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NCCI Workers Comp Medical Cost Discovery – PHC Best Measurement

October 18, 2017 By JL Risk Management Consultants Leave a Comment

New NCCI Workers Comp Medical Cost Discovery – One To Definitely Download and Read

A new NCCI Workers Comp medical cost discovery was met with a suspicious eye by me. Then again, the study, summary, and whitepaper came from the venerable organization. NCCI (National Compensation Council Inc) is headquartered in Boca Raton Florida. The NCCI rates approximately 40 states in one form or another.

The article on the medical cost inflation comparisons can be found here. The full whitepaper is located here. You can download the whitepaper from that link – PDF file.

The three medical cost inflation measures are:

CPI – Consumer Price Index
PPI- Producer Price Index
PHC – Personal Health Care

Medical costs have long been a thorn in the side of many workers compensation programs. In the old days, the Indemnity Benefits dominated the payouts on workers comp claims. That day, however, has long since passed – sometime in the late 1990’s. Medical costs dominate the benefit payments. I see no end to this trend.

The measurement from the Bureau of Labor Statistics (BLS) and graphed by NCCI shadows Workers Comp costs very closely.

BLS NCCI Workers Comp Medical Cost Chart

If one compares the two columns on the right, the similarities are very stark. From the summary and the whitepaper, I gathered that the main reasons for the similarities are:

Utilization is measured more accurately
Year over year estimates more accurately represent the changes in treatment and utilization
The PHC consists of variables that come very close to Workers Comp

I may have over-generalized the comparisons. You may want to download the whitepaper provided by NCCI. Please see the above links.

According to NCCI , the stakeholders in the Workers Comp can benefit from using this new measurement –

Carriers, TPA’s, Self Insured employers – can use to set reserves and to negotiate with medical providers
Regulators – able to keep tabs on medical costs , better method of monitoring why medical costs need to change over time
Employers – to see why loss costs change over time
Employees – assist with providing proper access to WC medical care

If the NCCI workers comp medical cost measurements change in the near future, I will repost on the subject.

Filed Under: NCCI Tagged With: BLS, CPI, PHC, PPI

WCRI Fee Schedule Webinar 11/2 Best State Government Risk Management Technique

October 16, 2017 By JL Risk Management Consultants Leave a Comment

WCRI Fee Schedule Webinar – How States Help Carriers and Employers Directly

The WCRI Fee Schedule Webinar should be a good one. Medical fee schedules have reduced the cost of workers compensation in a direct manner over many years. On the other side of the coin, medical providers know ahead of time what they will be paid for certain procedures so the guesswork is eliminated.

chart wcri fee schedule webinar electronic

public domain

The WCRI – Workers Compensation Research Institute leads the way in independent analyses of the workers compensation system. I live blogged their medical fee schedule presentation from the 2015 Annual Conference . Many of the articles I have written involve analyses by WCRI.

The hour long WCRI medical fee schedule webinar starts at Noon Eastern time. If you are a member the webinar is freebies. The non-member cost is $50 (reasonable).

One of the more complex tasks for state governments involves updating the fee schedules one they are in place. If you have any questions on medical fee schedules or a fee schedule in a certain state, the two presenters will be taking questions.

Hosting the webinar will be Dr. Rebecca Yang, a senior public policy analyst at WCRI, and Dr. Olesya Fomenko, an economist at WCRI.

I have written many articles over the years on fee schedules – the internal search for articles written on medical fee schedules can be found here.

According to WCRI The following WCRI studies, which examine both medical professional services and hospital services, will be covered in the webinar:

Designing Workers’ Compensation Medical Fee Schedules, 2016: The study highlighted some of the most important design choices that public officials face in adopting, reforming, and updating a workers’ compensation fee schedule for physicians, and discussed how the 43 states with fee schedules and the District of Columbia resolved these choices.

WCRI Medical Price Index for Workers’ Compensation, Ninth Edition (MPI-WC): The study examined the interstate variations in prices paid for medical professional services for treating injured workers in 31 states and monitored the trends in each state.

Hospital Outpatient Payment Index: Interstate Variations and Policy Analysis, 6th Edition: The study compared the hospital outpatient payments for common outpatient surgeries under workers’ compensation across 35 states and examined the trends within each state.

