Archives for February 2015

Are Micro Captives For Workers Comp New Frontier?

February 24, 2015 By JL Risk Management Consultants

Micro Captives For Workers Comp – Viable Alternative

Micro captives to cover Workers Comp losses is an interesting yet caveat-generating twist on an old subject.

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Captives for Workers Comp is one of the most “what was simple is now complex” areas in insurance. However, and that is a big, however, the very prudent use of micro captives may still be seen as one of the new frontiers for Workers Compensation.

Please see the list of articles that I have written on Captives for Workers Comp at the end of this article. Correction- there are over 15 articles on Captives, please use the search box on the right side of the page and use captive for the search term.

Workers Comp is and has always been seen as one of the laggard insurance areas for updates, technology, risk financing, and many other concerns.

This type of risk financing for Workers Comp can still be seen as a frontier. There are many old, but then again new arrangements. For example, Captives also known as micro captives may be an interesting alternative.

One BIG caveat – 831 (b) is not a section on captives- it applies to certain captives, those being micro captives. Setting up an agreement under Section 831 (b) will not work. That would draw a large amount of attention from the IRS and rightly so. A Google search for IRS scrutiny of 831 (b) tax consideration is an eye-opener.

Graphic Micro Captives Chip on Circuit Board

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The micro captive can qualify for 831 (b), but cannot be set up just to qualify for that section. 831 (b) basically gives a tax break for any underwriting profits. As with all Captives, there has to be a risk of losing everything – if there is not any risk, then it is not an insurance captive.

The main threshold is that micro captives premiums cannot exceed $1.2 million each year. Also, and this is a very critical point, you cannot carry a loss from year to year. If you have a $2 million underwriting loss, then the micro captive eats $800,000. This would require a heavy dose of Risk Management. Many of these micro captives have failed due to not considering and managing the upfront risk.

There are many great advantages to micro captives. With great advantages, there is always an equal amount of associated risk.

©J&L Risk Management Inc Copyright Notice

Workers Comp Audit – Five Great General Questions From Readers

February 19, 2015 By JL Risk Management Consultants

Workers Comp Audit Question Blog Readers Ask

Workers Comp audit questions are emailed or called in to us quite often. I was unable to cover all the questions over the last few months. A few of the questions are listed below with answers. There are links to other articles that relate to the questions. Follow the links for further information.

Emoji Of Workers Comp Audit With Question Marks

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We have not heard from our insurance carrier this year on our workers comp audit. Should we contact the carrier?

Carriers are quite adept at scheduling audits. Quite possibly, something happened on the carrier’s end such as they had to replace the auditor for some reason. You will be hearing from them soon.

Our business grew so that we now are experiencing our first workers comp audit. What preparations should we make?

One of the best ways to prepare is to be highly organized. Throwing a pile of papers at an auditor will never help your result. Excel is a great tool for organizing the paperwork that you will need to produce. Organization is the key.

We received our audits results and do not agree with them. How do we proceed?

You should have received an address, phone number, or email address to contact if you do not agree with your audit. I cannot recommend enough that you use Certified Return Receipt Mail and write to the address on the premium audit bill. You may want to review exactly what the auditor included in their audit workpapers if you were left a copy. If not, you can always ask for them by Certified Return Receipt Mail.

For whom does the Workers Comp auditor work for- the state, the carrier, the agent, as a consultant to our company?

The premium auditor works for the insurance company. The auditor is often from an independent company that is contracted by the insurance carrier. The auditor should leave a contact business card with you before they leave.

Do I have to allow the premium auditor to leave with our company files/information?

There is no rule concerning this situation. However, if you do not want any of your info to leave your business, you can make that request and it should be followed by the auditor. That is strictly up to your company.

**Please note that there are differing Workers Comp Audit rules in each state. These are answers are “in general.”

©J&L Risk Management Inc Copyright Notice

Exclusive Remedy Affirmed by North Carolina Appeals Court

February 19, 2015 By JL Risk Management Consultants

Exclusive Remedy – North Carolina Affirms

The North Carolina Court of Appeals has ruled the doctrine of exclusive remedy is still intact. The legal environment of today has begun to erode exclusive remedy.

North Carolina Exclusive Remedy Court of Appeals

Wikimedia Commons – NC Court of Appeals

Workers Compensation was originally structured to be the only remedy for injuries suffered on the job. Employees cannot bring suit against their employers as general liability claims. Employers are not able to deny the claim due to the employee’s negligence. This balance was the underpinning of WC for many years.

