PMA COMPANIES Zero In On Workers’ Compensation Cost Drivers and Trends Presented by: Chris Desmarais, Sales Manager Hunter Wells, Account Executive April 16, 2015 O R OLD REPUBLIC INSURANCE.
Download ReportTranscript PMA COMPANIES Zero In On Workers’ Compensation Cost Drivers and Trends Presented by: Chris Desmarais, Sales Manager Hunter Wells, Account Executive April 16, 2015 O R OLD REPUBLIC INSURANCE.
PMA COMPANIES Zero In On Workers’ Compensation Cost Drivers and Trends Presented by: Chris Desmarais, Sales Manager Hunter Wells, Account Executive April 16, 2015 O R OLD REPUBLIC INSURANCE GROUP Today’s Agenda • Learnings from workers’ compensation industry studies • Survey Trends: What risk managers had to say • Solutions for workers’ compensation costs for public entities • Questions and discussion PMA COMPANIES This presentation and the information set forth herein have been prepared by and is the property of PMA. You should not share, distribute, copy, republish, or reproduce any portion of this presentation without prior express written consent from PMA. For more information, contact PMA at [email protected] 2 © 2015 PMA COMPANIES All Rights Reserved. PRIMA Survey Overview • Survey demographic--public entities: ‒ PRIMA members--government members only ‒ Nationwide response • Independent market researcher--confidentiality • 25% response rate--above industry norms PMA COMPANIES This presentation and the information set forth herein have been prepared by and is the property of PMA. You should not share, distribute, copy, republish, or reproduce any portion of this presentation without prior express written consent from PMA. For more information, contact PMA at [email protected] 3 © 2015 PMA COMPANIES All Rights Reserved. Introduction Why Did We Do This? Workers’ compensation environment is changing and becoming increasingly complex. New approaches and solutions are needed. Then Now • Indemnity/medical split, 60%/40% • Medical is 60% of claims costs • Pharmacy • Pharmacy ‒ Small part of medical ‒ 19% of medical spending • Metric for medical savings was PPN penetration ‒ Narcotics about 30% of Rx spend • Complexity of fee schedules/billing was limited ‒ Physician dispensing • Aging workforce was not an issue • Claims • Traditional insurance ‒ Age, obesity, co-morbidies driving higher costs • Segment approach to controlling costs ‒ Economic pressure on return-to-work ‒ Aged claims are very expensive • More alternatives • Holistic approach needed to reduce TCOR PMA COMPANIES This presentation and the information set forth herein have been prepared by and is the property of PMA. You should not share, distribute, copy, republish, or reproduce any portion of this presentation without prior express written consent from PMA. For more information, contact PMA at [email protected] 4 © 2015 PMA COMPANIES All Rights Reserved. Consider the True Cost of Workers’ Compensation Indemnity Legal Medical Voc Rehab Pharmacy Nurses Excess True Cost of Workers’ Compensation Replace IW TPA Property Damage RMIS Time to Investigate Morale PMA COMPANIES This presentation and the information set forth herein have been prepared by and is the property of PMA. You should not share, distribute, copy, republish, or reproduce any portion of this presentation without prior express written consent from PMA. For more information, contact PMA at [email protected] 5 © 2015 PMA COMPANIES All Rights Reserved. Workers’ Compensation Issues, Concerns, & Challenges as outlined by PRIMA’s Risk Managers PMA COMPANIES This presentation and the information set forth herein have been prepared by and is the property of PMA. You should not share, distribute, copy, republish, or reproduce any portion of this presentation without prior express written consent from PMA. For more information, contact PMA at [email protected] 6 © 2015 PMA COMPANIES All Rights Reserved. Biggest Workers’ Compensation Concerns Please Indicate Your Two Biggest Workers’ Compensation Concerns The aging workforce 42% Controlling claims frequency 31% Returning employees to work 31% Co-morbidity issues impacting claims 22% Severity of exposures and risk potential 17% Resistance to safety culture 14% Increasing WC regulations 14% Ability to benchmark results Medical costs (write-in) 10% 5% Access to credible risk mgt info 2% Other 11% 0% 10% 20% PMA COMPANIES This presentation and the information set forth herein have been prepared by and is the property of PMA. You should not share, distribute, copy, republish, or reproduce any portion of this presentation without prior express written consent from PMA. For more information, contact PMA at [email protected] 30% 40% 50% 7 © 2015 PMA COMPANIES All Rights Reserved. Recent Cost Trends The Changes in Workers’ Compensation Costs for the Respondents in the 3 years