"Managed Care" comes to workers' compensation as California's first two HCOs are certified.

SAN FRANCISCO--(BUSINESS WIRE)--Nov. 22, 1994--The California Department of Industrial Relations Division of Workers' Compensation Tuesday officially certified the first two "managed care" health care plans in the state, which will provide medical treatment to workers injured on the job.

At ceremonies in San Francisco, state officials presented certificates to FHP Life Insurance Co. of Costa Mesa, Calif., and The Travelers Insurance Co. of Manhattan Beach, Calif., provisionally certifying them as California's first two "Health Care Organizations," or HCOs, under a key provision of workers' compensation reform legislation signed by Gov. Pete Wilson last year.

"HCOs are a new type of organization, created as part of the reform effort, which will allow employers to benefit from managed care techniques to control medical costs and ensure medical quality in the workers' compensation area," said Lloyd W. Aubry Jr., director of the Department of Industrial Relations, in announcing the action.

"Implementing this important segment of workers' compensation reform will help slow the fast growing medical component of the system, which now accounts for nearly half of workers' compensation costs, reduce other indemnity costs by providing a variety of disability management and return to work services, reduce litigation and offer comprehensive occupational medicine services for the injured worker," said Aubry.

"Early and appropriate return to work, which the managed care approach promotes, can prevent long periods of disability which cost the injured workers in lost earnings and the employer extended temporary disability payments," he said. "In addition, HCOs will also promote occupational health and safety programs to reduce injuries in the workplace."

At the ceremony, Casey Young, administrative director of the Division of Workers' Compensation, signed and presented the certificates to John Fritz, president of FHP Life Insurance Co., and Bruce Carlin, chief executive officer of The Travelers/CONSERVCO HCO.

Travelers/CONSERVCO will provide services throughout the state with a preferred provider network of approximately 3,000 participating physicians. FHP Life is certified to provide services in six Southern California counties -- Orange, Los Angeles, San Diego, Riverside, Ventura and San Bernardino -- and also has a preferred provider network with approximately 2,000 participating physicians.

Both companies were eligible to apply to be HCOs because they are disability insurers licensed by the Department of Insurance, Aubry said.

Applications have also been received by the other two types of organizations eligible to apply for HCO certification: pre-authorized, full

service Knox-Keene health care service plans licensed by the Department of Corporations (commonly called HMOs) and Workers' Compensation Health Care Provider Organizations which have been authorized by the Department of Corporations to apply.

"As more HCOs become available around the state, employers will be able to take advantage of the additional medical control they can offer in dealing with workers' compensation injuries," Aubry said.

Under regulations adopted by the Division of Workers' Compensation, insurance carriers and self-insured employers will be able to contract with two or more certified HCOs to treat workers covered by employers' workers' compensation insurance. Employees will then be given the opportunity to enroll in one of the plans for any on-the-job injuries they may experience.

State law also gives employees the option of predesignating their current personal doctor or another health care provider to provide treatment for work-related injuries and illnesses, if they prefer, he added.

Since it is expected that, in many cases, the employer may already be contracting with the same health care plan for general health coverage as a benefit for the company's employees and their families, those employees will have the advantage of enrolling with the same provider for both job related and non-job related injuries and illnesses.

Under California workers' compensation law, all the medical costs of treating a worker's job-related injuries are covered by workers' compensation insurance. There are no copayments or deductibles for employees to pay.

"Employers have been contracting with HMOs and other health care providers for years to obtain low cost general health insurance benefits for their workforce," he said. "This will allow the same cost-effective approach to be used for injuries and illnesses covered by workers' compensation insurance." -0-

NOTE TO EDITORS: The press contact for FHP is Ria Carlson, 714/378-5750. The press contact for The Travelers Insurance Co. is Dennis Milewski, 203/277-3476.

CONTACT: California Department of Industrial Relations

              John Duncan, 415/703-4590
              Richard Stephens, 415/703-5571