FECA Reform: Fresh Approaches, Aging Workers and Trying to Do More With Less

Karen C. Yotis, Esq., a Feature Resident Columnist for the LexisNexis Workers’ Compensation eNewsletter, provides insights into workplace issues and the nuts and bolts of the workers’ comp world.

The cost cutting game being played in the workers’ compensation world these days is called “REFORM,” and it should come as no surprise that the federal government—which is the biggest employer in the nation after all—is turning into a most accomplished gamer. Hearings in May 2015 about reform of the Federal Employees’ Compensation Act (FECA) before the Subcommittee on Workplace Protections kicked off with Committee Chairman Rep. Tim Walberg (R-MI) raising concerns that “FECA benefits are too generous and can discourage an employee’s return to work.” Witness Scott Dahl, Inspector General of the Department of Labor, echoed Walberg’s cost-cutting refrain with comments about ensuring that compensation benefits are “only paid to those who are truly injured and unable to work,” and that medical benefits be paid “for necessary services that are actually provided.” However, a series of seven studies which analyze the intricacies of injuries and claims under federal workers’ compensation that the Journal of Occupational and Environmental Medicine (JOEM) published in a March 2015 special supplement point to lack of accountability, poor communication, disarrayed recordkeeping—and the aging workforce—as the system’s big cost drivers, rather than greedy federal employees who lie about their injuries and are too lazy to get back to work. Like the countless games of reform that are being played across the nation in the private sector, the playing field at the federal level has employer pitted against employee in a very serious contest that has at stake the very future of the system itself.

LAYING THE GROUND RULES

Contrary to Chairman Walberg who appears to view FECA as an unrestrained cash cow, the subject matter experts that we spoke to when researching this article operate on the FECA playing field with a very different set of expectations.

According to California attorney Steven E. Brown, who chairs the WILG’s FECA section, the system “can be accurately described as either an adversarial system with no judicial review or a non-adversarial system administered unfairly, without sufficient procedural rights for claimants.”

Boston FECA attorney Daniel B. Shapiro approaches FECA as “a system that is skewed against the employee claimant and is pervaded with an anti-claimant and anti lawyer-sentiment.”

And New York FECA attorney Gay Snyder classified the notion of successful claimants as being not deserving, receiving too much money, faking their injuries, and bilking the system as a myth when she stated “that there is little fraud; that federal workers are not fully compensated for their injuries ; that there are aggressive efforts by some federal agencies such as the Post Office and the Veterans Administration to force employees off workers’ compensation; and that the U.S. Department of Labor, which administers the program, sides too often against injured workers.”

FECA is clearly a system fraught with controversy that is trying to do more with less. Something will eventually have to give, but should it be the injured federal worker or the taxpayers who finance FECA?

ENTER THE STUDY SWAMIS

The seven individual reports in JOEM’s special issue give us many of the specific elements that are necessary to understand the federal workers’ compensation program. One article for fresh initiates to the FECA rights, benefits and procedures provides an excellent review of the federal workers’ compensation program and accompanying DOD regulations. Another piece explores what clinicians and program managers can do to increase the number of federal workers that decide to seek treatment within the DOD or VHA rather than going to a personal physician in an outside facility where data shows outcomes to be less favorable and far more expensive. A third study explores the dramatic evolution of quality management in healthcare over the past 30 years and uses facility-level data to delve into the connections between system elements in order to identify missing pieces and recommend future solutions. A fourth report highlights VHA improvements at record-keeping and RTW initiatives, and the resultant positive impact that these programs had on costs.

Of particular value (and analyzed more fully below) are:

> Cameron J.L. Nelson et al.’s “Analysis of New Workers’ Compensation Claims in the Department of Defense Civilian Workforce, 2000-2012” (which describes changes in DOD workers’ comp costs and injuries and explores the relationship of age, occupation and nature of injury on costs and injury/illness rates);

> Scott E. Cherry et al.’s “Investigating the Relationship Between Worker Demographics and Nature of Injury on Federal Department of Defense Workers’ Compensation Injury Rates and Costs from 2000 to 2008” (which examines private industry studies of aging workers, notes increased risk of injuries and costs, and then compares and assesses whether a similar injury risk exists between private and federal sector worker experiences); and

> Timothy M. Mallon et al.’s “Managing Federal Workers’ Compensation Injuries and Costs” (which reviews how FECA injuries and illnesses are managed from the injury prevention and case management perspective)

Although each study examines a different specific piece of the federal workers’ comp puzzle, certain highlights appear across the board in this body of research. Among the basic lessons that we can extrapolate are that:

1. Buy-in from departmental and employer/agency top management—which entails insights and not merely policy elements from operational leadership—as well as clearly-defined accountability are essential components of success in matters of program management and cost containment.

