State Office of Risk Management Response to the 2003 State Health Care Claims Study
State Office of Risk Management (SORM) Comments on the Comptroller’s Draft “2002 State Health Care Claims Study Section III – State Employees Workers’ Compensation Study”
Pg. 58, Paragraph 3: Bills are submitted to SORM’s Medical Cost Containment Vendor, Argus Services Corporation, to process for payment. Analysts in Austin process the bill payments and consult with a Licensed Vocational Nurse to determine the medical necessity of each treatment. During a tour of Argus on September 13, 2002, Argus staff told the Comptroller’s office project team staff that the bill processing analysts do not use the TWCC treatment guidelines when reviewing the medical bills for payment.
SORM Comments – At the time thestudy sample was drawn, bills sent to Argus were first sent through an automated review for compliance with the Texas Workers’ Compensation Commission (TWCC) fee guidelines. After the automated review, registered nurses and adjuster auditors reviewed the bills for final recommendations for payment. This final review included consideration of TWCC treatment guidelines in effect on that date.
SORM has contacted Argus Services Corporation (Argus) in reference to the statement made to the Comptroller’s office project team that Argus’ analysts “do not use the TWCC treatment guidelines when reviewing the medical bills.” SORM’s contract with Argus requires that “All bills for medical care incurred on a workers’ compensation claim are evaluated in accordance with the rules and guidelines as established by the Texas Workers’ Compensation Commission,” which includes the treatment guidelines in effect during the sample period. Argus has assured SORM that relevant treatment guidelines have been considered in processing SORM’s bills.
At SORM’s request, Argus has prepared a report which indicates that 215 items during 2001, including 18 items during the sample period, were denied because the listed treatment exceeded the treatment guidelines. This report appears to directly contradict the statement reported by the study.
When the TWCC treatment guidelines were abolished in January 2002, Argus began using InterQual guidelines. Identification and use of a relevant, “nationally recognized, scientifically valid, and outcome-based” treatment guideline was agreed to by SORM and Argus in response to TWCC’s failure to establish such a guideline as required by HB2600 (77th Legislature). As with TWCC’s guidelines, the InterQual guideline provides “some evidence” of the appropriateness of the listed treatment, and when viewed in context with the other evidence in the case, can be used to show that the treatment was not reasonable or necessary under the Act.
SORM suggests that the confusion over the use of treatment guidelines may have been related to the timing of the question presented by the project team. When the team was told that Argus did not use the TWCC treatment guideline during a tour of the Argus facility in September 2002, the TWCC treatment guideline had been abolished for over nine months pursuant to HB2600 (77th Legislature).
Pg. 58, Paragraph 3: Only the TWCC fee guideline’s maximum payment limits are coded into the Argus bill processing system to set the allowable payment.
SORM Comments – SORM respectfully suggests that the statement is unclear and seems to suggest that Argus has selected a “maximum” payment limit to code into the bill processing system as opposed to a “minimum” limit.
The Argus system uses the exact value prescribed for individual CPT code values as determined by the fee guideline for that code. Application of the treatment guideline is a manual process conducted by Argus staff.
Pg. 58, Paragraph 3: Argus sends completed explanation of benefit statements to SORM on each workday. SORM adjusters review the statements and confirm the payments.
SORM Comments – Unfortunately, SORM does not have sufficient staff or resources for SORM adjusters to review all explanations of benefits (EOBs). The adjusters are made aware of a recommended payment of a bill only if one of two conditions exit: 1) if the adjuster had set a Medical Bill Review flag (MBR) in the claim file record on CMS; or 2) if a recommended payment amount exceeds $5,000.00. In these situations, SORM’s medical cost containment unit reviews the bill and consults with the adjuster, and/or the supervisor, to determine if payment should be made.
Pg. 58, Paragraph 4: SORM employs adjusters who monitor and settle all injury and illness claims and bills. In the summer of 2002, in response to a Comptroller’s January 2001 Health Care Claims study recommendation, SORM Claims Operations management implemented Medical Management Review Teams. These Teams consist of a senior adjuster, registered nurse and adjusters. The adjusters contact employees, the employee’s physicians, and the employing agencies when SORM receives notice that a state employee has been injured. The review team also identifies and handles claims that may have excessive medical treatments compared to the injury, treatments not related to the injury or potential fraud or abuse. In April 2002, SORM created a Customer Service Call Center staffed by adjusters who perform administrative functions, such as correcting claim information, and assist claimants with issues, such as finding an appropriate physician or therapist, related to state employees’ injury claims.
