Part 1. TEXAS DEPARTMENT OF INSURANCE
Chapter 7. CORPORATE AND FINANCIAL REGULATION
Subchapter D. RISK-BASED CAPITAL AND SURPLUS
The Commissioner of Insurance adopts new §7.402, concerning risk-based capital and surplus requirements for insurers and health maintenance organizations for year-end 2007. The section is adopted without changes to the proposed text published in the November 30, 2007 issue of the Texas Register (32 TexReg 8627).
REASONED JUSTIFICATION. The new section, which is necessary to regulate the 2007 risk-based capital and surplus requirements for insurers and health maintenance organizations (HMOs), adopts by reference the 2007 National Association of Insurance Commissioners (NAIC) risk-based capital formulas to be used for year-end 2007, including the 2007 NAIC Life Risk-Based Capital Report Including Overview and Instructions for Companies, the 2007 NAIC Fraternal Risk-Based Capital Report Including Overview and Instructions for Companies, the 2007 NAIC Property and Casualty Risk-Based Capital Report Including Overview and Instructions for Companies, and the 2007 NAIC Health Risk-Based Capital Report Including Overview and Instructions for Companies. The adopted section applies to property and casualty insurers, life insurance companies, fraternal benefit societies, stipulated premium companies that do business in other states, HMOs, and insurers filing the National Association of Insurance Commissioners (NAIC) Health blank. These insurers and HMOs are referred to collectively as "carriers" in this adoption. The risk-based capital requirement is a method of ensuring that a carrier has an appropriate level of policyholders' surplus after taking into account the underwriting, financial, and investment risks of a carrier. The adopted section is necessary to provide the Department with a widely used regulatory tool to identify the minimum amount of capital and surplus appropriate for a carrier to support its overall business operations in consideration of its size and risk exposure. The adopted section also provides for specific actions by the Commissioner or the reporting entity when the total adjusted capital of the reporting entity falls to certain levels specified in the section.
HOW THE SECTION WILL FUNCTION. Adopted §7.402(a) explains the purpose of the section. Adopted §7.402(b) specifies the scope of the section. Adopted §7.402(c) specifies definitions of certain terms when used in the section. Adopted §7.402(d) adopts the 2007 risk-based capital formulas by reference. Adopted §7.402(e) describes the filing requirements for the various types of carriers. Adopted §7.402(f) provides that in the event of a conflict between the Insurance Code, any rule of the Department or any specific requirement of the adopted section, and the risk-based capital formula and/or the risk-based capital instructions, the Insurance Code, rule or specific requirement of this section shall take precedence and in all respects control. Adopted §7.402(g) specifies the remedial actions that the Commissioner of Insurance may take depending on the results computed by the risk-based capital formula, including the new subsection (g)(6) requirement that subjects property and casualty insurers to a trend test under certain specified circumstances. Adopted §7.402(g)(6) imposes a new substantive requirement for year-end 2007 that subjects property and casualty insurers to a trend test if total adjusted capital to authorized control level risk-based capital is between 200 percent and 300 percent, and that if the result of the trend test as determined by the formula is "YES", the property and casualty insurers will be subject to the company action level requirements and will need to file additional reporting with the Department as a result of the trend test. This requirement will allow early identification of insurers that are likely to reach a company action level in the following year. By triggering a company action level sooner, insurers can plan better for their capital needs. Adopted §7.402(h) prohibits announcements that would be misleading. Adopted §7.402(i) prohibits the use of the risk-based capital instructions and any related filings for ratemaking. Adopted §7.402(j) mandates that the requirements of the adopted new section shall not reduce the amount of capital and surplus otherwise required by the provisions of the Insurance Code, Department rules, or by the authority of the Commissioner of Insurance as provided by law.
SUMMARY OF COMMENTS. The Department did not receive any comments on the published proposal.
