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Mr. Chairman and Members of the Subcommittee:

I appreciate the opportunity to appear before you to discuss the efforts of the Veterans Health Administration’s Veterans Integrated Service Network 22 to improve management of the Workers’ Compensation Program and reduce unnecessary costs.

Until about six years ago, VA Headquarters (HQ) paid all the Office of Workers' Compensation Program (OWCP) costs for the Department of Veterans Affairs. In an effort to better control, and possibly reduce, the continually escalating costs associated with the program, HQ decentralized the funds and responsibility for the OWCP program to each of the separate Administrations within the Department, and ultimately to the various field organizations and facilities.

Cumulatively the facilities in the VA Desert Pacific Healthcare Network (i.e., VISN 22), have historically had the highest level of OWPC costs in the country, far surpassing any other VISN. In Chargeback Year (CBY) 1995 (July 1, 1994 - June 30, 1995), the cumulative amount of OWCP cost in the facilities that now comprise VISN 22 was slightly over $13.4 million. It was apparent that action was required to reduce these costs.

Two VISN 22 facilities created separate, dedicated OWCP Coordinators, which were both Registered Nurses. The other VISN 22 facilities empowered Human Resources Specialists to assume primary responsibility for the various facets of the OWCP program. Additional support personnel were also provided at most facilities. It soon became obvious that good case management was the key to reducing both compensation costs and lost workdays.

Some of the specific problems identified by the OWCP staffs which were contributing to our high OWCP costs were as follows:

• Employees remaining off duty following an injury for a significant period of time
• Physicians, both VA and non-VA, not understanding that the VA can accommodate injured employees with physical limitations.
• Facilities and Services being unwilling to provide light duty positions.
• Employees intentionally avoiding the employee health clinic and going to VA emergency rooms after the employee health clinic had closed, based on the reputation that ER physicians tended to immediately place employees off duty and send them home.
• If a claim was accepted and compensation paid, but the agency disagreed with the acceptance, the agency has no appeal rights (see statute).
• In many instances, minimal to no correspondence between VA and the private sector treating physicians.
• In many instances the program had become a "retirement system" (which it is not).
• Frequently comprehensive pre-employment physical exams were not conducted.
• Comparatively minimal accident awareness and prevention training.

Several actions were then taken to address many of these identified problems, while being sensitive to employees with work-related injuries who legitimately needed to avail themselves of this program. In CBY 1998 (7/1/97 - 6/30/98), the cumulative amount of OWCP costs in VISN 22 had dropped to approximately $12.0 million., which reflects a reduction of 10.5%. Annualizing the OWCP costs experienced in the first half of CBY 1999 (7/1/98 - 12/31/98), amounts to a total projected CBY ’99 OWCP cost figure of $11.5 million., which would equate to a 14.2% reduction from CBY ’95. Some of the specific strategies implemented in VISN 22 to lower OWCP costs are as follows:

• Providing more staff devoted to managing OWCP claims, as previously described.
• Aggressive OWCP case management, from initial injury to final resolution.
• Implementation of a variety of Light Duty positions, to accommodate a wide range of injuries.
• Establishing communication with treating physicians to facilitate the expeditious, yet appropriate, return of employees to work.
• Establishing a better working relationship with DOL claim examiners.
• In off-hours (i.e., when the employee health clinic is not open), in general, ER physicians have been advised to return employees to work in a light duty capacity if at all possible.
• VA OWCP personnel provide counseling and packets of information to injured employees and inform them of their rights and responsibilities, as well as train all employees on OWCP rules and regulations to help ensure proper utilization of the program.
• Attempts have been made to acquire current medical documentation.
• Attend OWCP appeal hearings where employees are disputing denials of claims, in order to obtain up-to-date information.

• Coordination with Safety personnel on training for supervisors and employees regarding best practices for avoiding injuries.

• Evaluation of high-risk work areas, and implementation of corrective actions where indicted.

• Regular use of the VA’s Workers Compensation Management Information System (WC-MIS).
• Use of the Department of Labor’s Agency Query System (AQS).

• Establishing a dedicated VA position between VISNs 21 and 22, to serve as a full time liaison with the DOL to more expeditiously process, review, and adjudicate VA claims.

During the past year, VISN 22 has worked closely with the Office of the Inspector General (OIG), reviewing various aspects of the workers' compensation program. The primary focus was to identify "best practices", to develop an OWCP handbook to improve case management, and in turn, reduce compensation costs. Another facet of the work with the OIG involved the development of an algorithm to facilitate the identification of potential cases of OWCP fraud (e.g., dual compensation situations, where individuals who where considered to be "totally disabled" and were receiving OWCP payments were also gainfully employed, and in some instances performing the same duties for which they were being compensated). Another component of this was to also actually "test" the algorithm, and pursue investigation where indicated. As a result of this cooperative effort with the OIG, the OWCP Coordinator at VAMC Long Beach received the first ever Inspector General’s Contribution Award given to a VHA employee.

We are making every effort to provide a safe and healthy work environment and offer programs on accident prevention, but occasionally, accidents will happen and our staff will continue to manage each case individually and establish light duty positions for employees where possible.

This concludes my statement. I will be pleased to respond to questions from the Committee.

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