In 2005, Governor Perry signed into law the most comprehensive organizational and policy reforms to the Texas workers’ compensation system since 1989.  The key provisions in House Bill 7 led to reduced bureaucracy and increases in efficiency by abolishing the old Workers’ Compensation Commission and moving its mission to a new division in the Texas Department of Insurance governed by a single, appointed commissioner.  In addition, the legislation created workers’ compensation networks and the Office of Injured Employee Counsel, enhanced benefits for injured employees, provided TDI with the authority to mandate rate reductions, and renewed focus on returning injured employees to work.

Texas had one of the most costly and least effective workers’ compensation systems in the nation.  Under the old system, one in four Texans injured in the workplace never fully returned to work because of lack of care.  Doctors had been dropping out of the system because they could not afford to participate, and employers were paying the third highest rates in the nation.

Governor Perry made workers’ compensation reform a priority for his administration during the 79th legislative session, working with legislators and stakeholders to secure the passage of the most comprehensive workers’ compensation reforms since the 1980s. 

The Division of Workers’ Compensation continues to make substantial improvements to the system through promulgated rules and outreach, including new fee guidelines, effective March 1, 2008, for payment of doctors, health care providers and hospitals. These new guidelines include significant increases in reimbursement rates for doctors and health care providers, providing necessary incentives to increase participation in the states’ voluntary workers’ compensation system.  Additionally, the division will be able to identify areas of the state in which access to health care providers is less available and adopt appropriate standards, guidelines and rules regarding the delivery of health care in those areas.  These new rules provide an incentive reimbursement of 10 percent over the regular reimbursement amount to encourage health care providers to provide services to injured employees in underserved areas. 

Another improvement to the workers’ compensation system includes the implementation of an electronic billing and reimbursement project, which is expected to include reduction in lost and misrouted bills, acknowledgement of receipt of medical bills, reduction in processing time frames and reduction in administrative costs.

One of the most significant changes made to the workers’ compensation system through House Bill 7 is to the medical care delivery system through the creation of workers’ compensation health care networks.  Networks improve outcomes and lower the cost of claims by focusing on evidence-based care and return-to-work, minimizing arguments over medical necessity and market-based competition.  In addition, network providers are subject to greater surety of payment in claims where the work-relatedness of an injury is in question, and insurance carriers would be required to pay the cost of in-network medical disputes.  As of July, 2008, the division has certified 34 networks which serve 231 counties.

Another significant change to the workers’ compensation system is enhanced benefits for injured employees.  Currently, injured employees wait half as long to receive compensation for their first week of lost pay, and will see the cap on weekly income benefits rise by about 15 percent.  In addition, the legislation created the Office of Injured Employee Counsel, a dedicated state agency with the sole focus of helping injured employees through its ombudsman programs.  OIEC advocates the interests of injured employees on key rules and policies to ensure balance and fairness for everyone in the system.  In FY 2007, OIEC assisted 6,636 injured workers in benefit review conferences and over 2,000 injured workers in contested case hearings through their ombudsman programs.

Finally, through the workers’ compensation reforms enacted since Governor Perry took office, the Texas Department of Insurance, has authority to mandate rate reductions on carriers who do not pass savings on to employers in the form of lower premiums, allowing the opportunity for more employers to opt into the system and freeing resources to grow and create jobs.