Report on TDI's May 1, 2006 WC Working Group Meeting

Saturday, May 20, 2006 | 0

On May 1, 2006, The Texas Department of Insurance (TDI) Workers' Compensation Working Group (WCWG) met. The agenda for the WCWG meeting is available at the following TDI website link: http://www.tdi.state.tx.us/consumer/wcwg501.html#agenda.

Panel Discussion on PPOs

Audrey Selden, TDI's Senior Associate Commissioner for Consumer Protection, welcomed the audience and panelists and reviewed the antitrust statement and ground rules. The PPO panelists introduced themselves and the members of the Workers' Compensation Working Group and Technical Advisory Committee on Claims Processing in the audience were recognized.

Jennifer Ahrens, TDI's Associate Commissioner of Life, Health & Licensing, explained that the purpose of the panel is to provide basic information about PPOs and their role in managed healthcare and to discuss "silent" PPOs and other issues of concern.

Key points from the presentations are summarized below:

* A PPO or preferred provider organization is a group of health care providers that agrees to offer services to a given employer or insurer at a lower cost in return for a stable volume of patients or other incentives (referred to as "steerage"). There are about 1,000 PPO networks in the US; a very few specialize in workers' compensation (WC).

* A "silent" PPO buys, sells, leases or otherwise transfers provider discounts without regard for steerage of patients to preferred providers. The provider has no knowledge that a contract the provider signed with one PPO has been "sold" to another vendor.

* TDI has authority over insurers and third party administrators, as more specifically described in the PowerPoint slide presentation "Silent PPOs". PPOs are not licensed or regulated by TDI. Fourteen states have laws that address the "silent PPO" problem in some manner.

* Recent legislation gives TDI authority to promulgate rules regarding a carrier's or TPA's ability to reimburse providers who participate in a workers' compensation health care network. TDI certifies WC networks, and as part of the certification, reviews contracts, so WC networks are subject to more scrutiny. Some parties argue that, in Texas, there is clear legislative intent to regulate the discount of provider services.

* HealthSmart is an example of a PPO that is a "rental network." In this model, the PPO contracts with providers to create a "panel," then the PPO "sells" the panel to a payer (insurer, self-insured business, etc.) who does not have an in-house provider network. The provider sends the claim to the PPO; the PPO's logo and information is on the patient's ID card. Then the PPO re-prices the claim and sends it on to the payer. The payer adjudicates the claim and sends the payment to the provider.

* In addition to contracting with providers, selling access to provider panels, and re-pricing claims, PPOs may also credential providers and handle provider relations. PPOs do not assume risk. Typically they do not pay claims and are not involved in utilization management, or determination of benefits and coverage; these functions are performed by the payer.

* PPOs play an important role in the health care market by allowing for competition, especially in the individual and small group markets. PPOs compete based on the quality of their networks, their efficiency, and cost savings. Because they foster competition, they help assure quality of care and access to care.

* According to one panelist, the majority of organizations that function as "silent" PPOs are, in fact, the largest PPOs. The buying/selling of discounts exists because of out-of-network claims. For example, if about 90 percent of claims are in-network, then 10 percent are out-of-network and not covered by a discount. So the payer is looking for discounts to cover as much of the 10 percent as possible. Because payers are willing to "buy" discounts that will cover the out-of-network claims, there is a market for buying/selling discounts. The system is based on a "codependency": providers depend on payers to pay claims; payers can't provide affordable health care without PPO discounts; and PPOs must contract with providers in order to have a "product" to market to payers.

* There are databases that contain providers' tax ID numbers linked to their PPO contracts and discounts. Silent PPOs have access to these databases and market their ability to find the "best" i.e. deepest discount to payers. When the silent PPO receives the claim, it finds the deepest discount in the database, re-prices the claim, and sends it to the payer.

* Providers are hurt the most by silent PPOs because they are being paid either less than the amount for which they contracted if the "incorrect" discount is applied, or less than billed services if no discount is actually supposed to apply; either way, money is coming "out of" providers' pockets. Also, consumers can get caught in a payment dispute between the provider and payer.

* Providers have developed strategies for dealing with silent PPOs. For example, some providers will honor only the contract rate that matches the logo on the patient's ID card. If another organization pays the claim at a different rate, then the provider will not honor the discount. The provider may go back to the network or to the patient in order to get paid the appropriate amount.

* Providers pay a lot to collection agencies to match payments to claims in order to identify the "blind" discount and resubmit the claim to get paid what they should have been paid. If the problem persists, the provider may terminate the contract with the payer. Large providers, such as hospitals, have some leverage, while solo practitioners generally have none.

If a vendor calls a provider and asks "will you take a discount on this claim," the provider can say no or yes.

* A panelist suggested that an approach would be to control claim re-pricing; that is, the claim can only be re-priced by the PPO network with which the provider has the contract.

* Some providers urge TDI to adopt rules to require separate, signed contract amendments to authorize the sale, rental, or lease of the provider's discount each time the discount is brokered.

* Regarding the difference between a silent PPO and an informal network, an informal network is a "fee for contract" arrangement. Please see Commissioner's Bulletin Nos. B-0071-05, dated December 7, 2005, and B-0005-06, dated February 27, 2006, for more specific information regarding informal networks.

