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TOA Supports Legislative Efforts to Eliminate Designated Doctor Sales Tax

March 20, 2023

Texas Orthopaedic Association

Statement in Support of SB 1122 & HB 2535

The legislation would help ensure that injured employees with complex and severe injuries have access to the designated doctors with the highest level of training – physicians.

The Texas Orthopaedic Association (TOA) strongly supports SB 1122/HB 2535, which would eliminate the state’s upcoming sales tax on designated doctor services. The measures, which are authored by Sen. Charles Schwertner, MD, and Rep. Chris Turner, would eliminate a sales tax that could negatively impact physician participation in the designated doctor program.

Orthopaedic surgeons, for example, are facing a number of rising costs in their practices, and an additional cost, such as a sales tax, may serve disincentivize orthopaedic surgeon participation in the designated doctor program.

The Nation’s Leading Workers’ Comp System Requires Strong Physician Participation
Policymakers around the nation point to the Texas workers’ compensation program as one of the nation’s model programs. Designated doctors play a critical role in the program as a neutral doctor who determines what work-related injuries and occupational illnesses are subject to injured workers’ employment, and this may include maximum medical improvement status, impairment rating and return to work.

Injured employees in Texas deserve access to designated doctors with the highest level of training, physicians. In particular, it is critical for the system to feature specialists such as orthopaedic surgeons, neurosurgeons and neurologists to handle the most complex and severe injuries and occupational diseases. The workers’ compensation program cannot function in a proper manner without these specialists to address musculoskeletal trauma and traumatic brain injuries.

In October 2022, the Comptroller of Public Accounts issued a ruling indicating that charges for designated doctor examinations are considered “insurance services” and are subject to Texas sales and use tax, which would require designated doctors to collect sales tax when performing exams that are ordered by the Division of Workers’ Compensation (DWC).

The comptroller recognized the potential negative consequence that the tax could have on physician participation as designated doctors by delaying the implementation of the tax to allow the 2023 Texas Legislature to address the issue.

The 2021 Texas Legislature’s Precedent
One of the first bills signed into law by Governor Greg Abbott during the 2021 Texas Legislature was a similar tax related to medical and dental billing services. In a parallel move, the comptroller delayed the pre-claim medical billing services tax to allow the 2021 Texas Legislature to act. Governor Abbott signed HB 1445 into law on April 30, 2021.

Support for the Legislation
The Texas Orthopaedic Association and Texas Medical Association support SB 1122/HB 2535.

Bobby Hillert | Texas Orthopaedic Association
Executive Director | 214.728.7672 m