from the Texas Department of Insurance

Return-To-Work Programs for Texas Workers' Compensation Claimants: Suggested Design Parameters (January 1995)

Executive Summary

The Texas Workers' Compensation Act of 1989 brought a number of significant changes to the state's workers' compensation system. Among these changes were: instituting an administrative system to reduce the likelihood of litigation; establishing higher minimum and maximum benefits; and introducing the concept of maximum medical improvement. Many of the Act's key provisions were implemented in January 1991.

The Texas Environment

The way the workers' compensation and vocational rehabilitation (VR) systems currently operate on behalf of injured workers in Texas significantly affects the environment for return-to-work (RTW) programs. Among the more important issues concerning these systems as they affect the RTW environment are the following:

The Texas Rehabilitation Commission (TRC), which appears to be the usual referral target for injured workers covered by workers' compensation in Texas, is mandated to serve a number of other populations under the regular federal/state VR program as well. With growing numbers of individuals in need and increasing responsibilities under the Americans with Disabilities Act of 1990, TRC will have difficulty giving higher priority to serving injured workers over other needy target populations.
The Texas Workers' Compensation Commission's (TWCC's) process for referring workers to TRC tends to be a hit-or-miss proposition; injured workers often fail to receive needed VR services.
Some injured workers referred by TWCC to TRC for services apparently are not interested in returning to work when referred. There is little real incentive in the Act for them to participate.

The VR/RTW Literature and State Canvass Results

There is remarkably strong consensus among workers' compensation and VR policymakers and program staff, private rehabilitation professionals, employers, workers and researchers about some of the more essential elements of RTW and related policies. Such a consensus exists in few policy areas as it appears to surrounding RTW. Important related elements of this consensus include the following:

Disability (risk) prevention, rather than disability management, is key. Workers' compensation, VR and RTW programs would all face an easier job if there were fewer work-related injuries and if both employers and workers took more to heart the message that all accidents are preventable.
Expanded education for both the medical and business communities could yield substantial benefits for the workers' compensation system, employers, carriers and workers.
Early intervention, once an injury has occurred, is absolutely vital to injured workers' success in returning productively to the workplace.
Fostering trust and mature, cooperative relationships among the key players involved in the system, especially employers, workers and the public entities (i.e., TWCC and TRC) responsible for serving them, is essential as well.

In addition, as both the literature on VR and RTW programs and the canvass conducted for this project of state VR and RTW indicate, there is wide variation in the approaches and practices being implemented around the country, whether in the form of pilot/demonstration efforts or full-blown programs for injured workers covered under workers' compensation. In terms of RTW and related efforts, the range encompasses everything from the complete absence of VR and RTW references in state law (e.g., Delaware) and simple VR service referrals for groups needing such assistance (e.g., Texas) to aggressive disability prevention and early RTW programs, complete with financial incentives for both employers and injured workers (e.g., Washington and Oregon).

There is considerable documentation on the types of VR and RTW interventions which states offer for injured workers, with the possible exception of services provided directly by the employers-of-injury or arranged by their insurance carriers. Information about employer- and carrier-based RTW efforts remains largely anecdotal.

Recently, support has been growing for the use of incentives to promote hiring injured workers and a number of other related experimental initiatives to foster RTW and reduce workers' compensation premiums and disability costs for employers, workers and society. Both Oregon and Washington, the report's case study states, are using such approaches. They have done so deliberately and with the active support of partnerships forged with business, labor and government. Yet, the definitive word on whether such approaches are efficient and effective has not been written. Well-designed evaluations of these relatively new approaches to promoting early RTW have not been conducted.

Moreover, economic theory and existing empirical evidence from studies of similar incentive-based efforts are not at all encouraging. Such credits and subsidies unfortunately have been found to further stigmatize the populations targeted for assistance and overwhelmingly to be windfalls for participating employers. It is possible that such incentives may have very different effects when the targeted group is a known quantity -- an injured worker seeking early RTW with or rehire by the employer-at-injury -- rather than just another member of a targeted class of workers seeking a job.

