Because the values assigned to medical services in the RBRVS are based on the relative costs required to provide a service, reimbursements under the proposed rules are more closely related to the resources required to provide the services. The re-alignment of relative values makes the Texas workers' compensation system more comparable to other health care systems and may discourage overutilization of services that have been assigned a relative value higher than that in other systems. This benefits injured employees by preventing unnecessary treatment and delayed return to work. The same impact may occur if the new rule limits or disallows payment for medical care that is not proven medically efficacious. A decrease in medical costs may increase the number of employers who elect workers' compensation coverage, and injured workers will benefit from that coverage. Again, as suggested by the Legislative Stakeholders group, the adoption of standard payment policies will result in a net reduction in the administrative costs of compliance for Texas physicians. As a consequence, it will also result in an increase in access for injured workers, or at least mitigate the current erosion in access to physician services.

The commission estimates the difference in reimbursement under the current MFG when compared to reimbursement under the proposed MFG by category as follows:

Evaluation & Management: +26%

Medicine: -38%

Physical Medicine and Rehabilitation: -17%

Surgery: -38%

Radiology: -32%

Pathology: -60%

Anesthesiology: +9%

The increase or decrease in the reimbursement for any procedure within a category can vary significantly, since the current MFG MARs do not correlate with RBRVS unit values. Some health care practitioners will receive more reimbursement than under the current MFG, while others will receive less, depending on the mix of professional medical services they typically provide to patients.

Health care practitioners will benefit from the use of standardized and current methodologies, models, and value units, and use of standardized reporting, billing, and coding requirements. Additionally, most health care practitioners are familiar with the CMS system, as there are proportionately more Medicare providers than there are Texas workers' compensation system providers. As stated in a correspondence to the commission regarding previously proposed rules, the Texas Medical Association (TMA) asserts, "Compared to other payers, the Medicare rules are straightforward, widely understood and unambiguous." Clarity in the rules and reduction in the number of disputes should also benefit health care practitioners. This general sentiment was also stated by the TABCC Technical Work Group in correspondence to the commission. Insurance carriers will likewise benefit from use of standardized and current methodologies, models, and value units, and use of standardized reporting, billing, and coding requirements. The TABCC Technical Work Group provided the following public benefits to insurance carriers in recent correspondence to the commission: "The cost to insurance carriers of shifting to Medicare payment policies in Texas will vary significantly by carrier. All carriers will incur some training costs for staff responsible for payment of medical bills. Beyond training costs, the cost to the carrier will depend on the following factors:

* Carriers that outsource medical bill review should encounter no additional costs. Any transition costs will be borne by the medical bill review consultant. Competition among medical bill review consultants is sufficient to prevent these costs from being passed through to carriers.

* Carriers that do not outsource medical bill review, but who write insurance in one of the states that has previously adopted Medicare payment policies should incur small costs because they already have knowledgeable staff and information systems in place. Further, some carriers have adopted the Correct Coding Initiative and other Medicare payment policies on their own initiative where they do not conflict with policies of the states where they write insurance.

* Finally, most carriers that do not outsource medical bill review purchase software from large national software vendors. These vendors are responsible for updating their software as state rules change. The software market for workers' compensation bill review is sufficiently competitive that software vendors cannot pass through the costs of updating the software in Texas to their customers."

To the extent that adoption of the new MFG lowers the unit cost of medical services and reduces overutilization of medical services, carriers should benefit from lower medical benefit costs. In the short run the change may improve their medical loss ratio. In the long run these savings should be passed through to employers through price competition in the insurance market."

Employers will benefit from the reduction in costs and disputes, which may be favorably reflected in the cost to employers to provide workers' compensation coverage. In addition, if the new rule reduces overutilization of unnecessary medical services it may also enhance an injured employee's ability to return to work.

There will be some anticipated economic costs to persons required to comply with the rules as proposed. There will be no economic cost to injured workers, as these proposed rules do not impose any requirements on injured workers.

As suggested by the TABCC Technical Work Group, "the new MFG should reduce the unit cost of medical services and should reduce overutilization of medical services. Today medical services are the majority of benefit costs employers pay through workers' compensation insurance premiums or directly through self-insurance programs. Reducing the cost of medical treatment under the workers' compensation system should reduce the rate of cost increases."

Health care practitioners will experience some increased costs in some areas and decreased costs in others. Health care practitioners who do not currently participate in the Medicare system will have increased costs associated with training staff and adapting their billing systems to utilize the Medicare policies. However, these costs should not be great and, once trained, the costs to bill for workers' compensation health care should decrease. Providers are instructed to bill their usual and customary fees, therefore it is not necessary for providers to be able to calculate the Medicare reimbursement. Health care practitioners who are already participating in the Medicare system will not experience these same increased costs. Decreased costs will result from the fact that the number of disputes should decrease, after an initial increase, for the reasons described previously.

