Detailed Information on the
Federal Employees Compensation Act Assessment

Re-proposing legislation to update the benefit structure, improve benefit equity, and adopt best practices of state workers' compensation systems. These reforms would produce 10-year government-wide benefit savings of approximately $576 million.

Assessing the recently implemented electronic case management system to determine long-term program benefits.

Evaluating FECA early intervention and return to work processes and survey industry best practices. FECA will begin implementing recommendations to improve significant components of FECA processes.

FECA will conduct preliminary work, including the development of a logic model, that will serve as a basis for a future impact evaluation of FECA's disability management activities and program effectiveness

Using the Department's Cost Analysis Manager (CAM) system to assist analysis of resource investment and effectiveness of Vocational Rehabilitation.

Act upon the results of an independent evaluation of FECA's design and strategic goals, the success of various program strategies, and state and private industry best practices.

Continue its emphasis on timely estimates of federal agencies' FECA liability to support accelerated preparation of government-wide financial statements.

Continue to measure and improve the level of customer satisfaction.

Develop a cost-effectiveness performance goal (e.g., cost per rehabilitation) to assess efficiency and year-to-year trends.

Establish government-wide goals for reducing injuries and lost production days and improving timeliness of injury reporting, and report on agencies' performance against these goals.

Measure: Average lost production days (LPDs) per 100 non-Postal employees resulting from work-related injury and illness

Explanation:In addition to compensating injured Federal workers for wage-loss and medical costs, the FECA program also uses nurse case managers and other strategies to coordinate medical care and assist with return to work. These disability management efforts result in a shortening of the duration, measured as lost production days, which injured workers remain out of work due to their injuries. In this measure, time loss is calculated for the cases of all non-Postal Service Federal agencies within their first year from date of injury and measured against the employment levels of those agencies. The rate (per 100 employees) is derived from that calculation. Target levels are consistent with the President's Safety, Health and Return-to-Employment (SHARE) initiative which require (non-Postal) Federal agencies to reduce LPD rates by 1 percent annually. The baseline was originally set in FY 2003 at the beginning of SHARE. FECA data system enhancements enabled a more precise measurement in FY 2006, actually lowering the results values, and outyear targets were adjusted accordingly.

Measure: Average lost production days (LPDs) per 100 Postal employees resulting from work-related injury and illness

Explanation:In addition to compensating injured Federal workers for wage-loss and medical costs, the FECA program also uses nurse case managers and other strategies to coordinate medical care and assist with return to work. These disability management efforts result in a shortening of the duration, measured as lost production days, which injured workers remain out of work due to their injuries. A reduction over time in LPD is desirable, and that objective is reflected in target levels. Because of the quasi-governmental status of the United States Postal Service (USPS), a separate LPD measure was established. However, the LPD rate calculation is identical for USPS, measuring time loss for USPS cases within their first year from date of injury and compared to Postal Service employment to derive the rate per 100 employees. Since FY 2003, the USPS employment level has steadily decreased between one and two percent annually due to the automation of job functions and other cost-saving measures, in effect reducing the availability of reemployment opportunities for injured workers. In contrast, new lost-time case counts and corresponding total lost production days have fluctuated throughout this period. These trends are captured in the LPD rate's annual results and corresponding targets. FECA has adjusted out-year annual LPD targets based upon prior year results to reflect both Postal employment and injury rates (factors outside FECA control). Enhancements to the DFEC data system improved the precision of the LPD measurement in FY 2006, consequently eliminating inapplicable days previously included in the rate.

Measure: Rate of change in medical service costs per case, compared to the annual rate of change in the national Milliman Health Cost Index (MHCI)

Explanation:This measure indexes the rate of change in FECA medical treatment costs per case and compares those values to similar values measured by the Milliman USA Health Cost Index (HCI). The HCI measures health care costs per capita for the overall population and provides a benchmark against which to compare the FECA medical cost trend. FECA effectively manages medical costs through centralized bill processing, strengthened reviews of treatment authorization requests, fee schedules, and stronger automated edits, as well as other controls including automated front-end operations that check for: provider and claimant eligibility; diagnosis to accepted condition; treatment type and duration that are appropriate to diagnosis; billing form and content; and duplicate bills.

Measure: First-year benefit savings realized as a result of periodic beneficiary roll management review (in millions of dollars).

Explanation:FECA compensation benefit cases over 30 months old are reviewed annually to document changes in status and potential for return to work. FECA will request current medical documentation as well as determine work status and accuracy of benefit payments. Savings are generated by actions taken that will reduce or terminate benefits due to the identified changes and re-determination of eligibility status. Results under this measure are the annual total of compensation benefit savings produced on a case-by-case basis through reduction in periodic payments resulting from periodic case review actions. The long-term objectives of this measure are to provide quality oversight of long-term cases and to demonstrate resulting cost savings. It is expected that continual and effective PRM case review will reduce the number of cases and, thus, their savings potential in the long-term. Annual targets reflect this estimated savings potential.

Measure: Number of customer service and communications performance targets achieved

Explanation:Primary FECA program customers include claimants, Federal agency employers, and medical providers. Providing these customers with access to claims-related or technical program information and handling telephone inquiries constitutes a large and important workload for the program. Responsively and efficiently delivered, these services simultaneously satisfy customer needs and provide essential information to support FECA claims adjudication, benefit payment processing, and case management operations. The six measured communications indicators include: 1. Expanding access to FECA's Claimant Query System for Federal employees; 2. Increasing the proportion of claims filed via Electronic Data Interchange; 3. Maintaining average caller hold times to 3 minutes or less; 4. Maintaining average call-back response times to 1 day or less; 5. Increasing first-call resolutions to 80% of incoming calls: and 6. Maintaining call handling quality at 95% or better. The long-term objective of this measure is to achieve targeted performance levels consistently on an annual basis for all indicators.

Is the program purpose clear?

Explanation: FECA provides workers' compensation coverage for Federal civilian employees, providing wage-replacement and medical benefits to Federal civilian employees who suffer occupational injury or disease.