2. Agency-specific assessments (as opposed to a one-size-fits-all approach)—especially with respect to identifying and meeting staffing requirements—are other essential elements that underlie program success.

3. Data sharing and communication across the wide-as-they-are-high boundaries that exist between safety departments, workers’ compensation personnel and occupational health clinicians are what create the critical loop that must connect the planning, implementation and quality checking aspects of the improvement cycle.

4. Through targeted analyses—of injury causation, age demographics and different agency work practices—it is possible to identify (and thereby increase the chance of preventing) those injuries that are the most costly and severe.

5. The absence of an integrated data system that gives adequate detail and sufficient access remains a major roadblock to identifying and implementing solutions within the federal workers’ compensation system.

6. Metrics on program performance helped to reduce the number of injuries, but did not have the same effect on workers’ compensation costs. This is the scientist’s way of dancing around the naked truth that the high costs that run rampant throughout the system is attributable in large part to the aging workforce.

DO NOT PASS GO IF YOU’RE OVER 50

Make no mistake about it—the federal workforce is an aging gaggle that most often remains seated for prolonged periods or else drives and lifts for a living, and we are paying through our collective noses for the injuries and illnesses arising out of the 50-70 demographic. And like the various players in the private sector, from providers to administrators, the weak link on the federal team—the one position that everyone points to as the most expensive problem—is the aging employee. Indeed, two of the seminal studies detailed below reach conclusions that center around findings relating to aging workers. For example, in determining that the rates of new WC claims decreased during the 2000-2012 study period while costs per new claim and total WC program costs skyrocketed, the Nelson study authors recommend that future research focus on the changes associated with the aging workforce. Based upon eight years of data showing that whereas younger workers get hurt more often, older workers tend to have more expensive claims, the authors of the Cherry study conclude that “increasing age is associated with higher medical and indemnity costs per claim,” and recommend that “future research should focus on the changes associated with the aging worker and determine the most cost-effective ways to target injury prevention efforts to reduce injury and illness risk for these workers.”

The majority of the studies in the JOEM special issue do recount best practices and prevention programs developed and implemented at the federal level that effectively decreased the incidence rate of injuries and illness, but the authors make it clear that the focus and direction of effective future claims management and cost containment efforts must center in large part upon the various realities that the aging worker brings.

THE SCIENTIFIC NITTY GRITTY

Taken in their entirety, the articles in JOEM’s Federal Workers’ Compensation Supplement serve as a deep resource for uncovering weaknesses and to some extent documenting interventions that may be having a positive effect on the management and containment of FECA claims and costs. However, the Nelson, Cherry and Mallon articles provide the most comprehensive insight into the problems inherent in the federal workers’ compensation as well as potential realistic solutions.

The Nelson Article

Although the authors of this cross-sectional analysis of all new DOD civilian workers’ comp claims submitted between 2000 and 2012 are careful to characterize their article as “a hypothesis-generating study with no temporal or causal relationships,” and also note that estimated occupational injury rates can be imprecise because of underreporting and misclassification, the study finds clear evidence to support the result that “new claim frequencies, rates and costs aggregate among federal workers in older age groups.” And while the authors note higher injury rates in younger workers, they also note higher fatality rates in older workers. The study puts the full extent of the aging workforce’s future impact into perspective when it mentions the $3.025 billion in payments to injured federal workers in fiscal year 2012 alone alongside the U.S. Bureau of Labor Statistics’ related projection of a 47 percent increase in the number of workers aged 55 and older between 2006 and 2016, which is five times higher than the growth rate of the entire United States labor force. The authors also mention the so-called hidden costs associated with losing skilled and productive manpower and the resultant negative impact of that trend on DOD readiness.

The authors grouped their research data according to the nature of injury (NOI), the cause of injury (COI) and the location of injury (LOI) and calculated new claim rates by age group and over the duration of the entire 12-year study period to examine trends. The authors also explored the number and type of workers’ comp claims filed and total costs per new claim by each claimant’s age for an incredible $354 million paid out on 265,475 processed claims. The study observed an upward trend in new claims rates from younger to older age groups as well as a positive increasing trend in new claim costs for each successive 5-year increase in age group.

