A primary objective of the workers’ compensation system is to restore the injured worker to a self-sufficient status in an expeditious manner and to the greatest extent practicable. In many cases, vocational assistance, such as training and job-search assistance, is necessary to attain this objective.

A series of legislation has dramatically changed the face of the vocational assistance program over the last 15 years. The major changes since 1986 include: in 1987, House Bill 2900 was enacted, making major changes in the workers’ compensation system, some of which significantly impacted vocational assistance by limiting eligibility; in 1990, Senate Bill 1197 allowed injured workers and insurers to negotiate the release or settlement of non-medical rights, including vocational rehabilitation, through a Claim Disposition Agreement; Senate Bill 369, effective in 1995, further limited eligibility for workers making aggravation claims.

Determinations of eligibility for vocational assistance

In 1996, 1,065 injured workers were found eligible for vocational assistance under the Workers’ Compensation Law, a 10 percent decrease from the number eligible in 1995 and a 87 percent decrease from the peak of 8,506 in 1987. While 1987 vocational cases represented 66 percent of that year’s permanent partial disability (PPD) cases, the corresponding figure for 1988 was 19 percent, and has further decreased to 12 percent in 1996 (see Figure 1).

Changes in eligibility criteria

Legislative reform is the main reason there is no longer a correlation between claimants’ PPD awards and their vocational assistance eligibility status. House Bill 2900 went into effect in 1988, redefining the eligibility criteria:

“A worker is eligible for vocational assistance if the worker will not be able to return to the previous employment or to any other available and suitable employment with the employer at injury, and the worker has a substantial handicap to employment.”

This language effectively limits eligibility to the most difficult cases and has decreased the number of claimants considered for eligibility. In 1986, determinations of “eligible” outnumbered “ineligible” by more than two to one. From 1991 through 1995, the number of ineligibles averaged more than three times the number of eligibles. In 1996, the ratio of ineligibles to eligibles decreased slightly to 2.8. The sharp decrease in the overall volume of determinations indicates many claimants who would have been considered for eligibility prior to HB 2900, especially early assistance, no longer receive a determination. Most claimants ineligible for vocational assistance are eligible for other return-to-work assistance, particularly with the introduction of the Preferred Worker Program in 1988 and the Employer at Injury Program in 1993. At this time, it is too early to evaluate the effects of SB 369 on eligibility determinations.

Characteristics of eligible claims

Since implementation of HB 2900, the profile of the typical claim with vocational assistance eligibility has become more distinct from disabling claims as a whole. The definition of “suitable employment” has limited eligibility to workers unable to return to a job paying at least 80 percent of the wage currently paid for the job at injury. Workers with higher average wages, therefore, have become those most likely to be eligible. As Figure 2 shows, the average weekly wage at injury for eligible claims prior to 1988 was slightly below that of all disabling claims, but it has risen steadily over time to a level 11 percent above the disabling claim wage in 1996. Conversely, the average wage at injury for ineligible claims in 1996 has fallen to 16 percent below the average wage for all disabled workers.

Due to their association with wage levels, other claimant characteristics are affected by the “suitable employment” stipulation, such as sex, tenure with employer at injury, occupation, and industry. Male workers, whose wages are generally higher than females, had become, since 1989, disproportionately representative of eligible claimants compared to the frequency of males for all disabling claims—a reversal from the trends prior to HB 2900. In 1996, however, a decline in the percentage of males eligible for vocational assistance brought it nearly equal to that of all disabling claims. Median tenure for eligible claimants has increased from 12 months to 24 months in the period from 1987 to 1996. The distribution of eligible cases by occupation shows increased frequencies for construction workers, who are overwhelmingly male, and declines for service workers, who are more likely female as concerns occupational disability.

One measurement of the provisions that determine a “substantial handicap” is the rated extent of permanent disability at the time of eligibility. Figure 3 depicts a sharp increase in 1988, sustained over several years, in median degrees of PPD awarded to eligible claimants. The recent declining trend in the data can possibly be attributed to a decline overall in the average extent of permanent disability awarded.

