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Home » Archives for March 2014

Archives for March 2014

New York Workers Compensation Board Assesses Tina Fey $79,000 Fine

March 29, 2014 By JL Risk Management Consultants

 Tina Fey Fined By New York Workers Compensation Board

The New York Workers Compensation Board has fined a very unusual company- actually the actress Tina Fey.

According to an article in the Smoking Gun, Tina Fey of Saturday Night fame was hit with a $79,000 judgment by the New York Work Comp Board  (5 pages)  for having no Workers Compensation insurance.

Picture of New York Workers Compensation Board Actress Tina Fey

Wikimedia Commons – Mingle Media TV

The name of the production owned by Tina Fey is Little Stranger, Inc.  However, the judgment was in Fey’s name only.  The judgment was for failure to carry Workers Comp insurance.

It seems, as in many cases with this board, no one can exactly figure out how the $79,000 judgment was arrived at in the court documents.   However, all of  Fey’s appeals have now been exhausted which means it is pay-up time.

One has to wonder how the round number of $79,000 was arrived at in the judgment. A round number will usually mark an estimate, of sorts.   Payroll (remuneration) and the associated premium charges are very rarely round numbers.  This seems to be an estimate of charges.  Look for Tina Fey to settle this one as soon as possible.  Most Workers Compensation cases settle quickly regardless of the source. 

©J&L Risk Management Inc Copyright Notice

Filed Under: Fines Penalties Tagged With: remuneration, tina fey

Certificates of Insurance – Delaware Increases Fraud Enforcement

March 28, 2014 By JL Risk Management Consultants

Certificates of Insurance – Delaware Toughens On Improper Use

A big change in Certificates of Insurance  (Certs) – Delaware recently decided to increase the enforcement of their laws by amending their old laws on improper certificate use.  

Certs have long been a bane of premium auditors nationwide which has resulted in complete refusal of any presented to them.Delaware also brought job banks to light as a great risk management tool in 2013 when a bill was passed that required job banks by employers.  The article on job banks is one of the most popular on this blog.  More states should look at adding the job bank law.

Map Of Delaware Certificates of Insurance In Logo

StockUnlimited

The new Certs law bans any request for by any party for an untruthful certificate.  Agents were producing this type of certificates to keep the employer’s business.

The basic tenets of the law are that any party cannot:

  • Request of a certificate that does not accurately reflect the underlying policy
  • Issue of a false or misleading certificate or one that purports to alter, amend or extend the coverage provided by the insurance policy
  • Use of a certificate to warrant that a policy complies with the insurance or indemnification requests of a contract

The legislation also enables the Delaware Department of Insurance to issue cease-and-desist orders and to assess fines against those who request false or misleading certs.

The main part of the bill without the term definition clauses is:

 4503.  Certificate forms.

Graphic Of Certificates of Insurance Icon

StockUnlimited

        (a)  The Commissioner shall prohibit the use of a certificate of insurance form if the form:

         (1) Is unfair, misleading, or deceptive, or violates public policy; or

         (2) Violates any law, including any regulation promulgated by the commissioner of insurance.

        (b) A certificate of insurance is not a policy of insurance and does not affirmatively or negatively amend, extend, or alter the coverage afforded by the policy to which the certificate of insurance makes reference.  A certificate of insurance shall not confer to any person new or additional rights beyond what the referenced policy of insurance expressly provides.

        4504.  Limitations on use.

        (a) A person shall not:

                (1) Prepare, issue, or request or require the issuance of a certificate of insurance that contains any false or misleading information concerning the policy of insurance to which the certificate of insurance makes reference; or

                (2) Prepare, issue, request, or require the issuance of a certificate of insurance that purports to affirmatively or negatively alter, amend, or extend the coverage provided by the policy of insurance to which the certificate of insurance makes reference.

Graphic Of Certificates of Insurance Paper Agreement

StockUnlimited

        (b) A certificate of insurance shall not warrant that the policy of insurance referenced in the certificate comply with the insurance or indemnification requirements of a contract, and the inclusion of a contract number or description within a certificate of insurance shall not be interpreted as doing such.

        § 4505.  Notice requirements.

        A person is entitled to notice of cancellation, nonrenewal, or any material change, and to any similar notice concerning a policy of insurance only if the person has such notice rights under the terms of the policy of insurance or any endorsement to the policy. The terms and conditions of the notice are governed by the policy of insurance or endorsement and may not be altered by a certificate of insurance.