SORM Comments –The primary function of a SORM adjuster is to monitor and “adjust” injury and illness claims. They are involved in medical payment decisions only when using a MBR flag, pre-authorization, or bills with recommended payments that exceed $5,000.00. SORM’s budgetary constraint on staffing and the resulting high caseload per adjuster does not allow SORM the luxury to have the adjusters review all medical bills.
SORM has established only one medical management adjusting team. The Medical Management Team (MMT) currently consists of a claims supervisor, a senior adjuster, two registered nurses, one licensed vocational nurse and one medical technician. This team primarily focuses on the more complex and aged claims where ongoing medical treatment is a concern. One RN on the team is dedicated to Triage Case Management/Early Intervention in all claims where an injured state employee is losing time from work due to disability. Tasks include verifying a treatment plan, the claimant’s current status, and regimen of treatment in those claims that demonstrate potential problematic issues. This information is then coordinated with the handling adjuster. While the specialized skills of the nursing staff may be utilized in cases involving fraud by a medical provider, all staff and adjusting teams are responsible for identifying and pursuing potential fraud and abuse.
SORM’s Call Center is made up of administrative technicians that are adjuster trainees who perform administrative functions and assist with claimant issues. This enables claims handling adjusters more time for claims adjusting. This innovation was introduced to improve SORM’s ability to provide better quality customer service to injured state workers. In addition, this innovation partially offsets the high adjuster caseloads which were exacerbated by our initiative to provide more attention to “closed and inactive” cases which were incurring expenses without adjuster scrutiny.
Page 58, Paragraph 5: Argus is also paid to process pre-authorization requests and provide claimant’s clinical oversight, which is also called case management service.
SORM Comments – Argus Services is paid to handle pre-authorization requests for SORM. In their Dallas office, registered nurses review medical services requested by health care providers for medical necessity as related to the compensable injuries. Clinical justification for approvals and non-approvals are also provided. This clinical oversight function is a separate function from the nurse case management service Argus provides.
Page 58, Paragraph 5 - Argus employs licensed nurses as case managers at their Dallas headquarters who work with injured workers and their health care providers to ensure that state workers receive the care they need in a cost-effective manner. This case management service is limited to employees who have suffered the more catastrophic and costly injuries, such as a spinal cord or brain injury.
SORM Comments – Argus provides two separate nurse staffs, one associated with pre-authorization and one associated with case management. The case management team is based in Houston while the pre-authorization team is based in Dallas.
While case management is administered from Houston, much of the direct client work is performed by staff scattered throughout the state and closer to the injured workers.
SORM has expanded the role of case managers to better control system costs. In the 1,000 hours of case management services provided by certified case managers, services included but were not limited to catastrophic claims, spinal cord injury claims, one time field contacts of less severe claims, field contacts with treating doctors and telephonic case management.
Pg. 59, Paragraph 4: Beginning on September 1, 2002, the health care providers were reimbursed according to the federal government’s payment policies, as outlined in H.B. 2600.
SORM Comments – The new medical fee guideline outlined in HB2600 (77th Legislature) did not go into effect on September 1, 2002 as expected. The Travis County District Court entered a temporary injunction prohibiting the planned implementation in Texas AFL-CIO and Texas Medical Association vs. Texas Workers' Compensation Commission, Cause No. GN-202203, 126th Judicial District of Travis County, Texas. A planned hearing on a permanent injunction scheduled for January 2003 has been postponed indefinitely by the court. SORM has no further information on when, or if, this important reform will be effective.
Pg. 59, Table III-2: Pre-authorization of Medical Services - Denying unreasonable or unnecessary procedures prior to treatment. Argus reported savings to SORM as estimates. SORM is working with Argus to develop a more accurate methodology for tracking and reporting these as true saving instead of estimates.
