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The House Business & Industry Committee met on March 22 to study the workers’ compensation system, particularly the designated doctor process, lifetime income benefits and death benefits, and issues surrounding compound pharmaceuticals.
 
Economic Update
 
Ursula Parks, Legislative Budget Board

  • Certification revenue estimate stated that $4.2 billion will be left in the treasury after accounting for the budget
    • Mostly dedicated balances
  • Discussion ensured regarding the restrictions placed on GR-D accounts
  • That balance could potentially be spent down through the supplemental appropriations bill next session
  • There is a lawsuit having to do with the sales tax exemptions for goods and services; relative to oil and gas industry; if a favorable ruling is given to the industry the state could potentially owe refunds of around $4.4 billion
  • The revenue available for next session will be dependent on the oil and gas industry; although decreases in the price of oil have has the effect of increasing other tax revenue because people have more money to spend elsewhere

 
Workers’ Compensation
 
Ryan Brannan, Commissioner of Workers' Compensation, Division of Workers’ Compensation

  • Indemnity dispute resolution is the main function of the division
  • Medical fee disputes and necessity disputes are also important functions
  • The division regulates the drugs that are allowed to be distributed to workers’ comp patients
  • Trying to be as administratively efficient and transparent as possible
  • Discussed Lone Star Awards that recognize employers with good safety programs
  • Rep. Nicole Collier asked about the safety training program
    • There have been over 1,000 attendees to the program across the 20 field offices in the state; would like to see a higher response
  • Collier asked how many people file workers’ comp claims in Texas
    • Not sure
  • Chairman Rene Oliveira noted in 1991 an hourly rate for attorneys was set at $150; the legislature gave the Commissioner authority to change that rate; have heard that the median rate for attorneys is probably close to $260 adjusted for inflation; want to know what the plan is to address this disparity
    • Have recently finished up with all rules that were required to be changed by legislation; will be taking on other rules very soon
  • Oliveira noted he has concern about non-subscribers; what kind of employers are not subscribing
    • About 20% of the state’s employers are non-subscribers; for the most part, small businesses and very large businesses are not in the workers’ comp system; the number of subscribers is growing however
  • Oliveira noted he has heard there may be 500,000 workers in Texas not under any plan; has been generally pleased with non-subscribers but has serious concerns about the construction industry; a lot of time these employees are dropped off at the ER and it gets paid for by indigent care
  • Rep. Ron Simmons asked about non-subscribers
    • Oliveira noted that HEB and some others have great self-funded plans that their workers are satisfied with; these good companies are not the problem; the problem is with companies who are not providing any insurance and employers who are misclassifying workers as well
  • Non-subscribers have reporting requirements they have to comply with; compliance on these required reports has been low historically; trying to get the word out that those are required
  • Rep. Ramon Romero asked if an employer does not have workers’ comp whether an employee can still sue them
    • Yes, there may be arbitration requirements
  • Romero asked if there are injuries, whether the employer is required to report the injury if they are a non-subscriber
    • Yes, that is another required form
  • Romero asked if that would be a good way to track what industries injuries are happening in
    • Those forms aren’t turned in as often as they are supposed to be
  • Romero noted the most prudent thing to do would be for the state to insure workplace safety for every employee and requiring workers’ comp may be a part of that
  • Rep. Matt Rinaldi asked what the percentage is of employees that work for non-subscribers
    • 1/3 of employees in the state are outside of the system; 5% of employees in the state have no worker’s comp insurance and no employer self-funded insurance plan

 
Designated Doctor
 
Joe McElrath, Deputy Commissioner for Business Process, Division of Workers’ Compensation

