3 Elements Needed In Workers’ Comp Medical Networks


So last week I’m having lunch with a business associate and he says to me, “You know, I haven’t done a lot of business in work comp. Can you explain to me how it all works?” Hello, my name is Michael Stack and I’m the CEO of Amaxx and that question is a great question, particularly for those outside of our industry and also for many, many of individuals within our industry, trying to figure out the complexity of the work comp industry itself. As you look at it from the outside, it’s extraordinarily complex but at its core, it’s extraordinarily simple.

 

 

Getting Injured Employees Proper Treatment Is Core of Workers’ Comp

 

You’ve got an employee and an employer, that employee gets hurt and our job is to just help them get better and get back to work. Very, very simple and to do that, you need a lot of help and you need a lot of people. One of those individuals and one of the emerging markets and emerging sub-markets even within the physician world, is the emergence of networks and specialty networks. Today I want to talk about that specialty network and what you should look for when you’re setting this up so you can get those individual employees the treatment they need and help them get back to work. Let’s talk about a couple things here.

 

 

Broad vs Narrow Networks

 

First thing you’re going to do is you’re going to look at whether you’re going to be using a broad versus a narrow network. The narrow network, these are the ancillary networks, these are the specialty networks that has been really quietly emerging within our industry over the last several years. It’s not a bad idea to have a combination of the two. You’ve got the broad network to cover most of your organization, and then the narrow network to bring in some of those experts in those particular fields. Now, these can be physical therapy, these can be mental health, these can ambulatory service centers, these could be chiropractic, a whole host of specialties within the medical field that put together these ancillary or specialty networks.

 

A couple things that I want you to just be aware of. There’s a lot that obviously goes into this, but what we’re trying to do, think about the core of what we’re trying to do is, we’re trying to get that individual employee the treatment that they need to get them back to work. Now, how do we do that? Bringing in these best medical providers, leveraging the fee schedules, the discounts on the fee schedules that can often come from these. So, a couple of things that I want you to just look for, particularly if you’re evaluating a network and evaluating whether or not to bring in some of these specialty or ancillary or networks, which again have been emerging in the last several years.

 

 

Network Coverage

 

First thing that I want you to look at his coverage, next is access and the last one, or at least the last one we’re going to talk about today, is credentials, so coverage, access and credentials. Can you cover the entire geographic area of where your employees are? If you’re a regional or a national employer, is there the appropriate coverage that that employee could actually get to that provider in a reasonable amount of time to get the treatment that they need?

 

 

Network Access

 

Number two, are they accepting new patients? Are they accepting new patients? Workers’ comp specific patients. I can’t tell you how many conversations I’ve had with injured workers where they said, “You know, I got a list of five doctors and the first three I called, they didn’t take work comp at all and the fourth one I called, he wasn’t taking any new patients, and then the fifth one did take new patients and took work comp, but he was two hours away.” Coverage and access, incredibly important to get to that fundamentally simple concept of what it is we’re trying to do in this industry, help our employees get better, help them get back to work. You got to have the right doctors that are going to help them do that.

 

 

Credentialing

 

And then finally, particularly as it comes to network, what credentialing are they doing? Are they board certified? Do they have X amount of experience? Do they have certain criteria as far as the outcomes that they’re delivering? What is their credentialing of the networks? Work comp can be extraordinarily complex in how it’s all put together, but remember at the core, what it is we’re trying to do. Just get our employees the treatment that they need and help them get back to work. These couple of tips in regards to providers and network can help you do that.

 

 

Again, I’m Michael Stack, CEO of Amaxx and remember your work today in workers’ compensation can help you have a dramatic impact on your company’s bottom line, but it will have a dramatic impact on someone’s life, so be great.

 

 

 

Michael Stack - AmaxxAuthor Michael Stack, CEO Amaxx LLC. He is an expert in workers’ compensation cost containment systems and helps employers reduce their workers’ comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is a co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center .

 

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: https://blog.reduceyourworkerscomp.com/

 

©2019 Amaxx LLC. All rights reserved under International Copyright Law.

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

3 Criteria Determine If A Workers Comp Claim is Covered

Most workers’ compensation claims are clear cut, and there is no question by the employer that the claim is ‘covered’ for workers’ compensation.  However, when an unusual situation occurs, the employer may not know if the work comp claim is ‘covered.’  By ‘covered’ the employer is actually asking “is the claim a compensable workers’ compensation claim?”

 

The compensability of workers’ compensation claims is determined by three criteria.  The criteria that must be met for a claim to be ‘covered’ are:

 

  • There must be an injury or an illness
  • The injury or illness must arise in the course of employment
  • The injury or illness must be caused by the employment

 

 

There must be an injury or an illness:

 

This is the most basic requirement for a workers’ compensation claim.  Most employees understand that an accident that they are involved in which damages the employer’s property but does not cause them any bodily harm, is not a workers’ compensation claim.  “Near misses” where the employee almost got injured by a falling object, failed machinery or other sudden events do not create a workers’ compensation claim, regardless of how scared the employee may have been. (However, many states allow the employee to bring a stress claim if there is also a physical injury to the employee).

 

 

The injury or illness must arise in the course of employment:

 

An injury to the employee or an illness of the employee must occur during the employment.  If an employee injures his back while at home (or anywhere other than the employer’s worksite for that matter), it is not a workers’ compensation claim.  [The most frequent fraudulent claim is the injury that occurred while the employee was not working for the employer].  To determine if the injury is compensable, the employer should verify, preferably through independent witnesses, that the injury occurred while the employee was at work.

