A primary objective of the workers' compensation system is to restore the injured worker to a self-sufficient status in an expeditious manner and to the greatest extent practicable. In many cases, vocational assistance, such as training and job-search assistance, is necessary to attain this objective.
A series of legislation has dramatically changed the face of the vocational assistance program over the last 15 years. The major changes since 1986 include: in 1987, House Bill 2900 was enacted, making major changes in the workers' compensation system, some of which significantly impacted vocational assistance by limiting eligibility; in 1990, Senate Bill 1197 allowed injured workers and insurers to negotiate the release or settlement of non-medical rights, including vocational rehabilitation, through a Claim Disposition Agreement; Senate Bill 369, effective 7/1/95, further limited eligibility for workers making aggravation claims. Although SB 369 has probably affected 1995 eligibility figures to some extent, it is too early to evaluate its full impact on the vocational assistance program.
Reasons for ineligibility. Figure 4 illustrates the major impact HB 2900's definition of suitable employment has had on the reasons for ineligibility for vocational assistance. In 1995, nearly 66 percent of ineligible claimants were excluded for reasons of can "return to work" or "no substantial handicap" to employment. On the other hand, in 1987, one-third of ineligibles were "not feasible," usually because medical conditions precluded participation; and another third were already working or had reached "maximum services."
Benefit costs. Figure 5 shows that the cost of vocational assistance benefits has been more than halved, from $31 million for 1986 cases to $14.6 million for 1995 (dollars not adjusted for inflation unless specified).
Vocational benefits comprise three main categories: professional services provided by private rehabilitation organizations; time loss payments to claimants in training programs; and direct purchases, such as tuition, books, work clothing, etc. Professional services, averaging 58 percent of benefits paid in the years 1986-1988, now account for 45 percent, and with dollars spent declining from $18.3 million in 1986 to $6.5 million in 1995, this category has contributed most to the reduction in overall benefit costs. The cost of time loss payments has fallen by 31 percent, averaging 42 percent of benefits paid from 1991 on. Direct purchases constituted 15 percent of benefit costs in 1995, a figure slightly higher than the 13 percent average of previous years.
Rehabilitation plan types (training, direct employment, or no-plan) indicate the level of assistance chosen as necessary to return the worker to suitable employment. Figure 6 depicts the highest level of assistance provided and the average costs for all closed cases, whether successful or not and whether a plan has been completed or not. The distribution of level of assistance has changed as a result of HB 2900's eligibility criteria, which limit vocational assistance to the most difficult cases. The decline in the frequency of direct employment cases has been matched, until the most recent years, by the increase in training cases, from a frequency of 11 percent to nearly 40 percent. No-plan cases continue to comprise a large percentage of the total, largely due to the popularity of the Claim Disposition Agreement (CDA). Average costs have risen by 167 percent for no-plans and 79 percent for direct employment, most likely due to the increased difficulty of cases served under HB 2900's eligibility criteria. However, training cases, which have always been assigned to only the most difficult cases, saw an average cost increase of 35 percent.
The length of no-plans and direct employment cases doubled from 1987 to 1991, compared to a 15 percent increase in length of training cases. The expanding incidence of the CDA may account for recent sharp declines in average length of services.
The distribution of reasons for ending vocational services and a claimant's eligibility has been directly affected by SB 1197, which legalized the CDA, and indirectly affected by HB 2900's revised eligibility criteria. The percentages for 1995 are depicted in Figure 7. Currently, the CDA is the most common reason for end of eligibility. Previously, the most common reason was return to work, though the combined frequency of all other reasons, which might be considered the frequency of unsuccessful outcomes, has been greater.
Claim disposition agreements (CDAs). Since mid-1990, the injured worker may settle a claim by way of a CDA that releases rights to any benefits except medical assistance and reemployment incentives, typically in exchange for a lump-sum settlement. In 1993, the CDA became the most common reason for closing vocational services, and the current rate of settlement stands at 45 percent of eligible cases. The percentage of training cases ended by CDA has also risen steadily, from 10 percent in 1991 to 24 percent in 1995.
Completion rates, an indicator of program effectiveness, have declined from 59 percent in 1986 to 31 percent in 1995. The sharp decrease in completion rates from 1991 on coincides with the initiation of the CDA as a means of ending vocational eligibility.
Return-to-work case characteristics and costs. The impact of HB 2900's eligibility restrictions and the legalization of the CDA can also be seen in the sharp reduction in the number of injured workers returning to work via vocational assistance, which has dropped from a peak of 3,680 in 1987 to 348 in 1995. The return-to-work rate, computed from completed cases, has risen from the 70 percent range prior to 1991 to a 10-year high of 84 percent in 1995. Training cases accounted for 14 percent of return-to-work in 1986, compared to about 60 percent of successful outcomes in recent years.
Average costs for successful cases are higher than those for unsuccessful cases (excluding any CDA amounts). Although training cases are the most costly, their 1995 average cost of $29,822 has increased only 52 percent since 1986. Direct employment and no-plan cases, with 1995 average costs of $5,181 and $4,015 respectively, experienced increases of 90 percent and 222 percent since 1986. Gauged against the 42 percent rate of inflation during this time period, these figures indicate the dramatic change in the nature of cases provided vocational assistance under HB 2900, which restricts eligibility to only the most difficult.
In 1995, 83 percent of successful cases featured return-to-work with a new employer, and 91 percent engaged in a new kind of work, compared to rates around 50 percent for these characteristics in 1986. Another measure of program effectiveness is the wage recovery rate of return-to-work cases, which reports the return-to-work wage as a percentage of the wage at injury. Figure 8 shows average wage recovery rates falling from 95 percent of pre-injury wages for earlier years' cases to an average of 81 percent in recent years (wages adjusted for inflation). The increased frequency of training cases, dictated by HB 2900's eligibility rules, accounts for the decline in average wage recovery rates. The 1995 rate of 85 percent, however, is slightly higher than those of the past several years.
Return-to-work cases using reemployment incentives. In general, claimants eligible for vocational assistance have also been eligible for reemployment assistance contracts, especially from 1988 on when the Preferred Worker Program began. The most recent data show that 64 percent of successful vocational assistance cases also make use of reemployment incentives, such as wage subsidy or work site modification.
If you have questions about the information contained in this document please contact by e-mail or phone:
Mike Maier, Research Analyst, Research & Analysis, Information Management Division (503)947-7352 and/or Nancy Collins, Research Analyst, Research & Analysis, Information Management Division (503)947-7359.
This document was originally published in February 1997.
Printed form: 440-3084 (2/97/IMD)
Document URL: http://www.cbs.state.or.us/external/imd/rasums/308495.htm
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