Evidence: Program mission statement and regulations (20 CFR Parts 10 and 25). http://www.dol.gov/esa/regs/compliance/owcp/INDEXofResources.htm#bookmark1

Does the program address a specific and existing problem, interest, or need?

Explanation: FECA benefits are intended to mitigate the resulting human, social, and financial hardships. Over 100,000 new injuries, illnesses or deaths are suffered each year by Federal employees (including employees of the U. S. Postal Service).

Evidence: In 2007, the FECA program created 134,436 new cases for Federal employees suffering injuries, illnesses or deaths connected with their employment. While most of those cases involved only medical treatment, nearly 50,000 of them involved some time loss from work. Over 19,000 initial claims for FECA wage-loss benefits (those with time loss extending beyond the continuation-of-pay period of 45 days from injury) were filed. In FY 2007, FECA wage-loss cases grossed approximately $1.5 million in lost production days within the first year from injury. Total FECA benefit costs, including for wage-loss compensation, medical treatment and vocational rehabilitation in FY 2007 were approximately $2.6 billion.

Is the program designed so that it is not redundant or duplicative of any other Federal, state, local or private effort?

Explanation: FECA is the exclusive remedy for Federal civilian employees who suffer occupational injury or illness. There is some claimant overlap with other Federal programs: Department of Veterans' Affairs compensation (which compensates military personnel for injuries and fatalities) and Office of Personnel Management retirement (which has a different mission but serves many of the same individuals). Regulations generally bar the receipt of dual benefits for the same injury/illness and mandate the reduction in FECA benefits to offset other sources of compensation.

Evidence: Program regulations (20 CFR Parts 10 and 25). http://www.dol.gov/esa/regs/compliance/owcp/INDEXofResources.htm#bookmark1

Is the program design free of major flaws that would limit the program's effectiveness or efficiency?

Explanation: The program design is rational and free of major flaws. FECA's operational authority and responsibility is clearly defined, and its design provides checks and balances to ensure proper program administration, while maintaining sufficient flexibility to enable operational and procedural improvements. FECA's design as a non-adversarial system, with no judicial review and limited employer ability to contest claims, limits administrative and litigation costs. FECA direct administrative costs generally constitute around 5% of total program obligations (5.3% in FY 2007). In contrast, administrative costs (as of 2005) in comparable State systems averaged 11.4%, and were as much as 16.1%. Annual chargeback billing of the Federal employing agencies, for the benefit costs of their injury cases (and in the case of certain non-appropriated "Fair Share" agencies, billing for a pro rata portion of FECA administrative costs), establishes some incentive for agencies to reduce work injuries and properly manage and assist with injury cases. The program's statute has not been substantially updated since 1974, thus OWCP should continue pursuing legislative reform. The FY 2009 President's Budget re-proposes legislation to update the FECA program's benefit structure, adopt best practices of State workers' compensation systems, and strengthen return-to-work incentives. However, this reform is not directed to changes in program design, but rather to modifications in the statute to better reflect current workforce dynamics and provide more administrative flexibility.

Evidence: Cost information available from DOL statistical reports; OWCP publication: State Workers' Compensation Administration Profiles, October 2005; and also comparative data produced by the National Academy of Social Insurance publication: Workers' Compensation: Benefits, Coverage, and Costs, 2005, August 2007. http://www.nasi.org/publications2763/publications_show.htm?doc_id=516615 FY 2009 President's Budget submission to Congress containing DOL's proposal for FECA legislative reform: http://www.dol.gov/dol/budget/

Is the program design effectively targeted so that resources will address the program's purpose directly and will reach intended beneficiaries?

Explanation: FECA's program design ensures that the agency uses its resources directly and effectively to provide wage compensation to federal employees who suffer occupational illness or disease. The Division of Federal Employees' Compensation is organized geographically and consists of twelve district offices in major U.S. cities in six regions, which are supported by National headquarters operations in Washington, D.C. This structure takes advantage of proximity and DFEC field staff knowledge of the territory, including characteristics of the workforce, economic market, employer field organizations, personnel and facilities, and available medical service providers. Procedural and system controls ensure that entitlement decisions are accurate, that wage-loss and medical benefits reach the intended recipient and are appropriate to the medical condition. As a "no-fault" remedial program, FECA delivers benefits to the majority of claimants. Denied claimants have multiple opportunities to request reconsideration, a hearing, or a formal appeal. Through the Integrated Federal Employees' Compensation System (iFECS), FECA ensures that continuing eligibility is reviewed, that benefits are reduced or discontinued when work-related disability has lessened or ceased, and that each payment undergoes two assessments prior to disbursement. Strict separation of duties and related internal controls are applied to prevent internal fraud. Budget authority covers only direct program administration or benefits to claimants, and resource allocation within DFEC ensure that distributed funds are adequate to workloads and invested in systems that support workload processing and service delivery. A 2008 GAO study on improper payments under FECA identified several areas in which FECA could strengthen its financial management practices (though not program design) to identify, prevent, and recover erroneous payments. However, improper payments constitute a very small portion of total program outlays (less than 0.1% in FY 2007), as calculated by DOL's Office of the Chief Financial Officer.

Evidence: Program regulations (20 CFR Parts 10 and 25). DFEC Procedure Manual. http://www.dol.gov/esa/regs/compliance/owcp/INDEXofResources.htm#bookmark1 Department of Labor Congressional Budget Justification: http://www.dol.gov/dol/budget/ Special Report Relating to the Federal Employees' Compensation Act Special Benefit Fund Report No. 22-08-001-04-431 (October 25, 2007) http://www.oig.dol.gov/public/reports/oa/2008/22-08-001-04-431.pdf Federal Workers' Compensation: Better Data and Management Strategies Would Strengthen Efforts to Prevent and Address Improper Payments; GAO-08-284 February 26, 2008 http://www.gao.gov/new.items/d08284.pdf

Does the program have a limited number of specific long-term performance measures that focus on outcomes and meaningfully reflect the purpose of the program?