 

 

The injury or illness must be caused by the employment

 

‘Caused by the employment’ is often the most difficult aspect for both employees and employers to understand about workers’ compensation.  Just because an injury or illness occurs on the worksite does not by itself create a workers’ compensation claim.  The injury or illness must be caused by the employment.  For example, the employee who is on her lunch break and burns her lips, tongue and mouth with coffee that was too hot, does not have a workers’ compensation claim as the cause of her injury is drinking a very hot beverage.  The employment did not cause the injury.  Another type of occurrence that often becomes contentious is the heart attack that occurs while the employee is working.  If there are no work-related factors that caused the heart attack, the occurrence in the work place does not make it a compensable claim.

 

 

If the employer is unsure if the alleged claim is ‘covered’ by workers’ compensation, the employer should contact the adjuster and be prepared to discuss all the details surrounding the event that is being claimed as a work comp claim.  The adjuster will be able to assist the employer in determining whether or not they have a compensable workers’ compensation claim.

 

 

 

Michael Stack - AmaxxAuthor Michael Stack, CEO Amaxx LLC. He is an expert in workers’ compensation cost containment systems and helps employers reduce their workers’ comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is a co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center .

 

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: https://blog.reduceyourworkerscomp.com/

 

©2019 Amaxx LLC. All rights reserved under International Copyright Law.

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

 

5 Ways to Ensure a Workers’ Comp Claim Investigation Is Off to a Good Start

Effective Workers’ Comp Claim Investigation TechniquesIf you’ve ever been intrigued by police investigations in TV shows or detective novels, you might want to use that enthusiasm to investigate workplace injuries. Approaching a workers’ comp claim investigation claim in ‘detective’ mode will lead to better results; meaning, reduced costs and superior outcomes for injured workers.

 

 

The Workers’ Comp Claim Investigation

 

The ultimate goal of managing a workers’ compensation claim is to help the injured worker recover and get back to work as soon as possible, without the payer spending unnecessary costs. But often there are many gray areas to a claim. Determining exactly what happened and, therefore, what should be covered by workers’ compensation can be difficult.

 

Investigating a claim should uncover as many details as possible. Employers/payers can get all the information they need by implementing a precise system that kicks in immediately after an injury occurs. At the very least it should include:

 

 

  1. The Basics

 

The workers’ comp claim investigation process should begin with statements from the employee, employer, and any witnesses. There should be separate forms for each which should have open-ended questions, rather than boxes to check.

 

Additionally, there should be a separate attachment for details on each form. A form from a witness that says, ‘Joe slipped and hurt his back,’ really doesn’t reveal anything and won’t help determine whether and to what extent the claim is compensable.

 

The essential pieces of information that should be included about the injured worker and the incident include:

 

  • Date of birth
  • Name of the employee
  • Social security number
  • Average weekly wage
  • Date of injury
  • Date of hire

 

Too often such information is either not included or is inaccurate.

 

Another ‘basic’ procedure that makes a tremendous difference in a claim is the way the injured worker is treated. Anyone involved with managing the claim at any point should treat the person as if it is a friend or spouse and approach the employee in the same way as they would want that person treated.

 

 

  1. Preserve the Scene

 

Preserving the scene is where reading and watching cases in which detectives try to understand what has happened comes into play. Just as a detective on a case is trying to get to the truth, so too is the employer/payer.

 

Once an accident occurs, the area should be roped off to whatever extent is possible. If it is an area in which many people are working and is crucial to business operations, this might take some creativity. But the idea is to ‘protect’ any evidence that could indicate what and how the injury occurred.

 

Looking at the scene might reveal a cause. For example, water on the floor could indicate the worker slipped and fell. Or, there might be evidence that a piece of equipment was faulty, which could result in subrogation from a third party.

 

A thorough examination of the accident scene may help reveal the mechanism and extent of an injury. That could be advantageous if, say several months later the injured worker claims additional injury from the initial accident.

 

 

  1. Talk to Others

 

Witnesses play an important role in a workers’ comp claim investigation. While the injured worker experienced the accident, he may not know exactly how it happened. Someone who saw it might be able to fill in some of the blanks; for example, that a heavy box on an upper shelf fell, triggering the worker’s fall.

 

Also, identifying all witnesses as soon as an injury occurs prevents ‘new’ witnesses the injured worker may try to bring in later on.

 

 

  1. Record

 

While witness accounts of a situation are important, they may not always be reliable. Sometimes what people think they saw or remember may vary greatly from one witness to another. That’s why it’s also important to record the scene in as many ways as possible.

 

Just as a detective investigating a crime scene might seek out video footage of the area, getting recorded descriptions of the scene can help determine how the injury occurred and can be extremely valuable later on, if the case is litigated.

 

Video cameras may be present in or near the work area. There may also be video cameras around the building, or even on nearby buildings. The footage may reveal more information about the incident.

 

If no videos were present in or near the accident scene when it happened, taking a video of the accident area via a smartphone can also help provide information about what may have contributed to the injury. The person filming should also include narration to describe various objects, direction, location, etc.

 

Photos can also provide details. These can be taken from a distance as well as close up, to get different perspectives and angles.

 

 

  1. Document, Document, Document.

 

Every step taken during the workers’ comp claim investigation should be written down; from interviews with witnesses and others, to bits of information observed at the scene, and any other potentially relevant information.

 

Documentation pertaining to maintenance and training schedules and previous corrective actions involving the injured worker should also be included in the investigation materials. Information about prior medical treatment to the injured body part can also be relevant and should be included in the documentation

 

 

Conclusion

 

Conducting a thorough workers’ comp claim investigation provides the best opportunity to ensure the payer covers all of what should be funded and nothing more. It also signals the entire workforce that this is a normal process; meaning a worker will think twice before trying to fake an injury.

 

 

 

Author Michael Stack, CEO Amaxx LLC. He is an expert in workers’ compensation cost containment systems and helps employers reduce their workers’ comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is a co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center.

