TITLE 28.INSURANCE

Part 1. TEXAS DEPARTMENT OF INSURANCE

Chapter 5. PROPERTY AND CASUALTY INSURANCE

6. NOTICE REQUIREMENTS TO CLAIMANTS REGARDING MOTOR VEHICLE REPAIRS

The Texas Department of Insurance proposes amendments to §5.501, concerning the procedures an insurer must follow in order to give the proper notice to first- and third-party claimants regarding their motor vehicle repair rights as required by the Insurance Code Article 5.07-1. The changes are proposed to reduce confusion, eliminate consumer frustration, and enable the Department to more efficiently allocate agency resources.

Article 5.07-1(a) provides that except as provided by rules adopted by the Commissioner, under an auto insurance policy that is delivered, issued for delivery, or renewed in this state an insurer may not, directly or indirectly, limit its coverage under a policy covering damage to a motor vehicle by specifying the brand, type, kind, age, vendor, supplier, or condition of parts or products that may be used to repair the vehicle or by limiting the beneficiary of the policy from selecting a repair person or facility to repair damage to the motor vehicle covered under the policy. Article 5.07-1(e) provides that at the time the vehicle is presented to an insurer or an insurance adjuster or other person in connection with a claim for damage repair, the insurer or insurance adjuster or other person must provide to the beneficiary or third-party claimant notice of the provisions of Article 5.07-1. Article 5.07-1(e) also requires the Commissioner to adopt a rule establishing the method or methods insurers must use to comply with the statutorily required notice provisions of this subsection. Article 5.07-1(g) provides that in the settlement of liability claims by a third party against an insured for property damage claimed by the third party, an insurer may not require the third-party claimant to have repairs made by a particular repair person or facility or to use a particular brand, type, kind, age, vendor, supplier, or condition of parts or products.

Many consumers confuse the Department’s and insurance company’s roles under the current notice requirements outlined in §5.501. The notice does not state how to contact the responsible insurance company nor does it clearly indicate the insurance company’s role in the claims process. Instead, it prominently displays the Department’s contact information and encourages claimants to call with questions about their rights. As a result, many calls to the Department must be redirected to the appropriate insurance company. These consumers must make an additional phone call to the appropriate insurer. It results in consumer frustration. It also taxes the Department’s resources, increasing the amount of time other consumers must wait to have their calls answered.

To address these concerns, the proposed amended §5.501 clarifies the Department’s role and distinguishes it from the insurance company’s responsibilities by adding new language and requiring special formatting. The proposed language makes clear that the Department is responsible for providing information about Insurance Code Article 5.07-1, while insurance companies are responsible for providing detailed information about the nature of coverage under a particular policy. To emphasize the insurer’s role, the proposed amended notice displays the insurance company’s name, mailing address, phone number, fax number, and email or web address prominently in bold face type.

The proposed amended §5.501 makes a second important change. In an effort to better serve the Department’s increasing number of Spanish-speaking callers, the notice must also be provided in Spanish. In 2002, the Department’s Consumer Protection Division received 8,277 calls from Spanish-speaking consumers. By 2005, the inquiries had increased to over 13,000 calls.

Audrey Selden, Senior Associate Commissioner of Consumer Protection, has determined there will be no fiscal impact to state and local governments as a result of the enforcement or administration of this rule for each year of the first five years the proposed amended section is in effect. There will be no measurable effect on local employment or the local economy as a result of the proposal.

Ms. Selden has also determined that for each year of the first five years this section is in effect, that the primary public benefit anticipated as a result of the proposed amended section will be less confusion and frustration on the part of first- or third-party claimants who make a claim regarding damage to a motor vehicle. The amended rule will also benefit consumers by enabling the Department to better allocate its resources. By reducing the number of misdirected calls, more calls can be answered and more consumers can be assisted by the Department.

The costs for insurance companies to comply with the amended rule are negligible for two reasons. First, the cost to print the required notice should not increase. The current §5.501 requires the notice be attached to or printed on the reverse side of a copy of the Insurance Code Article 5.07-1. The Spanish notice fits below the English notice on one sheet of paper; therefore, insurers will not incur any additional production costs as a result of compliance with the proposed amendments. Second, an insurer should be able to exhaust its existing stock of notices prior to the effective date of amended §5.501. The Department proposes the revised notice requirements become applicable January 1, 2007. Existing notices printed according to the requirements in current §5.501 may be used through December 31, 2006. New notices can be produced in the regular course of business for use on or before January 1, 2007. Therefore, absent the pressure of immediate compliance insurers will not experience any real economic impact.

The Department does not anticipate that the cost to comply will vary between small, large, or micro-businesses. Although the Department does not anticipate that the proposed amendments will have an adverse effect on small and micro-businesses, the Department has considered the purpose of Article 5.07-1 of the Insurance Code. The statutory provision requires all insurers or insurance adjusters to provide notice to first- or third-party claimants at the time the vehicle is presented in connection with a claim for damage repair; therefore, it is neither legal nor feasible to waive the provisions of the proposed amendments for small or micro businesses. Additionally, it is the Department’s position that to waive or modify the requirements of the proposed amendments for small and micro businesses would result in a disparate effect on policyholders and other persons affected by the amendments because they would not receive adequate notice of their rights as required by the statute.

To be considered, written comments on the proposal must be submitted no later than 5:00 p.m. on July 24, 2006 to Gene C. Jarmon, General Counsel and Chief Clerk, Mail Code 113-2A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104. An additional copy of the comment must be simultaneously submitted to Audrey Selden, Senior Associate Commissioner, Consumer Protection, Mail Code 111-1A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104. Any request for a public hearing should be submitted separately to the Office of the Chief Clerk by no later than 5:00 p.m. on July 24, 2006. If a hearing is held, written and oral comments presented at the hearing will be considered.

The amendments are proposed under the Insurance Code Article 5.07-1, Article 5.98, and §36.001. Article 5.07-1 specifically charges the Commissioner with adopting rules to establish the method insurers must use to provide claimants with notice of their motor vehicle repair rights. Under Article 5.98, the Commissioner is authorized to adopt reasonable rules appropriate to accomplishing the purposes of Chapter 5 of the Insurance Code. Section 36.001 provides that the Commissioner of Insurance may adopt any rules necessary and appropriate to implement the powers and duties of the Texas Department of Insurance under the Insurance Code and other laws of this state.

The following statute is affected by this proposal: §5.501 Insurance Code Article 5.07-1

§5.501.Notice Requirements to Claimants Regarding Motor Vehicle Repairs.

(a) The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Business day--A day other than a Saturday, Sunday, or holiday recognized by the State of Texas.

(2) Insurer--An insurer or any person authorized to act on behalf of an insurer regarding damage to a vehicle, regardless of whether employed by the insurer.

(b) - (g) (No change.)

(h) The written notice must be printed in at least ten point type with the insurer’s name, mailing address, phone number, fax number and e-mail address or web address printed in bold face type and [ , ] must be attached to, or printed on the reverse side of, a copy of the Insurance Code, Article 5.07-1 . The written notice [ ~~, and~~ ] must read as follows:

Figure: 28 TAC §5.501(h)

(i) (No change.)

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on June 9, 2006.

TRD-200603139

Gene Jarmon

General Counsel and Chief Clerk

Texas Department of Insurance

Earliest possible date of adoption: July 23, 2006

For further information, please call: (512) 463-6327

Part 2. TEXAS DEPARTMENT OF INSURANCE, DIVISION OF WORKERS' COMPENSATION

Chapter 133. MEDICAL BILLING AND PROCESSING

Subchapter D. DISPUTE AND AUDIT OF BILLS BY INSURANCE CARRIERS

28 TAC §§133.305, 133.307, 133.308

(Editor's note: The text of the following sections proposed for repeal will not be published. The sections may be examined in the offices of the Texas Department of Insurance, Division of Workers' Compensation or in the Texas Register office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)

The Texas Department of Insurance, Division of Workers' Compensation proposes repeal of §§133.305, 133.307, and 133.308, concerning medical dispute resolution (MDR). The repeal of these sections is necessary for the Division to propose new §§133.305, 133.307, and 133.308 published elsewhere in this issue of the Texas Register . These new sections are necessary to: implement statutory provisions of House Bill (HB) 7, enacted by the 79th Legislature, Regular Session, effective September 1, 2005; address the merger of two agencies with similar purposes and processes; and improve efficiencies of the MDR process.

The proposed new sections incorporate HB 7 specific changes to the MDR process. The HB 7 changes remove the State Office of Administrative Hearings from the MDR process, authorize pharmacy processing agents to act in behalf of pharmacies under terms and conditions agreed on by the pharmacies, establish the binding effect of independent review organization (IRO) decisions, specify elements of the IRO decision, create workers' compensation health care networks, and institute quality monitoring of IROs. In addition, HB 7 requires the health care provider to refund a carrier for inappropriate charges upon receiving a carrier's request for refund and after opportunity for appeal to the insurance carrier, and establishes that disputes related to carrier refunds are to be pursued by health care providers through MDR.

