Performance-Based Oversight

1. Performance-Based Oversight April 19, 2006

2. Overview • What is PBO? • House Bill 7 • Key Regulatory Goals • Assessments • Tiers • Incentives • Timelines

3. What is PBO? • Encourages and rewards excellence and continuous improvement • Fosters improved and timely communications • Establishes performance objectives, measures and expectations • Focuses on results rather than prescriptive requirements

4. Who is using PBO? • Department of Energy • http://www.orau.gov/pbm/initiatives/bmop.html • US Nuclear Regulatory Commission • http://www.nrc.gov/what-we-do/regulatory.html • Blue Cross/Blue Shield Texas • http://www.bcbstx.com/provider/bluechoice_solutions/index.htm • Texas Commission on Environmental Quality • http://www.tceq.state.tx.us/compliance/enforcement/history/index.html

5. House Bill 7 4 basic goals of the workers’ compensation system • Each employee shall be treated with dignity and respect when injured on the job • Each injured employee shall have access to a fair and accessible dispute resolution process • Each injured worker shall have access to prompt, high-quality medical care • Each injured employee shall receive services to facilitate the employee’s return to employment

6. House Bill 7 • 9 legislative goals • Promote safe and healthy workplaces through appropriate incentives, education, and other actions • Encourage the safe and timely return of injured employees to productive roles in the workplace • Provide appropriate income benefits and medical benefits in a manner that is timely and cost-effective • Provide timely, appropriate, and high-quality medical care supporting restoration of the injured employee’s physical condition and earning capacity

7. House Bill 7 • Minimize the likelihood of disputes and resolve them promptly and fairly when identified • Promote compliance with this subtitle and rules adopted under this subtitle through performance-based incentives • Promptly detect and appropriately address acts or practices of noncompliance with this subtitle and rules adopted under this subtitle • Effectively educate and clearly inform each person who participates in the system as a claimant, employer, insurance carrier, health care provider or other participant of the person’s rights and responsibilities under the system and how to appropriately interact within the system

8. House Bill 7 • Take maximum advantage of technological advances to provide the highest levels of service possible to system participants and to promote communication among system participants

9. House Bill 7 • §402.075 • Develop and use key regulatory goals to assess insurance carriers and health care providers • At least biennially, assess the performance of insurance carriers and health care providers • Based on the assessment, develop regulatory tiers

10. House Bill 7 • The tiers should distinguish among: • Poor performers • Generally average performers • Consistently high performers • Develop incentives within each regulatory tier that promote greater overall compliance and performance • Focus regulatory oversight on those identified as poor performers

11. DWC PBO Activities • Internal cross- agency team • Strategic Plan • Concept Paper • Research of Performance-Based Oversight • Presentation from Blue Cross/Blue Shield • Interview of TCEQ management

12. Working Group Assistance • Identify key regulatory goals • Define assessment mechanism • Define tiers and tier placement strategy • Develop incentives for each tier

13. Key Regulatory Goals • Used to assess the insurance carriers and heath care providers • Must align with the general regulatory goals of the division

14. Key Regulatory Goals Examples • Timeliness of Income Benefits • Timeliness of Medical Bill Processing • Minimizing Disputes • Return-To-Work Outcomes • Workplace Safety

15. Assessments • Conducted at least biennially • Conducted through analysis of data • Maintained by Division • Self-reported data • Data Accuracy

16. Assessment Sources • EDI data • ECS/837 data • Division data • Dispute resolution figures • Complaints • Form filings • Data calls

17. Tiers • Poor performers • Generally average performers • Consistently high performers

18. Tier Examples • Quantifiable measures – 90%, 95%, etc • Defined measures • Can be conducted at any time for any time period • Bell Curve • Performance relative to peers on same duty • Consistent time period • Defined Distribution • Known number of entities

19. Incentives • Developed by rule • Defined for each tier • Publicly recognize high performers • Allow high performer designation as a marketing tool

20. Incentives Examples • Reduced penalties • Self Audits • Payment modifiers • Faster payments • Waiver of conference fees

21. Proposed Timeframes • Develop Key Regulatory Goals – 5/31/06 • Identify Assessment Mechanism – 7/31/06 • Develop Incentives – 7/31/06 • Identify Tiers and Tier Placement Strategy – 7/31/06 • Initiate Assessments – 8/31/06 • Complete Initial Assessments – 9/30/06 • Tier Placement – 10/15/06

22. Discussion Topics

23. Timeliness of Income Benefits

24. Timeliness of Medical Bill Processing

25. Minimize Disputes

26. Return-To-Work Outcomes

27. Workplace Safety