Richard Stephens
Mr. Stephens is the communications manager of the California Department of Industrial Relations' Division of Workers' Compensation in San Francisco.
Since passage of the seven workers' compensation reform bills by the state legislature last summer, the California Department of Industrial Relations (DIR) has been drafting regulations to implement provisions of the new laws under its jurisdiction. Some of the regulations are now in effect; others are still being revised. They cover such diverse elements of the workers' compensation system as managed health care organizations, industry medical councils, loss control service certification, the Cal-OSHA targeted inspection program, Cal-OSHA consultation, self-insurance, and Workers' Compensation Appeals Board procedures.
Managed Health Care
For years, California employers have been contracting with health maintenance organizations (HMOs) and other health care providers for insurance covering non-job-related injuries and illnesses of employees and their families. The reform legislation encourages use of the same cost-effective approach for injuries and illnesses covered by workers' compensation insurance.
Greater use of managed health care organizations (HCOs) is expected to benefit both employers and employees. Available evidence shows that, as HMO-type HCOs become familiar with the kinds of injuries and illnesses most common in the industries they serve, medical care for compensable claims is improved, less expensive, and less time-consuming. Managed care brings down costs. DIR has not estimated what the statewide savings will be, but they should be substantial.
The State Labor Code still gives employees the option of predesignating their current personal doctor or another health care provider for treatment of work-related injuries and illnesses. But there is an incentive for employers to arrange things so that employees' personal doctors are also their providers of workers' compensation medical care. So, in many cases, the same organization will provide for all of an employee's health needs, both work- and nonwork-related. New regulations from DIR outline standards and procedures for certification as a health care organization that employers or insurance carriers will be able to contract with to treat workers injured on the job.
In February, DIR's Division of Workers' Compensation mailed out about 100 application packages to qualified medical care providers interested in becoming certified as HCOs offering medical and other occupational health services for work-related injuries and illnesses. To be eligible, applicants must be one of the following: (1) a pre-authorized, full-service "Knox-Keene" health care service plan licensed by the State Department of Corporations, or (2) a disability insurer licensed by the State Department of Insurance, or (3) a Workers' Compensation Health Care Provider Organization licensed by the State Department of Corporations.
Loss Control Services
The Division of Occupational Safety and Health held public hearings during March on permanent regulations spelling out how Cal-OSHA will certify insurers' loss control consultation services. The new law requires that carriers writing workers' compensation insurance provide some services to all employers and additional services to those whose insurance premiums are high because of high injury and illness rates. These services are intended to help employers recognize, evaluate, and control significant preventable health and safety hazards and other potential sources of workers' compensation losses.
A key part of certification is submission by the insurance company of an "Annual Health and Safety Loss Control Plan" to the division, showing how it will select employers "targeted" for the higher level of service, establish loss reduction goals for those employers, and evaluate the effectiveness of consultations provided. Emergency regulations on certification went into effect January 10, and the permanent regulations are scheduled for release in early April.
Targeted Inspection and Consultation Programs
Targeted employers will also be subject to special inspections by a new unit of occupational safety and health investigators being established within the Division of Occupational Safety and Health. In addition, these employers will be able to avail themselves of free consultation provided by a greatly expanded Cal-OSHA Consultation Service, which is organizationally separate from the targeted inspection program. The consultation services are offered to employers to pinpoint health and safety problems, then recommend corrective measures to bring them into compliance with applicable Cal-OSHA standards.
Funding for the division's new activities - certifying insurance companies' loss control services, conducting inspections of targeted employers, and providing free consultation services to those employers - will come mainly from two sources. An application fee will be required from insurers when filing to have their loss control services certified, and an annual assessment will be made on businesses who employ workers in high-risk occupations. Regulations clarifying how the assessments will be collected are being drafted.
Group Self-Insurance
The reform legislation allows smaller, private sector employers operating in the same industry to self-insure their workers' compensation liability as part of a group. This cost-effective option was previously reserved for large employers and public agencies. Public hearings on group self-insurance have been held, and regulations are being formulated. They will go into effect within the next few months.
Self-insured employers will be permitted to pay DIR assessments by a direct billing from the department's Office of Self-Insurance Plans, based on workers' compensation indemnity paid to injured employees.
Rehabilitation, Evaluation, and Administration
An important set of regulations developed by the Division of Workers' Compensation implements numerous changes in the administration of claims and the vocational rehabilitation benefit. As specified in the reform legislation, there is now a set maximum for vocational rehabilitation expenses in all cases.
The Division of Workers' Compensation has also created a fee schedule for interpreters, and it has revised rules governing audits of claims administrators, permanent disability evaluations, and fees for obtaining documents or records from the division. Other subjects covered by the DWC include:
Conclusion
The new legislation, which was designed to reduce costs for employers
and improve benefits for injured workers, represents "the most extensive
reform of the state's workers' compensation system in modern memory,"
according to DIR Director Lloyd W. Aubry. As the regulations implementing
the reforms near completion, the process of informing all those who will
be affected has begun.