SORM Comments – Total savings as the result of a denied procedure are by their nature speculative, and Argus is currently unable to match subsequent re-submittals which are later approved, as when necessary documentation is provided. At SORM’s request, Argus has been exploring software to quantify savings as a direct result of the pre-authorization of medical services but have been unable to identify an existing software package that would accurately quantify direct pre-authorization savings.
Pg. 60, Table III-2, Claims Operations- Medical Management Teams consisting of a supervisor/senior adjuster, registered nurse and skilled adjusters review claims with high numbers of medical bills. These teams look for excessive use of medical treatments, treatments not related to the injury and potential fraud or abuse.
SORM Comments –The study should use the word “Team” not ”Teams.” Only one MMT has been established. The MMT consists of a claims supervisor, a senior adjuster, two registered nurses, one licensed vocational nurse and one medical technician. As the team has just recently been fully staffed, SORM anticipates this team to be extremely effective in bringing these claims under better control, with the end result being the eventual closing of these claims. SORM will be tracking the outcomes and results of this team. See also SORM Comment, Pg. 58, Paragraph 4
Pg. 61, Paragraph 1: The Comptroller’s study measured the incidence of potential overpayments, including occurrences of fraud and abuse in the Texas State Employees Workers’ Compensation program. An overpayment is a payment for a service that does not follow or exceeds the published rules or guidelines of the Texas State Employees Workers’ Compensation program.
SORM Comments – The definition of “overpayment” used in the report is inconsistent with the usual meaning of the word, is overbroad, and inflates the Dollars at Risk in a manner not supported by the evidence. Though the study measured only “potential overpayment,” the balance of the study refers to all discrepancies thereafter as “overpayments.”
An overpayment occurs when SORM pays more for a service than is allowed by TWCC. Under the definition used in the report, if SORM underpaid a medical bill (a payment that did not follow the rules or guidelines), the underpayment is by this definition an overpayment. A medical payment can be in excess of the treatment guideline yet still be medically necessary if the medical treatment provided is justified to reasonably cure or relieve the effects of the compensable injury. This is a judgment call based on the medical evidence available at the time.
SORM appreciates the guidance the Comptroller offers in the context of this fraud study to examine and improve other aspects of our business process, but disagrees with the study to the extent that it attempts to identify alleged discrepancies in the adjusting process as overpayments. The study design does not include consideration of the entire claim which is necessary to determine if a discrepancy ultimately resulted in an overpayment. SORM would refer the Comptroller to its 2000 Texas Health Care Claims Study in which it recognized that payments which were potentially in error could only be described as “discrepancies.” SORM respectfully requests that this be clarified to avoid creating an unrealistic expectation for savings.
Payment rules and guidelines are established by the “Texas Workers’ Compensation Commission” and not the “Texas State Employees Workers’ Compensation program” as noted in the study.
Pg. 61, Paragraph 3: The last three studies performed by the Comptroller’s office show that the majority of overpayments are not due to intentional fraud.
SORM Comments – SORM respectfully submits that the last three studies performed by the Comptroller's office do not establish that any of the alleged overpayments are due to intentional fraud, nor that such overpayments are a valid indicia of potential fraud. SORM welcomes opportunities to identify areas in which improvement is necessary and feasible. However, we do feel obligated to note that Government Code Section 403.028 specifically requires the biennial study to determine the number and type of potential fraudulent claims for medical or health care benefits submitted.
After three Health Care Claims Studies, no actionable cases of intentional fraud have yet been documented through the use of this study, nor does the current study provide any specific recommendations with regard to modification of SORM’s fraud control procedures as envisioned by §403.028(e).
SORM agrees with TWCC and the Research and Oversight Counsel on Workers’ Compensation (ROC) that fraud is a significant issue in the Texas Workers' Compensation system. SORM continues to identify and investigate fraud cases through the diligence and skill of its staff and welcomes the opportunity to benefit from the Comptroller's expertise in future Health Care Fraud Studies.
Pg. 61, Paragraph 3: In the future, these overpayments may be easier to control with the implementation of the new TWCC treatment criteria and fee guidelines.
SORM Comments – As referenced earlier the new TWCC guidelines have not been implemented. See fee guidelines Pg. 59, Paragraph 4 and treatment guidelines see Pg. 58, Paragraph 3.
Pg. 64, Paragraph 6: “controversial statements”
SORM Comments – This should read “statements of controversion (denials).”
