JL_risklogo.png

Workers Comp Audit Stress Reducer
Use It For Your Next Premium Audit

Texas – Did Banning Informal WC Networks Cost Employers

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn

WC Networks Cost Texas Employers According to WCRI

WC Networks Cost employers in Texas. Did Texas make a large inadvertent mistake?  WCRI recently completed  a study CompScope™ Medical Benchmarks for Texas 14th Edition,.  One of the conclusions of the study was the growth in medical payments per workers’ compensation claim in Texas was faster than in prior years and more rapid than in most other states in the study.

Flag of texas Networks Cost raise
Wikimedia Commons – Makaristos

The study found fee schedule increases following Medicare updates as required under HB 7, and the 2011 ban oninformal networks drove an increase in prices for medical services, fueling the recent growth in medical payments. A decrease in utilization of non-hospital care slightly offset the increases in prices. I thought I would  explore the ban on informal networks.   The statutes are included below.   The directions from the Texas Department of Insurance (TDI) were for companies that may be an informal or voluntary network to compare themselves to the below law to see if they were either type of network.   

My apologies if the statute did not line up properly.   After reading over the Statute and then examining the cost/benefit analysis, one has to question whether this was a good idea.  

I am thinking the law was enacted to protect the pharmacies from receiving “stacked” network reductions where the pharmacy charges are reduced multiple times by networks unknown to the pharmacy at the time the medications was dispensed to the injured worker. 

Business People Networks Cost Smiling
StockUnlimited


Many WC medical providers have become very vocal over “quiet network” reductions and have filed suit or complained vociferously to the WC Board or Commission in their respective states.   
   
If I happen to be off-base with my conclusion, Texas blog readers, please let me know. 

One of the two Texas Statutes that ending up costing employers is:Section 408.0281:
Reimbursement For Pharmaceutical Services; Administrative Violation
(a) In this section:
   (1) “Informal network” means a network that:
        (A) is established under a contract between an insurance carrier or an insurance carrier’s authorized agent and a health care provider for the provision of pharmaceutical services; and
        (B) includes a specific fee schedule.
Spec RX Networks Cost prescription
Wikimedia Commons – Dpbsmith

(2) “Voluntary network” means a voluntary workers’ compensation health care delivery network established under former Section 408.0223, as that section existed before repeal by Chapter 265 (H.B. 7), Acts of the 79th Legislature, Regular Session, 2005, by an insurance carrier for the provision of pharmaceutical services.

(b) Notwithstanding any provision of Chapter 1305, Insurance Code, or Section 504.053 of this code, prescription medication or services, as defined by Section 401.011(19)(E):
   (1) may be reimbursed in accordance with the fee guidelines adopted by the commissioner or at a contract rate in accordance with this section; and
   (2) may not be delivered through:
      (A) a workers’ compensation health care network under Chapter 1305, Insurance Code; or
      (B) a contract described by Section 504.053(b)(2).

(c) Notwithstanding any other provision of this title, including Section 408.028(f), or any provision of Chapter 1305, Insurance Code, an insurance carrier may pay a health care provider fees for pharmaceutical services that are inconsistent with the fee guidelines adopted by the commissioner only if the carrier has a contract with the health care provider and that contract includes a specific fee schedule. An insurance carrier or the carrier’s authorized agent may use an informal or voluntary network to obtain a contractual agreement that provides for fees different from the fees authorized under the fee guidelines adopted by the commissioner for pharmaceutical services. If a carrier or the carrier’s authorized agent chooses to use an informal or voluntary network to obtain a contractual fee arrangement, there must be a contractual arrangement between:

Physician Networks Cost Reviewing Paper
(c) stockunlimited
   (1) the carrier or authorized agent and the informal or voluntary network that authorizes the network to contract with health care providers for pharmaceutical services on the carrier’s behalf; and
   (2) the informal or voluntary network and the health care provider that includes a specific fee schedule and complies with the notice requirements of this section.
(d) An informal or voluntary network, or the carrier or the carrier’s authorized agent, as appropriate, shall, at least quarterly, notify each health care provider of any person, other than an injured employee, to which the network’s contractual fee arrangements with the health care provider are sold, leased, transferred, or conveyed. Notice to each health care provider:
   (1) must include:
        (A) the contact information for the network, including the name, physical address, and toll-free telephone number at which a health care provider with which the network has a contract may contact the network; and
        (B) in the body of the notice:
             (i) the name, physical address, and telephone number of any person, other than an injured employee, to which the network’s contractual fee arrangement with the health care provider is sold, leased, transferred, or conveyed; and

             (ii) the start date and any end date of the period during which any person, other than an injured employee, to

Graphic of Networks Cost TDI Texas
fmx.cpa.texas.gov

which the network’s contractual fee arrangement with the health care provider is sold, leased, transferred, or conveyed; and

   (2)  may be provided:
        (A) in an electronic format, if a paper version is available on request by the division; and
        (B) through an Internet website link, but only if the website:
              (i) contains the information described by Subdivision (1); and
              (ii) is updated at least monthly with current and correct information.
(e) An informal or voluntary network, or the carrier or the carrier’s authorized agent, as appropriate, shall document the delivery of the notice required under Subsection (d), including the method of delivery, to whom the notice was delivered, and the date of delivery. For purposes of Subsection (d), a notice is considered to be delivered on, as applicable:
(1)  the fifth day after the date the notice is mailed via United States Postal Service; or
   (2)  the date the notice is faxed or electronically delivered.
(f) An insurance carrier, or the carrier’s authorized agent or an informal or voluntary network at the carrier’s request, shall provide copies of each contract described by Subsection (c) to the division on the request of the division. Information included in a contract under Subsection (c) is confidential and is not subject to disclosure under Chapter 552, Government Code. Notwithstanding Subsection (c), the insurance carrier may be required to pay fees in accordance with the division’s fee guidelines if:
   (1) the contract:
      (A) is not provided to the division on the division’s request;

      (B) does not include a specific fee schedule consistent with Subsection (c); or

Businessman Networks Cost Passing Document To Businesswoman
(c) stockunlimited
      (C) does not clearly state that the contractual fee arrangement is between the health care provider and the named insurance carrier or the carrier’s authorized agent; or
  (2) the carrier or the carrier’s authorized agent does not comply with the notice requirements under Subsection (d).
(g) Failure to provide documentation described by Subsection (e) to the division on the request of the division or failure to provide notice as required under Subsection (d) creates a rebuttable presumption in an enforcement action under this subtitle and in a medical fee dispute under Chapter 413 that a health care provider did not receive the notice.
(h) An insurance carrier or the carrier’s authorized agent commits an administrative violation if the carrier or agent violates any provision of this section. Any administrative penalty assessed under this subsection shall be assessed against the carrier, regardless of whether the carrier or agent committed the violation.
(i) Notwithstanding Section 1305.003(b), Insurance Code, in the event of a conflict between this section and Section 413.016 or any other provision of Chapter 413 of this code or Chapter 1305, Insurance Code, this section prevails.
Added by Acts 2011, 82nd Leg., R.S., Ch. 705, Sec. 3, eff. June 17, 2011.
©J&L Risk Management Inc Copyright Notice
Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn

Table of Contents

Related...

James Moore

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications

Subscribe

Get the latest workers' comp news FREE!

Name
This field is for validation purposes and should be left unchanged.