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Workers' Compensation & Managed Care

A Closer Look

Workers' Compensation Managed Care Initiatives in Several States


Kate Kimpan, Director of Research and Statistics, Minnesota Department of Labor and Industry, St. Paul, MN.

Ree Sailors, M.S.W., Manager, Commercial Compliance Unit, Agency for Health Care Administration, Bureau of Managed Care, Tallahassee, FL.

Gary Franklin, M.D., M.P.H., Medical Director, Washington Department of Labor and Industries, Olympia, WA.

This session examined the efforts of three States that have implemented different managed care initiatives within their workers' compensation programs.


The session opened with Kate Kimpan describing policy development efforts in her State in the early 1990's that sought to control rapidly escalating workers' compensation medical costs, while maintaining quality services. Minnesota instituted reforms that:

  • Ensured the certification of workers' compensation managed care organizations.
  • Established mandatory treatment guidelines.
  • Instituted a resource-based relative value scale (RBRVS) fee schedule.
  • established managed care structures and processes.

These structures and processes focused on improving communications between providers, employers, and patients, producing better claims and claimant management, and providing services more efficiently.

As a result of these changes and other factors, the State has seen a marked decrease in medical and indemnity payments and premiums in certain markets. In the future, the State plans to further improve the managed care organization (MCO) system by continuing to evaluate treatment protocols and by conducting a 24-hour coverage pilot.


Ree Sailors continued the session with a discussion of the reforms in Florida, which were instituted with the goals of ensuring quality services, promoting timely return to work and the use of managed care, and preventing injuries. The key reform was that all care to injured workers in the State, even for self-insured employers, was required to be delivered through managed care arrangements (MCAs). The Florida MCAs are required to register with the State, but the State allows considerable flexibility in their structure.

To date, 670 MCAs have registered with the State, involving combinations of 40 provider networks and a wide variety of partner organizations handling some or all administrative functions (e.g., quality assurance; utilization review). This flexibility is meant to promote the use of managed care but also has some drawbacks, such as the fact that data collection is not consistent due to the many different information systems that may be used by the MCAs.

In order to evaluate the MCAs and their networks, the State has been conducting surveys, inventories and interviews to examine key areas such as access, credentialing, quality improvement processes, and utilization management.


Dr. Gary Franklin discussed how the State of Washington addressed cost and quality issues by implementing treatment guidelines, which are currently being evaluated, and by launching a workers' compensation managed care pilot program. The goals of the pilot were to:

  • Control costs.
  • Improve workers' functional outcomes.
  • Increase worker and employer satisfaction.

One of the key features of the pilot was the use of occupational medicine physicians to treat injured workers, which resulted in improved care coordination and communication, particularly in regard to return-to-work issues. Other unique features of the pilot were the use of experience-based capitation rates and the use of a variety of evaluations, including patient and employer satisfaction surveys, and cost and qualitative analyses.

The results of the pilot evaluation revealed a number of positive effects, including the reduction of overall medical costs by 27 percent, increased employer satisfaction with care, as well as increased employer and provider communications, and employer awareness of workplace safety. However, on the negative side, the evaluation also revealed that there appeared to be little improvement in the actual quality of care, and there was diminished employee satisfaction with treatment and access to care.


State of Minnesota, Managed Care Rules: 5218.0010-5218.0900: MC-1-MC-10.

State of Minnesota, Department of Labor and Industry. Workers' Compensation Treatment Parameter Rules. Effective: January 4, 1995: TP1-TP62.

Washington State Department of Labor & Industries, Office of the Medical Director, Medical Treatment Guidelines. Olympia, Washington: October 1996.

Washington State Department of Labor & Industries and the University of Washington Department of Health Services, Workers' Compensation Managed Care Pilot Project; Final Report to the Legislature; Executive Summary. Olympia, Washington: April 1997.

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