Section 133.305 outlines the general requirements of the MDR process. The section defines terms relevant to MDR, including network health care and non-network health care. The section uses preauthorization or concurrent for consistency with the use of those terms in Insurance Code Article 21.58A and related rules. The section sets forth the dispute sequence for resolving medical dispute issues, and requires all issues of compensability, extent of injury, liability and medical necessity to be resolved before a medical fee dispute can be processed. The section also establishes circumstances in which the Division may assess administrative fees, sets out requirements for redacting confidential information, and provides for the severability of any clauses a court may strike down so that the remaining provisions are still effective.

Section 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 section applies to certain authorized out-of-network care not subject to a fee contract, as well as to non-network health care. The section specifies who can be a requestor, the manner in which requests must be made, and the time requirements that govern requests. 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, liability and medical necessity exist. Section 133.307 allows a requestor access to MDR to resolve a fee dispute for which issues of compensability, extent of injury, liability and/or medical necessity have been finally 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.

Section 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 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, liability, medical necessity, or fee issues. If compensability, extent of injury, liability and/or medical necessity issues are identified, the fee dispute request will be dismissed until the issue is resolved. Third, the section provides that the Division may request additional information from the disputing parties and may raise new issues in the MDR process. The section also sets forth the reasons that justify dismissing a request for dispute resolution.

The section provides that aggrieved parties who disagree with the decision may seek judicial review of the decision by filing a petition in a Travis County district court. The section outlines the appropriate appeals process for parties to MDR seeking judicial review, the process for preparing a record for appeal of an MDR decision, and the contents of the record. The section also explains the Division's assessment of expenses for preparing the record.

Section 133.308 provides the process for the review of network and non-network preauthorization, concurrent or retrospective medical necessity disputes. The section specifies who can be a requestor, the manner in which requests must be made, and the time requirements that govern requests. The section also states the process for IRO assignment and carrier document submission. The 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 section addresses the process for an IRO to request a designated doctor exam. The time frames for IRO decisions are set forth, as well as the required contents of the IRO decision. The 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 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.

General: A commenter approves of the proposed rules, appreciates the opportunity to provide feedback regarding medical billing disputes, and thanks the Division for soliciting input from stakeholders prior to proposing the rules.

Agency Response: The Division appreciates the commenter's support.

General: A commenter states that the Texas Legislature passed HB 2600 and HB 7, in large part, because the size and the diversity of the state make access to pharmacy care a serious concern, particularly in rural areas of the state.

Agency Response: The Division understands the commenter's concerns about access to pharmacy care and has incorporated references to pharmacy processing agents in the sections.

General: A commenter does not recognize any language in the proposed rules that addresses the merger of the IRO processes of the Department and the Division. The commenter asks several related questions including: (1) whether IRO requests of the Department will be processed as pre-HB 7 reviews; (2) whether the Heath and Workers' Compensation Network and Quality Assurance Division will include the Department's request for the IRO; and (3) whether IROs now come under the Division of Workers' Compensation.

Agency Response: The effective date for the transition of Division IRO processes to the Department is anticipated to be January 15, 2007, which is specified in §133.307(a) and §133.308(a). IRO assignments previously handled by the Division will transfer to the Health and Workers' Compensation Health Care Network and Quality Assurance Division at that time. The Division provides clarification by adding a definition for the term adverse determination to §133.305(a), which is consistent with the Department's utilization review agent rules and also provides consistency within the MDR process.

General: A commenter states that to facilitate a quality IRO review, the requesting forms need to be completely and accurately completed because failure to do so may result in a high level of incomplete and inaccurate data, which could have a deleterious effect on the quality of the resultant review.

Agency Response: The Division expects that parties requesting independent review will make a good faith effort to complete all of the necessary information. Additionally, the online submission form is programmed with required fields that must be completed in order to be submitted.

