The Commissioner of the Division of Workers' Compensation, Texas Department of Insurance, adopts new §§133.305, 133.307, and 133.308, concerning medical dispute resolution (MDR). The sections are adopted with changes to the proposed text as published in the June 23, 2006, issue of the Texas Register (31 TexReg 5044).

These 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 within the MDR process.

Sections 133.305, 133.307, and 133.308 are necessary to implement HB 7 amendments to Labor Code §413.031 and new Labor Code §413.032 to conform the MDR process for medical disputes arising from non-network care or from certain authorized out-of-network care with the overall stated system aims of HB 7 as provided in Labor Code §402.021(b)(3) - (9). HB 7 amended Labor Code §408.027 relating to payment of health care providers and added Labor Code §408.0271 relating to reimbursement by health care provider. The sections are necessary to implement and clarify the changes to the Labor Code regarding payment and reimbursement that affect the dispute resolution process. HB 7 also added §413.0111 to the Labor Code relating to processing agents. The sections are necessary to implement the provisions of Labor Code §413.0111 and establish requirements and procedures for pharmacies to use pharmacy processing agents or assignees to process claims under the terms and conditions agreed on by the pharmacies. Additionally, the sections implement HB 7 amendments to Labor Code §413.031 regarding independent review organization (IROs) and implement new Labor Code §413.032 regarding IRO decisions and appeals. The sections establish the binding effect of IRO decisions, specify elements of the IRO decision, and institute quality monitoring of IROs. HB 7 further provides direct judicial review for an appeal from an IRO or from the Division, thus removing the State Office of Administrative Hearings (SOAH) layer from the MDR process. These HB 7 changes to the MDR process are implemented in the sections. The Commissioner also adopts the simultaneous repeal of existing §§133.305, 133.307, and 133.308, published elsewhere in this issue of the Texas Register.

The Division posted an informal draft of the new sections relating to MDR on February 13, 2006 and invited public input, which included a stakeholder meeting on March 9, 2006. Following publication of the proposed new sections in the Texas Register on June 23, 2006, the Division held a public hearing on July 26, 2006, and received comments suggesting changes to the proposed sections. In response to comments made at the hearing and written comments from interested parties, the Commissioner is adopting these sections with some changes to the proposal as published. Throughout the adopted rule, the Division has made editorial and grammatical changes to the rule, as proposed, for clarity. The Division also updated references to the Insurance Code throughout the rule as the result of the enactment of the nonsubstantive revision of the Insurance Code by the 79th Legislature, Regular Session, HB 2017, which are effective April 1, 2007. The adopted sections should be read in conjunction with Labor Code §413.031 and §413.032, and other statutes and rules as applicable.

§133.305. In subsection (a)(1), as adopted, the Division has added a definition of adverse determination for clarification that MDR intake requires a sufficient method, which meets the definition of adverse determination, to determine that an issue of medical necessity exists and dismiss the request for resolution of fee disputes. In response to a comment that a definition of life-threatening condition should be added to the definitions, the Division has added a definition of life-threatening in subsection (a)(2), as adopted, that mirrors the definition in Insurance Code Article 21.58A, §2(12). In response to a comment that Labor Code §413.0111 does not confer health care provider status on pharmacy processing agents and concern that §133.308(e)(1) unintentionally assigned such status, the Division has revised the references to pharmacy processing agents in §§133.305(a)(2)(A) ((a)(4)(A) as adopted), 133.307(b)(1), and 133.308(e)(1) by adding the words or a after the word provider and deleting the words which includes or including before the term pharmacy processing agent(s). In subsection (a)(2)(B) ((a)(4)(B) as adopted), in response to a comment to clarify when an employee may request MDR, the words a carrier have been deleted to clarify that an injured employee may request MDR when a carrier or a health care provider denies the injured employee's refund request. In subsection (a)(2)(C) ((a)(4)(C) as adopted) and §133.307(b)(2), in response to comments, the words or carrier were added after the words a Division and before the word audit to clarify that an insurance carrier, in addition to the Division, may request a health care provider refund after a carrier audit or review pursuant to Labor Code §408.0271. In response to a comment that the definition of network health care conflicts with 28 TAC §§10.102(i), 10.103(a)(4)(B)(iv), and 10.104(a)(2), the Division has revised subsection (a)(3) and (4), ((a)(5) and (6) as adopted) by adding the words or arranged to clarify that such networks may contract to provide health care. Subsection (a)(3) ((a)(5) as adopted) has also been revised by adding the words including authorized out-of-network care before the words health care network and as defined to clarify that network health care includes authorized out-of-network health care. In response to a comment regarding the processing of medical necessity and compensability related disputes prior to resolution of fee disputes, the Division has rewritten the language in subsection (b) to clarify that dispute resolution for compensability, extent of injury, liability, and/or medical necessity must be resolved prior to the submission of a medical fee dispute for the same services in accordance with Labor Code §413.031 and §408.021. In subsection (c)(4), in response to comments asserting that the Division has no jurisdiction to adjudicate contract disputes between parties, regardless of whether hidden discounts exist, the Division has deleted the phrase indicating a contracted discount rate with the provider and has provided and added the words based on between the words denied payment and a contract. In the same subsection, the phrase in accordance with Insurance Code Chapter 1305 has been added after the words workers' compensation health care network to clarify that workers' compensation networks must be certified under Insurance Code Chapter 1305. In response to comments that the language in subsection (d) was too broad and would require the redaction of contact information for persons who may have relevant information relating to the dispute, the Division has revised the language by deleting the word confidential between the word contains and the word information, deleting the phrase or a party in the dispute, and substituting the word patient for the word person and the words that patient for the words the person to appropriately narrow the scope of the subsection. In response to several comments that question the constitutionality of the removal by HB 7 of the SOAH from the MDR appeal process, the Division has added a severability clause in new subsection (e), which provides that if a court of competent jurisdiction holds that any provision of §§133.305, 133.307, and 133.308 is inconsistent with any of the statutes of the state, are declared unconstitutional, or are invalid for any reason, the remaining sections would still be effective. The constitutionality of Labor Code §413.031(k), from which the statutory basis of these rules is derived, is currently being litigated. If a court of competent jurisdiction were to declare Labor Code §413.031(k) and provisions of these rules that implement §413.031(k) unconstitutional, then the provisions unaffected by a court's decision would be valid.

