TITLE 28.INSURANCE

Part 1. TEXAS DEPARTMENT OF INSURANCE

The Texas Department of Insurance proposes amendments to §9.1 and §9.401 which concern the adoption by reference of certain amendments to the Basic Manual of Rules, Rates and Forms for the Writing of Title Insurance in the State of Texas (Basic Manual) and to the Texas Title Insurance Statistical Plan (Statistical Plan). The amendments reflect changes to the Basic Manual and the Statistical Plan which the proposed sections will adopt by reference and which were considered at the rulemaking phase of the 2000 Texas Title Insurance Biennial Hearing. Adopting new rules and forms and modifying or replacing currently existing rules and forms in the Basic Manual and Statistical Plan facilitate the administration and regulation of title insurance in this state. The proposed amendments to the Basic Manual and Statistical Plan will clarify and standardize the rules and forms regulating title insurance. The proposed amendments to the Basic Manual and Statistical Plan are identified by item number and are a republication of items published for consideration at the 2000 Texas Title Insurance Biennial Hearing, Rulemaking Phase, Docket Number 2470, (rulemaking hearing), held on November 27, 2001, together with proposed amendments and typographical and formatting changes to the items. Republication is necessary to incorporate these items into the Basic Manual and Statistical Plan as applicable, to give notice of the withdrawal, by their respective submitters, of Items 2000-20, 2000-21, 2000-22, 2000-23, 2000-24, 2000-25, 2000-31, 2000-E, 2000-G, 2000-H, and 2000-K at the rulemaking hearing, to give notice of the changes to the various proposed items, and to give notice of the decision not to adopt Items 2000-17, 2000-F, and 2000-J, which decision is set forth in a separate Commissioner's Order. The items which are the subject of this proposal are as follows:

Eleven proposals relate to mortgagee policy endorsements. The purpose of these endorsements is to streamline the mortgage lending process by allowing lenders to efficiently and economically close and package real estate loans for resale in the secondary lending market. This reflects a nationwide trend regarding uniformity of these types of endorsements so lenders can readily identify the types of coverages available on each particular loan. The department has made corrective and clarifying changes to these items and has assigned form numbers to each item. A brief description of each item follows its listing:

Item 2000-1 - Submission to adopt a new First Loss Endorsement (Form T-14). This proposed endorsement would be available for mortgagee policies and would typically be used in large commercial transactions. It would allow a lender to make a claim on its policy, without having to first foreclose on its lien, if appraisals show there has been a diminution in value of at least 10%.

Item 2000-2 - Submission to adopt a new Last Dollar Endorsement (Form T-15). This proposed endorsement would be available for mortgagee policies. Normally, policy limits are reduced as the principle is paid down. With this endorsement, loan payments would be applied first against the value of any personal property or non-Texas realty securing the loan and would not reduce the policy limits unless and until the loan amount secured by those other properties has been paid down completely.

Item 2000-3 - Submission to adopt a new Mortgagee Policy Aggregation Endorsement (Form T-16). When a loan is secured by land in multiple states, this proposed endorsement for mortgagee's policies would allow any claim on any piece of property to be paid out of the aggregate coverage from all the title policies involved. Coverage would be reduced 'pro tanto', meaning dollar for dollar.

Item 2000-4 - Submission to adopt a new Planned Unit Development Endorsement (Form T-17). This proposed endorsement for mortgagee's policies would give expanded coverage for restrictions, assessments, rights of first refusal, and forcible removal of structures. Planned Unit Developments are organized in such a way that facilitates the sort of search/due diligence that would be required in underwriting such risks.

Item 2000-5 - Submission to amend Procedural Rule P-9, Endorsement of Owner or Mortgagee Policies. This proposed procedural rule will authorize the use of the endorsements described in Items 2000-1 through 2000-4.

Item 2000-6 - Submission to adopt a new Restrictions, Encroachments, Minerals Endorsement (Form T-19). This proposed endorsement provides coverage for losses arising out of building setback line violations and other restrictions which have established easements, provided for an option to purchase, a right of first refusal or the prior approval of a future purchaser or occupant, or provided a right of reentry, possibility of reverter or right of forfeiture because of violations of enforceable covenants, conditions or restrictions. Also covered is damage to existing buildings located or encroaching upon any portion of the land subject to any easement excepted in Schedule B that results from the future exercise of any right existing on the date of the policy to use the surface of the land for the extraction or development of minerals excepted from the description of the land or excepted in Schedule B and from a final court order or judgment requiring removal from the land adjoining the insured land of any encroachment, other than fences, landscaping or driveways, excepted in Schedule B.

Item 2000-7 - Submission to adopt a new procedural rule (P-50) for the proposed new Restrictions, Encroachments, Minerals Endorsement. This procedural rule would authorize the use of the endorsement described in Item 2000-6.

Item 2000-8 - Submission to adopt a Texas Short Form Residential Mortgagee Policy of Title Insurance (T-2R) and Addendum (T-2R Addendum). This proposed short form will aid in logistics and speed the delivery of policies by giving the insured a checklist by which to elect various endorsements and make the language more consistent with American Land Title Association forms.

Three proposals would implement the short form checklist proposal and provide clean up language in certain rules and forms as detailed herein:

Item 2000-9 - Submission to amend Procedural Rule P-1 to make reference to direct operations and the proposed new Texas Short Form Residential Mortgagee Policy.

Item 2000-10 - Submission to adopt a new procedural rule (P-51) to implement the proposed new Texas Short Form Residential Mortgagee Policy.

Item 2000-11 - Submission to amend Schedules A and B of the Commitment for Title Insurance (Form T-7) to reference application of the proposed new Texas Short Form Residential Mortgagee Policy.

Item 2000-12 - Submission to amend Procedural Rule P-17, Electronically Produced Endorsement Forms. As proposed by the department, it would allow title companies to electronically produce forms and endorsements and make allowance for electronic signatures while preserving safeguards for document retention and audit.

Item 2000-13 - Submission to amend paragraph 1 of the Conditions and Stipulations of the Texas Owner Policy of Title Insurance (Form T-1). This item would amend the definition of insureds to add limited liability companies and limited liability partnerships. Such companies were not authorized in Texas when the form was last revised.

Three proposals would amend existing leasehold endorsements to incorporate the language of recent revisions to the American Land Title Association forms, including changes in the definition of valuation of an estate:

Item 2000-14 - Submission to amend the Leasehold Owner Policy Endorsement (Form T-4).

Item 2000-15 - Submission to amend the Residential Leasehold Endorsement (Form T-4R).

Item 2000-16 - Submission to amend the Leasehold Mortgagee Policy Endorsement (Form T-5) should allow more flexibility in calculating damages in an eviction.

Two proposals concern amendments regarding the use of surveys in title insurance. Existing Procedural Rule P-2 provides that a current survey must be purchased as a prerequisite for the survey deletion, except in residential refinances in which a seven year old survey can be used. The 77th Legislature enacted Senate Bill 1707, which added Insurance Code Article 9.07C to provide that a survey of any age can be used if it is acceptable to the underwriter and an affidavit verifying the existing survey is provided. The submissions would implement the legislation and make conforming amendments to the title commitment form. Further, the department has noted on the promulgated residential real property affidavit that it may also be modified as appropriate for commercial transactions.

Item 2000-18 - Submission to amend Procedural Rule P-2, Amendment to Exception to Area and Boundaries.

Item 2000-19 - Submission to amend the Commitment for Title Insurance (Form T-7).

The following six proposals correct typographical errors, update minimum escrow requirements, clarify the good funds rule, revise the Statistical Plan, and establish document retention rules:

Item 2000-26 - Submission to amend Minimum Standards, Specific Instructions and Report Forms for Audit of Trust Funds Required of Texas Title Insurance Agents, Direct Operations, Title Attorneys and Attorneys Licensed as Escrow Officers. This proposed amendment to the Minimum Escrow Procedures clarifies issues related to escrow accounts and copies of checks and clarifies reporting deadlines.

Item 2000-27 - Submission to amend Procedural Rule P-22 to be more consistent with Procedural Rules P-1 and P-24. This proposed amendment clarifies issues related to the payment of fees for examination and closing and also accommodates multi-county transactions.

Item 2000-28 - Submission to amend Procedural Rule P-27, Disbursement from Trust Fund Accounts. This proposed amendment clarifies "good funds" requirements to aid in preserving the integrity of escrow accounts.

Item 2000-29 - Submission to amend Procedural Rule P-28 to correct an address of the department.

Item 2000-30 - Submission to adopt new Procedural Rule P-32 regarding document retention. This proposed amendment clarifies document retention requirements in light of emerging electronic data storage technologies, while maintaining the department's ability to audit and verify information. Title policies must be kept indefinitely; hard copies of evidence of insurability must be kept for 3 years and thereafter can be electronically scanned and kept for the remainder of the 15 year retention period as required by Article 9.34, and escrow documentation is subject to a 3 year retention schedule. Read in conjunction with the proposed amendments to P-17 (Agenda Item 2000-12), documents which are initially computer generated or electronically produced may be retained in that medium.

Item 2000-32 - Submission to amend the Texas Title Insurance Statistical Plan is necessary to update and revise reporting codes.

Item 2000-A - Submission to adopt a new Procedural Rule P-52 regarding delivery of pro forma policies and promulgated forms. This proposed procedural rule would allow companies to issue pro forma policies in commercial transactions in excess of $500,000.

The following three proposals are designed to allow consumers to obtain title insurance on manufactured housing characterized as real property pursuant to recent legislative changes:

Item 2000-B - Submission to adopt a Supplemental Coverage Manufactured Housing Unit Endorsement (Form T-31.1).

