Can a Texas workers' comp insurer pay below the fee guideline for prescription drugs?

Plain-English summary

In Texas workers' compensation, insurance carriers reimburse health care providers for the prescriptions and other care that injured workers receive, and the Division of Workers' Compensation publishes fee guidelines for those payments. The Commissioner of Workers' Compensation asked two things: first, may a carrier contract to pay a provider less than the guideline rate for a prescription; and if so, may a carrier use informal or voluntary networks to line up those discounted deals.

On the first question, the Attorney General concluded there is no minimum. The Labor Code sections the Commissioner pointed to (408.027, 408.028, and 413.011) say nothing about a floor on prescription reimbursement. In fact, section 413.011 expressly lets carriers agree to pay more than the adopted fees, which signals that the Legislature knew how to address rate levels and chose not to set a minimum. The Division's own guidelines likewise set a maximum allowable rate, not a minimum. With no statutory or regulatory floor, the premise of the first question (a rate "lower than the guidelines allow") had nothing to bite on.

On the second question, the Attorney General reframed it: may a carrier use a certified network to obtain negotiated rates with providers? Texas law requires informal or voluntary networks to be certified as a workers' compensation health care network, and the Insurance Code says prescription medication or services cannot be delivered through such a network. But signing a contract is not itself delivering a prescription or providing medical treatment, so the no-delivery rule does not bar a carrier from using a network to arrange a contract with a provider at a negotiated rate. The Attorney General did add one limit: it expressed no opinion on whether any particular contract would be legally permissible, since the office does not review or construe contracts.

Currency note

This opinion was issued in 2010. Subsequent statutory amendments, court decisions, or later Attorney General opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

What the opinion meant for those who asked

Workers' compensation carriers (as the opinion held for them): The opinion concluded that no statute or guideline set a minimum prescription reimbursement rate, and that a carrier could contract through a certified workers' compensation health care network to obtain a provider contract at a negotiated rate.

The Division of Workers' Compensation (what the opinion described): The opinion read the Division's fee guidelines as establishing only a maximum allowable rate, not a minimum, so the guidelines did not prohibit a lower negotiated payment.

On any specific contract (what the opinion declined to decide): The opinion expressly stated it was expressing no opinion on whether any particular contract between a network and an insurer would be legally permissible, because the office does not review or construe contracts.

Common questions

Is there a minimum price a workers' comp insurer must pay for a prescription in Texas?
The opinion concluded there was not. Neither the Labor Code sections raised nor the Division's guidelines set a minimum allowable rate; the guidelines set only a maximum.

Can a carrier negotiate a discount below the guideline rate?
The opinion explained that because there is no minimum floor, there is no rate "lower than the guidelines" to prohibit, so a carrier may pay a negotiated rate.

Can a carrier use a health care network to arrange those discounts?
The opinion concluded a carrier could contract with a certified workers' compensation health care network to obtain a provider contract at a negotiated rate, because entering a contract is not delivering a prescription, which is the activity the network is barred from doing.

Did the Attorney General bless a specific network contract?
No. The opinion expressly declined to opine on whether any particular contract would be legally permissible, noting the office does not review or construe contracts.

Background and statutory framework

The Commissioner asked whether Labor Code sections 408.027, 408.028, and 413.011 prohibit a carrier from contracting for a prescription reimbursement rate lower than the Division's fee guidelines allow. The Attorney General noted that none of those statutes refers to a minimum fee rate. Tex. Lab. Code Ann. §§ 408.027 (West Supp. 2010), 408.028 (West 2006), 413.011 (West Supp. 2010). Reading statutes by the plain meaning of the words chosen, and presuming that words left out were left out on purpose, State v. Shumake, 199 S.W.3d 279, 284 (Tex. 2006); Cameron v. Terrel & Garrett, Inc., 618 S.W.2d 535, 540 (Tex. 1981), the opinion contrasted the silence on a minimum with section 413.011's express permission to contract for fees that exceed the adopted fees, Tex. Lab. Code Ann. § 413.011(d-4) (West Supp. 2010). Under the principle that expressly including one thing excludes what is left out, Mid-Century Ins. Co. of Tex. v. Kidd, 997 S.W.2d 265, 273-74 (Tex. 1999), the statutes do not set a minimum. The Division's guidelines likewise refer to a maximum allowable rate but not a minimum, 28 Tex. Admin. Code § 134.503(a) (2010), and administrative rules are read like statutes, Rodriguez v. Serv. Lloyd's Ins. Co., 997 S.W.2d 248, 254 (Tex. 1999). So there is no minimum allowable rate.

