Home Health Care for California's Injured Workers

Options for Implementing a Fee Schedule

by Barbara O. Wynn, Anne E. Boustead

This Article

RAND Health Quarterly, 2015; 5(1):9


The California Department of Industrial Relations/Division of Worker’s Compensation asked RAND to provide technical assistance in developing a fee schedule for home health services provided to injured workers. The fee schedule needs to address the full spectrum of home health services ranging from skilled nursing and therapy services to unskilled personal care or chore services that may be provided by family members. RAND researchers consulted with stakeholders in the California workers’ compensation system to outline issues the fee schedule should address, reviewed home health fee schedules used by other payers, and conducted interviews with WC administrators from other jurisdictions to elicit their experiences. California stakeholders identified unskilled attendant services as most problematic in determining need and payment rates, particularly services furnished by family members.

RAND researchers concentrated on fee schedule options that would result in a single fee schedule covering the full range of home health care services furnished to injured workers and made three sets of recommendations. The first set pertains to obtaining additional information that would highlight the policy issues likely to occur with the implementation of the fee schedule and alternatives for assessing an injured worker’s home health care needs. Another approach conforms most closely with the Labor Code requirements. It would integrate the fee schedules used by Medicare, In-Home Health Supportive Services, and the federal Office of Workers’ Compensation. The third approach would base the home health fee schedule on rules used by the federal Office of Workers’ Compensation.

For more information, see RAND RR-603-DIR at https://www.rand.org/pubs/research_reports/RR603.html

Full Text

The California Division of Workers' Compensation (DWC) maintains an Official Medical Fee Schedule (OMFS) for medical services provided under California's workers' compensation (WC) program. The OMFS establishes the maximum allowable amount for services unless the payer and provider contract for a different payment amount. Labor Code §5307.1(a)(1) requires that DWC adopt fee schedules for most services, including home health services based on Medicare fee schedules.

The Medicare fee schedule for home health services covers only home health services provided when a homebound individual needs intermittent or part-time skilled care. To date, DWC has not implemented a Medicare-based fee schedule for home health services. Section 74 of Senate Bill 863 added Labor Code §5307.8, which requires that DWC adopt a fee schedule for home health services not covered by Medicare. This fee schedule must establish fees and service provider requirements based on the rules used by the In-Home Supportive Services (IHSS) program, a MediCal-funded program that provides supportive services necessary to enable elderly and disabled individuals to remain safely within their homes.* In addition, DWC must ensure that several additional requirements are met: It must ensure that home health care services are provided only if reasonably required to ameliorate the effects of the worker's injury as prescribed by a physician; employers are liable for home health care services only if they receive notice within 14 days of the commencement of services; and family members of the injured workers do not receive payment for services that were customarily performed prior to the injury.** Taken together, the Labor Code provisions intend that the OMFS cover the range of activities that might be included within a program of home care for an injured worker.

Under the process put in place by SB-863, the primary treating physician must prescribe and request authorization for home health care services.*** The payer determines through utilization review whether the services are reasonable and necessary under Labor Code Section 4600 as medical treatment that is reasonably required to cure or relieve the effects of injury. The type, frequency and duration of home health services that are appropriate depend on the injured worker's functional status and type of impairment. An assessment of the patient's needs for home health services typically considers the patient's living environment and need for three types of services: skilled nursing and therapy services, assistance with personal care tasks such as bathing, grooming, dressing and eating, and assistance with activities that allow an individual with impaired functional status to remain at home, such as housework, shopping, and meal preparation, which we term chore services. These services are not inherently medical in nature and do not need to be performed by someone with formal medical training, but they are needed to allow the injured worker to remain in a home environment. These are the types of long-term care services covered by the IHSS that allow an individual who would otherwise require residential care to remain at home.

