Eyes on Texas

12.03.2014

By Joan E. Collier

The Texas Division of Workers’ Compensation has issued its biennial report to the Legislature, declaring that “while additional improvement can always be made, the system as a whole is stable.”

To support that claim, it points to significant improvements that it traces back to the 2005 system overhaul. Among the positive findings in the report:

Also, with the passage of tort reform legislation in 2003, more physicians have set up active practices in Texas. This influx of new physicians, says the report, resulted in an increase in the number of physicians treating workers’ compensation claims from 2005 – 2012 (from 17,219 physicians treating workers’ compensation claims in 2005 to 18,063 physicians treating workers’ compensation claims in 2012). In 2005, there were approximately 19.3 workers’ compensation claims per treating physician compared to 16.1 claims in 2012 and 16.5 in 2013—a 15 percent decrease. With this improved ratio, approximately 81 percent of injured employees received initial medical care either on the same day of injury or within seven days in 2013, up from 74 percent in 2000.

On the negative side, the DWC says it needs to work on decreasing the number of designated doctor disputes, improving injured employee education and outreach, and reducing the high number of work-related fatalities. Also, the percentage of medical-only claims receiving impairment rating examinations increased from 65 percent in 2005 to 72 percent in 2012.

Medical costs per claim are up, but the report blames that on the annual inflation factor in the Medicare Economic Index. It also points out that, when compared to other states, Texas has experienced significant reductions in medical costs per claim as a result of the 2005 reforms. In 2001, Texas had the highest costs in that area among 16 states. By 2010, it was almost 23 percent below the median costs of those same states.

The report especially applauds one piece of the 2005 reforms—the adoption of the pharmacy closed formulary. Under this process—which took effect for new claims with dates of injury on or after Sept. 1, 2011, and for older claims on Sept. 1, 2013—prescriptions for drugs that are excluded from the formulary require pre‐approval from the insurance carrier before they can be dispensed. The closed pharmacy formulary includes all FDA approved drugs, except for investigational and experimental drugs and excludes drugs listed as “N” drugs (or “not recommended” drugs) in DWC’s adopted treatment guidelines, the Official Disability Guidelines: Treatment in Workers’ Comp, published by the Work Loss Data Institute.

The report says that, using this formulary, total pharmacy costs for 2011 were reduced by 15 percent (approximately $6 million) when compared to 2010 claims. Prescription drug costs attributed to not‐recommended (“N”) drugs for 2011 claims were reduced by 82 percent when compared to 2010 and the average “N” drug cost per claim was reduced by almost half. The report further notes that the frequency of “N” drug prescriptions being dispensed to injured employees was reduced by 75 percent from 2010 to 2011. Additionally, the frequency of all opioid prescriptions was reduced by 11 percent and the frequency of “N” drug opioids was reduced by 64 percent between 2010 and 2011.

The report acknowledges some tweaking of the system may be in order, but says that given the magnitude of the legislative reforms that were passed in 2001 and 2005 and the results of those reforms, it is not recommending significant legislative changes at this time. Indeed, its very short list of recommendations (two) calls for raising the reimbursement for burial benefits payable under the Workers’ Compensation Act from $6,000 to $10,000, and establishing a pilot safety reimbursement program for small employers.

Good to know that's all that W. Ryan Brannan, the Commissioner of Workers’ Compensation, sees as needing to be fixed.

Too bad that not everybody agrees with him.

If you’re interested in a contrasting point of view, you might want to read “Hurting for Work,” published in June by The Texas Tribune, and “Texas’ workers comp system is still broken,” published in August by The Dallas Morning News.

Both articles take the system to task for the very heart of its program, the opt-out feature. Texas, says The Tribune, “is the only state that doesn’t require any private employer to carry workers’ compensation insurance or a private equivalent, so more than 500,000 people have no occupational benefits when they get injured at work.” It also finds significant fault with the system even when employers opt in, noting that “nearly half of all employee claims are initially denied or disputed in whole or in part, and when those denials blossom into a major disagreement before the Texas Division of Workers’ Compensation, workers lose most of the time … “

With a push by some regulators/office holders and organizations for other states to consider a similar opt-in opt-out type of system, eyes will remain on Texas and its unique approach to workers’ compensation coverage.

(See more Work Comp Nation blogs here.)

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