If It Is Broken, Fix It

Sunset Panel Recommends Major Workers' Comp Changes

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Legislative Affairs Feature -- December 2004

By Ken Ortolon
Senior Editor

Two years ago, more than 30,000 names appeared on the Texas Workers' Compensation Commission (TWCC) list of health care professionals approved to treat injured workers. Today, more than half of them have disappeared.

Physicians and others are bailing out of the state workers' compensation system saying it is too heavy on administrative burdens and too short on reimbursement.

"TWCC took a reasonable set of rules 12 years ago and systematically changed the rules so they're more onerous, and more burdensome, and they've chased an awful lot of good, high-quality physicians and specialists out of the system," said Beaumont orthopedic surgeon David Teuscher, MD.

Just about every stakeholder in the workers' compensation system is dissatisfied with how TWCC has run the program. They say the commission has been unresponsive to their mounting concerns.

"We don't believe the system is fair to anyone," said David Henkes, MD, of San Antonio, who chairs a special Texas Medical Association ad hoc committee on workers' compensation. "Business isn't happy with it. We haven't been happy with it. The workers haven't been happy with it. I don't think the insurance carriers necessarily have been happy with the system."

All of those groups are pushing for major workers' compensation system reform. Now, one legislative body is prepared to give it to them. The Sunset Advisory Commission is recommending lawmakers scrap the current system in favor of a new approach that would look more like a managed care plan with provider networks.

Employers enthusiastically endorsed the sunset commission proposal, but other stakeholders have reacted cautiously.

Out With the Old

The sunset commission tossed out a series of staff recommendations that would have tweaked the current workers' compensation system. It voted instead to recommend an overhaul. Led by commission chair Rep. Burt Solomons (R-Carrollton), the panel recommended abolishing TWCC and transferring its regulatory functions to the Texas Department of Insurance (TDI). (See "Reform to Turn Workers' Compensation Into True Insurance Product," November 2004 Texas Medicine , page 26.)

The proposal makes TDI responsible for medical and income dispute resolution, the Medical Quality Review Panel, the Accident Prevention Services Program, and other regulatory activities. Workplace education and safety would be transferred to the Texas Workforce Commission. A new Office of Employee Assistance within TDI would provide injured workers with legal representation, public advocacy, and other services.

The sunset commission also recommended that workers' compensation operate more like group health insurance, including the use of provider networks, with primary care physicians serving as gatekeepers.

Speaking to physicians at TMA's Summit 2004 in October, Representative Solomons said he envisions the new workers' compensation system functioning more like regular health insurance. He recommended abolishing TWCC because numerous attempts to tweak the current system simply failed to control costs and resolve stakeholder concerns.

"The system is crashing because we've lost sight of the fact the comp is an insurance product," Representative Solomons said. He says workers' compensation costs are skyrocketing, health outcomes are dropping, hassle factors for physicians and injured workers are increasing, and the dispute resolution system is "out of control."

In fact, data from the Massachusetts-based Workers' Compensation Research Institute (WCRI) show that Texas has one of the nation's costliest workers' compensation programs despite having some of the lowest physician fees. The average medical payment per claim in Texas was the highest among 12 states studied even though the average price per service here was below the median. Those statistics were based on October 2000 to September 2001 claims data.

Experts blame overutilization of services for Texas' high costs, and the WCRI data appear to back that up. WCRI ranked Texas at the top in the number of services provided per claim, and chiropractors appeared to be the worst overutilizers. The data showed average medical payment per claim and average number of services provided per claim were several times higher for Texas chiropractors than for other Texas health care professionals.

The Wrong Cure?

But instead of removing overutilizers from the system, TWCC chose to control costs by cutting fees. Last year, the agency set fees at 125 percent of Medicare fee guidelines. That represented about a 15-percent cut for primary care physicians; some specialties saw cuts of 40 percent or more.

This September, TWCC also instituted payment caps that resulted in payment cuts of almost one-half for physician-owned surgical centers.

Those reductions, combined with burdensome paperwork requirements, slow payment resulting from a compensability determination process that sometimes takes months, and other hassles, have prompted physicians to leave the system in droves. Patients are harmed as a result.

"Anyone who went to the sunset hearings heard patient after patient complain about not being able to find a physician who's close," Dr. Henkes said. "We've seen a decline in the approved doctor list of 50 percent. It's just too much of a hassle. The administrative burden is too high for what they're getting paid."

Dr. Henkes says TMA wanted to see a "cultural change" to make workers' compensation more responsive to stakeholders. However, TMA's ad hoc committee has not reached a consensus on whether the association should support abolishing TWCC and creating provider networks.

"We really don't feel like that [networks] is a 'silver bullet' that solves everything," he said. "If you just use networks to control costs, you're just going to drive more providers out of the system."

Dr. Henkes says such networks should be subjected to the same TDI rules as other health plans. Representative Solomons and the sunset commission apparently agree. Their recommendations call for prompt payment and other existing TDI regulations to apply to workers' compensation networks.

Jumping on the Bandwagon

Employers have embraced the proposal. Texas Association of Business (TAB) President Bill Hammond said the proposal "provides a framework to help make the changes needed to fix what's broken."

In fact, TAB and a coalition of large and small employers, health care professionals, and others have launched Texans for Workers' Compensation Reform to lobby for provider networks. Mr. Hammonds says networks could save employers between 11 and 21 percent in medical costs from workers' compensation claims.

Ken Ortolon can be reached by telephone at (800) 880-1300, ext. 1392, or (512) 370-1392; by fax at (512) 370-1629; or by email at Ken Ortolon.

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