Managing Workers’ Compensation Kenneth M. McGee II, CIC Vice President Clark-Mortenson Insurance and Financial Services
The State Of The WC Union• Market Analysis• 2013 Primary Loss Increases• If you’ve relied on “the market” to control costs, it may be time to adjust
Controlling Costs – The 1 hour list Identify top loss sources Adopt a return to work program Control your MOD or it will control you Pick partners who know it well Streamline reporting procedures Utilize occupational medicine specialists Mitigate legal expenses
Insured Costs Medical $1 ……. Compensation Uninsured Miscellaneous Costs Investigation time Cost of hiring and/or training others Overtime Extra supervisory time Clerical time Wages not compensated$4 to $10 …………...Down time Negative public image Legal fees Reduced employee morale
Is there a ROI on your iceberg?Do you measure costs, total cost of risk, returns, or a combination?Do you benchmark?Are you including soft costs (as positive and negative)?
Return to Work Programs– 4.1 million employees experience work-related injuries or illnesses in America each year.– According to the Bureau of Labor Statistics (BLS), the average time away from work per injury is eight days.– Employees who are off work for more than 16 consecutive weeks rarely return to work at all.– 70% of quick returners do not let their condition consume their thinking– 76% of quick returners refuse to feel victimized by their injury
Return to Work Projections 100%Chance of Returning to Any Work 75% 50% 25% 0% 6 months 12 months 24 Months Time Away From Work Source: New York State Workers’ Compensation Board, 2011
Successful Return To WorkPrograms: Clearly detail expectations and duties of employees Write job descriptions (and maintain them) Include physical demands required to perform job functions Create a modified duty job bank Spell out ramifications of non-compliance (jeopardize workers’ compensation benefits) ALWAYS try to get someone back to work
Benefits to Employee • Maintains full earning capacity • Maintains productive mindset • Keeps them on the “biological work clock” • Prevents them from becoming dependent on a disability system • Provides sense of security and stability • Reinforces management’s commitment to employee’s well-being
Benefits To Employer • Demonstrates a consistent procedure • Establishes solid communication all around • Improves ability to manage the claim/restrictions • Places experienced employees back on your premises (less time/money spent on recruiting and hiring) • Enhances employee’s self-worth • Discourages abuse • Reduces financial impact
Your Medical TeamDesignate Medical ProvidersMake it easy for medical teamPrevent lack of cooperation: – Send written notice to treating physician indicating modified duty is available – Physicians may tell employee to stay home until they can return to full duty, not realizing modified work is available – Generally, restrictions short of complete bed rest can be accommodated as employee recoversEmphasize your concern of employee well-being, so doctor understands you want what’s best for his/her patient
Occupational Medicine– Identify local clinic(s)– Invite staff physicians to tour facilities– Review expectations of Return to Work program– Supply clinic with Return to Work forms– How does employee get care?
Basic Concepts• Experience MOD for November 28, 2012 – 2008-2009 – 2009-2010 – 2010-2011• Primary vs. Excess Losses• Experience Rating Adjustment (ERA) for medical only claims
How do you control your MOD?• Make Sure it is Correct – Find out minimum MOD – What’s the financial difference between today and minimum• Claims Prevention – Hiring Right – Safety – Accident and Incident Investigations• Claims Management – Timely Reporting – Return To Work Programs – Fraud Investigations
What Drives Premiums• Payroll – How often do you review – Is your payroll fixed – Can you budget – How big are your audits• Employee Classifications – There are almost a thousand class codes for employees – Can you allocate payroll to partial class codes – Do you have a representative who understands where employees should be• Experience Modification Ratings – What is your mod, what can it be, why is it that number – How do you figure it out – How can you use it as a tool
Claims• Having a claim doesn’t make you bad• How it’s managed can – Medical Only – Return To Work – Reserving Practices – Time of Reserving – Who’s representing you (your team)?
Financial Impact • Managing the experience mod factor – Medical-only claims = less impact – In states that use the NCCI to calculate mod factor, medical-only claims are reduced by 70% • Lost wages substantially higher than medical costs • Return to work program can help: – Control hidden costs – Address indirect costs – Mitigate via loss prevention – Improve loss ratios
Claims Management• Early Reporting Claims reported greater than 10 days after the incident occurred have incurred values 2.5 times higher than claims reported within 2 days from the incident• Regular Review• Analysis
Managing Claims – When possible, work with those who understand your business and specialize in occupational health – Make it well known you have a return to work program…the physicians can have a negative or positive impact on employees returning to work – You can’t dictate, but you can control and manage
Managing Claims Cont.• Let medical professionals have copies of job descriptions…send them with the employee if you can• Return To Work Programs – Prevention of loss wages – Avoidance of out of work syndrome – Faster recuperation times – Positive mental outlook – Social aspects of being at work – Shows the employer cares…reciprocation
Summary• Workers’ Compensation is one of the most controllable insurance costs (and accounts for 40-68% of every casualty dollar an organization spends)• Keys Include: – Claims Management – Return to Work – Who are your partners• The most effective cost control measure is the experience modification rating• Reducing workers’ compensation costs is an active process• The first step is to see where you are today, why you are there and what the ‘end game’ is
Kenneth M. McGee II, CIC Vice Presidentkmcgee@clark-mortenson.com @skipmcgee30