 

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: https://blog.reduceyourworkerscomp.com/

 

©2019 Amaxx LLC. All rights reserved under International Copyright Law.

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

Clear and Responsive Employer Contacts in Account Instructions

 

 

If you fail to plan, you plan to fail. That quote was originally stated by Benjamin Franklin.

 

 

Account Handling Instructions Are Planning & Communication Tool

 

Hello, my name is Michael Stack, I’m the CEO of Amaxx. That concept of planning comes to light in the world of worker’s compensation in the form of your account handling instructions, your account services instructions, client instructions, et cetera. Various different TPAs and carriers have different names to mean the same thing, which is this tool, this communication tool between the employer and the claims handling organization, whether that’s your TPA or carrier. It’s a highly effective way to get on the same page for how you’re going to approach your worker’s compensation claims, how you’re going to handle them. What are those set of instructions for what to do as far as a communication tool, and then on the back side, an accountability tool.

 

You say, “Well, this is what we’re supposed to do,” and did we do it or not? And then you can come together with that and adjust as needed, tweak as needed, if the plan isn’t going as planned.

 

A number of things that I want you to address, and we cover this really in full detail in our course called How to Script Winning Account Handling Instructions, you can see the link to register for that below. One of these pieces that I want you to really focus on and highlight, because I feel like it gets missed the most, we’ve come up with all these things about settlements, settlement authority, and how to use medical vendors, and all this different stuff, and look at what term it is we want to use, et cetera, et cetera, et cetera in our planning. But the key piece that is so critical is this chain of command or communication or reliable contacts for the adjuster at the employer site.

 

 

Clear and Responsive Employer Contacts

 

For the adjuster at the employer site, who are those reliable, clear contacts that know their contacts and know that they need to get the adjuster information when the adjuster needs it? Because if you come up with this great plan, it’s like, “Okay, adjuster, I want you to do X, Y, and Z, and I want you to do all this stuff, and I want you to do this report, I want you to give me this data on X number of days, and I want you to get it all right all the time. Oh, but by the way, when you have a problem, you have a question, or you need to ask the employer something, we may or may not get back to you. I know Jane is your contact, but Jane’s on vacation. So you’re going to have to wait in order to get that information,” and that just doesn’t work.

 

So a number of things that I want you to do when you come up with this clear and concise list of reliable contacts for the adjuster at the employer site. Number one is, what is the chain of command. What is the chain of command at the employer site? So how does that adjuster kind of get to understand what’s going on at the company? Who’s going to send in, or who needs to receive, that notice of injury whenever an injury occurs? What are the injury details? How do they find out what happened? When the adjuster is going through their three-point contact, who are they calling? And who is that number, are they going to be reliable, are they going to be there to answer that phone?

 

 

Who Is The Back-Up Employer Contact?

 

Number four, who do they call to get the wage history? Who do they call to get the wage history? And then last piece here, there’s a number more, but these are just a couple of highlights. Who’s in charge of the light-duty program, who do they contact for light duty? And then, just in that example that I just gave, if Jane’s the contact and Jane’s on vacation, who’s the back-up? Who’s that back-up person that they’re going to contact?

 

So for every piece within your account instructions, who is the contact at the employer that’s going to be reliable and that’s going to get that adjuster the information they need to do their job appropriately? If you have that information, then it’s going to run just that much smoother.

 

Again, my name is Michael Stack, I’m the CEO of Amaxx. Remember, your work today in worker’s compensation can have a dramatic impact on your company’s bottom line, but it will have a dramatic impact on someone’s life. So, be great.

 

 

 

Michael Stack - AmaxxAuthor Michael Stack, CEO Amaxx LLC. He is an expert in workers’ compensation cost containment systems and helps employers reduce their workers’ comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is a co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center .

 

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: https://blog.reduceyourworkerscomp.com/

 

©2019 Amaxx LLC. All rights reserved under International Copyright Law.

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

10 Helpful Tips For Managing Angry Workers’ Comp Claimants

Angry Work Comp ClaimantsUnfortunately, angry workers’ comp claimants are often part of the workers’ compensation business. As hard as you try, you are never going to please all people all of the time.  Experienced professionals know how to properly diffuse a tense situation.  But it is an asset that is learned over time.

 

Here are a few important tips to remember:

 

1. Stay Calm

 

Regardless of the negative attitudes or unpleasant tones an angry caller may have, it is essential that you do not get emotional as well.  Using phrases such as “I hear what you are saying” or “I understand” can help to calm angry callers.  Remember they usually have no idea what is going on or why these decisions are being made on their claims, so take the time to let them vent a bit then calmly explain to them the situation.

 

 

2. Listen & Be Patient

 

Do not attempt to interrupt angry callers.  Be patient and let them finish speaking.  Sometimes they just need to vent their frustrations.  After that, they will relax a bit and work with you to resolve their issue.  Explain to them what is going on, and what options they may have for moving forward.

 

 

3. Remain Professional

 

Above all remain professional.  Remember you are in the customer service industry, and there is a lot of competition out there.  Every phone call should be dealt with in a professional matter, no matter the conversation.

 

 

4. Do Not Raise Your Voice

 

Raising your voice or talking in a sarcastic tone is only going to irritate your angry workers’ comp claimant further, which will resolve nothing.  If anything, you can get in trouble with your supervisor.  Many carriers record telephone conversations, and if this discussion gets pulled for review you are going to look foolish.

 

 

5. Try Not to Argue

 

Your main goal in diffusing a heated conversation is to resolve the problem.  But a direct argument will rarely resolve anything.  Instead, explain to them what is going on, and what they can do to help themselves.  It may be that getting medical records or a more detailed report from their doctor is the piece of evidence you need to complete your investigation.  Remember the claimant does not have the experience that you do in handling claims day in and day out, so cut them some slack and try to help them instead of just arguing point/counterpoint.