General: A commenter respectfully requests that the rule be amended to provide for one of two options: (1) an administrative hearing presided over by State Office of Administrative Hearings (SOAH) administrative law judges who specialize in hearings held to resolve medical necessity and payment disputes; or (2) an administrative hearing presided over by Division hearing officers who specialize in hearings held to resolve all medical disputes (medical necessity and payment disputes). The commenter is concerned that the MDR process lacks an administrative hearing and an opportunity for the disputing parties to build a record that includes the presentation of evidence and witnesses, as well as the cross-examination of witnesses presented by health care providers and injured employees. Members of the commenter's association are concerned about the lack of an agency record for appeals of IRO and Division medical fee dispute decisions to district court. Another commenter requests that dispute resolution be conducted under the provisions of the Administrative Procedure Act so that the decisions of the Division will not be based solely on unverified documents filed by parties to the dispute. According to the commenter, failure of the agency to conduct the review and hearing of the request in the manner described in these provisions would result in a violation of the division's statutory duty and a denial of fundamental due process guaranteed to the commenter by the Texas Constitution and the U.S. Constitution. Another commenter states that the opportunity for a hearing before a SOAH administrative law judge has been lost now for almost a year and thinks that everybody that participates in the system has now recognized that this is not good for the system.

Agency Response: The Division disagrees with the commenter that it has the statutory authority to make the requested change. HB 7, §8.013(b) states that "[e]ffective September 1, 2005, the State Office of Administrative hearings may not accept for hearing a medical dispute that remains unresolved pursuant to Section 413.031, Labor Code. A medical dispute that is not pending for a hearing by the State Office of Administrative Hearings on or before August 31, 2005, is subject to subsection (k), Section 413.031, Labor Code, as amended by this Act, and is not subject to a hearing before the State Office of Administrative Hearings." Labor Code §413.031(k) does not provide the Division with the authority to create a system for administrative appeals of medical disputes prior to judicial review. Labor Code §401.021 and §408.027(e) do not require hearings for medical fee disputes. Labor Code §401.021 provides that only certain specified provisions of the Texas Administrative Procedures Act are applicable to "a proceeding" under the Texas Workers' Compensation Act due to the language of the statute "except as otherwise provided by . . . [that Act]" and HB 7 specifically removed the language in §413.031 both for an entitlement to a hearing and for a contested case hearing at the SOAH for medical fee and necessity disputes. Labor Code §408.027(e) does not apply because a hearing should not be implied in §413.031 when the entitlement to a hearing has been specifically deleted and because the more recent and specific provisions of HB 7 are properly regarded as an exception to the earlier and more general language. The Division disagrees that the MDR process lacks an opportunity for disputing parties to build a record because §133.307(f) and §133.308(r) provide each party to a dispute with a meaningful opportunity to be heard in an informal adjudication or informal decision making process, prior to any court's review of the dispute. A party may provide documentation and explanation to support its position and to dispute or reject the position and information provided by another party to the dispute. Each decision contains a listing of the information submitted by each party and the rationale and basis for the decision. The Division and its predecessor agency have utilized informal adjudications to finally resolve numerous medical disputes for many years. Finally, the rule provides that a certified copy of the record of the dispute, all relevant documentation submitted for MDR, and the decision will be made available for any judicial review. Texas courts have affirmed that certain informal adjudications satisfy constitutional due process requirements. See, for example, Bell v. Tex. Workers' Comp. Comm'n, 102 S.W.3d 29, 303-306 (Tex. App.-Austin, 2003, no pet). Recent federal appellate court decisions have expanded the constitutional use of informal adjudications involving largely policy decisions and legislative facts. They have upheld the use of substantial evidence review for informal adjudications and have set strict requirements before additional due process, such as a formal evidentiary hearing, is required. See, for example, Continental Air Lines, Inc. v. Dole, 784 F.2d 1245 (5th Cir. 1986); National Tower, LLC v. Plainville Zoning Bd. Of Appeals, 297 F.3d 14, 20-21 (1st Cir. 2002); and Cascade Natural Gas. Corp. v. Fed. Energy Reg. Comm'n, 955 F.2d 1412, 1425-26 (10th Cir. 1992). Judicial review is available after the informal adjudication occurs and, also, provides constitutional due process. Lujan v. G&G Fire Sprinklers, Inc., 532 U.S. 189, 197 (2001). In this manner, the procedural processes provided in these rules conform to the constitutional due process requirements.

