Division to Move Forward with PBO

The Texas Department of Insurance, Division of Workers’ Compensation will go forward with the Performance Based Oversight process as scheduled, according to Commissioner of Workers’ Compensation Cassie Brown. Commissioner Brown made the announcement during the August 26, 2020 quarterly carrier meeting held by Zoom this week.

Commissioner Brown told carriers to expect their preliminary results to be delivered to their Austin Representatives August 28, 2020. System stakeholders have wondered whether the PBO process might be delayed or eliminated altogether because of the CoVID-19 pandemic. Those changes do not appear to be happening.

Commissioner Brown did not completely rule out the possibility that the agency would make some accommodations to carriers in light of the pandemic. She only conceded, however, that the Division was “currently evaluating options on how to deal with PBO under CoVID and new methodology.”

PBO is a statutorily mandated evaluation of insurance carrier performance in the Texas workers’ compensation system. It is required to take place every two years. A similar review process takes place biennially for health care providers who practice in the system.

Preparing the Management Response

After preliminary findings are distributed, carriers will have until October 5, 2020 to prepare and return their management responses to the Division. Following the preliminary determination of PBO status, carriers are entitled to challenge two of the five categories.

The first data element (timeliness of the initial payment of TIBs) is the element that causes the most work for carriers and DWC staff. This is because the data collected by the Division is unreliable and must be verified manually by carriers and the Division (where the carrier challenges the reliability of the Division’s data).

The data is unreliable because the Division’s system does not capture the 8th day of disability. You cannot measure whether an initial TIBs check is timely without that payment. So, carriers spend an inordinate amount of time during the PBO process trying to determine whether potential late payments are truly late or only look late because they were delayed lost time or split lost time cases.

Then the carriers must manually collect the documentation to support their positions and defend their challenge with SMO. DWC staff must then review the carrier’s challenge, verify or reject the data upon which it is based, and recalculate the carrier’s preliminary score.

For the same reason, the Division will also permit a challenge to the timely reporting of the IP record during this process.

The Division will not entertain a challenge to the preliminary determination of the medical bill processing data or disputes regarding the request for reconsideration data element. The Division believe that carriers should have already re-submitted an erroneous medical bill data prior to the preliminary determination.

The Weighted Measures

While the Division will evaluate carriers using the same weighted measures as in past years, the agency adjusted the weight allocated to those measures to place greater emphasis on timely initial payments of temporary income benefits and less prominence on EDI data reporting. Those reallocated measures will likely remain in effect according to the Commissioner’s comments.

For this year’s PBO review, the weighted measures will be reflected as follows:

1. 1. Timely payment of initial Temporary Income Benefits by the insurance carrier – 50% weight (up from 40%)
   2. Timely processing of initial medical bills by the insurance carrier – 30% weight
   3. Timely processing of request for reconsideration medical bills by the insurance carrier – 10% weight
   4. Timely submission of Initial Payment data via Electronic Data Interchange (EDI) – 5% weight (down from 10%)
   5. Timely submission of Medical Bill Processing data via EDI – 5% weight (down from 10%)

The Purpose and Process of PBO

PBO assessments are conducted by underwriting company, not by group or by TPA. Carriers and TPAs should review their internal procedures with an emphasis on compliance with the five measures set out above.

The PBO data time frame for the 2020 assessment ran from January 1, 2020 through June 30, 2020. The data sources used to assess performance of the above measures will come from the claim and medical data submitted electronically via EDI to the Division. The final PBO results will be posted in January 2021.

The final PBO results will place carriers into one of three regulatory tiers that distinguish among poor, average, and high performers in the system. Those assessed are deemed to have an impact on the system due to their volume of filings or initiation of benefit payments. The TDI-DWC is not asserting that high volume has a negative impact on the system. Those insurance carriers who are not assessed due to low volume are not absolved from regulatory duties or regulatory oversight when necessary.

In placing the selected entities into regulatory tiers, the Division will conduct several steps to place each insurance carrier into an overall tier. The first step is to calculate the performance score (percentage) for each measure. Next, the performance score for each measure will be multiplied by the assigned weight value – the value is rounded up. This calculation of two percentages will then be multiplied by 100 to obtain a weighted value – the value is rounded up. The weighted value of each measure will then be added together to calculate the score – no rounding.

The final score will identify the overall performance standard for the assessed entity. The performance standards are:

High Tier: 95 or greater

Average Tier: 80.00 through 94.99

Poor Tier: 79.99 or less

If you have questions about the PBO process, please feel free to contact James Sheffield, Steve Tipton or Bobby Stokes in our office.