There are states that have been eroding exclusive remedy over time such as California. Recently, I came across a North Carolina Court of Appeals case that concerned exclusive remedy.

The first case was taken from the 2015 North Carolina Court of Appeals opinions. If you want to view the complete decision, please follow the link.

Plaintiff Jeffrey Bowden was injured at work. While his workers’ compensation claim was pending, he sued First Liberty Insurance Corporation, the insurer handling the claim, for intentional infliction of emotional distress and bad faith. Bowden alleged that First Liberty engaged in a host of intentionally wrongful conduct while handling his claim and that he suffered various emotional injuries as a result.

Graphic North Carolina Exclusive Remedy Map

First Liberty moved to dismiss the claims on the ground that the Industrial
Commission had exclusive jurisdiction. The trial court denied the motion and First
Liberty appealed.
We reverse. This case is controlled by Johnson v. First Union Corp., 131 N.C. App. 142, 143-44, 504 S.E.2d 808, 809 (1998) and Deem v. Treadaway & Sons Painting & Wallcovering, Inc., 142 N.C. App. 472, 477-78, 543 S.E.2d 209, 212 (2001). In Johnson and Deem, this Court held that claims arising from an employer’s or insurer’s processing and handling of a workers’ compensation claim—even intentional torts—fall within the exclusive jurisdiction of the Industrial Commission.

We agree with First Liberty that the claims asserted in this case are indistinguishable from those we previously held to be within the exclusive jurisdiction of the Industrial Commission in Johnson and Deem. Accordingly, we reverse the trial court and remand for dismissal of the claims against First Liberty for lack of subject matter jurisdiction.
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The Woodson v Rowland case from 1991 did allow for an intentional tort to have jurisdiction outside of the North Carolina Industrial Commission.

©J&L Risk Management Inc Copyright Notice

Online Doctor Visits – Workers Comp Community Acceptance?

February 16, 2015 By JL Risk Management Consultants

Will Workers Comp Turn To Online Doctor Visits?

Online doctor visits are now readily available and inexpensive. I came across the DoctorsOnDemand website last night. Some of the notations that peaked my interest from their website were:

Picture Of Woman Doing Online Doctor Visits On Computer

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Free visit- everyone likes free stuff
All board-certified physicians
Android/Iphone Apps
$55 or $90 for Skype visit
$40 per visit- check employer page
90 seconds to physician access

I did not actually see any notation for WC treatment. However, my Six Keys To Saving On Workers Comp point out that quick medical access is a huge claims cost saver.

As WC lags so far behind on most subjects, hopefully some company, insurer, TPA, or this website will take the bull by the horns and start using e-medicine. I am sure there are many legal hurdles to having this service for WC.

The NWCDC (National Workers Comp and Disability Conference) last November in Las Vegas had a few vendors that mentioned e-medicine platforms. No one company was pushing the envelope similar to the Doctors On Demand website.

One of the main concerns from a claims standpoint would be the lack of an in-person visit to establish legitimacy of injury, etc. An e-visit could be excellent follow up care as an alternate to an in-person doctor’s office visit.

The co-founder of the service was none other than Dr. Phil. Check out their press section under the Press tab. The list of sources is very impressive.

The closest info that I found to a WC injury was their sports injury page.

Picture Of Man Doing Online Doctor Visits On Computer

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According to the website:

Sports and exercise activities are an important part of any healthy lifestyle. But with increased activity comes the increased risk of injury. In the absence of an obviously severe injury like a broken bone, most doctor’s visits concerning sports injuries are patients looking for reassurance that the injury is not more severe.

Sports injuries often fall into either a minor category (ankle sprains, wrist sprains, shoulder or rib soreness) or a severe category (broken bone, severely torn ligament/tendon).

The experience of a diagnosis and evaluation of sports injuries with a Doctor On Demand Video Visit is exactly like being in a doctor’s office. For example, if you injured your ankle playing basketball, the physician can determine the severity of your injuries through a few exercises, learning more about where it hurts and the degree of pain on a scale of 1-10. If the physician determines your injury is severe (e.g. a broken bone or tear) then the physician may recommend follow-up with a specialist. And if it’s a simple sprain, home care like icing or a brace may be all that you need. With chronic cases like tennis elbow or pitcher’s arm, the same thing is true –– the physician can often determine severity and treat minor injuries through a Doctor On Demand Video Visit.