Explanation: FECA has five long-term performance measures, including measures that are outcome oriented and aimed at reducing the consequences of work-related injuries. Each measure tracks different aspects of the program's major performance areas: maintenance of decision quality and processing efficiency; disability management and return to work; customer services; assistance to and cooperative initiatives with program partners; and maintenance of fiscal integrity. The long-term goals include: 1) reduction of Lost Production Days (LPD) rates (per 100 employees) for the US Postal Service (USPS) and 2) reduction of Lost Production Days (LPD) rates (per 100 employees) for all other government agencies; 3) ongoing maintenance of long-term disability cases through Periodic Roll Management (PRM) and case review (PRM outcomes are measured as compensation benefit savings); 4) the rate of change in per capita medical treatment costs below that of overall nationwide health care costs (as measured by the Milliman USA Health Cost Index). Cost savings are realized through accurate entitlement decisions, system edits, prior authorization controls, and other mechanisms; and 5) six communications indicators containing performance targets for call handling effectiveness and quality.

Evidence: Department of Labor FY 2006-2011 Strategic Plan: http://www.dol.gov/_sec/stratplan/main.htm; Department of Labor Annual Performance Report: http://www.dol.gov/_sec/media/reports/annual2007/; Congressional Budget Justification: http://www.dol.gov/dol/budget/

Does the program have ambitious targets and timeframes for its long-term measures?

Explanation: FECA tracks three measures with long-term targets, including lost production days (LPD's) for both US Postal Service and Non-postal Service federal employees, and Periodic Roll Management (PRM). US Postal Service LPD targets, which FECA determines using a mix of prior performance, program resources/management, and relevant factors within the Postal Service, are not adequately ambitious. Specifically, FECA has higher LPD targets than prior year performance levels. While FECA notes that LPD for the Postal Service remains particularly challenging as increased automation and cost efficiency considerations eliminate limited-duty jobs, and new lost-time injury levels remain constant as USPS employment levels decline, targets do not provide ambitious goals for improved program performance. FECA's non-postal LPD targets are consistent with the LPD targets of the President's Safety, Health and Return-to-Employment (SHARE) initiative, which requires a government-wide (non-Postal agencies) LPD rate reduction of 1% per year, and by 2012, a 6% LPD rate reduction over the FY 2006 baseline. FECA attributes its recent success, as shown by exceeded targets, to the cumulative impact of an overall reduction in injury rates (lost-time injuries filed with FECA have declined by 15% since FY 2003); FECA Quality Case Management improvements; and the efforts of individual agencies to reduce LPD. FECA notes that agencies' varied hiring levels may distort trends captured by the calculated LPD rate, and agency-by-agency results to achieve the target have been inconsistent. Long-term PRM target levels, which may not appear ambitious in relation to prior year performance, naturally diminish over time to reflect FECA's projections for the PRM beneficiary population and decreased opportunities for savings. As such, PRM cases naturally decline as the average age increases, and the remaining cases have a lower potential for job placement.

Evidence: Department of Labor FY 2006-2011 Strategic Plan, Department of Labor Annual Performance Report: http://www.dol.gov/dol/aboutdol/main.htm; http://www.expectmore.gov; President's Budget to Congress: http://www.dol.gov/dol/budget/

Does the program have a limited number of specific annual performance measures that can demonstrate progress toward achieving the program's long-term goals?

Explanation: Annual performance measures are also long-term measures, and annual targets represent FECA's incremental progression in achieving its long-term goals. The measure for medical cost containment tracks against the trend in nationwide cost rates, as is measured by the Milliman USA Health Cost Index, which measures fluctuations in healthcare costs (per capita) for the overall U.S. population based on data from hospitals, physicians, and pharmacies. Annual communications targets cover six communications areas, including: 1) increasing access to FECA's Claimant Query System; 2) increasing claims filed via Electronic Data Interchange (EDI); 3) keeping caller hold times below three minutes; 4) keeping average call-back response time at or below one workday; 5) increasing the share of calls that are responded to on the same day; and 6) increasing the share of calls that meet FECA call handling quality standards. Performance results are quantified and reported at frequent intervals throughout the year.

Evidence: Department of Labor FY 2006-2011 Strategic Plan: http://www.dol.gov/_sec/stratplan/main.htm, Department of Labor Annual Performance Report: http://www.dol.gov/_sec/media/reports/annual2007/; Congressional Budget Justification: http://www.dol.gov/dol/budget/

Does the program have baselines and ambitious targets for its annual measures?

Explanation: FECA establishes baselines, benchmarks, or performance standards for each performance measure and its long-term targets aim to continuously improve from these, and to provide the basis for establishing program standards for performance that are comparable to industry standards. With the exception of the medical cost containment and certain communications indicators which, respectively, use the Milliman Index and industry-standard performance levels as benchmarks, annual targets reflect incremental progress toward the achievement of long-term objectives and consider prior year performance, external factors, and program resources. FECA adjusts targets and baselines to keep targets ambitious and consistent with performance potential or to maintain validity as reporting and measurement capabilities change.

Evidence: Department of Labor FY 2006-2011 Strategic Plan: http://www.dol.gov/_sec/stratplan/main.htm, Department of Labor Annual Performance Report: http://www.dol.gov/_sec/media/reports/annual2007/; Congressional Budget Justification: http://www.dol.gov/dol/budget/

Do all partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) commit to and work toward the annual and/or long-term goals of the program?

