DWC Tweaks PBO, which begins January 1, 2020

The Texas Department of Insurance, Division of Workers’ Compensation has announced changes to the PBO oversight process for the first time in more than five years. The Division will retain the same weighted measures, but has 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.

For this PBO review, the weighted measures will vary as follows:

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%)

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.

In addition, the Division will not announce which underwriting companies will be selected to participate in the PBO process until after all of the data has been collected. Large companies will certainly be included in the process while mid-sized or smaller carriers will not know whether they will be evaluated under PBO until after the data assessment time frames have expired. The PBO data time frame for the 2020 assessment will run 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 TDI-DWC will have 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 TDI-DWC 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 Division will issue a preliminary determination. Following the DWC’s preliminary determination of PBO status, carriers are entitled to challenge two of the five categories. This is described below.

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 final score will identify the overall performance standard for the assessed entity. The overall performance standard is defined below.

The final scores will be placed into three regulatory tiers based on pre-determined performance standards that distinguish among poor, average, and high performers in the system.

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.