        § 4506.  Applicability.

        (a) The provisions of this Act shall apply to all certificates of insurance issued in connection with property, operations, or risks located in this State, regardless of where the policyholder, insurer, insurance producer, or person requesting or requiring the issuance of a certificate of insurance is located.

        (b) A certificate of insurance or any other document or correspondence prepared, issued, requested, or required in violation of this Act shall be null and void.

        § 4507.  Enforcement and Penalties.

        (a) The Commissioner shall have the power to examine and investigate the activities of any person that the Commissioner reasonably believes has been or is engaged in an act or practice prohibited by this Act.

Graphic of Approved Stamp Certificates of Insurance Text

Wikimedia Commons – Majays31

        (b) The Commissioner shall have the power to enforce the provisions of this Act, including the authority to issue orders to cease and desist and to impose a fine of up to $1,000 per violation against any person who violates this Act.

        (c) The Commissioner may adopt reasonable rules and regulations as are necessary or proper to carry out the provisions of this Act.

        Section 2. Effective Date.

        This Act shall take effect 90 days after enactment.

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Filed Under: certificate of insurance, Delaware Tagged With: certificate of warrant, insurance law, job banks

Texas – Did Banning Informal WC Networks Cost Employers

March 28, 2014 By JL Risk Management Consultants

WC Networks Cost Texas Employers According to WCRI

WC Networks Cost employers in Texas. Did Texas make a large inadvertent mistake?  WCRI recently completed  a study CompScope™ Medical Benchmarks for Texas 14th Edition,.  One of the conclusions of the study was the growth in medical payments per workers’ compensation claim in Texas was faster than in prior years and more rapid than in most other states in the study.

Flag of texas Networks Cost raise

Wikimedia Commons – Makaristos

The study found fee schedule increases following Medicare updates as required under HB 7, and the 2011 ban oninformal networks drove an increase in prices for medical services, fueling the recent growth in medical payments. A decrease in utilization of non-hospital care slightly offset the increases in prices. I thought I would  explore the ban on informal networks.   The statutes are included below.   The directions from the Texas Department of Insurance (TDI) were for companies that may be an informal or voluntary network to compare themselves to the below law to see if they were either type of network.   

My apologies if the statute did not line up properly.   After reading over the Statute and then examining the cost/benefit analysis, one has to question whether this was a good idea.  

I am thinking the law was enacted to protect the pharmacies from receiving “stacked” network reductions where the pharmacy charges are reduced multiple times by networks unknown to the pharmacy at the time the medications was dispensed to the injured worker. 

Business People Networks Cost Smiling

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Many WC medical providers have become very vocal over “quiet network” reductions and have filed suit or complained vociferously to the WC Board or Commission in their respective states.   
   
If I happen to be off-base with my conclusion, Texas blog readers, please let me know.  

One of the two Texas Statutes that ending up costing employers is:Section 408.0281:
Reimbursement For Pharmaceutical Services; Administrative Violation
(a) In this section:
   (1) “Informal network” means a network that:
        (A) is established under a contract between an insurance carrier or an insurance carrier’s authorized agent and a health care provider for the provision of pharmaceutical services; and
        (B) includes a specific fee schedule.
Spec RX Networks Cost prescription

Wikimedia Commons – Dpbsmith

   (2) “Voluntary network” means a voluntary workers’ compensation health care delivery network established under former Section 408.0223, as that section existed before repeal by Chapter 265 (H.B. 7), Acts of the 79th Legislature, Regular Session, 2005, by an insurance carrier for the provision of pharmaceutical services.

(b) Notwithstanding any provision of Chapter 1305, Insurance Code, or Section 504.053 of this code, prescription medication or services, as defined by Section 401.011(19)(E):
   (1) may be reimbursed in accordance with the fee guidelines adopted by the commissioner or at a contract rate in accordance with this section; and
   (2) may not be delivered through:
      (A) a workers’ compensation health care network under Chapter 1305, Insurance Code; or
      (B) a contract described by Section 504.053(b)(2).