Explanation: FECA partnerships include both formal and informal arrangements across the Federal Government, and FECA program results often depend upon the efforts of numerous Federal agencies. FECA regulations establish performance responsibilities for employing agencies, including standards for timely filing notices of injury and wage-loss. Agencies support FECA objectives by assisting newly injured workers in returning to employment; identifying or creating new reemployment opportunities (particularly transitional and light-duty job placements); and containing medical costs for work-related injuries. FECA promotes performance goals and supporting strategies through educational efforts and outreach, and encourages the adoption of new technology by agencies. FECA works directly with the Occupational Safety and Health Administration (OSHA) in jointly administering the President's Safety, Health and Return to Employment (SHARE) initiative, which assists executive branch agencies in reducing workplace injury and illness rates, reducing lost-time injury and illness case rates, reporting injuries and illnesses in a timely manner, and reducing lost days resulting from work-related injuries and illnesses. FECA maintains contracts with various agencies to manage its mail intake and bill processing, claims development and case management, early contact with injury cases, medical care and return-to-work assistance, and vocational rehabilitation activities. These contracts contain service level agreements (SLAs) to ensure that performance results are consistent with and supportive of FECA's annual and long-term performance objectives. FECA actively supports other agencies' workers' compensation initiatives, including the US Postal Service's "First Script" prescription drug and the Physician Network programs to reduce costs; the Department of Defense "Pipeline" program offering return-to-work light duty opportunities; and the Transportation Safety Administration's Nurse program. While these constitute informal partnerships, many directly affect FECA performance measures.

Evidence: Program regulations (20 CFR Parts 10 and 25). As part of FECA's educational efforts and outreach activities, FECA provides regular technical assistance training, publishes program information on its public website, and hosts conferences for agency personnel. In encouraging agencies to adopt new technology including its Agency Query System for access to employees' claims information and promotion of electronic filing of injury notices. For SHARE: President Bush's original memo to agency heads dated January 9, 2004: http://www.whitehouse.gov/news/releases/2004/01/20040109-9.html President Bush's Sep 29, 2006 extension of SHARE: http://www.whitehouse.gov/news/releases/2006/09/20060929-11.html OWCP website measuring agency submission timeliness against targets: http://www.dol.gov/esa/owcp/dfec/share/ca12/FY20081stQtr/Department1.htm For DOD's Pipeline Program: Program Overview and Evidence http://www.cpms.osd.mil/pipeline/pipeline_overview.aspx For USPS First Script Program: Postal Service's pharmacy card program that provides medications at a reduced rate through the use of a pharmacy network. USPS 2006 Comprehensive Statement on Postal Operations (page 26) http://www.usps.com/strategicplanning/cs06/chp1_021.html For TSA's FECA Management Program: http://www.dhs.gov/xoig/assets/mgmtrpts/OIG_07-45_May07.pdf FECA Online Training and Presentations: http://www.dol.gov/esa/owcp/share/Shareppt/ppt.aspx Program Contracts / Service Level Agreements

Are independent evaluations of sufficient scope and quality conducted on a regular basis or as needed to support program improvements and evaluate effectiveness and relevance to the problem, interest, or need?

Explanation: Rather than undertake one comprehensive study of the entire program, FECA targets specific program processes that, taken together, cover the major activity areas of program (as identified by FECA's Logic Model). DOL's Office of the Inspector General conducts routine annual and special audits of the FECA program to certify the integrity of the program's fiscal and data systems. These audits include the Consolidated Financial Audit and audits of FECA's IT financial systems and the Special Benefits Fund. In addition, both the OIG and the Government Accountability Office conduct special, targeted audits that address various other aspects of the FECA program, such as erroneous payments and IT security controls. Since 2003, FECA has undergone three independent program evaluations ?? Urban Institute (2003), ICF Consulting (2004), and SRA International (2008) ?? through contracts with DOL's Office of the Assistant Secretary for Administration and Management, thus ensuring an additional layer of independence. These evaluations have examined the comparative effectiveness of similar state workers' compensation programs, have evaluated key components of the program to recommend improvements that will increase its effectiveness and efficiency, have studied overall program operations, and have identified best practices. FECA is implementing selected recommendations, particularly improvements of FECA disability management.

Evidence: FECA Program Effectiveness Study, ICF Consulting, Inc., January 23, 2004 Continuation of Pay, Telephonic Case Management at the U.S. Department of Labor, The Urban Institute, February 2003 Evaluation of the Federal Employees' Compensation Program: Improved Early Disability Management, SRA International, Inc., February 15, 2008 DOL Office of Inspector General, Annual Audit of the FECA Benefit Fund, 2005 - 2007. http://www.oig.dol.gov/public/reports/oa/2006/22-06-006-04-431.pdf http://www.oig.dol.gov/public/reports/oa/2007/22-07-002-04-431.pdf http://www.oig.dol.gov/public/reports/oa/2008/22-08-001-04-431.pdf OIG Service Auditors' Reports on the Integrated Federal Employees' Compensation System and the Medical Bill Processing System, September 25, 2007, Report Number 22-07-009-04-431 OIG Special Report Relating to the Federal Employees' Compensation Act Special Benefit Fund, Report No. 22-08-001-04-431 (October 25, 2007) http://www.oig.dol.gov/public/reports/oa/2008/22-08-001-04-431.pdf OIG FY 2006 Findings and Recommendations Related to General, Application, and Security Controls for Selected DOL Information Technology Financial Systems, September 12, 2007 http://www.oig.dol.gov/cgi-bin/oa_rpts+.cgi?s=&y=fy92007&a=all&next_i=20 OIG Audit of General, Application, and Security Controls for Selected Employment Standards Administration Information Technology Systems that Support the FY 2005 Financial Statements, January 2006 2008 GAO/ Preventing "Improper Payments" Evidence: GAO-08-284, http://www.gao.gov/ GAO Agent Orange: Limited Information Is Available on the Number of Civilians Exposed in Vietnam and Their Workers' Compensation Claims, Evidence: GAO-05-371 April 22, 2005, http://www.gao.gov/

Are Budget requests explicitly tied to accomplishment of the annual and long-term performance goals, and are the resource needs presented in a complete and transparent manner in the program's budget?