DWC asked RAND for technical assistance in developing the OMFS for home health care services. We first consulted with stakeholders in the California WC system to outline key concerns that the fee schedule should address. Once we identified the issues, we reviewed home health fee schedule rates and policies used by other payers in order to determine how they had addressed similar problems and conducted interviews with WC administrators from other jurisdictions to elicit their experiences in implementing home health care policies in the WC context. We used this information in order to develop recommendations for the OMFS for home health care services.

Current State of Home Health Care for Workers' Compensation

We conducted nine interviews with selected individuals to obtain an overview of issues and concerns with home health services provided to injured workers. Our interviewees were from stakeholder groups with significant interest in the fee schedule and related issues: applicants' attorneys representing injured workers, payers, home care organization staff, and care management organizations. We identified representatives of each of these groups through conversations with the DWC and the Commission on Health and Safety and Workers' Compensation (CHSWC) at the outset of the project and selected at least two representatives from each group for a telephone interview.

All stakeholder groups identified personal care and chore services (which IHSS terms attendant services) as the underlying reason for the SB-863 provision. Services that are required over a long period of time and over most or all of the day or involve 24-hour protective services were identified as particularly problematic to assess what is reasonable, particularly when family members are providing the services. Prior to SB 863, a payer was often unaware that the services were being provided because there was no physician order and was faced with retroactive payments when the case was settled. SB 863 requires that the physician prescribe home care services and stipulates that the payer is not liable for services provided more than 14 days before being notified of the services being provided; however, determining the scope of appropriate home care services remains an issue in the absence of guidelines delineating an appropriate level of coverage for these services and requirements regarding the specificity of the physician's orders. Also, there is concern that the supplemental income generated by family caregivers creates incentives to overstate an injured worker's need for supportive services and disincentives to return-to-work. From the applicants' attorney perspective, issues are delays in getting needed home care services for injured workers while disagreements on the type and scope of services are resolved, accommodating an injured worker's preference for caregivers, and obtaining reasonable compensation for family caregivers.

Findings from Review of Other Fee Schedules

We found that neither the Medicare fee schedule nor the IHSS fee schedule would be sufficient to cover the full range of potential home care services provided to injured workers. Medicare's home health benefit is limited to services provided by a Medicare-certified home health agency to individuals with physician certification that they are homebound and need skilled care on a part-time or intermittent basis. The payment is based on 60-day episodes of care specific to the Medicare population and reflect the limited nature of its home health benefit. The most common diagnoses in 2012 for Medicare home health users were chronic conditions such as diabetes, hypertension, heart failure, and chronic skin ulcers rather than injuries. Postacute home health episodes account for 36 percent of Medicare home health clients. Most referrals for home health care under WC follow a surgical procedure (for example, spinal surgeries or hip replacements). Most Medicare patients are elderly with multiple chronic conditions likely to require a more prolonged set of postsurgical rehabilitation services than WC patients, who are younger and more likely to resume activities outside the home (including postsurgical rehabilitative services). For these patients, a Medicare-base episode is likely to provide excessive payments. In contrast, the resource needs for injured workers with major disabilities are likely to be inadequate. Because the 60-day episodes are based only on Medicare patients who need part-time or intermittent skilled care, they do not cover the type of patient receiving the most costly home care under the WC program, i.e., those that need care more extensive than part-time temporary nursing care or long-term support services on more than an intermittent basis.

The Medicare fee schedule also includes per visit rates for skilled services and limited home health services that apply when only a few home visits are required. The per visit rates could be incorporated into the OMFS, but they would need to be supplemented with fee schedule rates for more extensive skilled nursing and home health aide services that would be paid on a time-based unit of service rather than per visit basis.

The IHSS program provides unskilled chore support, personal care services, protective supervision, and other related services to aged, blind, and disabled individuals who need this support to live independently. There are four potential policy areas where the IHSS program might be incorporated into the OMFS: assessing the need for in-home supportive services, limiting the amount of services that are provided, determining who can provide the supportive services, and setting the payment rate for individual covered services. In each of these areas, we reviewed the suitability of the IHSS policies and investigated the policies under other programs that cover long-term supportive services: Medi-Cal, Veterans Affairs, the Office of Workers' Compensation Program (OWCP) that covers federal workers, and selected state WC programs.

