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Workers Compensation Is Zero Sum Game


WC Is A Zero Sum Game Of Sorts

I often advise investment groups when they look to invest in the Workers Compensation market – namely ancillary services such as Medicare Set Asides, Physical Therapy (PT), PBM, etc. One motto I have stuck with over the years is that Workers Compensation is a zero sum game of sorts. The Latin name for it is ceteris paribus or “all things remaining equal.”

Picture Of Patient On Wheelchair Zero Sum Game Listening To Physical Therapy

Investment groups are very concerned that – for instance – the allowable amount for each physical therapy is declining due to most states’ fee schedules being based on the Medicaid/Medicare fee schedules. As we all know, the federal fee schedules have been cut dramatically.

Interestingly enough, three years ago, I created a huge Risk Management study for an investment group that was looking to invest in a group of PT clinics in CA. My bottom line conclusion was that everything equals out in Workers Comp as the number of physical therapy visits and procedures per visit increase enough to offset the fee schedule reductions.

This same ceteris paribus was analyzed by NCCI recently. The number of workers compensation claims had fallen, but the severity of the claims had risen. The severity did not necessarily completely offset the lower numbers. I was reading an article in the Insurance Journal this morning that reminded me of this “equalization factor.” 

Physician Holding Stethoscope Zero Sum Game Picture
Wikimedia Commons – Alex Proimos
The number of California workers’ compensation insurance claims fell 13 percent between policy years 2007 and 2008 to 358,077 claims. However, a new report by the Workers’ Compensation Insurance Rating Bureau shows that the average incurred loss on a claim 18 months after policy inception rose more than 11 percent in the same period, with the average incurred loss at $9,711.
I may just be noticing the ones that equal out over time. However, when I see the WCIRB and NCCI both show the same results, the subject matter will command my attention.

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James J Moore - Workers Comp Expert

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Management Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications


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