Ken Haffey, Partner, Skoda Minotti and Mark Clendenin, BWC Northeast Region Business Development Manager discuss the evolution of the Ohio Bureau of Workers’ compensation.

1. The Evolving World of Workers’
Compensation
May 19, 2015
Ken Haffey, Skoda Minotti
Mark Clendenin, Bureau of
Workers’ Compensation

2. 2
AGENDA
• About BWC
• BWC Board of Directors
• BWC – What We’ve Accomplished
• BWC Updates and Overview of Prospective Billing
• Prospective Billing for Private Employers
• Destination Excellence
• Other States’ Coverage Project Update
• Q&A

3. 3
BWC – SIZE
• 1,800 employees
• 250, 000 policy handlers
• Collect $2 billion in premiums
• Pay about $2 billion claims per year
• $25 billion in investable assets (depending on the day)
• 97,000 new claims per year
• Over one million active claims

4. 4
BWC – SIZE
• If BWC was a private single-line carrier,
it would be the fifth or sixth largest
workers’ comp carrier in the
United States
• If BWC was a private company, it would
be a member of the New York
Stock Exchange

5. 5
BOARD COMPOSITION
• Governor appoints 11 members; Senate confirms these
members. By law:
 Two investment experts
 One certified public accountant
 One actuary
 Three business representatives
 Two union representatives
 One injured worker representative and one representing the public
• Staggered three-year terms

6. 6
BOARD OF DIRECTORS
• Current structure established in 2007
• Has a fiduciary responsibility to the State Insurance Fund
• Sets investment policy, premium and assessment rates, fee
schedules and overall operating policies
• Five committees:
 Committees required by law
– Actuarial
– Audit
– Investment
 Additional committees
– Governance
– Medical Services & Safety

7. 7
BOARD OF DIRECTORS
• Committees meet two days
every month
 Consecutively on the first day
 Full board meets on the
second day
• All directors attend all
committee meetings

8. 8
WHAT WE’VE ACCOMPLISHED
Employer / Actuarial / Financial – Since 2011
• PA employer rates have declined 21.4 percent
• PEC rates are at lowest level in 30 years
• The Investment Division has generated $2 billion in rebates
• BWC’s budget is down 15 percent
• We’ve improved our image toward becoming a partner,
rather than a barrier to economic growth

9. 9
WHAT WE’VE ACCOMPLISHED
Claims / Safety /Medical / Pharmacy – Since 2011
• Claims have declined below 100,000
• BWC has triple funding for safety and wellness grants
• Employer safety and risk program participation had
increased by 20 percent
• Narcotics usage has declined by 27 percent

10. 10
BWC Updates and Overview
of
Prospective Billing

11. 11
Regional Connection
Regional Business Development Manager
The Bureau of Workers’ Compensation
Northeast Ohio
Mark Clendenin

12. 12
A BWC Ohio Partnership
• While making significant progress, there’s still
more work to be done.
• BWC is an active partner in helping transform
Ohio for growth.
• Our mandate from the Governor has been
straight-forward: Improve Ohio’s workers’
compensation system so that it is no longer a
barrier to economic growth.

13. 13
Stakeholders Involvement
• Through discussion and partnerships we have:
Made progress helping injured workers return to work
with proper care
Streamlined internal business processes
Kept rates stable

14. 14

15. 15
Private Employer Rate Cuts
• BWC has approved rate cuts in three of the past
four years.
• Another rate cut of 10.8% will take effect July 1,
2015.
• At that time, rates will be down 21.4% from just
five years ago.

16. 16
Ohio’s Workers’ Compensation Rates
Beginning July 2015, private
employer RATES WILL BE
21.4% LOWER than the rates
from January 2011.
NATIONAL
MEDIAN1
OHIO
WORKERS’
COMP COSTS
$1.85
$1.74
1 2014 Oregon Premium Rate Ranking Study (per $100 of payroll)
Private employer rate reductions(2011 – 2015)

17. 17
Recent Rebates to Employers
• In 2013 and 2014, BWC returned $2 billion in
rebates to Ohio employers.
• BWC to provide $1.2 billion transition credit to
Ohio employers to ease the transition to a
prospective billing system.

