FECA Modernization and Cost Containment Act of 2026

(1) The Federal Employees’ Compensation Act has not undergone significant reform since 1974, despite advancements in workers’ compensation practices.

(2) Federal employees’ compensation costs are significantly higher than those in the private sector, creating a burden on taxpayers.

(3) The inability of Federal employers to direct injured employees to managed care networks results in increased medical costs, inconsistent treatment, poor clinical outcomes and extended recovery times.

(4) Fraud in the Federal employees’ compensation system remains a significant issue, requiring enhanced monitoring and predictive fraud detection measures.

(5) Implementing industry best practices, including employer-directed medical care, standardized treatment protocols, and case management programs, will improve efficiency, reduce costs, improve clinical outcomes for injured employees, and accelerate employee recovery.

Section 8103(a) of title 5, United States Code, is amended—

(1) by amending paragraph (3) to read as follows:

(3) except in the case of a medical emergency, through the managed care network that contracts with the employing agency of the employee pursuant to subsection (c)(1).; and

(2) in the matter following paragraph (3), by striking The employee and inserting Subject to subsection (c), the employee.

Section 8103 of title 5, United States Code, is amended by adding at the end the following:

To meet the requirements of subsection (a), the head of each employing agency shall enter into a contract with a managed care network to furnish services, appliances, and supplies to employees of such agency.

In a case in which the MCN with which the employing agency has a contract is unable to furnish prescribed or recommended services, appliances, or supplies to an employee, the employee may select a provider for such services, appliances, and supplies in accordance with the matter at the end of subsection (a) that follows paragraph (3) of such subsection.

In a case in which the MCN with which the employing agency has a contract furnishes a provider to an employee and such employee disputes a diagnosis or treatment recommendation received from such provider, the MCN shall furnish the employee a second opinion from a different provider.

The Secretary of Labor shall establish a system for review of disputes to ensure employees are furnished services, appliances, and supplies in a timely manner.

To be eligible to enter into and maintain a contract under paragraph (1), an MCN shall meet the following requirements:

The MCN shall make reasonable attempts to provide the services, appliances, and supplies required to be furnished to an employee under subsection (a).

The MCN shall comply with the standardized treatment protocols established pursuant to paragraph (4).

The MCN may not charge a fee for a service, appliance, or supply in excess of the fee established under the fee schedule (or a successor document) published by the Office of Workers Compensation Programs of the Department of Labor for such service, appliance, or supply.

The MCN shall maintain a sufficient number of providers within reasonable proximity to each work site of the employing agency.

The MCN shall, using a provider assessment system—

(i) regularly evaluate each provider providing services to an employing agency through the MCN for performance and cost-effectiveness; and

(ii) if appropriate, remove a provider from the MCN or exclude the provider from providing services through the MCN to the employing agency.

The MCN shall, on an annual basis, submit to the head of the employing agency a report containing information in relation to the preceding calendar year, including information on the following:

(i) Cost savings, as compared to estimated costs the agency would pay if the agency did not have a contract with the MCN.

(ii) An assessment of the performance of each provider furnished through the MCN.

(iii) Anonymized data on outcomes of employees who were treated by a provider furnished through the MCN.

The MCN shall provide the review board established pursuant to paragraph (5) such information as the board determines necessary to carry out the duties of the board under such paragraph, including, if requested, information needed for the board to carry out subparagraph (D) of such paragraph.

The Secretary of Labor shall establish standardized treatment protocols for employees based on the best practices of the healthcare industry.

Not later than 270 days after the effective date under section 3(c) of the FECA Modernization and Cost Containment Act of 2026, the Secretary of Labor shall establish a review board.

The board established pursuant to subparagraph (A) shall be selected by the Secretary of Labor and shall be composed of 16 members as follows:

(i) 2 representatives of the Secretary of Labor who are from the Office of Workers Compensation Programs.

(ii) 1 representative of the Secretary of Labor who is not from such Office.

(iii) 1 representative of the head of another agency.

(iv) 2 representatives of employees.

(v) 2 representatives from MCNs who have contracted with Federal agencies.

(vi) 5 representatives of providers who have contracted with MCNs described in clause (v).

The duties of the Board shall be to—

(i) monitor—

(I) MCNs to ensure compliance with standardized treatment protocols established pursuant to paragraph (4);

(II) rate negotiations; and

(III) the performance of providers furnished through MCNs; and

(ii) suggest improvements to the Secretary.

The Board may ensure MCNs comply with paragraph (3)(E).

The Secretary of Labor may contract with entities to monitor claims and flag potentially fraudulent claims for further review using predictive analytics tools (which may include the use of artificial intelligence (as defined in section 9401(3) of title 15, United States Code)) to, based on historical claim patterns and medical inconsistencies, identify potentially fraudulent claims.

In this section, the terms managed care network and MCN mean a network of providers that furnishes services, appliances, and supplies prescribed or recommended by a qualified physician as described under subsection (a).

The amendments made by this section shall take effect 1 year after the date of enactment of this Act.

Not later than 6 months after the date of enactment of this Act, the Secretary of Labor shall issue such regulations as are necessary to carry out the purposes of this Act.

Not later than 1 year after the date of enactment of this Act, the head of each Federal agency shall submit to the Secretary a plan describing how the agency will transition to the use of managed care networks pursuant to the amendments made by section 3 of this Act to section 8103 of title 5, United States Code.

(1) costs;

(2) fraud reduction; and

(3) administrative efficiency.