Other than causes falling into the category group marked as “unknown” (this most frequent COI suggests something unfortunate about recordkeeping in the federal workers’ comp system), the study data found that worker injuries were most often caused by handling manual equipment, slipping/twisting/tripping, striking against material equipment, and falling. The nature of these injuries were most frequently sprains/strains of ligaments/muscles/tendons, back sprain/strain and back pain, unclassified traumatic injury (there’s that record-keeping problem popping up again), contusions, and lacerations. These injuries most often hurt general administrative/clerical/office personnel, transportation/mobile equipment maintenance workers, and warehouse/stock handling workers who sit, drive and lift for a living.

While the study was prompted by the cost containment goals in President Obama’s multi-year Protecting Our Workers and Ensuring Reemployment (POWER) initiative (which set aggressive performance goals in multiple areas including reduction of injury and illness rates and analysis of lost time and illness data to reduce costs and target prevention efforts), it is the aging workforce and its impact on the rising costs of medical care not only in the DOD but throughout the United States which the authors present as the federal system’s most significant challenge.

Additional recommendations drawn from the study include the need to increase staffing levels, improve the accuracy of data capture during claims coding and processing and removal of barriers to data access because of privacy concerns. Yet there is no mistaking the authors’ primary message that “the goals of future research should focus on the changes associated with the aging worker,” and pay particular attention to the effects that age, occupation and the nature of an injury have on the duration of federal FECA claims.

The Cherry Article

Like the Nelson piece, this investigation into the relationship between worker demographics (especially age) and the nature of injury on workers’ comp injury rates and costs focuses on DOD figures during the period from 2000 to 2008. And like the Nelson study, this research also points to the age-specific trends which show younger workers getting hurt more often and older workers generating more expensive claims with as much as a threefold increase in costs per claim. And while the authors note inconsistencies in the current literature regarding the relationship between age and work-related injuries and illnesses, they do posit that “anticipation of the cognitive and physical changes of age could prevent many work-related injuries and illnesses.”

In particular, this study conducted a cross-sectional analysis of the relationship between variables such as age, sex, occupation and nature of injury and workers’ compensation injury rates medical/compensation total costs for each of the 142,115 workers’ comp claims that federal DOD employees filed between 2000 and 2008. The authors performed data analysis on the frequency, rates and costs per claim of each new claim, and also examined the changes in injury rates and costs over time.

With striking similarity to the conclusions reached in the Nelson study, the scientists who conducted the Cherry study observed the highest claim rate in the 30 to 34 age group and the lowest claim rate among workers in the 65 to 70 age group. This study likewise detected the youngest age group of 18 to 24 years accounting for the lowest median cost of a claim, with the second oldest age group of 60-64 accounting for the highest median claim cost. The age differential also revealed that employees 55 years and older are more than three times as likely than their 20- to 24-year-old counterparts to have an above-average claim cost and that workers in the 55 and over demographic had more than three times increased odds of being injured compared with the youngest 18 to 24 age group. According to the authors, older workers nevertheless “do seem to benefit from workplace experience in avoiding injuries.” Some consolation!

Among the distribution of top occupations among workers’ comp claims and associated costs, the highest number of claims were filed by federal DOD employees engaged in fire protections services, various mechanics occupations, clerical assistants, materials handlers, and engineering technicians.

While the study’s strength lies in the breadth of its examination of all DOD workers’ comp claims across a wide swath of time and the generally reliable nature of its metrics on age and claim cost, the authors note several limitations on their research. First, data includes only the first year of each claim, which means that the significant cost outlays that can occur in subsequent years were missed. This data would of course serve to exacerbate the study’s existing conclusions about the effect of age on claim costs. Another limitation is the lack of a method to adjust data based upon a claim’s severity, which could have a significant impact on the study’s results relating to claim costs.

The authors recommend future research around the various facets of age, including: a study of the detailed changes associated with aging; an examination of the effects that age, occupation and nature of injury have on federal DOD workers’ comp claims; and an investigation into the occupations with the highest claim frequency in an effort to target preventive measures.

The Mallon Article

The last of the three studies summarized in this article offers the most detail about current (and modestly successful) FECA case management practices, including program controls, best practices and opportunities for improvement. The authors examined workers’ comp management efforts at the DOD, the VHA and the DOL to assess existing initiatives and determine what more may be required to prevent more injuries and lower claim costs and concluded that achieving these dual goals depends primarily upon safety and occupational health personnel receiving enough actionable information to facilitate those efforts.