©J&L Risk Management Inc Copyright Notice

Six Ways To Excel In Comp Arena Without A College Degree

February 12, 2015 By JL Risk Management Consultants

Six Ways To Excel In the Comp Arena With No College Degree

The Comp arena has more than six ways to excel without a college degree. Below is a list of the Top Six, in my humble opinion.

Is there a way to excel in the WC industry without a college degree? This was a question posed to me last month when I was attending the NCCI Data Reporting conference in Palm Beach.

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A college degree used to be the minimum requirement in the ’70s to the ’90s for most carriers. However, the tide changed in the mid to late nineties. There are substitutes that will help depending on your track in the WC industry.

The best to ways excel in WC without a college degree are:

Working your way up from the bottom. This involves having the patience of a great fisherman/woman and waiting for your turn in line. Many great adjusters, agents, loss prevention reps, etc. have started at an admin assistant position and worked their way up the ladder. It is not the easiest method.
Obtaining designations from the AICPCU institute. The classes do require some dedication to studying a certain course. Having designations will always help if you are attempting #1 on this list. Jack Keir For Success has helped me with my designations. Some designations require as little as three courses.
Finding a mentor. One will be shocked by how much help can be obtained in the WC industry by asking. Most WC-industry workers will bend over backward to help. You can have many mentors that are experts in just one aspect of WC. However, you will need an overall mentor. I did excel in the jobs where I had a mentor.
Having insurance industry expertise in another line of insurance. For instance, subrogation is a tricky subject as there is so little training on liability insurance. Having a former auto, GL, or other types of liability adjuster in the WC claims area- priceless.
Obtaining your license immediately. Adjusters and agents have to be licensed in almost every state. Being licensed shows dedication and the WC insurer or TPA does not have to go through the licensure training.
Having a good work personality.
Wikimedia Commons – David Shankbone
This is the real secret out of the six ways to excel. People that play well with others are the ones that are sought out when a position is open. The person making the recommendation to hire someone may end up working with that person on a daily basis.
Bonus – Being a professional. This shines above all else and works with #6. When you walk in the door in the morning and until you leave the office in the evening, professionalism is the key. Workers Comp can be a very high-stress job at times. Keep being professional.

Check out The Two Most Powerful Phrases In The Insurance Industry for more on this subject.

©J&L Risk Management Inc Copyright Notice

NCCI Provides Plethora of Free Info When You Visit Their Website

February 11, 2015 By JL Risk Management Consultants

NCCI Provides A Large Amount of Info Freebies

The NCCI provides a plethora of free information. One of the great improvements with NCCI (National Council on Compensation Insurance) is the addition of many great tutorials on Workers Compensation.

Picture Of Palm Beach NCCI Provides In Florida

Wikipedia – CZmarlin

Many of those tutorials have one or multiple videos to aid in one’s understanding of what can be viewed as a very complicated insurance and rating system. NCCI has done well to allay those fears of the process being much too complex.

I recently attended their Data Reporting Workshop in beautiful Palm Beach, FL. There were so many nuggets of critical information that I absorbed over four days.

NCCI does charge for most of their services. However, one can navigate to their Educational Tab to see many areas covered by good no-cost foundation information.

Texas has decided to fully join NCCI in the upcoming months. You may follow the link or click the Texas Updates area on the homepage.

There are many states that have their own rating bureaus. Many states have multiple exceptions to the NCCI general rules. That is the one caveat on just relying on the general videos or information.

Picture Silhouette of Businesswoman Using Laptop NCCI Provides Free Information

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For instance, California and New Jersey have very different independent bureaus. The basic formulas are the same. However, each of these two states has very different rating plans in certain areas.

I also wanted to give a shout-out and thanks to Richard Saltzman of NCCI for his humor and great teaching skills. Richard’s bio reads that he has more than 30 years of experience in the insurance field including 20 years of insurance company experience.

The data reporting workshop may not be your cup of tea. Check out NCCI Events tab on their home page for further information on the workshops. There may be one coming to your respective state soon.