 

 

6. Speak Slowly and Clearly

 

Nobody likes to have to repeat themselves, so speak in a clear voice. Also, try to avoid talking in legal terms or in claim shorthand.  The angry workers’ comp claimant will probably have no idea what you are talking about, which will frustrate them.  Pretend you are explaining the issue to someone who has zero experience in this situation, and you may end up with better results than you planned.

 

 

7. Empathize & Apologize

 

How would you feel if you are in the same situation?  What would you want to be said to you to make you feel better about the call?  Angry workers’ comp claimants want to know that you understand where they are coming from, and they want the reassurance that you can help them with whatever issue they may have. Even if you know the caller is wrong, take a moment and apologize for the confusion.  Many callers simply want acknowledgment from the carrier that a mistake may have been made, if applicable to your scenario.  An apology is the first step to overcoming their anger and opening a dialogue about resolving the issue.

 

 

8. Offer Solutions

 

People are coming to you with questions about their claim, or why a decision was made.  But oftentimes these decisions are not written in stone.  Denied claims can be accepted later, and vice versa. Maybe your claimant can file for mediation on their denied claim.  Or maybe they did not submit enough information in the beginning for their claim to be accepted.  Whatever the reason may be, explain to them what options they have for moving to the next level.  If you cannot answer a question immediately, let them know that you will work on it and get back to them with some answers or options and go from there.

 

 

9. End the Call if the Person is Repeatedly Abusive

 

Your goal is to bring a successful closure to each phone call.  However, you do not have to tolerate abuse.  Kindly interject with an “Excuse me” if necessary and inform the caller that their language or behavior is not acceptable, and it will not help them resolve their conflict.  It is well within your ability to end the call if the person continues to be belligerent and abusive if you have asked them to calm down several times beforehand.

 

 

10. Do Not Take It Personally

 

In the end, this is your job.  A lot of claims adjusters have a lot of hours of work invested into each file, and sometimes they can wear their heart on their sleeves.  But at the end of the day, you have to accept the decisions you made on a claim.  I recall a young adjuster I knew that was first starting out in work comp, and he used to agonize over his decision about whether a claim was compensable or not, and if he was making the right call.  This is a good asset to have, but only if it is a healthy concern.  The process that is in place with supervisor reviews and audits is there to catch your errors, if you have any, and to help you make confident decisions on claim outcomes.  Trust in the process in place, and believe in your decisions that you make. Sometimes you have to go with your gut decision.

 

 

Summary

 

An adjuster is on the phone for the majority of their day, every day.  And in the field of claims, conflict will arise.  There is often no way to avoid dealing with an angry workers’ comp claimant.  But you have to be armed with the proper way to handle yourself on the phone–not just for certain calls but for every call.  Implement the tips above, and hopefully, you will be known around the office as a person that can diffuse any tough situation that is thrown their way.  Knowing how to work the phone is one of the best assets an adjuster can have.

 

 

 

Michael Stack - AmaxxAuthor Michael Stack, CEO Amaxx LLC. He is an expert in workers’ compensation cost containment systems and helps employers reduce their workers’ comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is a co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center.

 

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: https://blog.reduceyourworkerscomp.com/

 

©2019 Amaxx LLC. All rights reserved under International Copyright Law.

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

The Dangers of Under-Reserving

The Dangers of Under ReservingUnder-reserving in workers’ compensation is a dangerous practice.

 

A basic principle of business solvency is to have an asset to offset each liability. A workers’ compensation claim is a legal obligation – a liability for the company, whether it is a contractually assumed liability through an insurance policy for an insurance company, or a retained liability through self-insurance. A claim reserve is an estimate of what the workers’ compensation claim will cost. When the adjuster handling the work comp claim establishes a reserve on the claim file, it is a definite amount of dollars that are being set aside to pay the future cost of the work comp claim.

 

 

 

Under-Funded Liability Will Eventually Experience Shortfall

 

 

From an accounting standpoint, a claim is an incurred liability, even though it will be paid in the future. When the reserve is established by the adjuster, the company loses the ability to use the amount of money that has been set aside to pay the work comp claim.   Inaccurate reserving, whether the reserves are excessive or inadequate, distorts the company’s financial condition. When the reserves are too high, money the company could use in other aspects of the business is no longer available for use by the company. When the reserves are too low, the company has an underfunded liability. This creates a situation where the company will eventually experience a shortfall.

 

 

While both over-reserving and under-reserving present an inaccurate picture of the company’s financial health, most financial people will argue that under-reserving is worse for the company. The reason for this is simple – the self-insured employer or the insurance company must have adequate reserves to meet their obligations. If the reserves are inadequate, the self-insured employer or the insurance company runs the risk of insolvency.

 

 

When the self-insured employer or insurance company has understated their reserves, they have overstated their assets and have understated their liabilities.   The difference between the amount of assets an insurance company has and the amount of liabilities an insurance company has is referred to as the insurance company’s surplus. An insurance company’s ability to pay claims is evaluated by measuring its surplus in comparison to their outstanding obligations.

 

 

 

Evaluated By Ability To Pay Claims

 

 

Insurance rating firms like A.M. Best measure the financial stability of an insurance company by evaluating their ability to pay their claims. If the insurance company has understated their reserves, they may temporarily increase their financial stability rating, but when the claims come due (are paid) and the available surplus drops, the financial stability rating of the company will be downgraded. A downgrade in an insurance company’s financial stability rating results in fewer potential buyers of their insurance products because doing business with the downgraded insurance company is considered riskier.

