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Texas Department of Insurance Budget Reduction Plan

February 23, 2010                                                   Bulletin 2010-No. 02



On January 15, 2010, Governor Rick Perry, Lieutenant Governor David Dewhurst, and House Speaker Joe Straus asked state agencies and state institutions of higher education to identify a five (5%) percent reduction to their 2010 - 2011 General Revenue and General Revenue-Dedicated appropriations. The Texas Department of Insurance has posted on its website the five (5%) percent Budget Reduction Plan for the 2010-2011 Biennium. 


The Texas Department of Insurance Budget Reduction Plan (Plan) will materially affect Texas’ injured workers’ covered by workers’ compensation insurance.   The Plan provides for a reduction in full time equivalent (FTE) personnel in the Division of Workers’ Compensation (DWC) Field Operations (FO), the Records Management and Support (RMS) Section, and in the agency’s administrative support functions.  The reduction of personnel in the FO and RMS purportedly will reduce the agency’s budget by $2,129,890.


The FO reduction most likely will delay the processing of requests from injured workers for official actions such as injured workers’ requests to change treating doctors, accelerate income benefits, conduct dispute proceedings. This will likely adversely affect injured workers’ access to medical care, delaying the resolution of disputes, and potentially, the delivery of medical and indemnity benefits to injured workers’ by insurance carriers. The reductions will also delay approval of advances of income benefits, creating a financial hardship for injured workers.


The reduction will increase the time to process inquiries and complaints and other official actions. FO reductions may also adversely affect DWC’s ability to monitor workers’ compensation insurance carriers and detect violations of statute and rules.


The RMS reduction may result in backlogs of unprocessed records for scanning, data entry, coverage and records storage. This could result in delayed processing of open records requests for claim file and coverage information and requests for employer verifications. Other adverse effects of the RMS reduction include creation of backlogs in scanning and data entry and creating claim records.


The Plan also calls for the reduction of  FTEs in Life, Health and Licensing and in DWC administrative support functions.  This should decrease the budget by $1,027,159. The reduction apparently will prevent replacing/procuring technology; eliminate special projects and actuarial analysis contracts; delay response to external requests; prevent completing mandated studies; impede rulemaking; reduce travel for educating stakeholders; delay new product introductions and may permit noncompliant products in the market; and affect performance measures.


The Plan also calls for the reduction of  FTEs in the DWC Medical Fee Dispute Resolution (MFDR) and Hearing (HRG) programs as well as agency administrative support functions and reduces the agency budget by $1,132,567. The reductions would delay WC indemnity and medical dispute resolution services for some claims, resulting in backlogs of dispute resolution proceedings as well as increase the processing time for medical fee disputes from health care providers and insurance carriers.  Backlogs of proceedings will delay the delivery of benefits to injured workers causing financial hardships and hindering prompt medical care. Eliminating MFDR staff may affect the quality of communication to system participants regarding appropriate medical billing practices. Reducing communications regarding appropriate billing practices to system participants may actually result in an increase in medical fee disputes and an increase in needed MFDR resources to resolve those disputes in the future. DWC may not be able to meet statutory timeframes for conducting benefit review conferences (BRCs) and contested case hearings (CCHs). Reductions would curtail quality control programs that ensure the consistency and quality of hearings decisions across regional field offices in Texas. The reduction could result in a delay or curtailment of CCHs for retrospective medical necessity disputes, medical fee disputes and prospective medical necessity (i.e., preauthorization) disputes. Delays in these disputes may directly affect an injured worker’s access to reasonable and necessary medical care for the work-related injury and may indirectly affect health care providers’ willingness to treat workers’ compensation patients.


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