The webinar will address the following questions:

What are the different types of fee schedules that states use to regulate reimbursement for medical professional and hospital services?
How do medical prices paid for professional and hospital outpatient services in your state compare with others?
How are medical prices shaped by fee schedule policy choices?
What is the impact of recent fee schedule reforms on medical prices paid?

Click here to register for the WCRI Fee Schedule Webinar.

For reference, WCRI now and in the past has never paid J&L Risk Management Consultants any funds for this or any article placement. I just want my blog, email, and social media audience to be informed as possible on Workers Compensation.

Filed Under: fee schedule, medical Tagged With: live blogging, medical prices, Rebecca Yang, state government

Experience Mod Calculation Shortcut With 10 Ways To Reduce

October 5, 2017 By JL Risk Management Consultants

The Experience Mod Calculation Shortcut – Back To Basics

Lately, Experience Mod calculation questions have come into our offices at a very high rate compared to other subjects. The Experience Mod is also known as E-Mod, X-Mod, EMR, etc. Many factors exist that can change your Workers Comp premium. The Experience Mod calculation seems to receive the most attention.

Simultaneous Experience Mod Calculation Formulas

Public Domain Graph

The formula can be simplified into:

What happened in our Experience Period / What The Rating Bureau Expects To Happen or even more simply:

Reality / Expectations

One big time caveat exists with the Expectations part of the formula – Expectations come from how other similar companies to yours have performed over the past few years.

If say, you are a construction company and construction companies have become much more safe in the state(s) that you operate and your company does not become safer, then you may have a higher Mod. Why? The Rating Bureaus have recorded much lower claims in the Classification Codes that represent your company operations.

Their expectation of claims (Total Incurred) has lowered.

A low E-Mod does not guarantee insurance. Market forces sometimes will cause a company with a low X-Mod to not find coverage in the conventional Workers Comp marketplace. Many companies experienced this conundrum over the last 20 years.

How does one avoid being hit with a large E-Mod? Safety always counts. The complete E-mod system is predicated on rewarding safe companies and penalizing the unsafe ones.

I have attended Rating Bureau seminars, webinars, conferences, etc. where the presenters remarked – so that the safe companies are not subsidizing the unsafe ones. The NCCI changed their formula a few years ago to more heavily penalize unsafe companies.

The WCIRB has totally redone their X-Mod formula – actually twice for smaller companies. This formula looks to also penalize unsafe companies.

What to d0? 10 Ways To Possibly Reduce Your Experience Mod

Safety remains the key. We have seen companies cutting or eliminating their safety and risk management staff – rolling the workers comp dice. Higher penalties may now justify safety expenditures.
Make sure you are classified properly. Do the Class Codes represent what you do?
Review your policy, audits, and any other material you receive such as Policy Endorsements.
Reach out for assistance. No company is an island.
Start talking to your broker/agent more than just at renewal
Review your loss runs all the time. If you have online access, get to it.
Always make sure you follow the Six Keys To Workers Comp Savings – written in the 1980’s by me.
Search the articles here (box at top right of page) for any questions you may have on Workers Comp.
Understand that Workers Comp takes many years to correct. Safety today = workers comp savings in the future. This is the wrong place for immediate gratification.
Look at your Schedule Rating Factor
Bonus – Join Associations and Safety Groups – we have noticed that companies that join associations and/or safety groups seem to perform better with their Mods – not sure why. #12 may explain this one.
Pay attention – companies that turn their attention to Workers Comp always save $$ in the long run. Weed the garden.

Filed Under: Experience Modification Factor Tagged With: E-Mod, EMod, EMR, experience period, total incurred, X-Mod, Xmod

WCAN WCIRB California Workers Compensation – 2017

October 4, 2017 By JL Risk Management Consultants

WCAN WCIRB California Workers Comp Full Analysis (Great Charts)

The WCAN WCIRB California Analysis of Workers Comp consisted of many great charts. The WCAN (Workers Comp Action Network) provided a great link to a very thorough breakdown of everything you want to know about California Workers Compensation in 2017.

corona wcan wcirb california city picture

Corona CA Public Domain

The WCAN always provides a great summary. However, the California study at the WCIRB (Workers Compensation Insurance Rating Bureau) website contained a massive amount of information which no summary would do justice.