§133.307. In proposed subsection (a), the Division has revised the effective date from September 1, 2006 to January 15, 2007, to give both the Division and stakeholders adequate time to prepare for the changes in procedure to the MDR rules and process. In response to comments that subsection (c)(1) was confusing and a comment that the timeframe to request a refund notice of 20 days, as proposed, was not long enough, the Division has revised the timeframe for filing a refund notice from 20 days, as proposed, to 60 days and has revised the subsection for further clarification. In subsection (c)(2)(D), in response to a comment that if a carrier denies payment on the basis of compensability, then other threshold issues may not be addressed and it may be necessary for the carrier to enter additional reasons into the record as part of the MDR process, the Division has added the word liability after the words extent of injury and before the words and/or medical necessity. In subsection (c)(2)(E), the Division agreed to clarify and added the word applicable before the words medical records in response to a comment requesting that the Division explain that only those medical records in possession of the health care provider are required. In response to a comment to clarify when an employee may need to request MDR, subsection (c)(3) has been changed to clarify that an injured employee may request MDR when a carrier or a health care provider denies the injured employee's refund or reimbursement request. In subsection (c)(4), in response to a comment that along with the request, the Division will provide a copy of all documentation submitted in support of the request, the Division has added the phrase and the documentation submitted in accordance with paragraphs (2) and (3) of this subsection after the words the request and before the words to the respondent. In subsection (d), the words to request have been changed to to a request for, for clarification and readability. In subsection (d)(1), the word calendar has been added in two instances to clarify that 14 days means 14 calendar days in response to comments requesting clarification of the time frame. In subsection (d)(2)(A)(iii), the Division has added the words not already provided by the requestor after the words the fee dispute, in response to comments that the subsection be modified to require that the responding party only include medical records or documents provided by the requestor in the original request because there is no reason to make both parties file identical records and documentation. The Division revised subsection (d)(2)(B) by deleting the sentence that states "[r]esponses shall not address new or additional denial reasons or defenses after the filing of a request," and adding the sentence that states "[i]f the response includes unresolved issues of compensability, extent of injury, liability, or medical necessity, the request for MDR will be dismissed in accordance with subsection (e)(3)(G) and (H) of this section." These changes will allow a carrier to submit a subsequent response when a final decision is rendered regarding threshold issues such as compensability, extent of injury, liability, and medical necessity, in response to several comments that the language be changed to allow a carrier to provide additional evidence to support the reason for reduction or denial of payment. In subsection (d)(2)(C), a commenter requested that the language be revised to require the carrier to submit a written statement that the carrier did not receive information relevant to the dispute prior to the MDR request and to clarify whether an affidavit or written statement is required. In response to this comment, the Division has revised subparagraph (C) by deleting the words so certify when the carrier files the request form with and substituting the words include that information in a written statement in the response the carrier submits to to allow the carrier to submit a written statement indicating the carrier has not received the information prior to the MDR request. In subsection (d)(2)(D), the Division added the words medical fee before dispute and the words or liability have been added after the words extent of injury and the words has not been resolved and and 11 (PLN 11) have been deleted for clarification. Also, the Division has added subsection (d)(2)(E), which states "[i]f the medical fee dispute involves medical necessity issues, the carrier shall attach a copy of documentation that supports an adverse determination in accordance with §19.2005...." This change clarifies that MDR intake requires sufficient documentation, which meets the definition of adverse determination, to determine that an issue of medical necessity exists and dismiss the request for resolution of medical fee dispute. In subsection (e)(1), the Division has added the sentence that states "[t]he Division shall forward any additional information received by the parties," for clarification. The Division has deleted subsection (e)(2) and moved rule language to adopted subsection (e)(3)(H) based upon a comment that requested the dismissal of medical fee disputes involving compensability, extent of injury, or liability, instead of providing for the abatement of medical fee disputes, to avoid a pending status and allow the opportunity to refile and start the fee dispute process. This is also consistent with the dismissals of medical fee disputes involving medical necessity issues. The Division renumbered subsection (e)(3) ((e)(2) as adopted), (e)(4) ((e)(3) as adopted), (e)(5) ((e)(4) as adopted), and (e)(6) ((e)(5) as adopted), accordingly. In subsection (e)(4)(F) ((e)(3)(F) as adopted) the language pursuant to a private contractual fee arrangement has been substituted for the words to an employee by a network provider subject to Insurance Code Chapter 1305; or for consistency with the change to §133.305(c)(4) made in response to a comment that the Division has no jurisdiction to adjudicate contract disputes between private parties. In subsection (e)(3)(G), the word if has been deleted as unnecessary and for consistency with the other subparagraphs and the words adverse determination of have been added before the words medical necessity for clarification. In subsection (e)(3)(H), the Division has deleted proposed language that indicated the Division may dismiss a request for MDR involving contract rates not pertaining to networks certified under Insurance Code Chapter 1305 because the provision would be duplicative of adopted subsection (e)(3)(F). Adopted subsection (e)(3)(H) incorporates the provision of deleted proposed subsection (e)(2) and provides for the dismissal of medical fee disputes involving related disputes pertaining to compensability, extent of injury, or liability for the claim, which have not been resolved. In subsection (e)(5) ((e)(4) as adopted), the words and to representatives of record for the parties have been added in response to a few commenters who requested that the Division send the fee dispute decision to the parties' representatives, as well as to the parties to the dispute. In subsection (f), the Division has added the sentence that states "[t]he Division and the Department are not considered to be parties to the medical dispute pursuant to Labor Code §413.031(k)," in response to comments that the proposed rule does not provide for an evidentiary hearing and to clarify the statutory provision.

