Various parties have weighed in regarding the Texas Worker's Compensation System.  Some quotes of interest include:

"The payment per claim for prescription drugs used to treat injured workers in Texas was 30% higher than in most of the 15 other states included in a benchmark study by the Workers Compensation Research Institute (WCRI). WCRI found the average payment per claim for prescription drugs in the Texas workers‘ compensation system was $536, amounting to 30% more than the median. The institute said the main reason for the higher prescription costs in Texas was higher utilization of prescription drugs, with workers receiving more prescriptions for more pills per claim."

"The study, "Prescription Benchmarks for Texas," found the average number of pills per claim with prescriptions was 41% higher in Texas than the 16-state median. At the same time, the average number of prescriptions per workers‘ compensation claim was 34% higher, WCRI said. The study reported that while injured Texas workers received the same types of medications as workers in the other states, physicians in Texas more frequently prescribed muscle relaxants and anti-infectives. For example, WCRI reported, Carisoprodol (a muscle relaxant) was prescribed to 8% of injured workers in Texas (and for 12% in neighboring Louisiana). This is in contrast with 2% to 4% of claims in most other states, except in a few states where physician dispensing was a significant cost driver."

"The study said the average price per pill paid to pharmacies in Texas was similar to the median of the 16 study states. However, physicians in Texas used brand name medications for 20% of all prescriptions, compared with 15% in the median state."

"...a recent controversy regarding the Medical Quality Review Program and the agency‘s decision to stop nine healthcare provider investiga-tions. The controversy arose in May 2010 when former DWC staff alleged that the agency inappropriately dismissed the nine enforcement cases and investigations."

"One witness testified that he has seen an increase in denials of medical care that is within the medical treatment guideline, the Official Disability Guidelines Treatment in Workers’ Comp. He urged the agency to look into this issue."

"A labor representative testified that more large employers are moving to become non-subscribers, that there are a reduced number of supplemental income benefit recipients, and workers‘ compensation networks have only sought out low cost providers."

"Most of the testimony from industry representatives and the business and legal community centered on the recommendations to remove SOAH from the medical dispute process and the weakening of the Medical Advisor‘s authority within DWC."

Susan Rudd Bailey, M.D., the president of the Texas Medical Association (TMA), "reported that TMA continues to suggest that the DWC identify and work to improve geographic areas where access to care, treating doctors, subspecialty care, and Designated Doctors remain a challenge. She noted that TMA is committed to assisting in the promotion of strong and expanded physician participation in the Texas workers' compensation system."

"The Texas Alliance for Patient Access (TAPA) has reported that because of malpractice lawsuit reforms passed by the Texas Legislature, doctors are flocking to Texas in record number, returning to the emergency rooms and again taking complex cases. Unlike most states, Texas is adding high-risk and primary care doctors faster than the rate of population growth, which is an incredible accomplishment when one considers that Texas has one of the fastest growing populations in the nation and is the most populous of the fast growth states.? said TAPA. Because of tort reform, more Texas patients can now get the timely and specialized care they need closer to home. It is not known at this time what impact the influx of doctors into Texas is having on access to health care for injured employees."

TMA states "While we believe the MQRP process should be refined and improved, we believe the medical advisor should continue to manage and oversee the MQRP process. TMA believes that only a trained and licensed physician can truly provide medical quality oversight that measures up to peer review standards. TMA said it strongly recommends that a ?cabinet level? position of medical director, rather than lay staff, should oversee the medical quality review of workers' compensation medical care."

"TMA suggested that the DWC staff could make recommendations as to the audit-based review priorities of the MQRP, but noted the medical advisor should have final decision-making authority over what issues ultimately are chosen for review. TMA also reported that it believes that criteria for selection of MQRP members need to be improved with the final determinations as to who is and who is not selected to serve as an MQRP member remaining with the medical advisor. TMA also noted they believe the medical advisor should review all the MQRP findings and make the final decision to recommend or not recommend referral for enforcement. We feel that the medical advisor is a key position in the success of the division and the MQRP process of the oversight of medical quality and peer review, said TMA. This position should be strengthened in order to uphold quality standards that are recognized and uniform, and processes that are fair and ensure due process."

"It is estimated that 33 percent of Texas employers are non-subscribers who have the option to put in place effective safety, medical, and rehabilitative programs for their employees. A 2008 survey by the Texas Department of Insurance found that the overall percentage of non-subscribing employers is at its lowest point (33 percent) since 1993 when the rate was 44 percent. The number of employees covered by nonsubscribers, however, is at 25 percent compared to 20 percent in 1993."

