California's Return-to-Work Supplement Program (RTWSP) is a new benefit for permanently disabled workers who suffer disproportionately high earnings loss in comparison with their workers' compensation benefits. The RTWSP provides a one-time $5,000 payment to workers who cannot return to work following a permanently disabling workplace injury. RAND researchers evaluated the program's performance and identified options for improving the RTWSP.
Evaluation of the Return-to-Work Fund in California's Workers' Compensation System
Performance to Date and Options for Modification
- How many workers are eligible for, apply for, and receive the Return-to-Work (RTW) Supplement?
- Does the RTWSP accurately target workers whose permanent disability benefits are disproportionately low in comparison to their earnings loss?
- Are the RTWSP and related processes vulnerable to fraud and abuse?
- Are barriers to access preventing eligible workers from receiving the RTW Supplement?
- What modifications should the Department of Industrial Relations (DIR) consider to help the RTWSP more fully meet its goals?
- What changes to related processes (such as physician reporting and issuance of the SJDB voucher) might enhance RTWSP take-up and program integrity?
California's Return-to-Work Supplement Program (RTWSP) is a new benefit for permanently disabled workers who suffer disproportionately high earnings loss in comparison with their workers' compensation benefits. The RTWSP provides a one-time $5,000 payment to workers who cannot return to work following a permanently disabling workplace injury. RAND researchers conducted an evaluation of the program's performance and identified options for improving the RTWSP. The study included an environmental scan, stakeholder interviews, and analysis of program data. RAND also held a technical advisory group meeting with key stakeholders.
The RTWSP is performing well on several dimensions. The eligibility criteria have accurately targeted workers with more-severe disabilities, and program administration is efficient, with little evidence of fraud or abuse. However, take-up of the program is low: In a sample of eligible workers, just over half applied to receive the benefit. The most important factor predicting access to the program was legal representation, suggesting that many workers are failing to navigate the process on their own, despite the intent of the program's designers. The authors also found that the eligible population is larger than initially anticipated, a trend driven in part by rising utilization of California's vocational rehabilitation benefit (the Supplemental Job Displacement Benefit [SJDB]).
Based on these findings, the authors recommend that modifications to the RTWSP focus on increasing program take-up among currently eligible workers. Options to increase take-up include making issuance of the Return-to-Work Supplement automatic or improving outreach and notification efforts. The Department of Industrial Relations should also improve monitoring of SJDB voucher issuance to track emerging changes in the RTWSP-eligible population and to facilitate oversight of the SJDB.
The program is working as intended
- The RTWSP has been successfully targeted to workers with more-severe disabilities.
- Program administration is efficient and rapid, with little evidence of fraud or abuse.
- The RTWSP is paid to workers in a timely manner after application: 90 percent of successful applicants are paid the RTW Supplement within three weeks of applying.
- The vast majority of applicants ultimately receive the RTW Supplement: The ultimate acceptance rate among applicants is 96 percent.
But take-up rates can be improved, and workers without legal representation were unlikely to apply
- Despite the efficiency of the application process, just over half of eligible workers apply for the RTWSP.
- Legal representation is the factor most strongly associated with take-up of the RTWSP among eligible workers. After controlling for a wide range of other factors, eligible workers with legal representation were more than 40 percentage points more likely to apply for the RTWSP than comparable eligible workers without representation were. This suggests that many workers are failing to navigate the process on their own.
- Hypothesized barriers to access, such as language or geography, were not as important as legal representation in determining which eligible workers applied for the RTWSP.
- The eligible population for the program is larger than expected when the program was established, and increasing receipt of the SJDB voucher may contribute to continued eligibility growth.
- DIR could develop a system to make disbursement of the RTW Supplement automatic upon notification that a worker has received an SJDB voucher.
- If the RTW Supplement is not made automatic, DIR could make changes to outreach and notification processes to help increase take-up of the RTWSP by eligible workers. Relatively minor changes to the content and formatting of the SJDB voucher notification might improve workers' awareness of the RTWSP and their understanding that the RTW Supplement is a readily available $5,000 cash payment.
- Treating physicians do not always complete the forms necessary for workers to receive the SJDB and thus become eligible for the RTWSP. Targeted efforts to educate physicians about their reporting responsibilities could also improve workers' access to the RTW Supplement.
- Whether or not DIR decides to make the RTWSP automatic, the authors strongly recommend that DIR collect information from claims administrators about the issuance of SJDB vouchers, either on a systemwide or a representative basis.
Table of Contents
Background and Overview of Study
Operation of the Return-to-Work Supplement Program
California’s Return-to-Work Supplement Program from the Perspective of Key Stakeholders
Data Sources and Methods for Quantitative Analysis
Targeting and Take-Up of the RTWSP
Eligible Population and Program Cost Estimates
Policy Options to Improve the RTWSP and Related Processes
Conclusions and Policy Recommendations
Data Sources, Methods, and Supplementary Results for Quantitative Analysis