Transcript Communication and Injury Management

Communication and Injury
Management
“A New Approach to Lower Work Comp
Costs”
By: Carl Zeutzius, CIC, CWCA, MWCA
Tom Champoux, CPCU, AIC, CWCA, Licensed Consultant
What is a Certified WorkComp Advisor?
• An insurance professional who has been trained by
the Institute of WorkComp Professionals and has
passed a certification test.
• There are only about 300 Certified WorkComp
Advisors in the U.S.
• In October of 2010 UNICO Group was named the
National Work Comp Agency of The Year by the
Institute.
• 2009 Accident Fund’s National Work Comp Agency
of The Year
• We have clients from coast to coast
including Alaska.
Communication
Injury Problems ???
Wonder Why ?
Lawyers
Workers Compensation
Acts As a
On
Workplace Injuries
Insurance Companies Don’t Pay
for Employee Injuries
Employers Do!
Most Influential People After Injury
Employer
Doctor
Employee
Most Influential People After Injury
EMPLOYER
Decides whether to support the
recovering employee through a BackOn-The-Job Program
Confusion can cost you money!
• Do your employees know what is expected
by them, you and the doctor when they get
hurt?
• Help your employees navigate the workers’
compensation highway.
• Providing an injury packet or injury guide is a
good first step to help your employees
understand what lies ahead for them when
they are hurt.
Lag Time
Source: NCCI Summer 2000 Issues Report, “The High Cost of
Delays: Findings on Lag-Time Study” by Glen-Roberts Pitruzello.
How to Drive Down Employer’s Tax on
Injuries
Early Reporting
Train employees to report ALL injuries within
60 minutes of occurrence.
This will reduce your work comp costs!
Most Influential People After Injury
DOCTOR
• Diagnoses medical problem
• Prescribes the treatment plan
• Releases the employee back to work
• Path to function or disability
Employer and medical response to employee injury can
promote recovery, function, and well-being.
OR
Response can lead to needless, disability and disruption of
social and economic lifestyle.
Communication and teamwork between all parties is so
crucial to make it a win-win situation for everyone.
– Identify local clinic
– Invite staff physicians to tour facilities
– Review expectations of Return to Work program
– Supply clinic with Return to Work forms
Provider Ultimately
Dictates Costs
Emergency
Room
Surgical
Specialist
General
Practitioner
Occupation
Medicine
Care
Analytics
(CA)
Preferred
Panel
Ave Cost
2x
2x
1.2 x
1
0.7
Ave
Duration
3x
1.4 x
1.3 x
1
?
Hospital
Charges,
Referral
Pattern
Services,
Equipment,
Recovery
Treat For
Patient
Satisfaction
Treat For
Back To
Work
Optimized
Reason
– Sell your employees on
clinic’s specialty: workrelated injuries
– Communicate frequently
with employee
– Show concern for well-being
– Discuss return to work
expectations
Most Influential People After Injury
EMPLOYEE
• Decides whether to try and get better
as quickly as possible, or
• Let the medical problem become a lifelimiting event
Your
Experience
Check Modification
Factor
Myths We Hear Every Day
•
•
•
•
•
“Class codes are class codes – and the rates are
determined by the state – so the only way to
lower my E-Mod score is to reduce my claims”
(myth)
“What kind of rates do you offer?”
“Work comp is simple – my E-Mod score goes up
when the number of injuries goes up” (myth)
“We had a huge claim that sent our score through
the ceiling” (myth)
We just had a GREAT year - safest one ever –
and our E-Mod went up! (why?)