"The staff of the Texas Sunset Advisory Commission noted in their report on the Division of Workers‘ Compensation that only 10 percent of non-subscribing employers make required reports to the DWC, including information on workplace injuries."

"The Texas Association of Business (TAB) submitted comments to the Texas Sunset Advisory Commission (Sunset Commission) and weighed in on the ongoing Sunset Review of the Division of Workers‘ Compensation (DWC). TAB is a broad-based business group representing 3,000 large and small businesses, as well as over 200 local chambers of commerce. TAB is committed to strengthening our economy so businesses of all sizes can create more, good-paying jobs for more Texans.  Cathy Dewitt, vice president for governmental affairs with TAB, reported....employers have seen positive effects brought about by the 2005 reforms.  Medical costs per claim are significantly lower and the use of networks has allowed employers to receive premium discounts, said Dewitt. At the same time, injured workers have received increases in income benefits and return-to-work rates are improving. Dewitt reported that one of the few negative outcomes that has resulted due to the 2005 reforms is that, according to the Workers' Compensation Research Institute (WCRI), medical cost containment expenses per claim in Texas are the highest among the 14 study states included in a recent study by WCRI, and 45 percent higher than in the typical median state. The regulations that were necessary in reforming the system in 2005 has come with a large price tag, said Dewitt."

"Health care reform will change much of the medical services delivery system as we know it, but its impact on workers‘ compensation, while likely significant, will be indirect and accidental—as well as both positive and negative. Worries that the feds will take over workers‘ comp are unfounded. Congress has plenty on its plate without thinking about an infinitesimal industry that represents less than 2 percent of U.S. medical spending."

"Hospital and facility expenses account for about a third of workers‘ comp medical spending—roughly $10-to-$12 billion annually. That number is likely to go up.....Expect Medicare to reduce reimbursement to hospitals....If and when these reductions go into effect, hospitals may well look more closely at other payers as they seek to make up for lost revenue. And workers‘ comp is a very soft target—while it makes up about 2 percent of hospital revenues, it provides about 16 percent of margin."

"Pharmacy didn‘t ?escape reform but certainly wasn‘t dramatically impacted. While Congress (so far) failed to give CMS the power to negotiate drug pricing with pharmaceutical companies, those companies went ahead and raised brand drug prices in 2009 by more than nine percent. Workers‘ comp payers will see an increase in drug prices over the short term, and if CMS does gain the power to negotiate in the future, watch out for potential cost- shifting as manufacturers seek to make up for lost margin by increasing prices to non-governmental buyers."

"Today, health care is delivered episode by episode—diagnosis, care plan, treatment, assessment, and repeat steps two-to-four until the situation is resolved. This episodic model of care will (over time) change to one based on functional outcome management—care focused on returning the patient to functionality and maintaining that functionality. This will be in large part driven by the growing influence of chronic care and need to develop a better care model to address chronic care—one that will heavily emphasize patient education and monitoring. It will also require a different location of care, the medical home—NOT a primary-care gatekeeper model but rather a model wherein the physician is tasked with and responsible for coordinating care and educating the patient. Experts believe this model will be a big part of the solution in workers‘ comp, as the medical home may well be the dominant model for delivery of care throughout the health system in years to come. Studies indicate the home decreases medical errors and improves the quality of care delivered. In addition, with more individuals covered under insurance, the need for workers‘ comp payers to treat underlying health problems along with occupational injuries will decrease. That means it is more likely an injured worker will be undergoing treatment for their diabetes or hypertension, conditions that today often have to be addressed by the comp payer as they complicate surgery and other therapies. As a result, workers‘ comp payers won‘t have to pay for those treatments, and the patient population is likely to be healthier overall."

"TDI reviewed data from injury years 1991 – 2006 and prescription data from 2005 and 2006 to prepare the Pharmaceutical Descriptive Analysis. The study noted that in 2005, prescription drug costs accounted for 13 percent of medical benefit costs in the Texas workers‘ compensation system. The data analyzed by TDI staff revealed that prescription drug costs for 2006 accounted for 14 percent of medical benefit costs in the Texas system. TDI‘s study noted that the cost impact of prescription drugs for prescription year 2006 on the Texas workers‘ compensation system for dates of injuries from 1991 to 2006 was $131,674,459 and that there was a 2% increase – $2,136,072 – in the share of medical benefits payments associated with prescription drugs in 2006. It is important to note that for dates of injury 1991 to 2000, the number of injured employees in the study is 13%. However, the 13% of injured employees in the study constitutes 46% of the total payments for prescriptions in 2006."