§133.308. In proposed subsection (a), the Division has revised the effective date from September 1, 2006 to January 15, 2007, to give both the Division and stakeholders adequate time to prepare for the changes in procedure to the MDR rules and process. Also in subsection (a), in response to a few comments that §133.309 is subject to pending litigation and may be rendered invalid, the Division revised the reference from §133.309 to Labor Code §413.031(n) and related rules. The Division has rewritten subsection (e) for clarification and for consistency with other sections that distinguish network versus non-network disputes, as well as in response to a commenter who questioned why the proposed subsection, (e)(3) specifically, excluded non-network employees from medical necessity disputes. The revised subsection states who may be considered requestors in network disputes in subsection (e)(1): in subparagraph (A), providers, or qualified pharmacy processing agents acting on behalf of a pharmacy, for preauthorization, concurrent, and retrospective medical necessity dispute resolution; and in subparagraph (B), employees for preauthorization, concurrent, and retrospective medical necessity dispute resolution. The revised subsection states who may be considered requestors in non-network disputes in subsection (e)(2): in subparagraph (A), providers, or qualified pharmacy processing agents acting on behalf of a pharmacy, for preauthorization, concurrent, and retrospective medical necessity dispute resolution; and in subparagraph (B), employees for preauthorization and concurrent medical necessity dispute resolution; and for retrospective medical necessity dispute resolution when reimbursement was denied for health care paid by the employee. In response to a comment regarding the 45-day timeframe, the Division has revised the text of subsection (g) by inserting the word calendar after 45th and before day and inserting the words receipt of after the words day after and before the words the denial of reconsideration to address the commenter's concern. Also in subsection (g), the Division has deleted the reference to Insurance Code Article 21.58A, and has inserted the phrase §133.305 of this subchapter, to reference the definition of life-threatening that the Division added in §133.305(a)(2). In response to a comment that subsection (h)(3) be revised to state that a requestor does not have to seek reconsideration of a determination on a life-threatening condition prior to seeking an IRO determination, the Division has revised the paragraph by adding the words involving a life-threatening condition between the words dispute and has not been submitted. In subsection (k)(1), in response to a comment that the paragraph be revised to indicate what constitutes a provider as a party to the dispute, the Division has added the words or providers with relevant records between the words the party and shall deliver. In subsection (n), the words and to representatives of record for the parties were added between the words the parties and and transmitted for clarification of to whom the IRO decision will be mailed or transmitted. In subsection (n), the Division has also revised the language by deleting the words by facsimile to and adding the words in the form and manner prescribed by Cont'd...