HMOs get set to move into workers' comp arena.

Health maintenance organizations will be rolling out their packages of workers' compensation insurance soon in Los Angeles County. Preparing for this new field of coverage, they already are buying up companies which provide workers' comp insurance.

Blue Cross of California's finalized its acquisition of UniCare Insurance Co., an Irvine-based workers' comp insurance carrier, in January and will make its workers' comp coverage in tandem with its health care coverage available before year-end. In March, CareAmerica Health Plans announced it reached an agreement to purchase Health Cal, a San Francisco-based workers' comp insurance company. Fountain Valley-based FHP Health Care also entered an agreement to buy a workers' comp insurance, Anaheim-based Great States Insurance Co.

This acquisition wave follows legislation passed last year in Sacramento allowing HMOs to offer workers' comp coverage. The legislative initiative was a response to employers' complaints that their business in California was being killed by the high cost of workers' compensation insurance. Integrating workers' comp into managed care is expected to reduce costs.

The benefits of an integrated delivery systems are numerous, said Russ Leatherby, president of UniCare. "We will use a common network of doctors, common marketing, we will be able to underwrite both products at the same time. We'll be able to provide common billing and collection," he said. "It will give us an administrative ease that other workers' comp providers won't have."

In turn, administrative cost savings will be passed on to consumers as lower premiums. On the medical quality side, Leatherby said, the integration of services may help physicians more quickly identify medical problems because data will be available from patients' workers' comp as well as general health care histories.

Not everyone is convinced that managed care will solve the workers' comp cost crisis, however. Physicians feel they are being forced into a managed care system and the quality of care is in jeopardy since salaries are likely to be slashed.

"The fee schedule is already too low," said Dr. Ira Monosson, a workers' comp physician and a member of the California Industrial Medical Council. The fee schedule sets out what physicians receive from insurance companies for performing specific medical services.

"The insurers (under a managed care-type system) will deduct 25 percent from the fee schedule and on top of that they will take a service fee. Doctors will end up getting only 60 percent of the fee schedule," Monosson said.

He said he is concerned the best workers' comp physicians will opt to leave the system because they will refuse to work for such low pay.

Robert Wooley, spokesman for Del Amo Industrial Medical Clinic in Rancho Dominguez, called the movement toward managed care for workers' comp a "smoke screen." The state would do better to crack down on the fees charged for workers' comp medical services, he said.

Insurers and analysts, on the other hand, said there are good economic reasons for using a managed care type system to control the cost of workers' comp care. Primarily, it will reduce the cost to employers who traditionally have had to subscribe to separate health plans and workers comp plans.

And integrating workers' comp with health care should reduce administrative hassles for employers as well as employees, said Cam Freedlund, spokeswoman for Blue Cross. "There will be one 800 number for all coverage," she said. "We are also trying to offer single billing."

Employees will be able to go to the same physician for their traditional health care needs as well as for any injuries sustained on the job. Previously, they had to see different physicians for health care and workplace injuries.

From the standpoint of trimming expenses, said John Edelston, president of a Woodland Hills-based health care consulting firm called Health Pro Associates, "it makes all sorts of sense." He estimates employers should save about one-third of what they formerly spent on workers' comp by subscribing to a managed workers' comp insurance program.