SAIF’s share of eligible cases in 1996 increased from the previous year to 36 percent, reversing their declining trend of recent years. The Liberty group’s share has nearly tripled since 1986, growing to 30 percent in 1996. Other private insurers accounted for 19 percent of eligible cases, and self-insured employers made up the rest with 14 percent.

The percentage of cases where eligibility begins after first closure (meaning the claimant’s medical condition has become stable) began rising in 1988, from pre-HB 2900 figures of 20-22 percent to a rate of 67 percent in 1996. Since 1990, the median time from injury to eligibility has been around 17 months, compared to almost 7 months in 1986. This is probably attributable to changes in eligibility criteria acting as an incentive for insurers to wait longer before determining eligibility, in order to see if the claimant can return to work and to collect evidence regarding “substantial handicap.”

From 1987 to 1996, the most prevalent injury for eligible claimants was sprains and strains, but the frequency has declined over this time period, and at 49 percent in 1996, it is more in line with the frequency found among all disabling claims. The back was the body part injured in 35 percent of the claims in 1996, and while this continues a downward trend, it remains higher than the percentage for all disabling claims. Overexertion was the most common causal event, with 43 percent of the claims falling into this category in 1996, compared to 31 percent for all disabling claims. Reasons for ineligibility Figure 4 illustrates the major impact HB 2900’s definition of suitable employment has had on the reasons for ineligibility for vocational assistance. In 1996, 73 percent of ineligible claimants were excluded for reasons of “can return to work” or “no substantial handicap” to employment. On the other hand, in 1987, more than one-third of ineligibles were “not feasible,” usually because medical conditions precluded participation; and another third were already working or had reached “maximum services.”

Benefit costs

Figure 5 shows cases closed and costs of vocational assistance benefits. The number of cases closed in 1996 was 1,089, a 16 percent decrease from 1995. Costs have been more than halved, from $38.4 million for 1987 cases to $13.5 million for 1996 (dollars not adjusted for inflation unless specified).

Note that all data on costs and closed cases may be revised downward in the future, especially for the latest years. Some cases will have eligibility restored after the eligibility period ends, shifting these cases’ data to the subsequent year. For a more detailed explanation, refer to ‘Appendix A: Technical Notes’ of the report entitled Vocational Assistance in the Oregon Workers’ Compensation System, 1986-1994.

Vocational benefits comprise three main categories: professional services provided by private rehabilitation organizations; time loss payments to claimants in training programs; and direct purchases, such as tuition, books, work clothing, etc. Professional services, averaging 58 percent of benefits paid in the years 1987-1988, now account for 43 percent, and with dollars spent declining from $22.4 million in 1987 to $5.8 million in 1996, this category has contributed most to the reduction in overall benefit costs. The cost of time loss payments has fallen by 50 percent in this ten-year period, averaging 42 percent of benefits paid from 1991 on. Direct purchases constituted 17 percent of benefit costs in 1996, a figure slightly higher than the 13 percent average of previous years.

Level of assistance

Rehabilitation plan types (training, direct employment, or no-plan) indicate the level of assistance chosen as necessary to return the worker to suitable employment. Figure 6 depicts the highest level of assistance provided and the average costs for all closed cases, whether successful or not and whether a plan has been completed or not. The distribution of level of assistance has changed as a result of HB 2900’s eligibility criteria, which limit vocational assistance to the most difficult cases. The decline in the frequency of direct employment cases has been matched, until the most recent years, by the increase in training cases. The proportion of training cases was 12 percent in 1987; since 1991, it has hovered in the 35-40 percent range. No-plan cases continue to comprise a large percentage of the total, largely due to the popularity of the Claim Disposition Agreement (CDA). Since 1987, average costs have risen by 174 percent for no-plans and 74 percent for direct employment, most likely due to the increased difficulty of cases served under HB 2900’s eligibility criteria. However, training, which has always been assigned to only the most difficult cases, saw an average cost increase of 19 percent.

