When your workers compensation policy was issued the policy premium was based on estimated payrolls. After the policy expired an insurance auditor reviewed your records to determine the exact payrolls. That audit became the basis of your firm's final premium. While the process is often straightforward, there are pitfalls that employers should recognize; audits are NOT as clear cut as they may seem. Errors are found in as many as 50% of all premium audits. Here are some red flags that you are paying more than necessary:
- During the audit only a few questions are asked.
- The auditor does not volunteer to leave copies of the worksheets.
- A classification that was not on the policy is added to the audit.
- A classification that was on the policy is omitted from the audit.
- Employees are paid a significant amount of overtime.
- The effective date of your policy differs from the effective date of the experience modification.
- Your policy's modifier is labeled as either "contingent" or "preliminary."
- The policy is frequently endorsed with changes to classifications, rates or payrolls.
- The NCCI or your state's rating bureau responded to a question or complaint with an unfavorable decision.
- You have had a merger with another company within the last 3 years.
- Your company has expanded into new states.
Review these Red Flags and see if any have occurred. We will have more information next week about policy premium audits. Sign up for the RSS feed so you do not miss this important information. The RSS feed is a blue icon in the upper right-hand corner of the blog. We appreciate Norm Goodman at www.zapcomp.com for providing this information. He will bring us more helpful tips next week. Find out more about ZapComp in our Resources List http://www.reduceyourworkerscomp.com/resources.php. ZapComp's fees are contingency based — if they don't save you money, you don't pay a dime!
When you begin your workers' compensation cost containment process there are a few things you MUST do:
- Read your Account Handling Instructions.
- Hold a "Vendor Day".
- Visit the TPA's office to see their facilities first hand and view the claim handling process.
- Introduce and meet the adjusters that are working on your account. Adjusters are typically VERY busy handling their files, so meeting them and developing a rapport will do wonders to improve your working relationship.
- Ask to see any form letters or documents they send your employees, such as Work Ability Forms or Transitional Duty Offer Letters.
- Find out how the adjusters like to be contacted — do they prefer a phone call or email?
- Familiarize the adjusters with the key elements of your program. Show them the communication tools you'll be using. For example, show them the employee brochure, the post injury response packet, the Weekly Meeting Guidelines, the First Day Phone Call Questionaire, etc. This way they will know your program and make suggestions for better integration with their system.
- Set up an introductory meeting with your network physicians.
If you want a copy of a Sample Introductory Letter to your TPA, send me your email (business email only please) at Info@ReduceYourWorkersComp.com and I will send you the sample letter the next business day. The Biggest Mistakes Employers Make is at: http://www.reduceyourworkerscomp.com/lower-reduce-workers-comp-costs.php These 8 crucial steps are part of an overall improvement process. To read more about Phase 1 go to http://www.reduceyourworkerscomp.com/improvement-plan-step-1.php.
For MSAs, in addition to the compliance requirements that come with the MSP, there are new compliance requirements coming down the pike on 7/1/2009. On December 29, 2007, President Bush signed the SCHIP Extension Act of 2007 (SCHIP), Section 111. The reporting requirement will become effective in 7/1/2009 and will carry a monetary civil penalty for failure to report at the rate of $1,000 per day per claim per day. The Congressional Budget Office predicts that the federal government will recover $1.1 billion in fines in the first 5 years. If you would like more information about this, contact www.GouldandLamb.com.
I am often asked by younger risk professionals what are the most valuable ways to build a career. The two most valuable tools I had were 1) a business etiquette, dining and manners course, and 2) a career coach (I will discuss the career coach next week.) On the manners – Early in my career, I recognized I was at a disadvantage in the business world with unpolished manners. I felt uncomfortable not sure which glass to drink from and which bread plate to use. I would follow the lead of others at my table — until I found out THEY were doing it wrong also! A European colleague pointed out our error to us — "the Americans" were eating our main course with the dessert fork. Oh horrors. To put myself on a level playing field I attended a 2-day manners course in Washington, DC. I gained so much knowledge, and felt much more at ease knowing "the rules." I was able to feel confident in any business setting. I eventually became a certified manners and etiquette instructor and still offer group lessons from time to time. Since then, I have taught many groups including local Girl Scouts, young men seeking admission to the Naval Academy, teenagers interviewing for coveted spots at private schools and college students preparing for job interviews. I even taught Continental Airline's Risk Management Dept. That was many years ago when the former risk manager wanted his department to present a polished image because they frequently interacted with clients, insurance companies, vendors and management. I taught them how to shake hands and make introductions, how to dine and how to mingle at a business function. They all loved the course and said they gained life-long skills. I'm sure you have encountered someone recently that gave you a wet-noodle handshake … not a very strong business image, is it? Brush up on your business etiquette if you want to compete in today's corporate environment.