 

 

An example of how under-reserving of work comp claims can impact the surplus is as follows (to simplify, the insurer has no other liabilities except claims).

 

 

Total assets               Total Claim Reserves                                   Total surplus

$10,000,000              $8,000,000 (under reserved)                       $2,000,000

$10,000,000              $9,500,000 (properly reserved)                   $500,000

 

 

In this example, when the reserves are understated, it appears the insurance company has a surplus of 20% of assets, but in actuality, the surplus is only 5% of assets.

 

 

 

Reserving Practices Subject to Audits

 

 

All jurisdictions regulate the financial stability of self-insured employers and insurance companies. The reserving practices of the self-insured employers and insurance companies are subject to periodical audits by the state insurance department or other state regulatory agencies. When the self-insurer or the insurance company is audited, if the reserves are inadequate to pay all open claims (and technically, all claims that have been incurred but not yet reported), the state insurance department will require the self-insured employer or insurance company to increase the reserves to cover their obligations on their claims. If the self-insured employer or insurance company does not have the assets available to place in reserve for those claims, the state insurance department will shut the company down.

 

 

Another aspect of under-reserving is the impact on the calculation of future premiums. The reserves on the open claims are a part of the calculations in establishing the loss experience of the company. If the loss experience is understated because the reserves are understated, the insurance company will be charging inadequate premiums, resulting in lower profits for the company, or even pushing the company quicker to insolvency.

 

 

 

Proper Reserving Is Essential

 

To accurately reflect the self-insured employer’s financial position or the insurers financial position, proper reserving for the claims is essential. Under-reserving impacts the financial stability of the company, as the shortfall in reserving will eventually be corrected by taking the shortfall from the company’s surplus. If you have any doubts about the adequacy of the reserves on your workers’ compensation claims, please contact us as we can recommend claim auditors that will verify the adequacy of your claim file reserves.

 

 

 

Author Rebecca Shafer, JD, President of Amaxx Risk Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality, and manufacturing. She is the co-author of the #1 selling book on cost containment, Workers Compensation Management Program: Reduce Costs 20% to 50%. Contact:.

Contact: RShafer@ReduceYourWorkersComp.com.

Workers’ Comp Roundup Blog: https://blog.reduceyourworkerscomp.com/

 

©2019 Amaxx LLC. All rights reserved under International Copyright Law.

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

Six Things that Drive Workers Compensation Adjusters Crazy

workers compensation adjusterBeing a workers’ compensation adjuster has a lot of demands. Every day you have to juggle multiple demands on many files, sometimes within several jurisdictions. A typical caseload for the lost-time adjuster is 150 active files. The adjuster tries to handle the demands of those files in addition to the phone calls, emails, and medical records, usually without any support staff.

 

 

Every workers’ compensation adjuster appreciates anything that helps make their job easier. Below we discuss six small items that can make a big difference to Joe (or Josephine) Claims Adjuster.

 

 

1. Please complete all fields on the injury form.

 

When an workers’ compensation adjuster first gets a new assignment, nothing makes them more frustrated than to see many fields missing information. This can include social security numbers, birth dates, the type of injury, the date the injury was reported to the supervisor, etc. All of these fields are equally important, and when any are empty it means another phone call to the contact at the insured to gather this information. Take the time to complete all fields, so the adjuster has the information needed to get started on the file investigation without delay.

 

NOTE TO EMPLOYERS: IF YOU LEAVE BLANK FIELDS, SOMEONE ELSE MAY FILL THEM IN – WITH ANSWERS THAT YOU WON’T LIKE. Attach information if there isn’t enough room for the complete answer. Staple it and mail a copy to the adjuster.

 

 

2. Report All Claims in a Timely Manner.

 

The next thing that annoys workers’ compensation adjusters are late claims. Depending on the jurisdiction, this can put the adjuster in a time crunch to gather as much claims information to complete the investigation, and the fact they are rushing can lead to errors, or even worse, leakage. The last thing anyone wants is money and time wasted on a claim that is not compensable. One of the best things you can do is to report a claim right away. Do not let it sit on your desk until the injured worker goes in for surgery the next day. The sooner you can get that injury report to your adjuster, the better chance they will have to do a proper, thorough investigation. This leads to correct, ethical decisions on your claims without delays, penalties, or leakage.

 

 

3. Let the adjuster know if there is lost time on a claim.

 

Claims that include lost wages carry a certain priority with the workers’ compensation adjuster, since every day that clicks by means another day of potential wage loss due to the employee. As mentioned above, injuries should be reported right away. This gives the adjuster time to gather medical records to see if the claim is compensable. It also gives the adjuster a chance to get work restrictions on your employee so they can be placed in your light-duty work program. This eliminates the need for lost wages paid to the employee and keeps your claim costs down. When injuries are reported right away, everyone wins. The employee gets prompt contact by the adjuster, the adjuster gets a jump on the claim, and the employer gets to keep their costs down as low as possible.

 

 

4. Don’t tell the adjuster if a claim is compensable or not. It bugs them.

 

As much as you think a claim is legit or not, the employer typically cannot make a decision on a claim’s compensability. This is the adjuster’s job — what they get paid to do. This is why they are licensed to be claims adjusters in your state. They have the training and certification to make the decision on compensability. It is really important to voice your opinion on the claim, and to be able to back up your assumptions with facts. This will greatly help the adjuster with their investigation, but the overall decision on if the claim is accepted or not should be left up to the adjuster. Plus some jurisdictions have steep fines if claims are denied in error, so why put yourself in that position? Leave it up to the claims professionals.

