Workmans Comp Group Presentation


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CSUSM HR Group Presentation on Workman\'s comp-2009

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  • Phyllis Wallace
  • Note,_the_real_story
  • Janel McCormack
  • Janel McCormack
  • Janel McCormack
  • Janel McCormack
  • Workmans Comp Group Presentation

    1. 1. Workman’s Compensation Presenters: 1. Phyllis Wallace, 2. Michelle Butler, 3. Alan Theodore, 4. Janel McCormack & 5. Kim Murakami
    2. 2. Workers Compensation Overview <ul><li>What Is Workers Compensation </li></ul><ul><li>The nations oldest mandated social insurance program adopted in the 1920’s by most states, including California </li></ul><ul><li>Benefit covers any injury or illness if it is job related </li></ul><ul><li>Four types of benefits [medical, disability, death, rehabilitative] </li></ul><ul><li>The system is based on a “trade off” between employers and employees </li></ul>Phyllis Wallace 1
    3. 3. Workers Compensation Overview <ul><li>Sources Of Workers Compensation Insurance Coverage </li></ul><ul><li>Private carrier, state fund or self-funding </li></ul><ul><li>Premiums </li></ul>Phyllis Wallace 2
    4. 4. Workers Compensation Overview <ul><li>Controlling Workers Compensation Costs </li></ul><ul><li>Costs usually represent 2% to 10% of payroll </li></ul><ul><li>Contributors to increases [higher medical expenses, litigation, fraud] </li></ul><ul><li>Keys to cost reduction[ return-to-work plans, safety meetings, HR continually monitor their efforts] </li></ul>Phyllis Wallace 3
    5. 5. Workers Compensation Overview <ul><li>Workers Compensation Issues and Abuses </li></ul><ul><li>Misclassification of workers by employers [independent contractors] </li></ul><ul><li>Misclassification of workers by temp help & leasing agencies </li></ul><ul><li>Manipulation of rates </li></ul>Phyllis Wallace 4
    6. 6. Workers Compensation Overview <ul><li>Future Trends </li></ul><ul><li>Obesity </li></ul><ul><li>Aging workforce </li></ul><ul><li>Distracted driving </li></ul><ul><li>Emotional impairment </li></ul><ul><li>Telecommuting by employees </li></ul>Phyllis Wallace 5
    7. 7. Workman's Compensation Fraud <ul><li>The presumption during the 80s and 90s was that claimant (employee) fraud was the issue to increases in Workman's Comp. This speculation is what triggered in depth employee claims investigations. The results of those investigation and today’s reality is that the real drain is due to Employer and Provider fraud. </li></ul><ul><li>“ In terms of dollar cost, there’s no question </li></ul><ul><li>that employer fraud today cost more </li></ul><ul><li>dollars to carriers and to the industry </li></ul><ul><li>than employee fraud 1 ” </li></ul><ul><li>-Richard Schultz, spokesman for State Compensation Insurance Fund </li></ul>Michelle Butler 1
    8. 8. Recognizing the Real Fraud “ I will not stand for scam artist taking advantage of the system”- Steve Poinzer, Insurance Commissioner <ul><li>Employer Fraud </li></ul><ul><li>Underreporting payroll </li></ul><ul><li>Declaring independent contractors </li></ul><ul><li>Misclassifying workers </li></ul><ul><li>Misrepresenting claims experience </li></ul><ul><li>Underestimated employment projections </li></ul>Michelle Butler 2
    9. 9. Managed Care Issues <ul><li>Medical Provider Fraud </li></ul><ul><li>Creative billing </li></ul><ul><li>Self-referrals </li></ul><ul><li>Up coding </li></ul><ul><li>Unbundling </li></ul><ul><li>Product switching </li></ul><ul><li>Kickbacks </li></ul>Michelle Butler 3
    10. 10. Fraud Facts <ul><li>Top two states with highest fraud incidents: </li></ul><ul><li>California </li></ul><ul><li>Illinois </li></ul><ul><li>and the city Chicago </li></ul><ul><li>The Top Industry for Fraud </li></ul><ul><li>1. Construction (avg. $10-$15 per $100 p/e) </li></ul>Michelle Butler 4
    11. 11. Procedures for Filing a claim Employee and Employer Perspective <ul><li>Employee </li></ul><ul><li>Employee must report injury to employer </li></ul><ul><li>Employee completes WC claim form </li></ul><ul><li>Medical Care: Employees PCP </li></ul><ul><li>Employer </li></ul><ul><li>Employer can help to curb employee fraud </li></ul><ul><li>Employer must cooperate with the WC carrier </li></ul><ul><li>Medical Care: PTP (from MPN) </li></ul>Alan Theodore 1
