Proposed new §134.204 is necessary for reimbursement of workers' compensation specific services, and provisions for a separate section from new proposed §134.203 are recommended for ease in future amendments by the Division and for ease of implementation by system participants. Proposed §134.204 applies to workers' compensation specific codes, services and programs provided on or after March 1, 2008. The proposed section is not applicable to professional medical services described in proposed new §134.203; prescription drugs or medicines; dental services; facility services of a hospital or other health care facility; or medical services provided through a workers' compensation health care network certified pursuant to Insurance Code Chapter 1305, except as provided in §134.1 of this title and Insurance Code Chapter 1305.

Proposed §134.204(a)(3) provides that §134.202 (relating to Medical Fee Guideline) applies to workers' compensation specific codes, services and programs provided between August 1, 2003 and March 1, 2008, the applicability date of proposed §134.204. Proposed §134.204(a)(4) provides that for workers' compensation specific codes, services and programs provided before August 1, 2003, §134.201 (relating to Medical Fee Guideline for Medical Treatments and Services Provided under the Texas Workers' Compensation Act) and §134.302 (relating to Dental Fee Guideline) apply. Proposed §134.204(a)(5) sets forth that specific provisions contained in the Texas Labor Code or the Texas Department of Insurance, Division of Workers' Compensation (Division) rules, including this chapter, take precedence over any conflicting provision adopted or utilized by CMS in administering the Medicare program and that Independent Review Organization (IRO) decisions regarding medical necessity be made in accordance with Labor Code §413.031 and §133.308 (relating to MDR by Independent Review Organizations), which are made on a case-by-case basis, take precedence in that case only, over any Division rules and Medicare payment policies.

Proposed §134.204(b)(1) requires HCPs to bill their usual and customary charges using the most current HCPCS Level I and Level II codes and to submit medical bills in accordance with the Labor Code and Division rules.

Proposed §134.204(b)(2) states that appropriate modifiers, including more than one modifier if necessary, shall follow the appropriate Level I and Level II HCPCS codes on the bill to identify modifying circumstances. Division-specific modifiers are identified in subsection (n) of this section along with instructions for their application.

Proposed §134.204(b)(3) provides that a 10 percent incentive payment shall be added to the MAR for services outlined in subsections (d), (e), (g), (i), (j), and (k) of the section that are performed in designated workers' compensation underserved areas in accordance with §134.2.

Proposed §134.204(c) establishes that where there is a negotiated or contracted amount that complies with Labor Code §413.011, that amount shall be the reimbursement amount for the billed services.

Proposed §134.204(d) establishes that where there is no negotiated or contracted amount that complies with Labor Code §413.011, the reimbursement shall be the least of the MAR amount, the HCP's usual and customary charge, unless Division rule specifies a specific bill amount, or the fair and reasonable amount consistent with the standards of §134.1.

Proposed §134.204(e) sets forth the case management responsibilities for the treating doctor, establishes set fees for treating doctor case management services, directs the treating doctor to use a specific modifier when billing for these services that will distinguish treating doctors from other health care providers, and allows treating doctors a payment commensurate with case management responsibilities and workers' compensation administrative tasks. Proposed §134.204(e) also establishes set fees, which are 25 percent of the total provided to treating doctors, when a referral health care provider contributes to the case management activity. These established fees were derived from the 2007 Ingenix publication of The Essential RBRVS for determining the gap-filled, non-facility value, and then multiplied by the Division's 2007 conversion factor used during the early 2007 calendar year rule development stage.

Proposed §134.204(f) establishes that the reimbursement for home health services provided by a licensed home health agency shall be 125 percent of the published Texas Medicaid fee schedule for home health agencies or as provided in proposed subsections (c) or (d) of this section.

As in §134.202(e)(4), proposed §134.204(g) sets forth the requirements and limitations on functional capacity evaluations (FCEs), including limits on the number of FCEs allowed, the maximum number of hours to be reimbursed, the required billing code and modifier, and the required elements of a physical examination and neurological examination.

As in §134.202(e)(5), proposed §134.204(h) sets forth the billing and reimbursement requirements for Return to Work Rehabilitation Programs including appropriate coding, modifiers, and reimbursement rates. The section includes details of comparable CARF accredited programs.

Proposed §134.204(i) addresses the examinations and reimbursements with new modifiers that are associated with the expanded duties of designated doctors. This subsection is established for whichever examination is appropriate, and proposes an established cap with a prorated payment method for the four examinations not associated with MMI and IR.

