A proposed amendment to §133.308(u) states that a written appeal must be filed no later than 20 days after the date the IRO decision is sent to the appealing party, and that the appeal must be filed in compliance with Division rules.

A proposed amendment to §133.308(v) changes the words "health care provider" to "requestor."

Robert E. Lang, Deputy Commissioner of Hearings, has determined that for each year of the first five years the proposed amendments 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 amended rules. There will be no measurable effect on local employment or the local economy as a result of the proposal.

Mr. Lang, has also determined that for each year of the first five years the amended sections are in effect, the public benefit anticipated as a result of the administration and enforcement of the proposed amendments will be: i) access to appeal procedures that provide due process for parties appealing medical disputes under Chapter 133, Subchapter D; ii) greater regulatory efficiency in administering disputes brought under Chapter 133, Subchapter D; iii) update of obsolete statutory citations; and iv) conformance of existing rules to newly enacted statutes.

The Division has determined that this proposal contains two sets of provisions relating to appeals of contested cases that must be analyzed in order to determine costs to parties who elect to seek judicial review of an MDR administrative appeal decision issued by a Division hearing officer under §133.307 or §133.308 and are therefore required to comply with the proposal. The same cost components are involved in complying with the two sections, and the following analysis is applicable to both sections.

Proposed amendments to §133.307(f)(2)(G) and §133.308(t)(1)(B)(vi). It is anticipated that costs may be incurred by disputing parties that elect to seek judicial review of an MDR administrative appeal decision issued by a Division hearing officer under §133.307 and §133.308. No party, however, is required by statute or by rule to seek judicial review, and therefore any costs incurred are incurred solely at the option of the party that elects to seek the review. Because the proposal in amended §133.307(f)(2)(G) and §133.308(t)(1)(B)(vi) includes new provisions for preparation of a record by the Division pursuant to Government Code §2001.177, a party seeking such review will incur expenses related to preparation of the record. The probable economic cost to a party to obtain the record in the event of an appeal as specified in §133.307(f)(2)(G) and §133.308(t)(1)(B)(vi) will vary depending on the size of the record, including the number of pages to be copied and the length of the recording to be transcribed. The Division estimates the cost of copying to be $.10 per page and the cost of transcription of a recorded record to be $1.25 per minute. This would result in a total cost of $20 to copy a 200 page record (which is an average number of pages in a record), and a cost of $75 for a transcript of a 60-minute hearing (which is an average length of hearing time). In addition, the transcript must be copied and certified because, pursuant to DWC procedures, the Division maintains original transcripts provided to it in its records. Thus, the total cost for a party electing to seek judicial review of a hearing pursuant to Chapter 2001, Subchapter G of the Government Code, is estimated to be $20 for the record, $75 for the transcription fee, an additional $6 for the copied transcript (approximately 60 pages for a 60-minute hearing), and a fee of $1 for certification, or an approximate total of $102 for the record of an average hearing that has 200 pages of documents and 60 minutes of taped hearing time. Parties wanting additional copies of the record would need to make requests under the open records requests process, and any associated costs would be determined in accordance with 28 TAC §108.1.

The proposed amendments to §§133.305, 133.307, and 133.308 do not make any substantive changes to procedures or other requirements that result in increased costs to a disputing party filing a request for medical dispute resolution. Any additional economic costs are required under the existing provisions in §133.307 and §133.308, or result from the implementation of HB 724, which amends Labor Code §413.031 and adds Labor Code §413.0311. Amended Labor Code §413.031 and new Labor Code §413.0311 require a party to seek administrative review of a medical dispute resolution decision through a SOAH or Division contested case hearing prior to judicial review, and the costs associated with such a review are not a result of the adoption, enforcement, or administration of the proposed amendments.

