stakeholders group," Dr. McKinney wrote.

But when TWCC met April 25, delay was not in the cards, even when newly appointed commissioner Richard Smith, of Bryan, an architect of the 1989 reforms during a stint in the Texas House, asked for a delay to get up to speed on the fee guidelines. Another commissioner, Joel B. "Burt" Terrill, suggested to Mr. Smith that the governor was to blame for his predicament, noting that the governor could have filled two vacancies that existed for over a year, but "he has chosen not to do so until the very last minute. We've got to get some controls on medical costs in this state and this is the time to do it."

After TWCC approved the guidelines, Mr. Reynolds made comments that TMA leaders call misleading and misguided as well. Even as he noted that TMA had endorsed HB 2600, he characterized the organization "as not in agreement with the mandate of [HB] 2600." He also objected to the association's characterization of the Texas fee guidelines as the adoption of federal price guidelines. "We don't depend on the federal government in dictating price control," Mr. Reynolds said.

But Mr. Reynolds also told commissioners that TMA failed to provide TWCC with data comparing the workers' comp system's burden with that of Medicare. The comment angered TMA leaders, who point out that Mr. Reynolds conveniently forgot more than 20 pages of analysis submitted by TMA, and neglected to recall that TWCC is requiredto collect and analyze such information but has chosen not to.

At press time, TMA leaders were drafting a letter to Governor Perry pointing out that TMA had filed extensive comments and held numerous meetings with TWCC to present the views of the state's physicians.

Mr. Levy says labor leaders believe that business and insurance organizations do not like the provisions of HB 2600 -- a fact evidenced by the Texas Association of Business's late sign-on to the legislation in 2001 -- and have lobbied to make the legislation ineffective in its implementation.

"The insurance lobby, along with the Texas Association of Business, is almost single-minded in their effort to get complete control over the medical process," Mr. Levy said. "Unfortunately, the current administration is all too willing to do their bidding.

"In 1989, the legislature took workers' lawyers out of the system," Mr. Levy said. "In 2002, the insurance companies are taking the doctors out of the system."

Some physicians blame the governor for the mess, even though Dr. McKinney pleaded for a delay.

"The governor realizes he made a mistake when he vetoed prompt pay, and we think he tried to delay implementation to show physicians he wasn't against them," said Dr. Meril. "I can't see any other reason for the request."

Solutions by TMA

In considering the options for a response, TMA is likely to pursue legal action to block the implementation of the fee schedule. The key step could be made in August, when the courts would be asked to consider a motion for a temporary restraining order to block the new fees, which would go into effect Sept. 1. TMA General Counsel Donald P. Wilcox, JD, says any request for a temporary order would be part of a lawsuit challenging the reasonableness of the TWCC fee guidelines and their legality.

Revamping of TWCC may be among reforms pursued during the 2003 legislative session.TMA leaders and physicians who have dealt with TWCC see little hope of effecting change through the commission while the current membership remains unchanged, and Mr. Levy says there is a constitutional requirement that all state boards comprise an odd number of members by 2003.

Mr. Levy saysit is not only the  fee schedule and administrative burdens that have a number of stakeholders questioning the TWCC's intent. "It's the commission taking such an antagonistic stance towards the doctors. We want the doctors in the system. We need the doctors."

TMA Provides Workers' Comp Resources

If you have questions about the complicated system known as workers' compensation in Texas, look to the Texas Medical Association for the answers.

The Complete Workers' Compensation Manual for Texas Physicians, 3rd Edition , addresses fee guidelines and billing, dispute resolution, administrative rules and appeals, and maximum medical improvement (MMI) and impairment ratings. It also includes sample forms.

The manual costs $182.94, sales tax included.

To order, call (800) 880-1300, ext. 1456, or (512) 370-1456.

TMA also is offering training to help designated doctors assist the Texas Workers' Compensation Commission (TWCC) in resolving disputes regarding MMI and/or impairment ratings. Health care providers must fulfill the training requirements for designated doctors set out in TWCC Rule 126.10 and submit a Designated Doctor Application (TWCC-72) before being added to the designated doctor list. Training is valid for two years, and TWCC certification must be renewed every two years.

Health care providers performing only ROM, sensory, and strength testing for designated doctors must fulfill the training requirements set out in TWCC Rule 126. Training must be completed every two years.

Texas law requires that designated doctors use the AMA Guides to the Evaluation of Permanent Impairment, 4th Edition. TWCC requires that all doctors be trained on the use of this edition for calculating an impairment rating when MMI is certified on or after Oct. 15, 2001.

TMA is sponsoring two 2-day training sessions on this issue, July 26-27 in Houston and Nov. 8-9 in Dallas. The cost is $400 for TMA members and $550 for nonmembers.

You can register for the courses online on the TMA Web site; by mail at TMA Seminars (Impairment Evaluation Under Texas Workers' Compensation, 4th Edition), 401 W. 15th St., Austin, TX 78701-1680; by telephone at (800) 880-1300, ext. 1452, or (512) 370-1452; or by faxing the registration form and credit card information to (512) 370-1635.

July 2002 Texas Medicine Contents
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