STATUTORY AUTHORITY. The new section is adopted under the Insurance Code Chapters 404 and 441 and §§441.051, 541.401, 822.210, 841.205, 884.206, 843.404, 885.401, 982.105, 982.106, and 36.001. Chapters 404 and 441 address the duties of the Department when an insurer's solvency is impaired. Chapter 404 authorizes the Commissioner to set standards for evaluating the financial condition of an insurer. Chapter 441 addresses the prevention of insurer delinquencies and in §441.051 specifies "the circumstances in which an insurer is considered insolvent, delinquent, or threatened with delinquency" and includes certain statutorily specified conditions, including if an insurer's required surplus, capital, or capital stock is impaired to an extent prohibited by law. Under §441.005, the Commissioner may adopt reasonable rules as necessary to implement and supplement the purposes of Chapter 441. Section 541.401 authorizes the Commissioner to adopt reasonable rules necessary to accomplish the purposes of trade practices regulation in Chapter 541. Sections 822.210, 841.205, and 884.206 authorize the Commissioner to adopt rules to require an insurer to maintain capital and surplus levels in excess of statutory minimum levels to assure financial solvency of insurers for the protection of policyholders and insurers. Section 843.404 authorizes the Commissioner to adopt rules to require a health maintenance organization to maintain capital and surplus levels in excess of statutory minimum levels to ensure financial solvency of health maintenance organizations for the protection of enrollees. Section 885.401 requires each fraternal benefit society to file an annual report on the society's financial condition, including any information the Commissioner considers necessary to demonstrate the society's business and method of operation, and authorizes the Department to use the annual report in determining a society's financial solvency. Section 982.105 specifies the capital, stock, and surplus requirements for foreign or alien life, health, or accident insurance companies. Section 982.106 specifies the capital, stock, and surplus requirements for foreign or alien insurance companies other than life, health, or accident insurance companies. Section 36.001 authorizes the Commissioner of Insurance to 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.
This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on January 18, 2008.
TRD-200800253
Gene C. Jarmon
General Counsel and Chief Clerk
Texas Department of Insurance
Effective date: February 7, 2008
Proposal publication date: November 30, 2007
For further information, please call: (512) 463-6327
Subchapter T. SUBMISSION OF CLEAN CLAIMS
The Commissioner of Insurance adopts amendments to §21.2815, concerning failure to meet the statutory health care clean claims payment period for health care clean claims. The amendments are adopted with nonsubstantive changes to the proposed text published in the November 30, 2007, issue of the Texas Register (32 TexReg 8679). Pursuant to the request of the Texas Register staff, the adoption order also includes changes to the text in §21.2815(a) - (c) and (e) relating to the format of numbers and percentages, which were not a part of the published proposal, for consistency with the nonsubstantive changes proposed in subsection (d).
REASONED JUSTIFICATION. The amendments are necessary to implement SB 1884, enacted by the 80th Legislature, Regular Session, and effective September 1, 2007. SB 1884 amends the Insurance Code §843.342(g) and (h), and §1301.137(g) and (h).
The Department posted an informal working draft of the proposed amendments on the Department's internet website from September 18 to September 26, 2007, and invited public input. The Department received no comments on the informal working draft proposal. In accordance with the Insurance Code §1212.002(b), the Department also discussed the informal working draft of the proposed amendments at the September 20, 2007 meeting of the Technical Advisory Committee on Claims Processing (TACCP), and received favorable comment from TACCP members. The TACCP is appointed pursuant to the Insurance Code Chapter 1212. Section 1212.002(b) requires the Commissioner to consult the TACCP before adopting any rule related to the technical aspects of the coding of health care services and claims development, submission, processing, adjudication, and payment by insurers and health maintenance organizations (HMO's) for medical care and health care services provided to patients. The Department formally proposed the amendments in the November 30, 2007 issue of the Texas Register (32 TexReg 8679). The Department received no comments and no requests for a hearing on the proposal.
SB 1884 revises the basis for calculating the "underpaid amount" component of the formula for determining penalty amounts for certain underpaid claims in the Insurance Code §843.342(g) and §1301.137(g). Prior to the enactment of SB 1884, the underpayment penalty formula was calculated on the ratio of the amount underpaid on the contracted rate to the contracted rate as applied to the billed charges as submitted on the claim. The formula resulted in a penalty that was disproportionate to the underpayment in certain situations. Under SB 1884, the amended formula is calculated on the ratio of the amount underpaid on the contracted rate to the contracted rate as applied to an amount equal to the billed charges as submitted on the claim minus the contracted rate.