Insurance carriers should experience the same increased costs in some areas and decreased costs in others. For those carriers who do not currently participate in the Medicare system, increased costs include costs associated with training staff and adapting their billing systems to utilize the Medicare policies. Again, those who are already participating in the Medicare system or using Medicare billing and reimbursement policies will not experience these same increased costs. Decreased costs will result from the fact that the number of disputes should decrease, after an initial increase, for the reasons described previously.

There will be no adverse economic impact on small businesses or on micro-businesses as a result of the proposed new rules. Health care practitioners and insurance carriers who perform only a small amount of work in the workers' compensation system can comply with these rules without incurring costs. Many health care practitioners and insurance carriers already use the standardized items adopted in these proposed rules, and cost savings explained previously should offset any increased costs. As stated by the TABCC Technical Work Group, "The new MFG will reduce the payment per unit of service for most health care services. It will also reduce total revenue to some health care providers by restraining overutilization and ending unreasonable billing practices permitted by the current rule. These are adverse economic impacts on these health care providers."

There will be only a proportionate difference in the cost of compliance for small businesses and micro-businesses as compared to the largest businesses, including state and local government entities. The same basic processes and procedures apply, regardless of the size or volume of the business. The business size cost difference will be in direct proportion to the volume of business that falls under the purview of these proposed rules. Any increase in costs is expected to be offset by cost savings and time savings through the use of a standardized and streamlined process, resulting in no adverse economic impact.

Comments on the proposal must be received by 5:00 p.m., January 28, 2002. You may comment via the Internet by accessing the commission's website at www.twcc.state.tx.us and then clicking on "Proposed Rules." This medium for commenting will help you organize your comments. You may also comment by emailing your comments to RuleComments@twcc.state.tx.us or by mailing or delivering your comments to Nell Cheslock at the Office of the General Counsel, Mailstop #4-D, Texas Workers' Compensation Commission, Southfield Building, 4000 South IH-35, Austin, Texas 78704-7491.

Commenters are requested to clearly identify by number the specific rule and paragraph commented upon. The commission may not be able to respond to comments that cannot be linked to a particular proposed rule. Along with your comment, it is suggested that you include the reasoning for the comment in order for commission staff to fully evaluate your recommendations.

Based upon various considerations, including comments received and the staff's or commissioners' review of those comments, or based upon the commissioners' action at the public meeting, the rule as adopted may be revised from the rule as proposed in whole or in part. The conversion factors and reimbursements proposed may be revised to be higher than proposed or lower than proposed.

Persons in support or opposition of the rule as proposed, in whole or in part, are encouraged to comment to that effect. The failure to comment accordingly is not indicative of support or opposition.

A public hearing on this proposal will be held on January 24, 2002 at the Austin central office of the commission (Southfield Building, 4000 South IH-35, Austin, Texas). Those persons interested in attending the public hearing should contact the Commission's Office of Executive Communication at (512) 804-4430 to confirm the date, time, and location of the public hearing for this proposal. The public hearing schedule will also be available on the commission's website at www.twcc.state.tx.us.

The new rules are proposed under the Texas Labor Code §402.061, which authorizes the commission to adopt rules necessary to administer the Act; the Texas Labor Code, §413.002, which requires the commission's Medical Review Division monitor health care providers, insurance carriers and claimants to ensure compliance with commission rules; the Texas Labor Code, §413.007, which sets out information to be maintained by the commission's Medical Review Division; the Texas Labor Code §413.011, which mandates that the commission by rule establish medical policies and guidelines; the Texas Labor Code, §413.012, which requires review and revision of the medical policies and fee guidelines at least every two years; the Texas Labor Code, §413.013, which requires the commission by rule to establish programs related to health care treatments and services for dispute resolution, monitoring, and review; the Texas Labor Code, §413.015, which requires insurance carriers to pay charges for medical services as provided in the statute and requires that the commission ensure compliance with the medical policies and fee guidelines through audit and review; the Texas Labor Code, §413.016, which provides for refund of payments made in violation of the medical policies and fee guidelines; the Texas Labor Code, §413.017, which provides a presumption of reasonableness for medical services fees which are consistent with the medical policies and fee guidelines; the Texas Labor Code, §413.019, which provides for payment of interest on delayed payments refunds or overpayments; and the Texas Labor Code, §413.031, which provides a procedure for medical dispute resolution; the Texas Labor Code, §413.044, which provides for sanctions against designated doctors who are found to be out of compliance with the medical policies and fee guidelines.

The new rules are proposed under the Texas Labor Code §402.061, § 413.002, §413.007, §§413.011-413.013, §§413.015-413.017, §413.019, §413.031, §413.044,.

No other statutes, articles or codes are affected by the proposed rules.