Please note the document is a rather large PDF file that may take some time to download. The WCAN summary is a one page document. WCAN appears often in articles on this website.

Even if you do not have California interests in Workers Comp, I heavily recommend downloading the WCIRB document. If you do not want to go over every chart, the last few pages of the study include a summary of each chart. These charts are priceless for a California Workers Comp presentation. The underlying data in Excel format can be found on page 3 in the link (page 1 of the body of the study).

A few of the highlights from the analysis are:

Chart 26 – Virginia, Louisiana, Alaska, and Delaware are more expensive for medical costs in indemnity claims.
Chart 29 – Opioid costs per 100 claims reduced by 2/3. Would any of the cost be due to cheaper/generic opioids/
Chart 31 – California has a very high ratio of unreported claims at the 12 month mark (cumulative trauma?)
Chart 36 – $1 of benefits cost 53 cents for delivery of that benefit (Wow!)
Chart 44 – The quick and dirty summary for California

Many charts cover other areas well. You may want to check out the other charts provided by the WCIRB.

I am often asked why do I cover California so extensively. California is one of the more complicated and expensive states for Workers Comp in the nation. The other main reason points to the Golden State often enacts laws and rules which other states consider using in their Workers Comp regulations.

The WCAN WCIRB California analysis should be updated in the coming months.

Filed Under: WCAN, WCIRB Tagged With: Alaska, Delaware, Louisiana, Virginia

North Carolina Industrial Commission Invalidates Basic Adjusting

September 20, 2017 By JL Risk Management Consultants

North Carolina Industrial Commission Returns Form 24’s To Adjusters

Is The North Carolina Industrial Commission taking the first step in making policy determination a legal matter in the Tarheel State?

Recently, I came across a few articles on how filing a Form 24 seems to be similar to practicing law. The North Carolina Industrial Commission has decided , without a chance for industry or public involvement, to equate filing an Industrial Commission form with bringing suit against the employee.

An adjuster in one of the articles went through the process of how an adjuster would have to hire an attorney then immediately remove the attorney from the file after the Form 24 hearing. The Form 24 is basically the adjuster requesting that an employee be removed from benefits, no more, no less.

If any of my readers were around in the adjusting world in the 1990’s, there was a decision by the North Carolina Supreme Court that opened all closed medical only claims for lifetime benefits. The big carriers started pulling out of the state rather quickly as one of the assumptions of the Experience Modification system is that these claims once closed usually stayed closed after a two year window.

Why I am bringing this point up is that the Experience Modification system in North Carolina – as in the 1990’s – did not take into account the litigious environment that will now exist in the state. I am not saying this is a bad turn of events to have to use defense attorney much more, but rather an unexpected one. Will this cost employers a large amount of funds?

One would have to say partially no, as this part of the Experience Modification system – better known as Allocated Expenses – ALAE – are not usually counted in promulgating an E-Mod. However, there are many more expense such as extending the Temporary Total Disability period and increased medical costs that would cost employers more in the long run.

Raleigh is our HQ so this hits very close to home. The North Carolina Industrial Commission has always been great concerning fixing these situations on an amicable basis with the help of the North Carolina Legislature.

Then again, I may be concerned about something that will never come to a full fruition. However, I wanted to point it out.

Filed Under: North Carolina Industrial Commission Tagged With: ALAE, Allocated Expense, Expereince Modification, Raleigh

Workers Comp Article Publishing Top 10 Concerns

September 13, 2017 By JL Risk Management Consultants

How To Start Your First Workers Comp Article

Your first Workers Comp article may seem like such a laborious task. After you write your first article, you will find the next is much easier and the third workers comp article flows to the screen almost like magic.

The Top 10 Concerns are listed below with the answers to these questions or concerns later in the article.