  • A designated doctor is designated by the agency to answer questions about a health care claim in workers’ compensation
  • They do not provide care to patients
  • They can provide an evaluation to the patient and make determinations about the progress of care and the patients ability to return to work
  • They are included in the performance based review program at the agency
  • They must have had an active medical practice at some point in their career and they must successfully complete all training and testing required by the agency
  • They may travel to up to 50 examination sites to conduct investigations and they are allowed to choose if and where they want to travel
    • They are not compensated for their travel; they only receive a flat fee which varies based on what is done during the exam; around $800 per exam
  • Collier asked if chiropractors, DOs and MDs get paid the same rate
    • They get paid based on the issue and what exam is conducted not based on their licensure
  • Oliveira discussed the importance of sending the right experts to perform the right review; want to ensure chiropractors aren’t sent out when a different type of professional would be more appropriate
  • Collier noted over 60% of designated doctors exams are done by chiropractors; does that seem right
    • Bill Defoyd from the Division of Workers’ Compensation noted these things are all laid out in rules; there are definitely injuries that require MDs or DOs and  are required to be seen by those practitioners by rule and law; chiropractors are statutorily limited to musculoskeletal issues and additionally, the agency by rule requires them to be limited to that scope as well
  • Oliveira asked why a Dallas doctor is being sent to San Antonio when there are designated doctors in San Antonio
    • Statute requires that the agency must call on the next doctor in line and if they have Bexar County on their list and they are next in line they will be sent to Bexar County
  • Oliveira asked if there have been issues with designated doctors waiting to build up multiple appointments in a particular area before going there
    • There is a statutory timeframe that an exam must be given in 21 days; the first 14 days of that is set aside for the transmission of medical records
  • Collier asked about how many designated doctors use administrative scheduling companies
    • About 75%
  • Collier asked how much those companies charge
    • Not sure; that would be between the doctor and that company

 
Stephen Norwood, Texas Orthopedic Association

  • Between 2011-2016 there has been a 67% decrease in physician participation in the designated doctor program; there were 7 podiatrists and now there is only 1
  • Chiropractors represent the only provider group who have increased their involvement in that time; about 41% of the program
  • MMI/IR training should be shortened; currently is about 3 days
    • Physicians incur expenses for travel, hotel, test fee, orientation fee, etc; this discourages participation of physicians
    • They have planned future training sessions outside of Austin which could mitigate the expenses for some physicians
  • Advise that recertification requirement be changed to every four years; currently is every two years
  • The program requires subscriptions to two guidelines that total nearly $1,500 per year per physician
    • Recommends requiring use of only one guideline or removing the expense burden by having the carriers cover whatever subscription cost they can negotiate
  • Discussion of the usefulness of the two different guidelines required to be purchased and what the purpose of the guidelines are; Medical Disability Guidelines are less useful than the Official Disability Guidelines
  • Scheduling of exams needs improvement; doctors are only allowed to see one patient per day under certain circumstances; many times the program schedules doctors to travel when it doesn’t make any sense; it needs to be less automated and more logical
  • There are issues with patients not showing up for an exam and the doctor not getting paid
  • Whenever possible the agency should be required to assign a doctor to a patient based on the city of origin of the doctor
  • Doctors’ fees should be commensurate with the level of evaluation that is required; doctors get the same amount for evaluating a back sprain as they do for complex spinal issues
  • Physicians should not be required to store designated doctor records for seven years
  • Oliveira asked if that would require a change in workers’ compensation law or the Medical Practice Act
    • Not sure

 
Jeff Cunningham, Texas Chiropractic Association

  • Ongoing training required is very expensive and very time consuming
  • About 10% of the time patients don’t show up
  • The problem with scheduling more than one patient at once is that doctors would probably wait to see patients until they had multiple in one area
  • Oliveira asked if there are concerns regarding the guidelines
    • The MD guidelines are a waste of money; the ODG guidelines are pretty good

 
Compounded Pharmaceuticals

  • Oliveira noted TDI has seen an incredible hike in the prescription of compounded pharmaceuticals; need to learn more about the cause of this and any potential problems