* To avoid these problems in the new WC networks, the network certification process is rigorous and may eliminate the "blind" discount problem. WC providers should be diligent. If they are paid something other than their contracted rate they should complain to TDI.

Some WC providers urge the use of an ID card or similar identifier for WC patients as a way to assure providers that the patient is "in" the WC network and the provider will be paid appropriately, and to build providers' confidence in the new WC networks. Others say ID cards will not work for WC; instead, provide information to workers as needed, and make sure adjusters are informed and review claims before they are sent to the payers.

The WCWG members requested that future panels of PPO entities include a PPO that participates in workers' compensation.

In conclusion, Audrey Selden said that TDI would invite the panelists back for a further discussion about how to address the issues raised.

Update on Networks

Jennifer Ahrens, TDI's Associate Commissioner of Life, Health & Licensing, announced that, because of the discussion at previous WCWG meetings and concerns expressed by some of the WCWG members, TDI has made a policy decision that any network configuration should be certified via a separate application. This means that each network will have a certification number; there will be no "sub" or "tailored" networks that do not have certification numbers.

Creg Parks, Chief Executive Officer of Physicians Cooperative of Texas (a workers' compen-sation health care network applicant) requested that TDI issue a bulletin regarding this policy decision.

Margaret Lazaretti, TDI's Deputy Commissioner, Health and Workers' Compensation Network Certification and Quality Assurance, noted that there are two certified networks and 21 pending WC network applications with several close to being certified.

Discussion of Draft Proposal of Performance-based Oversight System

Workers' Compensation Commissioner Albert Betts welcomed the group and explained that Division of Workers' Compensation (DWC) staff has prepared an early, general draft for discussion about performance-based oversight (PBO). Commissioner Betts explained that there would likely be a PBO pilot project. He asked the members to listen with an open mind and provide feedback to him and DWC staff. Teresa Carney, the DWC's Acting Deputy Commissioner for Compliance & Regulation, led the discussion of the PBO draft.

Members' comments are summarized below.

General Comments

The WCWG member's general comments included discussion of:

* Make sure everyone understands that PBO is for both WC network and non-network participants.

* Focusing the system on identifying the outliers and poor performers.

* Beware of the danger of using only easy to measure goals, such as timely payment.

* Base the PBO system on one issue, such as return-to-work, for which all participants are accountable and all will be measured.

* Understand that the success of return-to-work is a team effort, requiring all stakeholders to do their part, not just carriers.

* Educate injured workers about return-to-work from the beginning so that they request return-to-work services.

* If the employer has no job for the worker to return to, then that outcome should not "count" against the carrier.

* Consider identifying return-to-work benchmarks for all participants.

* Identify the five biggest problems to solve in the WC system. For example, if the goal is "X", then measure providers for "X", employers for "X", carriers for "X", injured workers for "X", networks for "X" and attorneys for "X".

* Start with the problem we are trying to solve, and build measures around that desired outcome.

* Be more precise about what we are trying to measure.

* When developing the PBO system, focus on it as a tool to help get all participants into the "top tier."

* Ask the WCWG to prioritize the goals.

Goals for Insurance Carrier PBO

Teresa Carney, the DWC's Acting Deputy Commissioner for Compliance & Regulation, led a discussion on insurance carrier performance-based oversight.

The WCWG discussed the following issues and concepts:

* Focus on overall performance, not occasional errors. Regarding quality of the data submitted to TDI, consider using a percentage or weighting scheme, for example, if 10 percent of the data is not valid, then the carrier's score is 90.

* Consider appeals and reversals of appeals, not only prospective requests.

* Consider whether disputes were about compensable or non-compensable services.

* Consider the whole claim timeline, not just the date of injury and date first payment was made when determining timely payment. For example, consider when the carrier was notified of the claim, which may be different than the date of injury.

* Set return-to-work benchmarks for certain injuries.

* Include customer satisfaction surveys of the customers that the carrier serves, for example, ask employers, injured workers, and providers to rate the carrier. Have similar sets of surveys for the other system participants.

* Enforce prompt payment to providers.

Goals for Health Care Providers PBO

Teresa Carney, the DWC's Acting Deputy Commissioner for Compliance & Regulation, led a discussion on health care providers performance-based oversight.

The WCWG discussed the following issues and concepts:

* Be clear about how providers will be evaluated.

* Measure return-to-work outcomes by "buckets" not diagnoses codes. Define the buckets by using objective criteria.

* Help providers understand that if the injured worker learns during the course of treatment that there is no job to return to, then that the provider has a role to play in helping the worker understand options available, for example, the worker can get assistance from DARS, etc.

* Beware of setting up adversarial situations between the carrier's doctor and the company's doctor.

* Consider re-instituting fees paid to providers for completing WC paperwork.

Members were urged to send additional comments about the PBO discussion paper to the following TDI e-mail address: wcwg@tdi.state.tx.us.

TDI staff will take the comments and retool the discussion draft.

PBO will be a topic on the next agenda along with follow-up discussion regarding the PPO panel.

Members requested more detail regarding where TDI is at in approving network applications.

Members also asked for a full discussion of return-to-work.

Next Meeting of the WCWG

The next meeting of the WCWG is scheduled for May 24, 1 p.m to 4 p.m., in Room 100 at the Texas Department of Insurance main office building, located at 333 Guadalupe in Austin, Texas.

Republished with permission from the Insurance Counceil of Texas.

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