The usual concerns over posting your first article are:

I am not an expert in insurance or workers comp
There are experts more knowledgeable about this subject
I do not have a subject
Where will I publish it?
Will anyone ever read it?
Will the search engines rank it highly?
What publishing software should I use and why?
Blogging will use up too much of my time
How do I make money at publishing articles?
What if I make a mistake on a certain Workers Comp subject?

After publishing over 2,000 articles over 10 years, these are my assessments of the difficulties of writing your first article. (See above)

One does not have to necessarily be an expert in Workers Compensation to publish an article. If you research your subject and use backlinks to refer to the articles that you researched, you do not have to be an expert. Hundreds of workers comp articles are published weekly by non-experts.
Take one small aspect of Workers Comp and write an article covering the subject. I guarantee you there exists no expert that understands all the facets of Work Comp. Many blogs including some in workers comp are ghost written by other authors.
Read three of four articles or at least their first few paragraphs. This will furnish you with a few ideas. The more articles you read, the more likely you will publish a great article. Feel free to search this blog for any subject. Just use the search box at the top right of any blog page.
Publishing your article is one of the easy ones. If you go to wordpress.org and download the free WordPress software, you are on your way. Thousands of apps exist in WordPress to help you in your quest. My favorite is wpbeginner.com. They do a nice job of helping blog publishers get their website off the group. You can purchase a website address such as yourname.com if it is available. Websites are ridiculously cheap.
Your articles may not be read at the very first. You may have to publish a few before you will have them read. One great thing about publishing articles is that if one article is well-read, then your website visitors will look at the other articles you have published in the past.
The search engines are unto themselves. The idea is to at a minimum be noticed by the search engines. Also, remember that websites such as Twitter, Facebook, and LinkedIn can be looked at as search engines.
See #4 above for the answer to this one. WordPress seems to be the hot publisher right now and Google mentions them often as a great way to publish articles.
You may use quite a bit of time when you first write blog articles. Keeping the number of words at 300 -500 should not demand too much of your time.
Making money at blog publishing is the only one out of this Top 10 Concerns for which I cannot provide a good answer. I have always provided the articles for free. The effort has paid off for me as it will you if you do not look for dollar signs as a reason to publish a few articles a month.
All bloggers make mistakes. Keeping your articles in your area of knowledge or researching the subject fully with footnotes/backlinks will usually avoid this situation.

The main accomplishment of any blogger is that first well-written article posting to your own blog inside of your own website. Once that occurs, you are off and running on publishing articles.

My last thought on this subject suggests that one be kind with what they publish in any workers comp article. The subject can be one of many controversies – your blog should not be one of them.

Filed Under: Article Publishing Tagged With: WordPress, workers comp expert witness

Statistical Proportions – Quick And Dirty Number Powerhouse

September 6, 2017 By JL Risk Management Consultants

Statistical Proportions – A Guide To the Quick and Dirty Estimator

dogs head statistical proportions sketch

Wikimedia Commons License – Floriunux

I use statistical proportions as a very fast way to make predictions when you have three numbers and need to calculate the fourth one. My algebra teacher in Junior High School taught me how to apply them to many situations. Statistical proportions – often referred to as just proportions – can be a lifesaver if you need a number quickly.

Below is an example of how it works:

Current Workers Comp Policy = 136,000 in premiums

The Experience Modification Factor is .92. What would be the premium if the E-Mod moves to .99?

Proportions have been referred to as cross-multiplication and here is why –

.92/136,000 = .99/x

.92x = .99 * 136,000

x = 146,347

Now, many variables go into an X-Mod or E-Mod. At least you have a fast way to estimate a number for budgeting purposes, etc.

That was a very raw example for Workers Comp but it does work to a degree. Many actuaries will argue with me that I cannot shortcut the full E-Mod calculation. However, the numbers do come out as I have compared the prediction to the outcome that actually happened with the premium.

The further you go away from .92, for instance 1.35, the more inaccuracy that may be built in, but not necessarily.

No, I do not use this calculation to make predictions or comparisons all the time – however – it is not a bad way to figure any type of what if situaion when you know three numbers and need to predict the fourth.

A great example is the dog’s head drawing as to how statistical proportions work. The webpage has many different ways to work with proportions.

