To: Texas Workers’ Compensation System Participants

From: Patricia Gilbert, Executive Deputy Commissioner for Operations

Date: July 14, 2015

RE: Medical Records for Designated Doctor Examinations

The Division of Workers’ Compensation (DWC) reminds all system participants that 28 Texas Administrative Code § 127.10(a)(3) requires treating doctors and insurance carriers to provide all required medical records and any analyses to the designated doctor no later than three business days prior to a designated doctor examination. Additionally, if the required medical records are not received within one business day prior to an examination, the designated doctor shall reschedule the exam to occur no later than 21 days after receipt of the records. A new e-mail address for system participants to request assistance with medical records is listed at the end of this memorandum. Failure to provide medical records in accordance with the agency rule is an administrative violation and prevents the designated doctor from completing a certifying examination of the injured employee. Rescheduled examinations may result in unnecessary delays when processing a claim and bring increased cost to the system. Designated doctors are encouraged to reach out to the DWC for assistance obtaining medical records prior to examinations. DWC staff may contact treating doctors and insurance carriers that have not yet provided a complete set of required medical records to the designated doctor at any time before a scheduled examination, and will take necessary action to ensure all required medical records are received. The DWC asks all insurance carriers and treating doctors for full cooperation when contacted for assistance in obtaining medical records. Please contact DWC staff via e-mail at DDRecords@tdi.texas.gov for any questions.

Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Texas civil litigation attorneys based in Fort Worth who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s new office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.

3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Chapter 12

– Independent Review Organizations

SUBCHAPTER A. GENERAL PROVISIONS 28 TAC §12.1 AND §§12.3 – 12.6 SUBCHAPTER B. CERTIFICATE OF REGISTRATION FOR INDEPENDENT REVIEW 28 TAC §§12.101 – 12.111 SUBCHAPTER C. GENERAL STANDARDS OF INDEPENDENT REVIEW 28 TAC §§12.201 – 12.208 SUBCHAPTER D. ENFORCEMENT OF INDEPENDENT REVIEW STANDARDS 28 TAC §§12.301 – 12.303 SUBCHAPTER E. FEES AND PAYMENT 28 TAC §§12.401 – 12.406 SUBCHAPTER F. RANDOM ASSIGNMENT OF INDEPENDENT REVIEW ORGANIZATIONS 28 TAC §12.501 and §12.502