Item 2000-C - Submission to amend Procedural Rule 9.b.(7) to implement the adoption of the proposed Supplemental Coverage Manufactured Housing Unit Endorsement (Form T-31.1).

Item 2000-D - Submission to amend Procedural Rule 9.a. to implement the adoption of the proposed Supplemental Coverage Manufactured Housing Unit Endorsement (Form T-31.1).

Item 2000-I - Submission to amend Procedural Rule P-24 concerning the division of premiums between entities performing title services. Current Procedural Rule P-24 specifies the percentages of an agent's premium to be shared among agents for performing various services. This proposed amendment would eliminate a provision whereby agents can agree in writing to different percentages not prescribed by the Commissioner and would clarify the application of the payment of the percentages.

The department has filed a copy of each of the proposed items with the Secretary of State's Texas Register section. Persons desiring copies of the proposed items can obtain them from the Office of the Chief Clerk, Texas Department of Insurance, 333 Guadalupe Street, Austin, Texas, 78714-9104. To request copies, please contact Sylvia Gutierrez at 512/463-6327.

Robert R. Carter, Jr., deputy commissioner for the title division, has determined that, for each year of the first five years the amendments are in effect, there will be no fiscal impact on state or local government as a result of enforcing or administering the amendments. Mr. Carter has also determined that there will be no effect on local employment or the local economy that is separate from any impact of legislation.

Mr. Carter has also determined that for each year of the first five years the amendments are in effect there are a number of public benefits anticipated as a result of the amendments to the Statistical Plan and Basic Manual. Providing more uniform endorsements for mortgagee policies will allow for more efficient closing of transactions. The updating and revising of the minimum escrow requirements, good funds rule, and Statistical Plan, allow for consistent administration, facilitate the efficiency of the department and the closing of transactions. The proposals adapt the Basic Manual to changing business practices. Clarifying the division of payments between agents should make dealings between agents more efficient and should result in a larger percentage of the premium remaining in the county in which expenses related to maintaining and furnishing title evidence are incurred. The new and updated promulgated forms will impose no additional regulatory costs on companies that decide to participate in the title insurance market, and the costs of reproducing such forms, estimated to be no more than $.15 per form for the cost of a photocopy, should be fully compensated by the existing premium schedule. The public benefit anticipated as a result of administering and enforcing the survey proposals will be to clarify the circumstances under which area and boundary or survey coverage is provided as required by the 77th Legislature in SB 1707. There are anticipated costs to those title insurance companies and title agents required to comply with these survey proposals in the form of affidavits which title agents and title companies must provide for consumers to execute in lieu of new surveys. To the extent that title companies and title agents already provide such affidavits pursuant to the residential refinance requirements in Procedural Rule P-2, the department expects the current premium schedule to fully compensate for such costs. Further, the proposals impose no uncompensated regulatory costs on companies that decide to participate in the title insurance market. Any additional costs associated with those proposals implementing legislation are due to the legislation and are not a result of the administration of the rule. As to all the proposals, the department anticipates no differential impact between small, large, and micro-businesses. The cost per hour of labor should not vary between small, large, and micro-businesses. Further, it is neither legal nor feasible to exempt small or micro-businesses or to waive compliance considering the purpose of the efficient regulation of title insurance for which the amendments are to be adopted.

To be considered, written comments on the proposal must be submitted no later than 5 p.m. on January 28, 2002, to Lynda H. Nesenholtz, General Counsel and Chief Clerk, Mail Code 113-2A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104. An additional copy of the comments must be submitted simultaneously to Robert R. Carter, Jr., Deputy Commissioner, Title Division, Mail Code 106-2T, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104. Request for a public hearing should be submitted separately to the Chief Clerk's office. It is noted that any comments received during the previous rulemaking hearing will be considered part of the record regarding the proposed amendments.

Subchapter A. BASIC MANUAL OF RULES, RATES, AND FORMS FOR THE WRITING OF TITLE INSURANCE IN THE STATE OF TEXAS

28 TAC §9.1

These amended sections are proposed pursuant to Insurance Code Articles 9.07, 9.07C, 9.21, and §36.001, and House Bill (HB) 1869 concerning changes to the Texas Manufactured Housing Standards Act and the Texas Property Code. Article 9.07 authorizes and requires the commissioner to promulgate or approve rules and policy forms of title insurance and otherwise to provide for the regulation of the business of title insurance. Article 9.07C provides that a survey of any age can be used if it is acceptable to the underwriter. Article 9.21 authorizes the commissioner to promulgate and enforce rules prescribing underwriting standards and practices, and to promulgate and enforce all other rules necessary to accomplish the purposes of chapter 9, concerning regulation of title insurance. HB 1869 establishes new requirements for "permanently affixed" manufactured homes that allow a loan on a manufactured home and a loan on real property to be combined. Section 36.001 authorizes the Commissioner of Insurance to adopt rules for the conduct and execution of the duties and functions of the Texas Department of Insurance only as authorized by statute.

The following statutes are affected by this proposal: Insurance Code, Articles 9.07, 9.07C, and 9.21 Subchapter A. Basic Manual of Rules, Rates, and Forms for the Writing of Title Insurance in the State of Texas

§9.1.Basic Manual Of Rules, Rates, and Forms for the Writing of Title Insurance in the State of Texas.

The Texas Department of Insurance adopts by reference the Basic Manual of Rules, Rates, and Forms for the Writing of Title Insurance in the State of Texas as amended effective February 28, 2002 [ ~~June 5, 2000~~ ]. The document is available from and on file at the Texas Department of Insurance, Title Division, Mail Code 106-2T, 333 Guadalupe Street, Austin, Texas 78701-1998.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on December 17, 2001.

TRD-200107978

Gene Jarmon

Assistant General Counsel

Texas Department of Insurance

Earliest possible date of adoption: January 27, 2002

For further information, please call: (512) 463-6327

Subchapter C. TEXAS TITLE INSURANCE STATISTICAL PLAN

28 TAC §9.401

The following statutes are affected by this proposal: Insurance Code, Articles 9.07, 9.07C, and 9.21 Subchapter C. Texas Title Insurance Statistical Plan

§9.401.Texas Title Insurance Statistical Plan

The Texas Department [ ~~State Board~~ ] of Insurance adopts by reference the rules contained in the Texas Title Insurance Statistical Plan as amended effective February 28, 2002 [ ~~October 1, 1991~~ ]. This document is published by the Texas Department of Insurance and is available from the Property and Casualty Data Services [ ~~Statistical and Rate Development~~ ] Division, Mail Code 105-5D [ ~~109-1A~~ ], Texas Department of Insurance, William P. Hobby , Jr. State Office Building, 333 Guadalupe Street, P.O. Box 149104, Austin, Texas 78714-9104.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on December 17, 2001.

TRD-200107979

Gene Jarmon

Assistant General Counsel

Texas Department of Insurance

Earliest possible date of adoption: January 27, 2002

For further information, please call: (512) 463-6327

Chapter 21. TRADE PRACTICES

Subchapter M. MANDATORY BENEFIT NOTICE REQUIREMENTS

28 TAC §§21.2101 - 21.2103, 21.2105, 21.2106

The Texas Department of Insurance proposes amendments to §§21.2101 - 21.2103, 21.2105 and 21.2106 concerning mandatory notice of coverage of certain tests for the detection of colorectal cancer. The 77th Texas Legislature enacted Senate Bill 1467 which added new Article 21.53S to the Texas Insurance Code mandating certain benefits related to the detection of colorectal cancer. Article 21.53S also contains mandatory notice requirements. The department proposes the amendments to the notice provisions in subchapter M to implement the notice requirements in Article 21.53S.

Kim Stokes, Senior Associate Commissioner, Life, Health and Licensing Division, has determined that for each year of the first five years the proposed sections will be in effect, there will be no fiscal impact to state and local governments as a result of the enforcement or administration of the rule. There will be no measurable effect on local employment or the local economy as a result of the proposal.

Ms. Stokes has determined that for each year of the first five years the sections are in effect, the public benefit anticipated as a result of the proposed sections will be that affected enrollees are notified on a timely basis of available benefits related to tests for the detection of colorectal cancer. The costs to comply with the proposed amendments are the result of the legislative enactment of SB 1467, which created Article 21.53S. In an effort to minimize costs, carriers may, in a fashion similar to other notices required under this subchapter, deliver the required notice along with other plan documents rather than in a separate mailing. It is the department's position that the proposed amendments will not have an adverse economic effect on small businesses or micro-businesses and it is neither legal nor feasible to waive these requirements for small or micro businesses because to do so would have an adverse health impact on those entities' enrollees.

To be considered, written comments on the proposal must be submitted no later than 5:00 p.m. on January 28, 2002 to Lynda H. Nesenholtz, General Counsel and Chief Clerk, Mail Code 113-2A, Texas Department of Insurance, P. O. Box 149104, Austin, Texas 78714-9104. An additional copy of the comment must be simultaneously submitted to Diane Moellenberg, Mail Code 107-2A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104. A request for a public hearing should be submitted separately to the Office of the Chief Clerk.

The amendments are proposed under the Insurance Code Article 21.53S and Section 36.001. Article 21.53S provides rulemaking authority to the Commissioner of Insurance for the purpose of administering the statute and directs the Commissioner to adopt rules for the provision of a notice under the statute. Section 36.001 provides that the Commissioner of Insurance may adopt rules and regulations to execute the duties and functions of the Texas Department of Insurance only as authorized by statute.

The following articles are affected by this proposal: Insurance Code Article 21.53S

§21.2101.Scope.