Texas WC History

"The first workers' compensation laws were enacted in Texas in 1913 and held fast to the principle that employers should be allowed to choose whether to offer workers' compensation benefits to their employees. At the time, the courts generally held that mandatory, government- administered workers' compensation programs denied the property rights of employers without due process of law.  The judicial climate changed in 1917 when the U.S. Supreme Court ruled that it was lawful to require employers to choose whether or not to participate in a state's workers' compensation program."

"Texas revised its workers' compensation laws in 1917, but retained voluntary employer participation in the system. Today, Texas is the only state that allows employers to choose whether or not to provide workers' compensation, although public employers and employers that enter into a building or construction contract with a governmental entity must provide workers' compensation. The 1917 Texas law created the Texas Industrial Accident Board to administer workers' compensation laws in the state and provided the basic framework for the state's workers' compensation system until the late 1980s."

"In 1987, amid growing public complaints about high insurance costs for employers and low benefit rates for injured workers, the Texas Legislature appointed a Joint Select Committee on Workers' Compensation Insurance to make recommendations for change. The Joint Select Committee study concluded that work-related fatalities and injuries in Texas seemed to be higher than the rest of the nation. Also, the committee found that benefit rates and payment durations were low compared to other states, especially for seriously injured workers. Other key findings included that medical costs were on the rise and that attorneys were extensively involved in lost time claims by injured workers, even when the claims went undisputed."

"Addressing these concerns, the Texas Legislature adopted the Texas Worker's Compensation Act (Senate Bill 1), also referred to as the Act, on Dec. 13, 1989. The Act was immediately challenged in court but it was upheld eventually by the Texas Supreme Court."

"The Workers' Compensation Act ensures that injured workers are compensated fairly and appropriately for workplace injuries. Under the Act, Texas remains the only state that still allows private employers to choose whether or not to maintain workers' compensation insurance. Employers who choose not to maintain coverage must notify the Division and their employees that they do not intend to maintain workers' compensation insurance. The Act created more insurance options for employers, including self-insurance for large employers who meet established criteria and are certified by the Division."

"The Texas Workers' Compensation Commission (TWCC) was created under the Act to administer the workers' compensation system, replacing the Texas Industrial Accident Board. TWCC administered the system until 2005, when it was abolished and replaced by the Texas Department of Insurance, Division of Workers' Compensation (Division)."

"The 1989 Workers' Compensation Act established a new benefits system, raised basic benefit levels and set tight deadlines for employers and carriers to improve benefit delivery. An administrative dispute resolution process under the Act attempted to resolve claim disputes informally whenever possible. It provides for an internal administrative process that includes hearings and reviews by a three-judge appeals panel to settle disputes that cannot be resolved informally."

"To confront concerns about high costs and the involvement of attorneys in even routine claims, the Act called for the development of medical fee and treatment guidelines to control medical costs and limits attorneys fees to time and actual expenses, up to a maximum of 25 percent of an injured worker's total recovery.
The Act strengthened the Division's ability to monitor system participants and to assess administrative penalties for noncompliance with the Act or Division rules. It provided that the Division also investigates fraud and may work with local prosecutors and law enforcement officials to prosecute workers' compensation fraud."

"Finally, the Act consolidated and expanded state-administered workplace health and safety programs and the created workplace health and safety assistance and incentive programs for employers."

"During the 1990s, numerous measures were passed by the Legislature to make the workers' compensation system run more efficiently. A growing concern toward the end of the decade was high medical costs in the system. The length of time that injured workers stayed off the job was scrutinized as well, with several studies emerging comparing Texas unfavorably to other states for return to work outcomes."

"In 2004, two interim committees of the Texas Legislature were charged by state leaders to study the workers' compensation system. The Senate Select Interim Committee on Workers' Compensation was directed to examine the benefits of existing, regional health care networks to treat injured workers and to assess the potential impact of full-scale networks in the system. The committee also was directed to examine measures under-taken and proposed to regulate medical costs for treating worker injuries. The Senate Select Interim Committee concluded that health care networks should become part of the workers' compensation system and that treatment guidelines should be developed to direct the types of care given to injured workers."

"The House Business and Industry Committee prepared an interim study on the workers' compensation system that also endorsed health care networks to treat injured workers."

"In addition to the legislative interim studies, the former TWCC underwent review by the Texas Sunset Advisory Commission in 2004. The Sunset Commission recommended the abolition of TWCC, the addition of health care networks for injured workers, and the creation of an Office of Injured Employee Counsel (OIEC). Numerous other recommendations included improvement of return-to-work outcomes and measures to control medical costs."