Explanation: The program's budget requests are tied, in the aggregate, to its annual and long-term performance goals and present the full DOL costs of the program, but do not explicitly define the relationship between different funding levels and program outputs or outcomes. Budget requests are not built based on what is needed to attain a specific level of performance, but rather, resource allocation to field offices is based on work load in a top-down (vs. bottom up) distribution of resources. FECA uses the Cost Analysis Manager (CAM) model to measure program activities, but it is unclear how and whether this tool is used to develop annual budget requests. FECA also has a logic model to describe the relationship of program activities and resource investments to performance outcomes. While this provides a basis for understanding levels of resource investment, activity inter-relationships, and for identifying the likely influences of individual activity funding on program results, it is unclear how and whether this is used to develop annual budget requests.

Evidence: Congressional Budget Justification: http://www.dol.gov/dol/budget/; DOL Performance and Accountability Report; FECA Logic Model; DOL Cost Analysis Manager; Annual Operational Plan

Has the program taken meaningful steps to correct its strategic planning deficiencies?

Explanation: The FECA program conducts weekly, quarterly and annual reviews and management meetings to identify performance deficiencies against its strategic objectives, and to plan corrective actions and track progress. In particular, a formal review of progress against annual and long-term goals occurs through the Quarterly Review and Analysis process. Adherence to procedural standards and claims processing quality are assessed formally through national office-directed Accountability Reviews of FECA district offices. In addition, during its annual Managers' Conference in 2005, FECA developed a comprehensive strategic plan for the FY 2006 through FY 2011 period. That process identified current and future performance challenges, identified strategies to address them, and established strategic and operational level performance targets. This planning effort was undertaken at that time to coincide with and support the update of the DOL Strategic and Annual Plans. FECA has responded to independent evaluations that identified strategic deficiencies. In response to a 2004 ICF Consulting program effectiveness study, FECA adopted several recommendations to improve its Disability Management strategies in the early claims period. FECA has also reorganized its telephone handling and customer service operation, and has developed a communications performance goal that focuses on increasing customer access to information sources, improving responsiveness to callers, and raising the level of call handling quality and information accuracy. In response to 2008 GAO report on erroneous payments, which noted a need for additional program goals to maximize payment accuracy and overpayment processing, FECA is currently evaluating the feasibility of a program goal tied to payment accuracy. Additionally, FECA began modifying its iFECS system in November 2007 to support enhancement of the Agency Query and Claimant Query systems, which will provide greater detail on the status and basis of benefit payment and claims actions. Because FECA is the exclusive remedy for Federal civilian employees who suffer occupational injury or illness, an impact evaluation of the entire program would require comparative analysis to situations under which workers in need are not provided compensation. While the findings from such an evaluation may be of limited value for improving program effectiveness, various components of FECA, including its program approaches and disability management activities, could be evaluated using a method that wouldn't deny workers benefits.

Evidence: DOL Strategic Plan FY 2006-2011: http://www.dol.gov/_sec/stratplan/main.htm Annual Operational Plan As discussed in Question 1.4, a legislative proposal to reform the Federal Employees' Compensation Act is included with the Administration's FY 2009 Congressional Budget. (http://www.dol.gov/dol/budget/)

Does the agency regularly collect timely and credible performance information, including information from key program partners, and use it to manage the program and improve performance?

Explanation: FECA's operational plan for the fiscal year contains strategic goals and objectives, staffing allocations and performance targets and standards (such as timeliness, lost production days, PRM savings, and debt collection). FECA collects and reports data through the Integrated Federal Employees' Compensation System (iFECS). FECA measures district office performance during Quarterly Review and Analysis (QRA) assessments, and overall performance during biennial accountability reviews. In responding to problems, such as failure to meet goals, FECA develops and monitors corrective action plans. OIG uses QRA results in its audit testing. FECA maintains strict oversight of data entry into its internal systems, with regular on-site review by local managers and formal periodic reviews that check the quality of the data record. FECA utilizes iFECS data to track and monitor all Federal agencies' progress in achieving the four goals established by the President's SHARE initiative. In addition to ongoing improvements, such as modifications to the iFECS system, FECA has used the results of GAO and OIG audit reports to strengthen the program.

Evidence: FECA tracks progress against annual targets during quarterly management performance review and DOL mid-year and end-of-year reviews. Progress and the appropriateness of goals and strategies are also discussed with regional program managers during regular management conferences. FECA reevaluates its goals and strategies during DOL's regular annual performance planning cycles. For further evidence: Annual Operational Plan; quarterly Quality Review & Analysis reports; annual Accountability Review Manuals and final Accountability Review report packets; DOL Daily Status Reports from central bill processing contractor; annual DFEC District Director/Regional Director conferences. SHARE Performance website: http://www.dol.gov/esa/owcp/share/ GPRA Data Validation Review Federal Employees' Compensation Act Report No. 22-05-008-04-431 (September 27, 2005) http://www.oig.dol.gov/public/reports/oa/2005/22-05-008-04-431.pdf

Are Federal managers and program partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) held accountable for cost, schedule and performance results?

Explanation: FECA ties performance ratings for managers and supervisors to its achievement of strategic goals, PMA objectives and program operational goals. Individual performance standards for all employees are updated annually, and are aligned to program performance objectives. Progress against annual targets is tracked during regular OWCP quarterly management performance reviews and for the FECA program's mid-year and end-of-year reviews. Progress in achieving goals and strategies are discussed with regional program managers during regular management conferences. FECA reevaluates its goals and strategies during DOL's regular annual performance planning cycles. Through the Safety, Health and Return-to-Employment (SHARE) initiative, FECA works with its Federal partners to establish targets on (and work toward improvements in) safety, health and injury case management outcomes. FECA administers program efforts (such as interagency summits, outreach activities, and electronic claims submission) to monitor agency progress on a quarterly basis and publishes performance against targets on its website. These activities have contributed to significant improvement in the Federal government's timely filing rate, and in quarterly Lost Production Days reductions.

