COMMENT: Commenters reminded the commission that one of the stated purposes of the SMN was to assist pharmacists in the resolution of medical necessity disputes. Commenters felt that the introduction of the requirement of §134.502 (e) was a much needed change that provided a solution to the problem. One commenter pointed out that in many cases the rule served the purpose of giving the pharmacy a 'heads up' that the bill was being questioned. Commenters pointed out that pharmacies have no say in what is prescribed but find themselves having to bear the burden of defending the prescription written which is both difficult and costly. One commenter even believed that the requirement to request the SMN gave pharmacy providers assurance that they would not receive a denial for lack of medical necessity. Commenters felt that the commission has not taken the time to address the issue properly, nor justified the need for the proposed amendment, and should review the comments and preamble from the original adoption of §134.502 in December of 2001 for clarification of the original intent of the SMN. Commenters felt that upon doing so, the commission would see that part of the intent was to save the pharmacy and injured employee money by preventing medical necessity denials that could lead to costly disputes.

RESPONSE: The commission agrees that one of the purposes of the SMN was to assist pharmacists in the resolution of medical necessity disputes and points out that the SMN has not been removed from the rules. It is still defined in §134.500 and the prescribing doctor is still required to provide the statement upon request. Providers of pharmaceutical services can request a SMN whenever needed. The commission disagrees that removing the requirement to request a SMN prior to a denial reduces the pharmacy's access to the information necessary to support the medical necessity of the medication in a dispute. The commenter's suggestion that the requirement to request a SMN prior to a denial would prevent the pharmacy from receiving denials based upon medical necessity illustrates the confusion that continues to exist regarding SMNs. A SMN is a doctor's opinion on why something is medically necessary. The fact that a doctor provides such a statement does not mean that the medical necessity of the medication cannot be challenged, nor does it mean that the carrier will not deny the medication. Again, the commission is committed to continuing to explore ways to improve delivery of and reimbursement for pharmaceutical services

COMMENT: A commenter recommended that the commission develop a SMN form. The commenter believed that such a form would address the problem of differing interpretations among carriers as to what constitutes a satisfactory SMN.

RESPONSE: The commission disagrees that a form for the SMN is needed. Section 134.500 (a)(2) established the elements of information required for a SMN. An existing document, such as a medical chart note, may provide the information required to determine medical necessity without generating a separate, additional document. The SMN is a communication tool designed to establish the medical necessity of the treatment for the employee's condition and to facilitate payment. The specification of information that should be included, regardless of the format, helps the doctor to provide adequate information. Because a form will not always be helpful, and in some situations may add unnecessary time to the process, it is not being recommended at this time.

As previously stated, the commission is committed to continuing to explore ways to improve delivery of and reimbursement for reasonable and necessary pharmaceutical services and system participants should not assume that the adoption of this rule represents the commission's final answer to these issues.

COMMENT: A commenter recommended that the justification for medications be part of the treatment plan for the injured employee and that carriers be required to refer to the treatment plan prior to denying medications.

RESPONSE: The commission disagrees. While treatment plans are beneficial and may include medications, commission rules do not require treatment plans to be filed with or approved by carriers at this time.

COMMENT: A commenter recommended that subsection (e) be clarified by adding the phrase "carrier's utilization review agent" after "carrier." Commenter believes that the inclusion of the phrase will avoid disputes regarding whether or not the carriers' utilization review agent can request a SMN on behalf of the carrier.

RESPONSE: The commission disagrees that additional language is necessary. System participants may use agents to perform actions on their behalf. The employer of the agent is responsible for the acts and omissions of the agent without additional language in this or any other rule.

COMMENT: A commenter disagreed with the commission's statements in the public benefit/cost note section of the proposal preamble that state the proposed amendment will have minimal anticipated economic costs to persons who are required to comply with the proposed amendment. The commenter especially took issue with the statement that the probable economic costs anticipated as a result of enforcing the proposed amendment would be reduced costs to pharmacies and prescribing doctors associated with obtaining payment for pharmaceutical services. Commenter believed that while carriers would realize savings, the costs would be shifted to pharmacists. The commenter provided the commission with an estimate of the potential increase in operating expenses for pharmacies, taking into account requirements such as the pharmacy's request for a SMN, reproduction of the request, dissemination of the request to the carrier through the request for reconsideration process, etc. The commenter felt that since the carrier is the one that makes the decision to question and/or deny claims, it is justifiable for them to bear the cost of making and processing such requests and not require the pharmacist or doctor to shoulder the cost. The commenter believed that financial gain of one party at the expense of another was neither the intention of the legislature nor the commission, but that adoption of this rule would have that effect.