Prior to the Survey Decreased 27% Increased 39% Remained about the same 34% PMA COMPANIES This presentation and the information set forth herein have been prepared by and is the property of PMA. You should not share, distribute, copy, republish, or reproduce any portion of this presentation without prior express written consent from PMA. For more information, contact PMA at [email protected] 8 © 2015 PMA COMPANIES All Rights Reserved. Reasons for Workers’ Compensation Cost Increases Select The Top Four Increased medical provider costs 76% Increased pharmacy costs 53% Aging workforce 47% Increased claims frequency 35% General economic conditions 35% Cost of premiums and/or TPA 28% Co-morbidity impacting claims 25% Workers compensation reform 18% Increased regulations 16% Insufficient RTW programs Inadequate safety programs 15% 5% Other 22% 0% 10% 20% 30% 40% PMA COMPANIES This presentation and the information set forth herein have been prepared by and is the property of PMA. You should not share, distribute, copy, republish, or reproduce any portion of this presentation without prior express written consent from PMA. For more information, contact PMA at [email protected] 50% 60% 70% 80% 9 © 2015 PMA COMPANIES All Rights Reserved. Two Most Significant Factors Risk Managers Anticipate Will Impact Workers’ Compensation Costs ‒ Next Three Years Medical costs 65% Aging workforce 37% Liberal definitions of WC injuries 30% Co-morbidity affecting claims 21% Budgetary concerns 18% Increased regulations 14% Healthcare reform 13% 0% 10% 20% 30% 40% PMA COMPANIES This presentation and the information set forth herein have been prepared by and is the property of PMA. You should not share, distribute, copy, republish, or reproduce any portion of this presentation without prior express written consent from PMA. For more information, contact PMA at [email protected] 50% 60% 70% 10 © 2015 PMA COMPANIES All Rights Reserved. Solutions for Controlling Workers’ Compensation Costs PMA COMPANIES This presentation and the information set forth herein have been prepared by and is the property of PMA. You should not share, distribute, copy, republish, or reproduce any portion of this presentation without prior express written consent from PMA. For more information, contact PMA at [email protected] 11 © 2015 PMA COMPANIES All Rights Reserved. Sampling of Public Entities Data Predicting the Future What to expect from a database of 20,000 claims • Gender: Male 54%, female 46% • Accident causes--top three ‒ Strains: 32% ‒ Falls/slips: 29% ‒ Struck by: 13% • Age at accident ‒ 15-24: 4% ‒ 25-34: 16% ‒ 35-49: 40% ‒ 50+: 40% • Most expensive claims by age group: 50+ • Top three parts of body frequency: Knee, lower back, and shoulder • Top three most expensive claims by body part: back/disc, internal organs, heart PMA COMPANIES This presentation and the information set forth herein have been prepared by and is the property of PMA. You should not share, distribute, copy, republish, or reproduce any portion of this presentation without prior express written consent from PMA. For more information, contact PMA at [email protected] 12 © 2015 PMA COMPANIES All Rights Reserved. Workers’ Compensation Cost Reduction Strategies Are Attempting or Will Attempt ‒ Select The Four Most Important Improved safety programs 78% Return to work programs 72% Wellness programs 56% Mgr accountability/charge-backs 47% Claims settlements 30% Pre-screening of employees 29% Nurse case management 27% Fraud prevention 15% Change vendors (insurance/TPA) 11% Employee incentive programs 10% Other 8% 0% 10% 20% 30% 40% 50% PMA COMPANIES This presentation and the information set forth herein have been prepared by and is the property of PMA. You should not share, distribute, copy, republish, or reproduce any portion of this presentation without prior express written consent from PMA. For more information, contact PMA at [email protected] 60% 70% 80% 90% 13 © 2015 PMA COMPANIES All Rights Reserved. Risk Managers Can Use a Holistic Approach To Reducing Their Total Cost of Risk PMA COMPANIES This presentation and the information set forth herein have been prepared by and is the property of PMA. You should not share, distribute, copy, republish, or reproduce any portion of this presentation without prior express written consent from PMA. For more information, contact PMA at [email protected] 14 © 2015 PMA COMPANIES All Rights Reserved. Loss Prevention: Strategic Approach • Evaluate your loss prevention program annually • Understand from where your losses are coming • Understand what’s driving costs Establish specific, measurable, and achievable goals for loss prevention! PMA COMPANIES This presentation and the information set forth herein have been prepared by and is the property of PMA. You should not