1. INTRODUCTION. The Texas Department of Insurance (TDI) adopts amendments to 28 TAC §§12.1, 12.3 – 12.6, 12.101 – 12.110, 12.201 – 12.208, 12.301 – 12.303, 12.401 – 12.406, 12.501, 12.502, and new §12.111, concerning independent review organizations (IROs). TDI adopts the new section and amendments with changes to the proposed text published in the November 28, 2014, issue of the Texas Register (39 TexReg 9310). Two correction of error notices were published in the December 12, 2014, (39 TexReg 9738) and December 19, 2014, (39 TexReg 10083) issues of the Texas Register to correct errors in the proposal published in the November 28, 2014, issue of the Texas Register (39 TexReg 9310). In response to comments on the proposal, TDI added the phrase “if any” in §12.103(4)(A) to track Insurance Code §4202.004(6)(B). Also in response to comments, TDI deleted “a letter from the Texas Secretary of State” and added “a copy of the Certificate of Formation from the Secretary 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 2 of 139 Chapter 12 – Independent Review Organizations of State” in §12.103(8)(a) to reflect the formation and existence requirements of Business Organizations Code §3.001. In addition to changes made in response to comments and to conform to the agency’s current style guidelines, TDI deleted “as of September 1, 2013,” in §12.1. TDI deleted “applications for a certificate of registration as an IRO, and for a renewal of a certificate of registration as an IRO” and “April 1, 2015,” and added “This chapter is effective on July 7, 2015,” and “July 7, 2015” in §12.4 to clarify that all of 28 TAC Chapter 12 is effective on July 7, 2015. TDI revised §§12.5(20), 12.5(22), 12.101, 12.103, 12.104, 12.107, 12.108, 12.111, 12.206(d)(7), 12.208(f), 12.302(f), 12.401(a), and 12.406 to replace “certified,” “renew,” and “certification.” The term “certification” refers to an issuance of the certificate of registration. For consistency of terminology throughout 28 TAC Chapter 12, TDI removed references to the term “certification,” instead referring to a “certificate of registration.” As a conforming change, TDI also changed the title of Subchapter B. TDI deleted “pertaining to” and added “on” in §12.5(15) to conform to current agency writing style. TDI deleted “including” and added “includes” in §12.5(23)(a) to conform to current agency writing style. TDI capitalized deleted “Federal” and added “federal” in §12.5(25)(E)(i) to conform to current agency writing style. TDI deleted “pertaining to” and added “about” in §12.5(32) to conform to current agency writing style. TDI deleted “where the activities and computer systems described in” and “are maintained, performed, and located” and added “the IRO’s primary office” in §12.5(30) 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 3 of 139 Chapter 12 – Independent Review Organizations to implement Insurance Code §4202.002(c)(2)(A)(i), which requires the IRO to maintain a physical address in Texas, and Insurance Code §4202.002(c)(2)(A)(iv), which requires the IRO to maintain its primary offices in this state. TDI also made these changes throughout 28 TAC Chapter 12 for consistency. TDI added “in Texas” in §12.5(32) for clarity and to implement Insurance Code §4202.002(c)(2)(A)(i). TDI deleted “pertaining to” and added “about” in §12.5(32) to conform to current agency writing style. TDI made a nonsubstantive correction to punctuation in §12.5(35). TDI deleted “Certification” and “Organizations” and added “Certificate” and “IROs” in the title of subchapter B to correct the existing title and to comply with current agency writing style. TDI deleted “to” and added “in an IRO application form for” in §12.102(a) to be consistent throughout 28 TAC Chapter 12. TDI made nonsubstantive corrections to punctuation throughout §12.103. TDI deleted “title” and added “chapter” in §12.103(1)(E) to conform to current agency writing style. TDI deleted “title” and added “chapter” in §12.103(1)(E) to conform to current agency writing style. TDI deleted “above” and added “in subparagraph (A)” in §12.103(4)(B) to conform to current agency writing style. TDI moved “for an applicant that is publicly held” from the end to the beginning of §12.103(8)(B) to better track Insurance Code §4202.004(a)(1). TDI deleted “IRO” and added “applicant” in §12.103(8)(D), §12.103(8)(E), and §12.103(11)(D) to be consistent with existing language. TDI deleted “subchapter” and added “chapter” in §12.103(11) to conform to current agency writing style. TDI deleted “noted on the application” and added “included on the IRO application form” in §12.103(13)(A) for consistency and to conform to current agency 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 4 of 139 Chapter 12 – Independent Review Organizations writing style. TDI made a nonsubstantive amendment to renumber the paragraphs in §12.104 by deleting “4” and adding “3.” TDI replaced “will” with “may” in §12.106(a) to clarify that TDI conducts examinations at its discretion. TDI made a nonsubstantive correction to punctuation in §12.104(2)(B). TDI deleted “or the commissioner’s designee” in §12.106(a) because the commissioner’s designee is included in the definition of commissioner in §12.5(8). TDI deleted “Prior to” and added “Before” to the title of §12.107 to conform to current agency writing style. TDI added “of” to §12.108(a) to correct a grammatical error. TDI moved “Every two years” to the beginning of the sentence in §12.108(a) to conform to current agency writing style. TDI deleted “not” and added “no” in §12.108(a) to conform to current agency writing style. TDI deleted “responses” and added “responded” in §12.108(e)(2) to correct a grammatical error. TDI replaced “may” with “must” in §12.110(a) for consistency with §12.102(a), which requires the use of the IRO application form for reporting a material change. TDI also deleted “applicant’s” and added “purchaser’s” in §12.110(a) for consistency. TDI replaced “addresses” with “address” to clarify that the IRO is only required to maintain one physical address under Insurance Code §4202.0029(a)(2)(A). TDI deleted “not” and added “no” in §12.110(a) to conform to current agency writing style. TDI deleted “prior to” and added “before” in §12.110(c) to conform to current agency writing style. TDI deleted “§12.102” and added “§12.103” in §12.111(a) to cite to the correct section about reporting a material change. TDI deleted “not” and added “no” in §12.111(a) to conform to current agency writing style. 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 5 of 139 Chapter 12 – Independent Review Organizations TDI deleted “A” and added “a” in §12.201(1) to conform to current agency writing style. TDI deleted “utilize” and added “use” in §12.201(3)(A) to conform to current agency writing style. TDI deleted “utilize” and added “use” in §12.201(4)(A) to conform to current agency writing style. TDI made a nonsubstantive correction to punctuation in §12.202(a). TDI deleted “the” and added “who are” in §12.202(d) to conform to current agency writing style. TDI deleted “by” in §12.202(d) to conform to current agency writing style. TDI made a nonsubstantive change to the requirement in §12.202(d)(1) for readability and clarity. TDI deleted “screening criteria” and added “review criteria” in §12.202(c)(1). Proposed §12.202(c)(1) referred to the term “screening criteria” to describe the criteria used in the IRO’s review process. However, screening criteria applies more appropriately to the utilization review process than the independent review process, while review criteria is more reflective of the independent review process. TDI deleted “prior to” and “being” and added “before” and “is” in §12.202(g)(4) to conform to current agency writing style. TDI moved language about the definition of control from §12.203(b) to §12.5(9) to clarify that the language applies to the entire chapter, and further defines the term “control.” TDI removed the subsection numbering because there are no longer subsections within §12.203. Also in §12.203, TDI replaced “pursuant to” with “under” to conform to current agency writing style. TDI made a nonsubstantive correction to punctuation in §12.203. TDI added “and Relationships” to the title of §12.204 to correct the existing title. TDI deleted “not” and added “no” in §12.206(b) to conform to current agency writing style. TDI deleted “not” and added “no” in §12.206(c) to conform to 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 6 of 139 Chapter 12 – Independent Review Organizations current agency writing style. TDI deleted “prior to” and added “before its” in §12.206(d)(11)(F) to conform to current agency writing style. TDI made nonsubstantive corrections to punctuation throughout §12.208. TDI deleted “as” in §12.302(a) to conform to current agency writing style. TDI deleted “a” and “case” and added “cases” in §12.302(c) to conform to current agency writing style. TDI deleted “prior to” and added “before” in §12.502(f)(1) to conform to current agency writing style. 2. REASONED JUSTIFICATION. The amendments and new section are necessary to implement HB 2645, 83rd Legislature, Regular Session (2013), which amended Insurance Code Chapter 4202, relating to the certification and operation of IROs in Texas. HB 2645 allows TDI to continue to regulate IROs after January 1, 2016. It also establishes an advisory group. In addition, TDI has determined that other amendments are necessary to enforce Insurance Code Chapter 4202. The entire adoption order is part of the reasoned justification for the amendments and new section. Insurance Code §4202.002, concerning adoption of standards for IROs, requires the commissioner to adopt standards and rules for the certification, selection, and operation of IROs that perform independent reviews described by Insurance Code Chapter 4201, Subchapter I; and for the suspension and revocation of the certificate of registration issued to IROs. Insurance Code §4202.002(c) specifies that the commissioner must adopt standards and rules that prohibit an individual who serves as an officer, director, manager, executive, or supervisor of an IRO from serving as an officer, director, manager, executive, supervisor, employee, agent, or independent 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 7 of 139 Chapter 12 – Independent Review Organizations contractor of another IRO. Amendments to §12.204(d) implement the prohibition of persons from serving in certain positions with other IROs mandated in Insurance Code §4202.002(c). HB 2645 amends Insurance Code §4202.002, in part, to require an IRO to maintain a physical address and a mailing address in this state, to notify TDI of an agreement to sell the IRO or shares in the IRO, and to complete the transfer of ownership after TDI has sent written confirmation that the requirements are satisfied. Amendments to §12.103(13)(A) provide that an IRO must locate and maintain its primary office at the physical address in this state as noted on its application. Amendments to §12.103(13)(A) further require, as a condition of holding a certificate of registration to conduct the business of independent review in this state, that the physical address of the IRO’s primary office be maintained in this state. New §12.5(30) defines “physical address.” The existing definition of “primary office” is redesignated in §12.5(32) and adds the requirement that an IRO “maintain its physical address in Texas.” These amendments are necessary to implement Insurance Code §4202.002(c), which requires an IRO to maintain its primary office at a physical address in this state. Amendments to §12.110 are necessary to ensure TDI receives notice of an agreement to sell or transfer the ownership or shares in the IRO, and require the IRO to release certain information to TDI. HB 2645 adds Insurance Code §4202.002(f), which, in part requires the commissioner to adopt standards that require that the IRO’s primary office is equipped with a computer system capable of processing requests for independent review, that all 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 8 of 139 Chapter 12 – Independent Review Organizations records are maintained electronically, that records are made available to TDI on request, and that independent review offices located in residences are located in a room set aside for business purposes to ensure confidentiality of medical records. Amendments to §12.103(13) add a new subparagraph (B) to require an applicant for an initial or renewal certificate of registration to submit as part of the application process evidence that the applicant’s primary office is equipped with a computer system capable of certain requirements. Amendments to §12.103(13)(D) require that if the IRO’s primary office is in a residence, dedicated space is set aside for business purposes. HB 2645 amends Insurance Code §4202.003, which requires each IRO to make the IRO’s determination for a life-threatening condition, as defined by Insurance Code §4201.002, no later than the earlier of the third day (rather than the fifth day) after the date the IRO receives the information necessary to make the determination. With respect to a review of a health care service provided to a person eligible for workers’ compensation medical benefits, the IRO must make its determination for a lifethreatening condition by the eighth day after the date the IRO receives the request that the determination be made. HB 2645 amends Insurance Code §4202.004, which requires a description of any relationship the applicant or the named individual has with specified entities. It also requires the IRO application form to include information about an applicant’s procedures for verifying physician and provider credentials, including the computer processes, electronic databases, and records used, if any, and the software used by the credentialing manager for managing the processes, databases, and records. Insurance 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 9 of 139 Chapter 12 – Independent Review Organizations Code §4202.004(a)(8) requires the IRO application form to include a description of the applicant’s use of communications, records, and computer processes to manage the independent review process. Insurance Code §4202.004 also requires the commissioner to establish certifications for independent review of health care services provided to persons eligible for workers’ compensation medical benefits and other health care services, after considering accreditation, if any, by a nationally recognized accrediting organization that imposes requirements for accreditation that are the same as, substantially similar to, or more stringent than TDI’s requirements for a certificate of registration. HB 2645 amends Insurance Code §4202.004(g), which requires that the certification be renewed biennially. HB 2645 amends Insurance Code §4202.005(c), which requires that information about a material change be submitted on a form adopted by the commissioner no later than the 30th day after the date the material change occurs. If the material change is a relocation, §4202.005(c) requires the IRO to inform TDI that the new location is available for inspection by TDI before the date of the relocation, and that an officer of the IRO must attend the inspection on TDI’s request. Amendments to §12.5(22) define “IRO application form” to include that the IRO application form must be used to report a material change to TDI. Amendments to §12.102(a) require an IRO to report a material change in an IRO application form by submitting the IRO application form to TDI. In compliance with new Insurance Code §4202.011, the commissioner appointed an IRO advisory group on July 31, 2014, composed of members as required by Insurance Code §4202.011(a). 