 

IF IT IS NOT A LEGITIMATE CLAIM – TELL THEM YOU SUSPECT FRAUD. PUSH IT- so you are taken seriously. I don’t always live by my own advise here, and I almost always give my opinion about what I think is compensable, or not…

 

 

5. Make yourself accessible to the adjuster and return calls as soon as possible.

 

Workers’ Compensation adjusters have to make many phone calls every day. They are constantly on the phone. If they are calling you to get facts on an injury, and they leave you a message to call them, please call them back as soon as you can. Employer input on claims is important. Bear in mind you see your employees every day. You know a lot about them that the claim adjusters do not. Your investigation is just as important to the adjuster as is theirs. They rely on you heavily to know about the injury, what happened, why it happened, and what happened after the worker left. Send them any medical information you have, as this also will give them the provider’s name, address, contact info, and initial diagnosis. If you get bills for the treatment from the provider send them to the adjuster so they can be processed for payment if the claim is compensable. Anything you get that involves the claim should be sent to the adjuster, no matter what it is. The adjuster would always rather have more information than not enough.

 

 

6. Know the details of the injury soon after it happened.

 

The first question the workers’ compensation adjuster will ask you when they call is, “What happened?” Adjusters hate to hear the answer, “I do not know.” Obviously, this does not help the adjuster. You should be heavily involved in any claim that occurs at your workplace, whether it is a work comp injury, a liability injury, or a property damage claim. Gather facts and witness statements to send to the adjuster. Comments the witnesses have can impact a claim because the adjuster will compare that to the history given to them by the injured worker, and what history the injured worker gave the doctor when they were first examined in a medical facility. Any facts that do not add up will raise the red flag that there may be something more to this claim than what is on the surface, and it could prevent a claim from being falsely accepted. This again will keep your costs down, since you will not incur the leakage associated with paying a claim in error.

 

 

Conclusion

 

In conclusion, these are 6 items that can greatly help the workers’ compensation adjuster, even though you as the employer may find them quite trivial. You would be surprised if you saw the amount of information adjusters have to process on their 150-200 claims each day. Every little bit of information to the adjuster helps them out and makes their job easier. It all leads to the same goal that we have in claims, which is to properly investigate every one so the appropriate decision can be made on the compensability.

 

 

Author Rebecca Shafer, JD, President of Amaxx Risk Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality, and manufacturing. She is the co-author of the #1 selling book on cost containment, Workers Compensation Management Program: Reduce Costs 20% to 50%. Contact:.

Contact: RShafer@ReduceYourWorkersComp.com.

Workers’ Comp Roundup Blog: https://blog.reduceyourworkerscomp.com/

 

©2019 Amaxx LLC. All rights reserved under International Copyright Law.

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

21st Century Skepticism in Science and Effects on Medical Care

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Dr. Thomas Glimp, Medcor Chief Medical Officer

We live in an age of scientific enlightenment. Science, through technology, has made remarkable advances in the 20th and early 21st centuries.

 

Health advances over the same time include sanitation and hygiene with cleaner water and food, advanced imaging technologies using ionizing radiation and nuclear magnetic resonance, minimally invasive surgical techniques, organ transplantation, the discovery of DNA and sequencing of the human genome, the relationship of the genome to heritability and disease with great promise for  future  health, the discovery and mass production of antibiotics and widespread vaccination. Because of these and other health innovations, the average U.S. life expectancy increased from 47 years to 77 years in the 20th century.

 

Most bacteria are still susceptible to at least one or a few antibiotics, but we are getting uncomfortably close to the abyss.

 

In spite of these advancements, there is a skepticism of science in general and of medicine in particular. Skepticism can complicate daily medical management. Let’s look at an example:

 

 

Antibiotic Abuse

 

There, I’ve said it – abuse. Not overuse, but abuse. Antibiotics, one of the most important discoveries in the history of medicine are abused and, as a result, are losing their life-saving power.

 

Antibiotics are substances produced by microorganisms, including molds, that inhibit or kill competing microbes. Alexander Fleming accidentally discovered penicillin, the first antibiotic, in 1928. Fleming saw that staph bacteria growing in a petri dish were inhibited by a green mold (Penicillium notatum) contaminant. Through further testing, he found that “juice” produced by this mold inhibited or killed any number of pathogenic bacteria. Penicillium “mold juice” ultimately became the first antibiotic, penicillin. During World War II the U.S. War Production Board recognized the strategic value of penicillin and made its production a priority under the direction of Albert Elder,  known  as  the  “Penicillin  Czar.” I mention Elder for this quote:

 

You are urged to impress upon every worker in your plant that penicillin produced today will be saving the life of someone in a few days or curing the disease of someone now incapacitated.[1]

 

While true then, we have squandered the value of penicillin and many more antibiotics today. How do bacteria become resistant to antibiotics?  It’s all about selection pressure. The CDC explains it well:

 

Every time a person takes antibiotics, sensitive bacteria (bacteria that antibiotics can still attack) are killed, but resistant bacteria are left to grow and multiply. This is how repeated use of antibiotics can increase the number of drug-resistant bacteria.[2]

 

This is true whether the person given antibiotics has a bacterial or viral infection. The overuse of antibiotics promotes resistant bacteria, even if the infection is not bacterial. The “bathing” of our population in unnecessary antibiotics for medical illnesses that are not or only rarely bacterial – colds, bronchitis, sinusitis, etc. – has led to resistance and a tragic loss of antibiotic effectiveness. You have undoubtedly heard about “MRSA” – Methicillin Resistant Staph Aureus. You are just as likely to have not heard about VASA, VRE and the hundreds of other highly resistant bacteria for which there are few antibiotic choices. In just the past year, resistance was reported to the last remaining antibiotic, colistin, to which no resistance had previously been described. Fortunately, most bacteria are still susceptible to at least one or a few antibiotics, but we are getting uncomfortably close to the abyss.

