Archives for November 2013

Best Premium Audit Software For Employers – You Have It

November 20, 2013 By JL Risk Management Consultants

Best Premium Audit Software

Recommended Premium Audit Software updates

Wikimedia Commons – Victorgrigas

The best premium audit software may already be right in front of you and costs nothing to use. We receive many calls every week where an employer is very anxious about their workers comp premium audit. One of the main questions is how to properly prepare for this yearly necessity.

The best way to begin to prepare is with the right premium audit software.

By the way, the premium audit software the auditors use is very limited in availability. I have often been asked what the best software is by independent premium auditors.

The secret to any type of audit – be it tax, workers compensation, etc. is to be highly organized. One of the worst ways to prepare is by just piling a large amount of paper in front of any type of auditor and then say – go through it.

First impressions count in audits just as they do when meeting someone for the first time. The best method is to have everything organized as much as possible. Auditors – including premium auditors- by their nature are very organized workers.

The software that you likely have on your computer right now can easily organize what you need to show the premium auditor. Excel(R) or any other type of spreadsheet software is great for such a task. One of the main determinants will be the auditor’s letter to you.

The letter will point out what the auditor needs to complete the audit. One important point is that you are not required to let the auditor leave with any of your business information. If your company does not have Excel(R), you may want to try Apache’s Open Office.

Wikimedia Commons – Chris Rottensteiner

Calc is their version of a good spreadsheet program. It is open source and free, but you should donate to the program if you use it for commercial purposes. Programmers have donated thousands of hours of their time to make it work.

I have seen some employers organize the payroll by classification codes based on their prior year’s audit. Spreadsheet programs are perfect for this task. This can be helpful if you know exactly what you are doing. In some cases, this may cost you. The main goal is to be concise and complete.

If you use a payroll service, they can always run a yearly report. Some even have a Workers Comp report template that you can use. I just searched in my Excel 2010 for “yearly payroll” and was provided with a free template that with a few alterations may suffice.

The main goal is to summarize all your payroll data as much as possible using a spreadsheet. Premium auditors are under a tremendous time pressure. Anything you can do to present your payroll information in summary form with backing data will always pay off in the long run.

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California’s WC Reform(?) Produces Startling Numbers

November 20, 2013 By JL Risk Management Consultants

California’s WC Reform Not Yet A Cost Saver

A few startling numbers from California’s WC Reform are listed below. One wonders if the reform is working or if not enough time has elapsed to the differences.

Workers Compensation Action Network (WCAN) recently published a press release and email on the effects on SB 863. Even if you have no California Workers Compensation interests, it may behoove you to track their changes.

Wikimedia Commons – Makaristos

There are so many states that have just enacted or have reforms in the future. Reforms do not necessarily equal cost savings. The same type of changes may be coming to the states where you have WC interests.

A few of the most recent updates for the California reforms (?) are:

An 8.7% increase in the base rates
Claim frequency has risen – not really reform-related
An increase in Permanent Disability benefits
A new fee schedule for physicians – these usually cause a reduction in fees. This one caused an increase in medical costs.

Since 2009, the base Workers Compensation rates have increased by 35% for CA employers. This figure does not take into account the proposed additional 8.7% increase for 2014.

There are many projected cost reductions that will not be listed as they are forecasted results and not actual numbers.

Picture Hand Putting Money in Piggy Bank California's WC Reform Cost Saver

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After analyzing Workers Comp for so many states, the one conclusion I have concerning reforms is they are never permanent. California’s SB 899 was a landmark cost-savings group of laws that were meant to ease the crisis that occurred from the mid-’90s until the bill was passed.

I lauded the creation of Medical Provider Networks (MPN’s) as a method to quickly reduce medical costs by enhancing the employers’ medical control when sending their workers for post-accident treatment. MPN’s were one of my Five Keys To Saving on Workers Comp.

The changes from cost savings to cost increases with SB 899 were not surprising as WC systems change over time. The rapidness of the changes was surprising to me.

One very important consideration is the WC reforms take at least two years to show in the X-Mods. The full result of SB 863 may not be seen until 2015 and after.

The bottom line is reforms by name only do not result in automatic costs savings.

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Doc In A Box – Bad Name For Great Risk Management Technique

November 14, 2013 By JL Risk Management Consultants

Great Risk Management Technique with Bad Name – Doc In A Box

This Great Risk Management Technique known ass Doc in a Box deserves a better slang term. The Five Keys To Workers Comp Savings that I wrote 25 years ago have as their key savings component – medical control.

Clip art of Great Risk Management Technique

123RF

Even in states that do not have medical control, non-agenda injured employees will usually ask their employer a medical practitioner they recommend for treatment.

Establishing a medical treatment network before an accident happens is one of the best ways to save Workers Comp $. This was the first note I ever wrote to myself on how to save WC $. You may have seen posts and articles where a walk-in clinic is referred to as a doc-in-the-box.

That is such an unfair term for the easiest and highest return on investment post-accident risk management technique in workers comp. Many walk-in clinics are very industrial-minded and will perform applicable drug testing. I saw one post on LinkedIn where the author thought that walk-in clinics kept treating injured workers as a “churning” process.