Department of Defense - The study notes that the DOD saved $14 million at 14 sites using a number of medical claims management best practices intended to return injured employees to work and lower claims costs. These included training manager level personnel about injury reduction initiatives so all relevant individuals are well schooled in reporting protocols and procedures to follow when an injured worker needs medical care. The DOD also fosters and promotes the creation and maintenance of positive relationships and facilitation of information exchanges between managers, administrators and providers. Providers are also made aware of an injured employee’s work requirements or restrictions.

Perhaps the most effective best practice adopted by the DOD is the creation of a working group among FECA team members to talk about open issues, manage pending claims and review initiatives to reduce costs. Each facility’s working group holds mandated quarterly meetings, which are attended by HR staff, safety managers, medical professionals, attorneys, and high-level supervisors. On the agenda are discussions about specific claims metrics, details about employees’ return to work, long-term claims, and availability of potential light-duty roles for recovering employees.

Although the DOD’s case management program has been effective, the study identified several gaps in program services. For example, case management services don’t start until an injured employee is off of work for two weeks, field nurses are assigned at a claims manager’s discretion on a case-by-case basis, and case management stops whenever an injured employee returns to work in any capacity.

The study also pinpoints additional weakness in the DOD’s data system, which the authors recommend be redesigned to make it easier to analyze the outcome of claims and target injury prevention initiatives. The authors also cite commitment by top level management and clear accountability for injury prevention and management of cases as missing essential components for program success.

With 40 percent of collected data remaining uncoded and 38 percent of short-term disability days remaining untracked, poor record-keeping and underreporting are also obvious problems.

Department of Veterans Affairs – The study recaps a series of cost containment experiments that the VHA conducted when workers’ comp costs continued to increase in spite of a significant decline in lost time rates between 2002 and 2008. These promising initiatives included: tracking software to improve the ability to assess the effectiveness of claims management and cost containment interventions; and the documenting and assessment of overall poor record keeping habits as a precursor to the adoption of a telemedicine consulting service.

The study also reviews the VHA’s well-documented clinical successes, such as the implementation of the anonymous Patient Incident Reporting System, the Computerized Patient Record System, the modified Automated Safety Incident Surveillance and Tracking System and the Occupational Health Recordkeeping System.

The study describes how the VHA developed and implemented targeted injury prevention programs that effectively decreased injury rates based on analysis of data showing the association between: 90 percent of chargeback costs and claims over one year old; 40 percent of nursing injuries and patient handling incidents, and high-expense workers’ comp claims and patient assaults on VHA healthcare workers.

Like the DOD, the Department of Veterans Affairs has also created an elite taskforce called the Workers’ Compensation Steering Committee that includes VBA, NCA and VHA participants, which develops its own strategic plans and maintains open lines of communication with everyone in the workers’ comp food chain.

Department of Labor - The DOL’s workers’ comp program management efforts stem from the aggressive performance goals set by President Obama’s POWER initiative that covers fiscal years 2001 through 2014. The study notes the DOD’s good success in meeting POWER goals of reducing injury, illness and lost-time case rates through best practices that include: early contact with injured workers; the provision of modified work positions for workers that have short-term injuries; improved and streamlined intra-agency communication; period review of all cases with the Office of Workers’ Compensation Programs; and regular presentations of disability costs to accountable directors and managers at all levels. Additional DOL best practices include early contact in the RTW process, collaboration between safety personnel, case managers and medical professionals, the fostering of a culture with clearly-defined expectations; intra-agency sharing of learned lessons; and referral of injured employees whose work restrictions the department is unable to accommodate to the DOL Vocational Rehabilitation Program.

DON’T TOUCH THAT BENEFIT CHECK

Benefit cuts are not mentioned—anywhere—in the JOEM special report on FECA research studies. One wonders whether Chairman Walberg and his Congressional Subcommittee on Workplace Protections might benefit from a JOEM subscription. When we asked Gay Snyder to identify the most significant FECA challenge, she didn’t say “program management,” or “cost containment.” Instead, Snyder referenced various past congressional proposals to reduce workers’ compensation and the aggressive stance that employing agencies like the financially strapped U.S. Postal Service take in forcing a federal claimant off of workers’ compensation, and stated: “In my opinion the #1 issue facing the FECA system today are efforts to diminish benefits to deserving injured workers.”

So many approaches exist that are leading to solutions in the FECA landscape. Congress can set federal agencies and their injured employees up for future success by choosing careful reform over a band-aid fix.

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