Transcript The Cost of a Workers ’ Compensation Claim

The Cost of a
Workers’ Compensation Claim
Presented by:
Ann Kensy, CWCP, RWCS, CRM, CIC
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Facts – Statistics
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An employee who files a Workers’
Compensation(WC) claim for lost time is twice
as likely to file another WC within 3 years
26% of employees with a prior WC claim who
remained employed with the same employer
are more likely to file another claim with
employer
The second claim filed for this employee has
more than a 50% likelihood of being a back
injury
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Measurable Costs of the WC Claim
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Medical Costs
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Medical/Physician Costs
Diagnostic Costs
Nurse Case Management
Conservative Treatment
Physical Therapy
Prescriptions
Surgery Costs – should claim escalate
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Measurable Costs of the WC Claim
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Indemnity Costs
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Lost Wages
Employee Attorney Fees
Schedule Loss of Use Awards
Permanency Award
Allocated Loss Expenses
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Independent Medical Exams
Surveillance
Attorney Fess for Employer
Workers Compensation Board Costs/Hearings
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Indirect Costs
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Loss of production of employee
Replacement costs (overtime, agency fees)
Staffing issues
Training for new/agency personnel
Supplemental wage continuation – benefit
continuation
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Indirect Costs (Continued)
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Internal Management Time:
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Manager/Safety Person – Investigates the claim for safety
reasons-report completion
Unit Manager- Involved in the notification of claim reporting,
address staffing issues, monitoring of replacement personnel
to unit standards
Corporate Management – Monitor claim administration,
report on trends, pay the administrator for services, etc.
Finance Department – letters of credit, premiums, deductible
payments, liability booking on balance sheet, payroll for
wage continuation
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Employee Costs
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Injury: Pain, discomfort
Time waiting for care
Travel time to various medical providers
Delay in wages
Unable to perform daily functions
Unable to participate in hobbies
Family impact
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How are the Costs Evaluated
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Medical Costs:
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Initial care and evaluation
Diagnostic testing/results
Follow up care – specialists, physical therapy,
surgeons
Costs/Reserves are set to WC Fee Schedule
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How are Costs Evaluated (Continued)
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Indemnity Costs:
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Statutory Wages $550 for accident dates of
7/1/2008 through6/30/2009
$600 for accident dates of 7/1/2009 through
6/30/2010
State Average Weekly Wage (SAWW) from
7/1/2010 forward
Claimant Attorney Fees – Set by the WCB
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How are the Costs Evaluated
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Indemnity Costs – Continued
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Schedule Loss of Use Awards (SLU)
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To compensate the individual for loss of earning capacity
Percentage is provided by the physician or Independent
Medical Exam (IME) provider
Workers’ Compensation Rate x number of weeks based
on the percentage and body part – paid indemnity = SLU
award
Tax free benefit
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Claim Example –
Before SPHM Implemented
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Facts:
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Injury Description:
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Nurse, age mid 30’s
Felt pain in neck when transferring a patient
Initial Evaluation and Reserve Setting:
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Medical Reserve Setting = $3,000
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Emergency room visit, chiropractic treatments 3x week
for two months, diagnostic testing, prescriptions
Indemnity Reserve Setting:
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8 weeks at the $400 benefit rate
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Claim Example
Before SPHM Implemented
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First 60 Days:
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Medical Paid
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Emergency room visit, 12 chiropractic treatments, x-rays
prescription
Indemnity Paid
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$1,131.33
$3,200
Employee remains out of work
New Facts
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Employee is not able to return to work, MRI being
scheduled, now has additional complaints of upper back
injury, unable to lift more than 5lbs.
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Claim Example –
Before SPHM Implemented
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Medical and Indemnity Reserves need to
adjusted to reflect exposure
MRI returns negative for disc herniation
IME scheduled $695 Expense
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IME results – unable to lift more than 5 lbs, enroll
in physical therapy
Medical Reserve Increase: $3,000
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Physical therapy, chiropractic treatments,
neurologist consult
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Claim Example –
Before SPHM Implemented
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Indemnity Reserve Increase:
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$6,400
16 weeks at $400 rate
Paid:
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Medical
Indemnity
Expense
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$1,325.18
$4,800
$948
IME and medical bill review costs
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Claim Example –
Before SPHM Implemented
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Updated Facts:
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Physician evaluation , allows employee to return to
transitional duty, no lifting over 25lbs.