Accordingly, this adoption order amends the basis for calculating the "underpaid amount" component of the formula for determining penalty amounts for certain underpaid claims in §21.2815(d) for consistency with the SB 1884 amendments. This adoption order also amends the calculation example in §21.2815(d) for consistency with the amended formula.
SB 1884 also revises certain time frames that affect an HMO's or preferred provider benefit plan (PPBP) carrier's liability for underpaid claim penalties. Prior to SB 1884, an HMO or PPBP carrier was not liable for penalties for an underpaid claim if: (i) the claim was paid in accordance with the subchapter; (ii) the physician or provider notified the HMO or insurer of the underpayment after the 180th day after the date the underpayment was received; and (iii) the HMO or insurer paid the balance of the claim on or before the 45th day after the date the HMO or insurer received the notice. Under the Insurance Code §843.342(h)(2) and §1301.137(h)(2), as amended by SB 1884, an HMO or PPBP carrier is not liable for penalties for an underpaid claim if: (i) the claim is paid in accordance with the subchapter; (ii) the physician or provider notifies the HMO or insurer of the underpayment after the 270th day after the date the underpayment was received; and (iii) the HMO or insurer pays the balance of the claim on or before the 30th day after the date the HMO or insurer receives the notice.
Accordingly, this adoption order amends the time frames in §21.2815(f)(2) for consistency with the SB 1884 changes. In addition to amendments to §21.2815(d) and (f) to implement SB 1884, this adoption order makes nonsubstantive changes to the format of numbers and percentages within §21.2815(a) - (e) for purposes of conformity to agency style and internal consistency. However, these nonsubstantive changes do not introduce new subject matter or affect persons in addition to those subject to the proposal as published.
HOW THE SECTION WILL FUNCTION. The adopted amendments to §21.2815(d) revise the "underpaid amount" component of the formula for calculating the penalty amounts for certain underpaid claims, and also amend the calculation example. The adopted amendments to §21.2815(f) revise the time frames that affect an HMO's or PPBP carrier's liability for underpaid claim penalties. Additionally, adopted amendments to §21.2815(a) - (e) make nonsubstantive changes to the format of numbers and percentages for purposes of conformity to agency style and internal consistency.
SUMMARY OF COMMENTS AND AGENCY RESPONSE. The Department did not receive any comments on the proposed amendments.
STATUTORY AUTHORITY. The amendments are adopted pursuant to the Insurance Code §§843.342, 1301.137, 1212.002, 843.151, 1301.007, and 36.001. Section 843.342(g) and §1301.137(g) state that, for the purposes of the Insurance Code §843.342(d) and (e), and §1301.137(d) and (e), the underpaid amount is calculated on the ratio of the amount underpaid on the contracted rate to the contracted rate as applied to an amount equal to the billed charges as submitted on the claim minus the contracted rate. Section 843.342(h)(2) and §1301.137(h)(2) state that an HMO or insurer is not liable for a penalty under §843.342 or §1301.137 if the claim was paid in accordance with Chapter 843, Subchapter J or Chapter 1301, Subchapter C, but for less than the contracted rate, and: (A) the physician or preferred (provider) notifies the HMO or insurer of the underpayment after the 270th day after the date the underpayment was received; and (B) the HMO or insurer pays the balance of the claim on or before the 30th day after the date the HMO or insurer receives the notice. Section 1212.002(b) requires the Commissioner to consult the Technical Advisory Committee on Claims Processing, appointed under the Insurance Code Chapter 1212, before adopting any rule related to the technical aspects of the coding of health care services and claims development, submission, processing, adjudication, and payment by insurers and health maintenance organizations (HMO's) for medical care and health care services provided to patients. Section 843.151 authorizes the Commissioner to adopt reasonable rules as necessary and proper to implement the Insurance Code Chapter 843. Section 1301.007 authorizes the Commissioner to adopt rules as necessary to implement Insurance Code Chapter 1301. Section 36.001 authorizes the Commissioner of Insurance to 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.