This may seem too simple, but when you only have a minute to calculate an unknown number for comparison, this is a powerhouse. I have used them since the 8th grade – thank you Mr. Epperson.

Filed Under: Statistical Proportions Tagged With: actuary, E-Mod, Ex-Mod, experience modification factor, X-Mod

Accident Curve And Natural Disasters – Spike in Workers Comp Claims

August 31, 2017 By JL Risk Management Consultants

The accident curve measures the accident rate lessening per unit of work time. The concept has been debated over time. A search far and wide located a 1916 text that actually addressed this issue very well. Please see the last two sets of bullet points below. The picture is of Hurricane Isabel.

Hurricane Isabel Accident Curve from space

Wikimedia Commons License

The learning curve measures how long it takes for a person to learn a new task. The accident curve measures how many accidents happen in the first few hours someone works with a new machine or performs a new task.

I performed an informal study on the accident rates of claims that I was handling post-Hurricane Hugo. After two months, the claim numbers spiked and then returned to normal. Most of the injured workers were new to the construction industry. They were involved with the hurricane recovery efforts for many months.

We have all heard the expression “90% of the accidents occur the first time someone uses a tool/machine” or the first time a person performs a completely new task. Hendersons law is:

C_{n}=C_{1}n^{{-a}} Accident Curve

where:

C₁ is the cost of the first unit of production
C_n is the cost of the n-th unit of production
n is the cumulative volume of production
a is the elasticity of cost with regard to output

A few classes I attended to complete my actuarial degree covered the learning curve heavily. The application centered around production. Safety did not seem to be an issue. However, the learning curve is a the crux of a safe workplace. Hands-on training reduces workers comp accidents or their severity by exposing the workers to a learning curve with a person or persons that have long since handled the type of new task.

The actual formula uses logarithms to estimated the time it will take someone to complete the task. A very astute scientist derived an accident curve from the formula. However, they derived the accident curve from actual hands-on measurement in manufacturing plants. You will need to refer to the bottom page 127 of this old but still relevant text. The text is included below justifying the accident curve consideration. The studies were conducted on very heavy labor iron and steel plants.

ACCIDENTS AND INEXPERIENCE THE HIGH RISK OF BEGINNERS

It is generally recognized that inexperience is one of the most important elements in the causation of industrial accidents. What has not been sufficiently realized is the close parallelism of the rates of accidents and of inexperience. The industrial risks of beginners have been shown to be high Interesting testimony on this subject is given in the iron and steel report already quoted.

A table giving the incidence of accidents to press hands beginning work on the machine shows that on the first day of employment:

More than 5 times as many were injured as during all the rest of the first week
26 times as many as from the second week to the end of the first month
100 times as many as from the second through the sixth month

One can presume the figures indicate a six-month employee is 100 times less likely to have an accident as the first day employee.

Another table covering longer periods of employment shows the accident frequency rates per 1,000 workers at a steel plant falling from the exceedingly high rate of

111.3 per 1,000 in the first six months through
increasing lengths of service to 19.7 for from 5 to 10 years and to
zero after 15 years.

The book did not mention the level of training in these cases. One would have to guess that it was strictly on-the-job-training. I was going to construct a few graphs but the numbers speak for themselves.

I would love to dig into this further, but I have to get this article proofread, published and then publish a weekly newsletter.

Filed Under: accident curve, accident rate Tagged With: actuarial degree, actuary, Hurricane Sandy, Huuricane Hugo, learning curve

Kentucky HB 1 Shows Positive Results – Controls Opioids – WCRI Study

August 30, 2017 By JL Risk Management Consultants

Successful Results for Kentucky HB 1 According to WCRI

Kentucky HB 1 (House Bill 1) immediately shows that smart governmental regulation results in a win-win situation in the Bluegrass State. WCRI’s (Workers Comp Research Institute) recently published study results sparked my interest when the research organization released the initial results at their 2017 Annual March Conference.

Harbin – Wikimedia-Hydrocodone

I live blogged the conference much to the dismay of my fingers and wrist tendonitis. My side notes indicated I needed to check back within a year to see if any studies were released on Kentucky HB 1. WCRI released Impact of Kentucky Opioid Reforms this week. If you deal with Workers Comp in any manner, the study may be worth the cost. WCRI stays very conservative on their pricing of study results.