The proposed new sections govern dispute resolution of workers' compensation medical necessity and medical fee disputes. To accommodate a new dispute resolution framework, these proposed sections implement pertinent portions of HB 7, address the merger of two agencies, and streamline the MDR process. Additionally, the proposed sections incorporate the new processes, which not only simplify the administrative processing for stakeholders, but also allow for a more efficient and consistent method of processing and resolving medical disputes. The proposed sections also clarify that a qualified pharmacy processing agent will be considered a health care provider for purposes of MDR. The new sections apply to medical necessity and fee disputes filed on or after September 1, 2006.

Amy Rich, Director of Medical Disputes, Division of Workers' Compensation, has determined that for each year of the first five years the proposed repeal will be in effect, there will be no fiscal impact to state or local governments as a result of the enforcement or administration of the repeal. There will be no measurable effect on local employment or the local economy as a result of the proposal.

Ms. Rich has determined that for each year of the first five years the proposed repeal is in effect, the public benefit anticipated as a result of the repeal in conjunction with the adoption of new §§133.305, 133.307, and 133.308 will be improved organization resulting in greater regulatory efficiency in administering regulations under Chapter 133, Subchapter D. The proposed new sections reflect the 79th Legislature's express intent that medical benefits are to be provided in a timely and cost-effective manner.

There are no anticipated costs to system participants as a result of the proposed repeal. There is no difference in the cost of compliance between a large and small business as a result of the proposed repeal. Based on the cost of labor per hour, there is no disproportionate economic impact on small or micro-businesses.

To be considered, written comments on the proposal must be received no later than 5:00 p.m. on July 24, 2006. Comments may be submitted via the Internet through the Department's Internet website at http://www.tdi.state.tx.us/wc/proposedrules/toc.html or by mailing or delivering your comments to Kristi Dowding, Legal Services, MS-4D, Division of Workers' Compensation, Texas Department of Insurance, 7551 Metro Center Drive, Suite 100, Austin, Texas 78744.

The Division will consider the adoption of the proposal in public hearing scheduled for July 26, 2006 in the Tippy Foster Room, Division of Workers' Compensation, 7551 Metro Center Drive, Austin, Texas.

The repeal is proposed under Labor Code §§408.027(g), 408.0271, 408.031, 413.002, 413.020, 413.031, 413.032, 401.024, 402.00111, and 402.061. Labor Code §408.027(g) provides that §408.027 and §408.0271 apply to health care provided through a workers' compensation health care network established under Chapter 1305 and that the commissioner of workers' compensation shall adopt rules as necessary to implement the provisions of §408.027 and §408.0271. Section 408.0271 states that if health care services provided to an employee are determined by the carrier to be inappropriate, the carrier shall notify the provider in writing of the carrier's decision and demand a refund of the portion of payment on the claim received by the provider for the inappropriate services and the provider may appeal such a carrier's determination no later than the 45th day after the date of the carrier's request for the refund. Section 408.031(a) allows injured employees to receive benefits under a workers' compensation health care network established under Insurance Code Chapter 1305. Section 413.002(d) provides that if the commissioner determines that an IRO is in violation of Labor Code Chapter 413, rules adopted by the commissioner under Chapter 413, applicable provisions of Labor Code Title 5, the commissioner or a delegated representative shall notify the IRO of the alleged violation and may compel the production of any documents or other information as necessary to determine whether the violation occurred. Section 413.020 provides the authority to adopt rules which enable the Division to charge a carrier a reasonable fee for access to or evaluation of health care treatment, fees, or charges. The section also provides that the Division may charge a provider who exceeds a fee or utilization guideline or a carrier who unreasonably disputes charges that are consistent with a fee or utilization guideline a reasonable fee for review of health care treatment, fees, or charges. Section 413.031 specifies the processes for an IRO decision and appeal and states that the commissioner by rule shall specify the appropriate dispute resolution process for fee disputes in which a claimant has paid for medical services and seeks reimbursement. Section 413.032(a) provides that an IRO that conducts a review under Chapter 413 shall specify the minimum elements on which the IRO decision is based. Section 401.024 authorizes the commissioner to require by rule the use of facsimile or other electronic means to transmit information. Section 402.00111 provides that the commissioner of workers' compensation shall exercise all executive authority, including rulemaking authority, under the Labor Code and other laws of this state. Section 402.061 provides that the commissioner of workers' compensation has the authority to adopt rules as necessary to implement and enforce the Texas Workers' Compensation Act.

The following sections are affected by this proposal:

Labor Code §§401.024, 402.00111, 402.083, 408.0041, 408.027, 408.0271, 408.031, 413.002, 413.0111, 413.020, 413.031, 413.032, 413.0511, and 413.0512

§133.305.Medical Dispute Resolution--General.

§133.307.Medical Dispute Resolution of a Medical Fee Dispute.

§133.308.Medical Dispute Resolution by Independent Review Organizations.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on June 12, 2006.

TRD-200603182

Norma Garcia

General Counsel

Texas Department of Insurance, Division of Workers' Compensation

Earliest possible date of adoption: July 23, 2006

For further information, please call: (512) 804-4288

Subchapter D. DISPUTE OF MEDICAL BILLS

28 TAC §§133.305, 133.307, 133.308

The Texas Department of Insurance, Division of Workers' Compensation proposes new §§133.305, 133.307, and 133.308, concerning medical dispute resolution (MDR). These proposed sections are necessary to: implement statutory provisions of House Bill (HB) 7, enacted by the 79th Legislature, Regular Session, effective September 1, 2005; address the merger of two agencies with similar purposes and processes; and improve efficiencies of the MDR process. The Division also proposes the simultaneous repeal of existing §§133.305, 133.307, and 133.308, published elsewhere in this issue of the Texas Register .

The proposed sections incorporate HB 7 specific changes to the MDR process. The HB 7 changes remove the State Office of Administrative Hearings from the MDR process, authorize pharmacy processing agents to act on behalf of pharmacies under terms and conditions agreed on by the pharmacies, establish the binding effect of independent review organization (IRO) decisions, specify elements of the IRO decision, create workers' compensation health care networks, and institute quality monitoring of IROs. In addition, HB 7 requires the health care provider to refund a carrier for inappropriate charges upon receiving a carrier's request for refund and opportunity for appeal to the insurance carrier, and establishes that disputes related to carrier refunds are to be pursued by health care providers through MDR.

The overall aim of HB 7, as provided in Labor Code §402.021(b)(3) - (5), is to provide medical benefits in a timely and cost-effective manner. The goal also includes the provision of appropriate, high-quality medical care which supports restoration of the injured employee's (employee) physical condition and earning capacity. Additionally, the goal is to minimize the likelihood of disputes, while maximizing the prompt and fair resolution of identified disputes. In conjunction with these goals, HB 7 established certified workers' compensation health care networks (networks) which offer employers a cost-effective means of delivering medical benefits to employees.

Another significant HB 7 change is the creation of the Division of Workers' Compensation (Division) within the Texas Department of Insurance. The former Texas Workers' Compensation Commission functions were merged within the Texas Department of Insurance to form the new Division. In conjunction with the merger, several cross-agency work groups were created to examine functions shared by the two agencies and identify opportunities for ensuring consistency and efficient operations.

This cross-agency examination included a review and revision of the MDR rules and functions. The examination identified that health care providers (providers) are required to follow different processes to resolve medical necessity disputes for network and non-network claims. In addition, insurance carriers (carriers) with network contracts are required to follow different business processes and use different automated systems to support both network and non-network claims. These processes require the use of specialized forms, the submission of paperwork to separate entities, and IRO assignment by separate divisions of the Department. This duplication of function is expensive and time-consuming.

As a result of the examination, the proposal consolidates the IRO processes to reduce costs and save time. This consolidation is in accordance with Labor Code §413.031 and Insurance Code §1305.355, which both require medical necessity disputes to be conducted by an IRO pursuant to Insurance Code Article 21.58C. Therefore, the proposed rules create a single process for submitting and processing network and non-network requests for IRO review within the Health and Workers' Compensation Network Certification and Quality Assurance Division (HWCN Division) of the Department.

In reviewing the medical necessity dispute processes, the Department considered concerns expressed by stakeholders. Stakeholders were concerned that the current medical fee dispute resolution process was too time-consuming and administratively complex. The Department is aware that historically, a significant percentage of requests for fee dispute resolution involved more than solely fee issues. Issues of compensability, extent of injury or relatedness and/or medical necessity often exist in addition to the fee dispute, which has significantly complicated and slowed the resolution process. The Department identified additional areas of complexity within the process that result in delays in resolving a medical fee dispute. These areas include the proper identification of denial issues and the number of steps in the resolution process.

In the review, the Department also determined that the Division has the authority to resolve disputes related to out-of-network care for which a contracted rate is not established based upon Insurance Code §1305.153. This provision establishes that reimbursement for authorized out-of-network care shall be in accordance with the Labor Code and applicable rules.

The proposed sections govern dispute resolution of workers' compensation medical necessity and medical fee disputes. To accommodate a new dispute resolution framework, these proposed sections implement pertinent portions of HB 7, address the merger of two agencies, and streamline the MDR process. Additionally, the proposed sections incorporate the new processes, which not only simplify the administrative processing for stakeholders, but also allow for a more efficient and consistent method of processing and resolving medical disputes. The proposed sections also clarify that a qualified pharmacy processing agent will be considered a health care provider for purposes of MDR. The new sections apply to medical necessity and fee disputes filed on or after September 1, 2006.