Because there could be no rate "lower than the guidelines allow," the opinion treated the second question as whether a carrier may contract with informal or voluntary networks to obtain provider contracts at negotiated rates. Such networks must be certified as a workers' compensation health care network, Tex. Lab. Code Ann. § 413.0115(b) (West Supp. 2010), and the Insurance Code provides that prescription medication or services, as defined in Labor Code section 401.011(19)(E), may not be delivered through such a network, Tex. Ins. Code Ann. § 1305.101(c) (West 2009). Section 401.011(19)(E) treats a "prescription drug, medicine, or other remedy" as a form of health care, defined to include reasonable and necessary medical aid, examinations, treatments, diagnoses, evaluation, and services. Tex. Lab. Code Ann. § 401.011(19)(E) (West Supp. 2010). Because neither code defines "medical," the opinion looked to how the codes use it (for example, "medical benefit" and "medical emergency"), Tex. Lab. Code Ann. § 401.011(31); Tex. Ins. Code Ann. § 1305.004(13) (West Supp. 2010), and found it describes physical treatment or condition. Entering into a contract does not physically treat a worker, so it is not a prescription medication or service the network is barred from providing. A carrier may therefore use a certified network to obtain a provider contract at a negotiated rate. The opinion expressed no opinion on the legality of any particular contract.

Citations

Statutes and rules:

• Tex. Lab. Code Ann. § 408.027 (West Supp. 2010)
• Tex. Lab. Code Ann. § 408.028 (West 2006)
• Tex. Lab. Code Ann. § 413.011 (West Supp. 2010)
• Tex. Lab. Code Ann. § 413.011(d-4) (West Supp. 2010)
• Tex. Lab. Code Ann. § 413.0115(b) (West Supp. 2010)
• Tex. Lab. Code Ann. § 401.011(19)(E) (West Supp. 2010)
• Tex. Lab. Code Ann. § 401.011(31)
• Tex. Ins. Code Ann. § 1305.101(c) (West 2009)
• Tex. Ins. Code Ann. § 1305.004(13) (West Supp. 2010)
• 28 Tex. Admin. Code § 134.503(a) (2010)

Cases:

• State v. Shumake, 199 S.W.3d 279, 284 (Tex. 2006)
• Cameron v. Terrel & Garrett, Inc., 618 S.W.2d 535, 540 (Tex. 1981)
• Mid-Century Ins. Co. of Tex. v. Kidd, 997 S.W.2d 265, 273-74 (Tex. 1999)
• Rodriguez v. Serv. Lloyd's Ins. Co., 997 S.W.2d 248, 254 (Tex. 1999)

AG opinions referenced:

• Tex. Att'y Gen. Op. No. GA-0302 (2005)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/greg-abbott/ga-0828
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2010/ga0828.pdf

Original opinion text

Best-effort transcription from the official PDF. Minor extraction artifacts were corrected; the linked PDF is authoritative.

ATTORNEY GENERAL OF TEXAS
GREG ABBOTT

December 10, 2010

Mr. Rod Bordelon Opinion No. GA-0828
Commissioner of Workers' Compensation
Texas Department of Insurance Re: Whether a workers' compensation carrier
7551 Metro Center Drive, Suite 100 may pay for a prescription drug at a rate lower
Austin, Texas 78744-1609 than the fee rate allowed under the guidelines of
the Division of Workers' Compensation of the
Department of Insurance (RQ-0890-GA)

Dear Commissioner Bordelon:

You ask two questions about the fee rates that workers' compensation insurance carriers must pay to reimburse health care providers for prescription drugs and other remedies delivered to injured workers under Texas workers' compensation laws.[1] First, you ask whether insurers may contract with providers after January 1, 2011, to pay for prescriptions at rates lower than the rates that might be allowed under the fee guidelines established by the Texas Department of Insurance, Division of Workers' Compensation (the "Division"). Request Letter at 1. If the answer to that question is "yes," you want to know whether insurers may contract with informal or voluntary networks to obtain such contracts. Id.

I. Whether Insurers May Pay Rates Lower than the Guidelines Allow

In presenting your first question, you discuss whether sections 408.027, 408.028, and 413.011 of the Labor Code prohibit insurers from contracting for a reimbursement rate that is lower than the rates that the guidelines allow. Id. at 1-3. We begin our answer by noting that none of those statutes refers to a minimum fee rate at which insurers may reimburse providers for prescriptions. See generally TEX. LAB. CODE ANN. §§ 408.027 (West Supp. 2010), 408.028 (West 2006), 413.011 (West Supp. 2010). This suggests that the statutes you discuss do not establish a minimum rate. See State v. Shumake, 199 S.W.3d 279, 284 (Tex. 2006) (holding that courts determine the Legislature's intent from the plain meaning of the words it chose); see also Cameron v. Terrel & Garrett, Inc., 618 S.W.2d 535, 540 (Tex. 1981) (holding that courts must presume that every word excluded from a statute was excluded for a purpose). The lack of a reference to a minimum rate contrasts with the express grant of permission in section 413.011 to insurers to contract "for fees that exceed the fees adopted by the division under this section." TEX. LAB. CODE ANN. § 413.011(d-4) (West Supp. 2010) (effective January 1, 2011). This is further indication that the statutes you discuss do not establish a minimum rate. See Mid-Century Ins. Co. of Tex. v. Kidd, 997 S.W.2d 265, 273-74 (Tex. 1999) (explaining that a law's express inclusion of a thing generally excludes a thing not expressly included). We have not found any statute that mentions a minimum rate for prescriptions under the Texas workers' compensation system, nor did any of the many briefs we received in this matter purport to identify such a law. Because we are unaware of a statute that identifies a minimum allowable rate, we must interpret the guidelines in order to determine whether there is a minimum allowable rate.