(c) Notwithstanding any other provision of this title, including Section 408.028(f), or any provision of Chapter 1305, Insurance Code, an insurance carrier may pay a health care provider fees for pharmaceutical services that are inconsistent with the fee guidelines adopted by the commissioner only if the carrier has a contract with the health care provider and that contract includes a specific fee schedule. An insurance carrier or the carrier’s authorized agent may use an informal or voluntary network to obtain a contractual agreement that provides for fees different from the fees authorized under the fee guidelines adopted by the commissioner for pharmaceutical services. If a carrier or the carrier’s authorized agent chooses to use an informal or voluntary network to obtain a contractual fee arrangement, there must be a contractual arrangement between:

Physician Networks Cost Reviewing Paper

(c) stockunlimited

   (1) the carrier or authorized agent and the informal or voluntary network that authorizes the network to contract with health care providers for pharmaceutical services on the carrier’s behalf; and
   (2) the informal or voluntary network and the health care provider that includes a specific fee schedule and complies with the notice requirements of this section.
(d) An informal or voluntary network, or the carrier or the carrier’s authorized agent, as appropriate, shall, at least quarterly, notify each health care provider of any person, other than an injured employee, to which the network’s contractual fee arrangements with the health care provider are sold, leased, transferred, or conveyed. Notice to each health care provider:
   (1) must include:
        (A) the contact information for the network, including the name, physical address, and toll-free telephone number at which a health care provider with which the network has a contract may contact the network; and
        (B) in the body of the notice:
             (i) the name, physical address, and telephone number of any person, other than an injured employee, to which the network’s contractual fee arrangement with the health care provider is sold, leased, transferred, or conveyed; and

             (ii) the start date and any end date of the period during which any person, other than an injured employee, to

Graphic of Networks Cost TDI Texas

fmx.cpa.texas.gov

which the network’s contractual fee arrangement with the health care provider is sold, leased, transferred, or conveyed; and

   (2)  may be provided:
        (A) in an electronic format, if a paper version is available on request by the division; and
        (B) through an Internet website link, but only if the website:
              (i) contains the information described by Subdivision (1); and
              (ii) is updated at least monthly with current and correct information.
(e) An informal or voluntary network, or the carrier or the carrier’s authorized agent, as appropriate, shall document the delivery of the notice required under Subsection (d), including the method of delivery, to whom the notice was delivered, and the date of delivery. For purposes of Subsection (d), a notice is considered to be delivered on, as applicable:
(1)  the fifth day after the date the notice is mailed via United States Postal Service; or
   (2)  the date the notice is faxed or electronically delivered.
(f) An insurance carrier, or the carrier’s authorized agent or an informal or voluntary network at the carrier’s request, shall provide copies of each contract described by Subsection (c) to the division on the request of the division. Information included in a contract under Subsection (c) is confidential and is not subject to disclosure under Chapter 552, Government Code. Notwithstanding Subsection (c), the insurance carrier may be required to pay fees in accordance with the division’s fee guidelines if:
   (1) the contract:
      (A) is not provided to the division on the division’s request;

      (B) does not include a specific fee schedule consistent with Subsection (c); or

Businessman Networks Cost Passing Document To Businesswoman

(c) stockunlimited

      (C) does not clearly state that the contractual fee arrangement is between the health care provider and the named insurance carrier or the carrier’s authorized agent; or
  (2) the carrier or the carrier’s authorized agent does not comply with the notice requirements under Subsection (d).
(g) Failure to provide documentation described by Subsection (e) to the division on the request of the division or failure to provide notice as required under Subsection (d) creates a rebuttable presumption in an enforcement action under this subtitle and in a medical fee dispute under Chapter 413 that a health care provider did not receive the notice.
(h) An insurance carrier or the carrier’s authorized agent commits an administrative violation if the carrier or agent violates any provision of this section. Any administrative penalty assessed under this subsection shall be assessed against the carrier, regardless of whether the carrier or agent committed the violation.
(i) Notwithstanding Section 1305.003(b), Insurance Code, in the event of a conflict between this section and Section 413.016 or any other provision of Chapter 413 of this code or Chapter 1305, Insurance Code, this section prevails.
Added by Acts 2011, 82nd Leg., R.S., Ch. 705, Sec. 3, eff. June 17, 2011.
 
