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NEWSLETTERS
NEWSLETTERS
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In this issue
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Case Study: Office Furniture Co. Sees Mod Drop 22%
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Eight costly myths about Workers' Compensation |
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Working effectively with the family practitioner
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Case Study: Office Furniture Co. Sees Mod Drop 22%
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Insured
This assembler of office furniture employs 86 and has revenues in excess of $32 million annually.
Situation
The employer saw its Experience Mod escalating steadily up to 1.22.
Assessment
Certified WorkComp Advisors (CWCAs) found that one reason for the increase in the Experience Mod was the claim reserve for an employee who suffered a shoulder injury, resulting in numerous surgeries. Based on the extent of the injury, the carrier set a loss reserve in excess of $100,000, resulting in an increase in the Mod.
Solution
Upon researching the case, it was determined that even though the claim was actually settled for $19,000, it remained on the books at $100,000. The CWCAs had the insurance company reopen the claim and re-file it with the state in order to have the lower amount reflected on its state Experience Mod worksheet.
Result
With the identification and correction of this error, the company saw a 22% drop in its Experience Modification Factor from 1.22 to 1.0, lowering its annual premiums by $6,000-$7,000.
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Eight costly myths about Workers' Compensation
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Many employers believe Workers Compensation is "what it is" and few really understand it. Yet, two identical companies in the same industry can have widely varying premiums. The company with the higher premium accepts reports at face value and believes that it cannot alter the system, whereas the company with the lower premium is proactive and has an ongoing process in place to prevent injuries, manage claims and return employees to work as expeditiously as possible.
Here are some common myths often held by employers that unnecessarily drive up the costs of Workers Compensation:
#1. As long as losses remain the same, rates will not increase
Unlike other insurance, Workers Compensation functions like a credit line to finance the cost of injuries. The premium is calculated by rate x $100 payroll x Experience Modifier (a complex calculation that reflects the expected loss performance of an employer). When rates are declining, it is assumed that expected loss rates will also go down. If all other factors remain the same, the lower expected loss rates would result in higher Experience Modifiers. When rates and expected loss rates are declining, employers have to continually improve just to remain the same.
#2. Experience Modification Factors are correct
Calculating the Experience Mod is a complex process and errors are often made. There can be errors in payroll amounts, open claims, payroll classifications, claims in the wrong year, clerical errors, and calculation errors. Verifying Experience Mods can save money.
#3. Workers Compensation audits are routine
Workers Compensation audits are full of errors. Employees can be put into wrong classifications, legally entitled deductions overlooked, subcontractors charged improperly, excluded remuneration included, etc. Audit mistakes default to the insurance company and are costly to the employer.
#4. Uncontrollable medical prices are driving the costs of Workers Compensation
Medical expenses are 57% of the claims dollar and are climbing. While price increases are a minor factor, the growth in utilization is the key driver. An NCCI study found that Workers Compensation pays more than group health to treat comparable injuries and that utilization differences explain 80% of the overall treatment cost disparity. Chronic pain-related injuries such as bursitis, back pain and carpal tunnel have particularly large variances. Utilization can be managed and controlled.
#5. Managed care saves money
In many cases, managed care discounts are defined as savings to the employer. When discounts equal savings, there is no incentive to reduce utilization. In fact, more utilization means more savings and employers are being "saved to death!" A better definition of savings is the difference between the cost of the claims using managed care compared to the cost of the claims outside the program. (Health Strategy Associates)
#6. Treatment of Workers Comp injuries is the same as all other medical care
A CWCI study assessed the impact of the volume of Workers Compensation cases and the impact on outcomes. Comparing the most and least experienced physicians found the average cost per case to be 56% lower, the average disability duration 41% lower and the attorney involvement rate 58% lower. Working with physicians experienced in Occupational Medicine and Workers Compensation will reduce costs.
#7. Employees want to abuse the system and fraud drive costs
Most employees value their job and fraud represents a very small percentage of claims. Those that do occur are often the result of poor hiring choices, so by doing the proper background investigation before hiring, an employer can minimize the chances of fraud. The biggest problem is workers who dont get well as expected, not as a result of intentional malingering, but as a result of delayed recovery that is created by the system.
