Stuart Colburn examines the Texas Depart of Insurance, Division of Workers' Compensation's adopted rules for Performance Based Oversight (PBO).  The Division has already issued its “Report Cards” grading insurance carriers and medical providers without the benefit, or limitations, of any rules.  The adopted rules do not make the necessary changes suggested by various stakeholders. 

The controversial aspects of PBO are not found in the rule but rather the methodology.  First, the Division defended its use of the bell curve.  Application of the bell curve by definition means that even if each insurance carrier or medical provider received an “A” (90% compliant), a certain percentage of those health care providers and/or insurance companies would still be identified as a “Poor Performer.”  The Division writes, “The bell curve is a common methodology that compares performance relative to all system participants assessed.”  This justification is a truthful statement but does not address the concerns outlined by health care providers and insurance carriers.  In response to the argument a bell curve unnecessarily penalizes some medical providers and insurance companies, the Division responds, “Assessments based upon the actual performance of tiered participants may lessen the incentive to improve performance.  For example, if an assessment score of 90% moved a system participant into the higher performer tier, under the methodology proposed by the commentator, there would be no incentive to improve above that 90%.  In theory, all the system participants would cluster at 90% or slightly above and would be in the High Performer tier but would have no incentive to improve and to reach 100%.”  This justification assumes insurance carriers would simply “aim” for 90% but for the bell curve.  The Division then assumes its use of the bell curve will force insurance carriers to strive for perfection.  The lack of any logical rationale for such a statement is quite surprising.  Further, it does not respond to the argument a high performer is down graded into lower tiers based not upon actual performance but upon application of the bell curve. 

To read Colburn's further comments on other problems and controversies with PBO, see his expert commentary article.

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