Pg. 64, Paragraph 7: One of the observations made during this review was time gaps between the case notes and the actual medical events, even though medical bills for surgery and treatment were submitted and paid. In some claims, SORM was paying medical bills on claimants several months and even years after the last case note entry. One claimant was receiving prescriptions in 2002 for an injury that occurred in 1994, when the last case note was from 1997.
SORM Comments – SORM recognizes that adjusters for comparable carriers often review bills and EOBs; however, as stated in our response above to Pg. 58, Paragraph 3, SORM adjusters do not routinely review bills or EOBs due to insufficient numbers of adjusters on staff. SORM’s adjusters are processing excessively large caseloads by industry standards. Due to high claim volume, and limitations on Full Time Equivalents (FTE’s) and budget, SORM adjusting staff carry an average caseload of 284 claims per adjuster, over twice the industry standard of 125 claims per adjuster. The problem is compounded by SORM’s inability to pay a competitive salary to hire and retain highly experienced adjusters.
In the mid-1990’s, SORM established two business practices that have had a major impact on the way claims are adjusted and further impacts current management’s ability to currently address medical claims. In 1993, a study was conducted by Coopers & Lybrand of the Workers’ Compensation Division’s staffing, file controls, efficiencies, and case management practices. One of the many recommendations made included the recommendation that adjusters should not review medical bills, that it was entirely sufficient for the cost containment vendor to “cost contain” the bills. It was felt that the cost containment review process would be sufficient to catch all but a relatively minor few bills that were duplicates or that were improperly paid. Therefore, the decision was made to cease review of medical bills in order to allow the adjusters to concentrate on indemnity issues, which, at the time, were considered to be more substantial than medical issues.
Also in the mid-1990’s, management established another business practice that claims with no lost time activity and no medical activity would be “closed” and those claims where it appeared that only minimal medical activity existed were placed in an “inactive” status with a case reserve of $2,000.00 placed on the claim. If a closed claim again became active, or if an inactive claim’s expenditures exceeded $2,000.00 during the year, the claim was to be activated, and reviewed by an adjuster. This management decision was also an attempt to partially rectify the high caseload to adjuster problem.
In reality, these closed and inactive claims received little or no activity review by adjusters and supervisors, partially because of the continuing high caseloads and partially due to the CMS’s limitations to reactivate and reassign a claim to an adjuster or supervisor for active review. The net effect has been that numerous claims over the past several years were incurring medical expenditures with little or no adjusting activity to manage the costs.
SORM’s current management began to address the closed and inactive claims in 2002 with the establishment of the Medical Management Team. These closed and inactive claims with medical activity are being systematically reopened and reworked by the combination of adjusters and nurses to determine the best possible course of action to address the ongoing medical issues in order to bring these claims to permanent closure.
With regard to the review of all medical bills by SORM adjusters, efforts will be undertaken to review the continued applicability of the 1993 Coopers & Lybrand study.
The presence or absence of a case note at or near the time of the bill is irrelevant to the question of whether the bill was reviewed by an adjuster or whether the bill was paid in error. The primary responsibility for review of those bills rests upon Argus staff, who do not enter case notes in the CMS. It is neither cost effective nor necessary for Argus to enter notes into the case file for every bill reviewed and paid. Records relating to bill payment reviews and decisions are maintained by Argus pursuant to their contract.
SORM agrees that it would be beneficial if adjusters reviewed each medical bill and EOB prior to payment. Increased adjuster oversight would save the state an additional 3 to 10 times the adjuster’s salary every year; however, SORM has not been successful in obtaining legislative approval for a significant increase in our adjusting staff. SORM’s Legislative Appropriations Request for 2004-2005 included an exceptional item request for eleven additional adjuster positions in an attempt to rectify this staffing deficiency.
Treatment Guideline Issues:
Pg. 61, Paragraph 3: The overpayments are due to SORM’s payment of services that exceed the TWCC treatment guidelines, specifically paying for over-utilized services. For example, some services occurred three or more years after minor injuries. In some of these instances, provider and possibly claimant abuse is apparent.
Pg. 65, Paragraph 4: The review criteria for designating potential overpayments were based on the TWCC treatment and fee guidelines in effect for the sample dates of service, 9/1/2001 – 11/31/2001. These guidelines serve as the Texas workers’ compensation program policy and procedure manual for all the insurance carriers and for appropriate program payments.