share, distribute, copy, republish, or reproduce any portion of this presentation without prior express written consent from PMA. For more information, contact PMA at [email protected] 15 © 2015 PMA COMPANIES All Rights Reserved. Loss Prevention Additional Strategies • Execute good employee recruiting, hiring practices, and onboarding • Enhance employee engagement ‒ Education and job recognition programs promote job satisfaction • Demonstrate leadership commitment ‒ Observe, recognize, and demonstrate safe work practices • Establish a “culture of safety” ‒ Factor safety in all business decisions • Offer wellness programs ‒ Help your aging workforce stay well PMA COMPANIES This presentation and the information set forth herein have been prepared by and is the property of PMA. You should not share, distribute, copy, republish, or reproduce any portion of this presentation without prior express written consent from PMA. For more information, contact PMA at [email protected] 16 © 2015 PMA COMPANIES All Rights Reserved. Public Entity Risk Management Success Lori Gray, Risk Management Division Chief, Prince William County, Virginia, named 2013 Business Insurance’s “Risk Manager of the Year”, joining an elite group of risk managers, including past winners from Microsoft, Verizon, Coca-Cola, Boeing, and Johnson & Johnson PMA COMPANIES This presentation and the information set forth herein have been prepared by and is the property of PMA. You should not share, distribute, copy, republish, or reproduce any portion of this presentation without prior express written consent from PMA. For more information, contact PMA at [email protected] 17 © 2015 PMA COMPANIES All Rights Reserved. Prince William County’s Holistic Approach Workers’ Compensation Strategies Five Major Areas of Focus • Improved communication, processes and safety culture • Enhanced data collection for business decisions • Invested in the safety program • Opened an employee health clinic--focusing on wellness/fitness, injuries, etc. • Conducted strong return-to-work program Results • In-network usage of 86% (FY 2012) versus 71% statewide average • 32% reduction of billed medical charges from July 1, 2011 through June 30, 2012 • 71% of claims reported in three days; overall average five days PMA COMPANIES This presentation and the information set forth herein have been prepared by and is the property of PMA. You should not share, distribute, copy, republish, or reproduce any portion of this presentation without prior express written consent from PMA. For more information, contact PMA at [email protected] 18 © 2015 PMA COMPANIES All Rights Reserved. Aging Workforce Impact on Workers’ Compensation PMA COMPANIES This presentation and the information set forth herein have been prepared by and is the property of PMA. You should not share, distribute, copy, republish, or reproduce any portion of this presentation without prior express written consent from PMA. For more information, contact PMA at [email protected] 19 © 2015 PMA COMPANIES All Rights Reserved. Aging Workforce Key Points • Awareness: Aging workforce is a developing issue in our society • Medical and indemnity severity are the lead issues, not frequency • Motor vehicle accidents are the leading cause of occupational fatalities over 55 • Workplace safety management will benefit entire workforce • Incorporate multi-disciplinary management approach • Capitalize on the collective strengths of your most experienced employees PMA COMPANIES This presentation and the information set forth herein have been prepared by and is the property of PMA. You should not share, distribute, copy, republish, or reproduce any portion of this presentation without prior express written consent from PMA. For more information, contact PMA at [email protected] 20 © 2015 PMA COMPANIES All Rights Reserved. Aging Workforce Multi-disciplinary Risk Management Approach • Examples of methods to help prevent claims involving older workers: ‒ Helping older workers stay healthy » Exercise, eye examinations, physical accommodations, safety features ‒ Weight limits ‒ Avoid climbing ‒ Implement slip-and-fall prevention program PMA COMPANIES This presentation and the information set forth herein have been prepared by and is the property of PMA. You should not share, distribute, copy, republish, or reproduce any portion of this presentation without prior express written consent from PMA. For more information, contact PMA at [email protected] 21 © 2015 PMA COMPANIES All Rights Reserved. Addressing Medical and Pharmacy Costs Managed Care Strategies Adjuster Edits Specialty Networks - PT - Diagnostics - DME - Relatedness - Reasonable - Necessary - Litigation Fee/UCR Applications - Additional review - Rules interpretation - Code review PBM Nurse Clinical Evaluation - Generic - Home delivery - Formulary blocked performance - Physician outreach - Narcotics utilization review - Direct negotiations - Larger med bill - Appropriateness - Home health Medical Cost Bill Review Process - Adjuster - RN - Certified coders PPO Networks Out of Network Pharm Nurse - Focuses on narcotic spend trends - Drug testing - Morphine equivalent therapy Intervention Nurse - Free assessment for LT - Serious medical-only claims PMA COMPANIES This presentation and the information set forth herein have been prepared by and is the property of PMA. You should not share, distribute, copy, republish, or reproduce any portion of this presentation without prior express written consent from PMA. For more information, contact PMA at [email protected] 22 © 2015 PMA COMPANIES All Rights Reserved. Return-to-Work Programs Strategies for Public Entities • Paying attention to injured workers in a timely, consistent, and caring way • Facilitating return-to-work as soon as medically appropriate is critical in managing claim costs • Implement an effective modified duty program PMA COMPANIES This presentation and the information set forth herein have been prepared by and is the property of PMA. You should not share, distribute, copy, republish, or reproduce any portion of this presentation without prior express written consent from PMA. For more information, contact PMA at [email protected] 23 © 2015 PMA COMPANIES All Rights Reserved. Setting-up a Modified Duty Program Guidelines • Develop a formal written policy with time limits--obtain management and union buy-in • Train and educate the supervisors on why return-to-work is important, expectations concerning use and how it saves money • Inventory potential modified duty jobs ‒ Consider developing “job banks” ‒ Each supervisor/manager recommends three jobs in their department • Educate medical providers on: ‒ Availability of modified jobs ‒ Need for physical capacity information ‒ Return-to-work philosophy • Track and manage employees on modified duty • Consider central budgeting of modified duty expense PMA COMPANIES This presentation and the information set forth herein have been prepared by and is the property of PMA. You should not share, distribute, copy, republish, or reproduce any portion of this presentation without prior express written consent from PMA. For more information, contact PMA at [email protected] 24 © 2015 PMA COMPANIES All Rights Reserved. Return-to-Work Supervisors and Managers • Additional insights on gaining supervisor/manager buy-in: ‒ Introduce return-to-work as a policy ‒ Hold supervisors/managers accountable for losses and compliance ‒ Communicate compliance and savings achieved ‒ Include in performance evaluations ‒ Develop specific roles, particularly who will manage the return-to-work policy ‒ Avoid “no one in charge of returning employee”--engage human resources ‒ Establish policies that encourage return-to-work ‒ Semi-annual meeting with stakeholders PMA COMPANIES This presentation and the information set forth herein have been prepared by and is the property of PMA. You should not share, distribute, copy, republish, or reproduce any portion of this presentation without prior express written consent from PMA. For more information, contact PMA at [email protected] 25 © 2015 PMA COMPANIES All Rights Reserved. Integrating Wellness Programs and Risk Management Strategies for Public Entities PMA COMPANIES This presentation and the information set forth herein have been prepared by and is the property of PMA. You should not share, distribute, copy, republish, or reproduce any portion of this presentation without prior express written consent from PMA. For more information, contact PMA at [email protected] 26 © 2015 PMA COMPANIES All Rights Reserved. Integrating Wellness program and Risk Management Strategies for Public Entities Occupational health and safety vs. wellness programs: Occupational Health & Safety Goal Typical Elements Wellness Programs Risk management program that strives to foster a safer work environment. Focuses on preventing workplacerelated injuries and illnesses. Focuses on enhancing the overall wellbeing of workers, addressing specific lifestyle behaviors, inside and outside of the workplace. • Incident investigation training • Safety planning • Rules and workplace procedures • • • • • • Nutrition education Smoking cessation program Stress management program Access to fitness centers Exercise program Information on health topics PMA COMPANIES This presentation and the information set forth herein have been prepared by and is the property of PMA. You should not share, distribute, copy, republish, or reproduce any portion of this presentation without prior express written consent from PMA. For more information, contact PMA at [email protected] 27 © 2015 