ECONOMIC IMPACT STATEMENT

As required by the Government Code §2006.002(c), the Division has determined that the proposal may have an adverse economic effect on approximately 27,163 small or micro-businesses who elect to seek judicial review of an MDR administrative appeal decision issued by a Division hearing officer under §133.307 or §133.308 and are therefore are required to comply with the proposed rules. This number includes approximately 27,000 health care providers, and approximately 163 small business carriers. The number of small business health care providers comes from Texas Workforce Commission data for the second quarter of 2007. The number of small business carriers comes from current Division records. The proposed rule will only be applicable to health care providers that provide services to injured workers pursuant to the Texas workers' compensation system, thus will have no adverse economic effect on small business health care providers that do not provide services to injured workers pursuant to the Texas workers' compensation system.

Adverse economic impact may result from cost arising from proposed amendments to §133.307(f)(2)(G) and §133.308(t)(1)(B)(vi), which are discussed in the Public Benefit/Cost Note portion of this proposal. Specifically, cost to small or micro-businesses will arise from the expense associated with obtaining a record if a small or micro-business is party to a Division contested case hearing arising under §133.307 or §133.308 and elects to seek review of the decision of the Division hearing officer pursuant to Chapter 2001, Subchapter G of the Government Code. The cost of compliance with the proposal will not vary between large businesses and small or micro-businesses, and the Division's cost analysis and resulting estimated costs in the Public Benefit/Cost Note portion of this proposal is equally applicable to small or micro-businesses. The total cost of compliance to large businesses and small or micro-businesses is not dependent upon the size of the business, but rather is dependent upon the size of the record for a particular administrative proceeding, and the number of appeals that a business elects to pursue.

Section 2006.002(c) requires an agency that determines that there may be an adverse impact on small or micro businesses as a result of a rule proposal to prepare a regulatory flexibility analysis that includes the agency's consideration of alternative methods of achieving the purpose of the proposed rule. The Division has considered possible regulatory methods to accomplish the objectives of the proposed amendments that will also minimize the adverse impact on small businesses. These regulatory methods considered by the Division include: i) not adopting the proposed regulation; ii) implementing different requirements or standards for small and micro-businesses; and iii) including provisions that allow the Division to take financial impact into consideration when charging for an agency record. These regulatory methods are discussed in the following analysis.

REGULATORY FLEXIBILITY ANALYSIS

The primary objective of the amended sections is to ensure that parties involved in the medical dispute resolution process are afforded due process in the resolution of fee and medical necessity disputes that arise in the workers' compensation system. Provisions are included that require parties that elect to appeal a contested case decision to pay the cost associated with preparation of a record for judicial review.

In accordance with the Government Code §2006.002(c-1), the Division has considered the following regulatory methods to accomplish the objectives of the proposed sections while minimizing adverse impacts on small businesses:

Not adopting the proposed regulation. If the provisions requiring a party appealing a Division contested case hearing decision to pay the costs associated with preparation of the record were not included in the proposal, the proposed rule would not have an adverse economic effect on small or micro-businesses. However, Government Code §2001.177 requires that an agency adopt rules in order for it to charge an appealing party for the cost of preparation of the agency record for appeal. Therefore, without the provisions requiring a party appealing a Division contested case hearing decision to pay the costs associated with preparation of the record for the appeal, the Division would not be able to charge any party for preparation of a record, and the state would have to bear the cost burden of preparing all records for judicial appeal of Division contested case hearings arising under these proposed sections.

Implementing different requirements or standards for small and micro-businesses. If the provisions requiring a party appealing a Division contested case hearing decision to pay the costs associated with preparation of the record were drafted to not be applicable to small or micro-businesses, the proposed amendments would not have an adverse economic effect on small or micro-businesses. However, while the proposed amendments might have an adverse economic effect on small or micro-businesses, they will not always create an adverse economic impact. As noted in the cost note analysis, the estimated cost that a party could incur as result of implementation of this proposal is $102 (for an agency record that has 200 pages of documents and 60 minutes of taped hearing time) per judicial appeal pursued by that party. For some small or micro-businesses, payment of this expense would not result in adverse economic harm. It would be unfair to exempt from compliance some businesses that face no economic harm, while requiring all other parties that do not meet the definitions of small or micro businesses under §2006.001 of the Government Code to pay the cost of preparation of an agency record if they choose to appeal a decision in a Division contested case hearing.