Pg. 65, Paragraph 5: The TWCC Treatment Guidelines identify the normal course of treatment for injured or ill workers, clarifying services that are reasonable and medically necessary for operative and non-operative care specific to the injury or illness for these physical areas: spinal treatment by a physician (M.D.), spinal treatment by a chiropractor (D.C.), spine treatment testing, and the upper (arm) and lower(leg)extremities. Table III-6 provides an example of these treatment levels.
Pg. 68, Paragraph 1: The majority of the disagreements were with the project team’s use of the TWCC guidelines as a parameter for determining discrepancies, even though these are the rules all insurance carriers processing workers’ compensation claims were required to follow during 2001.
Pg. 69, Paragraph 1: The TWCC Treatment Guidelines identified the normal course of treatment for injured or ill workers, clarifying services that are reasonable and medically necessary for care specific to the injury or illness. Examples of services that exceed the maximum treatment time fore these guidelines found in the study were: ... A total of 29 services for $1,272 exceeded the TWCC treatment guidelines. Some of these services may have been warranted, however, without professional medical utilization or peer reviews, allowing unlimited payment makes it difficult to lower costs.
SORM Comments – SORM reiterates its concern regarding the inappropriate use of the TWCC treatment guidelines as a measure of potential overpayment. The Comptroller acknowledges that some of the services may have been warranted, and yet nonetheless the report mischaracterizes such payments as overpayments. The SORM called this error to the attention of the Comptroller in our comments to the draft report of the prior 2000-2001 Health Care Claims Study. The final report acknowledged that the TWCC treatment guidelines did not represent an appropriate sole basis for denying treatments or services and acknowledged that these guidelines were not mandatory rules. Each treatment guideline rule states, “This document and its parameters serve only as a guideline and shall not be used as the sole reason for denial of treatment and services.” Additionally, “A subset of injured employees will be found to be outside the parameters of this guideline...The Texas Workers’ Compensation Commission treatment guidelines are not to be used as a fixed treatment protocol.” However, the instant 2002-2003 draft report again characterizes these treatment guidelines as inflexible and narrow standards, erroneously stating all carriers are required to follow these guidelines.
Categorizing each such instance as an overpayment implies SORM must dispute each and every treatment or service that ostensibly falls outside the established norms, ignoring the process by which individual cases are evaluated on unique factors to determine if the application of the treatment guidelines is appropriate in each instance. This philosophy also ignores that an injured worker is entitled to life-time medical treatment and has the right to receive the medical care reasonable and necessary to treat a work-related injury or illness without any specific time limit. These factors and the totality of circumstances regarding the injury sustained and treatment received by each state employee are not considered by the reviewer and are not reflected in the draft report.
It appears that in the Healthcare Study, the treatment guidelines are being used as a definitive, rigid rule to determine whether or not SORM should or should not have paid for a treatment or service. It is SORM’s intention to pay for only those services that are medically reasonable and necessary based on the merits of each claim. SORM has only paid for those treatments or services that were medically necessary and were required to be paid for under the existing rules.
Further, it has been our experience that the actual medical dispute resolution process implemented by TWCC generally favors continuing treatment of claimants, and a carrier must present substantial evidence in addition to the treatment guideline before medical treatment is allowed to be discontinued by the medical dispute resolution officers.
The report reflects that 29 of the services exceeded the TWCC treatment guidelines. The report appears to imply that SORM does not make use of professional medical utilization or peer reviews. Depending on the needs of each claim, SORM requests and uses peer reviews and Independent Medical Exams. However, to do so in every claim would not be a prudent use of taxpayer’s dollars nor do the needs of each claim necessitate their usage.
Pg. 67, Paragraph 3: Out of the 1,384 medical services provided, 162 had discrepancies. The majority of the discrepancies were for services that did not have fees that matched the TWCC Medical Fee Guideline. Another common problem was a lack of sufficient documentation for verifying a service or the medical necessity of a service.