Assessing the need for in-home supportive services. The IHSS assessment and guidelines could be used to determine the supportive services needed to allow the patient to remain at home, but some modifications should be considered. It would be more efficient and less disruptive to the patient to have a single assessment as opposed to multiple assessments, and, unlike the assessment instrument used by Medicare and Medicaid, the IHSS instrument does not cover the full range of services. With respect to the guidelines for service hours, IHSS attendants may perform paramedical services with informed consent that otherwise must be performed by skilled personnel. It is not clear whether it is legal or appropriate to allow home health aides or attendants to provide paramedical services to injured workers. Also, IHSS guidelines preclude coverage for certain spousal services, such as meal preparation. This restriction may not be appropriate if the spouse has taken off work to care for the injured worker.

Determining who may provide the services. IHSS has three different types of arrangements for attendant services. First, the individuals could be employed by a home health agency or other home care organization. Second, the individual might be an independent home care aide who is providing services through a direct agreement with the injured worker. Third, the individual might be a family caregiver. All programs that we reviewed allow the injured worker to approve an individual caregiver, but some limit the arrangements under which care is provided, e.g., the care must be provided through a home health agency or other home care organization responsible for supervising attendant services. The Home Care Services Consumer Protective Act (AB 1217) requires home health aides employed by a health care organization to undergo a background check and register with the California Department of Social Services. Independent home health aides may also register. A WC requirement that only registered home health aides provide personal care services should address several of the concerns expressed by applicants' attorneys regarding payer-placed caregivers as well as payer concerns with caregivers selected by the injured worker. For family caregivers and any other nonregistered home care provider, an evaluation would be needed to verify the ability of the caregiver to furnish the services, whether training is needed, and the level of supervision required by a health care professional.

Limiting the amount of services that are provided. The IHSS has monthly maximums on the amount of services that can be provided to an individual: 195 hours per month for non–severely impaired and 283 hours for severely impaired cases. These limits are budget driven and would result in unmet need for some injured workers. Other public programs have incorporated limitations on coverage for long-term care services provided in the home based on a comparison with the expenses that would otherwise be paid for the appropriate level of care in an institutional setting. We did not identify a WC program that sets this type of limit. More typical among WC programs are dollar limits not expressly linked to the cost of institutional care. For example, the Hawaii WC program limits total home health benefits to four times the maximum weekly benefit rate per month.

Other WC programs establish specific limits on attendant services. For example, OWCP limits attendant care services to a maximum of $1,500 per month, where the need has been medically documented and the services are provided by a home health aide, licensed practical nurse, or similarly trained individual.**** An appropriately trained family member may provide care up to 12 hours per day under OWCP policies, while Michigan WC limits services by family caregivers to no more than 56 hours per week. Other jurisdictions place limits comparable to the type of restrictions under the IHSS on the type of care that can be provided—for example, excluding household tasks normally provided by members of a family or limiting coverage to personal care services only.

Setting the payment rate for individual covered services. The IHSS fee schedule rates are only for attendant services and are set by each county, generally on the minimum hourly wage rate. The hourly rates vary but are below the statewide median average hourly rate for personal care services set by the VA or the OWCP.