 
Matt Zurek, Deputy Commissioner, Division of Workers’ Compensation

  • HB 7 required TDI to develop a closed formulary for workers’ comp and to have procedures for what to do if a drug was prescribed that wasn’t on the formulary
  • Decided to craft the closed formulary around treatment guidelines
    • Even though there is construction of a closed formulary there is an appeals process built in through prior authorization process
  • Oliveira asked what a closed formulary means
    • A formulary in a simplified way is just a list of drugs; an open formulary would mean that all drugs are available; closed formulary means there is a list of drugs available and other drugs require approval
  • There is a lack of evidence that compound drugs have the efficacy needed to be able to approve them
  • There is an audit plan for the near future to determine the efficacy of compound drugs
  • Simmons asked how this looks in other states for workers comp, and whether compound drugs are used for other situations other than workplace injuries
    • Will have more information once the audit is completed
  • Starting to see a usage trend that is contrary to the rest of the formulary
  • Overall reimbursement for pharmaceuticals went down 31% in the last 10 years; for compound pharmaceuticals it went up 130%
  • Oliveira asked if the audit will look at non-workers comp cases
    • Do not believe so
  • Oliveira asked if the audit will be able to determine if the increase in price in compounds is much different than the increase in price in standard pharmaceuticals
    • It should be
  • About 10% of prescribers in workers’ comp wrote about 80% of the prescriptions for compounds
  • Simmons asked if these are pain management doctors
    • Not sure
  • Oliveira asked if medical necessity for prescription will be a part of the audit
    • Trying to develop those guidelines; there tend to be very few disputes against the denials of the compound drugs

 
Kevin Treabo, Helios

  • Helios is a PBM that provides pharmacy services to injured workers
  • The closed formulary is good because it is based on workers’ comp populations and based on the history of treatment of work related injuries
  • The formulary doesn’t deny any drugs it just provides for a process of appeal if a drug is not automatically distributed
  • Oliveira asked for an example of a compound
    • Most compounds are topical pain medications or topical muscle relaxant medications; there are others for many different injuries and conditions
  • Some states have a maximum reimbursement amount for compounds, some states have a limited number of drugs that can be reimbursed in a compound, other states are currently developing ways to handle the compound drug situation differently
  • Recommends giving the authority to the Division of Workers Comp to allow them to require preauthorization on all compounds

 
Lifetime Income Benefits & Death Benefits
 
Amy Lee, Division of Workers’ Compensation

  • Lifetime income benefits are statutorily defined for specific catastrophic injuries
    • Statute has remained the same for decades except for third degree burns which was added in 2001
  • Benefits are paid at a rate of 75% of average weekly wage with a 3% COLA
  • Statutory maximum of $895 per week for the first year
  • Lifetime income benefits are not taxable
  • Death benefits replace a portion of lost income to family members
    • Spouse, dependent children, grandchildren or dependent parents in some instances
  • If a spouse remarries their benefit will be shifted to other family members who may be receiving the benefit
  • No COLA attached to death benefits
  • Rinaldi asked what the purpose is for surviving spouse benefits
    • The person/family was dependent on that income and when the spouse dies they no longer receive that income without the benefit
  • Rinaldi asked if there are income tests or requirements that the person not have a job
    • No
  • Rinaldi asked what other states do
    • Most states have similar benefits that have remarriage penalties
  • Rinaldi asked if any states only continue for a set amount of time after death
    • Not sure

 
Red Tripp, State Office of Risk Management

  • There is a claim for lifetime income benefits currently on the books that has been going on for 15 years which started around $500 per year and is now closer to $900; this makes it seem as though the 3% COLA is working as it should
  • There are only 14 currently active cases; only state employees who are insured by SORM
  • The benefit is not dependent on the ability to work; some employees receive the benefit and continue working with the injury
  • There are 62 active death benefit claims at SORM

 
Cathy DeWitt, Texas Association of Business

  • Would like to see 100% of death benefit go to the children if the spouse remarries; especially if the children are in college

 
Rene Lara, AFL-CIO

  • Any inflationary protection is extremely important in these benefits
  • If someone loses a loved one due to an injury on the job and they qualify for death benefits they should be able to marry again without feeling that they will be financially penalized
  • Should expand a requirement to all employers to participate in workers’ compensation
  • Rinaldi asked if there are any other reasons for removing the marriage penalty
    • That is the major reason
  • Rinaldi noted that a sum certain or date certain limitation on the benefit would remove the marriage disincentive
    • The range of family situations is extremely diverse; losing even a small amount of benefit coming into the household could be a huge loss for low income earners