The purpose of this subchapter is:

(1) to require notice to enrollees in a health benefit plan of coverage and/or benefits for prostate cancer examinations; minimum inpatient stays for maternity and childbirth; minimum inpatient stays for mastectomy or lymph node dissection; [ ~~and~~ ] reconstructive surgery after mastectomy; and certain tests for the detection of colorectal cancer . With the exception of notice for reconstructive surgery after mastectomy and notice for colorectal cancer detection , §§21.2102 through 21.2106 of this subchapter apply to all carriers issuing, delivering, or renewing health benefit plans as defined in this subchapter as of January 1, 1998. For state notice requirements pertaining to reconstructive surgery after mastectomy, §§21.2102 - 21.2106 of this subchapter apply to all carriers issuing, delivering, or renewing health benefit plans as defined in this subchapter as of June 18, 1999. For notice requirements pertaining to tests for colorectal cancer detection, §§21.2102-21.2106 of this subchapter apply to all carriers issuing, delivering, or renewing health benefit plans as defined in this subchapter as of January 1, 2002.

(2) (No change.)

§21.2102.Definitions.

The following words and terms, when used in this subchapter shall have the following meanings, unless the context clearly indicates otherwise.

(1) Carrier--An insurance company, a group hospital service corporation, a fraternal benefit society, a stipulated premium insurance company, a health maintenance organization, a multiple employer welfare arrangement that holds a certificate of authority under Insurance Code Article 3.95-2, or an approved nonprofit health corporation that holds a certificate of authority issued by the commissioner under Insurance Code Article 21.52F. In addition, for the purposes of paragraph (3)(B) of this section, the term also includes a reciprocal exchange operating under Insurance Code Chapter 19 and for purposes of paragraph (3)(E) of this section, the term also includes a Lloyd's plan operating under Insurance Code, Chapter 18 and a risk pool created under Chapter 172, Local Government Code .

(2) Enrollee--A person enrolled in and entitled to coverage under a health benefit plan, including covered dependents.

(3) Health benefit plan--Subject to subparagraphs (A), (B), (C), [ ~~and~~ ] (D) and (E) of this paragraph, a plan that is offered by a carrier and provides benefits for medical or surgical expenses incurred as a result of a health condition, accident, or sickness including an individual, group, blanket or franchise insurance policy or insurance agreement, a group hospital service contract, an individual or group evidence of coverage, or any similar coverage document. The term does not include a plan that provides coverage only for accidental death or dismemberment, disability income, supplement to liability insurance, Medicare supplement, workers' compensation, medical payment insurance issued as a part of a motor vehicle insurance policy or a long-term care policy.

(A) For the inpatient mastectomy coverage notice required by subsection (a)(1) of §21.2103 of this title (relating to Mandatory Benefit Notices), the definition of health benefit plan includes a plan that provides coverage only for a specific disease or condition for the treatment of breast cancer or for hospitalization. The term does not include a small employer health benefit plan issued under the Insurance Code Chapter 26, Subchapters A-G.

(B) For the reconstructive surgery after mastectomy notices required by subsection (a)(2) of §21.2103 of this title, the definition of health benefit plan does not include a plan that provides coverage for a specified disease or other limited benefit except for cancer, a plan that provides only credit insurance, a plan that provides coverage only for dental or vision care, or only for indemnity for hospital confinement.

(C) For the prostate cancer examination notice required by subsection (a)(3) of §21.2103 of this title, the definition of health benefit plan does not include a small employer health benefit plan written under the Insurance Code Chapter 26, Subchapters A-G, a plan that provides coverage only for a specified disease or other limited benefit, or only for indemnity for hospital confinement.

(D) For the inpatient maternity and childbirth coverage notice required by subsections (a)(4) and (5) of §21.2103 of this title, the definition of health benefit plan does not include a plan that provides only credit insurance, a plan that provides coverage only for a specified disease or other limited benefit, only for dental or vision care, or only for indemnity for hospital confinement.

(E) For the detection of colorectal cancer screening coverage notice required by subsection (a)(6) of §21.2103 of this title, the definition of health benefit plan does not include a small employer health benefit plan written under the Insurance Code Chapter 26, Subchapters A-G, or a plan that provides coverage only for a specified disease or other limited benefit or only for indemnity for hospital confinement.

(4) Other limited benefit--A plan that provides coverage singularly or in combination, for benefits for a specifically named disease, accident or combination of diseases or accidents, including but not limited to heart attack, stroke, AIDS, and travel, farm or occupational accident.

(5) Primary Enrollee--For group coverage, the covered member or employee of the group. For individual coverage, the person first named on the application and/or enrollment form.

§21.2103.Mandatory Benefit Notices.

(a) Prescribed mandatory benefit notices consist of the following:

(1) - (5) (No change.)

(6) For a health benefit plan that provides coverage and/or benefits for screening medical procedures, a carrier shall issue a notice which includes the language provided in Figure 6 of subsection (b) of §21.2106 of this title (relating to Forms, Form Number 1467 Colorectal Cancer Screening).

(b) - (d) (No change.)

(e) If, before the effective date of the amendments to this subchapter relating to tests for the detection of colorectal cancer, a carrier has provided to its enrollees a notice that contains the information concerning colorectal cancer screening tests as required by §21.2103 (a)(6) or (b) of this subchapter, such notice shall be deemed to comply with the requirements of this subchapter as to those enrollees.

§21.2105.Delivery of Mandatory Benefit Notices.

(a) - (b) (No change.)

(c) The notice required by §21.2103(a)(6) of this title shall be issued to enrollees of a health benefit plan and Subsections (a)(2)-(6) of this section shall also apply to the notice, except for the timeline requirements of subsection (a)(1) of this section.

§21.2106.Forms.

(a) The forms identified in §21.2103 of this title (relating to Mandatory Benefit Notices) for notices of mandatory benefits are included in subsection (b) of this section in their entirety and have been filed with the Office of the Secretary of State. The forms can be obtained from the Texas Department of Insurance, Life/Health Division, MC 106-1A, P.O. Box 149104, Austin, Texas 78714-9104, or from the department's Web site, www.tdi.state.tx.us.

(b) The forms referenced in this chapter are as follow:

(1) - (5) (No change.)

(6) Figure Number 6: Form Number 1467 Colorectal Cancer Screening:

Figure: 28 TAC §21.2106(b)(6)

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on December 14, 2001.

TRD-200107935

Lynda Nesenholtz

General Counsel and Chief Clerk

Texas Department of Insurance

Earliest possible date of adoption: January 27, 2002

For further information, please call: (512) 463-6327

Part 2. TEXAS WORKERS' COMPENSATION COMMISSION

Chapter 134. BENEFITS--GUIDELINES FOR MEDICAL SERVICES, CHARGES, AND PAYMENTS

Subchapter A. MEDICAL POLICIES

28 TAC §134.1

The Texas Workers' Compensation Commission (the commission) proposes amendments to §134.1, concerning use of the medical fee guidelines. The amendment is proposed to make §134.1 consistent with other commission rules.

The Texas Register published text shows words proposed to be added to or deleted from the current text, and should be read to determine all proposed changes.

Since adoption of current §134.1 a number of changes to the commission's fee guidelines have been adopted. As a result, the references in §134.1 to the Medical Fee Guidelines, the Pharmaceutical Fee Guidelines, and the Hospital and Ambulatory Surgical Center Fee Guidelines have become outdated. Subsections (c), (d), and (e) are proposed to be deleted to remove the outdated references. Because information regarding the applicability of the various fee guidelines is contained in the fee guidelines themselves, it is not necessary to include this information in §134.1.

In addition, it is proposed that the language "using the codes from" in subsection (b) be replaced with "in accordance with" because the fee guidelines will not necessarily contain coding information within the text of the guidelines. In subsection (f), the citation to the Workers' Compensation Act has been updated to reflect the appropriate Texas Labor Code citation.

Bill DeCabooter, Acting Director of Medical Review, has determined that for the first five-year period the proposed rule is in effect there will be no fiscal implications for state or local governments as a result of enforcing or administering the rule.

Local government and state government as covered regulated entities will be impacted in the same manner as described later in this preamble for persons required to comply with the rule as proposed.

Mr. DeCabooter has also determined that for each year of the first five years the rule as proposed is in effect the public benefits anticipated as a result of enforcing the rule will be consistency in the rules under which all Texas worker's compensation system participants function.

There will be no anticipated economic costs to persons who are required to comply with the rule as proposed.

There will be no costs of compliance for small businesses or micro businesses. There will be no adverse economic impact on small businesses or micro-businesses. There will be no difference in the cost of compliance for small businesses or micro businesses as compared to large businesses.

Comments on the proposal must be received by 5:00 p.m., January 28, 2002. You may comment via the Internet by accessing the commission's website at www.twcc.state.tx.us and then clicking on "Proposed Rules." This medium for commenting will help you organize your comments by rule chapter. You may also comment by emailing your comments to RuleComments@twcc.state.tx.us or by mailing or delivering your comments to Nell Cheslock at the Office of the General Counsel, Mailstop #4-D, Texas Workers' Compensation Commission, Southfield Building, 4000 South IH-35, Austin, Texas 78704-7491.

Commenters are requested to clearly identify this specific rule, §134.1, and not address their comments regarding proposed new rule, §134.202, in this proposed amended rule. The commission may not be able to respond to comments that cannot be linked to this particular proposed rule amendment. Along with your comment, it is suggested that you include the reasoning for the comment in order for commission staff to fully evaluate your recommendations.