SORM Comments – SORM acknowledges errors did occur in many of the instances; in other instances, staff clearly indicated documentation supported the billing submitted. In some cases, the justification for rejecting the request for correction was again the mistaken assumption that the cost containment vendor was not utilizing the treatment guidelines. In others, the determination of the reviewer that the documentation was insufficient has been relied upon even after SORM has provided information to the contrary. SORM respectfully requests that each of these instances be objectively reevaluated. Please find attached a spreadsheet detailing SORM’s position on the remaining disputed allegations of error.
Pg. 68, Table III-8, Exceeds Spine Treatment Guidelines, Testing.
SORM Comments – The Comptroller has conceded that the one discrepancy in this category was properly paid. It appears the total reported should be 0 (zero) instead of 1.
Pg. 69, Paragraph 3: Payment discrepancies in this study include unbundled (separated) services, services not paid according to the TWCC medical or pharmacy fee guidelines and overpayments for incorrect procedure coding. . . . Most of these overpayments can be avoided with improving the claim processing system to enable it to identify procedure codes that are billed incorrectly or inappropriately.
SORM Comments – SORM acknowledges that many of the discrepancies found in reference to global procedures, unbundled services, medical necessity and fee guidelines should have been detected by Argus and in some cases, payment should not have been recommended. SORM will evaluate options to ensure that Argus reviews all claims for medical necessity in the future.
Pg. 69, Paragraph 5: The Comptroller identified 30 services provided with either insufficient documentation or no documentation to confirm the service was actually provided. The Comptroller also found discrepancies in the amounts of time billed and the amount of time in the records. For example, 11 minutes of physical therapy were documented for a 30 minute bill and one hour of therapeutic activities was billed when only 30 minutes were documented.
SORM Comments – SORM relies on Argus to review all services and related documentation to ensure that the documentation substantiates the charges billed prior to recommending payment pursuant to its contract. SORM has discussed this issue with Argus and will require Argus to perform the necessary comprehensive review of documentation prior to recommending payment for services billed. SORM notes, however, that it previously provided a detailed response to the initial draft of the report indicating disagreement with some of the insufficient documentation findings, and has again attached its position for further Comptroller review.
Pg. 70, Paragraph 1 – 2: All the medical necessity discrepancies were for prescription drugs and were reviewed by a peer physician. Most were for medications such as narcotics, muscle relaxants and sedatives billed two to seven years after an injury. One of the cases had bills for anti-depressants, anti-hypertensives and anti-ulcer drugs that were unrelated to a lower back strain.
Thirty services for $2,122 were medically unnecessary. These discrepancies could be avoided with improvements to the claim processing system to enable it to identify prescriptions billed after a specified time from the date of injury. This should be monitored closely particularly in cases where there are no corresponding physician visits to indicate that the claimant is treated appropriately.
SORM Comments – A majority of the pharmacy bills for medications deemed not medically necessary in the study were claims that had been inactivated or closed. Unless the adjuster had entered a medical note for Argus instructing not to pay the bill, the bill would be paid. It would be paid if the medication passed the edit imposed by SORM’s Pharmaceutical Preferred Provider Organization. This edit would compare the medication against a formulary indexed to the compensable injury and would also perform related tests on frequency of fills, etc. As part of the initiative to monitor such issues more closely, SORM’s Medical Management Team is currently handling the closed/inactive claims and seeking peer reviews to determine if medications and treatments should continue or cease. SORM reiterates that injured workers are statutorily guaranteed medical care reasonable and necessary to treat a work-related injury or illness without any specific time limit.
Pg. 70, Paragraph 2: There were many cases, some cited above in the documentation error findings, that Argus had authorized some services without any apparent time or quantity limit. Two claims of this type for seven services worth $108 dollars were found in the sample. One exceeded maximum treatment guidelines by a year. Prior authorization of a treatment is a successful cost containment measure only if time and quantity limits are set at the time of the authorization and these limits are monitored by either the claim processing system or the claims operation staff.
SORM Comments – Argus does not consistently place time limits on services they pre-authorize, they do approve specific services to be performed as part of their pre-authorization process. In one example cited, due to the injured worker’s condition and the clinical rationale given by the requestor, pre-authorization was properly granted. This pre-authorization of services established the medical necessity of the services reimbursed. SORM will work with Argus to ensure that specific time limits be provided in the future.