18. 18
Increased Commitment to Safety
• Last year, BWC awarded $15 million in safety
grants to 535 employers.
• BWC approved another $15 million for this year.
• $15 million will be available to employers in
fiscal years 2016 and 2017.

19. 19
Increased Commitment to Safety
• Expansion of Safety Council Program to include
health and wellness
• Advanced workplace safety and health
research-to-practice program
• Partnership with State Fire Marshall to fund
additional training for firefighters
• Development of safety curricula and funding for
skilled labor training program.

20. 20
Safety Intervention Grants
• Purpose
Information gathering and sharing
• Who Is Eligible
Any Ohio state-fund or public employer
• Requirements
Pay into the Ohio State Insurance Fund
Maintain Active Coverage
Be current on all monies owed BWC
Demonstrate the need for safety intervention

21. 21
124
519
447
118
497
184
92
58
225
195
71
184
26 11
0
100
200
300
400
500
600
2003(18) 2004(95) 2005(108) 2006(33) 2007(96) 2008(73) 2009(45)
NumberofClaims
Pre Intervention Post Intervention
Program Results

22. 22
Safety Grants
• Grants to assist employers in purchasing
equipment that will substantially reduce or
eliminate injuries
• 3-to-1 matching funds (up to $40,000)
• Last year, BWC awarded $15 million in grants to
535 employers
• Have you applied for your safety grant? If not …
what are you waiting for?

23. 23
Prospective Billing for
Private Employers

24. 24
Why Transition to Prospective
Billing?
• Industry standard
• More flexible payment options
• Decrease in base rates by 2% for private
employers
• Increased ability for us to detect non-compliance
and fraud

25. 25
Private Employer (PA)
Transition Overview
• Implement PA prospective payment effective July 1, 2015
• Will move to annual policy period
• To avoid employers needing to make a double payment,
BWC will provide an eight-month transition credit.
 This credit covers the August 2015 payroll report (for January-June) and
the first two months of the 2015 policy year.
• With the eight-month transition credit, employers will
make their first prospective payment at the time they
normally make their retrospective payment, by Aug. 31.

26. 26
PA Ending Retrospective Billing
(2014-2015)
• BWC will apply the transition credit to cover the
Jan. 1, 2015 – June 30, 2015, premium due,
when the employer files its payroll report in
August 2015.
Actual payroll is critical data in our rate calculations.

27. 27
Implementing PA Prospective
Billing
• BWC will always use the most recently reported
policy year to estimate an individual employer’s
premium obligation.
For example, BWC will use the July 1, 2013 - June 30,
2014, payroll for policy year 2015.
• In May of each year:
Employers will receive a notice of estimated annual
premium along with their annual certificate of
coverage.

28. 28
Notice of Estimated Annual Premium
Sample: Notice of Estimated Annual Premium

29. 29
Implementing PA Prospective
Billing
• In the first year, every employer except minimum
payers will be on a bi-monthly plan, with the
option of selecting a different installment plan by
July 15, 2015.
The first installment (covering July and August) will be
paid with transition credit.
BWC recommends staying with the bi-monthly default,
at least in the first year.

30. 30
Installment Options
Annual (1);
Semi-annual (2);
Quarterly (4);
Bi-monthly (6);
Monthly (12).
• Minimum payers will not receive installment
options.
• Minimum premium increasing to $120 due by
June 30 each year.

31. 31
Implementing PA Prospective
Billing (First Year Only)
• Employers will receive an invoice for the second
installment in early August.
• This invoice will be due by Aug. 31.
• Premium security deposits (PSD) will post as credits
to the account in this time frame.
• BWC will mail invoices 30 days prior to the due date
of each installment.

32. 32
Payroll True-up Report
• Prospective requires an annual payroll report true-
up. BWC will send a reminder in July of each year.
• The employer must report actual payroll for the
previous policy year.
Online or over the phone only
If additional premium is calculated, it is also due by
Aug. 15.
If credit calculated, it will be released in normal
process.
Employers must pay online to be eligible for the Go-
green discount.

33. 33
Payroll True-up Report
• Actual payroll information is critical for rate
setting. For that reason, an outstanding payroll
true-up report will result in immediate
disqualification from rating plans and programs
for that current policy year.
• Also, employers must complete* all true-ups to
be eligible for programs going forward.
*Complete = reporting and paying (if necessary).