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 10 of 139 Chapter 12 – Independent Review Organizations TDI has also determined that other amendments are necessary to enforce Insurance Code Chapter 4202. Insurance Code §4202.002(a) requires the commissioner to adopt “standards and rules for…the certification, selection, and operation of independent review organizations.” Under Insurance Code §4202.002(b), these standards must ensure the qualifications and independence of each reviewer, the fairness of the procedures used by an IRO in making review determinations, and that the procedures maintain the confidentiality of medical records transmitted to an IRO. TDI adopts amendments throughout the rule text to correct grammar and punctuation, and to make other nonsubstantive changes to update and conform rule text to the current agency writing style. TDI posted a concept draft of these rules to its website and held a public stakeholder meeting on November 20, 2013; posted to its website an informal draft of the rules on August 5, 2014; and held a public hearing on the proposed rules on December 15, 2014, under Docket Number 2776. In response to both written comments and comments made at the hearing, TDI made several changes to the proposal, but none of the changes made to the proposed text or form in this adoption materially alter issues raised in the proposal, introduce new subject matter, or affect persons other than those previously on notice. Section §12.1. Statutory Basis. Section 12.1 changes the existing provisions relating to the statutory basis for the rules in Subchapters A through F to reflect that the adopted rule amendments incorporate the most recent amendments to Insurance Code 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 11 of 139 Chapter 12 – Independent Review Organizations Chapter 4202. TDI adopts nonsubstantive amendments to §12.1 to conform to current agency writing style. Section §12.3. Effects of Chapter. TDI adopts nonsubstantive amendments to §12.3 to conform to current agency writing style. Section §12.4. Applicability. Section 12.4(b) specifies the applicability of Insurance Code Chapter 4202 to independent review requests filed with TDI before the effective date of the rules. The effective date of July 7, 2015, in §12.4(b) gives IROs time to comply with the amendments and new sections in 28 TAC Chapter 12, and allows time for IROs to complete any remaining reviews assigned to them under the current rules. TDI also adopts nonsubstantive amendments to §12.4 to conform to current agency writing style. Section 12.5. Definitions. New §12.5(4) adds the definition for “biographical affidavit.” This new definition is necessary to specify that the biographical affidavit form used in IRO applications must be the National Association of Insurance Commissioners biographical affidavit form. This amendment establishes the standardized form for submitting biographical information as required under Insurance Code §4202.004(4). New §12.5(9) adds the definition of “control.” This new definition is necessary to clarify how an IRO may comply with Insurance Code §4202.008, which prohibits an IRO from being a subsidiary of, or in any way owned or controlled by, a payor or a trade or professional association of payors. The definition of “control” is also necessary to clarify the use of the term in the existing definition of “affiliate” in §12.5(2), for disclosure to TDI 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 12 of 139 Chapter 12 – Independent Review Organizations in the original application under §12.103(10), and for determining whether control exists under §12.203. Insurance Code §4202.002(a)(1) requires the commissioner to adopt “standards and rules for … the certification, selection, and operation of independent review organizations.” The definition of “control” under new §12.5(9) will assist TDI in its goal to ensure compliance with Insurance Code Chapter 4202, and also to ensure that there are no conflicts of interest involving an IRO being controlled by a payor or professional association of payors. TDI defined this new term based on its rulemaking authority under Insurance Code §4202.002(a)(1). New §12.5(22) adds the definition of “IRO application form.” The definition is necessary to clarify the form to use to apply for a certificate of registration as an IRO in Texas, for renewal of a certificate of registration, and for reporting a material change to an IRO application for a certificate of registration previously submitted to TDI. Insurance Code §4202.004 requires an organization to submit an application in the form required by the commissioner. This definition also implements Insurance Code §4202.005(c), which provides that an IRO shall report any material change to the information submitted on a form adopted by the commissioner no later than the 30th day after the date the material change occurs. New §12.5(30) adds the definition of “physical address.” This definition is necessary to clarify the use of the term in amended §12.103(13)(A), which implements the requirements in Insurance Code §4202.002(c)(2)(A)(i) and (f). Insurance Code §4202.002(c)(2)(A)(i) requires the commissioner to adopt rules that require IROs to 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 13 of 139 Chapter 12 – Independent Review Organizations maintain a physical address in this state. Insurance Code §4202.002(f) requires the commissioner to adopt standards requiring an officer of an organization to attest that the organization’s office is located at a physical address in its application for certification. The requirement in new §12.5(30) that the IRO have personnel reasonably available by telephone at least 40 hours per week during normal business hours is an existing requirement in existing §12.207(a). Amendments to the definition of “primary office” in §12.5(32) delete “based upon the totality of the business activities related to independent review performed under this chapter” and add “maintains its physical address in Texas” to implement the requirements in Insurance Code §4202.002(c)(2)(A)(i) and (f). Insurance Code §4202.002(c) requires the commissioner to adopt standards and rules that require an IRO to maintain a physical address in this state. Insurance Code §4202.002(f) requires the commissioner to adopt standards requiring that, on application for certification, an officer of the IRO attest that the office is located at a physical address. TDI clarifies that the primary office cannot be virtual and must be at a physical address. Amendments to §12.5(32) also replace the term “stored” with the phrase “maintained and accessible” regarding the IRO’s books and records. These amendments are necessary for TDI staff to conduct on-site examinations that include an examination of the IRO’s records as part of its ongoing oversight requirement under Insurance Code §4202.007, and to ensure continued compliance with Insurance Code Chapter 4202 and 28 TAC Chapter 12. 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 14 of 139 Chapter 12 – Independent Review Organizations TDI also adopts nonsubstantive amendments to §12.5 to conform to current agency writing style. Section 12.6. Independent Review of Adverse Determinations of Health Care Provided Under Labor Code Title 5 or Insurance Code Chapter 1305. TDI adopts nonsubstantive amendments to §12.6 to conform to current agency writing style. Section 12.101. Certificate of Registration for Independent Review. Amendments to §12.101 change the heading of the section from “Where to File Application” to “Certificate of Registration for Independent Review” to more accurately reflect the content of the section. TDI also adopts nonsubstantive amendments to §12.101 to conform to current agency writing style. Section §12.102. IRO Application Form. Amendments to §12.102 include changing the title of the section to “IRO Application Form,” and other amendments to conform to current agency writing style. Amendments to §12.102(a) delete the adoption by reference of Form No. LHL006 (IRO Application Form). Amendments to §12.102(a) also instruct applicants to use the IRO application form to report a material change to a certificate of registration and require IRO applicants to use the IRO application form prescribed by TDI. These amendments are necessary to implement Insurance Code §4202.005(c), which requires that information about a material change be submitted on a form adopted by the commissioner no later than the 30th day after the date the material change occurs. Insurance Code §4202.005(c) also provides that if the material change is a relocation of the IRO, the IRO must inform TDI that the location is available for inspection by TDI before the date of the relocation, and an IRO officer must attend 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 15 of 139 Chapter 12 – Independent Review Organizations the inspection on TDI’s request. Amendments to §12.102(c) are necessary to provide the correct Internet and mailing addresses from which an applicant may obtain the form. TDI also adopts nonsubstantive amendments to §12.102 to conform to current agency writing style. Section §12.103. Information Required in Original Application for Certificate of Registration. Amendments to §12.103 change the name of the section from “Information Required in Application and Renewal Form” to “Information Required in Original Application for Certificate of Registration” to distinguish the requirements for an original application for certificate of registration from the requirements for a renewal of a certificate of registration. Amendments to §12.103 also delete the reference to Form No. LHL006 to conform to adopted amendments to §12.102. Amendments to §12.103(1)(C) replace “an authorized representative” with “the IRO’s medical director” as the person who must sign the certification that criteria and review procedures for review determinations are established with input from appropriate health care providers and physicians under existing §12.201(3). The requirement that a medical director sign the certification ensures that an appropriately qualified individual approves criteria for a higher quality of review. These amendments are necessary to implement Insurance Code §4202.002(b)(3) and (4), which require the commissioner to adopt standards to ensure the qualifications and independence of each reviewer, the fairness of the procedures used by an IRO in making review determinations, and the confidentiality of medical records transmitted to an IRO. They are also necessary to implement Insurance Code §4202.007, which requires TDI to maintain oversight of 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 16 of 139 Chapter 12 – Independent Review Organizations IROs to ensure continued compliance with Insurance Code Chapter 4202 and 28 TAC Chapter 12. Amendments to §12.103(1)(D) delete “§12.105(d)” and add “§12.111(a)” to more accurately reflect the new content of the section. New §12.103(1)(E) requires an IRO applicant to include a summary of the description of criteria and review procedures to be used by the medical director to conduct quality assurance audits under §12.202(c)(2). As in the paragraph above, new §12.103(1)(E) is also necessary to implement Insurance Code §4202.002(b)(3) and (4), and §4202.007. Amendments to §12.103(3) require an officer, director, or owner of the IRO to certify compliance with Insurance Code Chapter 4202 and 28 TAC Chapter 12, instead of only an authorized representative. The officer, director, or owner of the IRO must also certify that any party that performs an IRO function through contracts and subcontracts will comply with Insurance Code Chapter 4202 and 28 TAC Chapter 12. The certification must also state that the IRO retains responsibility to ensure compliance. Insurance Code §4202.002(a), in part, authorizes the commissioner to adopt standards and rules for the certification, selection, and operation of IROs to perform independent review. As outlined in paragraphs above, these amendments are also necessary to implement Insurance Code §4202.002(b)(3) and (4), and §4202.007. Amendments to §12.103(4) replace “credentialing” with “their credentials” for clarity and delete “relating to Personnel and Credentialing” to conform to agency writing style. New §12.103(4)(A) and (B) require an IRO applicant to include in the original 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 17 of 139 Chapter 12 – Independent Review Organizations application for a certificate of registration a description of the credentialing and recredentialing procedures, computer processes, electronic databases, records, and software used by the applicant to verify physician and provider credentials. These amendments are necessary to implement the requirements in Insurance Code §4202.004(a)(6)(B) and (C), which require the IRO application form to include a description of the procedures used by the applicant to verify physician and provider credentials, including the computer processes, electronic databases, and records used, if any, and the software used by the credentialing manager for managing those processes, databases, and records. New §12.103(6) requires the applicant to include a description of the applicant’s use of communications, records, and computer processes to manage the independent review process. This amendment is necessary to implement Insurance Code §4202.004(a)(8), which requires the IRO application to include a description of the applicant’s use of communications, records, and computer processes to manage the independent review process. New §12.103(7) requires the applicant to include a description and evidence of accreditation from a nationally recognized accrediting organization, if any, that imposes the same, substantially similar to, or stricter requirements than TDI’s certificate of registration in the IRO application form. Section 12.103(7) provides that TDI will maintain evidence of accreditation on file for the applicant, and allows the applicant to request expedited approval of the application