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Workers' Compensation Networks Informal Working Group (May 1, 2006)

May 1, 2006
1 p.m. to 4:30 p.m.
Hobby Building - Room 100

Goals of the workers' compensation system of Texas

  • Each employee shall be treated with dignity and respect when injured on the job;
  • Each injured employee shall have access to a fair and accessible dispute resolution process;
  • Each injured employee shall have access to prompt, high-quality medical care within the framework established by the Texas Workers' Compensation Act;
  • Each injured employee shall receive services to facilitate the employee's return to employment as soon as it is considered safe and appropriate by the employee's health care provider.

Agenda - May 1, 2006

Agenda Items Presenter
  • Antitrust statement
  • Review of ground rules

Albert Betts
Division of Workers' Compensation

Audrey Selden
Senior Associate Commissioner
Consumer Protection

Margaret Lazaretti
Deputy Commissioner, Health and Workers' Compensation Network Certification and Quality Assurance

  • Panel discussion on PPOs
    1 p.m. to 3 p.m.

Jennifer Ahrens, Associate Commissioner
Life, Health & Licensing

Reagan Bruce, Senior Vice President
HealthSmart Preferred Care

Devin Zakrzewski, Senior Vice President,
Provider Relations, Texas True Choice

Cade Havard, Chairman, CEO
Ecom PPO.com, Inc.

Chuck Neff, Director of Pain Medicine
Services and Managed Care
Pinnacle Partners in Medicine

Dave Cripe, Director of Pricing
Seton Healthcare Network

  • Update on networks
    • Applications
    • Outreach update

Margaret Lazaretti

  • Discuss draft proposal of performance-based oversight system

Teresa Carney
Acting Deputy Commissioner
Compliance & Regulation

  • Open discussion
  • Next meeting: May 24, 2006

Meeting Minutes - May 1, 2006

Panel Discussion on PPOs

Audrey Selden welcomed the audience and panelists and reviewed the antitrust statement and ground rules. Panelists introduced themselves. Members of the Workers' Compensation Working Group and Technical Advisory Committee on Claims Processing in the audience were recognized. Jennifer Ahrens 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.

Panelists are listed below. To view the PowerPoint slides used by four panelists as handouts, please click on the link next to the panelist's name.

Jennifer Ahrens, Associate Commissioner, Life, Health & Licensing | PowerPoint
Reagan Bruce, Senior Vice President, HealthSmart Preferred Care
Devin Zakrzewski, Senior vice President, Provider Relations, Texas True Choice | PowerPoint
Cade Havard, Chair, CEO, EcomPPO.com, Inc. | PowerPoint
Chuck Neff, Director of Pain Medicine Services and Managed Care, Pinnacle Partners in Medicine | PowerPoint
Dave Cripe, Director of Pricing, Seton Healthcare Network

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, then 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.

Regarding how 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.

Some requested that future panels of PPO entities include a PPO that participates in WC.

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

Update on networks

Jennifer Ahrens announced that, because of the discussion at the WCWG meetings and concerns expressed by 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 requested that TDI issue a bulletin regarding this policy decision. Margaret Lazaretti noted that there are two certified networks and 21 pending WC network applications with several close to being certified.

Discuss draft proposal of performance-based oversight system

Albert Betts welcomed the group and explained that staff have prepared an early, general draft for discussion about performance-based oversight (PBO). He explained that there will likely be a PBO pilot project. He asked the members to listen with an open mind and provide feedback to him. Teresa Carney led the discussion of the PBO draft. Members' comments are summarized below.


  • Make sure everyone understands that PBO is for both WC network and non-network participants.
  • Focus the system on identifying the outliers
  • the 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, for example. 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 __________________, then for providers measure __________, for employers ___________, for carriers ___________, for injured workers ____________, for networks __________ and for attorneys ____________.
  • 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 Carriers

  • 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 __ percent of the data is not valid, then the carrier's score is __.
  • 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 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. For example, if a worker has ___ injury, then the work should by return-to-work by ___ date.
  • 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 Providers

  • 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 versus 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 wcwg@tdi.texas.gov. TDI staff will take the comments and retool the discussion draft. PBO will be a topic on the next agenda along with followup discussion regarding the PPO panel. Members requested more detail regarding "where we are" in approving network applications, for example, how close are some etc. Members also asked for a full discussion of return-to-work.

Next meeting: May 24, 1 p.m to 4 p.m., Room 100.

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Last updated: 10/20/2015