34. 34
Rating Plan and Program Deadline
• Group-experience rating – Monday prior to
Thanksgiving
• Group retro, One Claim Program, Deductible,
Individual retro – Last business day in January
• Destination: Excellence programs – Last
business day in May

35. 35
Destination:
EXCELLENCE
Introduction and overview

36. 36
Overview
• Destination: Excellence
Introduction
Program list
Individual program details
‒ Program description
‒ Program benefits (not only about the financial incentives)
‒ Enrolling and getting the most out of the programs (strategy)
Compatibility, compliance and enrollment deadlines
• Goal – Provide enough information to help your
company decide which individual programs
make the most sense to enroll into.

37. 37
Overview
• What is Destination: Excellence?
Bundling of risk- and claims-management programs
to attack cost drivers of workers’ compensation
‒ Programs bundle BWC services and strategies
 Financial incentives to use BWC services, and to implement
sound safety and claims-management strategies.
 If implemented properly, reduction in premiums should far
outweigh any program rebates earned.

38. 38
Introduction
• Why BWC created Destination: Excellence
To reduce costs, so that we can lower premiums rates,
to make Ohio more competitive for jobs
‒ Safety programs to prevent accidents
‒ Return-to-work programs to help injured workers transition back
to work
‒ Savings programs to reduce BWC administrative costs
Lower costs  lower rates = Destination: Excellence

39. 39
Destination: Excellence - Eligibility
• Current on all undisputed premiums
• Active status as of application deadline
• No cumulative lapses greater than 40 days in
the last 12 months

40. 40
Destination: Excellence Program
• Savings options
Go-green
Lapse-free
• Safety options
Industry-Specific Safety Program
Safety councils
Drug-Free Safety Program
• Return-to-work options
Transitional work bonus/grant
Vocational rehabilitation

41. 41
• We will mail notice of estimated annual premium in May.
• Policy year begins July 1, with us paying first two months.
• Employer will receive first invoice at the beginning of August
installment due Aug. 31.
• Payroll report due/no money due by Aug. 31.
PA Timeline – First Prospective Year
Jan. 1, 2015 to Jan. 31, 2016
May 29, 2015
Destination:
Excellence
enrollment
May 31, 2015
Notice of
estimated
annual
premium for
policy year
2015 mailed
Nov. 23, 2015
Group
enrollment
for July 1,
2016 to June
30, 2017
July 1,2015
Transition credit
Aug. 1, 2015
Invoice mailed
for 2nd
installment
June 1, 2015
BWC pays 1st
installment; no
invoice
Aug. 31, 2015
Installment due
and payroll report
due for previous
six months (no $
due for payroll
report)
Sept. 30, 2015
EM Snapshot
For July 1, 2016
July 15, 2015
LSS Filing Deadline To
Impact EM for July 1, 2016

42. 42
July 1, 2016
• Invoice mailed June 1 – first installment due June 30
• Payroll true-up report notice sent July 1; due Aug. 15
Private Employer Policy Year – May 1, 2016 and Beyond
July 1,
2016
Payroll
true-up
report
notice
sent
Aug. 15,
2016
Payroll
true-up
report
due
June 1,
2016
Invoice
mailed for
July 1, 2016
to June 30,
2017
period
May 1, 2016
Notice of
estimated
annual
premium
sent
May 31, 2016
Destination:
Excellence
enrollment
Jan. 29, 2016
Group retro, One
Claim Program,
Individual retro,
and Deductible
enrollment
June 30,
2016 - 1st
installment
due
MCO open
enrollment

43. 43
Lapsing Coverage
• BWC will lapse any employer who does not pay
their installment on time.
• BWC will not lapse an employer who does not
true-up.
BWC will estimate the true-up by adding an additional
10% to the premium due and bill the employer.
If the employer still does not report their true-up, then
BWC will certify it to the Ohio Attorney General’s office
for collections.