According to WCRI’s press release:

“The study examined the impact of Kentucky’s HB 1 on opioid dispensing to newly injured worker in the first 12 months after the injury. The legislation, which went into effect on July 1, 2012, regulated pain clinics and established standards for dispensing and prescribing of opioids, including mandating prescribers to query the state prescription drug monitoring program prior to prescribing opioids.”

The four important aspects of Kentucky HB 1 are:

Effective 2012, so the study covers quite a bit of time
Regulated pain clinics
Established standards for dispensing and prescribing
Very important – prescribers had to query a drug monitoring program

Opioids were not on my radar screen until I was handling a runoff of claims for a defunct offshore insurance company. I was able to count 500 Vicodin at one time in possession of an injured worker due to seeing multiple doctors and multiple pharmacies at the same time. The above bolded bullet point eliminates that situation quickly.

Dr John Ruser, WCRI President and CEO commented the application of Kentucky HB 1 could apply to other jurisdictions as they try to combat their own opioid epidemics. That was a wise assessment.

The following are among the study’s major findings:

There was a 20.3 decrease in the number of Kentucky workers with pain medications who received opioids in the first 12 months after injury. Neighboring states saw no decreases.
The largest impact concerned seen among those who did not have a major surgery – the number of opioid prescriptions dropped 27%.

Study description

The findings are based on data comprising over 21,000 Kentucky workers’ compensation claims with injuries from January 1, 2011, to December 31, 2013, and nearly 91,000 prescriptions associated with those claims. The prescription utilization of each worker was observed for 12 months following the date of injury. Injury year 2011 represents the experience of injured workers prior to the effective date of HB 1, and 2013 represents the experience immediately after the implementation of the reforms. 2012 is partially post-reform. The data included represent 44 percent of workers’ compensation claims in Kentucky.

Hopefully, we will see more states enact opioid regulation with the success of Kentucky HB 1.

Filed Under: Kentucky, Opioid, WCRI Tagged With: Boston, Dr. John Ruser, wcri conference

Workers Comp Writers Block – Writing Into A Funnel

August 29, 2017 By JL Risk Management Consultants

Workers Comp Writers Block Not A Fun Time

Having Workers Comp writers block for the first time in 11 years ended with this article. The last three weeks contained the longest workers comp writers block for me.

man typing workers comp writers block head

Wikimedia Commons – Drew Coffman

The comment on writing into a funnel means that if I covered a subject in 2008 and now write about it again, the Google search algorithm penalizes duplication.

Matt Cutts, the Google spam guru rep says Google does not penalize duplication. However, if you write two articles on the same subject, each are partially devalued as Google makes a choice on which article gets the juice and ranking.

Of course Google is trying to remove spammers from their rankings. No blame goes to Google.

The last article on the .85 Combined Ratio announced at the NCCI Virginia Conference created quite a bit of buzz. In a roundabout way, Workers Comp carriers consider the market to be potentially profitable.

I began the blog to publish articles on workers comp premium audit and reserves. The writing funnel discourages me from continuing to write on those two subjects.

Many workers comp authors began damning the system a few years ago to get attention. It seems they are still at it today. We decided a few years ago to stop publishing articles that bash one facet or group of people in the Workers Comp business. I just finished reading an article of that sort.

Is it me or has there been way too many articles on opioids (not counting research WCRI, NCCI, etc.)?

One very positive note entails the updating and improvement of all 1,672 articles. Our web consultant contractor works tirelessly to improve the look (graphics, text spacing, and Google ranking) of the blog and website. I have spent 30 – 40 hours in the last two months reviewing and upgrading some of the text.

I begrudgingly removed 30 -40 articles which provided no knowledge advancement in the area of Workers Compensation.

1,672 articles now exist in this blog. Feel free to search them at the box on the top right of the screen.

PS I cannot call it writer’s or writers’ block as the apostrophes in Titles make the HTML go crazy.

I am now over the Workers Comp writers block.

Filed Under: Cutcompcosts Tagged With: algorithm, google, NCCI, opioids, Virginia