§21.2815.Failure to Meet the Statutory Claims Payment Period.
(a) An HMO or preferred provider carrier that determines under §21.2807 of this title (relating to Effect of Filing a Clean Claim) that a claim is payable shall:
(1) if the claim is paid on or before the 45th day after the end of the applicable 21-, 30- or 45-day statutory claims payment period, pay to the preferred provider, in addition to the contracted rate owed on the claim, a penalty in the amount of the lesser of:
(A) 50 percent of the difference between the billed charges and the contracted rate; or
(B) $100,000.
(2) If the claim is paid on or after the 46th day and before the 91st day after the end of the applicable 21-, 30- or 45-day statutory claims payment period, pay to the preferred provider, in addition to the contracted rate owed on the claim, a penalty in the amount of the lesser of:
(A) 100 percent of the difference between the billed charges and the contracted rate; or
(B) $200,000.
(3) If the claim is paid on or after the 91st day after the end of the applicable 21-, 30- or 45-day statutory claims payment period, pay to the preferred provider, in addition to the contracted rate owed on the claim, a penalty computed under paragraph (2) of this subsection plus 18 percent annual interest on the penalty amount. Interest under this subsection accrues beginning on the date the HMO or preferred provider carrier was required to pay the claim and ending on the date the claim and the penalty are paid in full.
(b) The following examples demonstrate how to calculate penalty amounts under subsection (a) of this section:
(1) If the contracted rate, including any patient financial responsibility, is $10,000 and the billed charges are $15,000, and the HMO or preferred provider carrier pays the claim on or before the 45th day after the end of the applicable statutory claims payment period, the HMO or preferred provider carrier shall pay, in addition to the amount owed on the claim, 50 percent of the difference between the billed charges ($15,000) and the contracted rate ($10,000) or $2,500. The basis for the penalty is the difference between the total contracted amount, including any patient financial responsibility, and the provider's billed charges;
(2) if the claim is paid on or after the 46th day and before the 91st day after the end of the applicable statutory claims payment period, the HMO or preferred provider carrier shall pay, in addition to the contracted rate owed on the claim, 100 percent of the difference between the billed charges and the contracted rate or $5,000; and
(3) if the claim is paid on or after the 91st day after the end of the applicable statutory claims payment period, the HMO or preferred provider carrier shall pay, in addition to the contracted rate owed on the claim, $5,000, plus 18 percent annual interest on the $5,000 penalty amount accruing from the statutory claim payment deadline.
(c) Except as provided by this section, an HMO or preferred provider carrier that determines under §21.2807 of this title that a claim is payable, pays only a portion of the amount of the claim on or before the end of the applicable 21-, 30- or 45-day statutory claims payment period, and pays the balance of the contracted rate owed for the claim after that date shall:
(1) If the balance of the claim is paid on or before the 45th day after the applicable 21-, 30- or 45-day statutory claims payment period, pay to the preferred provider, in addition to the contracted amount owed, a penalty on the amount not timely paid in the amount of the lesser of:
(A) 50 percent of the underpaid amount; or
(B) $100,000.
(2) If the balance of the claim is paid on or after the 46th day and before the 91st day after the end of the applicable 21-, 30- or 45-day statutory claims payment period, pay to the preferred provider, in addition to the contracted amount owed, a penalty in the amount of the lesser of:
(A) 100 percent of the underpaid amount; or
(B) $200,000.
(3) If the balance of the claim is paid on or after the 91st day after the end of the applicable 21-, 30- or 45-day statutory claims payment period, pay to the preferred provider, in addition to the contracted amount owed, a penalty computed under paragraph (2) of this subsection plus 18 percent annual interest on the penalty amount. Interest under this subsection accrues beginning on the date the HMO or preferred provider carrier was required to pay the claim and ending on the date the claim and the penalty are paid in full.
