"Q & A" for Federal Employees Workers’ Comp
Do federal employees receive workers compensation?
Yes, federal employees injured on the job are entitled to workers’ compensation.
There are several different federal workers’ compensation programs related to different populations of workers, but the majority of federal workers fall under the provisions of the Federal Employees’ Compensation Act (FECA).
FECA provides medical and wage loss compensation benefits to civilian employees of the United States for disability due to injury or disease sustained while in the performance of duty.
FECA also provides for the payment of benefits to dependents if a work-related injury or disease causes an employee’s death.
What benefits does FECA provide to federal employees?
FECA’s law provides payment of benefits, including loss wage compensation, schedule awards, medical benefits, and vocational rehabilitation services for employment-related injuries and occupational disease sustained in the performance of duty by civilian employees.
FECA also provides payment of monetary compensation to specified survivors of an employee whose death resulted in a work-related injury with payments of certain burial expenses subject to the provisions of 5 U.S.C. § 8134. FECA, however, is not a retirement system.
Who pays for these costs?
The employing agency is responsible for all costs associated with FECA claims. Similar to some self-funded arrangements, federal agencies reimburse the Department of Labor for all workers’ compensation related claims expenses through what is generally known as the "chargeback."
Who administers these claims? In private industry TPAs are used, is there a corollary service specific to federal agencies?
FECA is administered by the Department of Labor, Office of Workers’ Compensation Programs (OWCP). The 12 OWCP district offices adjudicate the claims and pay benefits, and the costs of those benefits are charged back to the employing agency. Continuation of Pay (COP) is for traumatic injury claims resulting in lost work days, for which the employing agency pays wage loss compensation directly to the injured employee. The intent of this provision is to eliminate interruption of the employee’s income while OWCP is processing the claim. Under FECA regulation, the DOL is the only entity with the authority to adjudicate claims, including determinations of compensability, authorization of medical care and medical fee schedules.
Which agencies and departments receive federal employees’ compensation?
Civilian employees of all U.S. federal agencies and departments, whether full or part-time, permanent or temporary (except those paid from non-appropriated funds) are covered under FECA. There is also special coverage for a variety of federal volunteer programs. There are additional special compensation benefit programs administered by the OWCP, including Black Lung (coal miners), the Energy Employees Occupational Illness Compensation Program and the Longshore and Harbor Workers’ Compensation Act.
What benefits do federal employees receive?
Wage loss compensation, following the Continuation of Pay (COP) period, is paid at two-thirds of the employee’s pay rate if there are no dependents, or augmented to three-fourths of the pay rate if married or has one or more dependents.
All medical care, rehabilitation, medications and equipment determined to be claim-related are covered as well.
If unable to return to the original employer, the employee may be entitled to vocational rehabilitation services, which may include retraining. If the employee later finds work but earns less than the previous federal salary, the employee may receive supplemental wage replacement.
An employee with a permanent impairment affecting covered body parts may be eligible for a “schedule award,” a monetary benefit payable to federal employees, under 5 U.S.C. §8017(c). The award is based on an impairment rating and paid out over a number of weeks. In the event a federal employee’s death is related to an accepted claim, the survivors are entitled to benefits.
Do federal agencies have return-to-work programs?
Some federal agencies have return-to-work programs which may include job modifications during the injury recovery process when an employee is given physical restrictions. Agency programs may also address long-term adjustments once maximal medical improvement is reached, whether the employee has returned to pre-injury baseline or not. The 2010 Presidential Protecting Our Workers and Ensuring Reemployment (POWER) Initiative established new goals challenging federal agencies to increase their efforts to return employees with serious injuries and illnesses to work.
Do federal employees select their own medical providers to treat their occupational injuries?
Federal employees have free choice of treating providers, including appropriate specialists, but they may not change a treating provider ad lib, once selected. In order to be paid for providing care under FECA, the treating provider needs to be registered as a federal provider. Providers interested in registering may do so online at ACS Web Bill Processing Portal of the Department of Labor Office of Workers’ Compensation (OWCP)
(opens in new window).
This portal is also used for billing, verifying eligibility and seeking authorization for treatment.
Many federal employers offer on-site medical care to their employees, but they cannot require their employees to accept these providers for care. Treating providers may refer their federal employee patients to other specialists for consultation or care as clinically indicated without seeking preauthorization. Specialists must also be registered as federal providers.
What challenges do federal agencies face in controlling their costs?
Federal agencies face challenges similar to those in the private sector in regards to controlling workers’ compensation costs. As with the private sector, costs generally fall into the categories of compensation, medical, legal and administrative but each category offers special challenges in the federal sector.
Federal agencies differ from the private sector due to a higher distribution of costs allocated to compensation. Average salaries tend to be higher due to the professional nature of many of the federal jobs and many claimants receive the 75% rate for claimants with dependents.
Compensation costs in the first 45 days of lost time are actually at 100% with Continuation of Pay (COP) by the employing agency. Compensation continues for the lifetime of the claimant if a job is not found within physical restrictions; settlement is not an option. Federal employees generally do not receive Social Security and often choose the option of retaining higher FECA compensation rather than federal disability or retirement.
Medical costs are certainly affected by the overall higher costs of health care, but lack the controls available to the private sector as discussed in later questions.
Legal fees are one area in which the federal sector’s expenses are less compared to the private sector, but federal agencies are still faced with the cost of internal legal departments and costs related to the appeals process.
Administrative fees are controlled by legislation and are generally incurred by the DOL and passed on to each agency. There is not a client/vendor relationship with competitive pricing.
