The Texas Department of Insurance, Division of Workers' Compensation proposes repeal of §§133.305, 133.307, and 133.308, concerning medical dispute resolution (MDR). The repeal of these sections is necessary for the Division to propose new §§133.305, 133.307, and 133.308 published elsewhere in this issue of the Texas Register. These new sections are necessary to: implement statutory provisions of House Bill (HB) 7, enacted by the 79th Legislature, Regular Session, effective September 1, 2005; address the merger of two agencies with similar purposes and processes; and improve efficiencies of the MDR process.

The proposed new sections incorporate HB 7 specific changes to the MDR process. The HB 7 changes remove the State Office of Administrative Hearings from the MDR process, authorize pharmacy processing agents to act in behalf of pharmacies under terms and conditions agreed on by the pharmacies, establish the binding effect of independent review organization (IRO) decisions, specify elements of the IRO decision, create workers' compensation health care networks, and institute quality monitoring of IROs. In addition, HB 7 requires the health care provider to refund a carrier for inappropriate charges upon receiving a carrier's request for refund and after opportunity for appeal to the insurance carrier, and establishes that disputes related to carrier refunds are to be pursued by health care providers through MDR.

The proposed new sections govern dispute resolution of workers' compensation medical necessity and medical fee disputes. To accommodate a new dispute resolution framework, these proposed sections implement pertinent portions of HB 7, address the merger of two agencies, and streamline the MDR process. Additionally, the proposed sections incorporate the new processes, which not only simplify the administrative processing for stakeholders, but also allow for a more efficient and consistent method of processing and resolving medical disputes. The proposed sections also clarify that a qualified pharmacy processing agent will be considered a health care provider for purposes of MDR. The new sections apply to medical necessity and fee disputes filed on or after September 1, 2006.

Amy Rich, Director of Medical Disputes, Division of Workers' Compensation, has determined that for each year of the first five years the proposed repeal 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 repeal. There will be no measurable effect on local employment or the local economy as a result of the proposal.

Ms. Rich has determined that for each year of the first five years the proposed repeal is in effect, the public benefit anticipated as a result of the repeal in conjunction with the adoption of new §§133.305, 133.307, and 133.308 will be improved organization resulting in greater regulatory efficiency in administering regulations under Chapter 133, Subchapter D. The proposed new sections reflect the 79th Legislature's express intent that medical benefits are to be provided in a timely and cost-effective manner.

There are no anticipated costs to system participants as a result of the proposed repeal. There is no difference in the cost of compliance between a large and small business as a result of the proposed repeal. Based on the cost of labor per hour, there is no disproportionate economic impact on small or micro-businesses.

To be considered, written comments on the proposal must be received no later than 5:00 p.m. on July 24, 2006. Comments may be submitted via the Internet through the Department's Internet website at http://www.tdi.state.tx.us/wc/proposedrules/toc.html or by mailing or delivering your comments to Kristi Dowding, Legal Services, MS-4D, Division of Workers' Compensation, Texas Department of Insurance, 7551 Metro Center Drive, Suite 100, Austin, Texas 78744.

The Division will consider the adoption of the proposal in public hearing scheduled for July 26, 2006 in the Tippy Foster Room, Division of Workers' Compensation, 7551 Metro Center Drive, Austin, Texas.

The repeal is proposed under Labor Code §§408.027(g), 408.0271, 408.031, 413.002, 413.020, 413.031, 413.032, 401.024, 402.00111, and 402.061. Labor Code §408.027(g) provides that §408.027 and §408.0271 apply to health care provided through a workers' compensation health care network established under Chapter 1305 and that the commissioner of workers' compensation shall adopt rules as necessary to implement the provisions of §408.027 and §408.0271. Section 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. Section 408.031(a) allows injured employees to receive benefits under a workers' compensation health care network established under Insurance Code Chapter 1305. Section 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. Section 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. Section 413.031 specifies the processes for an IRO decision and appeal and 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. Section 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. Section 401.024 authorizes the commissioner to require by rule the use of facsimile or other electronic means to transmit information. 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 §§401.024, 402.00111, 402.083, 408.0041, 408.027, 408.0271, 408.031, 413.002, 413.0111, 413.020, 413.031, 413.032, 413.0511, and 413.0512