Evidence: Revised Performance Management Plans for Senior Executives (Form DL 1-2059, Rev. 6/2004) and for Supervisors and Managers (Form DL 1-382, Rev. 6/2004); briefings by DOL staff; and DOL goals supporting the Human Capital Initiative of the President's Management Agenda. Contractors' service level agreements; DFEC quarterly performance reports; OWCP/DFEC annual performance reports. http://www.dol.gov/esa/aboutesa/owcpabot.htm DOL Annual Performance Report: http://www.dol.gov/_sec/media/reports/annual2007/ FECA's SHARE website http://www.dol.gov/esa/owcp/dfec/share/perform.asp?filename=summary.asp

Are funds (Federal and partners') obligated in a timely manner, spent for the intended purpose and accurately reported?

Explanation: Salaries and expenses funding is obligated in a timely manner and according to plan. Program funds are consistently obligated, with over 99% of available funds obligated as of the end of FY 2007. FECA reviews obligations and outlays on a monthly basis, and the DOL Annual Performance Reports provides a full cost for FECA program administration. On the benefit side, payments are made in a timely manner, and in conformance with the statute and regulations, and FECA uses the actuarial model to project benefit liability. A 2007 audit by DOL's OIG on the DFEC actuarial model and its projections found that in all material aspects the actuarial liability was presented fairly and in conformance with all U.S. Generally Accepted Accounting Principles. The Improper Payments Information Act classifies FECA as a "high-risk" agency for improper payments, due to the amount of benefits paid. However, erroneous payments represent a very small portion of total benefit payments in the FECA program (under 0.1%). In FY 2007, DOL's Office of the Chief Financial Officer (OCFO), using sampling methodology in concordance with OMB guidance, estimated an error rate of 0.1% of the $2.6 billion in outlays for FY 2007. A 2008 GAO study on Improper Payments reported an estimated $13.3 million in improper payments between FY2004 and FY 2006. While acknowledging some structural deficiencies identified by GAO (to prevent, identify and recover erroneous payments), FECA notes disagreements with the methodology GAO used in their estimation.

Evidence: Special Report Relating to the Federal Employees' Compensation Act Special Benefit Fund Report No. 22-08-001-04-431 (October 25, 2007) http://www.oig.dol.gov/public/reports/oa/2008/22-08-001-04-431.pdf FY 2007 Department of Labor Performance and Accountability Report (November 15, 2007), http://www.dol.gov/_sec/media/reports/annual2007/2007annualreport.pdf Financial Management Systems Inventory report for FY 2006: http://fido.gov/fmsi/fmssystemrpt.asp?ID=31985

Does the program have procedures (e.g. competitive sourcing/cost comparisons, IT improvements, appropriate incentives) to measure and achieve efficiencies and cost effectiveness in program execution?

Explanation: FECA has numerous procedures and systems in place to measure program efficiency. Workload productivity and claims processing time are measured using standard data reports produced weekly, monthly, or quarterly, and ad hoc reports produced as needed. Special Benefit Fund reports of expenditures and receipts are available weekly and monthly. FECA Chargeback reports are available quarterly and made available to the Federal agencies for the FECA Chargeback process. DOL's CAM model assists in the measurement of program activity costs. Cost data is shared among National and Regional managers and reviewed regularly to assess the impact of resource investments on performance. The program tracks two efficiency measures, including medical cost containment and communications targets that cover six communications areas. (As discussed in question 2.3.) In response to the 2003 PART assessment, which identified a need for a cost-effectiveness measure, FECA is currently developing a measure to track Vocational Rehabilitation activity costs and savings. FECA plans to use the DOL CAM application to capture administrative costs for the Voc Rehab activity and Special Benefits Fund payment information to measure benefit service costs, and performance results will be captured using the iFECS case management databases.

Evidence: DOL Annual Performance and Accountability Report; http://www.dol.gov/dol/aboutdol/main.htm; Congressional Budget Justification: http://www.dol.gov/dol/budget/

Does the program collaborate and coordinate effectively with related programs?

Explanation: The FECA program collaborates with Federal agencies to improve the administration of benefits and injury case outcomes. This includes data-sharing partnerships with OPM and SSA, aimed at increasing program efficiency, reducing payment errors, and identifying and preventing fraud. FECA also works with federal agency injury compensation offices to reemploy injured workers, monitor job readjustments, and track benefits paid, and FECA nurses work with agencies to assist with worker reemployment. These efforts have helped reduce lost production days in new (QCM) injury cases disability by 23% since FY 1996, and over 8,000 injured workers returned to work with nurse assistance in FY 2007. To coordinate services that are provided by both the FECA program and the employing agencies to the same population at different times, the FECA Procedure Manual incorporates strong policies. These policies cover documentation of and filing of first notice of injury and claims for wage-loss, monitoring and assistance with return-to-work, request for updated medical information to document change of condition, verification of pay rates; notification of recurrence of injury, development of modified light duty jobs, and third-party subrogation. Since 2004 OWCP has collaborated with the Occupational Safety and Health Administration (OSHA) to lead the President's Safety, Health and Return-to-Employment (SHARE) initiative. This program helps to improve key FECA outcomes, including timeliness of claims filing and reduction of lost production days due to injury, and has given OWCP a greater opportunity to press its case for increased attention to FECA case management. Utilization of a common bill processing contract across three OWCP programs also demonstrates the program's collaboration efforts, and has resulted in significant overall efficiencies.

Evidence: Quarterly Chargeback Data Extract Agreements between DFEC and various agencies, Memorandum of Understanding with OPM, FECA Procedure Manual. http://www.dol.gov/esa/regs/compliance/owcp/INDEXofResources.htm#bookmark1 FECA program procedures require ongoing dialogue with employing agencies to, for example, expedite case adjudications, facilitate offers of accommodated employment for injured workers, and timely transfer responsibility for health and life insurance deductions. FECA regulations require that the agencies timely file notices of injury and claims for wage-loss benefits. FECA measures filing timeliness and posts the results on its Website. Claim and payment status are available to the Federal employers through the FECA's Agency Query System; agencies also use the AQS system to check and correct case record accuracy. FECA conducts formal training courses for Agency injury compensation specialists to improve coordination and agency performance. Written agreements requiring FECA to provide these Federal agencies with quarterly data extracts ensure payment integrity and reduce medical bill payment errors.