Proposed §133.305 outlines the general requirements of the MDR process. The proposed section defines terms relevant to MDR, including network and non-network health care. The proposed section uses "preauthorization or concurrent" for consistency with the use of those terms in Insurance Code Article 21.58A and related rules. The proposed section sets forth the dispute sequence for resolving medical dispute issues, and requires all issues of compensability, extent of injury and/or medical necessity to be resolved before a fee dispute can be processed. The proposed section also establishes circumstances in which the Division may assess administrative fees and sets out requirements for redacting confidential information.

Proposed §133.307 establishes the new MDR process for resolving disputes regarding the amount of payment due for health care determined to be medically necessary and appropriate for treatment of a compensable injury. This proposed section applies to authorized out-of-network care not subject to a fee contract, as well as non-network care. The request for medical fee dispute resolution shall be filed not later than one year after the date of service in dispute, unless issues of compensability, extent of injury and/or medical necessity exist. Proposed §133.307 allows a requestor access to MDR to resolve a fee dispute for which compensability, extent of injury and/or medical necessity and compensability has been determined through dispute resolution regardless of the date of service, if the submission of the request for MDR is within 60 days of the final determination.

Proposed §133.307 outlines the following three steps for resolving fee disputes. First, the requestor is required to present all information necessary to resolve the dispute upon the initial request for dispute resolution. The Division will notify the respondent of the dispute by providing a copy of all the information submitted by the requestor. Second, in response to the dispute, the proposed section requires the respondent, most often the carrier, to provide all information required by this section, including any missing explanation of benefits that may identify outstanding compensability, extent of injury, medical necessity, or fee issues. If compensability, extent of injury and/or medical necessity issues are identified, the fee dispute request will be abated until the issue is resolved. Third, the proposed section provides that the Division may request additional information from the disputing parties and may raise new issues in the MDR process. The proposed section also sets forth the reasons that justify dismissing a request for dispute resolution.

The proposed section provides that aggrieved parties who disagree with the decision may seek judicial review. The proposed section outlines the appropriate appeal process for parties to MDR seeking judicial review of the IRO's decision, the process for preparing a record for appeal of an MDR decision, and the contents of the record. The proposed section also explains the Division's assessment of expenses for preparing the record.

Proposed §133.308 provides the process for the review of network and non-network preauthorization, concurrent or retrospective medical necessity disputes. The proposed section specifies who can be a requestor, the manner in which requests must be made, and the time requirements that govern requests. The proposed section also states the process for IRO assignment and carrier document submission. The proposed section establishes IRO fees and corresponding time limits for payment along with the consequences of case dismissal in the event of non-compliance with the section. Further, the proposed section addresses the process for an IRO to request a designated doctor exam. The proposed time frames for IRO decisions are set forth, as well as what the IRO decision must include. The proposed section provides that the IRO is responsible for determining the prevailing party and compiling the appellate record in the case of judicial review. The process of appealing IRO decisions is outlined in the proposed section. IRO decisions are not agency decisions, and the Department and the Division are not parties to any such appeals. Both network and non-network appeals processes are detailed, as well as those for appeals of non-network spinal surgery. The section also addresses who will pay the costs for the appeal.

Amy Rich, Director of Medical Disputes, Division of Workers' Compensation, has determined that for each year of the first five years the proposed sections will be in effect, there will be no fiscal impact to state or local governments as a result of the enforcement or administration of the rules. There will be no measurable effect on local employment or the local economy as a result of the proposal.

The new rules continue the assessment of administrative fees by the Division when a carrier or provider does not comply with a provision of the Insurance Code, Labor Code, or related rules. The new rules, like the current rules, do not assess an administrative fee to the injured employee. The administrative fee of $50.00 per hour is assessed only when there is a violation of the applicable Code or rules. For fiscal year 2005, the Division assessed an administrative fee of $50.00 per hour for approximately 2,634 hours. It is anticipated that a similar number of hours on an fiscal year basis will incur this administrative fee when the rule becomes effective.

Ms. Rich has determined that for each year of the first five years the sections are in effect, the public benefit anticipated as a result of the administration and enforcement of the proposed sections will be improved organization resulting in greater regulatory efficiency in administering regulations under Chapter 133, Subchapter D. The proposed sections reflect the 79th Legislature's express intent that medical benefits are to be provided in a timely and cost-effective manner.

It is anticipated that costs will be incurred by the disputing parties whether requesting or responding to medical dispute resolution. The new rule requires the requestor, typically the provider, to submit two complete sets of all documents related to the medical fee dispute upon the initial request for MDR. The average number of pages per dispute is approximately 60 pages for the two complete sets. The number of pages varies depending on the amount and complexity of the issues in dispute. The new rules require the respondent, typically a carrier, to submit approximately 25 - 30 pages of documents. The Division estimates the cost of copying to be approximately 10 - 30 cents per page. The Division's estimate was based on an estimate provided by an IRO and the Division's published administrative fee schedule.

In addition to cost of copies, the anticipated costs also include staff time and mail service. According to the United States Postal Service, the mail cost associated with a delivery of a small parcel is estimated at 39 cents per pound. The Division estimates that requests and responses vary between 1 - 8 pounds. According to the most recent compensation summary of the Texas Workforce Commission, the average hourly wage for an insurance claims processing clerk is $15.68. The Division estimates that the staff time involved in requesting and responding to MDR is between 1 - 4 hours. Disputing parties currently experience administrative costs in a multi-step process which takes more time than the proposed process. The Department anticipates a slight decrease in administrative costs to disputing parties because the new rules reduce the number of responses required in the process.

The probable economic cost to a party to obtain the record in the event of an appeal as specified in §133.307(f) and §133.308(r) will vary depending on the size of the record, as well as the charge per copy. The Department estimates the cost of copying to be approximately 10 - 30 cents per page, which would result in a total cost of $20.00 - $60.00 for a 200 page record.

In an effort to ensure that requestors have exhausted other avenues and will follow through once a request is made, requestors who withdraw their request for an IRO decision will be assessed fees. These fees are necessary to reimburse IROs for the costs they incur when they receive an assignment by the Department and perform various administrative procedures to assign the review to a provider. The Division anticipates that the fees will deter unnecessary IRO withdrawals. Therefore, requestors who withdraw their request for an IRO decision after the IRO has been assigned and before the IRO sends the case to a reviewer will be liable for a $150 fee payable to the IRO. Requestors who withdraw a request for an IRO decision after IRO assignment of a reviewer will be liable for the entire IRO fee. If the IRO fee is a tier two fee, the amount will be $460. If the IRO fee is a tier one fee, the amount will be $650.

Any additional economic costs currently exist under existing rules or result from the implementation of pertinent portions of HB 7 and are not a result of the adoption, enforcement, or administration of the proposed sections. There will be no difference between the cost of compliance for large and small businesses as a result of the proposed sections. Based on the cost of labor per hour, there is no disproportionate economic impact on small or micro business. Even if the proposed sections would have an adverse effect on small or micro businesses, it is neither legal nor feasible to waive the requirements of the sections for small or micro-businesses because the Labor Code requires equal application of these provisions to all affected individuals.

The new sections are proposed under Labor Code §§408.027(g), 408.0271, 408.031, 413.002, 413.0111, 413.020, 413.031, 413.032, 401.024, 402.00111, 402.083 and 402.061; Insurance Code Article 21.58A, §14(c); and Government Code §2001.177. Labor Code §408.027(g) provides that §408.027 and §408.0271 apply to health care provided through a workers' compensation health care network established under Chapter 1305 and that the commissioner of workers' compensation shall adopt rules as necessary to implement the provisions of §408.027 and §408.0271. Section 408.0271 states that if health care services provided to an employee are determined by the carrier to be inappropriate, the carrier shall notify the provider in writing of the carrier's decision and demand a refund of the portion of payment on the claim received by the provider for the inappropriate services and the provider may appeal such a carrier's determination no later than the 45th day after the date of the carrier's request for the refund. Section 408.031(a) allows injured employees to receive benefits under a workers' compensation health care network established under Insurance Code Chapter 1305. Section 413.002(d) provides that if the commissioner determines that an IRO is in violation of Labor Code Chapter 413, rules adopted by the commissioner under Chapter 413, applicable provisions of Labor Code Title 5, the commissioner or a delegated representative shall notify the IRO of the alleged violation and may compel the production of any documents or other information as necessary to determine whether the violation occurred. Section 413.0111 provides that the rules adopted by the commissioner for the reimbursement of prescription medications and services must authorize pharmacies to use agents or assignees to process claims and act on behalf of the pharmacies under terms and conditions agreed upon by the pharmacies. Section 413.020 provides the authority to adopt rules which enable the Division to charge a carrier a reasonable fee for access to or evaluation of health care treatment, fees, or charges. The section also provides that the Division may charge a provider who exceeds a fee or utilization guideline or a carrier who unreasonably disputes charges that are consistent with a fee or utilization guideline a reasonable fee for review of health care treatment, fees, or charges. Section 413.031 specifies the processes for an IRO decision and appeal and states that the commissioner by rule shall specify the appropriate dispute resolution process for fee disputes in which a claimant has paid for medical services and seeks reimbursement. Section 413.032(a) provides that an IRO that conducts a review under Chapter 413 shall specify the minimum elements on which the IRO decision is based. Section 401.024 authorizes the commissioner to require by rule the use of facsimile or other electronic means to transmit information. Section 402.00111 provides that the commissioner of workers' compensation shall exercise all executive authority, including rulemaking authority, under the Labor Code and other laws of this state. Section 402.083 provides that information in or derived from a claim file regarding an employee is confidential. Section 402.061 provides that the commissioner of workers' compensation has the authority to adopt rules as necessary to implement and enforce the Texas Workers' Compensation Act. Insurance Code Article 21.58A, §14(c), grants the commissioner of workers' compensation the authority to adopt rules as necessary to implement Article 21.58A, as that Article applies to utilization review of health care services provided to persons eligible for workers' compensation medical benefits under Labor Code Title 5. Government Code §2001.177(a) provides that a state agency by rule may require a party who appeals a final decision in a contested case to pay all or a part of the cost of preparation of the original or a certified copy of the record of the agency proceeding that is required to be sent to the reviewing court.