As in §134.202(e)(6), proposed §134.204(j) sets forth the billing, coding, and reimbursement requirements, including modifiers, for Maximum Medical Improvement (MMI) and Impairment Rating (IR) examinations. The subsection specifies what shall be included in the examinations, any limitations on the number of examinations allowed, billing and reimbursement for testing not outlined in the AMA Guides, and that the doctor performing the examinations be an authorized doctor under the Act, Division rules, and Chapter 130 relating to Certification of Maximum Medical Improvement and Evaluation of Permanent Impairment. The subsection further sets out different billing, coding, including modifiers, and reimbursement rates depending on whether the examining HCP is the treating doctor, a referral doctor, or a referral specialist. A new, clarifying provision has been added for the billing and reimbursement of an IR evaluation in circumstances when there is no test to determine an IR for a non-musculoskeletal condition.

Proposed §134.204(k) sets forth the billing, coding, including modifiers, and reimbursements rates for Return to Work and Evaluation of Medicare Care examinations (RTW/EMC), that are not done for the purpose of certifying MMI or assigning IR. The proposed subsection addresses the newer designated doctor responsibilities and raises the overall reimbursement rate from $350 to $500 for whichever examination is appropriate as outlined in subsection (i) of this section. Additionally, any required testing is to be billed using appropriate codes and modifiers in addition to the examination fee.

Proposed §134.204(l) refers a HCP to §129.5 (relating to Work Status Reports) when billing for a Work Status Report that is not conducted as part of the examination outlined in subsections (i) and (j) of this section.

Proposed §134.204(m) refers a treating doctor to §126.14 (relating to Treating Doctor Examination to Define Compensable Injury) when billing for an examination to define the compensable injury.

Proposed §134.204(n) sets forth Division modifiers to be used by HCPs in conjunction with procedure codes to ensure correct coding, reporting, billing, and reimbursement. The proposal includes six new modifiers associated with treating doctor case management functions and requested designated doctor examinations.

Jaelene Fayhee, Deputy Executive Commissioner for Policy and Research, has determined the following with respect to fiscal impact for the first five-year period the proposed rule amendment and proposed new rules are in effect.

With regard to enforcement and administration of the rules by state government, the Division will experience minimal increased costs in some areas and decreased costs in others. Increased costs, although difficult to quantify, may include expenses associated with the preparation of new training materials and presentation of training classes for Department and Division staff and other system participants, and costs associated with monitoring the Medicare payment policies.

Once system participants become familiar with the amendments to these sections and the conversion factors to consider in calculating the maximum allowable reimbursement amounts, it is expected to result in fewer medical fee disputes. For example, case management activities have an established set fee amount as do the reimbursements for designated doctor examinations. Additionally, there is more direction provided for the reimbursement of home health services, and all of these previously were silent and left to the insurance carrier's determination of a fair and reasonable reimbursement.

There will be no fiscal impact on local government as a result of enforcing or administering the rules as local governments do not have regulatory authority with respect to these rules. Local governments and state governmental entities as regulated entities will be impacted in the same manner as persons required to comply with the rules as proposed. Aggregate medical costs should increase in proportion to the raise in the conversion factor reimbursement amounts, which have not increased since the implementation of §134.202 in August 2003. If the local government's workers' compensation coverage is provided by an insurance company, premium costs may increase as a result of the higher medical costs. However, at this time the Division cannot determine if local governments will experience an increase in these premium costs. Any local government that is self-insured will likely experience a similar cost increase if utilization and injury experience remain unchanged.

There will be no measurable effect on local employment or the local economy as a result of the proposal.

Ms. Fayhee has also determined that for each year of the first five years the section is in effect, the public benefit anticipated as a result of the proposed sections is the continued access to health care and stability provided through consistent application of the Division's adopted fee guidelines that are based on the standardized Medicare reimbursement methodologies, models and values or weights, as well as Medicare's payment policies relating to coding, billing, and reporting.

Injured employees will benefit from the proposed rules because the conversion factor increase will result in additional reimbursement to providers. Increased reimbursement rates may encourage additional providers to participate in the workers' compensation system, thereby increasing injured employees' access to quality health care. Additionally, injured employees in underserved areas will benefit from the inducement to providers created by the provisions for an additional 10 percent reimbursement to health care providers who provide services in designated shortage areas represented by specific ZIP Codes.

Insurance carriers will benefit from the proposed rules by the establishment of fees for reimbursing case management activities, the specification of the tiered reimbursement structure for the non-MMI and IR designated doctor examinations, guidance on the coding and billing for licensed home health services, and the proposed new modifiers, all of which lend certainty and stability to the system. Insurance carriers will also benefit from the predictability of the annual MEI adjustments that will determine the annual workers' compensation conversion factor changes. Carriers will continue to benefit from use of standardized and current methodologies, models, and value units, and use of standardized reporting, billing, and coding requirements.