I recently mentioned in an on-line forum that Workers Comp Kit has a dashboard, and we were then swamped with visitors to see the dash, so this is obviously an area companies are interested in. Our dash is a personalized platform where the Workers Comp Manager (WCM) monitors his/her performance.
Performance in: best practice analysis and scores, benchmarking, return to work ratio improvement, and implementation of policies and tools is visually monitored. Click here to see our dash: http://www.reduceyourworkerscomp.com/dashboard-sample.php
As WCK’s Levels 1, 2 and 3 are completed in a step-by-step process, each red box is checked off. Policies, tools and documents are shown with green arrows as they are used. Score Tracker shows improvement is WC Score and RTW Tracker monitors improvement in returning employees to work within 1 to 4 days after an injury. Employees returning to work in either Transitional Duty or Full Duty will likely not incur any paid lost days because they have returned within the state waiting period although this varies according to state law.
It’s personalized implementation monitoring. The Risk Manager in charge of the project can also view the dash to see whether business units need assistance.
The Biggest Mistakes Employers Make is at: http://www.reduceyourworkerscomp.com/lower-reduce-workers-comp-costs.php
Head injuries are the most costly workers’ compensation claims. According to NCCI, the average incurred cost per claim for a head injury in a work-related injury is $46,898 in 2004-2005 (the most recent statistics I could find)(page 55 of National Safety Council’s 2008 Injury Statistics).
More than 5 million Americans suffer with traumatic brain injury (TBI), mostly the result of car accidents and falls — many of which are work-related. TBI is more disabling than most realized. The typical presenting symptoms are memory loss, decreased concentration, difficulty staying on task, fatigue and other, often vague complaints. Because little is seen on MRI or CT scan, symptoms seems “psychological” or even exaggerated, and it is not difficult to dismiss complaints as psychological or such a person as a symptom magnifier.
Until recently there has been no effective treatment. There is an emerging technology called EEG biofeedback, or neurofeedback that is unusually effective in helping with this very real problem. Neurofeedback looks at the brain as a bioelectric system; large neural networks firing in a coordinated manner. Problems are analogougs to the spark plugs in a car not firing properly. A “disregulation” occurs, and the brain does not function properly.
Neurofeedback helps the brain balance and self-regulate. Physiological changes are seen in the brainwaves, which are electrical recordings of the brain function analogous to an electrocardiogram (EKG), which is an electrical recording of the heart.
Neurofeedback technology has been found very effective for certain pain syndromes, ADD (as effective as Ritalin, making continued medication unnecessary), acute anxiety, and PTSD. There are also reports of effectiveness in some RSD (reflex sympathetic dystrophy).
Neurofeedback is a rapidly emerging technology. Not all neurofeedback systems and programs are equally effective even when you can find a practitioner. For further information you can contact Dr. Dubin at MD@ReduceYourWorkersComp.com.
Chances are, if you are on this blog, you are looking for solutions to the high cost of workers comp. The place to start is to learn what workers comp is and is not.
Workers Compensation, often shortened to workers comp, work comp, workmans comp is a system of state and federal statutes providing benefits to injured employees — these are called “occupational injuries.” Such benefits are necessary because in the early part of the 1900′s if an employee was injured on the job they were essentiall “disposed of”, fired, then due to what was often a disabling injury, they could not find employement elsewhere. So, a system of compensation was legislated to provide for these people. And, hopefully to encourage safer workplaces.
If an employee is injured on the job, they are entitled to payment of medical care, hospital care, medical testing, lost wages (called “indemnity” benefits), medication, transportation to/from the medical provider, rehabilitation and if there is permanent injury, then there is likely a benefit for “permanency” and scarring.
Workers Comp varies by state and jurisdication. For example, if your company is based in Maryland, benefits are administerd according to Maryland laws. Just click on the map to find your state’s regulations: http://www.workerscompkit.com/resources.php.
If your are a federal governmental agency, benefits are administered by Federal Employees’ Compensation Act (FECA) . Click on that category at the top of drop down menu. Dockworkers, and several other categories of employees, for example those working on ships or offshore, for example, may be covered by other regulations such as the Longshore and Harbor Workers’ Compensation Act (LHWCA) even though you, as the employer, are physically located in the State of Maryland. (this is only an example). Some employees may be covered by state laws, others may be covered by LHWCA.
So, first, determine what statutes apply to your companies situation. You can ask your risk manager, insurance adjuster or human resource manager to find out.