(d) For the purposes of subsection (c) of this section, the underpaid amount is calculated on the ratio of the balance owed by the carrier to the total contracted rate, including any patient financial responsibility, as applied to an amount equal to the billed charges minus the contracted rate. For example, a claim for a contracted rate of $1,000 and billed charges of $1,500 is initially underpaid at $600, with the insured owing $200 and the HMO or preferred provider carrier owing a balance of $200. The HMO or preferred provider carrier pays the $200 balance on the 30th day after the end of the applicable statutory claims payment period. The amount the HMO or preferred provider carrier initially underpaid, $200, is 20 percent of the contracted rate. To determine the penalty, the HMO or preferred provider carrier must calculate 20 percent of the billed charges minus the contracted rate, which is $100. This amount represents the underpaid amount for subsection (c)(1) of this section. Therefore, the HMO or preferred provider carrier must pay, as a penalty, 50 percent of $100, or $50.
(e) For purposes of calculating a penalty when an HMO or preferred provider carrier is a secondary carrier for a claim, the contracted rate and billed charges must be reduced in accordance with the percentage of the entire claim that is owed by the secondary carrier. The following example illustrates this method: Carrier A pays 80 percent of a claim for a contracted rate of $1,000 and billed charges of $1,500, leaving $200 unpaid as the patient's financial responsibility. The patient has coverage through Carrier B that is secondary and Carrier B will owe the $200 balance pursuant to the coordination of benefits provision of Carrier B's policy. If Carrier B fails to pay the $200 within the applicable statutory claims payment period, Carrier B will pay a penalty based on the percentage of the claim that it owed. The contracted rate for Carrier B will therefore be $200 (20 percent of Carrier A's $1,000 contracted rate), and the billed charges will be $300 (20 percent of $1,500). Although Carrier B may have a contracted rate with the provider that is different than Carrier A's contracted rate, it is Carrier A's contracted rate that establishes the entire claim amount for the purpose of calculating Carrier B's penalty.
(f) An HMO or preferred provider carrier is not liable for a penalty under this section:
(1) if the failure to pay the claim in accordance with the applicable statutory claims payment period is a result of a catastrophic event that the HMO or preferred provider carrier certified according to the provisions of §21.2819 of this title (relating to Catastrophic Event); or
(2) if the claim was paid in accordance with §21.2807 of this title, but for less than the contracted rate, and:
(A) the preferred provider notifies the HMO or preferred provider carrier of the underpayment after the 270th day after the date the underpayment was received; and
(B) the HMO or preferred provider carrier pays the balance of the claim on or before the 30th day after the date the insurer receives the notice of underpayment.
(g) Subsection (f) of this section does not relieve the HMO or preferred provider carrier of the obligation to pay the remaining unpaid contracted rate owed the preferred provider.
(h) An HMO or preferred provider carrier that pays a penalty under this section shall clearly indicate on the explanation of payment the amount of the contracted rate paid, the amount of the billed charges as submitted by the physician or provider and the amount paid as a penalty. A non-electronic explanation of payment complies with this requirement if it clearly and prominently identifies the notice of the penalty amount.
This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on January 18, 2008.
TRD-200800254
Gene C. Jarmon
General Counsel and Chief Clerk
Texas Department of Insurance
Effective date: February 7, 2008
Proposal publication date: November 30, 2007
For further information, please call: (512) 463-6327
Chapter 137. DISABILITY MANAGEMENT
Subchapter B. RETURN TO WORK
The Commissioner of Workers' Compensation ("Commissioner"), Texas Department of Insurance (Department), Division of Workers' Compensation ("Division") adopts an amendment to §137.41 and adopts new §137.49, concerning the optional preauthorization plan. This amendment and new section is adopted without changes to the proposal published in the December 7, 2007, issue of the Texas Register (32 TexReg 9095).
The adopted amendment and new section is necessary to implement amendments enacted under House Bill (HB) 886, by the 80th Legislature, Regular Session, to Labor Code §413.022 (relating to return-to-work pilot program for small employers; fund).
