SAN FRANCISCO – A California Workers’ Compensation Institute study shows State Compensation Insurance Fund policyholders saved more than $395 million in total workers' compensation claims costs through the State Fund-Kaiser Permanente Alliance over the long term partnership running from 1996 until January of 2005. A final evaluation of the State Fund-Kaiser Alliance confirms the savings achieved by State Fund policyholders over the program's history. The Alliance was one of the longest running managed care partnerships between an insurance carrier and a medical provider and has been associated with consistently positive outcomes. The Alliance Program ended in January 2005 as a result of legislation allowing for the creation and use of Medical Provider Networks (MPNs). State Fund’s Medical Provider Network continues to include Kaiser Permanente medical providers as an important part of the network.

The State Fund-Kaiser Permanente Alliance began in 1996 as a collaborative effort to integrate managed care and workers' compensation in an effort to lower workers' compensation costs and improve outcomes. The Alliance flourished with excellent results. One of the unique characteristics of the State Fund-Kaiser Alliance program was a willingness to continuously track program performance as well as report the outcomes to key stakeholders. This fifth and final Alliance study by the Oakland based California Workers' Compensation Institute (CWCI) covered more than 700,000 Alliance and control group claims. Results reflect that costs for Kaiser Alliance claims were lowest across all benefit types and validates that the Alliance produced significant savings and quality care for multiple years. In California's “no-fault” workers' compensation insurance system, an estimated 55% of every dollar paid in benefits to injured employees is allocated to medical treatment on a statewide basis. Alliance claims treated by Kaiser Permanente saved an average of approximately 32% in medical costs, according to CWCI researcher Alex Swedlow who authored the study, "Over the term of the partnership, Alliance program participants were associated with a number of positive outcomes including lower cost claims, less litigation and faster return-to-work than Control group claims."

Based on this final study, key results indicate that the State Fund-Kaiser Alliance produced:

• 32% lower medical treatment costs
• 25% lower disability costs
• 30% lower attorney involvement rate
• 24% lower average total costs

In addition Kaiser physicians maintained control over the life of the claim in approximately 9 out of 10 Alliance claims where Kaiser had the opportunity to deliver care to the injured employee.

"This study is one of the largest and longest workers' compensation performance studies on record, covering 10 years of results. These results reflect definitive savings in total case cost and marked reduction in medical care costs,” said Kaiser Permanente's Northern California Coordinator of Occupational Health, Douglas Benner, M.D. “There was much less attorney involvement, indicating that these results can be obtained without increased litigation or employee dissatisfaction. Delivering prompt, appropriate, and cost effective evidence-based medical care can deliver total cost savings."

"The State Fund-Kaiser Permanente Alliance was a model program for controlling and reducing some of the most significant cost drivers in the California workers' compensation system,” said State Fund Vice President, Connie Raiche. “Kaiser Permanente remains an integral part of State Fund's Medical Provider Network which continues to provide valuable cost savings to our policyholders.

EDITOR’S NOTE: Established by the California Legislature in 1914, State Compensation Insurance Fund is a self-supporting, nonprofit, fairly competitive public enterprise that provides workers’ compensation insurance coverage at cost to California employers. State Fund is headquartered in San Francisco.

Kaiser Permanente is a nonprofit prepaid group practice Health Maintenance Organization founded in 1945. The Kaiser Permanente Southern California Region has more than 3.2 million members. It includes 3,953 physicians in the Southern California Permanente Medical Group (SCPMG) and 45,000 Kaiser Foundation Health Plan and Hospitals and medical group employees. The Region is served by 11 major medical centers. The Kaiser Permanente Northern California Region has almost 3.3 million members. It includes 5,154 physicians in the Permanente Medical Group (TPMG) and approximately 46,000 Kaiser Foundation Health Plan and Hospitals and TPMG employees. The Northern California Region has 19 major medical centers.

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