for a certificate of registration based on the evidence of accreditation. These amendments are necessary to implement 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 18 of 139 Chapter 12 – Independent Review Organizations Insurance Code §4202.004(b), (e) and (f), which establish requirements for certifications for independent review of health care services provided to persons eligible for workers’ compensation medical benefits and other health care services after considering accreditation, if any, by a nationally recognized accrediting organization that imposes the same, substantially similar to, or stricter requirements than TDI’s requirements for accreditation. Insurance Code §4202.004(e), in part, requires that an IRO that applies for a certificate of registration to review health care services that is accredited by an organization described Insurance Code §4202.004(b) provide TDI with evidence of the accreditation. Insurance Code §4202.004(e) requires the commissioner to consider the evidence if the accrediting organization publishes and makes available to the commissioner the accrediting organization’s requirements for and methods used in the accreditation process, and authorizes an accredited IRO to request that TDI expedite the application process. HB 2645 amended Insurance Code §4202.004(f), in part, to authorize a certified IRO that becomes accredited by certain organizations to provide evidence of that accreditation to TDI and requires that evidence be maintained in TDI’s file related to the IRO’s certification. Amendments to redesignated §12.103(8)(A) require the applicant to submit written evidence that the applicant is incorporated in this state, which may include a copy of the Certificate of Formation from the Secretary of State. These amendments are necessary to implement Insurance Code §4202.002(c)(2)(A)(ii), which requires an IRO to be incorporated in this state. Amendments to §12.103(8)(A) also delete language requiring the applicant to submit documents relating to its internal affairs, such 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 19 of 139 Chapter 12 – Independent Review Organizations as bylaws, because TDI has included more specific requirements about the information necessary for the commissioner to determine whether an applicant is qualified to obtain a certificate of registration as an IRO in amended §12.103. Amendments to §12.103(8)(B) require the applicant to submit the address and Federal Employer Identification Number (EIN) for each stockholder or owner of more than 5 percent of the applicant’s stock or options if the applicant is publicly held. These amendments are necessary under Insurance Code §4202.002, §4202.004, §4202.005, and §4202.007 for TDI staff reviewing IRO applications for certificates of registration, renewals of certificates of registration, and reports of material changes to quickly and efficiently verify the identification information submitted by the applicant in the IRO application form. TDI recognizes that IROs and IRO applicants benefit from a more efficient process. Amendments to §12.103(8)(D) clarify the contents of the chart of contractual arrangements to include contracts between the applicant and any persons and all subcontracts with other persons to perform any business or daily functions of an IRO. New §12.103(8)(E) requires the applicant to submit copies of the contract and subcontract the applicant has with any person who will perform IRO functions, and new §12.103(8)(E)(i) – (iv) lists the elements those contracts must include. These amendments are necessary to implement Insurance Code §4202.002(a) and §4202.007, ensuring that the IRO is responsible for compliance with Insurance Code Chapter 4202 and 28 TAC Chapter 12 and to ensure TDI is aware of the actual parties conducting IRO functions. 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 20 of 139 Chapter 12 – Independent Review Organizations Amendments to redesignated §12.103(10) require the applicant to submit the address and EIN of any organization the applicant controls or is affiliated with. These amendments also implement Insurance Code §4202.002(a) and are necessary for TDI staff reviewing IRO applications for certificates of registration to quickly and efficiently verify the identification information submitted by the applicant in the IRO application form. TDI recognizes that IROs and IRO applicants benefit from a more efficient process. Amendments to redesignated §12.103(11) change “Form No. FIN311 (Biographical Affidavit)” to “biographical affidavit” to conform to new §12.5(4). New §12.103(11)(A) requires the applicant to submit fingerprints for each director, officer, executive, owner, or shareholder of the applicant. These amendments are necessary to implement Insurance Code §4202.004(d), which, in part, requires the commissioner to obtain from each officer of the applicant and each owner or shareholder of the applicant, or, if the purchaser is publicly held, each owner or shareholder of more than 5 percent of any of the applicant’s stock or options, a complete and legible set of fingerprints for obtaining criminal history record information from the Texas Department of Public Safety (DPS) and the FBI. It also requires TDI to conduct a criminal history check of each applicant using information provided under this section, by obtaining information made available to TDI by the DPS, the FBI, and any other criminal justice agency under Government Code Chapter 411. Additionally, 28 TAC §1.501(b)(1)(B) authorizes TDI to determine a person’s fitness for holding a certification or registration or a person’s fitness to have the ability to control entities when that person has committed a criminal 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 21 of 139 Chapter 12 – Independent Review Organizations offense or has engaged in fraudulent or dishonest activity, including applicants for a certificate of registration under Insurance Code Chapter 4202. Title 28 TAC §1.503, in part, provides that the fingerprint requirement in 28 TAC §1.504(a) applies to applicants for certificates of registration under Insurance Code Chapter 4202. Amendments to redesignated §12.103(11)(B) delete the application of the fingerprint requirement because that requirement is found in new §12.103(11)(A). Amendments to §12.103(11)(D) require the applicant to submit a list of any outstanding loans or contracts to provide service to “any other person relating to any functions performed by or on behalf of the applicant.” These amendments are necessary to implement Insurance Code §4202.004(d). New §12.103(12) requires the applicant to submit documentation from the comptroller demonstrating the applicant’s good standing and the right to transact business in this state. This amendment is necessary to implement Insurance Code §4202.002(c)(2)(A)(iii), which specifies that the commissioner must adopt standards and rules that, among other things, require the IRO to be in good standing with the comptroller. Amendments to redesignated §12.103(13) require a sworn statement from an officer of the IRO. The information required in the sworn statement in amendments to §12.103(13)(A) – (D) is necessary to implement Insurance Code §4202.002(f), which requires the commissioner to adopt standards requiring that: (i) on application for certification, an officer of the IRO attest that the office is located at a physical address; (ii) the office be equipped with a computer system capable of processing requests for 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 22 of 139 Chapter 12 – Independent Review Organizations independent review and accessing all electronic records related to the review and the independent review process; (iii) all records be maintained electronically and made available to TDI on request; and (iv) in the case of an office located in a residence, the working office be located in a room set aside for independent review business purposes and in a manner to ensure confidentiality. New §12.103(13)(E) adds a requirement for the sworn statement that medical records be maintained according to §12.208. This amendment is necessary to implement Insurance Code §4202.002(e), which requires that the standards to ensure the confidentiality of medical records transmitted to an IRO under Insurance Code §4202.002(b)(2) require IROs and utilization review agents (URAs) to transmit and store records in compliance with the Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. Section 1320d et seq.)(HIPAA) and the regulations and standards adopted under that Act. TDI also adopts nonsubstantive amendments to §12.103 to conform to current agency writing style. Section 12.104. Review of Original Application. TDI changed the title of the section from “Review of Application” to “Review of Original Application” to reflect that the content of the section is for review of an original application. New §12.104(1) and §12.104(2)(a) – (c) delete the current process for TDI’s review of an original application and replace it with a new process that mirrors TDI’s review of certification or registration of URAs in 28 TAC §19.1704(e) and (f), and §19.2004(e) and (f). These amendments are necessary to maintain consistency across TDI’s processes. TDI has determined 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 23 of 139 Chapter 12 – Independent Review Organizations that the process for reviewing original applications for certificates of registration as IROs should be consistent with the process for review of applications for certification or registration of URAs. This change streamlines processes and enables TDI to process both types of applications efficiently for the benefit of regulated entities. TDI recognizes that uniform standards offer a more consistent process for ease of stakeholder interpretation and compliance. New §12.104(1) provides that TDI will grant or deny an original certificate of registration within 60 days of receipt of a complete original application. This section also provides an applicant the right to waive the 60-day time limit. New §12.104(2)(A) provides that TDI will send the applicant written notice of any omissions or deficiencies in the original application. New §12.104(2)(B) changes the requirement in existing §12.104(2) by lessening the number of days that an applicant has to correct any omissions or deficiencies in the application from 30 days to 15 days from the date of TDI’s latest notice of the omissions or deficiencies. This reduction in applicant response time is necessary to streamline the application process by providing TDI with necessary information more quickly. These amendments implement Insurance Code §4202.002, which requires the commissioner to adopt standards to ensure the qualifications and independence of each reviewer, the fairness of the procedures used by an IRO in making review determinations, and the confidentiality of medical records transmitted to an IRO. They are also necessary to implement Insurance Code §4202.007, which requires TDI to maintain oversight of IROs to ensure continued compliance with Insurance Code Chapter 4202 and 28 TAC Chapter 12. New 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 24 of 139 Chapter 12 – Independent Review Organizations §12.104(2)(B) also provides that the applicant may request in writing additional time to correct the omissions or deficiencies in the application. TDI clarifies that the request for additional time must be approved by TDI in writing for the requested extension to be effective. New §12.104(2)(C) provides that an applicant’s failure to correct omissions or deficiencies within the time frame provided will result in the application being closed as incomplete and provides that the application fee is not refundable. This amendment is adopted under the commissioner’s authority in Insurance Code §4202.004(a) to prescribe the application form and its authority to adopt standards and rules for the certification, selection, and operation of IROs to perform independent review, and the requirement in Insurance Code §4202.007 for TDI to maintain oversight of IROs to ensure continued compliance with Insurance Code Chapter 4202 and 28 TAC Chapter 12. TDI also adopts nonsubstantive amendments to §12.104 to conform to current agency writing style. Section 12.105. Revisions During Review Process. Amendments to §12.202(b) include renumbering subsections. Amendments to §12.105 clarify that revisions made by the applicant must be submitted electronically in the manner specified by TDI in correspondence with the applicant or sent by mail. Amendments to §12.105 also correct the mailing address where applicants send revisions to TDI. Amendments to redesignated §12.105(b) make a conforming change to delete the requirement that revisions to bylaws be accompanied by a notarized certification 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 25 of 139 Chapter 12 – Independent Review Organizations because the requirement to submit bylaws in existing §12.103(8)(A) is also adopted for deletion. Amendments to redesignated §12.105(b) also delete “to be,” “all copies of,” and the quotes around “red-lined” to conform to current agency writing style. Additionally, amendments to redesignated §12.105(b) delete “or otherwise clearly designated” after “red-lined” to ensure that all revisions submitted to TDI are uniform and easily understood. Amendments to §12.105(d) – (f) delete the requirements for an applicant to report material changes to the application because that information is in new §12.111. TDI also adopts nonsubstantive amendments to §12.105 to conform to current agency writing style. Section 12.106. Examinations. TDI adopts an amendment to this section’s title from “Qualifying Examinations” to “Examinations” to reflect that this section applies to all IRO examinations. Amendments to §12.106 include reformatting to add subsections. New §12.106(a) also clarifies that the examination will be at the applicant’s primary office and is necessary to implement Insurance Code §4202.013, which requires an IRO to maintain its primary office in this state. New §12.106(b) clarifies that TDI may conduct examinations as often as the commissioner deems necessary to determine compliance with Insurance Code Chapter 4202 and 28 TAC Chapter 12. Insurance Code §4202.007 requires the commissioner to provide ongoing oversight of IROs to ensure continued compliance with Insurance Code Chapter 4202 and 28 TAC Chapter 12. 