#8. Bidding and quoting is the best strategy to drive down costs
The view that Workers Compensation is a commodity is shortsighted at best. To manage premiums over the long term requires expertise in claims management, medical cost containment, injury prevention and management, return to work, and supervisor training. There must be a proven process in place to minimize the cost of injury and expedite injured employees return to work. One mismanaged claim can drive up future premiums and result in the loss of a valuable employee. |
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Working effectively with the family practitioner
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While the ideal situation is to have all Workers' Compensation injuries treated by physicians trained in Occupational Medicine who understand how to facilitate recovery and expedite return to work, its not unusual to be dealing with a family practitioner who has little or no training in Occupational Medicine. Frequently, there are stories about the physician asking injured employees how many days they want off work or prescribing the improper treatment. And the blame for the unnecessary costs and delays in return to work is placed squarely on the treating physician. Yet, a passive employer can be equally as responsible because many doctors do not understand the process and the employer does not educate them.
At a recent symposium of the Institute of WorkComp Professionals, Dr. Michael Weizman, a board certified family physician, presented a new perspective on the employer employee physician relationship. Prior to being introduced to the Institutes process of managing Workers' Compensation, Dr. Weizmans views were quite typical:
* Assumed the injured patient did not want to return to work
* Assumed that injured patients in general wanted to blame the employer and take advantage of the situation
* Assumed the injured employee's visits would be unrewarding doctor-patient encounters
* Would more than likely give the patient whatever he/she wanted to expedite his day
Dr. Weizman readily admits that he did not fully understand the mentality and motivation of the injured employee, or the motivation and goals of the employer and had little incentive to learn more or change his ways. Although he wanted to do what was right for his injured patients, he lacked knowledge and understanding of Workers Comp and had not been contacted by employers who may have altered his views.
However, when he was introduced to the Institute process and educated on the value of managing Workers Compensation, he realized his approach was flawed and that:
* Injured employees in general do want to return to work
* Employers want to minimize their losses
* There are evidence-based guidelines for various injuries and time away from work predictions that he can use
* The sooner employees return to work, the more likely they are to stay in the workforce
* He could take a more pro-active role in the process
* He could increase his job satisfaction of caring for injured patients by doing the right thing
Today, Dr. Weizman works to influence patient outcomes based on his newly developed proactive approach to Workers Comp cases. While he is committed to expanding his knowledge, he expresses frustration that few employers are proactive and contact him.
To optimize the services from any medical provider, employers need to communicate and monitor the patient care to return the injured employee safely to work as soon as possible. It is only with an understanding of the essential job functions, the availability of modified duty and the employers concern for the employee, that treating physicians can make reasonable decisions on when employees can return to work.
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Controlling your risk in wage and hour compliance
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The Department of Labor estimates that 70% of employers are out of compliance with federal laws governing wage and hours. Class actions have emerged as one of the most significant employment law trends of this decade.
The Department of Labor estimates that 70% of employers are out of compliance with federal laws governing wage and hours. Class actions have emerged as one of the most significant employment law trends of this decade.
According to Tammy McCutchen and Lisa Schreter of Littler Mendelson, experts in wage and hour compliance, the most significant wage and hour risks faced by employers today include meal and rest periods, off-clock work, continuous workday issues and employee misclassification. To control risk they recommend:
Conduct an audit to ensure jobs are classified correctly
Keep job descriptions up to date and have employees confirm accuracy during performance appraisal there is often a disconnect between whats on paper and what an employee is actually doing
Centralized review of new and changed jobs by HR/Legal
Periodic training for HR/Legal
Adopt employment policies, including off-the-clock policy, payroll integrity policy, overtime policy, and rest and meal break policies
Conduct periodic audits of payroll records
Provide training to front-line managers and employees
Hold managers accountable
Employers who demonstrate they have made a sincere effort to comply with the FSLA can avoid significant additional liability on top of whatever back wages are owed. In addition, state laws may be more restrictive than FSLA and employers must also understand the laws in all states where they have employees.
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