Managers told to cut workers' comp costs

Federal managers need to submit claims on time in order to help contain the escalating costs of administering the federal workers' disability compensation program, a Labor Department official testified Thursday.

Despite some progress in cost containment, the Veterans Affairs Department and other agencies are not meeting their timeliness goals, Shelby Hallmark, deputy director of the Office of Workers' Compensation Programs (OWCP) at the Labor Department said at a hearing of the House Veterans' Affairs Subcommittee on Oversight and Investigations. OWCP expects agencies to submit 75 percent of initial claims within 14 days of a reported incident.

The Federal Employees' Compensation Act provides disability benefits to federal employees. OWCP, which administers the act, has long been criticized for its inadequate financial management and poor case handling.

"Claims that linger are the ones that become old cases," Hallmark said, and "old cases become costly cases." At VA alone, cases older than five years account for 75 percent of the dollars spent on its workers' compensation program, VA Inspector General Richard J. Griffin told the panel. Only one agency, the Tennessee Valley Authority, meets the goal of submitting 75 percent of initial claims within two weeks.

Agencies also need to identify safe duties that would allow injured workers to return to work sooner, Hallmark said. Such tasks help keep workers busy and help reduce the costs of case management. Smith Jenkins Jr., director of the VA's Desert Pacific Healthcare Network, which has historically had the highest level of disability costs in the country, said an initiative to move injured employees to light duty positions helped reduce costs by 14 percent.

Hallmark urged agencies to improve communications with injured workers during the early stages after an accident. To jump-start communications, OWCP has developed an online system that allows agencies to track cases and advise workers, he said.

Managers should also be concerned about misuse of workers' compensation programs. In VA, for example, Griffin estimated that more than 500 fraudulent cases cost the agency $9 million in 1996. "We're talking about tax dollars that can be better used to treat vets than by people that are trying to rip off the program," he said.

Managers should comb automated case databases for "red flags" that signal potential fraud, Griffin said. Examples of red flags include claimants with post office box addresses, those with a history of claims, and those about to be fired or with a negative personnel record.

To facilitate sharing of "best practices" for cost containment among agencies, VA is hosting its first workers' compensation conference in Orlando, Fla. from Aug. 29 to Sept. 2. The conference will feature more than 50 workshops on improving workers' compensation programs.

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