The length of no-plans and direct employment cases doubled from 1987 to 1991, compared to a 15 percent increase in length of training cases. Sharp declines in average length of services occurred after 1991, possibly due to the expanding incidence of the CDA. In 1996, the average length of training cases was 20 months, 23 percent less than in 1987.

Outcomes

The distribution of reasons for ending vocational services and a claimant’s eligibility has been directly affected by SB 1197, which legalized the CDA, and indirectly affected by HB 2900’s restrictive eligibility criteria. The percentages for 1996 are depicted in Figure 7. Currently, the CDA is the most common reason for end of eligibility. Prior to 1993, the most common reason was return to work, though the combined frequency of all other reasons, which might be considered the frequency of unsuccessful outcomes, has been greater.

Claim disposition agreements (CDAs)

Since mid-1990, the injured worker may settle a claim by way of a CDA that releases rights to any benefits except medical assistance and reemployment incentives, typically in exchange for a lump-sum settlement. In 1993, the CDA became the most common reason for closing vocational services, and the current rate of settlement stands at 44 percent of eligible cases. The percentage of training cases ended by CDA has also risen steadily, from 10 percent in 1991 to 25 percent in 1996.

Completion rates, an indicator of program effectiveness, declined from 56 percent in 1987 to 31 percent in 1995. The prominence of the CDA as a means of ending vocational eligibility largely coincides with the steepened downward trend in completion rates.

Return-to-work case characteristics and costs

The impact of the reform legislation can also be seen in the sharp reduction in the number of injured workers returning to work via vocational assistance, which has dropped from a peak of 3,680 in 1987 to 339 in 1996. The return-to-work rate, computed from completed cases, has risen from the 70 percent range prior to 1991 to the record high 91 percent in 1996. Training cases accounted for an average of 62 percent of return-to-work during the past five years, compared to a rate of 14 percent in 1987.

Logically, average costs for successful cases are higher than those for unsuccessful cases (excluding any CDA amounts). Although training cases are the most costly, their 1996 average cost of $28,857 has increased only 26 percent since 1987. Direct employment and no-plan cases, with 1996 average costs of $6,687 and $4,789 respectively, experienced increases of 124 percent and 287 percent since 1987. Gauged against the 43 percent rate of inflation during this time period, these figures indicate the dramatic change in the nature of cases provided vocational assistance under HB 2900, which restricts eligibility to only the most difficult.

In 1996, 87 percent of successful cases featured return-to-work with a new employer, and 92 percent engaged in a new kind of work, compared to rates around 50 percent for these characteristics in 1987. Another measure of program effectiveness is the wage recovery rate of return-to-work cases, which reports the return-to-work wage as a percentage of the wage at injury. Figure 8 shows average wage recovery rates falling from 90 percent of pre-injury wages for earlier years’ cases to an average of 80 percent in recent years (wages adjusted for inflation). The increased frequency of training cases, dictated by HB 2900’s eligibility rules, accounts for the decline in average wage recovery rates. The 1996 rate of 86 percent, however, is higher than those of the past several years.

Return-to-work cases using reemployment incentives

In general, claimants eligible for vocational assistance have also been eligible for reemployment assistance contracts, especially from 1988 on when the Preferred Worker Program began. These contracts involve reemployment incentives, such as wage subsidy or work site modification. In 1991, 79 percent of successful vocational assistance cases also had Preferred Worker contracts, but a steady decline in this frequency has resulted in a corresponding figure of 59 percent for 1996.

If you have questions about the information contained in this document please contact by e-mail or phone:
Mike Maier, Research Analyst, Research & Analysis, Information Management Division (503)947-7352 .
This document was originally published in November 1997.
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