Persons in support or opposition of the rule as proposed, in whole or in part, are encouraged to comment to that effect. The failure to comment accordingly is not indicative of support or opposition. A public hearing on this proposal will be held on January 24, 2002 at the Austin central office of the commission (Southfield Building, 4000 South IH-35, Austin, Texas). Those persons interested in attending the public hearing should contact the Commission's Office of Executive Communication at (512) 804-4430 to confirm the date, time, and location of the public hearing for this proposal. The public hearing schedule will also be available on the commission's website at www.twcc.state.tx.us .

The amendment is proposed under the following statutes that are associated with the Medical Fee Guidelines: the Texas Labor Code §402.061, §413.002, §413.007, §413.011, §413.012, §413.013, §413.015, § 413.016, §413.017, §413.019, §413.031, §413.044.

No other code, statute, or article is affected by this rule action.

§134.1.Use of the Fee Guidelines.

(a) The ground rules and the medical service standards and limitations as established by the fee guidelines shall be used to properly calculate the payments due to the health care providers.

(b) Health care providers shall bill the insurance carrier for all compensable injuries in accordance with [ ~~using the codes from~~ ] the fee guidelines established by the commission. The health care provider shall bill the insurance carrier for the health care treatments and services performed, and medically necessary to relieve the effects of the compensable injury and promote recovery.

(c) [ Doctors of medicine, osteopathy, dentistry, chiropractic, podiatry, optometry, psychology, and registered nurses, physical therapists, occupational therapists, imaging or radiology centers, minor emergency centers, free-standing pathology centers, durable medical equipment suppliers, and orthotic and prosthetic suppliers shall bill the insurance carrier using the medical fee guideline described in §134.200 of this title (relating to Medical Fee Guideline). ]

~~[(d) Pharmacists, in settings other than a hospital, shall bill according to the Pharmaceutical Fee Guideline described in §134.501 of this title (relating to Pharmaceutical Fee Guideline).]~~

[(e) Hospitals, licensed by Texas Department of Health or Texas Department of Mental Health and Mental Retardation, and ambulatory surgical centers, licensed by Texas Department of Health, shall bill according to the Hospital and Ambulatory Surgical Center Fee Guideline described in §134.400 of this title (relating to Hospital and Ambulatory Surgical Center Fee Guideline).]

[(f)] Reimbursement for services not identified in an established fee guideline shall be reimbursed at fair and reasonable rates as described in the Texas Workers' Compensation Act, §413.011 [ ~~§8.21(b)~~ ]until such period that specific fee guidelines are established by the commission.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on December 14, 2001.

TRD-200107942

Susan Cory

General Counsel

Texas Workers' Compensation Commission

Earliest possible date of adoption: January 27, 2002

For further information, please call: (512) 804-4287

Subchapter C. MEDICAL FEE GUIDELINES

28 TAC §134.202

The Texas Workers' Compensation Commission (the commission) proposes new §134.202 concerning the Medical Fee Guideline.

This new rule is proposed to comply with statutory mandates in the Texas Labor Code. Section 413.011 of the Texas Labor Code requires the commission to adopt rules to establish medical policies and guidelines relating to fees charged or paid for medical services, including guidelines relating to payment of fees for specific medical treatments or services. The statute requires that guidelines for medical services fees be fair and reasonable and designed to ensure the quality of medical care and to achieve effective medical cost control. The guidelines may not provide for payment of a fee in excess of the fee charged for similar treatment of an injured individual of an equivalent standard of living and paid by that individual or by someone acting on that individual's behalf. The commission must consider the increased security of payment afforded by the Texas Workers' Compensation Act (the Act) in establishing the fee guidelines.

House Bill 2600 (HB-2600), adopted during the 2001 Texas Legislative Session, amended §413.011. In addition to the previous requirements, the revised statute also requires that the commission:

* use health care reimbursement policies and guidelines that reflect the standardized reimbursement structures found in other health care delivery systems with minimal modifications to those reimbursement methodologies as necessary to meet occupational injury requirements;

* adopt the most current reimbursement methodologies, models, and values or weights used by the federal Health Care Financing Administration (HCFA) to achieve standardization, including applicable payment policies relating to coding, billing, and reporting, and may modify documentation requirements as necessary to meet the requirements of §413.053 of the Act (relating to Standards of Reporting and Billing);

* develop conversion factors or other payment adjustment factors in determining appropriate fees, taking into account economic indicators in health care;

* provide for reasonable fees for the evaluation and management of care as required by §408.025(c) and commission rules;

* comply with the statute by not adopting the Medicare fee schedule, and by not adopting conversion factors or other payment adjustment factors based solely on those factors as developed by the HCFA; and

* comply with the statute by not interpreting the legislation in a manner that would discriminate in the amount or method of payment or reimbursement for services in a manner prohibited by Section 3(d), Article 21.52, Insurance Code, or as restricting the ability of chiropractors to serve as treating doctors as authorized by this subtitle.

Currently, reimbursements for medical treatments and services are established by §134.201 of this title (regarding Medical Fee Guideline for Medical Treatments and Services Provided Under the Texas Workers' Compensation Act) and §134.302 of this title (regarding Dental Fee Guideline). The Medical Fee Guideline (MFG) provides maximum allowable reimbursement (MAR) amounts for health care providers (HCPs) treating injured workers in Texas. This proposed new rule uses the required Medicare methodologies for determining reimbursement in the Texas workers' compensation system to comply with the new provisions in Texas Labor Code §413.011.

In February 2001, the commission signed a professional services agreement with Milliman & Robertson, Inc., now Milliman USA (Milliman), a professional firm specializing in actuarial and health care services, to assist the commission in developing and implementing a new MFG. Milliman provided the commission with written reports of their findings and recommendations.

Milliman conducted a market analysis of reimbursements from the 1996 MFG, commercial payers in Texas, workers' compensation systems from other states, and 2001 Medicare allowed fees in Texas, comparing the reimbursement level for corresponding services, and drew the following conclusions as a result of the market analysis:

* commercial reimbursement rates in Texas show variations that are wider than can be explained by geographic differences, and current MFG reimbursement levels fall within this broad range;

* current MFG reimbursement levels tend to be high relative to other state workers' compensation systems, with the exception of Evaluation and Management (E&M) services; and,

* current MFG MARs average approximately 130% of calendar year 2001 Medicare allowed fees.

A revision of the MFG that meets the rigorous statutory criteria and uses the most current reimbursement methodologies, models, and values or weights used by HCFA, (now the Centers for Medicare and Medicaid Services (CMS)), including applicable payment policies relating to coding, billing, and reporting (sometimes referred to as ground rules) is the goal of this proposed new rule.

In developing this proposal, commission staff met and discussed issues with the primary HB-2600 Legislative Stakeholders. This Legislative Stakeholder group included: a delegation of employers, insurance carriers, utilization review organizations, and other interested parties working together under the umbrella name, Texas Association of Business & Chambers of Commerce (TABCC) Technical Work Group; the Texas Chiropractic Association; and the Texas Medical Association. Input from this group was a major factor in developing this proposed rule.

Proposed new §134.202 establishes reimbursement for professional medical services provided on or after the effective date of the new rule. The new rule provides standardization of reimbursement methods and billing procedures by aligning the workers' compensation reimbursement structure with the structure used by the CMS.

Proposed subsection (a) establishes the applicability of the guidelines for reimbursements for professional medical services, which includes all health care as defined in §401.011(19) of the Act other than prescription drugs or medicines, and other than the facility services of a hospital or other health care facility. Current §134.201 and §134.302 would remain in effect for treatments and services provided prior to the effective date of the proposed new rule. Reimbursement is determined in accordance with the rules in effect on the date that the professional medical service was provided. In accordance with Texas Labor Code §413.011(c), subsection (a) provides that chiropractors are an exception to the CMS payment policies, and may be reimbursed for services provided within the scope of their practice act. Specific provisions contained in the workers' compensation Act, or commission rules, shall take precedence over any conflicting provision adopted or utilized by CMS in administering the Medicare program. Additionally, subsection (a) requires use of the most recent payment policies adopted by the Medicare program, including updated relative value units, for compliance with commission rules, decisions and orders. The policies and reimbursement methodologies in effect for Medicare on the date a service is provided are the policies and reimbursement methodologies to be used in the workers' compensation system. This will prevent the workers' compensation system from falling out of synchronization with Medicare and will achieve the standardization goals established in HB-2600.

Proposed new subsection (b) requires system participants to utilize the Medicare reimbursement methodologies, models, and values or weights including its coding, billing, and reporting payment policies for coding, billing, reporting, and reimbursement of professional medical services provided in the Texas workers' compensation system. This allows for the basic Medicare program provisions to be applied with any additions or exceptions necessary for adaptation to the Texas workers' compensation system. The Medicare program is not a static system. Medicare policies change frequently. To achieve standardization it is necessary to use the Medicare billing and reimbursement policies as they are modified by CMS. Adoption of policies in effect on a particular date would require participants in the Texas workers' compensation system to bill and reimburse in a manner different from the current Medicare system. Therefore, the proposed rule, in compliance with the statute, requires the use of the Medicare policies in effect on the day that a service is provided.

The Resource Based Relative Value Scale (RBRVS) system used by Medicare values services according to the relative costs required to provide them, recognizing skill, practice cost, and risk. These relative value units represent national standards assigned to medical treatments and services. The relative value units reflect the relationship between the resources necessary to provide a professional medical service relative to resources necessary to provide other professional medical services.

The RBRVS uses three components to establish the total relative value units for a particular code: work, practice expense, and malpractice insurance. RBRVS relative value units are also adjusted by Geographical Practice Cost Indices (GPCIs) to reflect geographical differences. The proposed rule also requires system participants to use these components and adjustments of relative values. Use of CMS RBRVS aligns the basis for workers' compensation reimbursement with nationally recognized standards of relative values used in other health care delivery systems, and takes into account economic indicators in health care.