 

There is a delicate balance between clinical need and preventing resistance. To prevent resistance, antibiotic use must be thoughtful and frugal. The world is lacking that balance.

 

There are three culprits:

 

  • agricultural use of antibiotics in livestock feed
  • overuse of antibiotics through free access in much of the world
  • over-prescription of antibiotics by medical providers.

 

Our focus at Medcor has been on appropriate antibiotic prescribing practices or “Antibiotic Stewardship.” Our perennial campaign is comprised of patient education materials, including handouts and posters, specific provider support through education, monitoring of prescription practices, and feedback.

 

A world with effective antibiotics sounds like a place we’d all like, but there are considerable obstacles to antibiotic stewardship, not the least of which is skepticism.  When it comes to antibiotics, physicians and other medical providers seem to have little credibility with patients.  Providers seem unable to convince patients that not every infection can be successfully treated with antibiotics and further that indiscriminate antibiotic use is unnecessary and unwise. In a study published in the British Journal of General Practice, antibiotic prescribing volume was a strong predictor of “doctor satisfaction” and “practice satisfaction.” In this study, 55% of physicians reported pressure to prescribe antibiotics, 45% had prescribed antibiotics for a viral Infection knowing that they would be ineffective, and 44% admitted that they had prescribed antibiotics in order to get a patient to leave. The authors calculated that a 25% reduction in antibiotic prescription would result in a 3-6 percentile decrease in national satisfaction ranking.[3]

 

There is a clash between what is right for patients and what is desired by patients. It is borne of the skepticism surrounding what is right.

 

 

The Point

 

So, what’s the point of this exercise? It’s to give you a better idea of the surprising pressures, born of skepticism, under which healthcare providers operate today and the complex realities of medical practice. Who would predict that dedication to evidence-based care would meet with patient resistance and poor impressions of provider performance? Overcoming skepticism is not easy, nor does the pressure relent. Toward the goal of better health for all, it is up to all involved in healthcare to show grit – passion plus perseverance wielding science as a weapon.

 

[1] Quoted In John Parascandola. “The Introduction of Antibiotics into Therapeutics in Sickness and Health in America: Readings in the History of Medicine and Public Health Third Edition Revised, ed. Judith Walzer Leavitt and Ronald L. Numbers (Madison University of Wisconsin Press 1997), 106

[2] Centers for Disease Control and Prevention, “Antibiotic Resistance Questions and Answers” last modified May 29, 2018. https://www.cdc.gov/antibiotic-use/community/about/antibiotic-resistance-faqs.html

[3]  Mark Ashworth et al., “Antibiotic prescribing and patient satisfaction in primary care in England: Cross-sectional analysis of national patient survey data and prescribing data” The British Journal of General Practice: The Journal of the Royal College of General Practitioners 66, no 642 (2016 ): e40-e46. doi: 10.3399/bjgp15X688105.

 

 

 

Author Thomas Glimp, MD, Chief Medical Officer, Medcor. Dr. Glimp, MD joined Medcor in 1994. Tom is board certified in internal medicine and in emergency medicine. Dr. Glimp’s clinical affairs team provides standards, scope, guidelines and protocols, quality assurance, and other support for Medcor’s clinical services and staff. Medcor helps employers reduce the costs of workers’ compensation and general health care by providing injury triage services and operating worksite health and wellness clinics. Medcor’s services are available 24/7 nationwide for worksites of any size in any industry.

Over-Reserving and Your Bottom Line

Over-Reserving and Your Bottom LineOver-reserving of workers’ compensation claims can have a major financial impact.

 

To pay the cost of workers compensation claims, the insurer or the self-insured employer sets aside the amount of money the company anticipates as necessary to cover the cost of the claim. The process of placing money in a reserve – reserving – sounds simple, but it’s not. While most financial obligations of a company have a set price, workers comp claims do not come with a predetermined cost. The amount of money needed to pay the claim is an estimate based on the experience of the adjuster with previous similar injury claims. Even though the reserve is an estimate, it is a legal obligation and appears on the insurer’s balance sheet.

 

 

 

Under-Reserving & Over-Reserving Creates Issues

 

If the workers’ comp adjuster for the insurer underestimates the amount of money necessary to pay the claim, the claim is under-reserved. If the adjuster overestimates the amount of money needed for the claim, the claim is over-reserved. Both under-reserving and over reserving creates issues for the insurer.

 

 

When a claim file is over-reserved, the extra money placed in the insurance reserve to pay the claim is not available to the insurer for any other purpose. The growth of the business is reduced because the insurer has less money available for its financial operations – investing, supplies, salaries, etc. While the impact of one claim being over reserved may not be felt, the impact of many claims being over reserved significantly curtails the growth of the insurance company and can even strangle the potential of the insurance company by reducing the funds it has available for its business.

 

 

 

Over-Reserving Causes Side-Effects

 

Over-reserving also causes a serious side effect for the workers’ comp insurer because of the way the premiums are calculated. The two components of workers comp claims affecting insurance premiums are frequency and severity. Workers comp claims are often referred to as “long-tail” claims because they often remain open for years. Therefore, when the underwriter at the insurance company computes the insurance premium, both the closed claims – where the reserves reflect what was actually paid – and the open claims, are used to calculate the future premium.

 

 

When the claim files are over-reserved, the severity of the claims is overstated in the calculation of the insurance premiums. This has a detrimental impact on the cost of workers comp insurance. The extra money in the over reserved open claims results in the premium calculation being higher than it should be. The employer is penalized for over reserves by having to pay higher insurance premiums than should be charged. If the employer can obtain the same workers’ compensation insurance at another company, at a lower price, the insurer loses the employer’s business. If the over reserving is severe enough, it can cause the financial collapse of the workers’ comp insurer because the insurer is unable to sell any new business as the insurance premiums it charges employers are too high.