PMA COMPANIES All Rights Reserved. Benchmarking • Key question: who is your audience? ‒ You ‒ Safety Director ‒ Claims Manager ‒ Risk Manager ‒ Excess carrier ‒ Other public entity senior management ‒ The public PMA COMPANIES This presentation and the information set forth herein have been prepared by and is the property of PMA. You should not share, distribute, copy, republish, or reproduce any portion of this presentation without prior express written consent from PMA. For more information, contact PMA at [email protected] 28 © 2015 PMA COMPANIES All Rights Reserved. Benchmarking 15 Measures of Your Workers’ Compensation Success • 3-5 year payments • Closure rates vs. database • Average cost—closed claims • Medical savings • Costs of workers’ compensation/employee • Breakdown of lost-time/medical-only claims • Loss run • Percentage claims closed within 90 days • Number of injuries in first 90 days of job • Frequency ratio vs. database • Prompt reporting/repeater report • Percentage of claims by severity • Frequency/severity by locations • Age of injured workers • Average lost-time days PMA COMPANIES This presentation and the information set forth herein have been prepared by and is the property of PMA. You should not share, distribute, copy, republish, or reproduce any portion of this presentation without prior express written consent from PMA. For more information, contact PMA at [email protected] 29 © 2015 PMA COMPANIES All Rights Reserved. Chargebacks Strategies for Public Entities Percent holding department managers accountable for workers’ compensation costs Yes 36% No 64% PMA COMPANIES This presentation and the information set forth herein have been prepared by and is the property of PMA. You should not share, distribute, copy, republish, or reproduce any portion of this presentation without prior express written consent from PMA. For more information, contact PMA at [email protected] 30 © 2015 PMA COMPANIES All Rights Reserved. Chargebacks Strategies for Public Entities • Develop a system that is easy to understand and administer ‒ Complex systems do not provide clear incentives for performance ‒ Information should be easily verifiable • Develop a system not subject to manipulation ‒ Suppressing claim reporting ‒ Suppressing reporting of claim information to lower projected costs PMA COMPANIES This presentation and the information set forth herein have been prepared by and is the property of PMA. You should not share, distribute, copy, republish, or reproduce any portion of this presentation without prior express written consent from PMA. For more information, contact PMA at [email protected] 31 © 2015 PMA COMPANIES All Rights Reserved. Chargebacks Strategies for Public Entities 1. Establish goals for your allocation system 2. Assess your organization’s willingness and financial ability to budget and allocate costs at the operating unit level 3. Define the risk management costs to be allocated 4. Determine whether prospective or retrospective allocation approach works best 5. Define allocation methods ‒ Exposure base ‒ Experience base ‒ Allocation limits ‒ Experience period ‒ Valuation dates 6. Partner with others: Agents, consultants, actuary, accounting, financial, senior management, information systems, etc. 7. Perform trial calculations PMA COMPANIES This presentation and the information set forth herein have been prepared by and is the property of PMA. You should not share, distribute, copy, republish, or reproduce any portion of this presentation without prior express written consent from PMA. For more information, contact PMA at [email protected] 32 © 2015 PMA COMPANIES All Rights Reserved. Action You Can Take • Review this survey with your Sr. Management Team (education is a powerful tool) • Study your trends--are they similar to what we saw today (aging workforce, frequency, increasing medical and pharmacy costs)? • Complete a Risk Management Assessment (RMA) • Set 3-5 goals • Measure results • Benchmark • Evaluate • Publish results and action steps for improvement PMA COMPANIES This presentation and the information set forth herein have been prepared by and is the property of PMA. You should not share, distribute, copy, republish, or reproduce any portion of this presentation without prior express written consent from PMA. For more information, contact PMA at [email protected] 33 © 2015 PMA COMPANIES All Rights Reserved. Questions & Discussion Thank you PMA COMPANIES This presentation and the information set forth herein have been prepared by and is the property of PMA. You should not share, distribute, copy, republish, or reproduce any portion of this presentation without prior express written consent from PMA. For more information, contact PMA at [email protected] 34 © 2015 PMA COMPANIES All Rights Reserved.