2007 Legislative Compendium: Workers' Compensation

The Texas Workers' Compensation system ranks as one of the most costly, least satisfactory, and least effective systems in the country. Texas is the only state where workers' compensation insurance is voluntary. Universally, all participants agree that the system, in its current state, is one of disarray and frustration. Physicians are refusing to treat workers' compensation patients primarily because of the extremely high administrative hassles, billing issues, and low reimbursement rates.

In 2005, the Texas Legislature reformed the workers' compensation system by allowing networks to manage injured workers' health care. In the past, injured employees in Texas could choose any provider (including a chiropractor or a dentist) to be their treating doctor. Workers now enrolled in managed care networks must choose a treating doctor from a list of contracted doctors.

While the networks are slowly developing, the 80 th Legislature indicated that the reforms of 2005 needed time to be implemented, so major changes would not be considered. More than 65 bills were filed to "tweak" the system and 12 passed.

Prohibition on Anti-Kickback
House Bill 34 by Rep. Burt Solomons (R- Carrolton) prohibits paying, allowing, or offering fees, rebates, or other considerations in exchange for the referral of medical or case management services on a workers' compensation claim.

Regulation of Third-Party Administrators
House Bill 472 by Representative Solomons and Sen. Kenneth Brimer (R-Fort Worth) regulates third-party administrators in workers' compensation. Until this law passed, third-party administrators were exempt from the Texas Department of Insurance (TDI) regulation through the Third-Party Administrator Act.

Elimination of "Voluntary Networks"
House Bill 473 by Representative Solomons and Sen. Leticia Van de Putte (D-San Antonio) closes the loophole under which voluntary networks have been operating. Prior to 2005, insurance carriers and employers were prohibited by statute from directing employees to specific health care providers for treatment of a workers' compensation injury. However, carriers and employers had utilized discount fee contracts with certain providers, referred to as voluntary networks. Although the employers and carriers were prohibited from directing an employee to see a particular provider in that network, if the employee chose to receive care from one of those providers, the provider would be paid the contractual fee discount rather than the fee dictated by the medical fee guideline.

During the 79 th  Legislature, the legislature enacted House Bill 7, which provided for certified health care networks for workers' compensation by adding Chapter 1305, Insurance Code. It specifically states that a person may not operate a workers' compensation health care network in this state unless the person holds a certificate issued under this chapter and rules adopted by the commissioner. In addition to the creation of health care networks, HB 7 if an insurance carrier is authorized to pay an amount different from the medical fee guideline if the carrier has a contract with the provider. After the effective date of HB 7, carriers requested guidance from TDI on the legality of voluntary networks arguing that although the references to a voluntary network had been eliminated, there was no prohibition of them mentioned either. TDI issued Bulletin B-0071-05, which stated that under the provisions of HB 7, all networks must be certified by TDI.

Immediately, the carriers requested further clarification of whether voluntary networks were authorized, in light of a provision added by HB 7 that stated that deviations from the medical fee guideline were allowed as long as a contract existed between the carrier and the provider with a specific fee schedule. TDI then issued Bulletin B-0005-06, which states that a voluntary network could continue to exist as long as it contracted for a fee discount only if any management of the claims existed then certification was required. The original intent of the language of that provision, however, was to allow a deviation from the fee guideline to treat an injured worker in a non-network situation if the carrier was having difficulty securing necessary medical treatment within the fee guidelines.

Resolution of Fee Disputes
House Bill 724 by Representative Solomons and Sen. Mike Jackson (R-Pasadena) sends medical necessity disputes with a cost lower than $3,000 and fee disputes with a cost lower than $2,000 to a contested hearing, and sends any disputes above these amounts to a State Office of Administrative Hearings (SOAH) hearing.

Under previous law, workers' compensation fee dispute hearings took place in state district court in Travis County. House Bill 7, which passed in the 2005 legislature, eliminated appeals to SOAH for all types of disputes and, in turn, created a problem for medical necessity and fee disputes because there was no longer an administrative hearing for such disputes. Therefore, there were no administrative records to review when such disputes were appealed to court.

Mandate to Use Texas Licensed Physicians in IRO Proceedings
House Bill 1003 by Rep. Helen Giddings (D-DeSoto) and Sen. Kirk Watson (D-Austin) requires independent review organizations to use only doctors licensed to practice in Texas when performing workers' compensation reviews.

Timely Claim Filing Requirements
House Bill 1005 by Representative Giddings and Senator Van de Putte provides that a health care provider in workers' compensation does not forfeit his or her right to reimbursement if the claim for payment is timely filed, but erroneously filed with the wrong insurer. The bill also allows extension of the deadline by agreement of the parties or in catastrophic situations.

Peer Review Requirements
House Bill 1006 by Representative Giddings and Senator Watson requires doctors who perform utilization review, retrospective review, and peer review to be licensed in Texas.

Same Specialty Physician Review
House Bill 2004 by Representative Giddings and Sen. Eduardo Lucio (D-Brownsville) requires that the reviewing physician in certain workers' compensation case be specialized in the area of injury involved in the case. This requirement extends to a physician, dentist, or chiropractor conducting a peer review, retrospective review, required examination, or a designated doctor or physician member of the medical quality review panel. Previous law did not require doctors reviewing certain workers' compensation cases to practice in a specialty related to the injury.

Care for Artificial Limbs
Senate Bill 458 by Senator Watson and Representative Giddings ensures that workers' compensation carriers treat artificial limbs as natural limbs. Currently, workers' compensation carriers do not treat "artificial limbs" as a physical structure of the body. An accident resulting in a broken leg would be treatable under workers' compensation. However, if the same accident injured an artificial leg, workers' compensation would not cover repair or replacement of the artificial leg.

Workers' Compensation TMA Staff Team:

Legislation: Greg Herzog
Policy: Michael Reed and Rich Johnson
Legal: C.J. Francisco

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