The Experience Mod
(E-Mod)
• Specific to your industry, size, and state
• Statutorily used by the NCCI to punish or
reward businesses
• Created by the NCCI
• Controlled by the NCCI
• Calculations are promulgated by the NCCI
The Data Included in E-Mod Calculation
Data
2013 E-Mod
2012 - 2013
Lag Year
2011 - 2012
1
2010 - 2011
2
2009 - 2010
3
IJ Codes
IJ Codes
Medical Claim
IJ Code 1
Death
IJ Code 2
Permanent Total Disability (PTD)
IJ Code 5
Temporary Total or Temporary Partial Disability (TTD/TPD)
IJ Code 6
Medical Only
IJ Code 7
Contract Medical or Hospital Allowance
IJ Code 9
Permanent Partial Disability (PPD)
States Using NCCI or similar methodology
AK AL AR AZ CA CO CT DC FL GA HI
IA ID IL IN KS LA MA MD ME MI MN
MO MS NC NE NH NM NV NY OK OR RI
SC SD TN TX UT VA VA VT WI
States that have approved ERA
AL
IN
MT
SD
AR
KS
NC
TN
AZ CT DC FL HI IA ID IL
KY LA MD ME MI MN MO MS
NE NH NV OK RI SC
UT VA VT WI
The Experience Rating Process & Formula
1
2
3D4
5 EXPECTED 6 EXP PRIM
7 CLAIM
8 O
9 ACT INC 10 ACT PRIM
CODE
ELR
RATI
PAYROLL
LOSSES
LOSSES
DATA
IJ
F
LOSSES
LOSSES
CARRIER 13145 POLICY NO.
EFF DATE 06/01/04 EXP - DATE 06/01/05
7380
260
17
6218
162
28
NO
5
6 *
667
667
8810
014
19
171081
240
46
211036
6 F
2880
2880
8833
068
18
1273775
8662
1559
222251
6 F
5820
5000
9040
205
20
282611
5794
1159
223175
6 F
6234
5000
9807
ADDITIONAL PREMIUM
[
0] [
0]
POLICY – TOTAL
1733685
(SUBJECT PREMIUM = 37378)
15601
CARRIER 13145
POLICY NO
EFF DATE 06/01/05 EXP-DATE 06/01/06
7380
260
17
5183
135
23
286237
4 O
141702
5000
8810
014
19
232664
325
62
248298
5 F
6802
5000
8833
068
18
1321793
8988
1618
NO
6
6 *
1642
1642
9040
205
20
293176
6010
1202
261759
6 F
6208
5000
9807
ADDITIONAL PREMIUM
[
0] [
0]
POLICY – TOTAL
1852816
(SUBJECT PREMIUM = 40891)
156354
CARRIER 13145
POLICY NO
EFF DATE 06/01/06 EXP-DATE 06/01/07
7380
260
17
7158
186
32
322308
4 O
25196
5000
8810
014
19
261478
366
70
293195
5 F
1658
1658
8833
068
18
1413332
9611
1730
NO
5
6 *
3129
3129
9040
205
20
313286
6422
1284
9807
ADDITIONAL PREMIUM
[
0] [
0]
POLICY – TOTAL
1995249
(SUBJECT PREMIUM = 45277)
29983
RATING RELECTS A DECREASE OF 70% MEDICAL ONLY PRIMARY AND EXCESS LOSS
DOLLARS WHERE ERA IS APPLIED
(ARAP) IF APPL: 1.49
(A)
(B)
(C) Expected
(D)
(E)
(F) Actual
(G)
(H)
(I)
Excess (D-E)
Excess (H-I)
010
38089
46902
8813
159678
20400
183332
23654
* Total by Policy Year of all cases $2,000 or less.
# Limited loss
C Catastrophic loss
ACTUAL
(I)
23654
D Disease loss
E Employers Liability Loss
DATE 01/25/08
EXPECTED
(E)
8813
(C) x (1-W) + (G) (A) x (F)
54680
15968
(A) x (C )
54680
3809
(J)
94302
(K)
67302
(J)/(K)
1.40
This number
is now 10,000
You can control your Experience
Modification Factor
Know the gap between your Current Mod and Minimum Mod
1.25
$140,000
1.09
$114,450
1.00
$120,000
0.75
$100,000
$80,000
$64,050
0.61
$50,400
0.48
0.50
$60,000
0.25
$40,000
$20,000
CURRENT MOD 1.09 = $115,450
Minimum Mod 0.61
= $ 64,050
Controllable Mod .48 = $ 50,400
Know and Communicate Your Min E-Mod
Rate
– The current experience mod rate is: 1.00 but projected
to increase to 1.24 on 04/01/12
– Minimum Mod rate is: .75
1.4
1.24
Exp Mod
1.2
Min Mod
1
1
Cont Mod
0.89
0.8
0.75
0.73
0.71
0.6
0.49
0.4
-----$90,300
0.27
0.18
0.2
0
2010
2011
2012
If no wages are paid to the employee by the insurance
company, your cost for the claim is reduced by 70%.
