Fire P32--SEPTA--go page xx, with --128 lines

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A suburban transit system in Pennsylvania is proving that it'spossible to buck the nationwide trend of spiraling workers'compensation costs, according to executives connected with theprogram.

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The success story comes from the Southeastern PennsylvaniaTransportation Authority, a railroad system that servicesPhiladelphia and its suburbs with a 9,000 member workforce.

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Since it implemented a new system SEPTA has reported millions ofdollars in savings and a huge drop in claims.

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SEPTA took action to reduce its workers' comp costs after theyescalated in the early nineties from $20.2 million in 1992, $21.4million in 1993 and up to $25.8 million in 1994.

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A key move came in 1999 when SEPTA switched from aself-administered program to the Philadelphia based third partyadministrator, CompServices Inc. (CSI), a firm that is a subsidiaryof Independence Blue Cross of Philadelphia.

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One of the immediate changes, CSI advised SEPTA to implement wasthe use of a capitated managed-care program, which provides medicalservices to beneficiaries for a fixed per-person fee. Under thissystem, SEPTA pays one price for an annual contract covering allworkers' comp medical care expenses.

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Mark Adams, vice president of CSI said that the ownership of thecompany by Independence Blue Cross, the largest health insurer ineastern Pennsylvania, allows his company to pay significantly belowthe state of Pennsylvania's fee schedule, which allows the company15 months to pay off expenses incurred for medical services in acalendar year.

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"What sets us apart from the industry is the huge discounts wecan offer [since] we pay Blue Cross hospital rates for workers'comp," Mr. Adams explained.

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To put that savings in context, the state's department of Laborand Industry reported in their 2004 Medical Access Study ExecutiveOverview that the workers' comp fee schedule, was on average 17percent higher than Medicare, but is seen by many providers asinadequate to compensate for the extra time and administrativeburden required in treating patients.

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Providing quality service at below average cost benefits CSI, astheir contract includes an experience refund, which allows CSI tosplit the possible savings per service with SEPTA if it comes inunder the fixed rate.

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SEPTA reported savings in excess of $7.4 million under itsbudget projections since 1995. Open claims decreased by nearly halffrom 1,006 to 520. In addition the volume of workers receivingbenefits was dropped from 530 to 308, a 42 percent decline.

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SEPTA said that it also worked more closely with employees toexchange ideas on improving safety and reducing workplace injuries.The company also established an in-house program, which placesemployees in temporary job positions while they recover frominjuries. These positions are referred to as light dutyassignments.

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Light duty or modified duty may involve a temporary reassignmentof the employee to an entirely new job with lessphysically-intensive requirements, or it may consist of allowingthe worker to perform the regular job at less than fullproductivity.

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In most cases, light duty workers will earn less than theirpre-injury salaries, their workers' comp will make up thedifference. An employee may also face a temporary exclusion ofcertain difficult tasks from their regular job duties.

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Bob O'Connor, a representative of the Transport Workers UnionLocal 234, said that the light duty positions SEPTA providestypically pay $5.64 an hour and difference from their originalsalary is made up with workers' comp.

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"We've given up the since the mid-nineties almost $100 millionback in concessions in order to maintain our health care benefits,"he added stating that SEPTA was able to make changes in theworkers' comp program and the employees health care plan with thecooperation of the union.

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Even with the savings on its comp program SEPTA spokesmanRichard Maloney said the railroad remains in the midst of a seriousfinancial crisis.

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Mr. O'Connor discussing the comp program, he said the shift to athird party administrator "has been more beneficial to members asit took it [the claims process] away from SEPTA who thoughteveryone was a fraud."

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He said he believes that CSI is more objective in reviewingclaims and did not treat the union employees as badly as SEPTA didduring its self-administered program.

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SEPTA said partnership with CSI has allowed SEPTA to trim theirworkers' comp program costs down to $13.1 million last year.

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The railroad is currently in negotiations with its unions sinceits contract expired March 15.

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"We have a lot of issues. It's a big contract that is complexand very expensive for the taxpayers," Mr. Maloney said, but headded that among the issues to be dealt with workers' comp is onethat is not an immediate concern.

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