The following sections are affected by this proposal:

Insurance Code, Article 21.58A, 21.58C, and Chapter 1305, Subchapter H, and Labor Code §§401.024, 402.00111, 402.083, 408.0041, 408.027, 408.0271, 408.031, 413.002, 413.0111, 413.020, 413.031, 413.032, 413.0511, and 413.0512

§133.305.Medical Dispute Resolution--General.

(a) Definitions. The following words and terms, when used in this subchapter, shall have the following meanings unless the context clearly indicates otherwise.

(1) Medical dispute resolution (MDR)--A process for resolution of one or more of the following disputes:

(A) a medical fee dispute; or

(B) a medical necessity dispute, which may be:

(i) a preauthorization or concurrent medical necessity dispute; or

(ii) a retrospective medical necessity dispute.

(2) Medical fee dispute--A dispute that involves an amount of payment for non-network health care rendered to an injured employee (employee) that has been determined to be medically necessary and appropriate for treatment of that employee's compensable injury. The dispute is resolved by the Division pursuant to Division rules, including §133.307 of this subchapter (relating to Medical Dispute Resolution of Fee Disputes). The following types of disputes can be a medical fee dispute:

(A) a health care provider (provider), which includes qualified pharmacy processing agents as described in Labor Code §413.0111, dispute of an insurance carrier (carrier) reduction or denial of a medical bill;

(B) an employee dispute of a carrier reduction or denial of a refund request for health care charges paid by the employee; and

(C) a provider dispute regarding the results of a Division audit or review which requires the provider to refund an amount for health care services previously paid by the carrier.

(3) Network health care--Health care delivered by a certified workers' compensation health care network as defined in Insurance Code Chapter 1305 and related rules.

(4) Non-network health care--Health care not delivered by a certified workers' compensation health care network as defined in Insurance Code Chapter 1305 and related rules.

(5) Preauthorization or concurrent medical necessity disputes--A dispute that involves a review of adverse determination of network or non-network health care requiring preauthorization or concurrent review. The dispute is reviewed by an independent review organization (IRO) pursuant to the Insurance Code, the Labor Code and related rules, including §133.308 of this subchapter (relating to Medical Dispute Resolution by Independent Review Organizations).

(6) Retrospective medical necessity dispute--A dispute that involves a review of the medical necessity of health care already provided. The dispute is reviewed by an IRO pursuant to the Insurance Code, Labor Code and related rules, including §133.308 of this subchapter.

(b) Dispute Sequence. If there is a retrospective medical necessity dispute for the same services for which there are also medical fee issues, the requestor shall file a request for medical fee dispute resolution with the Division only after the receipt of an IRO decision, inclusive of all appeals, which resolves the medical necessity issue. The medical necessity dispute must be resolved pursuant to §133.308 of this subchapter prior to the submission of the medical fee dispute pursuant to §133.307 of this subchapter.

(c) Division Administrative Fee. The Division may assess a fee, as published on the Division's website, in accordance with Labor Code §413.020 when resolving disputes pursuant to §133.307 and §133.308 of this subchapter if the decision indicates the following:

(1) the provider billed an amount in conflict with Division rules, including billing rules, fee guidelines or treatment guidelines;

(2) the carrier denied or reduced payment in conflict with Division rules, including reimbursement or audit rules, fee guidelines or treatment guidelines;

(3) the carrier has reduced the payment based on a contracted discount rate with the provider but has not made the contract available upon the Division's request;

(4) the carrier has reduced or denied payment indicating a contracted discount rate with the provider and has provided a contract that indicates the direction or management of health care through a provider arrangement that has not been certified as a workers' compensation network; or

(5) the carrier or provider did not comply with a provision of the Insurance Code, Labor Code or related rules.

(d) Confidentiality. Any documentation exchanged by the parties during MDR that contains confidential information regarding a person other than the employee for that claim or a party in the dispute must be redacted by the party submitting the documentation to remove any information that identifies the person.

§133.307.Medical Dispute Resolution of Fee Disputes.

(a) Applicability. This section applies to a request for medical fee dispute resolution for non-network or certain authorized out-of-network health care not subject to a contract, which was filed on or after September 1, 2006. Dispute resolution requests filed prior to September 1, 2006 shall be resolved in accordance with the rules in effect at the time the request was filed. In resolving non-network disputes which are over the amount of payment due for health care determined to be medically necessary and appropriate for treatment of a compensable injury, the role of the Division of Workers' Compensation (Division) is to adjudicate the payment, given the relevant statutory provisions and Division rules.

(b) Requestors. The following parties may be requestors in medical fee disputes:

(1) the health care provider (provider), including qualified pharmacy processing agents as described in Labor Code §413.0111, in a dispute over the reimbursement of a medical bill(s);

(2) the provider in a dispute about the results of a Division audit or review which requires the provider to refund an amount for health care services previously paid by the insurance carrier;

(3) the injured employee (employee) in a dispute involving an employee's request for reimbursement from the carrier of medical expenses paid by the employee; or

(4) the employee when requesting a refund of the amount the employee paid to the provider in excess of a Division fee guideline.

(c) Requests. Requests for medical dispute resolution (MDR) shall be filed in the form and manner prescribed by the Division. Requestors shall file two legible copies of the request with the Division.

(1) Timeliness. A requestor shall timely file with the Division's MDR Section or waive the right to MDR. The Division shall deem a request to be filed on the date the MDR Section receives the request. A request for medical fee dispute resolution shall be filed not later than one year after the date(s) of service in dispute, except in the following circumstances:

(A) if a dispute under Labor Code Chapter 410 has been filed related to the health care that is the subject of the dispute, the medical dispute must be filed not later than 60 days after the date the requestor received the final decision on compensability or extent of injury, inclusive of all appeals, involving health care for conditions determined to be compensable;

(B) if a medical dispute regarding medical necessity has been filed, the medical dispute must be filed not later than 60 days after the date the requestor received the final decision on medical necessity, inclusive of all appeals, related to the health care in dispute and for which the carrier previously denied payment based on medical necessity; or

(C) if the dispute relates to a refund notice issued pursuant to a Division audit or review, the dispute must be filed not later than 20 days after the date of the receipt of a refund notice.

(2) Provider Request. The provider shall complete the required sections of the request in the form and manner prescribed by the Division. The provider shall file the request with the MDR Section by any mail service or personal delivery. The request shall include:

(A) a copy of all medical bill(s) as originally submitted to the carrier and a copy of all medical bill(s) submitted to the carrier for reconsideration in accordance with §133.250 of this chapter (relating to Reconsideration for Payment of Medical Bills);

(B) a copy of each explanation of benefits (EOB) relevant to the fee dispute or, if no EOB was received, convincing documentation providing evidence of carrier receipt of the request for an EOB;

(C) the form DWC-60 table listing the specific disputed health care and charges in the form and manner prescribed by the Division;

(D) when applicable, a copy of the final decision regarding compensability, extent of injury, and/or medical necessity for the health care related to the dispute;

(E) a copy of all medical records specific to the dates of service in dispute;

(F) a position statement of the disputed issue(s) that shall include:

(i) a description of the health care for which payment is in dispute,

(ii) the requestor's reasoning for why the disputed fees should be paid or refunded,

(iii) how the Labor Code, Division rules, and fee guidelines impact the disputed fee issues, and

(iv) how the submitted documentation supports the requestor position for each disputed fee issue;

(G) documentation that discusses, demonstrates, and justifies that the payment amount being sought is a fair and reasonable rate of reimbursement in accordance with §134.1 of this title (relating to Medical Reimbursement) when the dispute involves health care for which the Division has not established a maximum allowable reimbursement (MAR), as applicable; and

(H) if the requestor is a pharmacy processing agent, a signed and dated copy of an agreement between the processing agent and the pharmacy clearly demonstrating the dates of service covered by the contract and a clear assignment of the pharmacy's right to participate in the MDR process. The pharmacy processing agent may redact any proprietary information contained within the agreement.