Case Example - 70% Rule:
$2,000 Medical Only claim vs. $2,100 Med/Indemnity claim
MED ONLY - $2,000
MED/INDEMNITY - $2,100
(reduced by 70%)
IJ Code: 6
3-year Premium Cost $1,800
($2,000-Med plus $100-Indem)
IJ Codes: 3,4, and 5
3-year Premium Cost $6,600
The $100 Indemnity Payment
costs $4,800 in increased premium!!!
For those states under NCCI
jurisdiction, only Colorado,
Massachusetts and Oregon will not be
ERA states after Alaska (1/1/2013),
Georgia (3/1/2013), and Louisiana
(5/1/2013) adopt the rule in 2013.
How Can You Lower Your Experience
Mod?
• Work Comp is the most controllable
form of insurance you have. It isn’t a
commodity and if you view it that way
you are ultimately paying more than you
should.
• The goal is to increase profitability and
understanding work comp can increase
your profits.
Demonstrate Your
Commitment to Injury
Prevention
Did You Know When You Prevent A
Workplace Injury You..

Keep Your Workers Comp Costs Down

You Help Your Company Remain Productive

You Increase/Preserve Workers Incomes

You Maintain/Improve The Quality of Employee’s Lives

Higher Incident of Divorce, Substance Abuse,
Depression Among Seriously Injured
All The More Reason To Be Proud Of What You Do
Safety Attitude-Culture Makes a
Difference
–An attitude from the top to the bottom
of the organization.
–Prevents injuries
–Keeps the company OSHA compliant
–Prepares for the unexpected
–Improves work environment and
morale
Loss Causes
Many companies fail in their loss prevention efforts
because they are not based on correct principles of
organization and effectiveness.
88% of all employee injuries, liability & vehicle
losses are caused by unsafe acts of employees.
•
10% of all employee injuries, liability & vehicle
losses are caused by unsafe physical conditions.
•
A strong safety culture brings other
Savings & Benefits
• When a company has claims there are
indirect costs associated with the claim.
• These costs are not covered by
insurance.
• These expenses come directly out of
the bottom-line of the company.
Insured Costs
$1 …….
 Medical
 Compensation
Uninsured Miscellaneous Costs
 Investigation time
$4 to $10 …………...
Cost of hiring and/or training
replacements
Overtime
Extra supervisory time
Clerical time
Wages not compensated
Down time
Negative public image
Legal fees
Reduced employee morale
The real cost of accidents can be measured and controlled
Impact of Accidents on Profits and Sales
 Direct Costs
o Medical costs + Indemnity payments
 Indirect Costs
o Multiply direct costs by a cost multiplier
0 - $2,999
$ 3,000 - $4,999
$ 5,000 - $9,999
$10,000 +
4.5
1.6
1.2
1.1
 Direct Costs + Indirect Costs = Total
Example:
Direct cost of injury:
$25,000
Indirect cost of injury: $25,000 x 1.1 = $27,500
Total cost:
$25,000 + $27,500 = $52,500
Impact on Profitability
$ 340,000 (total profits)
$8,500,000 (total sales)
$
52,500 (total costs)
0.04 (profit margin)
= 0.04 (profit margin)
= $1,312,500 (sales)
Financial Impact:
Indirect Costs
• Indirect Costs Affect Profitability
– Per OSHA Statistics: One $2,300 claim costs your
company $12,650
• Assume a 10% profit margin
– Additional sales required to offset one $2,300 claim:
$126,500
Have an
Effective
Return-To-Work
Program
Recovery at Work (RTW) Myths
•
“What’s the big deal about recovery at work…this is why
I buy workers compensation”
•
“Their peers get angry when they see someone doing
light duty”
•
“My workers will never do that kind of job”
•
“RTW looks good on paper, but never works in real life”
•
“I don’t want my workers here if they can’t do their job”
•
“The doctor says that he can’t return to his / her job”
The Workers’ Comp Paradox
The
frequency of
jobrelated
injuries is
down 40%
over the last
10 years
But the
severity of
injuries and
total costs
are up!