Labor Code §413.022, enacted by the 79th Legislature, Regular Session, establishes the workers' compensation return-to-work account, a special account in the general revenue fund funded by administrative penalties collected by the Division, and requires the Commissioner to establish by rule a return-to-work pilot program for small employers ("pilot program") designed to promote the early and sustained return to work of an injured employee who sustains a compensable injury. The pilot program reimburses from the return-to-work account an eligible employer for expenses incurred by the employer in making workplace modifications and changes necessary to accommodate an injured employee's return to modified or alternative work. Reimbursement under this pilot program may not exceed $2,500. In accordance with Labor Code §413.022, the Commissioner adopted 28 TAC §§137.41 - 137.48. These sections establish and set forth the terms, conditions, and requirements for the pilot program.
HB 886 described above amends Labor Code §413.022 by requiring the Commissioner to establish by rule an optional preauthorization plan for eligible employers who participate in the pilot program. The optional preauthorization plan allows small employers to obtain Division approval of workplace modifications and changes prior to incurring the out-of-pocket expenses associated with implementing the modifications and changes. HB 886 requires a small employer who wants to participate in the optional preauthorization plan to submit a proposal to the Division, in the manner prescribed by the Division, that describes the workplace modifications and other changes that the employer proposes to make to accommodate an injured employee's return to work. HB 886 provides that if the Division approves the employer's proposal, the Division will guarantee reimbursement of the expenses incurred by the employer in implementing the modifications and changes from the return-to-work account unless the Division determines that the modifications and changes differ materially from the employer's proposal. Reimbursement under the optional preauthorization plan is subject to the $2,500 limit.
The adopted amendment to §137.41 and new §137.49 establishes the optional preauthorization plan. The adopted amendment to §137.41 incorporates new §137.49 into the rules in Subchapter B that establish and set forth the terms, conditions, and requirements for the pilot program. New §137.49 establishes the procedures and requirements for the optional preauthorization plan whereby small employers may submit a proposal plan to the Division that describes the workplace modifications and other changes that the employer proposes to make to accommodate an injured employee's return to work. This new rule also provides that if the Division approves the employer's proposal, the Division will guarantee reimbursement of the expenses incurred by the employer in implementing the modifications and changes from the return-to-work account.
The amendment to §137.41 adds new §137.49 to the purpose provision of Subchapter B. Amended §137.41 provides that the purpose of §§137.41 - 137.49 is to set forth the terms, conditions, and requirements for the return-to-work pilot program for small employers.
New §137.49(a) specifies who is eligible to apply for a guaranteed reimbursement of expenses from the return-to-work account. This subsection states that an "eligible employer," which is defined by Labor Code §413.022(a)(2) and §137.42(2), may apply for a guaranteed reimbursement of expenses. This subsection also states that an eligible employer may apply for a guaranteed reimbursement of "eligible expenses." "Eligible expense" is defined by §137.42(3).
New §137.49(b) specifies how an eligible employer applies for a guaranteed reimbursement of expenses. This subsection requires the employer to submit to the Division a properly completed Preauthorization Proposal Plan (DWC Form - 008) that includes a description of the proposed modifications and changes, the estimated costs of those modifications and changes, and a copy of the Division's "Work Status Report" from the injured employee's examining doctor.
New §137.49(c) provides that an incomplete proposal plan may be denied or returned to the employer for additional information.
New §137.49(d) provides that the Division will make the Preauthorization Proposal Plan form available on the Division's website located at http://www.tdi.state.tx.us/wc/index.html and at the Division's central office and will provide the form to an employer upon request.
New §137.49(e) requires the return-to-work account administrator to review each submitted proposal plan in accordance with §137.48. This subsection provides that the administrator may approve or deny the proposal plan in whole or in part or request additional information. The administrator must promptly notify the employer in writing of the approval or denial of the employer's proposal plan.
New §137.49(f) specifies the process the employer must follow to obtain reimbursement. This subsection requires the employer to complete the approved modifications and changes and to submit to the Division an application for reimbursement under §137.46 that contains the information under §137.47.
Upon receipt of a properly completed application for reimbursement and subject to §137.44, new §137.49(g) requires the Division to reimburse the employer the costs the employer incurred in making the approved modifications and changes. This subsection permits the Division to deny reimbursement if the Division determines that the modifications and changes differ materially from the proposal plan.