Employee continues to treat with a chiropractor as
complaints continue for neck and back
Employee returns to transitional duty with
restrictions, third day into return employee
aggravates the injury again while transferring a
patient
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Claim Example –
Before SPHM Implemented
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Medical Reserve Increase:
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Diagnostic testing, chiropractic treatments, surgeon
evaluation, physical therapy and prescriptions
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Indemnity Reserve:
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Additional Facts:
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$5,000
$1,600 remaining
from prior evaluation
MRI completed and reveals a herniated disc
Neurosurgeon requests and is granted surgery, discectomy
Employee opts to treat conservatively for an additional 2
years
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Claim ExampleBefore SPHM Implemented
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One year post accident evaluation:
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Employee remains disabled and treating actively
Paid:
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Medical
Indemnity
$7,321.36
$20,800
Reserves have been adjusted and need to reflect
additional exposure
IME performed – agrees with neurosurgeon,
employee remains totally disabled from duties
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Claim ExampleBefore SPHM Implemented
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Second year post accident evaluation:
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Employee opts to have surgery
Reserves need to be revised to include surgery,
post rehab and recovery along with wage
continuation
Medical Reserve Increases
$15,000
Indemnity Reserve Increases
$20,800
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Benefits for one year post surgery at $400 rate
Re-evaluate after one year post surgery
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Claim Example –
Before SPHM Implemented
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Five years post accident evaluation:
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Employee can no longer work as a Nurse
Employee in early 40’s, and is now classified at the
WCB as permanently partially disabled
Claim remains open with the following reserves
and payments
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Claim Example –
Before SPHM Implemented
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Paid:
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Medical
Indemnity
Expense
$49,354.78
$104,000.00
$10,007.00
Reserves:
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Medical
Indemnity
Expense
$30,277.00
$420,000.00
$5,492
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Claim Example –
Before SPHM Implemented
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Medical reserve reflects treatments and
prescriptions for 3 years
Looking to settle case asked Center for
Medicare to provide an evaluation of medical
exposure
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CMS estimates $320,000 for medical
Indemnity reflects life exposure of claim
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Claim Example –
SPHM Implemented
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Facts:
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Description of Injury:
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Nurse, age 42
Felt pain in lower back when transferring patient
using slip sheets
Reserves for the first 60 days:
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Medical
Indemnity
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$3,000
$4,000
8 weeks at $500 rate
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Claim ExampleSPHM Implemented
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First 60 days after accident evaluation:
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Paid:
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Medical
$739.67
Indemnity
$2,500
 5 weeks x $500 rate
Employee returned to work with restrictions of
lifting, accommodations made with unit manager
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Lost time ceases transitional duty assignment is adhered
by manager and employee allowing for full duty release 6
months from accident
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Claim Example –
SPHM Implemented
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Reserve Evaluation:
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Medical – remains the same to pay for continued treatment
until employee reaches full duty status
Indemnity – employee returned to work transitionally,
recovered to full duty no additional wages paid
Final Evaluation of claim:
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Paid:
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Medical
Indemnity
Expense
$4,092.49
$2,500
$762.39
File closed employee returned to full duty as a nurse
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Lessons Learned
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Transitional return to work programs can be
utilized with supervision and will assist in cost
controlling the claim
Safe Patient Handling Equipment allows
transitional returns for employee as
restrictions can be adhered to by the staff
and employee
SPHM equipment reduces the severe back
injuries
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Lesson Learned
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What do you do about the old claims that
costs seem to escalate?
How do you measure for the indirect costs
that your facility has to account for but are
not reflected in the cost of the claim from a
workers’ compensation perspective?
What resources are available for your
company?
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Tools
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Utilize your TPA/Carrier to assist in settling
old claims
Be an active participant with your TPA/Carrier
on handling of claims
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Place special handling instructions on your files
Get the managers involved
Claim Reviews – Action plans to be discussed,
reserving philosophy and justifications
Hold your TPA accountable for claim handling
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Tools
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Measuring Indirect Costs:
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Create spreadsheets/cost centers
Create accountability/allocation to facilities, units
Measure your transitional return to work programs
Resources available:
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TPA/Carrier – accountability for claim handling
Loss Prevention
Create platforms –continuity of program
administration internal and external
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