Look for the next entry in WC 101 series next week. Sign up for the RSS feed or email updates in the top right corner of the blog. If you are ready to move along more quickly, look at our home site by clicking on the elephant in the right column, and go to WC 101. http://www.reduceyourworkerscomp.com/workers_comp.php
Structured settlements are a tool to resolve large workers’ compensation claims. When settling a claim the claimant might receive either a lump sum payment (one payment) or a “structured settlement†(payments made over time). Structured settlements are a type of annuity. They are a natural fit with workers’ compensation claims since claimants were already accustomed to receiving weekly payments. Settling a claim with a structured settlement instead of a lump sum payment allows claimants to continue receiving payments on a scheduled basis while also:
· giving them the option to designate a beneficiary,
· to receive benefits tax-free,
· plan for future family expenses such as college and
· allowing some the opportunity to receive more money on a coordinated basis once the structured settlement value was pro-rated over a lifetime.
Structured settlements are a benefit to employers too since the annuities are funded with “present value†rather than “ultimate valueâ€. Thus, employers are able to cap their exposures and close the file with less outlay than if they funded the entire amount up front. Employers with high retentions and self-insured employers have input into which structured settlement company they use. If you select a firm to work with, include that in your Special Handling Instructions.
We appreciate Richard Regna, CSSC, for providing this material. If you’d like additional information, you can post a comment or contact Richard directly at rregna@sfainc.com Structured Financial Associates, Inc. website: www.sfainc.com
Managing "Medicare risk" is a growing concern for carriers, TPAs, and self insured self administered employer groups. Adequate consideration must be given to Medicare when closing or limiting future medical as part of a settlement. When managing your Medicare risk for "qualified claimants," parties must secure Medicare Set-Asides (MSAs). In order to manage the Medicare risks, respective parties should comply with the requirements derived by the Medicare Secondary Payer Statute (MSP) & the State Child Health Insurance Program (SCHIP), Section 111. The United States Code, Title 42, Chapter 7, Subchapter XVIII, Section 1395Y comprises the Medicare Secondary Payer Statute (MSP). The law requires that "adequate consideration" of Medicare's interests be made in all Workers' Compensation settlements that seek to limit or close future medicals. Medicare's administrative guidelines require that settlements with "qualified claimants" be reviewed and approved by Medicare in order to create a compliant settlement. A Medicare Set-Aside is a projection of the future Medicare covered medical expenses associated with the workers' compensation claim. The MSA allocation can be self administered or professionally administered by a custodial fund administrator. Annual reporting is required to CMS (Center For Medicare and Medicaid Services). Employers should work closely with a national/regional structured settlement firm, and fund the MSAs with annuities – as this will position them to control their loss dollar spent on MSA allocations. Using annuities to settle claims means saving on each MSA. Partnering with a leading firm allows you to manage your Medicare Risk as a "program." If you are working with a particular firm, include that in your account instructions.
If you need more information about Medicare Set-Asides, you can contact www.gouldandlamb.com. Thanks Gould and Lamb for providing this important information.
Maintain as much contact as possible with your injured employees. SOMEONE will be communicating with them — whether its the lawyer on the TV ad, a billboard, or other employees, so make sure YOU are telling the employee what they need to know:
Here are a couple examples:
1 – First Day Phone Call by Supervisor — a friendly “how are you feeling” call, do they need anything, was anything left at the workplace that is needed, giving latest scoop at workplace, keeping them in the social loop, etc.
2- Nurse or Medical Advisor (MD) Call — to clarify medical situation. Employees often don’t understand the medical issues, so the doctor or nurse can clarify RX, diagnosis, treatment, etc. And, of course leave their phone number if additional information is needed.
3- Work Comp Manager (WCM) — call next day to explain benefits, when they will receive, how much it is, transitional duty requirements, and WEEKLY MEETING SCHEDULE. Employee is required to come to weekly meetings with WCM unless they are bedridden, and if that’s the case, a Nurse Case Manager from carrier will come to the home. Remind employee that all the needed phone numbers are on the Wallet Card and/or Employee Injury Brochure.
4- Adjuster & Case Manager contact — find out what contacts your carrier makes, so employer calls are integrated.
5- Get Well Card to Employee — have co-workers sign the card and include a gift certificate to Domino’s Pizza or another restaurant. This gives the employee the message that you care, and also offers an opportunity for the family to enjoy a meal out while the employee is recuperating.
Make checklists to follow so Workers Comp Managers (WCM) are comfortable make the calls and holding weekly meetings. Workers Comp Kit has quidelines for Weekly Meeting, First Day Phone Calls, Introduction Letters to Injured Employees, Employee Brochures, and many other templates. This makes your job SO much easier and takes 85% less time when developing a workers comp cost containment program.
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