(3) Employee Refund Dispute Request. An employee who has paid for health care may request medical fee dispute resolution of a refund denied by the provider. The employee's refund request shall be sent to the MDR Section by mail service, personal delivery or facsimile and shall include:

(A) the form DWC-60 table listing the specific disputed health care in the form and manner prescribed by the Division;

(B) an explanation of the disputed amount that includes a description of the health care, why the disputed amount should be refunded, and how the submitted documentation supports the explanation for each disputed amount;

(D) a copy of the carrier's denial of reimbursement relevant to the dispute, or, if no denial was received, convincing evidence of the employee's attempt to obtain reimbursement from the carrier;

(4) Division Response to Request. The Division will forward a copy of the request to the respondent. The respondent shall be deemed to have received the request on the acknowledgement date as defined in §102.5 of this title (relating to General Rules for Written Communications to and from the Commission).

(d) Responses. Carrier or provider responses to request MDR shall be legible and submitted in the form and manner prescribed by the Division.

(1) Timeliness. The response will be deemed timely if received by the Division via mail service, personal delivery, or facsimile within 14 days after the date the respondent received the copy of the requestor's dispute. If the Division does not receive the response information within 14 days of the dispute notification, then the Division may base its decision on the available information.

(2) Carrier Response. Upon receipt of the request, the carrier shall complete the required sections of the request form and provide any missing information not provided by the requestor and known to the carrier.

(A) The response to the request shall include the completed request form and:

(i) all initial and reconsideration EOBs related to the health care in dispute not submitted by the requestor or a statement certifying that the carrier did not receive the provider's disputed billing prior to the dispute request;

(ii) a copy of all medical bill(s) relevant to the dispute, if different from that originally submitted to the carrier for reimbursement;

(iii) a copy of any pertinent medical records or other documents relevant to the fee dispute;

(iv) a statement of the disputed fee issue(s), which includes:

(I) a description of the health care in dispute;

(II) a position statement of reasons why the disputed medical fees should not be paid;

(III) a discussion of how the Labor Code and Division rules, including fee guidelines, impact the disputed fee issues; and

(IV) a discussion regarding how the submitted documentation supports the respondent's position for each disputed fee issue; and

(V) documentation that discusses, demonstrates, and justifies that the amount the respondent paid is a fair and reasonable reimbursement in accordance with Labor Code §413.011 and §134.1 of this title if the dispute involves health care for which the Division has not established a MAR, as applicable.

(B) The response shall address only those denial reasons presented to the requestor prior to the date the request for MDR was filed with the Division and the other party. Responses shall not address new or additional denial reasons or defenses after the filing of a request. Any new denial reasons or defenses raised shall not be considered in the review.

(C) If the carrier did not receive the provider's disputed billing or the employee's reimbursement request relevant to the dispute prior to the request, the carrier shall so certify when the carrier files the request form with the Division.

(D) If the dispute has not been resolved and involves compensability or extent of injury the carrier shall attach a copy of any related Plain Language Notice 11 (PLN 11) in accordance with §124.2 of this title (relating to Carrier Reporting and Notification Requirements).

(3) Provider Response. Upon receipt of the request, the provider shall complete the required sections of the request form and provide any missing information not provided by the requestor and known to the provider. The response shall include:

(A) any documentation, including medical bills and employee payment receipts, supporting the reasons why the refund request was denied;

(B) a statement of the disputed fee issue(s), which includes a discussion regarding how the submitted documentation supports the provider's position for each disputed fee issue; and

(e) MDR Action. The Division will review the completed request and response to determine appropriate MDR action.

(1) Request for Additional Information. The Division may request additional information from either party to review the medical fee issues in dispute. The additional information must be received by the Division no later than 14 days after receipt of this request. If the Division does not receive the requested additional information within 14 days after receipt of the request, then the Division may base its decision on the information available.

(2) Abatement of Dispute. If the carrier has raised a dispute pertaining to compensability, or extent of injury for the claim, in accordance with §124.2 of this title, the request for medical fee dispute resolution will be held in abatement until those disputes have been resolved by a final decision of the Division, inclusive of all appeals, or receipt of written notice from the carrier.

(3) Issues Raised by the Division. The Division may raise issues in the MDR process when it determines such an action to be appropriate to administer the dispute process consistent with the provisions of the Labor Code and Division rules.

(4) Dismissal. The Division may dismiss a request for medical fee dispute resolution if:

(A) the requestor informs the Division, or the Division otherwise determines, that the dispute no longer exists;

(B) the requestor is not a proper party to the dispute pursuant to subsection (b) of this section;

(C) the Division determines that the medical bills in the dispute have not been submitted to the carrier for reconsideration;

(D) the fee disputes for the date(s) of health care in question have been previously adjudicated by the Division;

(E) the request for medical fee dispute resolution is untimely;

(F) the Division determines the medical fee dispute is for health care services provided to an employee by a network provider subject to Insurance Code Chapter 1305; or

(G) if the request contains unresolved medical necessity issues, the Division shall notify the parties of the review requirements pursuant to §133.308 of this subchapter (relating to Medical Dispute Resolution by Independent Review Organizations) and will dismiss the request in accordance with the process outlined in §133.305 of this subchapter (relating to Medical Dispute Resolution--General).

(H) the request for medical fee dispute resolution involves contract rates not pertaining to networks certified under Insurance Code Chapter 1305 and not in accordance with Labor Code §413.011 or §504.053;

(I) the request for medical fee dispute resolution was not submitted in compliance with the provisions of the Labor Code and this chapter; or

(J) the Division determines that good cause exists to dismiss the request.

(5) Decision. The Division shall send a decision to the disputing parties and post the decision on the Department Internet website.

(6) Division Fee. The Division may assess a fee in accordance with §133.305 of this subchapter.

(f) Appeal. A party to a medical fee dispute may seek judicial review of the decision by filing a petition in a Travis County district court not later than the 30th day after the date on which the decision is received by the appealing party. The parties will be deemed to have received the decision on the acknowledgement date as defined in §102.5 of this title. Any decision that is not timely appealed becomes final. If a party to a medical fee dispute files a petition for judicial review of the MDR Section decision, the party shall, at the time the petition is filed with the district court, send a copy of the petition for judicial review to the Division. The following information must be included in the petition or provided by cover letter:

(1) the MDR Section tracking number for the dispute being appealed;

(2) the names of the parties;

(3) the cause number;

(4) the identity of the court; and

(5) the date the petition was filed with the court.

(g) Record for Appeal. The Division shall upon receipt of the court petition prepare a record of the MDR Section review and submit a copy of the record to the district court. The Division shall assess the party seeking judicial review expenses incurred by the Division in preparing and copying the record. The record shall contain:

(1) the MDR Section decision;

(2) the request for MDR;

(3) all documentation and written information submitted by the requestor;

(4) all documentation and written information submitted by the respondent;

(5) other documents contained in the MDR Section files (e.g. correspondence, orders for production;

(6) copies of any pertinent medical literature or other documentation utilized to support the decision or, where such documentation is subject to copyright protection or is voluminous, then a listing of such documentation referencing the portion(s) of each document utilized;

(7) if not specified in the decision, citations to the particular provisions in statutes, rules, and other authorities that are utilized to support the decision; and

(8) signed and certified custodian of records affidavit;

(h) Letter of Clerical Correction. Upon receipt of a Division decision, either party may request a clerical correction of an error in a decision. Clerical errors are non-substantive and include but are not limited to typographical or mathematical calculation errors. Only the Division can determine if a clerical correction is required. A request for clerical correction does not alter the deadlines for appeal.

§133.308.Medical Dispute Resolution by Independent Review Organizations.

(a) Applicability. This section applies to the independent review of network and non-network preauthorization, concurrent or retrospective medical necessity disputes for a dispute resolution request filed on or after September 1, 2006. Dispute resolution requests filed prior to September 1, 2006 shall be resolved in accordance with the rules in effect at the time the request was filed. When applicable, retrospective medical necessity disputes shall be governed by the provisions of §133.309 of this chapter (relating to Alternative Medical Necessity Dispute Resolution by Case Review Doctor). All independent review organizations (IROs) performing reviews of health care under the Labor Code and Insurance Code, regardless of where the independent review activities are located, shall comply with this section. The Insurance Code, the Labor Code and related rules govern the independent review process.

(b) IRO Certification. Each IRO performing independent review of health care provided in the workers' compensation system shall be certified pursuant to Insurance Code Article 21.58C.

(c) Conflicts. Conflicts of interest will be reviewed by the Department consistent with the provisions of the Insurance Code Article 21.58C, §2(f), Labor Code §413.032(b), §12.203 of this title (relating to Conflicts of Interest Prohibited) and any other related rules. Notification of each IRO decision must include a certification by the IRO that the reviewing provider has certified that no known conflicts of interest exist between that provider, the employee, any of the treating providers, or any of the providers who reviewed the case for determination prior to referral to the IRO.

(d) Monitoring. The Division will monitor IROs under Labor Code §§413.002, 413.0511, and 413.0512. The Division shall report the results of the monitoring of IROs to the Department on at least a quarterly basis.