The IHSS fee schedule addresses longer-term attendant services. It does not address the need for temporary but extensive nursing services, nor are these services addressed by Medicare's fee schedule because of its focus on intermittent or part-time care. For administrative simplicity, there are advantages to adopting a single fee schedule that encompasses the full range of home health services. We reviewed the fee schedules for home health services used by Medi-Cal, Veterans Affairs, the OWCP, and selected state workers' compensation programs to assess their suitability as a model fee schedule. We found that both the Medi-Cal fee schedule and the OWCP fee schedule cover the full range of home health care services and are already in use in California. Of these two fee schedules, the OWCP fee schedule has the advantage of providing for annual updates and pricing based on a relative value scale and conversion factor also used under the physician fee schedule. The fee schedule does not incorporate the Medicare per visit rates but rather uses 15-minute time increments to pay for skilled services. When converted to an estimated per visit rate, the amounts are higher than what would be paid based on 120 percent of the Medicare fee schedule for skilled home health care. In contrast, the per visit rates under Medicaid are substantially lower than the Medicare fee schedule rates.

Framework for a Home Health Care Fee Schedule

Based on discussions with DWC, our stakeholder interviews, and review of home health fee schedules used by other programs, we developed the following framework to guide our analysis of potential options for a home health care fee schedule:

  • To cover the home health care needs of the WC patient population, the fee schedule should address the range of home health services including (1) temporary skilled and/or nonskilled supportive care services typically needed on a part-time or intermittent basis for a finite period of time following an acute care medical event (2) more extensive (e.g., full-time or longer-term) skilled care and (3) long-term supportive care services for a seriously injured worker, needed to enable the individual to remain safely at home.
  • To reduce administrative burden for providers and for DWC, the fee schedule should build on existing fee schedules policies, coding system and payment amounts. This is the approach that has been taken with respect to other components of the OMFS. Given the SB 863 requirements, priority should be given to adapting the IHSS fee schedules as needed for the WC patient population.
  • To establish payment rates that provide access to different types of home care providers and to facilitate monitoring and deter fraud and abuse, there should be standardized codes describing the type and volume of services provided to the injured worker. To the extent feasible, the codes should draw on existing code sets.
  • To ensure workers receive high quality medically appropriate care efficiently, the payment rates should be adequate to cover the estimated costs (including a fair return on investment) of providing the services efficiently, and the payment incentives should be structured to safeguard against the under- or overprovision of care.
  • To ensure that workers receive needed services required by their work-related conditions and to reduce contention between payers and injured workers over what services are needed, there should be an independent patient needs assessment that considers the services required by the individual's functional status and home environment.
  • To balance worker choice with safety and cost considerations, family members should be allowed to provide attendant care services when they have the training to do so and there is appropriate financial accountability and oversight.


The task that DWC faces in establishing a fee schedule for home health services that meets the requirements imposed by the Labor Code is difficult. Weaving multiple fee schedules into a single integrated fee schedule is challenging in itself and is further complicated by the absence of data on the volume and cost of different types of home care services and caregivers providing services to injured workers. In this study, we concentrated on identifying options that would result in a single fee schedule that would cover the full range of home health services furnished to injured workers and identified a number of options that could be considered. We have developed three sets of recommendations. The first set deals with policies and activities that should be undertaken regardless of the actions of the other sets of recommendations. These recommended steps include:

  1. Convene an expert panel representing different perspectives on the home care provided to injured workers to consider issues related to an assessment of an injured worker's need for home health services.
  2. Evaluate whether the IHSS guidelines can be applied to functional status scores generated with the Medicare/Medicaid assessment instrument and whether the resulting estimates of service needs are comparable to those that are indicated by the IHSS assessment tool.
  3. Partner with payer(s) and/or WC case management organizations for a sample of WC patients for whom skilled care is prescribed to obtain a better understanding of the volume and type of home health services currently being provided, the arrangements for providing them, and the “border” issues that are likely to occur if multiple fee schedules are integrated into a single fee schedule.
  4. With regard to support services:
    1. Confirm the skill levels required to furnish paramedical services under the WC program, i.e., whether the WC program can adopt IHSS policies in this regard without specific statutory authorization.
    2. Require that any caregiver providing attendant services be either employed by a licensed home health agency or registered with the Department of Social Services unless the payer and worker agree to an unregistered home care aide (who may be a family member) with the necessary skills to provide personal care services.
    3. Require that the physician, the health care professional conducting the assessment, and the injured worker (or representative) participate in the decision regarding whether needed long-term care services can be provided in a home environment safely and the type of arrangements for attendant care services.
    4. Use the IHSS guidelines as a starting place to determine the number of hours needed for supportive services exclusive of the monthly cap. Consider what changes might be necessary in the IHSS policies and guidelines to ensure that workers have access to needed services.
    5. Assume that the IHSS restriction on services provided by spouses or other family members would be a simple but effective way to address the requirement that family members do not receive payment for services customarily performed prior to the injury.
    6. Consider whether to impose a cap on aggregate expenditures, e.g., 120 percent of Medicaid limitations for long-term home care under its waiver program. This would balance worker choice with the cost effectiveness of the arrangement.
  5. Standardize the physician prescription forms and billing forms that should be used for home health services to facilitate fiscal responsibility and monitoring of home care services.