Does the program use strong financial management practices?

Explanation: FECA has begun pursuing improved safeguards against improper payments with ongoing enhancements to its iFECS system. iFECS tracks payment creation and certification, and collects compensation and medical payment samples during biennial accountability reviews to identify procedural and work output quality weaknesses that might produce erroneous payments. FECA conducts regular reviews of the accounts receivable system to ensure that debt collection efforts are effective. FECA also conducts medical bill payment reports and reviews of the utilization of high-cost/high-incidence medical services for appropriateness. The program also makes use of the Periodic Entitlement Review (PER) system in iFECS to review and track long-term disability cases. An FY 2007 audit of the FECA Special Benefits Fund conducted by DOL's Inspector General reported an improper payment rate of 0.1% of $2.65 billion in total compensation and medical benefit outlays for the FECA program. The FY 2007 A-123 review conducted under the direction of the OCFO found a similar payment error rate. A 2008 GAO study highlighted the need for stronger financial management practices to identify, prevent, and recover erroneous payments. However, a majority of GAO's recommendations to mitigate procedural deficiencies had already been identified by FECA and improvements were underway prior to the publication of the report.

Evidence: Special Report Relating to the Federal Employees' Compensation Act Special Benefit Fund Report No. 22-08-001-04-431 (October 25, 2007) http://www.oig.dol.gov/public/reports/oa/2008/22-08-001-04-431.pdf FY 2007 Department of Labor Performance and Accountability Report (November 15, 2007) http://www.dol.gov/_sec/media/reports/annual2007/2007annualreport.pdf Financial Management Systems Inventory report for FY 2006: http://fido.gov/fmsi/fmssystemrpt.asp?ID=31985 Management system reports, iFECS User Guides, Schedule 9 reports, SF-224 reports, DFEC Aging Schedule reports. Department of Labor, Performance and Accountability Report, 2007: http://www.dol.gov/_sec/media/reports/annual2007/

Has the program taken meaningful steps to address its management deficiencies?

Explanation: FECA program performance data is derived from a number of internal sources and reports including the iFECS claims management system, bill processing services reports, and call monitoring software. The program conducts Quarterly Review and Analysis meetings with each of its District Office Directors and their managers to evaluate timeliness, workflow and outcome performance across an array of key mission activities. These activities include claims intake and adjudication, case management, medical authorization and treatment, successful return to work, post-vocational rehabilitation re-employment, long-term disability roll review, debt management, and customer service. Performance deficiencies are identified by comparing performance to established program standards and corrective actions instituted. In addition, each year the National Office convenes teams of FECA program specialists to conduct week-long Accountability Review evaluations in six (one-half) of the District Offices, and develop corrective action plans for identified deficiencies. FECA has taken measures to respond to the DOL 2007 PAR, which identified vulnerabilities to improper payments and fraud, and is currently considering recommendations in the 2008 GAO report on improper payments.

Evidence: In enhancing its capabilities to identify, prevent, and recover erroneous payments, as noted in both the DOL 2007 PAR and the 2008 GAO report on improper payments, FECA has begun enhancing the iFECS system. This includes modifying the periodic roll entitlement review process, and instituting advanced edit checks and certification processes in the Compensation and Case Management applications. In addition, in FY 2008 the program established a new quarterly performance measure to track timely debt identification and processing. FECA elevated the review of office overpayment performance to the FECA National Office for all Accountability Reviews. In response to the potential for fraud, FECA has incorporated into its legislative reform proposal a provision to enable data record matching with the Social Security Administration to identify wage earnings during FECA disability periods. Quarterly Review and Analysis Reports; Accountability Review Manual; Accountability Review Corrective Action Plan Findings and Recommendations Identified in an Audit of the Consolidated Financial Statements for the Year Ended September 30, 2006; Report No. 22-07-001-13-001 (May 16, 2007) http://www.oig.dol.gov/public/reports/oa/2007/22-07-001-13-001.pdf Federal Workers' Compensation: Better Data and Management Strategies Would Strengthen Efforts to Prevent and Address Improper Payments; GAO-08-284 February 26, 2008 http://www.gao.gov/new.items/d08284.pdf

Has the program demonstrated adequate progress in achieving its long-term performance goals?

Explanation: FECA has demonstrated measurable progress in meeting its five strategic goals, but lacks ambitious targets for one of its long-term measures (identified in question 2.1). LPD for the Postal Service remains much higher than for most other agencies, but while FECA met Postal LPD targets in FY's 2005 and 2006, they did not in FY 2007. FECA has readjusted USPS LPD targets for FY's 2008 and 2009 to better match expected results, but these are not ambitious in relation to prior year performance. FECA notes that three factors are unique to the Postal Service and independent of FECA's disability management efforts contribute to these results. First, USPS continues to report high levels of new lost-time injuries; second, employment levels have declined; and third, Postal's own Reassessment Project is reviewing and will eliminate many limited duty positions, many held by previously injured workers, some of whom will reenter the FECA compensation system. FECA argues that while the overall result will be to leave fewer positions available for reemploying and transitioning injured workers, the program has adopted an operational goal to directly serve affected Postal workers whose jobs are eliminated and return to FECA payment rolls by increasing the number placed in jobs with new employers through FECA vocational rehabilitation. FECA remains on track to reduce LPD rates for non-Postal Service Government agencies and reach this long-term goal. Contributing to this has been the impressive gains in reducing average disability duration in the first year of FECA's Quality Case Management cases (over 20% reduction in the past decade) and the SHARE initiative which has focused the non-Postal agencies on injury and LPD rate reductions (new lost-time injury claims have declined in each of the past four years). FECA has met the Periodic Roll Management savings goal through directed review of long-term disability cases, and through PRM, DOL has saved over $1 billion since FY 1999.