New proposed subsection (c) establishes the method to be used for determining the MAR for professional services in the Texas workers' compensation system. The MARs established in the current MFG do not correlate with RBRVS unit values, and the change to the RBRVS in this rule proposal will result in some significant increases and decreases for certain procedures. The use of a different relative value unit system, the RBRVS, results in a significant re-alignment of reimbursements among the CPT groupings. Assuming no net change in total system reimbursement, the estimated re-alignment impact of applying the RBRVS system alone, is approximately:

Evaluation & Management: +48%

Medicine: -27%

Physical Medicine and Rehabilitation: -2%

Mandated by statute, this re-alignment substantially changes reimbursement for some codes.

Proposed new subsection (c) establishes a conversion factor by setting a multiplier to apply to the Medicare conversion factor. In establishing this multiplier the commission considered the statutory requirements and objectives and utilized Medicare data, current commission reimbursement levels, and available commercial payor information. The data reviewed consistently reflected current commission reimbursement equal to approximately 140% of the 2002 Medicare reimbursement and in the mid-range of commercial payor reimbursement.

Proposed new subsection (c) additionally establishes MARs for durable medical equipment, prosthetics, orthotics, supplies, laboratory services, dental treatments and services, and commission specific codes, services, and programs. The subsection provides directions for a system of payment that allows a carrier to assign a relative value for a product or service that does not contain a relative value unit and/or a recommended payment amount in either the CMS system or as established by the commission. Carriers are to assign a relative value which is based on nationally recognized published relative value studies, published medical dispute decisions, and values assigned for services involving similar work and resource commitments.

Subsection (d) provides that the reimbursement for professional medical services is the least of: the MAR as established by rule; the HCP's usual and customary charge; or, the HCP's applicable workers' compensation negotiated or contracted amount that applies to the billed service.

Proposed new subsection (e) addresses payment policies relating to coding, billing, and reporting, of commission-specific codes, services, and programs. There are some services which are specific to and necessary in the Texas workers' compensation system that are not commonly used or not used at all in the Medicare system. Some examples of these services are: case management, tests and measurements, impairment rating evaluation, designated doctor examination, and return to work rehabilitation programs. Subsection (e) sets out the payment policies relating to coding, billing, and reporting for those services. In addition, subsection (e) provides a list of modifiers to be used when billing commission-specific codes, services, and programs. The use of these modifiers will allow the commission to monitor patterns of usual, customary and reasonable medical charges, payments and treatment protocols for commission-specific services. The additions set out in subsection (e) are designed to reflect the standardized reimbursement structures found in other health care delivery systems with minimal modifications to those reimbursement methodologies as necessary to meet occupational injury requirements.

Proposed new subsection (f) provides that the invalidation of a section of this subchapter or its application or applications to any person or circumstance by a court of competent jurisdiction does not affect other provisions or applications of the subchapter that can be given effect without the invalidated provision or application.

Bill DeCabooter, Acting Director of the Medical Review Division, has determined the following with respect to fiscal impact for the first five-year period the proposed rules are in effect.

With regard to enforcement and administration of the rule by state government, the commission will experience increased costs in some areas and decreased costs in others. Increased costs may include expenses associated with the preparation of training materials and presentation of training classes for commission staff and other system participants, and costs associated with monitoring the Medicare payment policies.

Initially costs may increase due to increased disputes for the next twelve to twenty-four months, resulting from the initiation of a new payment methodology and the utilization of Medicare billing and payment policies. However, after system participants become familiar with the policies and the commission's administration of these policies, the use of standardized coding, billing, and methodology is expected to result in fewer disputes regarding medical reporting, billing and reimbursement because use of:

* a standardized reimbursement structure found in other health care delivery systems should reduce the number of disputes, in part because of familiarity with other reimbursement systems, and in part because of the predictability of reimbursement amounts;

* the most current Medicare program reimbursement methodologies, models and weights or values is expected to eliminate some disputes because changes in Medicare reimbursement system will be reflected in the workers' compensation system as they become effective keeping the system current and therefore reducing disputes relating to the amount of reimbursement;

* current coding, billing and reporting policies clarifies the proper coding for some professional medical services about which there were uncertainties and disputes under the current MFG; and

* standardized components of the Medicare system should decrease the cost and time required for the commission to review or revise the fee schedules.

There may be some increase in revenue to the commission as a result of enforcing or administering the rule due to an initial increase in disputes heard by the commission. Although the fees from the increase in this activity will increase revenue, these fees generally cover expenses only and are expected to be offset by a subsequent decrease in this activity.

In recent correspondence with the commission, the TCA, stated, "the TCA believes that adoption of Medicare reimbursement methodologies and payment systems could provide a reduction to the commission for enforcing and administering these rules. This is because the commission would no longer be required to develop, maintain, and administer its own unique fee structure and payment policies. Medicare would be the basis of a fair structure, with modifications as needed, as required by HB 2600. This would benefit all parties, by allowing greater access to care, fewer disputes, and reduces administrative costs."

There will be no fiscal impact on local government as a result of enforcing or administering the rule, as local governments do not have regulatory authority with respect to these rules. Local governments and state governmental entities as regulated entities will be impacted in the same manner as persons required to comply with the rules as proposed. Aggregate medical costs should decrease for all participants in the system. The commission cannot predict if local governments will experience a decrease in their premium costs if the local government's workers' compensation coverage is provided by an insurance company. Any local government that is self-insured will likely experience a cost decrease if utilization and injury experience remain unchanged.

Mr. DeCabooter has also determined that for each year of the first five years the proposed rule is in effect, the public benefits anticipated as a result of a reimbursement system with a well-known, standardized structure for delivery of quality medical care with effective cost control, that will provide positive benefits to all participants in the system: injured employees, employers, insurance carriers, and health care providers. As suggested by the Legislative Stakeholder group, the Texas workers' compensation system as a whole will benefit by bringing its payment policies and unit costs in line with mainstream medicine. Adoption of Medicare policies should lead to reduced administrative costs, a reduced number of medical disputes, and a reduction in unproductive costs for medical services.

The commission estimates that the proposed rules will result in an aggregate reduction of approximately (16% ) in total payments, if applied to historical workers' compensation system claim costs. The commission projects a similar impact on future aggregate claim costs, assuming that there is not a significant shift in the distribution of claims. A number of other factors could affect the impact including frequency of injury, severity of injury, and changes in the practice of medicine for injured workers in Texas, distribution of services provided, current billing practices, and random fluctuations. The differential between the current MFG MAR and the proposed MAR varies from service to service even within a category of services because of the adjustments made to the current MFG relative value units. Use of standardized coding, reporting, billing, and reimbursement methodologies in the rules as proposed is expected to decrease fee disputes within the workers' compensation system after a period of time for system participants to become familiar with the system.

Because the values assigned to medical services in the RBRVS are based on the relative costs required to provide a service, reimbursements under the proposed rules are more closely related to the resources required to provide the services. The re-alignment of relative values makes the Texas workers' compensation system more comparable to other health care systems and may discourage overutilization of services that have been assigned a relative value higher than that in other systems. This benefits injured employees by preventing unnecessary treatment and delayed return to work. The same impact may occur if the new rule limits or disallows payment for medical care that is not proven medically efficacious. A decrease in medical costs may increase the number of employers who elect workers' compensation coverage, and injured workers will benefit from that coverage. Again, as suggested by the Legislative Stakeholders group, the adoption of standard payment policies will result in a net reduction in the administrative costs of compliance for Texas physicians. As a consequence, it will also result in an increase in access for injured workers, or at least mitigate the current erosion in access to physician services.

The commission estimates the difference in reimbursement under the current MFG when compared to reimbursement under the proposed MFG by category as follows:

Evaluation & Management: +26%

Medicine: -38%

Physical Medicine and Rehabilitation: -17%

The increase or decrease in the reimbursement for any procedure within a category can vary significantly, since the current MFG MARs do not correlate with RBRVS unit values. Some health care practitioners will receive more reimbursement than under the current MFG, while others will receive less, depending on the mix of professional medical services they typically provide to patients.

Health care practitioners will benefit from the use of standardized and current methodologies, models, and value units, and use of standardized reporting, billing, and coding requirements. Additionally, most health care practitioners are familiar with the CMS system, as there are proportionately more Medicare providers than there are Texas workers' compensation system providers. As stated in a correspondence to the commission regarding previously proposed rules, the Texas Medical Association (TMA) asserts, "Compared to other payers, the Medicare rules are straightforward, widely understood and unambiguous." Clarity in the rules and reduction in the number of disputes should also benefit health care practitioners. This general sentiment was also stated by the TABCC Technical Work Group in correspondence to the commission. Insurance carriers will likewise benefit from use of standardized and current methodologies, models, and value units, and use of standardized reporting, billing, and coding requirements. The TABCC Technical Work Group provided the following public benefits to insurance carriers in recent correspondence to the commission: "The cost to insurance carriers of shifting to Medicare payment policies in Texas will vary significantly by carrier. All carriers will incur some training costs for staff responsible for payment of medical bills. Beyond training costs, the cost to the carrier will depend on the following factors:

* Carriers that outsource medical bill review should encounter no additional costs. Any transition costs will be borne by the medical bill review consultant. Competition among medical bill review consultants is sufficient to prevent these costs from being passed through to carriers.

* Carriers that do not outsource medical bill review, but who write insurance in one of the states that has previously adopted Medicare payment policies should incur small costs because they already have knowledgeable staff and information systems in place. Further, some carriers have adopted the Correct Coding Initiative and other Medicare payment policies on their own initiative where they do not conflict with policies of the states where they write insurance.

