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Recommendations for the State Employees Workers’ Compensation Program

State Office of Risk Management
A. SORM should consider contracting with another larger carrier such as Texas Mutual to improve medical bill processing and cost containment. This contract should include specified performance measures with penalties if the measures are not met.

The current contract with Argus cost $6.7 million for services from June 23, 1999 through August 31, 2004.[21] This contract’s yearly amount of $1.4 million may increase to as much as $3 million per year to achieve cost containment with effective utilization review and system technology.

B. SORM should continue with the Medical Management Team’s responsibilities of:

  • targeting reviews of procedures and providers for identifying abusive billing practices;
  • periodically evaluating the appropriateness of prior authorizations issued by the cost containment vendor; and
  • identifying of cases that should be managed medically to ensure the claimant receives the appropriate treatment and medical care.

To date this team has reopened 800 claims with potential over-utilized services, stopping treatment and challenging ongoing treatment for 90 percent of the claims. SORM projects this team can potentially reduce payments by $2 million a year. Increasing this team from its current staff of four nurses with five additional nurses at an annual salary (including administrative costs) of approximately $225,000 dollars should result in additional savings to the State Employees Workers' Compensation program.

C. SORM should consider contracting with a physician medical advisor with expertise in the Texas Workers’ Compensation Program to help the Medical Management Teams identify services that are not medically necessary.

Fiscal Impact
These recommendations require an increase to this agency’s current appropriations. This increase would be offset by savings to the state from reduced overpayments of state employees workers’ compensation’s medical expenses.


[21] Legislative Budget Board, Contracts Reported by Texas State Agencies and Institutions of Higher Education, Summary of Contracts-fiscal Year 2002 (Austin, Texas, December 2002). p.31, (Last visited February 3, 2003.)