Pg. 70, Paragraph 5: Many of the errors found are similar to ones found in a process improvement assessment SORM requested from the State Auditor’s Office’s (SAO) Management Advisory Services (MAS) department in October 2001. The purpose of the assessment was to enhance service delivery and business activity efficiencies through an analysis of SORM’s document management (mailroom) and claims operations department.
SORM Comments – SORM has been pleased with the services received from the MAS Study commissioned by SORM. The SAO identified numerous strategies for improving SORM’s operation and reducing the potential risks. SORM is currently working to fully implement those recommendations. However, funding availability is affecting some of the more expensive suggestions.
Pg. 70, Paragraph 6: MAS states that SORM should review and clarify criteria for approving/denying claims, closing or inactivating claims, claim referrals for medical case management or peer review. The application of the TWCC medical fee and treatment guidelines for claims assessment was also considered an area for improvement in SORM’s policies and procedures ...
SORM Comments – SORM is in the process of reviewing and clarifying criteria for approving/denying claims, closing/inactivating claims, and claim referrals for medical case management or peer review. Adjusters now keep claims open at least six (6) months and only when there has been no activity in the claims for at least ninety (90) days may the a claim be closed. Further, when a claim is closed, no reserves are assigned and an MBR flag (Medical Benefits Review) is set to prevent medical payments being made without reopening the claim and the adjuster investigating the bill.
Pg 71, Paragraph 1: treatment guidelines for clams. . .
SORM Comments – Claims is misspelled.
Pg. 71, Paragraph 1: – The most significant information technology recommendation related to the Comptrollers study was establishing automated system controls in the claims management process and programming ... the claim processing system to deny or flag a claim before further payment of medical bills was made.
SORM Comments – SORM agrees that increased use of technical solutions would benefit the claims management process; however, current design of the CMS and programming time allocated for CMS by the Office of the Attorney General would make such changes problematic at best. SORM has requested additional programming time be allocated to address design issues and is actively pursuing the CMS redesign process.
Pg. 71, Paragraph 2: The new payment policies implemented in September 2002 for H.B. 2600 addresses a majority of the discrepancies identified in this study. These payment policies include time limits for medical treatments and limits on procedure codes that can be billed for specific diagnoses.
SORM Comments – While the new Medicaid fee guideline has not been implemented as discussed in our comment at Pg 59, Paragraph 4, SORM agrees that the more stringent payment policies will provide an effective mechanism to limit over-utilization of medical services.
Pg. 71, Paragraph 3: Many of the treatment and coding overpayment discrepancies found during this study can be reduced through software programs either commercially sold or specially coded, that review medical bills for appropriate payments using the new H.B. 2600 payment policies.
SORM Comments – Programming services for the Claims Management System (CMS) are currently provided by the Office of the Attorney General through direct appropriation for administrative support services to SORM. The CMS is a mainframe ADABAS system programmed in Natural. Unfortunately, enhancements to the system are very slow. SORM has many requests for changes to the system that are over two years old. The OAG has limited programming staff dedicated to support their systems, as well as SORM. Integration of a commercial package to assist in administering claims would require OAG programming staff time and would also require purchase of such a package.
SORM has reviewed several commercial packages and has determined that the majority of the systems are designed for integration into relational databases. The current CMS hierarchical database cannot be easily modified to incorporate commercially-available package integration. SORM has made a strategic information technology decision to port the current system from the mainframe to a SORM-maintained Web-enabled client server environment. SORM’s CMS redesign will also incorporate enhanced editing, flagging, and notification capabilities into the system.
Methodology:
Pg. 61, Paragraph 4: Sample Selection
SORM Comments – SORM believes that the sample selected for the study was inappropriate. The 200 random samples are all selected from the September 1, 2001 to November 30, 2001 period. In an analysis of the Fiscal 2002 data trend by month, the mean of the medical bill amount varies month by month. Therefore, any predictions based upon a three-month period will be unreliable.
Pg. 71, Paragraph 7: The overpayment calculation performed by the State Auditor’s Office used the same method applied in the Medicaid Vendor Drug Program Pilot Study to determine of amount of overpayments, the amount paid for the state employees workers’ compensation medical services considered potential overpayments was divided by the amount paid for the sample services.
SORM Comments – SORM is unclear on your reference to the overpayment calculation performed by the State Auditor’s Office.
