Interim Report to the Legislature:
24 Hour Pilot Programs under
Labor Code Section 4612

March 1997

Research and Evaluation Unit
California Division of Workers' Compensation
P.O. Box 420603
San Francisco, CA 94142

TABLE OF CONTENTS

Summary of Findings 1
Introduction 3

    What is 24 Hour Health Coverage

3
Law and Regulation 4

    Proposals for pilot programs
    Legislative and Policy History
    Key elements of Legislation on Pilot Programs
    The Regulations
    Application developed and released
    Applications Accepted and Denied
    Analysis of successful applications

4
4
4
5
5
6
7
7
24 Hour NonPilot programs 10
Results and Outcomes 10

    General Impressions
    Criteria for evaluation - 13 items to review

10
12
Final Program Evaluation 15

    Sponsors Funding the Study
    Organizations Performing the Evaluation
    Study Design
    Recruitment of Control Group Employers for the Study

19
19
20
29
Conclusions and Recommendations 21
Endnotes 22
Table of Appendices 23

    Appendix 1-CALIFORNIA LABOR CODE SECTION 4612
    Appendix 2-CALIFORNIA CODE OF REGULATIONS, SECTION 10175-10181
    Appendix 3: Application-24-Hour Care Pilot Program Application
    Brochures and Enrollment Information

24
27
33
38

An Interim Report to the Legislature on 24 hour care

Summary of Findings

Labor Code Section 4612, adopted in 1992 and amended in 1993, established three year pilot programs of 24 hour health care in California. These programs were set up to test the administrative efficiencies, cost control potential, and service capabilities of having a single system provide health care for occupational and nonoccupational injuries and illnesses.

Under traditional workers' compensation law, workers often have different sources of medical care, depending on whether an injury occurred at work or was not work-related. Typically, workers choose their own physician for care provided under their nonoccupational health plan (if they have health coverage). When injured on the job, employers typically determine the primary care provider. Under the pilot programs, workers have a single network of providers for both on- and off-the-job health problems. Employees signing up for the program agree to receive all medical care for on and off the job injuries from an "exclusive provider" of health care for up to one year, in contrast to the 30 day period of medical control that employers have under traditional programs. Employees have a choice as to whether to enroll or maintain their traditional system.

The pilot programs were legislated at a time when employers' costs for workers' compensation were rising rapidly, having grown from approximately $8 billion in 1988 to $11 billion in 1993. By 1995, when the program was getting underway statewide, overall compensation costs had dropped dramatically, back below the 1988 levels. Competitive (or "open") rating provided cost reductions just as marketing for the pilots got underway. Many employers were reluctant to attempt a conceptually interesting but largely untested program when premium discounts were already readily available. In addition, the new product combination proved to be more complex to market than separate group health and workers' compensation policies, requiring increased coordination between insurance brokers familiar with workers' compensation or nonoccupational health benefits.

Four individual pilot program designs were approved after the application period in 1994. Since their approval, one of the four has dropped its participation, and another has experienced low enrollments. The vast majority of participating employers and employees are under two related projects, emanating from the northern and southern regional offices of the state's largest health maintenance organization.

Implemented in 1994 with the participation of five employers in San Diego County, the program now includes over 65 employers in four counties. Enrollments in pilot programs have grown steadily and currently stand at nearly 8,000 employees in participating firms. Enrollments, however, are somewhat lower than originally expected. Many reasons are given for the low level of enrollments, but the most prominent is the success of controlling employers' workers' compensation costs outside the pilot program.

Those employers who entered the program are generally satisfied. Nearly all employers with experience in the program believe it is working well and would like to see it continue. Some cite the impact on their costs. Others feel that the program has led to greatly improved communication with those providing medical care to injured employees. Some like the increased period of medical control. Still others like being a part of an innovative experiment that attempts to blur the lines and treatment arrangements between the various causes of disability. While direct measurement of worker satisfaction with the program is just getting underway, at annual renewals of the individual employer programs, the number of enrollees has generally grown. While a few employees have dropped out of the program along the way, more have joined each year at open enrollment times. Attorneys for injured workers have voiced some instances of dissatisfaction with medical care and with the process of communicating the restrictions of the programs.

A comprehensive evaluation, largely funded by external foundation grants, is now underway to test a series of questions raised by the legislation. The evaluation is being conducted by a consortium of the UCLA School of Public Health, the Rand Institute, and UC-Berkeley's Survey Research Center. The bulk of the financing comes from the Workers' Compensation Health Initiative of the Robert Wood Johnson Foundation, with other funding from the Rand Institute and from assessments on participating employers. The survey instruments and study methodology are likely to be put to use in evaluating other states' experience in 24 hour health care programs. A final report to the Legislature is due at the end of 1998, one year after the close of the pilot programs.

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