First Annual Federal Workers Compensation Conference

1
First Annual Federal Workers Compensation
Conference Exposition

• Detecting Fraud and Reducing Workers
  Compensation Cost
• How Information Technology Can Help
• Presented By Department of Veterans Affairs (VA)
  Office of Inspector General (OIG)

2
Session Panel

• VA Office of Inspector General
• Steve Gaskell, 52CO
• James Farmer, 52CO
• Bruce Sackman, 51NY
• VA Veterans Health Administration
• Sheila Green, VISN 2
• VA Austin Automation Center
• Chuck Hodges, WC/OSH-MIS

3
Federal Employee Compensation Act (FECA)

• Compensation Paid Under FECA Is An Essential
  Employee Benefit That Entitles Persons Who Are
  Injured On The Job To Compensation While They
  Recover From The Injury
• VA-OIG Efforts In This Program Area Has Shown
  That A Small Percentage (about 4) Of Employees
  Commit Program Fraud.
• We Have Focused On Fraud Cases However, We Have
  Also Addressed Enhance Program Oversight

4
Topics To Be Discussed

• VA Workers Compensation Program (WCP)
• Approach Taken To Review VAs WCP
• Fraud Indicators - Red Flags
• Best Practices
• Protocol Package Handbook
• Results
• How Information Technology Was Used
• Internet Addresses For Additional Information
• Panel Discussion

5
VA Workers Compensation Program

• VA Employs About 250,000 People Nation-Wide
• VHA has the largest healthcare system in the U.S.
  with medical services provided at over 1,150
  facilities.
• VBA has a benefit delivery network of 58 regional
  offices.
• NCA has a burial system involving 115 national
  cemeteries 34 other cemetery installations.
• VA Has About The 4th Largest Federal WCP
• In Charge Back Year (CBY) 1998 VAs WCP costs
  were over 140 million.
• There were about 16,000 open/active cases - about
  5,000 on periodic rolls (receiving compensation)

6
VA WCP (Continued)

• VA Requested OIG Assistance In Identifying
  Opportunities To Reduce WCP Costs
• Our efforts focused on VHA because they account
  for about 95 of VAs WCP costs.
• Long Term Cases (cases over 5 years old)
• In 1992, represented about 11.5 WCP claims and
  accounted for about 50 of the compensation
  costs.
• In 1997, represented about 36 (24.5 increase)
  WCP claims and accounted for about 77 (27
  increase) of total WCP costs.

7
VA-OIG Approach Taken

• Applied A Three Step Approach
• A Comprehensive National Audit
• Joint OIG (Investigative/Audit) and VHA Effort
• Development Of A Protocol Package Handbook
• Coordinated Efforts With OWCP District Offices
• Ensures non-duplication of efforts
• Provides guidance - OWCP has final authority on
  all cases
• Automated Analysis of OWCP Claims
• Used red flags to target potential fraud
• Methodology tested in southern California (VISN
  22) and upstate New York (VISN 2)

8
Comprehensive National Audit

• Reviewed A National Random Sample Of All
  Active/Open WCP Claims In CBY 1996
• 17.5 Million In Compensation Costs Could Have
  Been Avoided In CBY 1996 - Lifetime Benefits Were
  Estimated To Be 247 Million
• Recommended A One Time Review Of All Active/Open
  WCP Cases To Prioritize Cases
• About 4 Of Cases Could Involve Fraud

9
Joint Investigative/Audit Effort

• Positive Productive Teaming Between OIG and VHA
• Cases Were Selected Based On Analysis Of
  Compensation Payments And Addresses
• Reviews Were Conducted At VA Facilities OWCP
  District Offices
• Showed Our Methodologies Identified Potential
  Fraud and Aided In Reducing WCP Cost

10
OWCP District Offices Coordination

• Begin Coordination With Initial Planning On Any
  Major Review Work Such As Targeting Fraud
• Early coordination will avoid duplication of
  efforts
• DOL-OWCP has received funding for Periodic Roll
  review teams.
• District Office Will Provide Guidance As What
  They Will Do To Assist In Effort
• Recent changes in regulation may preclude some
  things.
• Possible they can assist in automated analysis of
  cases.
• May assign staff to assist in efforts.

11
WCP Fraud

• Fraud occurs when someone knowingly and with
  intent to defraud, presents or causes to be
  presented, any written statement that is
  materially false and misleading to obtain some
  benefit or advantage. Examples are
• Not reporting wages earned to OWCP on annual
  questionnaire (Form 1032)
• Providing a false statement as to ability to work
  to OWCP in order to continue receiving
  compensation payments.