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Filed Under: Texas Tagged With: HB 7, informal, medical benchmarks, stacked

Shocking Discovery – Workers Compensation Insurance Began 2050 BC

March 26, 2014 By JL Risk Management Consultants

Ancient Sumeria Invented Workers Compensation Insurance

The origins of Workers Compensation Insurance is much more ancient than in the early 1900’s.  I had always thought the beginnings of the WC system involved merchant ships or started in Wisconsin.

Map Of Wisconsin Workers Compensation Insurance With Badge

Wikipedia

This article from the State of Wisconsin Department of Workforce Development  (DWD) refers to 1905 as the actual start of some type of WC system.  In Wisconsin the employer has three common law defenses to paying an injured worker.   The three defenses were that the:

  1. worker was also negligent, 
  2. worker knew of the dangers involved and “assumed the risk,” or 
  3. injury occurred because of the negligence of a “fellow employee.” 

Under this archaic workers compensation insurance system it was very difficult for workers to recover against their employers. If they won, however, there were no dollar limits on what a jury could award. 

The article from the DWD goes on to say Wisconsin in 1911, adopted a Workmen’s Compensation Act.  Please refer to the passage at the end of the article for the first US Work Comp system.   The reason I moved it to the end of the article is that WC (of a sort) was in force at the time of the beginning of written history.  

I was able to uncover an incredible article that footnoted a book that placed the origins of WC in ancient Sumeria in 2050 BC. Yes, WC is that old. The article was produced by Gregory Guyton, Dept. of Orthopedics, University of North Carolina. The article seems to be the most authoritative one I have found on ancient WC systems.  It can be found here. 

From the article – “The Nippur Tablet No. 3191 from ancient Sumeria in the fertile crescent outlines the law of Ur-Nammu, king of the city-state of Ur. It dates to approximately 2050 B.C. The law of Ur provided monetary compensation for specific injury to workers’ body parts, including fractures. 

Graphic Of Dollar Sack Workers Compensation Insurance In White Background

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The code of Hammurabi from 1750 B.C. provided a similar set of rewards for specific injuries and their implied permanent impairments. Ancient Greek, Roman, Arab, and Chinese law provided sets of compensation schedules, with precise payments for the loss of a body part.”

One caveat is there were no actual payments for  Temporary Total (TTD) or Temporary Partial Disability (TPD)   Only Permanent Partial Disability (PPD) was considered in ancient times.  The amazing footnote to ancient PPD is that they were based on schedules very similar to the state mandated schedules of today. The bottom line is PPD is much older than TTD or TPD payments. 

footnote – Wisconsin– This remedy is essentially a “no-fault” system under which a worker no longer has to prove negligence on the part of the employer, and the employer’s three common law defenses are eliminated. The intent of the law was to require an employer to promptly and accurately compensate a worker for any injury suffered on the job, regardless of the existence of any fault or whose it might be. In return, the WC Act limited the amount of money that a worker could recover. Thus, workers are only entitled to:

Employee Workers Compensation Insurance Benefits

StockUnlimited

  • certain wage loss benefits, 
  • the cost of medical treatment, 
  • certain disability payments and 
  • payments for vocational rehabilitation retraining. 

Under the pre-WC Act tort system, workers had been able to recover for pain and suffering, loss of enjoyment of life and other damages that a jury might award. This is no longer possible under the WC Act.

©J&L Risk Management Inc Copyright Notice

Filed Under: Permanent Partial, Temporary Partial, Temporary Total, Wisconsin Tagged With: authoritative, merchant ships, pain and suffering

Paying Supplemental Wages While Injured Employee TTD

March 18, 2014 By JL Risk Management Consultants

Paying Supplemental Wages To Injured Employees Analyzed

Is Paying Supplemental Wages while injured employee is TTD OK? I was asked this question twice over the last month.  This is one of those areas where an employer wants to help an injured employee by paying his/her shortfall while the employee is out of work.   

paying supplemental wages in TTD graphic

Wikipedia

From a manual that I wrote many years ago- my conclusions on paying injured employees supplemental wages:

__________________________________________________________________

 

One of the most popular subjects in WC is employer supplements.  This subject seems to come up in risk management meetings and seminars very often. 

Supplements involve the employer offsetting the reduction in pay an employee allegedly experiences when they are on WC benefits. 

 Waiting Period

Employee’s Loss of Earnings (???)