% Employees ever return to work
Time is of the Essence
100%
Time away from work in weeks
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
0
4
8
12
16
20
24
32
At 12 weeks, employees have only a 50%
chance of ever returning to work.
36
40
44
48
52
Study:
Most Lost Time Injuries Can Be Avoided
Fewer than 10% of work-related injuries
should require employees to take more than 3
days off work for medical reasons.
(ManagedComp Survey)
Nationally, 24% of workplace injuries result in
lost time greater than 3 days.
60% to 80% of lost time is avoidable.
FACT
OSHA - Only 4 out of every 100 claims
reported to the NCCI in 2008 truly required
the injured employee to miss more than 7
days – with no possibility of light duty return
to work
Most business owners are not aware of just how many thousands of
dollars they are wasting on injuries that could easily be light duty
After all, “…that’s why I have Workers Comp coverage.”
Benefits to the Employee
 Reduced or Eliminated stress, boredom and depression
from the injury or illness and from being unproductive.
 Shortened recovery time.
 Injured worker remains active and productive.
 Prevention of loss of physical fitness and muscle tone
due to inactivity.
 Feelings of dependency and lack of control are alleviated.
 Reduced accident and injury related costs may help
preserve benefits and jobs as well as contribute to
improve work environment.
Benefits to the Employer
Essential Components:
Develop a Formal Plan
• Develop a written policy
– Policy should be approved/supported
by management
• Ensure employee understanding
of policy
• Explain thoroughly during new
employee orientation program
– Also, review periodically with current
employees
• Obtain employee sign off – their
agreement to follow program in
event of an injury
Early RTW Ideas
•
•
•
•
•
•
•
•
•
•
Don’t be afraid to be creative
Off-Site Transitional Duty Tasks if on-site is unavailable
Break down jobs into tasks
Organizing or cleaning drawers or cupboards
Making customer satisfaction or survey phone calls
Running needed errands
Viewing safety videos or CE requirements
Answering the phone
Miscellaneous clerical duties
Inventory
Stay Active
In Reviewing
Open Claim
Reserves
Reducing Reserves
The most important day of the year – It’s
not what you think!
• Too many Workers Compensation policyholders think that
the most important date of the year is their renewal date.
Guess what, it’s not.
• Without question, the far more important date of the year is
six months after your renewal date. If your broker doesn’t
know this, or talk about the importance of the Unit
Statistical report and the Valuation date, you have the wrong
broker.
Many Agents and Brokers state that they
‘monitor and review’ claims
Do you actually see the data of the results they are
obtaining for you?
Do you know the results of open claim reserves
that they have monitored and lowered for you?
It is critical that your open claim reserves be
reviewed and audited.
Open claims have a direct impact on your experience
modification.
The key period is the 60-day window prior to your
experience modification effective date.
UNICOMP Claim
Reserve Monitoring
From 2006 to 2013
We helped lower open claim reserves
by over $10 million.
This resulted in experience modification
factors decreasing substantially!
• In 2012 Our Claims Advocate was successful in lowering
open work comp claim reserves by over $2,800,000!
• This saved our clients just under $900,000 in work comp
premiums!
• Are you claim review meetings producing results like this?
Reserve Reductions
Claimant:
DOL: 03/38/09
Insured:
Policy period: 04/23/08 – 04/23/09
Indemnity
Medical
Expense
Total
Paid Amount
$0.00
$11,424.39
$30.86
$11,455.25
Claim #: 101478998
Adjuster: Jeanie
Ins. Co.:
Close date: 10/08/09
Reserves
$0.00
$0.00
$0.00
$0.00
Total Incurred
$0.00
$11,424.39
$30.86
$11,455.25
Nature of Injury: The claimant sustained a broken wrist.
Accident Location: NE
Ave. Weekly Wage: $
Compensable: Yes
Comp. Rate: $
Treatment: The claimant underwent open reduction internal fixation (ORIF) surgery on her wrist on 4/06/09.
Work Status: The claimant has not lost any time from work
Indemnity Payments: The claimant has not received any indemnity benefits
Maximum Medical Improvement (MMI)/Permanent Impairment Rating (PIR):
Dr. does not expect the claimant to reach maximum medical improvement until
around 1 year post op, which will be 04/06/10.
