NEWS on the Federal Employees Compensation Act and Prescription Drug Abuse

The Federal Employees Compensation Act (FECA) covers 2.7 million federal employees and postal workers and paid out $1.9 billion in wage-loss compensation, impairment and death benefits and $898 million in medical and rehabilitation services and supplies during the 2010 charge back year, which ended June 30, 2010.

There have been no major revisions to the law since 1974. Currently there are two bills pending. Both would put in place a few significant changes. “The Federal Workers Compensation Modernization and Improvement Act” (HR 2465), was passed in the House and has been sent to the Senate Committee on Homeland Security and Government Affairs. Another proposal that originated in the Senate, “The 21st Century Postal Service Act of 2011” (S1789) has made it out of committee. Both include significant provisions related to FECA reform.(WCxKit)


There are several provisions
in the current version of the bill that would have a material impact on the claimants and the manner in which claims are managed. Section 302, Federal Workers Compensation Reforms for Retirement Age Employees, will reduce total available compensation rates and re-define coverage at and beyond retirement age. This particular provision would have a positive effect on cost as well as remove any notion that FECA is a retirement plan.

This legislation also includes provisions that are directly related to case management; one in particular supports increased involvement by the employing agency in managing its’ workers compensation claims. This provision requires an independent medical assessment of disability and potential for return to work for beneficiaries after six months of disability and on a regular basis thereafter.

Currently, federal agencies do not have the authority to schedule or direct the scheduling of independent medical evaluations. They can request that the Department of Labor set up an exam, but the final decision on whether and when to refer for an IME (independent medical evaluation) is in the hands of the claims examiner (DOL). In addition to requiring periodic scheduling of independent medical evaluations by the DOL, the current draft of the proposed legislation provides a mechanism for the employing agency to direct the scheduling of an IME, subject to review of the request by the Secretary of Labor.

The complementary piece of legislation that has passed the House is THE FEDERAL WORKERS COMPENSATION MODERNIZATION AND IMPROVEMENT ACT (HR 2465), which among other things would streamline the claims process for those workers who sustain a traumatic injury in a designated armed conflict zone, would permit physician assistants and nurse practitioners to certify disability for traumatic injuries and ensure that they are reimbursed for their services, and would allow the Department of Labor to verify federal employees salaries against social security administration data, all of which will modernize and streamline administration of FECA benefits.(WCxKit)


One significant industry-wide
issue that is not explicit to either piece of proposed legislation is prescription opioid abuse. Prescription opioid abuse is being addressed in most workers compensation systems by establishing controls on prescribing with the help of Pharmacy Benefit Management (PBM) programs. In the federal workers compensation system, only the Department of Labor has the authority to adjudicate claims, including those for ancillary services, which limits the employing agency’s ability to control the inappropriate use of pharmaceuticals.

Although federal agencies can, and a few do, hire PBMs to help address the efficacy and cost of prescription drugs, neither the agency nor the PBM have the authority to place any limits on prescribers or fulfillment beyond those established by OWCP, which are extremely limited. It is hard to imagine how the federal workers compensation system, which provides workers compensation coverage for almost 3 million workers, is going to be able to handle the opioid epidemic without a significant change in policy related to the use of formularies and other preventive controls applied at both the benefit level and the point-of-sale.

Authors Lisa M. Firestone, MHSA and Marianne Cloeren, MD, MPH, FACOEM provide services at Managed Care Advisors, Inc. (MCA) an innovative, woman-owned business specializing in workers' compensation, employee health benefits, disability management consulting, and full service workers compensation case management. Based in Bethesda, Maryland, MCA services customers throughout the United States and U.S. Territories. Visit the MCA’s website
Lisa M. Firestone, MHSA is the company’s president and owner and brings her 30 years plus experience to the healthcare industry. She is a recognized expert in the areas of employee benefit program development, evaluation, and strategic planning. She has been actively involved in the evolution of workers’ compensation case management and disability management programs, most recently focusing on the federal workers’ compensation and disability systems. She can be reached at
Marianne Cloeren, MD, MPH, FACOEM Medical Director of MCA where she supports the company’s federal workers’ compensation case management services, oversees quality assurance, and develops educational offerings related to disability management and evaluation. Dr. Cloeren’s experience includes managing employee health in the Veterans Administration system, serving as medical director for several companies, and as an occupational medicine physician for the Army’s Center for Health Promotion and Preventive Medicine, where her focus was federal workers’ compensation case management. She can be reached at

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.
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