PCI Calls for Substantial TWCC Reforms

The Property Casualty Insurers Association of America (PCI) testified before the Texas Sunset Advisory Commission and asserted that substantial changes are needed to address the problems plaguing the Texas Workers’ Compensation Commission (TWCC).

TWCC’s mission and performance are under review as required under the Texas Sunset Act. The Act provides that the Sunset Commission, composed of legislators and public members, periodically evaluate a state agency to determine if the agency is still needed, and what improvements are needed.

Based on the recommendations of the Sunset Commission, the Texas Legislature ultimately decides whether an agency continues to operate into the future.

“It is important that the TWCC and the Workers’ Compensation Act should continue, but significant changes need to be made,” stated Joe Woods, regional manager and assistant vice president for PCI. “The current system was a result of a compromise in 1989 that has outlived its usefulness and should be fixed.”

The current system was developed in part to assure that the shift from a court driven process to an administrative approach would still protect workers rights.

“The administrative system that was developed contained every imaginable safeguard of due process and then added a belt and suspenders as a final safeguard. On top of that, there has been over the last few years an intense effort by TWCC to adopt very detailed rules to ostensibly protect injured workers in getting their benefits. Unfortunately, as the Sunset staff found in their review, every participant in the system now is being strangled by the belt and hung on the suspenders,” Woods said.

PCI expressed concerns with the overall system including the high cost of workers’ compensation insurance coverage, rising medical costs and utilization, limited access to quality medical care, and poor return to work outcomes for injured workers. These issues were also highlighted in the Sunset Commission Staff Report issued in April.

Regarding the governance and structure of the commission, PCI is recommending that the administration of the Workers’ Compensation Act should be separate and independent from the administration of the insurance code. All the workers’ compensation commissioners should serve full time and thus be less dependent on staff for information and guidance. The commissioners should appoint a staff executive director to run the day-to-day operations.

Unlike the Sunset Advisory Commission recommendations, PCI believes that the research on the effectiveness of the workers’ compensation system needs to be independent of TWCC and for that matter the department of insurance. PCI does, however, concur with the Sunset Advisory Commission on the imperative need for such research.

Over the past few years, the biggest problem with the Texas workers’ compensation system has been abuses in the delivery of medical care that has resulted in the highest medical cost per injury and one of the worst return-to-work outcomes in the United States.

“We urge that a medical network system of care in workers’ compensation be placed with insurance carriers, because insurers are more experienced and successful in delivering medical benefits in a cost-efficient manner and with good return-to-work outcomes. TWCC has spent far too much time and focus over-regulating this process. Its handling of compliance monitoring and sanctions appears to be grossly out of balance and has not addressed the current abusive billing practices of some healthcare providers,” Woods said.

PCI members are concerned with the effectiveness of the TWCC. Through the thorough reexamination of how TWCC performs its mission the commission can place more emphasis on developing a strategic direction. “This will allow TWCC to better take advantage of opportunities to improve the stakeholder participation process, address rising medical costs, improve the return to work initiatives, and streamline the dispute resolution and compliance functions,” Woods said.