Graphic Man and Woman Cycling Great Risk Management Technique Doc In A Box

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In my opinion, nothing is further from the truth. The one main consideration I like about walk-in clinics is they have no personal involvement with the injured employee. A family doctor may have brought the injured employee into the world.

I have seen hundreds of medical notes where a family physician will write the employee completely out of work and not even consider that there may be light-duty jobs available.

Walk-in clinic office managers can usually even ask where you want you to have your injured employees referred if they warrant more extensive treatment. I have not seen very many opioid prescriptions from walk-in clinics.

This scenario is also applicable to California MPN’s and other states that require a panel of treating physicians.

The bottom line is the extra cost of not using a medical treatment network = 400%. I have an example that I use in presentations that traces the medical treatment of how a $350 medical only claim turned into a claim that was settled for a total cost of $475,000 in 1994 dollars. I still see similar files today.

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Statistical Madness – Another Shining Example From Internet

November 14, 2013 By JL Risk Management Consultants

Statistical Madness – Eating While Driving

More statistical madness was created with another shining example this month. Over time, a few Workers Comp statistics articles are published that basically have no basis in fact. For example, many pundits said that California SB 863 was going to save employers large amount of premium. That just did not happen. The WC system is a delayed system. The results are really not known for 4 – 6 years after any law is enacted in any state.

Picture Of Man Calling On Phone Statistical Madness Car Accident

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How can statistics be so far from reality? The following example is one the general public even caught onto very quickly. The comments section says it all. This was likely just a headline – attention grabber, better known as clickbait for website traffic.

This article on distracted driving from CBS Los Angeles has the title: Eating While Driving Significantly Increases Chances Of A Car Accident, Experts Say. Where did the reporter get the idea there was an 80% risk increase while eating? Of course, if someone says an expert says so, then it must be a fact.

A quote from the article:

Asked if the CHP has seen an increase in drivers who eat, Galvan said, “We did have a [Distracted Driving Awareness Month] in April. Over 10,000 enforcement contacts were made and over 240 citations were issued for an unsafe speed related to distracted driving. So, quite possibly, there could have been a good majority that were eating.”

Man And Woman Statistical Madness Traveling Fast In Car

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That is 2.4% for speeding due to distracted driving, not 80%. The reference to 80% might have resulted from a 2009 study by the National Highway Transportation Safety Administration (NHTSA). I followed three pages of Google search links and then tried to use the NHTSA website which is always very slow.

Regardless, I wonder if this would fall under distracted driving even though it was in a Dunkin’ Donuts parking lot.

Predictive Model For Workers Comp Misunderstanding

November 12, 2013 By JL Risk Management Consultants

Prior WC Predictive Model Article Was Referring To Claim Reserves

Last Friday, I published a blog article on a predictive model in Workers Compensation. A few emails were received that indicated there were many great software products for predicting E-Mods and other variables in Workers Compensation.

Wikimedia Commons – Camelia.boban

In the original article, I was mainly referring to the fact I have yet to see any predictive model type program that could ever come close to forecasting the reserves for the life of a WC claim. We have reviewed a large number of WC files where a predictive model was used to set the reserves on a file.

The best analytic program model for worker’s compensation reserves is an experienced adjuster handling the same type of injury, employer, and state jurisdiction.

Those reserves had to always to overridden by the adjuster (usually with supervisory approval) at some later point in the file. The healing time of the human body is almost a random length between injured employees. Claims have too many almost random variables in them for claims analytics.

If Liberty Mutual ever shares their massive WC database, we may actually be able to have predictive modeling for claims.

My next article is on Statistics Madness.

Workers Compensation Predictive Modeling Will Never Work

November 8, 2013 By JL Risk Management Consultants

Workers Compensation Predictive Modeling

One of the more popular buzz phrases now is Workers Compensation predictive modeling. If one looks at any of the WC groups on LinkedIn, there are many discussions on this very matter.

Wikimedia – Jaberi-Douraki M

There are many predictive models on WC. Those models usually leave the observer with an empty feeling. Yes, you can forecast the Indemnity and Expenses almost to the penny. There are many modeling programs that will suffice in this case.

The inherent problem is valuing and forecasting medical benefits on any file. A health profile and background of the injured employee may shed some light on the subject. However, we are all very genetically unique individuals.

Woman Workers Compensation Predictive Modeling Carrying Files

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A ruptured spinal disc can vary in treatment from two months to two years or longer.Predictive modeling requires some sort of stability in the variables. As any adjuster will tell you, it is hellish to try to predict medical treatment at the outset of the file. There are medical outcome determining factors that are not known for many months.Workers compensation claims adjusters walk a very fine line with medical forecasting. Sixty days into the file development, the adjuster is supposed to make a medical reserve determination for the life of the file. This is not possible. Reserving files is an art, not a science. We analyze many reserves on files on a daily basis. Reviewing reserves is a complete exercise of hindsight which is usually 20-20. Discussing what reserves were placed on a file one or two years ago is an easy task. The reverse of discussing what the reserves should be on a file in one or two years is difficult at best.Communicating with the claims adjusters about the status of an employee can reap large dividends, but as they happen, not three months later. Emails work best for claims departments.

Bottom line – a well-trained experienced adjuster is the best predictive modeler in Workers Compensation.