12
Fraud Indicators - Red Flags

• Potential WCP Fraud Can Be Profiled Using Case
  Attributes Or Red Flags
• Attributes Are Identified In Various Ways
• Analysis Of Automated Data
• Discussions With Appropriate Facility Staff
• Detail Review Of WCP Claim Files
• Detail Review Of WCP Claimants Personnel Files

13
Listing of Some Red Flags

• High Compensation - Little or No Medical Costs
• Soft Tissue Injuries
• Claimants Living Out of State
• Claimant Has Marketable Job Skills
• Disgruntled Employees, Facing Imminent Firing or
  Layoff, Etc.
• Seasonal Work or Temporary Job About to End
• Circumstances of Work Related Injury
• Details of injury vague, not promptly reported,
  etc.

14
Examples Of Analysis To Identify Red Flags

• Automated Analysis Of Data
• High Compensation Costs With Little Or No Medical
  Costs
• Claimant Lives Out-Of-State Or Has PO Box
• Old WCP Case Or History Of WCP Claims
• Soft Tissue Injuries
• Automated Analysis And Other Factors
• Claimant With Marketable Job Skills
• Seasonal or Temporary Jobs
• Tips From Facility Employees Or Other Sources

15
Best PracticesKey Case Management Elements

• Maintaining Case Files on All Open Cases - No
  Matter How Old the Claim
• Offering Light or Modified Duty to Employees as
  They Recover From Injury
• Providing Timely Follow Up Actions on All Cases
• Monitoring Program Areas Such as Continuation of
  Pay (COP) to Develop Trends In Potential
  Increases or Decreases in WCP Costs.
• Utilize Automated Information Systems to Track
  and Trend WCP Costs

16
Additional Best Practices

• Establish a WCP Task Force
• Review Team That Reviews all Accident Reports.
• Ergonomics Technical Advisory Group
• Aggressive Case Management Efforts
• Challenge Questionable Medical Reports,
  Assessments, and Bills.
• Offer Creative and Innovative Jobs to Employees
  on WCP Rolls.
• Establish a Network for Modified or Light Duty
• Establish a Hotline for Reporting Program Fraud
  and Abuse

17
Protocol Package Handbook

• Protocol Package Is For VISN Level Oversight
• Handbook Is For Facility Level Oversight
• Prioritizes CBY 1997 Cases That Had Compensation
  Payments
• Customized VISN Packages - List Cases By
  Facilities
• Provides Review Instructions Worksheets
• Tool For Enhanced Identification Of Fraud, Waste,
  Abuse - Starting Point For One Time Review

18
How IT Was Used

• OWCP Provides Automated Information On WCP Claims
  To VA For WC/OSH-MIS
• Key To Protocol Methodology Is Automated Analysis
  Of WCP Claims
• Prioritize Records - Claimants Over 65 Cases
  Less Than 4 Years Old
• Compare Compensation Medical Costs
• Identify Claimants Living Out-Of-State Or PO Box
  Address
• Trend Analysis, Marketable Job Skills, Nature of
  Injury, Etc.
• Download Data From WC/OSH-MIS And Use On PC To
  Perform Automated Analysis

19
Recent VISN 2 22 Efforts

• 228 WCP Claims Reviewed - 3.4 Million In Annual
  Compensation Costs - 45 Million In Lifetime
  Benefits (age 70)
• 16 Actual Removal From WCP Rolls - 349 Thousand
  Annual - 4.2 Million Lifetime
• 45 Potential Removal From WCP Rolls - 727
  Thousand Annual - 10.7 Million Lifetime
• 21 Potential Fraud Cases - 335 Thousand Annual -
  6.4 Million Lifetime - Additional Potential
  Fraud Cases Are Included Above

20
OIG Reports Available On Internet

• http//www.va.gov/oig/52/reports/mainlist.htm
• National Audit Report No. 8D2-G01-067 Issued
  July 1, 1998
• Protocol Package Report No. 9D2-G01-002 Issued
  April 14, 1999
• Handbook Report No. 9D2-G01-064 Issued April
  14, 1999
• http//www.house.gov/va/hearings/schedule106
• IGs March 25,1999 House Subcommittee Testimony
  (Also Includes Testimony From VISN 2 22)
• http//www.dol.gov/dol/esa/public/owcp_org.htm