* Finally, most carriers that do not outsource medical bill review purchase software from large national software vendors. These vendors are responsible for updating their software as state rules change. The software market for workers' compensation bill review is sufficiently competitive that software vendors cannot pass through the costs of updating the software in Texas to their customers."

To the extent that adoption of the new MFG lowers the unit cost of medical services and reduces overutilization of medical services, carriers should benefit from lower medical benefit costs. In the short run the change may improve their medical loss ratio. In the long run these savings should be passed through to employers through price competition in the insurance market."

Employers will benefit from the reduction in costs and disputes, which may be favorably reflected in the cost to employers to provide workers' compensation coverage. In addition, if the new rule reduces overutilization of unnecessary medical services it may also enhance an injured employee's ability to return to work.

There will be some anticipated economic costs to persons required to comply with the rules as proposed. There will be no economic cost to injured workers, as these proposed rules do not impose any requirements on injured workers.

As suggested by the TABCC Technical Work Group, "the new MFG should reduce the unit cost of medical services and should reduce overutilization of medical services. Today medical services are the majority of benefit costs employers pay through workers' compensation insurance premiums or directly through self-insurance programs. Reducing the cost of medical treatment under the workers' compensation system should reduce the rate of cost increases."

Health care practitioners will experience some increased costs in some areas and decreased costs in others. Health care practitioners who do not currently participate in the Medicare system will have increased costs associated with training staff and adapting their billing systems to utilize the Medicare policies. However, these costs should not be great and, once trained, the costs to bill for workers' compensation health care should decrease. Providers are instructed to bill their usual and customary fees, therefore it is not necessary for providers to be able to calculate the Medicare reimbursement. Health care practitioners who are already participating in the Medicare system will not experience these same increased costs. Decreased costs will result from the fact that the number of disputes should decrease, after an initial increase, for the reasons described previously.

Insurance carriers should experience the same increased costs in some areas and decreased costs in others. For those carriers who do not currently participate in the Medicare system, increased costs include costs associated with training staff and adapting their billing systems to utilize the Medicare policies. Again, those who are already participating in the Medicare system or using Medicare billing and reimbursement policies will not experience these same increased costs. Decreased costs will result from the fact that the number of disputes should decrease, after an initial increase, for the reasons described previously.

There will be no adverse economic impact on small businesses or on micro-businesses as a result of the proposed new rules. Health care practitioners and insurance carriers who perform only a small amount of work in the workers' compensation system can comply with these rules without incurring costs. Many health care practitioners and insurance carriers already use the standardized items adopted in these proposed rules, and cost savings explained previously should offset any increased costs. As stated by the TABCC Technical Work Group, "The new MFG will reduce the payment per unit of service for most health care services. It will also reduce total revenue to some health care providers by restraining overutilization and ending unreasonable billing practices permitted by the current rule. These are adverse economic impacts on these health care providers."

There will be only a proportionate difference in the cost of compliance for small businesses and micro-businesses as compared to the largest businesses, including state and local government entities. The same basic processes and procedures apply, regardless of the size or volume of the business. The business size cost difference will be in direct proportion to the volume of business that falls under the purview of these proposed rules. Any increase in costs is expected to be offset by cost savings and time savings through the use of a standardized and streamlined process, resulting in no adverse economic impact.

Comments on the proposal must be received by 5:00 p.m., January 28, 2002. You may comment via the Internet by accessing the commission's website at www.twcc.state.tx.us and then clicking on "Proposed Rules." This medium for commenting will help you organize your comments. You may also comment by emailing your comments to RuleComments@twcc.state.tx.us or by mailing or delivering your comments to Nell Cheslock at the Office of the General Counsel, Mailstop #4-D, Texas Workers' Compensation Commission, Southfield Building, 4000 South IH-35, Austin, Texas 78704-7491.

Commenters are requested to clearly identify by number the specific rule and paragraph commented upon. The commission may not be able to respond to comments that cannot be linked to a particular proposed rule. Along with your comment, it is suggested that you include the reasoning for the comment in order for commission staff to fully evaluate your recommendations.

Based upon various considerations, including comments received and the staff's or commissioners' review of those comments, or based upon the commissioners' action at the public meeting, the rule as adopted may be revised from the rule as proposed in whole or in part. The conversion factors and reimbursements proposed may be revised to be higher than proposed or lower than proposed.

Persons in support or opposition of the rule as proposed, in whole or in part, are encouraged to comment to that effect. The failure to comment accordingly is not indicative of support or opposition.

A public hearing on this proposal will be held on January 24, 2002 at the Austin central office of the commission (Southfield Building, 4000 South IH-35, Austin, Texas). Those persons interested in attending the public hearing should contact the Commission's Office of Executive Communication at (512) 804-4430 to confirm the date, time, and location of the public hearing for this proposal. The public hearing schedule will also be available on the commission's website at www.twcc.state.tx.us .

The new rules are proposed under the Texas Labor Code §402.061, § 413.002, §413.007, §§413.011-413.013, §§413.015-413.017, §413.019, §413.031, §413.044,.

No other statutes, articles or codes are affected by the proposed rules.

§134.202.Medical Fee Guideline.

(a) Applicability of this rule is as follows:

(1) This section applies to professional medical services (health care other than prescription drugs or medicine, and the facility services of a hospital or other health care facility) provided in the Texas Workers' Compensation system.

(2) This section shall be applicable for professional medical services provided on or after June 1, 2002. For professional medical services provided prior to June 1, 2002, §134.201 and §134.302 of this title (relating to Medical Fee Guidelines) shall be applicable.

(3) Notwithstanding Centers for Medicare and Medicaid Services (CMS) payment policies, chiropractors may be reimbursed for services provided within the scope of their practice act.

(4) Specific provisions contained in the Texas Workers' Compensation Act (Act), or commission rules, including this rule, shall take precedence over any conflicting provision adopted by or utilized by CMS in administering the Medicare program. Exceptions to Medicare payment policies for medical necessity may be provided by commission rule or through medical dispute resolution in accordance with the Act and commission rules.

(5) Whenever a component of the Medicare program is revised and effective, use of the revised component shall be required for compliance with commission rules, decisions and orders for services rendered on or after the effective date of the revised component.

(b) For coding, billing, reporting, and reimbursement of professional medical services, Texas Workers' Compensation system participants shall apply the Medicare program reimbursement methodologies, models, and values or weights including its coding, billing, and reporting payment policies in effect on the date a service is provided with any additions or exceptions in this section.

(c) To determine the maximum allowable reimbursements (MARs) for professional services system participants shall apply the Medicare payment policies with the following minimal modifications:

(1) for service categories of Evaluation & Management, General Medicine, Physical Medicine and Rehabilitation, Surgery, Radiology, and Pathology the conversion factor to be used for determining reimbursement in the Texas workers' compensation system is the effective conversion factor adopted by CMS multiplied by 120%. For Anesthesiology services, the same conversion factor shall be used.

(2) for HCPCS Level II codes A, E, J. K, and L:

(A) 120% of the fee listed for the code in the Medicare Durable Medical Equipment, Prosthethics, Orthotics and Supplies (DMEPOS) fee schedule;

(B) if the code has no published Medicare rate, 120% of the published Texas Medicaid Fee Schedule Durable medical Equipment/Medical Supplies Report J, for HCPCS; or

(C) if neither paragraph (2)(A) nor (2)(B) of this section apply, then as calculated according to paragraph (6) of this subsection.

(3) for laboratory services 120% of the fee listed for the code in the Medicare Clinical Fee Schedule.

(4) for dental treatments and services 120% of the fee listed for the code in the Texas Medicaid Dental Fee Schedule in effect on the date the service is provided.

(5) for commission specific codes, services and programs (e.g. Functional Capacity Evaluation, Impairment Rating Evaluations, Return to Work Programs, etc.) as calculated in accordance with subsection (e) of this section.

(6) for products and services for which CMS or the Commission does not establish a relative value unit and/or a payment amount the carrier shall assign a relative value, which may be based on nationally recognized published relative value studies, published medical dispute decisions, and values assigned for services involving similar work and resource commitments.

(d) In all cases, reimbursement shall be the least of the:

(1) MAR amount as established by this rule;

(2) health care provider's usual and customary charge; or,

(3) health care provider's workers' compensation negotiated and/or contracted amount that applies to the billed service(s).

(e) Payment Policies Relating to Coding, Billing, and Reporting for commission-specific codes, services, and programs are as follows:

(1) Billing. Health care providers (HCPs) shall bill their usual and customary charges. HCPs shall submit medical bills in accordance with subsection (b), the Act, and commission rules.

(2) Modifiers. Modifying circumstance shall be identified by use of the appropriate modifier following the appropriate CPT code. Additionally, commission specific modifiers are identified in paragraph (10) of this subsection. When two modifiers are applicable to a single code, indicate each modifier on the bill.

(3) Case Management. Case Management is the responsibility of the treating doctor. Team conferences and phone calls shall include coordination with an interdisciplinary team (members shall not be employees of the coordinating HCP and the coordination must be outside of an interdisciplinary program). Documentation shall include the name and specialty of each individual attending the team conference or engaged in a phone call. Team conferences and phone calls should be triggered by a documented change in the condition of the injured employee and performed for the purpose of coordination of medical treatment and/or return to work for the injured employee. Contact with one or more members of the interdisciplinary team more often than once every 30 days shall be limited to the following:

(A) The development or revision of a treatment plan;

(B) To alter or clarify previous instructions;

(D) To coordinate with the employer, employee, and/or an assigned medical or vocational case manager to determine return to work options.

