Controlling Medical Costs and Improving Quality of Care:

Lessons from Texas

Amy Lee, Research DirectorState of Texas Research and Oversight Council

on Workers’ Compensation

What is the Research and Oversight Council on Workers’ Compensation

(ROC)?

• Small state agency with a mission to:

– Conduct objective research on workers’ compensation issues; and

– Make legislative and regulatory recommendations to the state leadership and ROC Board every biennium.

HB 3697 (76th Legislature, 1999) required the ROC to:

• Investigate the quality and cost-effectiveness of

WC medical care in Texas compared to:

– other states; and

– other health care delivery systems in Texas.

Key Findings from HB 3697 Studies Included:

• Texas WC medical costs are higher than other states and other health care delivery systems.

• Medical care utilization is high in areas such as surgery, physical medicine, and diagnostic tests.

• Relatively small proportion of providers, claims and medical procedures are driving costs.

Source: Striking the Balance An Analysis of the Cost and Quality of Medical Care in the Texas Workers’ Compensation System, January 2001.

Average Medical Paid Per Claim, Injury Year 1997

$1,139 $1,214 $1,266

$2,205

$1,408$1,364

$870

$1,817

$1,569

$0

$500

$1,000

$1,500

$2,000

$2,500

KY MN OR GA FL CO CA NJ TXState

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One-Year Post-Injury

Source: Striking the Balance An Analysis of the Cost and Quality of Medical Care in the Texas Workers’ Compensation System, January 2001.

Key Findings from HB 3697 Studies Included:

• Texas workers also receive medical care for longer periods of time, compared with national guideline recommendations and other states.

• More costly and intensive medical care in Texas has not resulted in improvements in worker satisfaction, functional outcomes (i.e., whether the worker got better), or return-to-work outcomes.

Source: Striking the Balance An Analysis of the Cost and Quality of Medical Care in the Texas Workers’ Compensation System, January 2001.

HB 2600, 77th Legislature (2001)

• Grew out of research findings from HB 3697 studies

• Basic findings: Texas pays more but does not get more, resulted in the following policy goals:

– Increased accountability through improved monitoring of all parties;

– More extensive use of medical expertise in agency decision making; and

– Emphasis on outcomes rather than medical costs alone.

A New Model for Quality Enhancement and Cost Control

(Article 1 of HB 2600)

• Registration and training for doctors

• Monitoring for all system participants

• Creation of a Medical Quality Review Panel, new

roles for Medical Advisor

• Collection of outcomes data

• Sanctions and rewards

Four Monitoring Programs Envisioned Under Article 1

of HB 2600:

• Doctor/Health care provider

• Insurance Carrier/URA

• Designated doctor

• IRO medical dispute decisions

(To date 41 doctors and designated doctors have been reviewed by the Medical Quality Review Panel; 24 other doctors pending review.)

Four Components to Each Monitoring Program:

• Data analysis, to identify potential outliers;

• Review of sample cases to determine whether full clinical review is warranted;

• Full clinical review on cases in question; and

• Progressive sanction program may be initiated.

Use of Designated Doctors (DDs) in Impairment Rating and MMI Exams

(Article 5)

• HB 2600 called for:– Use of DDs instead of RMEs in IR and MMI

exams– More flexibility in selecting DDs

• Implementation challenges:– How to use new selection criteria (“trained and

experienced”)– Move to 4th edition of AMA Guides and new

doctor training requirements

Medical Dispute Resolution (Article 6)

• HB 2600 called for medical disputes to be resolved by Independent Review Organizations (IRO) rather than TWCC staff

• Implementation challenges:– Workload shift from agency to IROs– Capacity and concerns of IROs– Payment of IROs: when and how much?– Timeframes for dispute resolution

Medical Fee Guidelines (Article 6)

• HB 2600 called for:– Conversion to RBRVS reimbursement structure;

and– Conversion to Medicare-based payment policies

• Implementation challenges:– How to adopt and adapt Medicare policies– How to set conversion factors (pricing)– Interaction with new utilization control efforts– TWCC’s ability to train staff or obtain outside

medical expertise

Almost Two Years Later, What’s Been Learned?

• Drafting rules are one thing; drafting an implementation plan is another;

• Many concepts are inter-related and should be treated as such;

• Use research findings to prioritize implementation efforts and address key cost drivers first;

• Set realistic system goals for controlling overutilization and improving return-to-work outcomes and publish those goals;

Almost Two Years Later, What’s Been Learned?

• Keep stakeholders working together to reach system goals;

• Anticipate data reporting changes that need to occur before the effective date; and

• Don’t try to do too much at once because it becomes a nightmare to study later.

Contact Information

Research and Oversight Council on Workers’ Compensation

9800 N. Lamar Blvd., Suite 260 Austin, Texas 78753

(512) 469-7811, Fax (512) 469-7481

Email: info@roc.state.tx.us Website: www.roc.state.tx.us