Since SORM has determined that the three-month sample used in the report is not indicative of the entire year’s claims, SORM suggests that a weight factor needs to be applied to adjust the conclusion based on an entire year of data.
Utilization of a statistically valid weight factor in combination with Comptroller computational formulas significantly lowers both the overpayment ratio and amount at risk.
Pg. 72, Paragraph 4: Recommendation A: SORM should consider contracting with another larger carrier such as Texas Mutual to improve medical bill processing and cost containment. This contract should include specified performance measures with penalties if the measures are not met.
SORM Comments – SORM has had preliminary discussions with Texas Mutual (TMIC) and Texas Association of School Boards (TASB) in this regard. A TMIC representative is involved in ongoing discussions with management and will schedule a meeting with SORM in the near future to address this matter. A TASB representative indicated that TASB may be interested in this effort, but would have to consult with TASB legal staff to determine whether there would be any legal barriers to such an arrangement. Future meetings will be arranged to discuss this matter in more detail since both entities have indicated an interest in potentially providing this service for SORM. The requirement for competitive bid is also a factor that must be considered. Other alternatives, including establishing in-house cost containment capabilities, pooling resources to establish a shared medical cost containment function among SORM and other self-insured governmental entities, have also been considered as we continue to identify alternative solutions.
Pg. 72, Paragraph 4, Recommendation B: SORM should consider enhancing Medical Management Team responsibilities to include: targeted reviews of procedures and providers for identifying abusive billing practices; periodic evaluation of the appropriateness of prior authorizations issued by the cost containment vendor and timely identification of cases that should be managed medically to ensure the claimant receives the appropriate treatment and medical care.
SORM Comments – SORM’s Medical Cost Containment Unit (MCCU) has developed edit tables targeting providers that appear to have abusive billing practices and excessive treatments. SORM recently implemented a program requiring Argus to notify SORM of pre-authorization requests received on claims that have had no activity within the previous six (6) months. This program should enable the adjuster to immediately investigate to determine relatedness to the compensable injury and medical necessity prior to the treatment being approved. The MCCU now reviews all disputed pre-authorization requests approved or denied by the cost containment vendor and ensures all required clinical data is presented to support the decision.
The MMT has identified numerous closed or inactive claims with open reserves with the potential to allow unmonitored ongoing medical treatment. The team evaluates and disputes all medical treatment that does not appear to be medically necessary or related to the compensable injury, if appropriate. In these disputed cases the team develops a strategy for handling the claim and takes action to obtain peer reviews or independent medical examinations at the time of the dispute, in order to defend SORM’s position when SORM’s decisions are challenged through administrative processes provided for in the Texas Workers’ Compensation Act.
Pg. 72, Paragraph 4 Recommendation C: SORM should consider contracting with a physician medical advisor with expertise in the Texas Workers’ Compensation Program to help the Medical Management Teams identify services that are not medically necessary.
SORM Comments – SORM began the process of preparing an RFP to contract with a Physician Advisor and the contracting process had an anticipated completion date of 06/01/03.
Pg. 73, Paragraph 1, Fiscal Impact These recommendations can be implemented with these agency’s current appropriation.
SORM disagrees that recommendations made in this report can be implemented with current appropriations. SORM does not receive direct appropriations for technical support of the CMS; therefore any costs for enhancements would necessarily be borne by the OAG. Additionally, commercial software packages can be very expensive and are typically designed for integration into relational databases unlike the current claims management system.
The creation of SORM’s Medical Management Team incorporated positions previously assigned to other claims adjusting teams already understaffed for the existing workloads. As noted previously, SORM adjusters are responsible for an average of 284 claims while similar operations such as Texas Department of Transportation, UT Systems, A&M Systems, City of Houston and Texas Association of School Boards average approximately 125 claims per adjuster.
The requested State Auditor’s Management Advisory Services recommendations concerning the Document Processing Section presented many positive ways in which SORM could improve its efficiency and effectiveness of service. Currently, 80% of the recommendations were implemented in FY02. Of the recommendations that SORM was unable to execute, all but one were on hold due to budgetary constraints.
Legislative Leadership recently required agencies to reduce FY03 spending by at least 7% and eliminate contracts for professional services.
