California, where managed care was born and which boasts a higher HMO enrollment than any other state, is trying to lead the way in applying managed care to the treatment of on-the-job injuries.
Employer-backed workers' compensation reform legislation, which the state enacted in July 1993, was intended to encourage HMOs to get into the care of injured workers by becoming certified healthcare organizations, known informally as HCOs. Under the law, employers that offer HCOs can maintain up to a year's control of an injured worker's medical treatment. Without offering an HCO, employers have only 30 days of control.
With the medical costs of California's workers' compensation program running at $4 billion annually, HMOs are eager to respond to demand for cost containment.
The model system.Experts say the ideal managed-care workers' compensation system would involve the appropriate treatment of injured workers by capitated providers dedicated to getting patients back to work.
While that would be the best of all worlds, industry sources at a recent National Managed Health Care Congress conference on workers' compensation said it's still a distant objective.
"It's a wide-open market. Everybody is talking idealistically, but there is very little happening," said Michael Hancock, an independent vocational rehabilitation counselor.
"There's very little action," agreed John R. Keenan, chief executive officer of Keenan & Associates, a third-party administrator based in Torrance, Calif.
The confusing reform law doesn't help. Asked if Pacific Bell, the state's largest employer, would use an HCO, Charles J. Johnson, the company's director of workers' compensation, responded it would, "If you can tell me what an HCO is."
David Caine, manager of workers' compensation at Southern California Edison, another large employer, said the interrelation "between HMOs, HCOs, PPOs, E-I-E-I-O...is mind-boggling." Mr. Caine chairs a committee of Californians for Compensation Reform-a business group working to introduce a bill amending the workers' compensation reform law.
care-without capitation-is making some inroads into workers' compensation in California as well as in other states. PPO networks of occupational-injury providers are available, as are procedural oversight programs such as billing review and case management.
The state also has so-called 24-hour programs, such as one put together by Cerritos, Calif.-based FHP Health Care and Anaheim, Calif.-based Great States Insurance Co. Such programs coordinate traditional medical care under group health plans and workers' compensation coverage. Health Net and Blue Cross of California also offer 24-hour programs.
However, only Oakland-based Kaiser Permanente is providing capitated services for injured workers in California, and only through a 24-hour pilot program in San Diego called "Kaiser On-the-Job."
The FHP/Great States capitation model "is in the garage. We're not sure how to roll it out yet," said John Pasqualetto, Great States' presidentand CEO.
Capitation rates for injured workers are more difficult to set because, among other things, they may require more intensive and frequent treatment in order to speed their return to work.
Partnered with Boston-based Liberty Mutual Insurance Co., which provides disability coverage, PacifiCare last year ran a successful capitated workers' compensation medical-care pilot project for a chain of California retail stores. PacifiCare recently received approval from the state to offer its CompPremier program to other employers, but it doesn't have any enrollment yet.
However, Cypress, Calif.-based PacifiCare has decided not to apply to become an HCO. The company believes it can offer employers a better managed-care product by avoiding the complex regulations, said Vicki Merrill, CompPremier's president.
Cigna HealthCare, meanwhile, after spending $1 million, scrapped its HCO program before even applying for state certification (Oct. 3, p. 10). The rules for HCOs are "regulating an industry before it is born," said Jennifer Christian, M.D., director of occupational health and safety at Cigna in Glendale.
Cigna would have had to spend another $4 million to get the program running, and it didn't see a return on its investment, said Rochelle Glassman, a consultant who worked on the project.
Back to work.The movement toward
integrating group health and workers' compensation programs is based on the growing belief that the two systems should focus on worker productivity: getting people back to work as soon as possible, whether they are out with a back injury or with a kidney infection.
Return to work is important because 60% of the costs in workers' compensation are the billions of dollars in disability payments to injured workers.
"The issue in the late '90s will be employee lost time," said Phillip L. Polakoff, M.D., president of Integrated Health Management Associates, an Albany, Calif.-based consulting firm. To tackle the issue, employers and providers need data on the most effective workers' compensation practices, such as prevention programs and the best treatments for injured workers.
Above all, what is needed is "a communication program that links the provider to management," Dr. Polakoff said. In other words, employers and providers need to discuss treatment of the injured worker and the specifics of modified job duties that will speed the patient's return to the workplace.
Another obstacle is that HMO physicians who care for workers under group health plans often aren't focused on getting patients back to work. A recent study by the California Workers' Compensation Institute showed that workers' compensation costs could actually rise if injured workers received care through group health providers who aren't committed to getting a worker back on the job as quickly as possible.
Employer representatives like Mr. Caine agree, saying they won't send their injured workers to HMOs until group health physicians provide care geared toward getting patients healthy so they can return to work.