Evidence: DOL Strategic Plan FY 2006-2011: http://www.dol.gov/_sec/stratplan/main.htm; DOL Annual Performance and Accountability Report: http://www.dol.gov/_sec/media/reports/annual2007/

Does the program (including program partners) achieve its annual performance goals?

Explanation: FECA has consistently met or exceeded the annual targets it tracks for the PRM, Medical Cost Containment, and Communications goals. FECA PRM review units produced $17.1 million in savings in FY 2007, and well over $1 billion in savings since FY 1999. FECA's medical treatment cost inflation rates have been below the national rates each of the past four years. Achievement of that target relies on the performance of the central bill processing (CPB) contract. Performance under that contract includes the accurate and timely processing of bills; medical provider services; and coordination with FECA claims operations in the field, including adjudication of medical authorization requests. The CBP call center also contributes to Communications results.

Evidence: DOL Strategic Plan FY 2006-2011: http://www.dol.gov/_sec/stratplan/main.htm; DOL Annual Performance and Accountability Report: http://www.dol.gov/_sec/media/reports/annual2007/

Does the program demonstrate improved efficiencies or cost effectiveness in achieving program goals each year?

Explanation: FECA has met outcome goal efficiency targets in each of the past several years. FECA's PRM activity provides directed review of long-term disability roll cases that help identify conditions that could signal return to work, and adjustments or termination of disability payments resulting from these outcomes have produced over $1 billion in compensation benefit cost savings since 1999. FECA uses four administrative measures to contain medical benefits costs The rate of change in average FECA medical treatment costs has remained below the nation's cost change rate as measured by the Milliman USA Health Cost Index, and equates to (conservatively) nearly $30 million in fewer costs annually since FY 2000. Improved effectiveness has resulted in significant cost savings through the reduction of Quality Case Management (QCM) lost production days (using early nurse intervention and other strategies). Since FY 1996, QCM LPD has been reduced 24 percent, to an average 148 days, as measured in the first year of disability, and has resulted savings of approximately $54 million in compensation costs for the cases measured in FY 2007 compared to first-year LPD costs in FY 1996. FECA has developed a number of Web-based applications for workload processing and case tracking. Similarly, it has begun conducting formal hearings on appealed claims via telephone conference and utilizes its iFECS paperless claim system to streamline work assignments. These efforts have led to a 79% reduction in backlog of appealed claims, improved adjudication timeframes by 28%, and reduced travel expenditures by 34% from FY2005 to FY2007.

Evidence: DOL Annual Performance and Accountability Report: http://www.dol.gov/_sec/media/reports/annual2007/; Congressional Budget Justification: http://www.dol.gov/dol/budget/; Quarterly Review and Analysis reports

Does the performance of this program compare favorably to other programs, including government, private, etc., with similar purpose and goals?

Explanation: There are no performance comparisons on which to judge FECA's overall performance relative to comparable Federal programs (e.g., Veterans' Compensation). While benchmarking of common indicators for State workers' compensation systems has been undertaken by the Workers' Compensation Research Institute, they have not conducted a study to compare the States' to FECA's performance. There are no data available comparing FECA with other Federal and State workers' compensation programs, such comparisons would not be too inherently difficult to perform and would have value. As noted previously, using administrative share as a barometer, FECA appears to be efficient relative to comparable (i.e., State-administered) workers' compensation programs. FECA administrative costs have been measured over time as efficient relative to comparable State systems (i.e., State-administered systems). FECA administrative costs have generally remained approximately 5% of total program obligations (5.3% in FY 2007). In contrast, administrative costs (in 2005) in comparable state systems were as much as 16.1%.

Evidence: FECA Program Effectiveness Study, ICF Consulting, Inc., January 23, 2004

Do independent evaluations of sufficient scope and quality indicate that the program is effective and achieving results?

Explanation: Evaluations between 2003 and 2008 have yielded mixed results. In its 2004 evaluation of the program, ICF Consulting observed that FECA has made significant progress in achieving efficiency in management and customer service. A subject matter expert on the ICF study team, H. Allan Hunt of the Upjohn Institute, noted in a separate paper, Performance Measurement in Workers' Compensation Systems,that "Lost production days may be the ultimate performance measure for a workers' compensation agency, because it represents both the incidence of claims and their duration. A reduction in lost production days is clearly a good thing for both workers and employers." A 2003 independent evaluation of customer services received by medical providers from the FECA program found that 62% of the respondents were very/somewhat satisfied with services. A telephone caller "call-back" survey conducted by Synovate in 2003 to follow up an earlier study, found improvements in accessibility, response time, response quality, and caller satisfaction with services. In its annual audits of the FECA financial system, the OIG concluded that the FECA program's schedules and controls are in conformity with U.S. generally accepted accounting principles, leading them to give the program unqualified opinions in each year. A study by the GAO released in February 2008 on Improper Payments, reported an estimated $13.3 million in over and under payments (0.7 percent of compensation payments) identified in FY 2006 but which occurred between FY2004-2006.

Evidence: FECA Program Effectiveness Study, ICF Consulting, Inc., January 23, 2004 H. Allan Hunt, The Upjohn Institute, Performance Measurement in Workers???? Compensation Systems. http://www.upjohninstitute.org/publications/newsletter/HAH_105.pdf Provider Telephone Customer Service, Maximum Research, Sample Survey, October 10, 2003. Incoming Telephone Call Customer Service Study, Synovate, September 30, 2003. DOL Office of Inspector General, Annual Audit of the FECA Benefit Fund 2005 ??V 2007. http://www.oig.dol.gov/public/reports/oa/2006/22-06-006-04-431.pdf http://www.oig.dol.gov/public/reports/oa/2007/22-07-002-04-431.pdf http://www.oig.dol.gov/public/reports/oa/2008/22-08-001-04-431.pdf OIG Service Auditors???? Reports on the Integrated Federal Employees???? Compensation System and the Medical Bill Processing System, September 25, 2007, Report Number 22-07-009-04-431