44. 44
Web Resources
For more information, visit www.bwc.ohio.gov
• Overview document (with key dates)
• Frequently asked questions document
• Webinars

45. 45
• Prospective Billing mailbox
bwcprospectivebilling@ohiobwc.com

46. 46
What you Learned
Q: What was the final retro premium due date?
A: Private: February 2015
Q: Prospective Premium Implementation Date?
A: July 1st 2015-Private
Q: What is the initial payment plan set to?
A: Private: Bi-monthly
Q: Will my policy lapse if I don’t complete the True-Up?
A: No, but you will be removed from all programs

47. 47
In Fiscal Year 2013, approximately 17,000 claimants missed more than seven
days of work.
 Of these 17,000 lost-time claims, nearly 50 percent missed more than 45
days of work and approximately 32 percent missed more than 100 days.
 The average cost per lost-time claim was 30-40 times greater than the
average cost of a medical-only claim.
 Nearly one in five lost-time claimants was physically dependent on opiates.
 Total lost productivity was nearly 2 million days.
The Current State of BWC’s
Healthcare Delivery System

48. 48
Wellness Grants
Awards employers up to $15,000 over four years
• $300 an employee
$100 the first year
$ 75 the second year
$ 75 the third year
$ 50 the fourth year

49. 49
2000
Obesity trends among U.S. Adults
(*BMI 30, or about
30 lbs. overweight for
5’4” person)
2010
1990
No Data <10% 10%–14% 15%–19% 20%–24% 25%–29% ≥30%
Source: CDC

50. 50
1990
Source: CDC
2004 2008
Obesity trends among Ohio Adults

51. 51
Source: CDC
2004 2008
Diabetes trends among Ohio Adults

52. 52
WC cost: Obesity & aging effects
Weight Category BMI Claims*
Lost
Days*
Medical
Cost ($)*
Indemnity
Cost ($)*
Underweight <18.5 5.5 41.9 $7,109 $3,924
Rec. Weight 18.5 – 24.9 5.8 14.2 $7,503 $5,396
Overweight 25 – 29.9 7.1 60.2 $13,338 $13,569
Obese (Class I) 30 – 34.9 8.8 75.2 $19,661 $23,633
Obese (Class II) 35 – 39.9 10.8 117.8 $23,373 $34,293
Obese (Class III) ≥40 11.7 186.6 $51,091 $59,178
Source: Ostbye et. al.
Obesity and Workers’
Compensation. Arch Intern
Med. 2007; 167(8).
Age Group
(yrs)
Claims*
Lost
Days*
Medical
Cost ($)*
Indemnity
Cost ($)*
15-34 7.4 35.3 $9,810 $7,820
35-54 7.3 53.7 $15,578 $17,517
>55 7.0 100.5 $20,443 $23,991
*Cum. per 100 FTEs over
the 7-yr study period

53. 53
Other States’ Coverage
Project Update

54. 54
Ohio’s Extraterritorial Coverage
• BWC will generally cover claims of Ohio
employees temporarily working out of state as
long as the claim is filed in Ohio.
• Ohio’s Extraterritorial Coverage is not intended
to cover employees who are regularly
performing work outside the state.

55. 55
Jurisdictional Risk to Employers
• BWC cannot respond to claims filed in other
states.
• Some states require coverage (other than
BWC’s coverage) for any work in the state,
no matter how brief.

56. 56
House Bill 493,
130th General Assembly
• This bill grants BWC the authority to contract
with an insurer licensed in other states to
provide coverage to eligible Ohio employers
for out-of-state exposures.

57. 57
Exposure Types
• Limited Other-States’ Coverage — For Ohio
employers who have employees temporarily
working outside the state
• Other-States’ Coverage — For Ohio employers
who have regular or full-time employees
working outside the state

58. 58
How would it work?
• Employer would apply directly to BWC
• BWC would determine eligibility
Employer in good standing
EM under 2
80% payroll in Ohio
• Vendor will issue a policy to cover out-of-state
exposures
• Vendor will respond to any claims filed out of
state

59. 59
RFP Process
• Currently in drafting process
• RFP issued — April 28, 2015

60. 60
QUESTIONS?
Ken Haffey
CPA, CVA, CGMA
Partner
Skoda Minotti
440-449-6800
khaffey@skodaminotti.com
Mark Clendenin
NE Regional Business Development Manager
Bureau of Workers’ Compensation
330-312-4713
Mark.Clendenin@ohiobwc.com