(4) Tests and Measurements. The following provisions apply to Tests and Measurements services:

(A) Tests and Measurements Current Procedural Terminology (CPT) codes require a report of the results, to include the start and end times. No additional reimbursement shall be allowed for this report.

(B) Job site visit/assessment shall be billed using the "Community/work reintegration training..." CPT code with modifier "JA". Job site visit/assessments shall be reimbursed at $25.00 per 15 minutes.

(C) A maximum of three Functional Capacity Evaluations (FCEs) for each compensable injury shall be billed and reimbursed. FCEs ordered by the Commission shall not count toward the three FCEs allowed for each compensable injury. FCEs shall be billed using the "Physical performance test or measurement..." CPT code with modifier "FC." FCEs shall be reimbursed at $25 per 15-minute increment up to a maximum of five hours ($500) for the first test and for a Commission ordered test; and, a maximum of two hours ($200) for a second and/or third test. FCEs shall include the following elements:

(i) A physical examination and neurological evaluation, which include the following:

(I) appearance (observational and palpation);

(II) flexibility of the extremity joint or spinal region (usually observational);

(III) posture and deformities;

(IV) vascular integrity;

(V) neurological tests to detect sensory deficit;

(VI) myotomal strength to detect gross motor deficit; and

(VII) reflexes to detect neurological reflex symmetry.

(ii) A physical capacity evaluation of the injured area, which includes the following:

(I) range of motion (quantitative measurements using appropriate devices) of the injured joint or region; and

(II) strength/endurance (quantitative measures using accurate devices) with comparison to contralateral side or normative data base. This testing may include isometric, isokinetic, or isoinertial devices in one or more planes.

(iii) Functional abilities tests, which include the following:

(I) activities of daily living (standardized tests of generic functional tasks such as pushing, pulling, kneeling, squatting, carrying, and climbing);

(II) hand function tests which measure fine and gross motor coordination, grip strength, pinch strength, and manipulation tests using measuring devices;

(III) submaximal cardiovascular endurance tests which measure aerobic capacity using stationary bicycle or treadmill; and

(IV) static positional tolerance (observational determination of tolerance for sitting or standing).

(5) Return To Work Rehabilitation Programs. The following shall be applied for billing and reimbursement of Work Conditioning/General Occupational Rehabilitation Programs, Work Hardening/Comprehensive Occupational Rehabilitation Programs, Chronic Pain Management/Interdisciplinary Pain Rehabilitation Programs, and Outpatient Medical Rehabilitation Programs.

(A) Accreditation by the Commission for Accreditation of Rehabilitation Facilities (CARF) is recommended, but not required. To qualify as a Return to Work Rehabilitation Program, a program should meet the clinical standards for the program as listed in the most recent CARF Medical Rehabilitation Standards Manual.

(i) If the program is CARF accredited, modifier "CA" shall follow the appropriate program modifier as designated for the specific programs listed below. The hourly reimbursement for a CARF accredited program shall be 100% of the MAR.

(ii) If the program is not CARF accredited, the only modifier required is the appropriate program modifier. The hourly reimbursement for a non-CARF accredited program shall be 80% of the MAR.

(B) Work Conditioning/General Occupational Rehabilitation Programs (for TWCC purposes, CARF accredited General Occupational Rehabilitation Programs are considered Work Conditioning.)

(i) The first two hours of each session shall be billed and reimbursed as one unit, using the "Work hardening/conditioning; initial 2 hours" CPT code with modifier "WC." Each additional hour shall be billed using the "Work hardening/conditioning; each additional hour" CPT code with modifier "WC." CARF accredited Programs shall add "CA" as a second modifier.

(ii) Reimbursement shall be $36.00 per hour. Units of less than 31 minutes shall not be billed or reimbursed.

(C) Work Hardening/Comprehensive Occupational Rehabilitation Programs (for TWCC purposes, CARF accredited Comprehensive Occupational Rehabilitation Programs are considered Work Hardening.)

(i) The first two hours of each session shall be billed and reimbursed as one unit, using the "Work hardening/conditioning; initial 2 hours" CPT code with modifier "WH." Each additional hour shall be billed using the "Work hardening/conditioning; each additional hour" CPT code with modifier "WH." CARF accredited Programs shall add "CA" as a second modifier.

(ii) Reimbursement shall be $64.00 per hour. Units of less than 31 minutes shall not be billed or reimbursed.

(D) Outpatient Medical Rehabilitation Programs

(i) Program shall be billed and reimbursed using the "Unlisted physical medicine/rehabilitation service or procedure" CPT code with modifier "MR" for each hour. The number of hours shall be indicated in the units column on the bill. CARF accredited Programs shall add "CA" as a second modifier.

(ii) Reimbursement shall be $90.00 per hour. Units of less than 31 minutes shall not be billed or reimbursed.

(E) Chronic Pain Management/Interdisciplinary Pain Rehabilitation Programs

(i) Program shall be billed and reimbursed using the "Unlisted physical medicine/rehabilitation service or procedure" CPT code with modifier "CP" for each hour. The number of hours shall be indicated in the units column on the bill. CARF accredited Programs shall add "CA" as a second modifier.

(ii) Reimbursement shall be $125.00 per hour. Units of less than 31 minutes shall not be billed or reimbursed.

(6) Maximum Medical Improvement and/or Impairment Rating (MMI/IR). MMI/IR shall be billed and reimbursed as follows.

(A) The total MAR for an MMI/IR examination shall be equal to the MMI examination reimbursement plus the reimbursement for the body area(s) rated for the assignment of an IR. The total MAR for determination of MMI/IR shall include:

(i) the examination;

(ii) consultation with the injured employee;

(iii) review of the records and films;

(iv) the preparation and submission of reports (including the narrative report, and responding to the need for further clarification, explanation, or reconsideration), calculation tables, figures, and worksheets;

(v) range of motion, strength and sensory testing, and measurements; and,

(vi) other tests used to validate the IR, as outlined in the American Medical Association (AMA) Guides to the Evaluation of Permanent Impairment (the Guides) .

(B) For IR testing, the HCP shall indicate the number of body areas rated in the units column of the billing form. Body areas shall be billed and reimbursed as follows:

(i) The examining doctor may bill for a maximum of three musculoskeletal body areas.

(I) Musculoskeletal body areas are defined as follows:

(-a-) spine and pelvis;

(-b-) upper extremities and hands; and,

(-c-) lower extremities (including feet).

(II) The MAR for musculoskeletal body areas shall be:

(-a-) one musculoskeletal body area: $300.00; and,

(-b-) each additional musculoskeletal body area: $150.00.

(III) When the examining doctor conducts the MMI examination and the IR testing, the examining doctor shall bill using the appropriate MMI/IR code with modifier "WP." Reimbursement shall be 100% of the total MAR.

(IV) If the examining doctor conducts the MMI examination and determines the assignment of IR, excluding the testing, then the examining doctor shall bill using the appropriate MMI/IR code with CPT modifier "26." Reimbursement shall be 80% of the total MAR.

(V) If testing is performed by a HCP other than the examining doctor, then the HCP shall bill using the appropriate MMI/IR code with modifier "TC." Reimbursement shall be 20% of the total MAR.

(ii) Non-musculoskeletal body areas shall be billed and reimbursed using the appropriate CPT code(s) for the tests required for the assignment of IR.

(I) Non-musculoskeletal body areas are as follows:

(-a-) body systems;

(-b-) body structures (including skin); and,

(-c-) mental and behavioral disorders.

(II) For a complete list of non-musculoskeletal body areas refer to the Guides, as stated in the commission Act and Rules Chapter 130 relating to Impairment and Supplemental Income Benefits.

(C) When testing is required for the assignment of IR and the examining doctor refers the testing to a specialist, then the following shall apply:

(i) The examining doctor (e.g., the referring doctor) shall bill specialist referred testing as one unit on the billing form using the appropriate MMI/IR CPT code with modifier "SP." Reimbursement shall be $50.00 for incorporating one or more specialists' report information into the final IR. This reimbursement shall be allowed only once per examination.

(ii) The referral specialist shall bill and be reimbursed for the appropriate CPT code(s) for the tests required for the assignment of IR. Documentation is required.

(D) Testing that falls outside of what is outlined in the Guides , but is required for the determination of MMI and/or the assignment of an IR, shall be billed using the appropriate CPT codes and reimbursed in addition to fees outlined in this section.

(E) When the result of the evaluation is that MMI has not been reached, the total reimbursement shall be equal to the reimbursement for the determination of MMI. This reimbursement shall include all services required for an MMI/IR examination excluding those services unique to assigning an IR. The examining doctor shall bill using the appropriate MMI/IR CPT code with modifier "NM."

(F) The treating doctor shall bill for an MMI/IR examination using the "Work related or medical disability examination by the treating physician..." CPT code with the appropriate modifier.

(i) Reimbursement for the determination of MMI shall be the applicable established patient office visit level associated with the examination. Modifiers "V1", "V2", "V3", "V4", or "V5" shall be added to the MMI/IR examination CPT code to correspond with the last digit of the applicable office visit.

(ii) Reimbursement for the determination of an IR shall be according to the areas rated.

(iii) If the treating doctor refers the injured employee to another doctor for the certification of MMI and assignment of IR and the referral doctor has:

(I) not previously treated the injured employee, then the referral doctor shall bill using the "Unlisted evaluation and management service" CPT code and the reimbursement shall be as outlined in subsection (H) for Required Medical Examinations (RME); or,

(II) previously been treating the injured employee, then the billing and reimbursement shall be as outlined for the treating doctor.