(e) Requestors. The following parties are considered requestors in preauthorization, concurrent and retrospective medical necessity dispute resolution:

(1) providers, including qualified pharmacy processing agents acting on behalf of a pharmacy as described in Labor Code §413.0111;

(2) employees covered by a network; and

(3) employees not covered by a network, excluding retrospective medical necessity disputes, except when reimbursement was denied for health care paid by the employee.

(f) Requests. A request for independent review must be filed in the form and manner prescribed by the Department. The Department's IRO request form may be obtained from:

(1) the Department's Internet website at www.tdi.state.tx.us; or

(2) the Health and Worker's Compensation Network Certification and Quality Assurance Division, Mail Code 103-6A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104.

(g) Timeliness. A requestor shall file a request for independent review with the insurance carrier (carrier) or the carrier's utilization review agent (URA) no later than the 45th day after the denial of reconsideration. The carrier shall immediately notify the Department upon receipt of the request for an independent review. In a preauthorization or concurrent review dispute request, an employee with a life-threatening condition, as defined in Insurance Code Article 21.58A, is entitled to an immediate review by an IRO and is not required to comply with the procedures for a reconsideration.

(h) Dismissal. The Department may dismiss a request for medical necessity dispute resolution if:

(1) the requestor informs the Department, or the Department otherwise determines, that the dispute no longer exists;

(2) the individual or entity requesting medical necessity dispute resolution is not a proper party to the dispute;

(3) the Department determines that the dispute has not been submitted to the carrier for reconsideration;

(4) the Department has previously resolved the dispute for the date(s) of health care in question;

(5) the request for dispute resolution is untimely pursuant to subsection (g) of this section;

(6) the request for medical necessity dispute resolution was not submitted in compliance with the provisions of this subchapter; or

(7) the Department determines that good cause otherwise exists to dismiss the request.

(i) IRO Assignment and Notification. The Department shall review the request for IRO review, assign an IRO, and notify the parties about the IRO assignment consistent with the provisions of Insurance Code Article 21.58C, §2(a)(1)(A), §1305.355(a), Chapter 12, Subchapter F of this title (related to Random Assignment of Independent Review Organizations), any other related rules and this subchapter.

(j) Carrier Document Submission. The carrier or the carrier's URA shall submit the documentation required in paragraphs (1) - (6) of this subsection to the IRO not later than the third working day after the date the carrier receives the notice of IRO assignment. The documentation shall include:

(1) the forms prescribed by the Department for requesting IRO review;

(2) all medical records of the employee in the possession of the carrier that are relevant to the review;

(3) all documents, guidelines, policies, protocols and criteria used by the carrier in making the decision;

(4) all documentation and written information submitted to the carrier in support of the appeal;

(5) the written notification of the initial adverse determination and the written adverse determination of the reconsideration; and

(6) any other information required by the Department related to a request from a carrier for the assignment of an IRO.

(k) Additional Information. The IRO shall request additional necessary information from either party or from other providers whose records are relevant to the review.

(1) The party shall deliver the requested information to the IRO as directed by the IRO. If the provider requested to submit records is not a party to the dispute, the carrier shall reimburse copy expenses for the requested records pursuant to §134.120 of this title (relating to Reimbursement for Medical Documentation). Parties to the dispute may not be reimbursed for copies of records sent to the IRO.

(2) If the required documentation has not been received as requested by the IRO, the IRO shall notify the Department and the Department shall request the necessary documentation.

(3) Failure to provide the requested documentation as directed by the IRO or Department may result in enforcement action as authorized by statutes and rules.

(l) Designated Doctor Exam. In performing a review of medical necessity, an IRO may request that the Division require an examination by a designated doctor and direct the employee to attend the examination pursuant to Labor Code §413.031(g) and §408.0041. The IRO request to the Division must be made no later than 10 days after the IRO receives notification of assignment of the IRO. The treating doctor and carrier shall forward a copy of all medical records, diagnostic reports, films, and other medical documents to the designated doctor appointed by the Division, to arrive no later than three working days prior to the scheduled examination. Communication with the designated doctor is prohibited regarding issues not related to the medical necessity dispute. The designated doctor shall complete a report and file it with the IRO, on the form and in the manner prescribed by the Division no later than seven working days after completing the examination. The designated doctor report shall address all issues as directed by the Division.

(m) Time Frame for IRO Decision. The IRO will render a decision as follows:

(1) for life-threatening conditions, no later than eight days after the IRO receipt of the dispute;

(2) for preauthorization and concurrent medical necessity disputes, no later than the 20th day after the IRO receipt of the dispute;

(3) for retrospective medical necessity disputes, no later than the 30th day after the IRO receipt of the IRO fee; and

(4) if a designated doctor examination has been requested by the IRO, the above time frames begin on the date of the IRO receipt of the designated doctor report.

(n) IRO Decision. The decision shall be mailed or otherwise transmitted to the parties and transmitted by facsimile to the Department within the time frames specified in this section.

(1) The IRO decision must include:

(A) a list of all medical records and other documents reviewed by the IRO, including the dates of those documents;

(B) a description and the source of the screening criteria or clinical basis used in making the decision;

(C) an analysis of, and explanation for, the decision, including the findings and conclusions used to support the decision;

(D) a description of the qualifications of each physician or other health care provider who reviewed the decision;

(E) a statement that clearly states whether or not medical necessity exists for each of the health care services in dispute;

(F) a certification by the IRO that the reviewing provider has no known conflicts of interest pursuant to the Insurance Code Article 21.58A, Labor Code §413.032, and §12.203 of this title; and

(G) if the IRO's decision is contrary to:

(i) the Division's policies or guidelines adopted under Labor Code §413.011, the IRO must indicate in the decision the specific basis for its divergence in the review of medical necessity of non-network health care; or

(ii) the network's treatment guidelines, the IRO must indicate in the decision the specific basis for its divergence in the review of medical necessity of network health care.

(2) The notification to the Department shall also include certification of the date and means by which the decision was sent to the parties.

(o) Carrier Use of IRO Decision. If an IRO decision determines that medical necessity exists for health care that the carrier denied and the carrier utilized a peer review report on which to base its denial, the peer review report shall not be used for subsequent medical necessity denials of the same claim.

(p) IRO Fees. IRO fees will be paid in the same amounts as the IRO fees set by Department rules. In addition to the specialty classifications established as tier two fee in Department rules, independent review by a doctor of chiropractic shall be paid the tier two fee. IRO fees shall be paid as follows:

(1) In network disputes, a preauthorization, concurrent, or retrospective medical necessity dispute for health care provided by a network, the carrier must remit payment to the assigned IRO within 15 days after receipt of an invoice from the IRO;

(2) In non-network disputes, IRO fees for disputes regarding non-network health care must be paid as follows:

(A) in a preauthorization or concurrent review medical necessity dispute or an employee reimbursement dispute, the carrier shall remit payment to the assigned IRO within 15 days after receipt of an invoice from the IRO.

(B) in a retrospective medical necessity dispute, the requestor must remit payment to the assigned IRO within 15 days after receipt of an invoice from the IRO.

(i) if the IRO fee has not been received within 15 days of the requestor's receipt of the invoice, the IRO shall notify the Department and the Department shall dismiss the dispute with prejudice.

(ii) after an IRO decision is rendered, the IRO fee must be paid or refunded by the nonprevailing party as determined by the IRO in its decision.

(3) Designated doctor examinations requested by an IRO shall be paid by the carrier in accordance with the medical fee guidelines under the Labor Code and related rules.

(4) Failure to pay or refund the IRO fee may result in enforcement action as authorized by statute and rules and removal from the Division's Approved Doctor List.

(5) For health care not provided by a network, the non-prevailing party to a retrospective medical necessity dispute must pay or refund the IRO fee to the prevailing party upon receipt of the IRO decision, but not later than 15 days regardless of whether an appeal of the IRO decision has been or will be filed.

(6) The IRO fees may include an amended notification of decision if the Department determines the notification to be incomplete. The amended notification of decision shall be filed with the Department no later than five working days from the IRO's receipt of such notice from the Department. The amended notification of decision does not alter the deadlines for appeal.

(7) If a requestor withdraws the request for an IRO decision after the IRO has been assigned by the Department but before the IRO sends the case to an IRO reviewer, the requestor shall pay the IRO a withdrawal fee of $150 within 30 days of the withdrawal. If a requestor withdraws the request for an IRO decision after the case is sent to a reviewer, the requestor shall pay the IRO the full IRO review fee within 30 days of the withdrawal.

(8) In addition to Department enforcement action, the Division may assess an administrative fee in accordance with Labor Code §413.020 and §133.305 of this subchapter (relating to Medical Dispute Resolution--General).

(q) Defense. A carrier may claim a defense to a medical necessity dispute if the carrier timely complies with the IRO decision with respect to the medical necessity or appropriateness of health care for an employee. Upon receipt of an IRO decision for a retrospective medical necessity dispute that finds that medical necessity exists, the carrier must review, audit and process the bill. In addition, the carrier shall tender payment consistent with the IRO decision, and issue a new explanation of benefits (EOB) to reflect the payment within 21 days upon receipt of the IRO decision.