"The Texas Legislature enacted House Bill (HB) 7 in 2005 to reform the administration of the workers' compensation system and implement major changes in the delivery of benefits to injured workers. HB 7 provided that the newly-created Division of Workers' Compensation at the Texas Department of Insurance would be overseen by a Commissioner of Workers' Compensation appointed by the Governor. This represented a significant change in the stewardship of the workers' compensation system from the former Worker's Compensation Commission composed of six members representing employers and employees."

"HB 7 also established a new state agency, the Office of Injured Employee Counsel (OIEC), to be administered by a Public Counsel appointed by the Governor. The Public Counsel represents injured workers in rulemaking proceedings and coordinates ombudsman assistance for injured workers in administrative dispute proceedings."

"Health care networks, similar to those found in group health insurance, first came to the Texas workers' compensation system under HB 7. As the networks were being developed to begin operations in 2006, the Commissioner of Workers' Compensation also directed the implementation of many other reforms approved by the legislature in HB 7."

"On May 26, 2010, Texas Mutual Insurance Company‘s (Texas Mutual) board of directors approved the company‘s plan to distribute $100 million in workers‘ compensation dividends. Dividends reward loyal policyholders who share Texas Mutual‘s commitment to workplace safety. Texas Mutual has declared $845 million in dividends during the past 12 years."

"...chairman of the Texas Mutual board of directors....In 1999, we were thrilled to pay our first dividend - $25 million. Today, that number has grown to $100 million. Our policyholders will use those funds to expand their businesses...This year‘s dividend announcement comes as the economy continues to climb out of the worst slump since the Great Depression. Texas Mutual President Ron Wright said that the company‘s 12th consecutive dividend payout is a sign of its ongoing financial stability."

Prescription Abuse

"On June 3, 2010, Representatives Mary Bono Mack (CA-45) and Harold Rogers (KY-05) launched a bi-partisan Congressional Caucus on Prescription Drug Abuse. As the Co-Chairs of the Caucus, Bono Mack and Rogers are long-time advocates for multi-tiered solutions to the ever-growing epidemic that has wrought havoc on communities large and small throughout the United States."

"Prescription drug abuse is on the rise, threatening the lives of more and more of our young people every day," said Bono Mack. "Far too many Americans have the misconception that prescription drugs are 'safer‘ because they‘re prescribed by a doctor, but the fact is that prescription drugs, when abused, can be just as addictive and as deadly as street drugs....Prescription drug abuse is overwhelming our local law enforcement community, challenging our health practitioners and worst of all, is an easy predator on our young people..."

"Between 2002 and 2007, my home state of Massachusetts lost 42 times as many residents to opioid-related overdoses than in the Iraq and Afghanistan wars and the Commonwealth is currently seeing 2 deaths per day."

"The Prescription Drug Caucus will help raise awareness of this terrible epidemic while developing effective policies to combat abuse....According to the National Institute on Drug Abuse, nearly 7 million people are utilizing prescription drugs for non-medical purposes. Nearly one-third of individuals who began abusing drugs in the past year reported their first drug was a prescription drug, and one out of every five new drug abusers is initiating use with potent narcotics, such as oxycodone, hydrocodone and methadone. The Drug Enforcement Administration (DEA) indicates illegal prescription drug diversion is the fastest growing drug threat nationwide. The Caucus will conduct periodic events to educate Members of Congress, congressional staff, relevant government officials and the general public about the dangers of prescription drug abuse and policies aimed at reducing the diversion and misuse of these drugs."

"On December 23, 2009, Joe Paduda, a nationally recognized expert, speaker, media source and author on managed care in group health and in workers‘ compensation, reported that the use of narcotics to treat workers‘ compensation injuries is a problem. 'This isn't just a drug cost issue; the extended use of narcotics is also associated with longer duration of disability and higher claims costs,' said Paduda.

"States with above average use of narcotics include California, Oklahoma, Texas, Louisiana, Alabama, South Carolina, Massachusetts , Delaware, and New Hampshire..."

"In December of 2009, NCCI reported that narcotic drugs account for nearly one quarter of all workers‘ compensation prescription drug costs. NCCI reported:
Narcotics use early in the life of claims is increasing; Narcotics use can persist for many years; and Heavy narcotics use for workers‘ compensation injuries is related to substance-abuse treatments."


Source:  TEXAS WORKERS’ COMPENSATION UPDATE; June 25, 2010