Suggested RTW Program Approaches

The RTW program approaches suggested here for Texas policymakers to consider have been developed based on an extensive review of the VR and RTW literature, a 1993 canvass of VR and RTW programs in all states and the District of Columbia, and site visits conducted in Washington and Oregon in August 1993. They are also based in part on the earlier analysis of Texas RTW patterns and programs performed for the Texas Workers' Compensation Research Center by King et al. (1993). These suggestions are further based on two important premises regarding the Texas workers' compensation and VR environment; namely, that both workers' compensation and VR services for covered injured workers will continue to be voluntary, and that funding for TRC's VR services, now financed almost exclusively through the federal/state VR program, will remain largely unchanged.

A number of suggested RTW program approaches are provided. Each should be reviewed as a suggestion only.

Education and marketing efforts should be expanded, regarding workplace safety generally and disability prevention and early RTW in particular. Such education and marketing efforts should be targeted to the medical and business (employer) communities. In part, these would market model early RTW approaches used in TRC's Early RTW Pilots and in other states around the country.
TRC's existing Early RTW Pilots should also be enhanced and expanded to other areas of the state, based on interest carefully cultivated by TWCC and TRC program staff among industry associations and employer and worker groups. The "right stuff" is already there programmatically. The costs of early RTW appear to be quite low, and the initial outcomes very good. TRC, the participating employers and related groups could serve as the nucleus for expanding them.
TRC's efforts to computerize skills transferability assessment should be continued and examined for possible enhancements and expansion potential. An existing joint project (with the Texas State Occupational Information Coordinating Committee [SOICC]) is providing frontline TRC counselors with improved access to information necessary for assessing injured workers' current skills and skills transferability, as well as their opportunities for reemployment. This should be continued in some form, whether with SOICC or other entities. More effective models may be possible in the future. TRC is currently exploring enhanced models.
Oregon's Preferred Worker Program and its companion, the Employer Assistance Incentive Program, should be piloted in Texas. These two programs involve worker wage and training subsidies as well as marketing efforts for employers to hire/rehire injured workers rather than let them sit idle while collecting their impairment income benefits. While the empirical evidence on hiring/employment subsidies, tax credits and similar efforts is not very encouraging, there is sufficient interest and experimentation in other states to warrant piloting such programs on a small scale.
Adequate funding for such incentive programs would need to be secured, since they are likely to be expensive. Oregon funds its programs out of its Re-employment Assistance Reserve, supported by employer and worker contributions. A small pilot or demonstration effort could be funded through other sources.
A public sector early RTW initiative should be implemented as well. A few state agencies should be selected -- based on a combination of accident/injury rates, resource availability and interest -- to demonstrate the public sector cost savings potential as well as the possible benefits for injured state employees.
A two-tiered system for serving injured workers more effectively and efficiently should be developed and tested. Of the VR options available, most injured workers (in other states) have tended to do better -- in terms of returning to work and recovering their preinjury earnings -- with less intensive, work force attachment than with more intensive education and retraining approaches. Such early RTW efforts also tend to be far less costly. At the same time, some injured workers clearly could benefit from receiving more traditional, intensive VR services.
More concerted, ongoing evaluations should be instituted, to document the costs as well as the impacts of VR and early RTW on longer-term employment and earnings for injured workers and accompanying effects on employers-of-injury and carriers. Given the availability of archived unemployment insurance (UI) wage records in Texas, workers' labor market outcomes could be tracked inexpensively, both for participating injured workers, as well as for a similar group of nonparticipants.
Additional analyses should be conducted on those groups of injured workers whose RTW patterns have been less than successful. Special efforts should be made to better understand the characteristics of injured workers who are unsuccessful in returning to work and the factors affecting them, using the Texas Workers' Compensation Research Center's existing data bases. The results of these analyses could facilitate better targeting of safety and disability prevention efforts, development of early RTW programs focused on those injuries, occupations and industries with the greatest potential benefit, and thus increased efficiency and effectiveness.

For further information, contact: WCResearch@tdi.state.tx.us .
This page was last updated on December 9, 2002.