(r) Appeal. A decision issued by an IRO is not considered an agency decision and neither the Department nor the Division are considered parties to an appeal. Appeals of IRO decisions will be as follows:

(1) Non-Network Appeal Procedures. A carrier shall comply with the IRO decision in accordance with Labor Code §413.031(m). A party to a medical necessity dispute may seek judicial review of the IRO decision by filing a petition in a Travis County district court not later than the 30th day after the date on which the decision is received by the appealing party. The parties will be deemed to have received the decision on the acknowledgement date as defined in §102.5 of this title (relating to General Rules for Written Communications to and from the Commission). Any decision that is not timely appealed becomes final. A party to a medical necessity dispute who appeals the decision shall, at the time the petition is filed, send a copy of the petition for judicial review to the IRO that issued the decision being appealed, and request that the IRO provide a record for the appeal. The party requesting the record shall pay the IRO copying costs for the records.

(2) Record for Non-Network Appeal. If a party to a medical necessity dispute files a petition for judicial review of the IRO decision, the IRO, upon request, shall provide a record of the review and submit it to the requestor within 15 days of the request. The record shall include the following documents that are in the possession of the IRO and which were reviewed by the IRO in making the decision:

(A) medical records;

(B) all documents used by the carrier in making the decision that resulted in the adverse determination under review by the IRO;

(D) the written notification of the adverse determination and the written determination of the reconsideration;

(E) a list containing the name, address and phone number of each provider who provided medical records to the IRO relevant to the review;

(F) a list of all medical records or other documents reviewed by the IRO, including the dates of those documents;

(G) a copy of the decision that was sent to all parties;

(H) copies of any pertinent medical literature or other documentation (such as any treatment guideline or screening criteria) utilized to support the decision or, where such documentation is subject to copyright protection or is voluminous, then a listing of such documentation referencing the portion(s) of each document utilized;

(I) a signed and certified custodian of records affidavit; and

(J) other information that was required by the Department related to a request from a carrier or the carrier's URA for the assignment of the IRO.

(3) Network Appeal Procedures. A party to a medical necessity dispute may seek judicial review of the decision as provided in Insurance Code §1305.355.

(s) Non-Network Spinal Surgery Appeal. A party to a preauthorization or concurrent medical necessity dispute regarding spinal surgery may appeal the IRO decision in accordance with Labor Code §413.031(l) by requesting a Contested Case Hearing (CCH).

(1) The written appeal must be filed with the Division Chief Clerk no later than 10 days after receipt of the IRO decision and must be filed in compliance with §142.5(c) of this title (relating to Sequence of Proceedings to Resolve Benefit Disputes).

(2) The CCH must be scheduled and held not later than 20 days after Division receipt of the request for a CCH.

(3) The hearing and further appeals shall be conducted in accordance with Chapters 140, 142, and 143 of this title (relating to Dispute Resolution/General Provisions, Benefit Contested Case Hearing, and Review by the Appeals Panel).

(4) The party appealing the IRO decision shall deliver a copy of its written request for a hearing to all other parties involved in the dispute. The IRO is not required to participate in the CCH or any appeal.

(t) Medical Fee Dispute Request. If the health care provider has an unresolved fee dispute related to health care that was found medically necessary, after the final decision of the medical necessity dispute, the provider may file a medical fee dispute in accordance with §133.305 and §133.307 of this subchapter (relating to Medical Dispute Resolution--General and Medical Dispute Resolution of Fee Disputes).

(u) Enforcement. If the Department believes that any person is in violation of the Labor Code, Insurance Code and related rules, the Department may initiate an enforcement action. Nothing in this section modifies or limits the authority of the Department or the Division.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on June 12, 2006.

TRD-200603183

Norma Garcia

General Counsel

Texas Department of Insurance, Division of Workers' Compensation

Earliest possible date of adoption: July 23, 2006

For further information, please call: (512) 804-4288

Part 6. OFFICE OF INJURED EMPLOYEE COUNSEL

Chapter 276. GENERAL ADMINISTRATION

Subchapter B. OMBUDSMAN PROGRAM

The Office of Injured Employee Counsel (OIEC) proposes the repeal of §276.10 and §276.11, new §276.10, and amendments to §276.12, concerning ombudsman training and education and private meetings with unrepresented injured employees. The proposed repeal of §276.10 and §276.11, new §276.10, and amendments to §276.12 are necessary to implement OIEC's ombudsman education and training program pursuant to Labor Code §404.152 as amended by House Bill (HB) 7, 79th Texas Legislature, Regular Session.

The proposed repeal of §276.10 is necessary to reduce confusion as necessary definitions are proposed in new §276.10(a). Proposed repeal of §276.10 provides for future OIEC rulemaking initiatives, particularly in providing a single location for Chapter 276 definitions.

Proposed repeal of §276.11 and proposed new §276.10 are needed to provide an extensive ombudsman education and training program for an ombudsman's assistance to an unrepresented injured employee in the Texas workers' compensation system. The proposed repeal of §276.11 and new §276.10 are necessary to implement a detailed process and procedure to deliver workers' compensation education to ombudsmen, provide a system for continuing education for ombudsmen, and to assure that injured employees of Texas are provided with assistance in both informal and formal dispute resolution proceedings in the workers' compensation system.

The proposed amendments to §276.12 are necessary to complete the transfer of the ombudsmen education and training program from the former Texas Workers' Compensation Commission to OIEC. The proposed amendments to §276.12 are necessary to provide clarity to ombudsmen and injured employees in preparing for informal and formal proceedings.

Luz Loza, Director of Injured Employee Services, has determined that for each year of the first five years the proposed repeal, new, and amended sections shall be in effect, there shall be no fiscal impact to state or local governments as a result of the enforcement or administration of the proposal. There shall be no measurable effect on local employment or the local economy as a result of the proposal.

Ms. Loza has determined that for each year of the first five years the repeal, new, and amended sections are in effect, the public benefits anticipated as a result of the proposal shall be a more comprehensive ombudsman education and training program. Injured employees shall benefit from an ombudsman program where ombudsmen provide assistance to injured employees in both informal and formal workers' compensation proceedings. Both injured employees and ombudsmen will benefit from the existence of regional staff attorneys who will provide legal research and advice to ombudsmen assisting injured employees.

It is anticipated that all system participants will benefit from a workers' compensation system where unrepresented injured employees receive a higher level of assistance in benefit review conferences and contested case hearings. An increased level of ombudsmen education and training is likely to result in a workers' compensation system that provides increased access to assistance, narrows the information disparity in proceedings where an injured employee's right to benefits is at stake, and provides additional information and education on the injured employee's rights and responsibilities in the workers' compensation system. Further, an increased ombudsmen education and training program is anticipated to provide ombudsmen with a skill set and resources to provide a more efficient level of assistance for Texas' injured employees.

The proposed repeal, new, and amended sections provide consistency with Chapter 404 of the Texas Labor Code and clarify that OIEC is the state agency that offers ombudsman assistance to unrepresented injured employees in the Texas workers' compensation system. The probable economic cost to persons required to comply with the proposal shall be OIEC's costs of obtaining and renewing an ombudsman's adjuster's license. OIEC's cost to obtain an adjuster's license from the Texas Department of Insurance for an ombudsman is $50 with an additional $50 biennial cost to maintain the adjuster's license. However, the requirement for ombudsman to obtain an adjuster's license is not a new requirement and poses no new costs. There are no additional costs as a result of the proposed repeal, new, or amended sections.

Further, any additional economic costs either exist under current rules or result from the enactment of HB 7 and are not a result of the adoption, enforcement, or administration of the proposed repeal, new, and amended sections. Based upon the cost of labor per hour, there is no disproportionate economic impact on small or micro businesses. Even if the proposed repeal, new, and amended sections would have an adverse effect on small or micro businesses, it is neither legal nor feasible to waive the provisions of the proposal for small or micro businesses because the Labor Code requires equal application of these provisions to all affected individuals.

To be considered, written comments on the proposal must be submitted no later than 5:00 p.m. on July 24, 2006 to Brian White, Counsel for Policy Development, Office of Injured Employee Counsel, Mail Code 50, 7551 Metro Center Drive, Austin, Texas 78744. A request for a public hearing should be submitted separately to the Counsel for Policy Development.

28 TAC §276.10, §276.11

(Editor's note: The text of the following sections proposed for repeal will not be published. The sections may be examined in the Office of Injured Employee Counsel or in the Texas Register office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)

The repeal is proposed pursuant to Texas Labor Code §§404.151, 404.152, 404.154, 404.103, 404.105, and 404.006. Section 404.151 provides for the maintenance of an ombudsman program; the assistance of unrepresented injured employees and the protection of their rights in the workers' compensation system; and the meeting of an ombudsman with an unrepresented injured employee privately for a minimum of 15 minutes prior to any informal or formal hearing. Section 404.152 provides for the designation, education and training, and continuing education requirements to be an ombudsman. Section 404.152(c) provides that the public counsel shall by rule adopt training guidelines and continuing education requirements for ombudsmen, which must include: education on the workers' compensation laws, rules, and appeals panel decisions; require ombudsmen undergoing training to be observed and monitored by an experienced ombudsman during daily activities; and assign staff attorneys, as the public counsel considers appropriate, to supervise the work of the ombudsman program and advise ombudsmen in providing assistance to claimants and preparing for informal and formal hearings. Section 404.154 requires the office to widely disseminate information about the ombudsman program. Section 404.103 provides for the operation of the ombudsman program and requires the public counsel to assign staff attorneys, as appropriate, to supervise the work of the ombudsman program and advise ombudsmen in providing assistance to claimants and preparing for informal and formal hearings. Section 404.105 provides that the office, through the ombudsman program, may appear before the commissioner or division on behalf of an individual injured employee during an administrative dispute resolution process. Section 404.006 requires the public counsel to adopt rules to implement Chapter 404 of the Labor Code.