The commenter further objected to statements in the public benefit/cost note section indicating that employees and pharmacies will benefit from a return to the process that does not require a SMN prior to denial, and that the removal of §134.502 (e) should improve the consistency and delivery of appropriate medical care to employees and reduce concerns regarding obtaining required documentation within tight timeframes. The commenter believes that the amendment will have the opposite effect by imposing increased operational costs onto pharmacies, which will in turn either stop filling workers' compensation prescriptions (creating an access problem), or require the injured employee to pay for all services out of pocket, thus driving up costs for injured employees.

Finally, the commenter disagreed with language stating that there will be no adverse economic impact on small businesses or micro-businesses as a result of the rule as proposed to be amended. Commenter stated that small and micro-businesses will bear an even heavier burden than other pharmacies and many small, independently owned and operated pharmacies will have to absorb the impact of the increased cost for additional billing issues and personnel. The commenter does not feel that these operations have the financial ability to meet the billing issues that will be imposed on them by the proposed amendment and that the commission did not clearly research the impact the proposed amendment may have on the small and micro-business.

RESPONSE: Although the commission agrees that the pharmacies could experience some increases in costs, the commission believes that these increases would be more than offset by savings to a pharmacy based on the ability to pursue and participate in medical dispute resolution. The commission also disagrees with some of the commenter's premises regarding where costs would increase.

The commenter seems to believe that there would be a great increase in the number of SMNs that pharmacies would have to request as a result of the amended rule. The commission has no reason to believe that the number of denied pharmacy bills would increase based upon the amended rule.

Under both the original and the amended rule, only the requestor of the SMN would receive a copy. Therefore, under the original rule, when the carrier requested an SMN, the pharmacy was not provided a copy by the prescribing doctor. So if the carrier ultimately denied the bill, the pharmacy had to request a copy of the SMN from the prescribing doctor if the pharmacy wanted to establish medical necessity at Medical Dispute Resolution. Under the amended rule, this is largely unchanged, except that instead of requesting a copy of a SMN that already existed from the prescribing doctor, the pharmacy would often be requesting that the prescribing doctor prepare or send the SMN for the first time.

At the same time the pharmacy would experience savings because they would not be inundated with SMNs. This would save pharmacies the costs related to processing, filing, and storing the SMNs with prescription records.

At this time, the commission disagrees that the carrier should bear the cost of making and processing SMN requests and not require the pharmacist or doctor to shoulder the cost. There are numerous health care providers in the system who, similar to pharmacies, only provide care in response to a prescription, and little medical judgment on their part regarding medical necessity is involved in their provision of the care. For example, durable medical equipment providers, imaging centers, pathology laboratories and others all simply follow a doctor's prescription. Yet, if the carrier denies their care, they are still expected to take the active role in pursuing payment. The process is the same for pharmacies.

Regarding the suggestion that pharmacies would charge injured employees, while §134.504, Pharmaceutical Expenses Incurred by the Injured Employee, provides an avenue for reimbursement for employees who have paid out of pocket for pharmacy expenses, it does not give permission for a pharmacy to charge or accept payment from an injured employee. With the introduction of over-the-counter medications to the system, the legislature made provisions for employees who purchased such products from non-pharmacy establishments (such as convenience stores) to be reimbursed. The rules were written broadly enough to encompass any medication that the employee may have spent personal funds on in order to have an established reimbursement method. If a pharmacy knowingly charges an injured employee for any or all of the cost of a prescription related to a compensable injury or to an injury in dispute that has not been finally adjudicated as non-compensable, the pharmacy is in violation of Texas Labor Code §413.042 and may be subject to administrative sanctions.

The commission does not believe that small pharmacies would be any more impacted under the amended rule than they were under the previous rule since, as noted, under the original rule pharmacies did not automatically receive SMNs from prescribing doctors when the carriers requested them. As such, pharmacies (both small and large) should see no adverse impact under the amended rule.

COMMENT: A commenter questioned whether or not the carrier is required to send the EOB to parties when a bill is denied as a duplicate bill. The commenter also pointed out that several billing forms are currently accepted, one of which does not contain information for the prescribing doctor and questioned whether or not the carrier has to send a copy of the EOB to the prescribing doctor when that information is not available via the billing form. The commenter asked other clarifying questions that were unrelated to the proposed rule.

RESPONSE: The intent of the proposed change in subsection (g) was to reduce filing requirements so that carriers would not have to send EOBs to parties that did not need them (such as when the carrier reduced a bill to the maximum allowable reimbursement.) The carrier would not be required to send the EOB to the prescribing doctor and injured employee when the bill is denied as a duplicate bill. It is clear from the commenter's question that there are other circumstances in which there is no need to file the EOB with other parties.