Health care providers will benefit from the reimbursement modifications included in the proposed rules. The conversion factor increase will result in additional reimbursement to providers. Based on calendar year 2005 reimbursement data, reimbursement for professional services other than surgical procedures performed in a facility setting is anticipated to increase approximately $51 million, or 9.8 percent. Reimbursement for surgical services performed in a facility setting is anticipated to increase approximately $20.6 million, or 39.5 percent. This is an approximate $71.6 million increase in system costs with a net change of approximately 7.2 percent of total system medical payments. These increases are reflective of the increased costs as identified through the MEI for the provision of medical services and more accurately reflect the increases in costs of providing health care than the previous index to Medicare. This relationship will improve the financial viability of providers to participate in the Texas workers' compensation system. HCPs will benefit from the predictability of the annual MEI adjustments which ensure that changes in the costs of providing services will be reflected in the yearly workers' compensation conversion factor changes.

In addition, the Division has identified workers' compensation underserved areas. Those HCPs identified in the §134.203 and §134.204 providing medical services and treatments in those areas will benefit from an additional 10 percent reimbursement.

Providers will also benefit from the set reimbursement amounts for case management functions as these activities become increasingly important in our disability management model. The clarifications and specificities associated with this change in reimbursement methodology will allow providers to be more consistently reimbursed for case management responsibilities. This change further supports the responsibilities of the treating doctor and contributing HCPs to fulfill the disability management objectives of the Division.

Licensed home health agencies, as providers, will also benefit from clarification as to reimbursement for home health services provided to injured employees. Designated doctors will benefit from a more streamlined and tiered reimbursement structure for non-MMI and IR designated doctor examinations.

Employers, similar to insurance carriers, will benefit from the proposed rules due to the carrier's ability to process the established fees for reimbursing case management activities, the specification of the tiered reimbursement structure for the non-MMI and IR designated doctor examinations, guidance on the coding and billing for licensed home health services, and the proposed new modifiers, all of which lend certainty and stability to the system. Employers also benefit from these proposed rules as they support disability management and return to work initiatives.

The Department 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 November 5, 2007. 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 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.

The commissioner will consider the adoption of the proposed amended section and proposed new sections in a public hearing at 1:00 p.m. on November 5, 2007, in Room 100 at the William B. Hobby, Jr. State Office Building, 333 Guadalupe Street, Austin, Texas 78701. Written and oral comments presented at the hearing will be considered.

The amended rule and new rules are proposed under the Texas Labor Code §§408.021, 413.002, 413.007, 413.011, 413.012, 413.0551, 408.0252, 413.013, 413.014, 413.015, 413.016, 413.017, 413.019, 413.031; 402.0111, and 402.061.

Section 408.021 entitles injured employees to all health care reasonably required by the nature of the injury as and when needed. Section 413.002 requires the Division to monitor health care providers, insurance carriers and claimants to ensure compliance with rules adopted by the commissioner of workers' compensation, including fee guidelines. Section 413.007 sets out information to be maintained by the Division. Section 413.011 mandates that the Division by rule establish medical policies and guidelines. Section 413.012 requires the Division to review and revise the medical policies and fee guidelines at least every two years to reflect fair and reasonable fees. Section 413.0551 requires the Medical Advisor to make recommendations regarding the adoption of rules and policies to develop, maintain, and review guidelines as provided by §413.011. Section 408.0252 allows the commissioner of workers' compensation to identify areas of the state in which access to health care provides is less available and adopt appropriate standards, guidelines, and rules regarding the delivery of health care in those areas. Section 413.013 requires the Division by rule to establish programs related to health care treatments and services for dispute resolution, monitoring, and review. Section 413.014 requires preauthorization by the insurance carrier for health care treatments and services. Section 413.015 requires insurance carriers to pay charges for medical services as provided in the statute and requires that the Division ensure compliance with the medical policies and fee guidelines through audit and review. Section 413.016 provides for refund of payments made in violation of the medical policies and fee guidelines. Section 413.017 provides a presumption of reasonableness for medical services fees that are consistent with the medical policies and fee guidelines. Section 413.019 provides for payment of interest on delayed payments refunds or overpayments. Section 413.031 provides a procedure for medical dispute resolution. 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 §§408.021, 408.0252, 413.002, 413.007, 413.011 - 413.017, 413.019, 413.031; 402.0111, 413.0551, and 402.061.