Workers' Comp Reform Brings Managed Care, Group Self Insurance

Among its many changes, the recent workers' compensation reforms have changed the way employers may insure their employees and the manner in which medical treatment may be delivered to injured workers.

Self insurance will be possible for more businesses. With self insurance, businesses meet criteria set by the Self Insurance Plans Unit of DIR and post bonds to ensure that they would be able to cover any claims. This method serves as a cost-effective alternative to purchasing workers' compensation insurance from a carrier.

Until now, self insurance has been available only to large employers and public agencies. The reform legislation allows small businesses to band together and insure their liability as a group. The Self Insurance Plans Unit recently completed public hearings on proposed implementing regulations. The final regulations should be effective within a few months.

The legislation also allows for the use of managed care to treat injured workers. The Division of Workers' Compensation has mailed applications to health care organizations (HCOs) interested in obtaining certification to provide treatment for work-related injuries and illnesses.

Under this option, insurers now will be able to contract with specific health care providers to treat workers covered by an employer's workers' compensation insurance policy who are injured on the job. This method will slow the fast-growing medical component of the system, which now accounts for nearly half of workers' compensation costs.

Managed care will allow for greater continuity of coverage in addition to cost savings. For example, employers commonly contract with HMOs and other health providers for coverage of non-work-related injuries and illnesses. Managed care in workers' compensation will allow the same cost-effective approach to be used for injuries and illnesses covered by workers' compensation insurance. In fact, in many cases, the same organization will provide for an employee's work-related and non-work-related health needs.

Under the California Labor Code, employees have the option of designating their current physician or another provider to provide for work-related or non-work-related injuries and illnesses if they prefer. To be certified as an HCO, applicants must qualify as either: 1) a full-service Knox-Keene plan licensed by the Department of Corporations; 2) a disability insurer licensed by the Department of Insurance; or 3) a Workers' Compensation Health Care Provider Organization licensed by the Department of Corporations.

Further information on group self-insurance is available from the Self Insurance Plans Unit by calling (916) 483-3392 or writing Mark Ashcraft, Manager, Self Insurance Plans, 2265 Watt Ave.-Suite 1, Sacramento, CA 95825. For more information on managed care, please call the Division of Workers' Compensation at (415) 703-3731 or write Dr. Linda Rudolph, Division of Workers' Compensation, 455 Golden Gate Ave., San Francisco, CA 94102.