The second set of recommendations pertains to implementing a single integrated fee schedule that would draw on three existing fee schedules: Medicare, IHSS, and the OWCP. These recommendations are based on a straightforward reading of the Labor Code requirements for a home health fee schedule under current law and are being made at DWC's request. The fee schedule would be based on using the Medicare per visit rates to pay for intermittent or part-time care, the IHSS hourly rates for unskilled attendant services, and the OWCP rates to fill the gaps between the two fee schedules. The fee schedule allowance would be linked to whether the physician prescribed intermittent or part-time skilled care, more extensive skilled care, or unskilled attendant services only. There are “border” issues regarding which fee schedules should apply that would need to be addressed and perhaps most importantly, the difference between Medicare's per visit rate and OWCP's time-based rates create incentives to overestimate the level of needed service.

Because we are concerned by the complexities raised by this type of fee schedule and the adequacies of both the Medicare per visit allowances and the IHSS allowances, we also developed a third set of detailed recommendations based on implementing an OWCP-based fee schedule, at least with respect to skilled home health services that would not otherwise be covered under IHSS. We believe that this fee schedule is more likely to accurately match the allowances with the services needed by injured workers, is less prone to payment disputes and potential abuse, and is administratively less complex. Unlike the Medicare or Medicaid fee schedules, it has policies that are tailored to a workers' compensation population, e.g., limiting coverage to services required by the work-related condition.

DWC has authority under Labor Code Section 5307.1(b) to establish different payment parameters from those used in the Medicare payment system to assure that the OMFS allowances are adequate to ensure a reasonable standard of services and care for injured workers as long as the estimated aggregate fees do not exceed 120 percent of the amounts payable in the relevant Medicare payment system for the same class of services. Arguably, the DWC might conclude that this provides sufficient authority to adopt the OWCP fee schedule with appropriate modifications to keep within the 120 percent limitation on aggregate fees for intermittent or part-time services covered by Medicare. If DWC concludes that it does not have the flexibility to implement an OWCP-based fee schedule without changes to the Labor Code, the agency may wish to concentrate in the short run on the IHSS-like services, because these are the most costly and problematic services. However, we would be concerned about putting in place fee schedule features that may not be the most appropriate policies in the long run but may be difficult to change after they are implemented.


* State of California, Senate Bill No. 863, 2011–2012 Regular Session (California 2012). September 19, 2012, Section 76.

** State of California, 2012, Section 35.

*** The requirement that the primary treating physician prescribe home health services was added by SB 863.

**** Federal Register, Code of Federal Regulations, Title 20, Volume 1, Section 10.314—Will OWCP Pay for the Services of an Attendant?, 2010.

The research described in this article was supported by the California Department of Industrial Relations/Division of Workers' Compensation and was conducted in the RAND Center for Health and Safety in the Workplace, a part of RAND Justice, Infrastructure, and Environment.

RAND Health Quarterly is produced by the RAND Corporation. ISSN 2162-8254.