General: A commenter recommends the Division require, within the rules, a written explanation of any denials or reductions in payment for each line item on the explanation of benefits (EOB) because physicians will not understand the exception codes which are not mentioned in this rule and which have increased in number and all the different meanings associated with these codes may cause unnecessary disputes.

Agency Response: The Division disagrees with the commenter that it is necessary to amend the rules. Labor Code §408.027(e) requires that an insurance carrier send to the Division, the health care provider, and the injured employee a report that sufficiently explains the reasons for the reduction or denial of payment for health care services provided to the employee.

General: A commenter recommends a time limit be placed on a carrier to request a refund based upon the rational that carriers have in years past requested refunds from physicians years after the services were provided.

Agency Response: The Division disagrees that these rules need to establish a timeframe to request refunds as §133.260 establishes the process and timeframes for carriers to request refunds. Labor Code §408.0271(a) provides that if the health care services provided to an injured employee are determined by the carrier to be inappropriate, then the carrier shall: (1) notify the health care provider in writing of the carrier's decision; and (2) demand a refund by the provider of the portion of payment on the claim that was received by the health care provider for the inappropriate services.

§133.305(a): A commenter states that instead of referencing the definition of life-threatening condition listed in Insurance Code Article 21.58A, a definition for the term should be included in the definitions section of the adopted rule because many providers do not have copies of the Insurance Code available to reference.

Agency Response: The Division agrees with the commenter and has added a definition of life-threatening in subsection (a)(2), as adopted, consistent with the definition contained in Insurance Code Article 21.58A. In conjunction with this change, the Division has also corrected the reference in §133.308(g) by deleting the words Insurance Code Article 21.58A and adding the words §133.305 of this subchapter.

§133.305(a)(2)(A): A commenter supports specific references to Labor Code §413.0111, which authorizes pharmacies to use agents to process claims, under proposed §133.305 and §133.307 as legitimate requestors and parties to disputes involving reimbursement of pharmacy related medical bills. Another commenter further states this provision is not sufficient in assisting injured employees in obtaining their medications or in assisting pharmacy agents' ability to collect reimbursement.

Agency Response: Labor Code §413.0111 allows pharmacy processing agents who demonstrate that they are authorized by a pharmacy to act on its behalf, to participate in the MDR process. This expands access to the MDR process to pharmacy processing agents granting participation that was not previously available to them. The definition of medical fee dispute in proposed subsection (a)(2)(A) ((a)(4)(A) as adopted) includes a qualified pharmacy processing agent's dispute of a carrier's reduction or denial of a bill as a type of dispute, as intended by Labor Code §402.021(a)(2) and allowed by Labor Code §413.031. However, subsection (a)(2)(A) ((a)(4)(A) as adopted) has been changed to clarify that a pharmacy processing agent is not considered to be a health care provider.

§133.305(a)(2)(A): A commenter requests clarification on what entities are considered to be qualified pharmacy agents.

Agency Response: The Division clarifies that in subsection (a)(2)(A) ((a)(4)(A) as adopted) a qualified pharmacy agent is an agent or assignee of a pharmacy authorized to process claims and act on behalf of the pharmacy under terms and conditions agreed on by the pharmacy. Section 133.307, as adopted, requires documentation to be provided to MDR demonstrating the relationship between the pharmacy and the pharmacy processing agent, the dates of service covered by the contract, and a clear assignment by the pharmacy of the right to participate in the MDR process.

§133.305(a)(2)(A): A commenter states that Labor Code §413.0111 does not confer health care provider status on pharmacy processing agents. Rather, that section authorizes pharmacies to use agents or assignees to process claims and act on behalf of pharmacies only under the terms and conditions agreed upon by the pharmacies. The commenter suggested that subsection (a)(2)(A) may unintentionally create the opportunity for abuse and confusion and exceeds the Division's authority by improperly granting independent rights and status to processing agents.