Therefore, subsection (g) of the rule has been amended to emphasize that an EOB shall be sent to the sender of the bill in accordance with §133.304 (relating to Medical Payments and Denials) which requires an insurance carrier to send a copy of the explanation of benefits (EOB) to the sender of the bill at the time the carrier makes or denies payment on a bill. Subsection (g) also requires that the EOB be sent to the prescribing doctor and the employee if the bill is reduced for any reason related to compensability of, liability for, extent of, or relatedness to the compensable injury, or for reasons related to reasonableness or medical necessity.

Regardless of which version of the TWCC-66a, Statement for Pharmacy Services, is used by the sender of the bill, in some cases the rule requires the carrier to provide a copy of the EOB to the prescribing doctor. However, the commission is aware that earlier editions of the TWCC-66a did not facilitate compliance with this requirement and has adopted a final TWCC-66a, dated 01/01/03 which contains the information a carrier needs to send the EOB to the prescribing doctor. The form is available for use immediately but is not required until January 1, 2003. Although the delay in making the new form mandatory will allow the existing problems filing EOBs with prescribing doctors to continue for another three weeks, these problems existed under the original rule and thus are not new. Further, the fact that the amended rule reduces the circumstances under which the carrier is required file extra copies of EOBs means that the scope of the existing problem will be reduced immediately even if widespread use of the new form does not begin until January 2003.

The amended rule is adopted under the following statutes: the Texas Labor Code §402.042, that authorizes the Executive Director to enter orders as authorized by the statute as well as to prescribe the form and manner and procedure for transmission of information to the commission; the Texas Labor Code §402.061, which authorizes the commission to adopt rules necessary to administer the Act; the Texas Labor Code §406.010, that authorizes the commission to adopt rules necessary to specify the requirements for carriers to provide claims service and establishes that a person commits a violation if the person violates a rule adopted under this section; the Texas Labor Code §408.021(a), that states an employee who sustains a compensable injury is entitled to all health care reasonably required by the nature of the injury as and when needed; the Texas Labor Code §408.025, that requires the commission to specify by rule what reports a health care provider is required to file; the Texas Labor Code §408.028, as passed by the 77th Texas Legislature, that requires health care practitioners providing care to an employee to prescribe any necessary prescription drugs in accordance with applicable state law; the Texas Labor Code §413.002, that requires the commission to monitor health care providers and insurance carriers to ensure compliance with commission rules relating to health care including medical policies and fee guidelines; the Texas Labor Code §413.011, as passed by the 77th Texas Legislature, that requires the commission by rule to establish medical policies and guidelines relating to necessary treatments for injuries, and fees, designed to ensure the quality of medical care and to achieve effective medical cost control; the Texas Labor Code §413.012, that requires the commission to review and revise medical policies and fee guidelines at least every two years to reflect current medical treatment and fees that are reasonable and necessary; the Texas Labor Code §413.013 (1) (2) and (3), that require the commission by rule to establish a program for prospective, concurrent, and retrospective review and resolution of a dispute regarding health care treatments and services; a program for the systematic monitoring of the necessity of the treatments administered and fees charged and paid for medical treatments or services including the authorization of prospective, concurrent or retrospective review under the medical policies of the commission to ensure the medical policies and guidelines are not exceeded; and a program to detect practices and patterns by insurance carriers in unreasonably denying authorization of payment for medical services requested or performed if authorization is required by the medical policies of the commission; the Texas Labor Code §413.0141, as passed by the 77th Texas Legislature, regarding initial pharmaceutical coverage; the Texas Labor Code §413.017, that establishes presumption of reasonableness of medical services; the Texas Labor Code §413.031, as passed by the 77th Texas Legislature, that entitles a party, including a health care provider, to a review of a medical service for which authorization for payment has been denied or reduced; the Texas Labor Code §415.002, that establishes an administrative violation for an insurance carrier to: unreasonably dispute the reasonableness and necessity of health care, to violate a commission rule or to fail to comply with the Act; the Texas Labor Code §415.003, as passed by the 77th Texas Legislature, that establishes an administrative violation for a health care provider to: administer improper, unreasonable, or medically unnecessary treatment or services, to violate a commission rule, or to fail to comply with the act; and the Texas Labor Code §415.0035, that establishes an administrative violation for an insurance carrier to deny preauthorization in a manner that is not in accordance with commission rules.

The amendment is adopted under the Texas Labor Code §§402.042, §402.061, §406.010, §408.021(a), §408.025, §408.028, §413.002, §§413.011-413.013 (1) (2) and (3), §413.0141, §413.017, §413.031, §415.002, §415.003, §415.0035.