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 26 of 139 Chapter 12 – Independent Review Organizations New §12.106(c) deletes “Documents that support the application for the certificate of registration of renewal of the certificate of registration” and adds “The following documents.” New §12.106(c)(1)-(8) are documents that an IRO must make available for review during the examinations. New §12.106(d) requires the IRO’s owner and staff to be available at the IRO’s primary office during the on-site examination. These amendments implement Insurance Code §4202.002(a) and Insurance Code §4202.007 and are necessary for TDI staff conducting on-site examinations to quickly and efficiently verify the IRO is in compliance with Insurance Code Chapter 4202 and 28 TAC Chapter 12. TDI also adopts nonsubstantive amendments to §12.106 to conform to current agency writing style. Section 12.107. Withdrawal of an Original Application Before Granting a Certificate of Registration and Subsequent Renewal Applications. Amendments to §12.107 revise the section title to more accurately reflect the content of the section. TDI also adopts nonsubstantive amendments to §12.107 to conform to current agency writing style. Section 12.108. Renewal of Certificate of Registration. Amendments to §12.108(a) and (b) change the requirement that an IRO must apply for renewal of its certification of registration from every year to requiring renewal every two years to implement Insurance Code §4202.004(g), as amended. Amendments to §12.108(b) replace references to “Form No. LHL006” and “renewal form” with “IRO application form” to conform the new reference to language in the adopted amended §12.102. TDI 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 27 of 139 Chapter 12 – Independent Review Organizations adopts amendments to §12.108(b) and the deletion of sections (e) – (g) to remove the requirements about reporting material changes because those requirements are adopted in new §12.111. Amendments to §12.108(b) and (d) delete the requirement that an IRO submit a summary of their current review criteria with the completed IRO application form. This summary submission will be unnecessary because TDI will already have this information from either the original application for a certificate of registration or the IRO reporting it as a material change required under new §12.111. TDI also adopts nonsubstantive amendments to §12.108 to conform to current agency writing style. Section 12.109. Appeal of Denial of Application or Renewal. TDI adopts nonsubstantive amendments to §12.109 to conform to current agency writing style. Adopted §12.110. Effect of Sale or Transfer of Ownership of an Independent Review Organization. Amendments to §12.110 replace existing requirements for the sale of an IRO and the prohibition on transferring an IRO with requirements for the sale or transfer of ownership of an IRO to implement Insurance Code §4202.002(c)(2)(C), as amended. New §12.110(a) requires the IRO to notify TDI of the agreement to sell or transfer the ownership of the IRO no later than 60 days before the date of the sale or transfer of ownership, and provides the TDI address where the owner must send the notification. New §12.110(a)(1) requires the IRO to submit the name of the purchaser and a complete set of fingerprints for each officer, owner, and shareholder of the purchaser. New §12.110(b) provides that TDI will send the IRO written confirmation that the requirements under Insurance Code Chapter 4202 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 28 of 139 Chapter 12 – Independent Review Organizations and 28 TAC Chapter 12 have been satisfied before the sale can be completed. These sections are necessary to implement amendments to Insurance Code §4202.002(c)(2)(C), which require an IRO to: (i) notify TDI of an agreement to sell the IRO or shares in the IRO; (ii) no later than the 60th day before the date of the sale, submit the name of the purchaser and a complete and legible set of fingerprints for each officer of the purchaser and for each owner or shareholder of the purchaser or, if the purchaser is publicly held, each owner or shareholder of more than 5 percent of the IRO’s stock or options, and any additional information necessary to comply with Insurance Code §4202.004(d); and (iii) complete the transfer of ownership after TDI has sent written confirmation that the requirements of 28 TAC Chapter 12 have been satisfied. Amendments to §12.110 also delete existing requirements for sale of an IRO and the prohibition on transferring an IRO to implement Insurance Code §4202.004, as amended. New §12.110 (a)(2) requires an IRO to notify TDI of any material changes in its notice of intent to sell or transfer ownership. Insurance Code §4202.005(c) requires the IRO to submit information about a material change to TDI no later than the 30th day after the date the material change occurs. In the case of a sale or transfer of ownership of an IRO, TDI has determined that this rule is necessary under TDI’s rulemaking authority in Insurance Code §4202.002(a), the requirement under Insurance Code §4202.007 to provide ongoing oversight of IROs to ensure continued compliance with Insurance Code Chapter 4202 and 28 TAC Chapter 12, and for TDI staff to review all changes about an IRO sale or transfer of ownership at the same time for the sake of 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 29 of 139 Chapter 12 – Independent Review Organizations efficiency. The amendments to redesignated §12.110(c) add the phrase “the sale or transfer of ownership” for consistency throughout §12.110. TDI also adopts nonsubstantive amendments to §12.110 to conform to current agency writing style. Section 12.111. Regulatory Requirements Subsequent to Certificate of Registration. New §12.111(a) adds the requirement that an IRO must report to TDI a material change in the information required in the IRO application form no later than the 30th day after the date the change takes effect. New §12.111(b) contains the requirements for reporting a material change if the material change is a relocation of the IRO’s primary office. These sections are necessary to implement Insurance Code §4202.005(c), which, in part, requires that information about a material change be submitted on a form adopted by the commissioner no later than the 30th day after the date the material change occurs. Insurance Code §4202.005 also requires the IRO, if the material change is a relocation of the IRO, to inform TDI that the location is available for inspection by TDI before the date of the IRO’s relocation, and that an officer of the IRO attend the inspection on TDI’s request. New §12.111(c), an existing requirement that was formerly in deleted §12.108(f), exempts IROs from compliance with §12.111(a) in the event a contracted specialist IRO reviewer is unavailable and immediate contracting with a new specialist is necessary to complete an independent review. New §12.111(d), an existing requirement that was formerly in deleted §12.108(g), requires the IRO to notify TDI within 10 days after it 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 30 of 139 Chapter 12 – Independent Review Organizations enters into any new contracts under subsection (c), and requires the notification to include a complete explanation of the circumstances. TDI also adopts nonsubstantive amendments to §12.111 to conform to current agency writing style. Adopted §12.201. Independent Review Plan. Amendments to §12.201 delete “a physician” and adds “the IRO’s medical director” to clarify that the medical director must review and approve the IRO’s independent review plan. Insurance Code §4202.007 requires the commissioner to provide ongoing oversight of IROs to ensure continued compliance with Insurance Code Chapter 4202 and 28 TAC Chapter 12. These amendments are necessary because TDI has determined that a physician medical director is best qualified to ensure the qualifications and independence of each reviewer, the fairness of the procedures used by an IRO in making review determinations, and the confidentiality of medical records transmitted to an IRO. These are standards for which the commissioner must adopt rules under Insurance Code §4202.002(b). TDI adopts nonsubstantive amendments to §12.201 to conform to current agency writing style. Adopted §12.202. Personnel and Credentialing. New §12.202(a)(1) requires personnel conducting independent reviews for health services to hold an unrestricted license, an administrative license, or otherwise be authorized to provide the same or similar specialty health services by a licensing agency in the United States. New §12.202(a)(2) requires personnel conducting independent reviews for workers’ 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 31 of 139 Chapter 12 – Independent Review Organizations compensation health services to hold an unrestricted license, an administrative license, or otherwise be authorized to provide the same or similar specialty health services by a licensing agency in this state. Amendments to §12.202(b)(1) require the IRO to provide the commissioner, in addition to the existing requirements, the name, license number, state of licensure, and date of contract of personnel employed or under contract to perform independent reviews. Amendments to §12.202(b) include reformatting to add paragraphs. New §12.202(b)(2) deletes language about the IRO’s maintenance of reviewer qualification records and profiles of reviewers. These requirements are now in §12.202(d). Amendments to §12.202(c) add “medical director who is a” before “physician,” and add “The medical director functions must include, but are not limited to, conducting.” New §12.202(c)(1) – (3) describe the functions of the IRO’s medical director. These functions include, but are not limited to, the annual review and approval of review criteria, annual quality assurance audits of at least 25 percent of all decisions, and annual quality assurance audits of at least 25 percent of all assignments. New §12.202(d) requires the IRO to maintain credentialing and recredentialing files of personnel employed or under contract to perform independent reviews. This is an existing requirement moved from §12.202(b)(2). New §12.202(d)(1) – (4) lists the minimum types of credentialing and recredentialing information that the IRO must maintain current and that must be available for review by TDI. Amendments to §12.202(d) also delete existing language about the IRO’s credentialing requirements because they are redundant in light of the more detailed credentialing requirements in 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 32 of 139 Chapter 12 – Independent Review Organizations amended §12.202. New §12.202(g) requires the providers conducting independent review to sign and date the certification of independence and qualifications of the reviewer in the format prescribed by TDI. New §12.202(g)(1) – (8) list the required elements of the certification of independence and qualifications of the reviewer. New §12.202(h) provides that the information required in §12.202 must be available for examination and review by TDI and TDI-DWC personnel on request. New §12.202(i) requires IROs to require providers conducting independent reviews to notify the IROs of any changes in the information in §12.202(d). New §12.202(a)(1), §12.202(a)(2), §12.202(c)(1) – (3), §12.202(d)(1) – (4), and §12.202(g)-(i) and amendments to §12.202(b)(1) and §12.202(c) are necessary to implement Insurance Code §4202.007 and Insurance Code §4202.002(b). Insurance Code §4202.007 requires the commissioner to provide ongoing oversight of IROs to ensure continued compliance with Insurance Code Chapter 4202 and 28 TAC Chapter 12. TDI has determined the enhanced personnel and credentialing requirements of amended §12.202 are necessary to ensure the qualifications and independence of each reviewer and the fairness of the procedures used by an IRO in making review determinations, standards for which the commissioner must adopt rules under Insurance Code §4202.002(b). TDI also adopts nonsubstantive amendments to §12.202 to conform to current agency writing style. Section §12.203. Conflicts of Interest Prohibited. Amendments to §12.203 delete “is a subsidiary of, or in any way owned or controlled by” and add “has any 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 33 of 139 Chapter 12 – Independent Review Organizations ownership interest in or control over the person, or if the person has any ownership interest in or control over a payor” for clarity and to conform to current agency writing style. Section §12.204. Prohibitions of Certain Activities and Relationships of Independent Review Organizations and Individuals or Entities Associated with Independent Review Organizations. New §12.204(d) prohibits an officer, director, manager, executive, or supervisor of an IRO from serving as an officer, director, manager, executive, supervisor, employee, agent, or independent contractor of another IRO. This amendment is necessary to implement Insurance Code §4202.002(c)(1)(E). Insurance Code §4202.002(c) requires the commissioner to adopt standards and rules that prohibit an individual who serves as an officer, director, manager, executive, or supervisor of an IRO from serving as an officer, director, manager, executive, supervisor, employee, agent, or independent contractor of another IRO. TDI deletes §12.204(h) because the “December 26, 2010,” applicability dates are no longer relevant. Existing §12.204(g) is redesignated as §12.204(h). TDI also adopts nonsubstantive amendments to §12.204 to conform to current agency writing style. Section §12.205. Independent Review Organization Contact with and Receipt of Information from Health Care Providers and Patients. Amendments to §12.205(a) delete “preclude” and add “as the initial contract prevent” to clarify an existing requirement. Amendments to §12.205(e) delete “such expense shall be reimbursed by the” and “as expense of independent review” and add “The” and “must 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 34 of 139 Chapter 12 – Independent Review Organizations pay these unreimbursed costs to the health care provider” to clarify an existing requirement. TDI also adopts nonsubstantive changes to conform to current agency writing style. Section §12.206. Notice of Determinations Made by Independent Review Organizations. Amendments to §12.206(c)(1) and new §12.206(c)(2) and (3) require IROs to make a determination on a life-threatening condition within three days after receiving the information necessary to make a determination or, with respect to workers’ compensation medical benefits, within eight days after receiving the request to make a determination. These amendments are necessary to implement Insurance Code §4202.003(1), which provides that the standards adopted under §4202.002 require each IRO to make the IRO’s determination for a life-threatening condition as defined by §4201.002 no later than the earlier of the third day, rather than the fifth day, after the date the IRO receives the information necessary to make the determination. With respect to a review of a health care service provided to a person eligible for workers’ compensation medical benefits, the IRO must make its determination for a lifethreatening condition by the eighth day after the date the IRO receives the request for determination. With respect to a review of a health care service other than services provided to a person eligible for workers’ compensation medical benefits, the IRO must make its determination by the third day after the date the IRO receives the request that a determination be made. An amendment to §12.206(e) updates the web address for TDI’s forms. 