    12. 12. Action Steps-After Filing/WC Benefits Employee and Employer Perspective <ul><li>Employee </li></ul><ul><li>What should employee do once claim is filed? </li></ul><ul><li>Available Benefits: Medical Expense, Disability Pay, Death Benefits & Vocational Rehabilitation </li></ul><ul><li>Employer </li></ul><ul><li>What should employer do once claim is filed? </li></ul>Alan Theodore 2
    13. 13. California is considering linking the OMFS to Medicare’s fee schedules. <ul><li>What is Medicare? </li></ul><ul><li>How are Medicare and Workers Compensation related? </li></ul><ul><li>Medicare’s fee schedule – updated annually. </li></ul><ul><li>What is the OMFS? – same since 2001. </li></ul><ul><li>Expected Growth of Medicare </li></ul><ul><li>Expected Population Growth in California </li></ul>Janel McCormack 1
    14. 14. What is the result? Cons and Pros <ul><li>PROS </li></ul><ul><li>Expand services and reduce administrative burdens. </li></ul><ul><li>Potential better patient access to quality care. </li></ul><ul><li>CONS </li></ul><ul><li>Dramatic and Continuous increases to Medicare costs. </li></ul><ul><li>In turn, higher settlement costs for Workers Compensation. </li></ul>Janel McCormack 2
    15. 15. Workers Compensation Medical Set-Aside Arrangement (WCMSA) <ul><li>What is it? </li></ul><ul><li>Medicare as Secondary Payer Act 42 USC 1395y(b) </li></ul><ul><li>How does it work? </li></ul><ul><li>Why is it a problem - settlements? </li></ul><ul><li>Past Medical expenses and Future Medical Expenses. </li></ul><ul><li>“ Consider the interest of Medicare.” </li></ul><ul><li>Open Claims </li></ul><ul><li>When is Medicare involved (reasonable expectation). </li></ul>Janel McCormack 3
    16. 16. The Real Impact <ul><li>Should California link the OMFS to Medicare’s fee schedules? </li></ul><ul><li>It will help to maintain updated fee schedules and reduce administrative costs as well as expand the services covered by the OMFS. </li></ul><ul><li>The Workers Compensation Medical Set-Aside Arrangement (WCMSA) has a tremendous effect on the ultimate settlement costs, therefore directly helping to increase Workers Compensation costs to the employers. </li></ul>Janel McCormack 4
    17. 17. Impact of Business Cycles on Workers’ Compensation <ul><li>Economic shrinkage = Compensation claim rates drop (in relation to the total number of hours) </li></ul><ul><li>There are fewer inexperienced workers </li></ul><ul><li>The least safe equipment is taken out of use </li></ul><ul><li>The pace of work is slower </li></ul><ul><li>Workers fearing job loss may defer filing claims </li></ul><ul><li>Hazardous industries experience the largest decline in employment </li></ul>Kim Murakami 1
    18. 18. Workers’ Compensation Insurance Rate Increases <ul><li>The Workers' Compensation Insurance Rating Bureau will present its case for lifting a statewide benchmark for insurance rates by 23.7 percent, the biggest jump in 30 years </li></ul><ul><ul><li>Seems unlikely that this request will be granted, realistically a 4-5 % increase should prevail </li></ul></ul><ul><li>Currently, California employers pay an average of $2.25 per $100 of payroll </li></ul><ul><ul><li>If that were increased by 23.7 percent, it would come to $2.78, less than half the $6.45 average rate in 2003 </li></ul></ul>Kim Murakami 2
    19. 19. Why Are Rates Going Up? <ul><li>Increases are blamed largely on rising medical costs </li></ul><ul><ul><li>the latest period for comprehensive data (05-07) cost of surgery rose 19%; medicine, 16%; and radiology, 9% </li></ul></ul><ul><li># of claims has dropped dramatically, but cost per claim has risen steadily </li></ul><ul><ul><li>Critics say increases reflect overhead costs, profits & legal expenses, rather than just medical care </li></ul></ul>Kim Murakami 3
    20. 20. Specific Trends will Impact Future of Workers’ Compensation <ul><li>Obesity statistics reveal that obese workers are 2 x as likely to file a claim as workers who are at a healthy weight. Costs associated with an obese worker claim are significantly higher. </li></ul><ul><li>Aging Workforce as workers age, lost time due to illness & injury increases as does the fatality rate for work related injuries. Fatality rate for age 65+ workers is twice the rate from workers age 55-64. </li></ul><ul><li>Distracted Driving/Equipment Operation highway incidents remain the leading cause of occupational death (even in economic recession). More than 50% of drivers between the ages of 16-61 being distracted while driving. </li></ul>Kim Murakami 4