Including provisions that allow the Division to take financial impact into consideration when charging for an agency record. Provisions already exist in Chapter 148 of Title 28 of the Administrative Code that allow the Division, upon request, to take into consideration a party's financial ability to pay the cost of preparation of a record when the party appeals a SOAH decision made pursuant to Labor Code §413.031. If similar provisions are included in this proposal concerning preparation of an agency record for appeal of a Division contested case hearing decision made pursuant to Labor Code §413.031, a small or micro-businesses that chooses to appeal a decision of a hearing officer in a Division contested case hearing pursuant to the proposed amendments could request the Division to take its financial ability to pay the cost of preparation of a record into consideration. In this way, the Division could take steps to avoid actual adverse economic effect on the small or micro-business. Additionally, inclusion of such provisions would allow the Division to avoid actual adverse economic effect on other parties as well.

As a result of the foregoing analysis, the Division has included the following provision in the proposal at §133.307(f)(2)(G) and §133.308(t)(1)(B)(vii)(III): "Upon request, the Division shall consider the financial ability of the party to pay the costs, or any other factor that is relevant to a just and reasonable assessment of costs."

The Division has determined that no private real property interests are affected by this proposal and that this proposal does not restrict or limit an owner's right to property that would otherwise exist in the absence of government action, and, therefore, does not constitute a taking or require a takings impact assessment under the Government Code §2007.043.

To be considered, written comments on the proposal must be received no later than 5:00 p.m. on January 14, 2008. Comments may be submitted via the Internet through the Division's Internet website at http://www.tdi.state.tx.us/wc/rules/proposedrules/toc.html or by mailing or delivering your comments to Victoria Ortega, Legal Services, MS-4D, Texas Department of Insurance, Division of Workers' Compensation, 7551 Metro Center Drive, Suite 100, Austin, Texas 78744.

Any request for a public hearing should be submitted separately to the Office of the General Counsel, MS-1, 7551 Metro Center Drive, Austin, Texas 78744 before the close of the public comment period. If a hearing is held, written and oral comments presented at the hearing will be considered.

The amendments are proposed under Labor Code §§408.0271, 413.002, 413.0111, 413.020, 413.031, 413.0311, 413.032, 410.157, 408.0043, 401.024, 402.00111, 402.083 and 402.061; Insurance Code §4201.054 and Government Code §2001.177. Labor Code §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. Labor Code §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. Labor Code §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. Labor Code §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. Labor Code §413.031 specifies the processes for the decision and appeal for medical fee and medical necessity disputes not subject to Labor Code §413.0311, 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, and provides that an IRO that uses doctors to perform reviews of health care services provided under this title may only use doctors licensed to practice in this state. Labor Code §413.0311 specifies the processes for the decision and appeal for medical fee and medical necessity disputes which involve a party to a medical fee dispute in which the amount sought in reimbursement does not exceed $2,000, a party appealing an IRO decision regarding determination of the retrospective medical necessity for a health care service for which the amount billed does not exceed $3,000, and a party appealing an IRO decision regarding determination of the concurrent or prospective medical necessity for a health care service. Labor Code §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. Labor Code §410.157 grants the Commissioner authority to adopt rules governing procedures under which contested case hearings are conducted. Labor Code §408.0043 provides that a doctor performing an independent review of a health care service provided to an injured employee, including a retrospective review, who reviews a specific workers' compensation case to hold a professional certification in a health care specialty appropriate to the type of health care that the injured employee is receiving. Labor Code §401.024 authorizes the Commissioner to require by rule the use of facsimile or other electronic means to transmit information. Labor Code §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. Labor Code §402.083 provides that information in or derived from a claim file regarding an employee is confidential. Labor Code §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 §4201.054 grants the Commissioner of Workers' Compensation the authority to adopt rules as necessary to implement Chapter 4201, 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 statutes are affected by this proposal: Insurance Code Chapters 4201 and 4202; Labor Code §§401.024, 402.00111, 402.083, 408.0043, 408.0271, 408.031, 413.002, 413.0111, 413.020, 413.031, 413.0311, 413.032, 413.0511, and 413.0512; and Government Code §2001.177(a).