Employee is restored to Pre-Injury Wage

 

.6667 of Pre-Injury Wage    (Tax Free)

Pre-Injury Wage                   $600 week (Taxed)

Comp Rate                           $400 week (Tax Free)

Employer Supplement         $200 week (Taxed)

                                               $135 week (Tax Free)

Employee Receives            $535 week (Tax Free)

                                               $750 week (Taxed)

Motivation to Return to Work?

Group of people discuss Supplemental Wages on big round table

Wikimedia Commons – NSaad

The first area concerning supplements is the Waiting Period.  This is usually the first three to seven days that the employee is out of work.  The Waiting Period is not paid until the employee has been out of work for a certain amount of days.  For example, the first seven calendar days may not be payable until an employee is out of work for more than 21 days.  The main reason for a waiting period is to encourage the employee to rapidly return to work.  If the employer pays the first week of benefits, this built in encouragement is eliminated.

The basic function of WC benefits (as with most insurance) is to make the employee “whole again.”  Most states require the WC insurer to pay 2/3 of the employees’ average weekly wage subject to a maximum. The benefits are paid tax-free.  In the above chart, the employee is receiving $600 per week as an average weekly wage.  The WC weekly benefit rate is $400. 

 The employer has decided to provide a supplement of $200 (taxed) per week to raise the employee’s wages back to their pre-injury wage. The after tax rate of the supplement is $135.  When added to the WC weekly benefit rate, the employee is receiving $535 tax-free. Converting the employee’s pay back to a taxed rate, the employee is now receiving $750 per week taxed.  The employee is now receiving a larger pay rate without having to work. 

The employee has little or no motivation to return to work (RTW).  The WC Supplement has eliminated the employee’s motivation to return to work.  I recommend the avoidance of providing WC supplements for this very reason.

©J&L Risk Management Inc Copyright Notice

Filed Under: Temporary Total, TTD Tagged With: earnings, pre-injury wage, supplements

WCRI – Accountable Care Organizations (ACO’s) – Live

March 13, 2014 By JL Risk Management Consultants

Accountable Care Organizations (ACO)

The accountable care organizations (ACO)  are healthcare organizations characterized by a payment and care delivery model that seeks to tie provider reimbursements to quality metrics and reductions in the total cost of care for an assigned population of patients.

Picture of Woman Extending Hand for Handshake Accountable Care Organizations (ACO's)

StockUnlimited

Presenter Partners Healthcare Network – Dr. Chaqutunu

There are 18.2 million lives that are covered by accountable care organizations (ACO’s) in the US.   Any medical condition that has a mental health component is 42% more costly. 

If medical assistants and physicians work in the same physical general area, there is a much better information flow of medical information.  

ACO’s differ from HMO’s on the gatekeeper concept.  Instead of having a Dr. be the HMO gatekeeper, access to enhanced medical treatment and providers is very important. 

ACO’s also provide referral feedback to the primary care physician from the specialist.  ACO’s also provide access to more acute or emergency care when needed. 

The explanation/assessment of  the risk for a certain procedure is more defined to a patent than just the general risks.  (30 year old vs. 80 year old patient).  Personalized consent forms are crucial in this situation. 

The return on investment (ROI) cannot be measured unless the numbers are studied for a large population.  

Physician incentives are very important with transforming the delivery of treatment to patients.   Fitting ACO’s into the Workers Comp arena will be complicated. 

©J&L Risk Management Inc Copyright Notice

Filed Under: Definition Tagged With: care delivery, gate keeper, gatekeeper, HMO, medical conditions

WCRI – How Economy Drives Financial Performance of WC – Live

March 13, 2014 By JL Risk Management Consultants

Economy Drives Work Comp Success – WCRI

A great presentation on how the Economy Drives the financial performance of WC.

.Dr. Harry Shuford from NCCI –  One of the best presentations so far at this conference.   This was great data analyses.  He should have been given longer than 30 minutes of time.  An hour would have sufficed for his presentation.

Picture of Man Economy Drives On Bar Graph

(c) 123RF

Income statement approach

Workers Comp’s average profitability 5% over time.  It is very cyclical.

109% combined ratio – underwriting loss of 9% per year

If insurers charged the NCCI recommended rates, they would cover costs.  – I did not understand that concept as most of the carriers use LCM (Loss Cost Multipliers) of more than 100% which would generate a profit.