Another special challenge facing federal agencies is the three level claimant-oriented appeals process. The employing agency does not have appeal rights as decisions regarding the claim are considered internal within the federal system with adjudication by the DOL. Actual costs compared to projections can be greatly altered during the appeals process.
The overall challenges inherent in a system as large as the federal government are definitely also felt in the workers’ compensation area. Allocation of resources within each agency and the DOL can lead to high caseloads that can subsequently result in less efficiency and delays.
Can federal agencies use traditional cost control techniques?
Federal agencies can use some of the traditional cost control techniques but many of the strategies used in the private sector are not available or allowed within the federal sector. As an example, the claims settlement process, often leading to reduction of short and long term compensation in the private sector, is not an option under federal regulation. Many employing agency actions are approached more from the perspective of assuring appropriate FECA benefits are provided, rather than a means to control costs. Control of costs may be a byproduct of this attention, rather than the primary intent. Controversion and denial of a claim occur when facts do not support the regulatory requirements to establish a claim and do result in reduction of overall costs. Cost control techniques such as comprehensive injury investigations and thorough documentation may be utilized by federal agencies and results are shared with the OWCP Claims Examiner in order to facilitate adjudication and provide the basis for denials as appropriate.
As in the private sector, compensation costs are driven by medical needs and opinions. With an emphasis on the individual employee’s right to select medical providers, the federal system has been hesitant to offer the cost control techniques available through credentialed provider networks, negotiated fees, utilization review and managed care arrangements. Independent Medical Exams are rarely utilized to clarify causal relationship, occasionally used to address appropriate treatment plans (especially need for surgery) and are sometimes used to address return-to-work issues and impairment ratings. These exams must be obtained through the DOL at the discretion of the Claims Examiner. Unnecessary costs may continue during the lengthy duration from the point a need is identified and the time a final second opinion or referee report is obtained and action taken.
Federal agencies may obtain an agency directed medical exam in some cases, but the examiner’s opinion is not given the same weight as the treating provider or the DOL directed second opinion examiner, and this option is rarely used.
A few federal agencies have access to internal medical resources to provide assistance to injured workers and guidance to the human resources staff managing the claim, but these internal resources are more the exception than the norm.
Efforts have been made through presidential initiatives to highlight the need for cost controls with an emphasis on timely reporting, reduction of lost time days and most recently, through the POWER initiative, with the additional emphasis on return-to-work strategies.
What cost containment vendors and services can federal agencies use?
Federal agencies can contract for workers’ compensation services; contracted vendors need to understand federal regulations and processes. Vendors contracted with employing agencies do not have the authority to adjudicate claims, including authorizing treatment and re-pricing bills, but there are a lot of things they can do.
Individual federal agencies can and do contract independently for assistance to the agency and injured workers through such services as:
- Claims management
- Medical case management
- Pharmacy benefit management (PBM) programs
- Durable medical equipment and/or
- Diagnostic services
Federal agencies may also contract with consultants to provide technical advice and/or guidance related to the prevention and management of work related injuries and/or illnesses.
The DOL can and does assign authority to contracted vendors for such things as:
- Medical authorizations
- Second opinion and referee exams
- Medical bill payment
- Field case management
- Vocational rehabilitation
Since the agencies do not have "profit margins," how can cost containment vendors best get the attention of agencies to get management commitment?
Federal agencies do not have profit margins but are subject to budgets and staffing levels; agencies need to maximize productivity. Services impacting early lost work days will affect the agency’s real-time bottom line, since these lost work days are usually paid directly by the agency’s payroll. Savings in COP are real savings right now. Getting employees back to work early will also impact the later "chargeback" costs, as these are employees who might well have otherwise wound up on the long-term disability rolls – called the periodic rolls in the federal system. Avoided long-term liability can also be estimated in cases returned to work after prolonged disability, using compensation payment data and longevity estimates; since most claimants on the periodic rolls stay there for the rest of their lives unless the agency makes concerted case management efforts and return to work offers, this is a reasonable estimate.
With understanding of the FECA appeals process, contracted vendors can assist agencies with the compiling and analysis of the medical aspects of a claim to be shared with the DOL Claims Examiner to support requested claims actions.
Do federal agencies have account instructions with their claim handlers?
Unlike the private sector with a client account orientation, the federal sector claims are managed within the federal government by the Department of Labor. Claims for all agencies are managed under the same laws and regulations with special programs as noted earlier. Claims Examiners do become familiar with the employment characteristics of each agency but claims services must be delivered in a consistent manner in compliance with the FECA law and regulations.
What approaches can federal agencies use for old claims?
Older federal workers compensation cases make up a significant proportion of the federal agency’s chargeback costs and lost production days. A systematic approach is needed, which includes obtaining current and recent medical documentation to review, and identifying actions that may need the support of the DOL claims examiner.
Since many of these cases involve ongoing lost time days, the approach to managing older claims must stress objective verification of total disability, analysis of medical care utilization, empowerment of the injured worker, and clarification with employer and claims team that appropriate benefits are being provided and administered. The result of this team approach is reliable cost control. The nurses maintain the integrity of the injured worker and treating provider’s roles while analyzing objective data.
For more information about this approach, read this blog article:
Many thanks to Managed Care Advisors (MCA) for their help preparing the material on this page. MCA is an innovative, woman-owned small business enterprise specializing in managed care, employee health benefits and workers’ compensation consulting and case management services. MCA currently holds two (2) Federal Supply Schedules; MOBIS Contract GS10F0323P and HREEO Contract: GS-02F-0128W. Find them at