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 35 of 139 Chapter 12 – Independent Review Organizations TDI also adopts nonsubstantive amendments to §12.206 to conform to current agency writing style. Section §12.207. Independent Review Organization Telephone Access. Amendments to §12.207(a) change “both time zones in Texas” to “both Central and Mountain time zones” for clarity. Amendments to §12.207(b) require an IRO’s phone system to be “dedicated.” TDI clarifies that a dedicated telephone system is a phone system intended primarily for use in the IRO business. These amendments are necessary to implement Insurance Code §4202.002(a) and (b). They are also necessary for TDI staff to be able to contact the IRO as part of its ongoing oversight of IROs under Insurance Code §4202.007. Moreover, the amendments ensure the IRO is preserving the confidentiality patient records. TDI also adopts nonsubstantive amendments to §12.207 to conform to current agency writing style. Section §12.208. Confidentiality. New §12.208(b) prohibits IROs from disclosing patient information protected by HIPPA to implement Insurance Code §4202.002(c)(1)(F). New §12.208(c) adds a reference to HIPAA to implement Insurance Code §4202.002(c)(1)(F). Amendments to redesignated §12.208(h) require IROs to transmit and store records in compliance with HIPAA to implement Insurance Code §4202.002(c)(1)(F). Insurance Code §4202.002(c), in part, requires the commissioner to adopt standards and rules that prohibit publicly disclosing patient information protected by HIPAA or transmitting the information to a subcontractor 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 36 of 139 Chapter 12 – Independent Review Organizations involved in the independent review process that has not signed an agreement similar to the business associate agreement required by regulations adopted under the HIPAA. TDI also adopts nonsubstantive amendments to §12.208 to conform to current agency writing style. Section §12.301. Complaints, Oversight, and Information. TDI adopts nonsubstantive amendments to §12.301 to conform to current agency writing style. Section §12.302. Administrative Violations. TDI adopts nonsubstantive amendments to §12.302 to conform to current agency writing style. Section §12.303. Surrender of Certificate of Registration. Amendments to §12.303(a) clarify when an IRO must surrender its certificate of registration. Amendments to §12.303(a) delete “while the organization is under investigation or as part of an agreed order” to implement Insurance Code §4202.002(c)(2)(B) as amended by HB 2645. Amendments to existing §12.303(b) delete the definition of “investigation” to conform to changes to §4202.002(c)(2)(B), as amended by HB 2645, which deleted the term. Amendments to existing §12.303(c) delete “a certificate of registration that is surrendered under this section is temporarily suspended while the investigation is pending” also to conform to changes to §4202.002(c)(2)(B). Amendments to §12.303 delete existing §12.303(f), which states that §12.4 only applies to IROs licensed on or after December 26, 2010, or IROs with certificates of registration renewed in Texas on or after December 26, 2010, as the applicability of this chapter is addressed in amended §12.4. 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 37 of 139 Chapter 12 – Independent Review Organizations TDI also adopts nonsubstantive amendments to §12.303 to conform to current agency writing style. Section §12.401. Fees. TDI adopts nonsubstantive amendments to §12.401 to conform to agency writing style. Section §12.402. Classification of Specialty. TDI adopts nonsubstantive amendments to §12.402 to conform to agency writing style. Section §12.403 Fee Amounts. TDI adopts nonsubstantive amendments to §12.403 to conform to agency writing style. Section §12.404. Payment of Fees. Amendments to §12.404(c) change the number of days within which URAs or payors must pay IROs from 30 to 15. These amendments implement Insurance Code §4202.002(a) and are necessary because TDI has determined 15 days is a sufficient amount of time for URAs or payors to pay IROs. TDI also adopts nonsubstantive amendments to §12.404 to conform to current agency writing style. Section §12.405. Failure To Pay Invoice. TDI adopts nonsubstantive amendments to §12.405 to conform to agency writing style. Section §12.406. Application and Renewal of Certificate of Registration Fees. Amendments to §12.406 change the fee for an original certificate of registration as an IRO from $800 to $1000, and the fee for renewal of a certificate of registration from $200 to $400. The increase in the fee for an original certificate of registration is necessary because the new fee better reflects the cost to TDI of regulating IROs. The amendment to the fee for the renewal of a certificate of registration is necessary 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 38 of 139 Chapter 12 – Independent Review Organizations because the renewal is now every two years instead of every year. TDI clarifies that the net cost of renewal for an IRO will remain the same. TDI clarifies that there is no fee for reporting a material change to a certification as an IRO. These amendments are adopted under TDI’s rulemaking authority in Insurance Code §4202.002(a)(1). TDI also adopts nonsubstantive amendments to §12.406 to conform to current agency writing style. Section §12.501. Requests for Independent Review. Amendments to §12.501 include inserting “Chapter 4201,” a reference to “Subchapter U,” and a reference to “Chapter 134 of this title.” These amendments are necessary under Insurance Code §4202.002(a) to properly cite the sections of the Insurance Code about utilization review. TDI also adopts nonsubstantive amendments to §12.501 to conform to current agency writing style. Section §12.502. Random Assignment. TDI adopts nonsubstantive amendments to §12.502(b) to conform to agency writing style. 3. SUMMARY OF COMMENTS AND AGENCY RESPONSE. General Comment: Commenters express their support for the proposed amendments. Agency Response: TDI appreciates the supportive comments. 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 39 of 139 Chapter 12 – Independent Review Organizations Comment: A commenter requests that all agency responses in the adopted rules implementing HB 4519 from the December 17, 2010, issue of the Texas Register (35 TexReg 11281) be reviewed and that the precedents set in the rulemaking phase of HB 4519 be used in rulemaking for HB 2645. A commenter states that the proposed rules have an “overly broad” interpretation of HB 2645 and that substantial portions of the proposed sections have no legislative authorization in HB 2645. Agency Response: TDI declines to make the suggested change. TDI emphasizes that the amendments and new section are necessary to implement HB 2645, 83rd Legislature, Regular Session (2013), which amends Insurance Code Chapter 4202, relating to the certification and operation of IROs in Texas. In addition, TDI has determined that other amendments are necessary to enforce Insurance Code Chapter 4202. TDI clarifies that in the December 17, 2010, issue of the Texas Register, adopted rules implementing HB 4519 were published (35 TexReg 11281), and reconsideration and application of HB 4519 agency responses would be redundant. Comment: A commenter requests the commissioner change the deadline for the submission of written comments on the proposed rules and delay the rule proposal public hearing for 30 days. The commenter states that IROs do not have full-time regulatory and advisory attorneys to prepare comments on new rules to determine constitutional issues such as legislative authority. The only option for IROs would be to retain law firms. Small IROs have had no surplus earnings to retain an attorney 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 40 of 139 Chapter 12 – Independent Review Organizations because average caseload was down to four per month in 2014. The commenter states that executives of the IROs prepare the comments and need more time. The commenter states that legislators who managed the passing of HB2645 should have additional time to review the proposed new rules to determine whether the rules faithfully implement the legislation that passed by overwhelming majorities in both houses and that was approved by the office of the governor. The commenter further explains that TDI has allowed IROs to comment on two draft proposals before publication of the proposed rules, but that the comments many submitted have not led to dialogue or discussion, and the same rules that were proposed will now be adopted. Agency Response: TDI declines to provide additional time for submission of comments because TDI provided a reasonable opportunity for all interested persons to submit data, views, or arguments, orally and in writing as required under Government Code §2001.029(a). TDI provided many opportunities for public comment, including a public stakeholder hearing, two advisory group forums, a public hearing on the rule proposal with oral testimony, and both a concept draft and proposed rule comment period. Comment: A commenter expresses concern that a currently filed bill will jeopardize confidentiality of the IRO panels of reviewers. The commenter states that IROs will no longer be independent if the reviewers’ identities are known. Agency Response: TDI asserts that proposed legislation is outside the scope of the proposed IRO rules. 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 41 of 139 Chapter 12 – Independent Review Organizations Section 12.4 Applicability Comment: A commenter recommends changing the applicability date in one of two ways: (i) at the time of the renewal application in the first renewal period after the publication of the adoption, or (ii) 120 days after the publication of the adoption. The commenter states that at least 120 days may be required to comply with the provisions of the new rules that require IROs to develop software to manage IRO processes, including a system for credentialing verification. The commenter states that while some IROs have software, others do not, and software experts tell the commenter that it may take as long as 180 days to develop and test the new software. The commenter states that it may take IROs a considerable amount of time to contract with medical directors, and with reviewers whose contracts must be changed to disclose that another physician without the same specialization of the reviewer will be auditing their work product. Agency Response: TDI agrees to change the effective date of the rule, but disagrees with the commenter’s suggested change. As explained in the reasoned justification, TDI has determined that the effective date of the adopted rules, which gives stakeholders until July 7, 2015, is sufficient. Based on this effective date, TDI also clarifies that existing IROs have an obligation to update their applications, but their submission of updated information does not change their existing renewal date. TDI asserts that IROs that have been granted a renewal of a certificate of registration before the effective date of this rule must report any material change, which will include new 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 42 of 139 Chapter 12 – Independent Review Organizations requirements of §12.103, no later than the 30th day after the date on which the change takes effect under Insurance Code §4202.005(c). TDI deleted the phrase “applications for a certificate of registration as an IRO, and for a renewal of a certificate of registration as an IRO” in adopted §12.4 to clarify that IROs must comply with the adopted amendments on the effective date of the rule. However, all independent reviews filed with TDI before the effective date of the rule are subject to the rules in effect at the time the independent review was filed with TDI. TDI clarifies that amended §12.103(4)(A) and (B) does not require IROs to develop software to manage IRO processes. But amended §12.103(4)(A)and (B) does require an IRO to include in its original application the procedures used by the IRO applicant to verify physician and provider credentials and the computer processes, electronic databases, and records used to make the verification, if any, and the credentialing software used by the applicant for managing the processes, databases, and records. An extension of the effective date is not necessary for an IRO to develop and test the new software, because an IRO is not required to purchase new software under the proposed rules. TDI clarifies that the new and amended rules neither require the IRO to change its contracts with reviewers nor require an IRO to disclose to reviewers that the medical director will perform quality assurance audits. Section 12.5. Definitions 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 43 of 139 Chapter 12 – Independent Review Organizations Comment: A commenter states the definition of “adverse determination” should be amended to highlight that a determination that a health care service is experimental or investigational is not an adverse determination for purposes of health care provided under workers’ compensation insurance. Section 12.5(1) should be amended to be consistent with the definition of adverse determination for utilization review in §19.2003(b)(1) and state specifically that a determination that a health care service is experimental or investigational is not an adverse determination for purposes of health care provided under workers’ compensation insurance. The commenter recommends that the definition of “adverse determination” include the sentence, “For purposes of workers’ compensation, a determination that health care services are experimental or investigational does not constitute an adverse determination.” The commenter states that the definition of “independent review” in amended §12.5(19) should be modified by removing the language after adverse determination. The commenter states this would permit the same definition of the phrase for both workers’ compensation and group health, without continuing the misstatement that a determination that proposed health care is experimental or investigational is a basis for denial in workers’ compensation. The commenter states the changes to both §12.5(1) and §12.5(19) provide precision and clarity as to the meaning of the rules. Agency Response: TDI declines to make the suggested change. TDI did not propose amendments to the existing definition