Cost drivers

  • Heavy drop in manufacturing and private sector  injuries (frequency)
  • Business cycle – flow of inexperience workers (AIG study)
  • Business cycle – duration increases in recession,  decreases in better economic times.
  • Better medical treatment
  • The key is labor market function

Hard markets are always preceded by a heavy recession.   Underwriting cycles match economic performance of investments.

Bottom line – Workers Comp overall has performed much better than most of the financial industries. 

I agree with the above statement as the usual market growth rate is approximately 4% over time.   Workers comp performs at 1% better level than other financial and insurance markets. 

©J&L Risk Management Inc Copyright Notice

Filed Under: LCM, NCCI, WCRI Tagged With: cost drivers, data analyses, heavy recession

Ambulatory Surgery Centers (ASC) Cost Factors – WCRI- Live

March 13, 2014 By JL Risk Management Consultants

Ambulatory Surgery Centers (ASC) Four State Comparison

Ambulatory Surgery Centers (ASC) Cost Factors.  Difference for same type of surgery = 300%  between the states. Neighboring states – MD and VA or NY and CT  have  large differences  in ASC charges.

Picture of Ambulatory Surgery Centers Wilford Hall

Wikimedia Commons – Dwayne Snader

Fee schedule states ASC’s usually charge less.  Variability of ASC charges in the same state is greater in non-fee schedule states

Injured workers actually have the same experience whether they have surgery in hospital or ASC.  

Four states were compared that had similar fee schedules.   There was little variability in costs  among the ASC’s in these four states.  Could that have been due to the states being in the same region?

ASC differs cost factors differ greatly across states due to fee schedules.   States with fees schedules had a greater level of predictable costs than states without fee schedules.   In fact, most states with fee schedules allowed for a higher level of predictably of charges. 

Network penetration rates are much lower for ASC’s  even though the surgeon is actually in-network.   This situation happens often in health insurance where the doctor is in-network but many of the associated physicians are not in-network with the insured bearing the brunt of the additional costs. 

©J&L Risk Management Inc Copyright Notice

Filed Under: ambulatory surgery center, WCRI Annual Conference Tagged With: four states, injured workers, neighboring states

Affordable Care Act (Obamacare) Effects on WC – LIVE WCRI

March 13, 2014 By JL Risk Management Consultants

Affordable Care Act – Effect on Workers Comp- LIVE

The Effect of Th Affordable Care Act(Obamacare) on WC could be significant. 

Dr. Richard Victor-  (Will update during presentation until finished) – not edited until final version

Picture of Affordable Care Act Doctor and Patient Shaking Hands

123RF

The effects of ACA on WC are: (could be):

  • Increased demand for medical care
  • Shortage of providers – when demand exceeds supply
  • Possible increased prices- basic market function when supply stays same and demand increases – remember the gas lines in the 1970’s?
  • How will WC system adjust to ACA?  – use of Nurse Practitioners , Physician Assistants, Pharmacists, Podiatrists
  • States that will be affected more are ones that have opted-in for the Medicaid expansion
  • States may have to increase the appeal of their medical markets to recruit and maintain medical providers
  • Workers Comp overall pays more than health providers, especially Medicaid/Medicare

29% of all patients in Canada have to wait for even basic medical care

Workers Compensation has the indemnity benefit that will be lengthened – Will WC carriers pay more than fee schedule to reduce the indemnity benefits?

Surprisingly, there are many states where WC actually pays less than Medicaid/Medicare benfits – which may be the states where there could be a shortage of  medical providers unless there is an increase in the fee schedule rates.

Patient Affordable Care Act Talking To Doctor

StockUnlimited

Contrast – Minnesota vs. Florida  medical environment

Oregon Study –  30,000 people added to Oregon Medicaid program

  • Diabetes diagnosis was statistically significant
  • Cholesterol diagnosis was not significant
  • Depression was identified enough to be statistically significant
  • Bottom line – increasing medical coverage increases public health

States that have longer term use of opioids – Louisiana was #1 for long tern opioid use.   Arkansas had highest surgical rates of any state.

Cost shifting –  higher prices to WC as part of a shift in the general medical marketplace

Hospital mergers showed little statistical significance as they relate to increases in prices

©J&L Risk Management Inc Copyright Notice

Filed Under: Obamacare Tagged With: increased prices, Louisiana, Oregon Medicaid, shortage, supply

WCRI- live – Illinois Fee Schedule Caused 30% Reduction in Medical Costs

March 12, 2014 By JL Risk Management Consultants

Illinois Fee Schedule Reduction Causes Changes

The Illinois fee schedule reduction of 30% – blogging –  WCRI live.

