How Long Would Workers Compensation Survive Like This???

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Could Workers Compensation Survive With High Overpayments?

Today, I was wondering how long would Workers Compensation survive when examining the following situation.

Graphic of Workers Compensation Survive On Boat with struggle
123RF

The process of Workers Compensation is going to always involve claim over-payments. Any time that I hear “We have X, Y & Z process in place to not overpay vendor and injured employees are just not being honest with themselves.

Any time benefits are paid to any type of claimant or vendor, overpaying the benefits is going to be a large concern.

Insurance carriers and especially Third Party Administrators (TPA’s) have a massive fiduciary responsibility to their insured clients to make sure that overpayments are limited as much as possible.   There is no excuse for issuing overpayments as part of a trend.  I was reading today in a report by the GAO (PDF file) which found $14.1 billion in overpayments.  

 

This did not seem that large as the Center for Medicaid/Medicare Services (CMS) is a massive payor.   I then read in this article the error rate for overpayments was 5.8%.

 

The 5.8% error rate is likely understated.  The audit was examining a small section of the overall payment structure.  The GAO and CMS even admitted that their MCO (PPO) payors had not really been audited.

 

We often are consulted to audit payments by carriers and TPA’s.   The error rate is usually much lower, especially if the payments are made through a Workers Comp PPO network.   However, direct non PPO payments do have a similar error rate to the CMS or higher.      

One has to wonder how long would workers compensation survive if the error rates were as high as the CMS.

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James Moore

Raleigh, NC, United States

About The Author...

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
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications

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