State Audit Report Finds Deficiencies
Austin, TX., November, 2010–WorkCompWire–Significant process and information issues at the Division of Workers’ Compensation (DWC) within the Texas Department of Insurance (TDI) significantly inhibit DWC’s ability to monitor the quality of health care in the workers’ compensation system. The issues are in four primary areas:
– Unreliable information.
– Weaknesses in complaint processing.
– Weaknesses in the medical quality review process.
– Weaknesses in the enforcement and sanction process.
These issues increase the risk of (1) injured workers receiving unnecessary medical procedures and (2) overutilization within the workers’ compensation system.
DWC does not maintain reliable information on (1) complaints related to workers’ compensation providers that its Office of the Medical Advisor investigates, (2) Office of the Medical Advisor medical quality reviews of workers’ compensation providers, and (3) Office of the Medical Advisor medical quality reviews that are referred to TDI’s Enforcement Division for sanctions.
The extent and significance of the weaknesses in that information impaired the State Auditor’s Office’s ability to form a conclusion on the audit objective to determine whether TDI issues appropriate and consistent disciplinary orders for workers’ compensation providers that have committed violations or are identified as noncompliant. DWC will need to implement significant corrective action to restore the integrity of the complaint and review information necessary to carry out its responsibilities. Despite the information issues identified, the State Auditor’s Office proceeded with this audit and attempted to assess DWC’s complaint and medical quality review processes to the extent possible.
Weaknesses in Complaint Processing
The complaint review process within DWC’s Office of the Medical Advisor is inconsistent, lacks certain controls, and does not fully comply with the Texas Labor Code. For example, for 52 (70 percent) of 74 complaint files reviewed, there were no documented summaries of the results of the investigations of the complaints. The Texas Labor Code requires the preparation of that summary. In addition, for 54 complaints against workers’ compensation providers that were closed with no further action, DWC’s Office of the Medical Advisor had no documented explanation for closing 44 (81 percent ) of those complaints. The Texas Labor Code requires an explanation of the reason a complaint was closed without action.
Weaknesses in the Medical Quality Review Process
The process DWC uses to select providers for medical quality reviews lacks sufficient policies and procedures and controls intended to ensure consistency and prevent overutilization of health care within the workers’ compensation system. For example:
– DWC asserts that a process outlined in a September 2008 presentation constitutes its policy for provider selection. However, that presentation lacked specific details and served only as a general guide for how DWC should consider selecting providers.
– DWC asserts that its provider selection process is random. However, aspects of that process–such as selecting high-, medium-, and low-utilizer providers and focusing on certain medical areas and billing codes–are not random.
DWC also lacks certain controls to ensure that the medical quality review process itself is consistent, effective, and operates as intended. For example:
– Due to a lack of documentation, it was unclear whether any of DWC’s Office of the Medical Advisor policies and procedures related to medical quality reviews were formally approved by DWC management and communicated to all appropriate staff.
– DWC’s procedures for medical quality reviews do not include detailed steps to accomplish specific tasks within the medical quality review process.
Auditors examined 33 medical quality reviews and noted both strengths and weaknesses. For example, for all 25 reviews that involved charges filed against providers, the providers were given the opportunity to respond to the charges against them. However, for 4 (31 percent) of the 13 reviews that were closed with no further action, there was no documented explanation for that disposition in the case files.
Weaknesses in the Enforcement and Sanctioning Process
DWC’s Office of the Medical Advisor can refer the results of its medical quality reviews to TDI’s Enforcement Division for potential sanctions against providers. At that point, the reviews become enforcement cases. As of July 2010, 27 enforcement cases originating from medical quality reviews had been pending for an average of 344 calendar days; one of those enforcement cases had been pending since March 2007.
Auditors also determined that, between September 2006 and July 2010, TDI’s Enforcement Division closed 86 (75 percent) of the 114 enforcement cases originating from DWC’s Office of the Medical Advisor with a warning letter and no sanctions against the providers or other system participants. Three enforcement cases originating from medical quality reviews were closed with an order from DWC’s Commissioner (a Commissioner order is more serious than a warning letter, but it may not necessarily impose administrative penalties on a provider). In addition, for 21 enforcement cases originating from medical quality reviews that auditors reviewed, the final case disposition determined by TDI’s Enforcement Division differed from the original case disposition recommended by DWC’s Office of the Medical Advisor. However, there was no documented explanation for why the final case disposition differed from the original case disposition recommended by DWC’s Office of the Medical Advisor.
In March 2010, DWC’s Commissioner dismissed eight enforcement cases originating from medical quality reviews, and there was no documented explanation for the dismissal of those cases in the case files. DWC’s Office of the Medical Advisor had selected the providers associated with those eight enforcement cases using the selection process described above. However, for two of those eight enforcement cases, DWC’s Office of the Medical Advisor also had received complaints about the providers. At the Commissioner’s request, those eight enforcement cases were closed without any sanctions against the providers. DWC’s Commissioner status reports indicated that, prior to the dismissal of those eight enforcement cases, an agreed order (settlement) draft had been sent to one of those providers, and agreed orders had been drafted for three other providers. After the eight cases were closed, DWC referred those cases to the licensing boards. However, statute requires DWC to refer disciplinary actions to the licensing boards, but DWC had not imposed disciplinary actions for those cases.
John Keel, CPA
Texas State Auditor
The full report can be downloaded at: http://www.sao.state.tx.us/reports/main/11-011.pdf
Source: State Auditors Office