The guidelines refer to a maximum allowable rate, but they do not refer to a minimum allowable rate. 28 TEX. ADMIN. CODE § 134.503(a) (2010) (Tex. Dep't of Ins., Reimbursement Methodology).[2] This suggests that the guidelines do not provide a minimum allowable rate. See Kidd, 997 S.W.2d at 273-74 (noting that the express inclusion of something excludes something not expressly included); see also Rodriguez v. Serv. Lloyd's Ins. Co., 997 S.W.2d 248, 254 (Tex. 1999) (providing that courts interpret administrative rules as they interpret statutes). Therefore, we conclude that there is not a minimum allowable rate under the guidelines.

II. Whether Insurers May Contract for Discounted Rates

You also ask "whether insurance carriers may contract with informal or voluntary networks" to obtain a contractual agreement with health care providers to pay for prescriptions at rates lower than the rates allowed under the guidelines after January 1, 2011. Request Letter at 1. Because there could not be a rate lower than the rates the guidelines allow, we will discuss the more basic question of whether insurance carriers may enter into contracts with informal or voluntary networks to obtain contracts with health care providers to pay for prescriptions at negotiated rates. Under Insurance Code chapter 1305, every informal or voluntary network must be certified as a workers' compensation health care network ("WCHCN") by January 1, 2011. TEX. LAB. CODE ANN. § 413.0115(b) (West Supp. 2010). Chapter 1305 provides that "prescription medication or services, as defined by section 401.011(19)(E), Labor Code, may not be delivered through" a WCHCN. TEX. INS. CODE ANN. § 1305.101(c) (West 2009). Section 401.011(19)(E) of the Labor Code provides that a "prescription drug, medicine, or other remedy" is a form of "[h]ealth care," the definition of which includes "all reasonable and necessary medical aid, medical examinations, medical treatments, medical diagnoses, medical evaluation, and medical services." TEX. LAB. CODE ANN. § 401.011(19)(E) (West Supp. 2010). Thus, "prescription medication or services" under chapter 1305.101 are medications or services that provide medical aid to injured workers.

Neither the Labor Code nor Insurance Code defines the adjective "medical," but both codes use it to define other terms in a way that indicates it describes a physical treatment or condition. See id. § 401.011(31) (defining the term "medical benefit" as payment for health care intended to treat an injury or disease); TEX. INS. CODE ANN. § 1305.004(13) (West Supp. 2010) (defining the term "medical emergency" as the sudden onset of a condition manifested by severe pain or serious bodily dysfunction). Because entering into a contract would not physically treat an injured worker, entering into a contract could not be a prescription medication or service. See TEX. INS. CODE ANN. § 1305.101(c) (West 2009) (prohibiting a WCHCN from providing a prescription medication or service). Therefore, although a WCHCN must not provide prescription medication or services, an insurance carrier may enter into a contract with a WCHCN to obtain a contract with a health care provider to pay for prescriptions at a negotiated rate after January 1, 2011.[3]

SUMMARY

Sections 408.027, 408.028, and 413.011 of the Texas Labor Code do not establish a minimum allowable rate at which workers' compensation insurance carriers may pay for a prescription drug, medicine, or other remedy. A workers' compensation insurance carrier may contract with a workers' compensation health care network to obtain a contract with a health care provider to pay for a prescription drug, medicine, or other remedy at negotiated rates that are permitted by law.

DANIEL T. HODGE
First Assistant Attorney General

DAVID J. SCHENCK
Deputy Attorney General for Legal Counsel

NANCY S. FULLER
Chair, Opinion Committee

Jason Boatright
Assistant Attorney General, Opinion Committee

[1] Request Letter at 1 (available at http://www.texasattorneygeneral.gov).

[2] See E-mail from Dirk Johnson, the Division's General Counsel, to Jason Boatright, Assistant Attorney General (Sept. 16, 2010) (indicating that the guidelines are section 134.503) (on file with the Opinion Committee).

[3] We express no opinion on whether any particular contract between a WCHCN and an insurer would be legally permissible. Tex. Att'y Gen. Op. No. GA-0302 (2005) (stating that this office does not review or construe contracts).