of “adverse determination” because existing §12.6(b), in part, provides that IROs and personnel conducting independent reviews must comply with Labor Code Title 5 and applicable TDI-DWC rules. For workers’ 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 44 of 139 Chapter 12 – Independent Review Organizations compensation, in the event of a conflict between 28 TAC Chapter 12 and the Labor Code, the Labor Code controls. It is TDI’s and TDI-DWC’s position that, based on Labor Code §408.021, an injured employee under both network and nonnetwork coverage is entitled to all medically necessary health care services, including experimental and investigational health care services. Labor Code §408.021 entitles an injured employee, under both network and nonnetwork coverage, to health care reasonably required by the nature of the injury as and when needed. Additionally, under §12.206(d)(15), the IRO’s review outcome in the notice of determination must clearly state whether medical necessity or appropriateness exists for each of the health care services in dispute and whether the health care services in dispute are experimental or investigational, as applicable. Comment: A commenter welcomes the replacement of the term “stored” with “maintained and accessible” in proposed §12.5(32) because most micro businesses, and businesses in general in the current technological environment, store their records in secure remote servers, accessible from their office computers. These records are “maintained and accessible” and managed by the computer in the office of the business. This contrasts with the past technological environment where business records were stored in file cabinets in physical offices. Commenters also state that a short inspection of the computer system at the office of an IRO would allow TDI to verify both that an IRO has a physical office in the state and that the required records are “maintained and accessible” from the IRO’s 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 45 of 139 Chapter 12 – Independent Review Organizations computer. A commenter states that the same records could be accessed by IRO staff at a computer at the TDI offices, which would allow TDI to hold examinations in a government office rather than in the home offices of small, micro businesses. Agency Response: TDI appreciates the supportive comment but does not agree that TDI can access the IRO’s computer from the TDI offices. Remotely accessing the IRO’s records would require TDI to expend additional resources obtaining a system capable of such access and potentially jeopardize both the IRO’s and TDI’s security as well as patients’ and reviewers’ confidentiality. In addition, TDI does not agree with the commenter’s recommendation that TDI could hold examinations in TDI’s offices. Existing §12.106(c) requires that documents that support the application for certificate of registration or renewal must be available for inspection at the primary office of the IRO. In addition to examining records, TDI staff must go on-site to determine continuing compliance with Insurance Code Chapter 4202. Under amended §12.106(c), TDI specifies that documents must be available for review during an examination at the IRO’s primary office located in Texas, including information required in the original application for a certificate of registration. TDI will conduct an on-site examination at the applicant’s primary office to ensure compliance with TDI’s rules, including amended §12.106, §12.208, and §12.103(13), existing §12.204(c), and in the case of an office located in a residence, verifying that the office is located in a room set aside for IRO business. 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 46 of 139 Chapter 12 – Independent Review Organizations Section 12.103. Information Required in Original Application for Certificate of Registration. Comment: A commenter recommends clarifying in §12.103(1)(B) that the summary of review criteria and review procedures that will be used to determine the experimental and investigational nature of health care will have no application for IROs performing review of health care provided in workers’ compensation. The commenter suggests adding “provided outside of workers’ compensation” to the end of existing §12.103(1)(B). Agency Response: TDI declines to make the suggested change. TDI clarifies that existing §12.6(b), in part, provides that IROs and personnel conducting independent reviews for workers’ compensation must comply with Labor Code Title 5 and applicable TDI-DWC rules. In the event of a conflict between 28 TAC Chapter 12 and the Labor Code, the Labor Code controls. It is TDI’s and TDI-DWC’s position that based on Labor Code §408.021, an injured employee under both network and nonnetwork coverage is entitled to all medically necessary health care services, including experimental and investigational health care services. Labor Code §408.021 entitles an injured employee, under both network and nonnetwork coverage, to health care reasonably required by the nature of the injury as and when needed. Under §12.206(d)(15), the IRO’s review outcome in the notice of determination must clearly state whether medical necessity or appropriateness exists for each of the health care services in dispute and whether the health care services in dispute are experimental or investigational, as applicable. 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 47 of 139 Chapter 12 – Independent Review Organizations Comment: A commenter that is an accreditation board asks TDI to state whether its accreditation standards for IROs are substantially similar to TDI’s requirements. Agency Response: TDI will consider an organization’s accreditation standards at the time an IRO applicant submits an application for or renewal of a certificate of registration. Comment: A commenter requests that new §12.103(8)(A) state “the applicant shall submit written evidence in the form of a copy of the Certificate of Formation issued by the Texas Secretary of State, and nothing in this rule shall be taken to mean that the applicant must submit any additional ‘letter’ or other documentation from the secretary of state.” Agency Response: TDI agrees to amend §12.103, but disagrees with the suggested language. TDI deleted the phrase “a letter from the Texas Secretary of State” and added the phrase “a copy of the Certificate of Formation from the Texas Secretary of State” in §12.103(8) to reflect the formation and existence requirements of Business Organizations Code §3.001. Comment: A commenter disagrees with TDI’s proposed deletion of existing §12.103(8)(A), requiring an IRO to submit documentary evidence including the applicant’s bylaws, rules, and regulations in the IRO application. The commenter requests that §12.103(8)(A) require an IRO to provide: 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 48 of 139 Chapter 12 – Independent Review Organizations (A) Written evidence that the applicant is doing business in this state in accordance with the Business Organizations Code, which may include: (i) a letter from the Secretary of State indicating the entity has filed the appropriate information to conduct business in this state; and (ii) the bylaws, rules, and regulations, or any similar document regulating the conduct of the internal affairs of the applicant with a notarized certification bearing the original signature of an officer or authorized representative of the applicant that they are true, accurate, and complete copies of the originals. Agency Response: TDI declines to make the suggested change. New §12.103(12) requires the IRO applicant to submit to TDI documentation from the comptroller demonstrating the applicant’s good standing and the right to transact business in Texas. Insurance Code §4202.002(c)(2)(A)(ii) requires an IRO to be incorporated in this state. TDI deleted the phrase “a letter from the Texas Secretary of State” and added the phrase “a copy of the Certificate of Formation from the Texas Secretary of State” in new §12.103(8)(A) to reflect the formation and existence requirements of Business Organizations Code §3.001. TDI deleted language requiring the applicant to submit documents relating to its internal affairs, such as bylaws, because TDI has included more specific requirements about the information necessary for the commissioner to determine whether an applicant is qualified to obtain a certificate of registration as an IRO in amended §12.103. 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 49 of 139 Chapter 12 – Independent Review Organizations Comment: A commenter states that new §12.103(8)(E) has no legislative authorization, is not in HB 2645, and is not in Insurance Code §4200.002(a) or any other section of the Insurance Code. Insurance Code §4200.002(a) requires IROs to submit a list of any contractors, and a list follows of the types of businesses, all of which are in the health care industry. The commenter suggests TDI make it clear that IROs must submit a list of contractors in the medical industry where there might be a conflict of interest, but this is not a demand for lists of contracts for any and all contractors, especially if not in the medical industry or if the contractor is not involved in processing cases and does not have access to medical records. A commenter requests that TDI continue the same practice that has been in place for over a decade, requiring IROs to submit lists of contractors in the health insurance industry. If the contractor has access to medical records, the contractor must sign a business associate agreement, as per HB 2645. A commenter states that until 2014, IROs were not required to submit either copies of contracts or lists. Agency Response: TDI declines to make the suggested change. TDI clarifies that Insurance Code Chapter 4202 does not contain a requirement that IROs submit to TDI only a list of health care industry contracts. Insurance Code Chapter 4202 gives the commissioner the authority to adopt standards and rules for the certification, selection, and operation of IROs. Insurance Code §4202.007 requires the commissioner to provide ongoing oversight of IROs to ensure continued compliance. TDI’s oversight of IROs includes oversight of contracts and subcontracts with third parties who perform any IRO functions on behalf of the IRO. TDI staff must determine compliance with all 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 50 of 139 Chapter 12 – Independent Review Organizations requirements of Insurance Code Chapter 4202, including processing the independent review requests that TDI assigns to the IRO, maintaining confidentiality, and credentialing of reviewers. To do so, TDI staff must be aware of all parties performing IRO functions. TDI clarifies that new §12.103(8)(E) is necessary to implement Insurance Code §4202.002(a) and Insurance Code §4202.007, to ensure that IROs retain responsibility for compliance with Insurance Code Chapter 4202 and 28 TAC Chapter 12. Section 12.104. Review of Original Application. Comment: A commenter states that the existing 30-day time frame for an applicant to correct omissions or deficiencies in the application should be retained unless TDI publishes and makes available to applicants a guide to application for a certificate of registration as an IRO, in which case the proposed 15-day requirement would be sufficient. At one time before HB 4519, TDI published such a guide, but no such guide has been available since 2009. The commenter states that a guide would streamline the application and renewal process, and any audit or examination process. The commenter states that a guide would make TDI’s understanding of the IRO process clear, and how to be successful and avoid lengthy disputes with IROs that have been certified as IROs. Agency Response: TDI declines to make the suggested change. TDI clarifies that the requirement in new §12.104(2)(B) that an applicant correct omissions or deficiencies in the application within 15 days of the date of TDI’s latest notice of omissions or 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 51 of 139 Chapter 12 – Independent Review Organizations deficiencies only applies to original applications for certificates of registration, and does not apply to renewals, audits, or examinations. TDI determined that 15 days is a sufficient amount of time for applicants to respond to TDI’s notice of omissions and deficiencies. Additionally, new §12.104(2)(B) provides that an applicant may request additional time, not to exceed 30 days, in writing to correct omissions or deficiencies. TDI is not aware of any guide that TDI published for use by IRO applicants. The current and past application forms (LHL006) include and have included instructions for applicants. TDI has also prepared a Frequently Asked Questions page for IROs, available on TDI’s website at www.tdi.texas.gov/hmo/irofaqs.html. Section 12.106. Examinations. Comment: A commenter commends TDI for establishing that the commissioner or the commissioner’s designee will conduct an on-site examination of the IRO applicant’s primary office. The commenter agrees that an on-site examination is the most effective mechanism for ensuring compliance with the requirements to be certified as an IRO. Agency Response: TDI appreciates the supportive comment. Comment: A commenter states that HB 2645 does not directly address examinations, either before or after certification, but it does address computer systems required at the office of the IRO, and the required use of electronic records by IRO. A commenter recommended that HB 2645 include a provision that IROs move to computer systems 3927 TITLE 28. INSURANCE Adopted Sections Part I. Texas Department of Insurance Page 52 of 139 Chapter 12 – Independent Review Organizations and electronic systems in the hope that TDI would see how these provisions would streamline the examination and certification process by making a form of eRegulation possible. The commenter states that in TDI’s adopted rules in November 2010, implementing HB 4519, TDI declares that on-site examinations of IROs are necessary in order to examine the books and records of the IRO, which at that time were usually in file cabinets at the IROs primary office in Texas. The commenter states that HB 2645 requires IROs to maintain electronic records that are accessible from the computer systems in the IRO’s offices. A commenter states that proposed amended §12.106 was not required by HB 2645 and is not addressed in the Insurance Code. The commenter requests that TDI amend §12.106 to state: “Prior to Certification: Prior to issuing a Certification, TDI will conduct an onsite ‘Inspection’ of the executive office of the IRO to verify that the IRO has a physical office, and that it is equipped with a computer system where records are maintained and accessible. Continued:  https://www.tdi.state.tx.us/rules/2015/documents/order3927.pdf

Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Texas civil litigation attorneys based in Fort Worth who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s new office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.

As a prerequisite for writing workers’ compensation insurance in Texas, an insurance company must maintain or provide accident prevention facilities that are adequate to provide accident prevention services required by the nature of their policyholder operations. These include surveys, recommendations, training programs, consultations, analysis of accident causes, industrial hygiene, and industrial health services. Applicable statute and rules include the Texas Labor Code (TLC), Chapter 411, Subchapter E and 28 Texas Administrative Code (TAC), Chapter 166. For more information about the accident prevention services requirements, contact the TDI-DWC at 512-804-4626 or aps@tdi.texas.gov.

• Annual Reporting Requirements
• Accident Prevention Services Inspections
• Recently Adopted/Repealed Accident Prevention Services Rules 28 TAC, Chapter 166

Annual Reporting Requirements

• Companies Writing Worker’s Compensation Policies Before October 1, 2013Insurance companies that had active workers’ compensation policies at any time from January 1, 2013 through October 1, 2013 must submit an initial DWC Form-109, Accident Prevention Services Annual Report, to the TDI-DWC by April 1, 2014. Subsequent annual reports must be filed by April 1 of each year thereafter if active policies were in effect for the preceding calendar year.
• Companies that Start Writing Worker’s Compensation Policies On or After October 1, 2013 

  An insurance company that writes its first workers’ compensation policy on or after October 1, 2013 shall file with the TDI-DWC an initial DWC Form-109, Accident Prevention Services Annual Report,not later than the effective date of its first workers’ compensation insurance policy. Thereafter, they must file a subsequent annual report by April 1 of each year if active policies were in effect for the preceding calendar year.The DWC Form-109 may be submitted to the TDI-DWC via e-mail to aps@tdi.texas.gov.

Accident Prevention Services Inspections

The TDI-DWC determines the adequacy of insurance company accident prevention facilities and services that are required by state law through review of information submitted on the DWC Form-109, Accident Prevention Services Annual Report, and through inspections of an insurance company’s accident prevention services.

As part of the inspection process, the TDI-DWC conducts policyholder visits to help determine the adequacy of the accident prevention services provided by insurance companies. Items reviewed during policyholder visits typically include: the types and confirmation of accident prevention services provided by the insurance company; a review of policyholder written safety programs and work-related injuries and illnesses; and an assessment of safety or health hazards at the worksite.

As determined to be appropriate, the TDI-DWC can remotely inspect an insurance company’s accident prevention services via electronic means. Insurance companies that desire an electronic inspection should notify the TDI-DWC of the request as soon as possible after receipt of the notification of inspection letter and no later than the date the policyholder list is due. Insurance company representatives or their designees must be available by telephone on the day of the inspection. Any information presented electronically by insurance companies will be provided in a manner that does not impede or alter the inspection process and will be in accordance with 28 TAC Chapter 166.

Each insurance company writing workers’ compensation policies will receive an initial inspection. Subsequent inspections will be conducted as often as the TDI-DWC considers necessary to determine compliance with the statute and rules.

Recently Adopted/Repealed Accident Prevention Services Rules

On March 11, 2013, Commissioner of Workers’ Compensation Rod Bordelon adopted new 28 TAC §166.2, amended §§166.1, 166.3, and 166.5, and repealed §§166.2, 166.4, and 166.6 – 166.9 regarding Texas Workers’ Compensation Accident Prevention Services. The purpose of these changes is to update various notice, service, and reporting requirements imposed upon insurance companies regarding accident prevention services associated with TLC provisions in Chapter 411, Subchapter E, Accident Prevention Services.

The adopted rules were effective October 1, 2013. The newly adopted rules and associated forms are available on the TDI website.

• Adopted/Repealed Rules (28 TAC Chapter 166)
• DWC Form-105, Accident Prevention Services Worksheet
• DWC Form-109, Accident Prevention Services Annual Report
• Accident Prevention Services Rule Implementation Training Materials (PDF)

For more information contact: APS@tdi.texas.gov

Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Texas civil litigation attorneys based in Fort Worth who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s new office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.