Reserve Reductions
Surveillance: Surveillance is not warranted.
Litigation:
Claimant Attorney: Not Represented
Defense Attorney: Not Represented
Settlement Status: At this time the claim has been closed.
Subrogation: Claim file does not support subrogation.
Special Disability Trust Fund (SDTF).Second Injury Fund (SIF): Claim file documentation does not support
SDTF/SIF Recovery.
Reserve Reduction/Recovery Potential: Our audit began on 8/13/09. The unit stat filing date for insured is 10/23/09.
Our audit revealed that the Clmt tripped while moving a pallet from the dock on 3/02/09. Clmt fell backwards which
caused her to break her wrist. Clmt underwent open reduction fixation surgery on her wrist on 4/06/09. On 8/13/09,
UNICO learned that there was no lost time from the injury. Dr. does not expect the clmt to reach MMI until around
4/06/10 (1-yr post op). The adjuster plans to follow up with the clmt in 6 months to see how she is getting along. On
10/02/09 UNICO asked the adjuster about the possibility of getting the reserves reduced as the clmt had not missed
any time from work to date and most medical bills from surgery should be covered. The adjuster sent a referral to her
spvsor for approval to lower the medical and TTD reserves before the unit stat filing date. The adjustor’s spvsor would
not approve w/o contacting the clmt first regarding the need for further care. The adjuster has been unable to reach the
clmt. UNICO will f/u with the adjuster in 1 week regarding the reserves. On 10/07/09 UNICO and the adjuster
conference the clmt in on a phone call to determine if the clmt felt she would be in need of add’l care. Clmt stated that
she feels her injury has healed completely and does not plan to return to the Dr. in the future. The adjuster advised the
clmt that she would send a letter informing her that the claim was being closed. This caused the med/indem reserves to
be wiped out resulting in a reserve reduction of $40,175.61. By closing the claim it will be kept medical only resulting in
an ERA reduction of 70%. UNICO will continue to audit the claim and verify the accuracy of your reserves in
preparation of the 10/23/09 unit stat filing date.
Reserve Reduction/Recovery: $40,175.61
Reserve Reductions
If your open claims are not being reviewed
prior to the time those claims are sent to
NCCI more than likely you have overpaid for
your workers’ compensation premiums.
Result- Your profitability has been reduced
from an inflated experience modification
factor!
New NCCI Changes That Will Impact You
• The new filing calls for an increase in the split point to an
inflation-adjusted $15,000 over a three-year transition
period, and will further increase this amount thereafter on an
annual basis using a countrywide inflation index. The details
are as follows:
• In Year 1, initially increase the split point to $10,000
• In Year 2, increase the split point to $13,500
• Beginning in Year 3 and annually thereafter, increase the
split point to the indexed value for $15,000, where the index
would be based on annual changes in the average cost of a
claim
New NCCI Changes That Will Impact You
• On an individual risk basis, most employers currently
receiving credit mods generally will see larger credits under
the proposal.
• Most employers currently receiving debit mods generally will
see larger debits under the proposal.
• It has been over 20 years since NCCI has made a change
like this.
• Your claims NOW will be affected by this change!
Changes In Annual Claim Cost
“We quote it out to three or four agents
each year”
“We put them all on a spreadsheet
and pick the lowest price”
Living Breathing Service Timeline
JAN
FEB
MAR
APR
MAY
Loss Control
JUN
JUL
AUG
SEP
OCT
Safety Implementation
Inception
Injury Process
Occ Med Provider
Audit Prep
Unit Stat Prep
Claims Status
UNIT STAT
Audit Results
DEC
Loss Control Review
Investigations
Rehab Facilitator
Audit
NOV
Discuss Industry Changes
Certificates
New E-Mod
Forecasting
Carrier Introductions
EE handbook Rework
Implementation Meeting
RTW Program
Q1 Review
Marketing
Back to Work Practices
Q2 Review
Alt Financing Options
Q3 Review
Q4 Review
Renewal
E-Mod Explanation Ltr
Utilize the services and the resources
available to you.
Use a broker that has a proven
track record with outcomes that
will help you increase your
profitability
“If you do what you’ve always done,
you’ll get what you always got.”
- W. Edward Deming