Texas Labor Code §§404.151, 404.152, 404.154, 404.103, 404.105, and 404.006 are affected by the repeal of §276.10 and §276.11.

§276.10.Definitions.

§276.11.Ombudsman Training Program/Continuing Education.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on June 12, 2006.

TRD-200603158

Brian M. White

Counsel for Policy Development

Office of Injured Employee Counsel

Earliest possible date of adoption: July 23, 2006

For further information, please call: (512) 804-4186

28 TAC §276.10, §276.12

The new rule and amendments are proposed pursuant to Texas Labor Code §§404.151, 404.152, 404.154, 404.103, 404.105, and 404.006. Section 404.151 provides for the maintenance of an ombudsman program; the assistance of unrepresented injured employees and the protection of their rights in the workers' compensation system; and the meeting of an ombudsman with an unrepresented injured employee privately for a minimum of 15 minutes prior to any informal or formal hearing. Section 404.152 provides for the designation, education and training, and continuing education requirements to be an ombudsman. Section 404.152(c) provides that the public counsel shall by rule adopt training guidelines and continuing education requirements for ombudsmen, which must include: education on the workers' compensation laws, rules, and appeals panel decisions; require ombudsmen undergoing training to be observed and monitored by an experienced ombudsman during daily activities; and assign staff attorneys, as the public counsel considers appropriate, to supervise the work of the ombudsman program and advise ombudsmen in providing assistance to claimants and preparing for informal and formal hearings. Section 404.154 requires the office to widely disseminate information about the ombudsman program. Section 404.103 provides for the operation of the ombudsman program and requires the public counsel to assign staff attorneys, as appropriate, to supervise the work of the ombudsman program and advise ombudsmen in providing assistance to claimants and preparing for informal and formal hearings. Section 404.105 provides that the office, through the ombudsman program, may appear before the commissioner or division on behalf of an individual injured employee during an administrative dispute resolution process. Section 404.006 requires the public counsel to adopt rules to implement Chapter 404 of the Labor Code.

Texas Labor Code §§404.151, 404.152, 404.154, 404.103, 404.105, and 404.006 are affected by new §276.10 and the amendments to §276.12.

§276.10.Ombudsmen Education and Training Program.

(a) Definitions. The following words and phrases shall have the following meaning in this section unless the context clearly indicates otherwise:

(1) Adjuster's license: A workers' compensation license issued by the Texas Department of Insurance.

(2) Continuing education: A formal training program required for all ombudsmen in this state that includes continuing education for obtaining and retaining an adjuster's license.

(3) Ombudsmen education and training program: The training required by the Office of Injured Employee Counsel (OIEC) to serve as an ombudsman, which results in certification upon completion.

(b) Purpose. OIEC shall establish and maintain the ombudsmen education and training program to ensure consistent, quality, and thorough training of ombudsmen staff. The ombudsmen education and training program applies to every ombudsman, regardless of hire date. The ombudsmen education and training program shall include, but is not limited to:

(1) formal classroom training conducted by OIEC staff;

(2) on-the-job training monitored by a supervising ombudsman, senior ombudsman, and regional staff attorneys;

(3) observations of ombudsmen by supervising ombudsman, senior ombudsman, and regional staff attorneys;

(4) professional skill development and legal education on workers' compensation laws, rules, advisories, and appeals panel decisions by the regional attorneys; and

(5) resource meetings with OIEC's central staff to discuss current and pending issues instrumental to providing assistance to injured employees in informal and formal proceedings.

(c) OIEC staff's responsibilities regarding education and training. OIEC staff shall maintain the knowledge and skills needed to properly assist unrepresented injured employees in the workers' compensation system.

(1) Injured Employee Services is the division within OIEC that is responsible for the overall management of the ombudsman education and training program. Injured Employee Services' responsibilities include, but are not limited to:

(A) educating ombudsmen about the workers' compensation laws, rules, advisories, appeals panel decisions, dispute resolution, OIEC policies and procedures, and application of such information to specific cases or factual situations;

(B) selecting team lead supervisors, training ombudsmen, and senior ombudsmen to observe, supervise, train, and provide feedback to ombudsmen on a daily basis;

(D) establishing on-going training schedules for ombudsmen and evaluating the performance of ombudsmen's progress through the education and training program;

(E) maintaining documentation to monitor the effectiveness of the ombudsman program and coordinating with OIEC's Legal Services division to develop education and training materials to address systematic issues to enhance ombudsmen's effectiveness;

(F) examining the proficiency and competency of each ombudsman by conducting technical observations and identifying areas for professional improvement;

(G) providing targeted training to individual ombudsman for professional development and incorporating the technical observations and evaluations into the performance evaluation process;

(H) providing continuing education and training, at least annually, to ombudsmen on workers' compensation laws, rules, advisories, appeals panel decisions, dispute resolution, OIEC policies and procedures; and

(I) assigning a staff attorney to each ombudsman who will advise the ombudsman on providing assistance to injured employees and preparing for informal and formal proceedings.

(2) An ombudsman's responsibilities shall include, but is not limited to:

(A) obtaining and maintaining a valid workers' compensation adjusters' license issued by the Texas Department of Insurance and submitting a copy of the license to OIEC's central office;

(B) completing the ombudsmen education and training program;

(D) completing all continuing education requirements;

(E) maintaining the technical and professional skills to perform all the duties of an ombudsman; and

(F) assisting and serving as an advocate for injured employees throughout the workers' compensation system.

§276.12. Procedures for Private Meetings with Unrepresented Injured Employees Prior to a Workers' Compensation Proceeding [ ~~Claimants~~ ].

[(a) Appropriate field office staff shall forward to each ombudsman in the field office a list of unrepresented claimants who have been notified of a benefit review conference or a benefit contested case hearing. The ombudsman shall maintain an up to date calendar of pending benefit review conferences and benefit contested case hearings.]

(a) [ ~~(b)~~ ] An ombudsman shall meet privately with an unrepresented injured employee [ ~~claimant~~ ] for a minimum of 15 minutes prior to each benefit review conference and benefit contested case hearing.

(b) [ ~~(c)~~ ] The 15-minute private meeting shall include :

(1) an overview of the dispute resolution process, and

(2) a review of the injured employee's [ ~~claimant's~~ ] disputed issues and applicable [ ~~the application of the~~ ] workers' compensation laws [ ~~statute~~ ], [ ~~the~~ ] rules , [ ~~of the commission~~ ] and appeals panel decisions.

(c) [ ~~(d)~~ ] If, at the beginning of a benefit review conference or benefit contested case hearing, the benefit review officer or benefit contested case hearing officer determines that the unrepresented injured employee [ ~~claimant~~ ] has not met with an ombudsman for a minimum of 15 minutes prior to the proceeding, the ombudsman shall request the benefit review officer or [ ~~benefit~~ ] contested case hearing officer to [ ~~shall~~ ] recess the proceeding to allow for the private meeting pursuant to Labor Code §404.151(b)(5) [ ~~as described in this rule~~ ].

(d) [ ~~(e)~~ ] If the injured employee [ ~~claimant~~ ] refuses to attend the required meeting prior to a benefit review conference or a contested case hearing , the injured employee [ ~~claimant~~ ] shall acknowledge such refusal in writing. If the injured employee [ ~~claimant~~ ] refuses to sign the acknowledgement , the ombudsman shall request that [ ~~of his or her refusal, the benefit review officer shall~~ ]:

(1) the injured employee receive a copy of Texas Labor Code §404.151, and

(2) the benefit review officer make a notation of the injured employee's refusal in the claim file or that the contested case hearing officer note such refusal in the hearing record.

~~[(1) provide the claimant a copy of Texas Labor Code, §409.041(b)(5); and]~~

~~[(2) make a notation of the claimant's refusal in the claim file, and proceed with the hearing.]~~

[(f) If the claimant refuses to attend the required meeting prior to a benefit contested case hearing, the claimant shall acknowledge such refusal in writing. If the claimant refuses to sign the acknowledgement of his or her refusal, the benefit contested case hearing officer shall:]

~~[(1) provide the claimant a copy of the Texas Labor Code, §409.041(b)(5); and]~~

~~[(2) make a record of the claimant's refusal to comply with §409.041(b)(5) and the provisions of this rule, and proceed with the hearing.]~~

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on June 12, 2006.

TRD-200603157

Brian M. White

Counsel for Policy Development

Office of Injured Employee Counsel

Earliest possible date of adoption: July 23, 2006

For further information, please call: (512) 804-4186