(iv) The treating doctor is required to review the certification of MMI and assignment of IR performed by another doctor (other than the designated doctor) as required by Chapter 130 of this title. The treating doctor shall bill using the "Work related or medical disability examination by the treating physician..." CPT code with modifier "VR" to indicate a review of the report only, and shall be reimbursed $50.00.

(G) A designated doctor shall bill for an MMI/IR examination using the "Work related or medical disability examination by other than the treating physician..." CPT code with the appropriate modifier.

(i) Reimbursement for the determination of MMI shall be based on the amount of time that has elapsed since the date of injury (DOI). One of the following modifiers shall be added to the MMI/IR examination CPT code:

(I) D1 (less than one year since the DOI) - $200.00

(II) D2 (greater than or equal to one year and less than two years since the DOI) - $300.00

(III) D3 (greater than or equal to two years since the DOI) - $400.00

(ii) Reimbursement for the determination of an IR shall be according to the areas rated. If the testing is performed by a HCP other than the designated doctor, then to qualify for reimbursement, the testing HCP shall:

(I) not have previously examined or treated the injured employee within the past 12 months, or with regard to the medical condition being evaluated by the designated doctor; and,

(II) have successfully completed commission-approved training in the proper use of the Guides .

(iii) Appointments canceled or not attended by the injured employee, with less than 24 hours notice to the designated doctor, shall be billed using the MMI/IR examination CPT code with modifier "BA" and the reimbursement shall be $100.00.

(H) A doctor performing a Required Medical Examination (RME) for the purpose of certifying MMI and assigning an IR shall bill using the "Unlisted evaluation and management service" CPT code with the appropriate modifier.

(I) R1 (first RME if less than one year from DOI or any subsequent RMEs) - $100.00

(II) R2 (first RME if greater than or equal to one year and less than two years since the DOI) - $200.00

(III) R3 (first RME if greater than or equal to two years since the DOI) - $300.00

(ii) Reimbursement for the determination of an IR shall be according to the areas rated.

(iii) Appointments scheduled by the commission and canceled or not attended by the injured employee, with less than 24 hours notice to the doctor, shall be billed using the MMI/IR CPT code with modifier "BA" and the reimbursement shall be $100.00.

(iv) An injured employee's treating doctor attending an RME shall bill using the "Unlisted evaluation and management service" CPT code with modifier "AR." Reimbursement shall be $25.00 per 15-minute increment (any amount over ten minutes shall be considered an additional 15 minute increment). Reimbursement includes the duration of the examination and the time required to travel to and from the treating doctor's usual place of business to the place of examination. A maximum of four hours shall be allowed, unless the insurance carrier previously approved extended time.

(7) Return to Work Exam. When a designated doctor is appointed by the commission to perform an examination to resolve a return to work dispute, the designated doctor shall bill using the "Work related or medical disability examination by other than the treating physician..." CPT code with modifier "RW." The reimbursement shall be $350.00 and shall include commission-required reports. Testing that is required for the return to work determination shall be billed using the appropriate CPT codes and reimbursed in addition to the return to work examination fee. Appointments scheduled by the commission and canceled or not attended by the injured employee, with less than 24 hours notice to the designated doctor, shall be billed using the "Work related or medical disability examination by other than the treating physician..." CPT code with modifier "BA" and the reimbursement shall be $100.00.

(8) Evaluation of Medical Care Exam. When conducting a commission or insurance carrier requested RME that is not for the purpose of certifying MMI and/or assigning an IR (e.g. evaluation of medical care), the examining doctor shall bill and be reimbursed using the appropriate consultation CPT code with modifier "RM." Appointments scheduled by the commission and canceled or not attended by the injured employee with less than 24 hours notice to the HCP shall be billed using the "Unlisted special service, procedure or report" CPT code with modifier "BA," and reimbursement shall be $50.00.

(9) Work Status Report. When billing for a Work Status Report refer to the commission Act and Rules Chapter 129 relating to Income Benefits - Temporary Income Benefits.

(10) Commission Modifiers. HCPs billing professional medical services shall utilize the following modifiers, in addition to the modifiers prescribed by the Medicare policies required to be used in subsection (b) of this section, for correct coding, reporting, billing, and reimbursement of the procedure codes.

(A) AR, Treating Doctor Attendance at RME - This modifier shall be added to the "Unlisted evaluation and management service" CPT code to indicate an injured employee's treating doctor attended an RME.

(B) BA, Broken Appointment - This modifier shall be added to the appropriate CPT code when appointments scheduled by the commission are canceled or not attended by the injured employee, with less than 24 hours notice to the HCP.

(C) CA, Commission of Accreditation of Rehabilitation Facilities (CARF) Accredited programs - This modifier shall be used when an HCP bills for a Return To Work Rehabilitation Program that is CARF accredited.

(D) CP, Chronic Pain Management Program - This modifier shall be added to the "Unlisted physical medicine/rehabilitation service or procedure" CPT code to indicate Chronic Pain Management Program services were performed.

(E) D1, Time of MMI/IR for Designated Doctor - This modifier shall be added to the "Work related or medical disability examination by other than the treating physician..." CPT code when the amount of time that has elapsed since the date of injury is less than one year.

(F) D2, Time of MMI/IR for Designated Doctor - This modifier shall be added to the "Work related or medical disability examination by other than the treating physician..." CPT code when the amount of time that has elapsed since the date of injury is greater than or equal to one year and less than two years.

(G) D3, Time of MMI/IR for Designated Doctor - This modifier shall be added to the "Work related or medical disability examination by other than the treating physician..." CPT code when the amount of time that has elapsed since the date of injury is greater than or equal to two years.

(H) FC, Functional Capacity - This modifier shall be added to the "Physical performance test or measurement..." CPT code when a functional capacity evaluation is performed.

(I) JA, Job Site Analysis/Assessment - This modifier shall be added to the "Community/work reintegration training..." CPT code when a job site visit/assessment is performed.

(J) MR, Outpatient Medical Rehabilitation Program - This modifier shall be added to the "Unlisted physical medicine/rehabilitation service or procedure" CPT code to indicate Outpatient Medical Rehabilitation Program services were performed.

(K) NM, Not at Maximum Medical Improvement (MMI) - This modifier shall be added to the appropriate MMI/IR CPT code to indicate that the injured employee has not reached MMI when the purpose of the exam was to determine MMI.

(L) RM, Required Medical Examination to Evaluate Medical Care - This modifier shall be added to the appropriate consultation CPT code to indicate an RME not for the purpose of certifying MMI or assessing an IR has been performed.

(M) RW, Required Return-to-Work Exam - This modifier shall be added to the "Work related or medical disability examination by other than the treating physician..." CPT code when a designated doctor is appointed by the commission to perform an examination to resolve return to work disputes.

(N) R1, Time of MMI/IR for RME Doctor - This modifier shall be added to the "Unlisted evaluation and management service" CPT code when the amount of time that has elapsed since the date of injury is less than one year; or, for any subsequent RMEs.

(O) R2, Time of MMI/IR for RME Doctor - This modifier shall be added to the "Unlisted evaluation and management service" CPT code when the amount of time that has elapsed since the date of injury is greater than or equal to one year and less than two years.

(P) R3, Time of MMI/IR for RME Doctor - This modifier shall be added to the "Unlisted evaluation and management service" CPT code when the amount of time that has elapsed since the date of injury is greater than or equal to two years.

(Q) SP, Specialty Area - This modifier shall be added to the appropriate MMI/IR CPT code when a specialty area is incorporated into the MMI/IR report.

(R) TC, Technical Component - This modifier shall be added to the CPT code when the technical component of a procedure is billed separately.

(S) VR, Review report - This modifier shall be added to the "Work related or medical disability examination by the treating physician..." CPT code to indicate that the service was the treating doctor's review of report(s) only.

(T) V1, Level of MMI for Treating Doctor - This modifier shall be added to the "Work related or medical disability examination by the treating physician..." CPT code when the office visit level of service is equal to a "minimal" level.

(U) V2, Level of MMI for Treating Doctor - This modifier shall be added to the "Work related or medical disability examination by the treating physician..." CPT code when the office visit level of service is equal to "self limited or minor" level.

(V) V3, Level of MMI for Treating Doctor - This modifier shall be added to the "Work related or medical disability examination by the treating physician..." CPT code when the office visit level of service is equal to "low to moderate" level.

(W) V4, Level of MMI for Treating Doctor - This modifier shall be added to the "Work related or medical disability examination by the treating physician..." CPT code when the office visit level of service is equal to "moderate to high severity" level and of at least 25 minutes duration.

(X) V5, Level of MMI for Treating Doctor - This modifier shall be added to the "Work related or medical disability examination by the treating physician..." CPT code when the office visit level of service is equal to "moderate to high severity" level and of at least 45 minutes duration.

(Y) WC, Work Conditioning - This modifier shall be added to the "Work hardening/conditioning" CPT code to indicate work conditioning was performed.

(Z) WH, Work Hardening - This modifier shall be added to the "Work hardening/conditioning" CPT code to indicate work hardening was performed. (AA) WP, Whole Procedure - This modifier shall be added to the CPT code when both the professional and technical components of a procedure are performed by a single HCP.

(f) Where any terms or parts of this section or its application to any person or circumstance are determined by a court of competent jurisdiction to be invalid, the invalidity does not affect other provisions or applications of this section that can be given effect without the invalidated provision or application.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on December 14, 2001.

TRD-200107941

Susan Cory

General Counsel

Texas Workers' Compensation Commission

Earliest possible date of adoption: January 27, 2002

For further information, please call: (512) 804-4287