 

 

 

Adjuster May Over-Reserve Out of Caution

 

The workers comp adjuster may over reserve the claim out of an abundance of caution, or more often, because it is easier to put a high reserve on the file than it is to spend the necessary time evaluating the medical information, the extent of the impairment/disability, and the applicable workers comp statutes to determine the correct reserve amount. As claims management understands the impact of over-reserving, when they see a pattern of over-reserving, the usual conclusion is the adjuster is either inexperienced or incompetent. The insurer or self-insured employer needs to work with the adjuster who is over reserving to improve the adjuster’s reserving skills. When over reserving is corrected, the excess money being held in reserves is released and goes straight to the bottom line of the insurer’s financial report.

 

 

The financial security and well-being of the insurer or the self-insured employer is dependent upon the adequacy of the workers’ comp claim reserved. If the reserved is overstated, it will diminish the monetary funds the company has available for its other financial obligations and opportunities. It will also cause the necessary premiums to be overstated, resulting in a loss of business for the insurer.

 

 

If you are a self-insured employer and believe your workers’ comp claim reserves are set too high, please contact us and we will be glad to set you up with an independent claims auditor to verify the accuracy of your claim file reserves.

 

 

 

Author Rebecca Shafer, JD, President of Amaxx Risk Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality, and manufacturing. She is the co-author of the #1 selling book on cost containment, Workers Compensation Management Program: Reduce Costs 20% to 50%. Contact:.

Contact: RShafer@ReduceYourWorkersComp.com.

Workers’ Comp Roundup Blog: https://blog.reduceyourworkerscomp.com/

 

©2019 Amaxx LLC. All rights reserved under International Copyright Law.

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

Detecting Workers’ Compensation Fraud

Detecting Workers’ Compensation FraudWorkers’ compensation fraud continues to be a problem.  Members of the claim management team need to be aware of this problem and develop a plan for its prevention.  They also need to create a plan to remedy the situation.  By taking steps to stamp out workers’ compensation fraud, programs will become more efficient and ultimately reduce costs program-wide.

 

 

Defining the Issue – What is Workers’ Compensation Fraud?

 

Malingering or showing signs of pain magnification is not workers’ compensation fraud.  Instead, it is defined by state law, and investigated and prosecuted by a state agency.  Other civil ramifications can also apply.

 

According to Webster’s Dictionary, “fraud,” occurs “when a person knowingly or intentionally conceals, misrepresents, or makes a false statement to obtain” workers’ compensation benefits or coverage, “or otherwise profit from the deceit.”

 

Workers’ Compensation fraud is not limited to injured employees.  Employers can commit acts of fraud by:

 

  • Misrepresenting company payroll on underwriting forms;

 

  • Paying an employee cash or not accurately reporting wages;

 

  • Not accurately reporting their payroll staff; and

 

 

In sum, an employer commits fraud anytime it intentionally undertakes an action to reduce the cost of its workers’ compensation insurance premium.

 

 

Common Examples of Workers’ Compensation Fraud by Injured Employee’s

 

There are numerous examples of workers’ compensation fraud committed by an employee in the context of a claim.  Some of the more common examples include:

 

  • Filing a claim for an injury that never occurred, or occurred outside the workplace;

 

 

  • Reporting an injury that occurred during another activity, such and an employee intentionally inflicting an injury and making a claim for benefits;

 

  • Misrepresenting the nature/extent of a work injury to a medical provider; and

 

  • Making a claim related to an injury that occurred following a job termination, layoff, or end of seasonal work.

 

 

Danger Ahead – Common Red Flags of Workers’ Compensation Fraud

 

There are numerous red flags members of the claim management team should look out for when investigating a claim.  It is important to work as a team and share information to help less experienced claim handlers detect it and avoid paying unnecessarily on a claim.

 

  • Employment changes and terminations: Be mindful of claims that arise at the same time an employee changes positions within an employer or is terminated/seasonally laid off.  A complete review of whether the injury/incident was reported prior to termination or whether the employee was near the end of their unemployment benefits prior to reporting a claim is key.

 

  • Beginning of week injuries:  It is often not a coincidence an employee is injured first thing Monday morning after arriving at the workplace.  This should make anyone scrutinize a claim to determine if it in fact occurred over the weekend.

 

  • Unwitnessed incidents: This should be an area of concern when the claim is made by someone who would typically not be working in a particular area or performing a certain activity.  A review of security video should be a part of any investigation to monitor the activities of the employee immediately prior to the incident.

 

  • Experienced claimants: These are individuals with a long and well-documented history of work injuries and other insurance claims.  A review of an insurance bureau index can track claims histories of a person and be a part of an investigation.

 

Other red flags include employee’s who give differing stories, work other side jobs (often as independent contractors), or may be experiencing financial difficulties.  It is also important to understand what hobbies or recreational activities an injured employee partakes in away from the workplace.  This can include someone playing in a sports league or enjoys “extreme sports.”  Proactive claim teams should have a plan in place to identify potential fraud issues and undertake a more exacting investigation.

 

 

Conclusions

 

Members of the claim management team need to be mindful of workers’ compensation fraud in all claims.  In addressing this issue, there are many red flags a claim handler must be aware of before accepting a claim and paying benefits.  By doing this, one can ensure that all valid claims are paid in a timely and correct manner.  It can also improve program performance and efficiency.

 

 

 

Michael Stack - AmaxxAuthor Michael Stack, CEO Amaxx LLC. He is an expert in workers’ compensation cost containment systems and helps employers reduce their workers’ comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is a co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center.

 

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: https://blog.reduceyourworkerscomp.com/

 

©2019 Amaxx LLC. All rights reserved under International Copyright Law.

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

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