30% across the board reduction by Illinois and its effects

As with most across the board cuts in WC in other states over time, the costs per claim were not reduced in total by 30%.   I am not a fan of synthetic fee schedules.   A synthetic fee schedule is one that does not follow the usual fee schedule structure as is most other states. 

Major surgery fees were not reduced.  Illinois was the third-highest state in major surgical fees post-fee schedule reduction.

Graphic of 30 % Illinois Fee Schedule Reduction

(c) 123RF

Fees for office visits, physical medicine, and pain management injections were reduced the most (25%, 27%, and 26% respectively.)

Reasons for less than 30% reduction

  • Network penetration and resulting discounts
  • Negotiated prices were not to the 30% level
  • More complex office visits than before the reduction

I think Illinois had the right idea, but as I have presented in a few articles, a straight synthetic fee schedule is not the best approach.   However, kudos to Illinois for trending down overall costs regardless of not reducing costs by 30%.   It is a start that can be adapted in the future- possibly with some of the reduction elements in Texas or other states.

©J&L Risk Management Inc Copyright Notice

Filed Under: fee schedule, Illinois Tagged With: office visit, physical medicine

Texas Reforms Results Analysis – WCRI – Blogging Live

March 12, 2014 By JL Risk Management Consultants

Texas Reforms – WCRI Conference – Live blogging 

The new Texas reforms  were presented along with the preliminary results. 

Graphic of Texas Reforms Analysis

123RF

This is a very informative conference-session. The current  session is pre- and-post reforms in the state of TX.

This example could be applied to other states with upcoming or in-place reforms

  • Total costs were lowered post-reform
  • Medical costs were the drivers for Texas and caused the need for reforms
  • Utilization of non-hospital services plunged.  Usually the utilization rates increase when the medical costs factors are lowered.   Other cost factors in Texas showed an increase in utilization vs. the pre-reform years 
  • Heavy pre-authorization requirements
  • Most impact were noticed in 2011 and 2012 claims
  • Decrease in chiropractic care (-8.5%).  This is a dramatic increase in such a short amount of time. 
  • Only California had higher cost claims that included chiropractic care.   
  • As with CA, TX medical cost containment costs increased, California cost containment became prohibitively expensive 
  • As compared with others states, more monitoring of expenses increase utilization review- this is an expected result that has appeared in most states. 

As a side note, I have performed many studies that indicate a decrease in medical rates is counteracted by an increase in utilization.   This is on a state-by-state and type of treatment basis.  We shall see more results soon on the Texas reforms. 

©J&L Risk Management Inc Copyright Notice

Filed Under: Texas, WCRI Annual Conference Tagged With: chiropractor, ost drivers, UR

WCRI (Workers Comp Research Conference) – Reporting Live

March 12, 2014 By JL Risk Management Consultants

WCRI (Workers Comp Research Conference)

Workers Comp Research Conference reporting live.

Graphic of Workers Comp Research Conference Reporting Live

123RF

First Session is ACA (American Healthcare Act) effects on Workers Comp.  Dr. Jon Gruber–  Wow this conference is packed.   Kudos to WCRI.   Everyone from WCRI was very helpful and hooked me up to the hotel wireless system so I could do this live (way cool).

I am here as the press with a press pass.  I just met Dr. Christine Yee – An economist with WCRI.  She performed some of the Texas studies for WCRI.  This is an interesting crowd.  It is a mix of data, management and general WC personnel.

Who shows up to hear about Workers Comp statistics?   I am seeing name tags from insurers.  There are some off-the-record presentations over the next two days.  I will likely not be able to live blog any off-the-record type of presentations. 

This is an interesting change from the usual rating bureau conferences.   Andrew Kenneally was nice enough to invite me for the last three or four years.   I decided to show this year as WC is changing not quickly, but steadily.

I will update these reports as it goes through the next two days.

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Filed Under: Obamacare, WCRI Annual Conference Tagged With: Christine Yee, Dr. Jon Gruber, insurer, presentation

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James J Moore
Raleigh, NC, United States

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt 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
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