Comment: A commenter recommends that §137.49(c) provide, "An incomplete proposal plan shall be returned to the employer for additional information with an explanation of how or why the proposed plan is deficient or incomplete. An incomplete or deficient proposal plan may be denied upon resubmission to the Division." The commenter makes this recommendation arguing that an employer should be entitled to an explanation of the deficiencies and given an opportunity to correct the deficiencies before having a proposal plan denied.
Agency Response: The Division disagrees that this additional language should be added. The Division believes new §137.49(c) and (e) address the commenter's concern. New §137.49(c) and (e) both provide that the Division may request the employer to provide additional information. These subsections permit the Division to inform an employer on what information is necessary to correct a deficient proposal plan. Further, in the case of a denial, new §137.49(e) provides that the Division will promptly notify the employer of the denial in writing. The Division interprets this subsection to require this written notification to include the reason(s) for the denial. Additionally, no rule prohibits an employer from resubmitting a corrected proposal plan after a denial.
Comment: A commenter states that requiring an employer to submit an application for reimbursement after completing the modifications and changes set out in an approved proposal plan is an unnecessary duplication of effort and requires a preauthorization applicant to do the same thing a non-preauthorization applicant must do thereby undermining the purpose and effectiveness of the optional preauthorization plan. Further, the commenter recommends requiring an employer seeking reimbursement to submit to the Division a certification stating the workplace modifications have been completed in accordance with the approved proposal plan and that the criteria of §137.47(1), (2), and (3) has been satisfied.
Agency Response: The Division does not agree that requiring an application for reimbursement is an unnecessary duplication of effort nor undermines the purpose and effectiveness of the optional preauthorization plan.
The Division is requiring the employer to submit an application for reimbursement after implementing the modifications and changes because the Division anticipates that there may be cases where the modifications and changes implemented will deviate to a certain extent from those described in the approved proposal plan. The Division interprets the Labor Code and this rule to permit some deviations as long as those deviations are not material. In cases where there is a deviation, the Division must determine whether the deviation is material. A properly completed application for reimbursement will provide the Division with information to make this determination.
The DWC Form - 008 is a dual purpose form setting out the information required for both the proposal plan and the application for reimbursement. An employer may designate on this form which one is being submitted by checking the appropriate box at the beginning of the form. This form is available on the Division's website in both a .pdf and .doc format and both formats allow this form to be completed electronically and saved. Completing and submitting the application for reimbursement where there is an approved proposal plan should be simple and not time consuming. An employer may utilize the electronic copy of the already completed and approved proposal plan when completing an application for reimbursement.
Further, this new section requires the Division to reimburse the employer upon Division receipt of a properly completed application for reimbursement. Receipt of the application for reimbursement triggers reimbursement. The application for reimbursement is not subject to the same evaluation as it is when an employer goes through the non-preauthorization process because the modifications and changes have already been reviewed and approved during the evaluation of the proposal plan. Thus, in the optional preauthorization plan, the application for reimbursement acts as a certification. The only instance where the Division must perform an additional evaluation of the application for reimbursement is if the modifications and changes implemented differ from those set out in the approved proposal plan. In this instance and as required by Labor Code §413.022 and new §137.49(g), the Division must determine whether the modifications and changes implemented differ materially from the proposal plan.
For: None
For with changes: Office of Injured Employee Counsel
Against: None
This proposed amendment and new section is adopted under Labor Code §§413.022, 402.00111, and 402.061.
Labor Code §413.022 requires the Commissioner of Workers' Compensation by rule to establish an optional preauthorization plan for eligible employers who participate in the return-to-work pilot program. Labor Code §402.00111 provides that the Commissioner of Workers' Compensation shall exercise all executive authority, including rulemaking authority, under Labor Code Title 5. Labor Code §402.061 provides that the Commissioner of Workers' Compensation shall adopt rules as necessary for the implementation and enforcement of the Texas Workers' Compensation Act.
This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on January 18, 2008.
TRD-200800243
Norma Garcia
General Counsel
Texas Department of Insurance, Division of Workers' Compensation
Effective date: February 7, 2008
Proposal publication date: December 7, 2007
For further information, please call: (512) 804-4288