©J&L Risk Management Inc Copyright Notice

BidRx As Model For Injured Employee Driven Networks

February 11, 2015 By JL Risk Management Consultants

BidRx As A Model For Injured Employee Choice

One of the most economical websites today is BidRx. I found it while reading a publication by Clark Howard. The website was given a thumbs up by the Center for Medicare/Medicaid Services. (CMS)

One has to have a sponsor when they sign up. I used CLARK from Clark Howard. The 5 minute sign up process was very smooth.

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BidRx has a few simple steps:

Enter in your prescription
Pharmacies will bid on your prescription
Wait three days to see who is low bidder
Pick one of the providers
Work out the details

There is really no more to it than the four above steps. I was very skeptical as a website that sounds too good to be true usually bombs later.

I do realize that there a few Workers Comp websites that provide this service. However, the ability for the injured employee to do the search on their own may be a good idea. The results would not be dependent on the carrier or TPA’s network.

This page on BidRx seems to market to physicians.

Wikimedia Commons – Linda Bartlett

Last month, I decided to try to see if the website would actually save any money on a generic prescription I had been taking for quite some time. I filled in the Bid Sheet and waited a day. Believe it or not, the savings amounted to almost 60%.

One of the interesting quotes on the website is:

Know your patients’ benefit structure and rules

Most patients have drug benefits – of one flavor or another. BidRx shows your patients and their benefits, linked together, so you can make fully informed decisions, for every prescription, every time. BidRx shows you prices, co-payments, discounts, prior authorization (PA) forms that can be completed on-line, and even the availability of product samples. All the information you need is in one place; it’s all on BidRx.

Could this also work for the adjusters? I am under the impression we will see many more patient-driven medical networks such as BidRx.

©J&L Risk Management Inc Copyright Notice

Hybrid Premium Audits Still Allowed For Larger Employers

February 5, 2015 By JL Risk Management Consultants

Mail-In and Hybrid Premium Audits Possible With Technology

Hybrid Premium audits are becoming more popular every year due to technological advancements. Securely scanning and emailing documents lessened the need for in-person audits by the workers’ comp premium auditor.

The two terms that seemed to raise the most questions were mail-in (voluntary) and hybrid premium audits. I mentioned these terms in an article I wrote earlier this week. I did receive a few emailed questions on these two types of audits.

Picture of Hand Hybrid Premium Audits Concept

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Technology-based premium audits are usually the audits that we perform for clients. I first heard the term hybrid a few years ago at an NSIPA national conference.

Due to technological advancements, many audits can be performed without being there in person. Teleconferencing and the ability to scan large numbers of documents into very small files has allowed auditors to change their methods somewhat.

Mail-In or voluntary audits usually involve smaller employers. The employer “voluntarily” fills out a premium form that is provided by the carrier. Once the employer calculates the premium, a check is mailed in with the premium form. The premium is usually calculated and paid monthly.

As the article earlier this week pointed out, the states are sticklers on in-person physical audits being performed by the carriers annually. The rating bureaus see the in-person audit as developing a more accurate premium.

Woman Hybrid Premium Audits Using Laptop

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One has to wonder if the states will allow more hybrid premium audits in the future for larger employers. Mobile technology should allow auditors to be able to tour business without ever actually being there. States may be slow to adopt hybrid audits.

The one main steadfast rule by almost all states requires an in-person physical premium audit. This requirement means states will allow this type of audit with smaller companies.

One requirement used in the future will likely be a required physical premium audit for the first audit. The carrier may then use hybrid premium audits for subsequent years.

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59 Modifier Medical Bill Controversy Causes CMS To React

February 5, 2015 By JL Risk Management Consultants

59 Modifier Medical Bill Confounds CMS

The 59 Modifier Medical Bill Controversy.A friend of mine forwarded a note on how medical bills could have be over-inflated by the use of what is known as a 59 modifier. Her company does not use that modifier.

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According to Optum – a medical bill coding company, the Center for Medicare Services (CMS) instituted a new set of codes to combat this overcharging. From what I have read, the use of this modifier on certain medical bill charges was basically rampant.

For further reading, you may want to check out this guidance transmittal from the CMS. CMS estimated that the use of a 59 modifier cost them over $75 million in excess charges.

The modifier can also be used in Workers Comp. I could stand corrected, but I am under the impression that PPO Networks and bill review systems for WC would have not caught the overuse of this modifier.

According to CMS:

The CPT Manual defines modifier 59 as follows: “Distinct Procedural Service: Under certain circumstances, it may be necessary to indicate that a procedure or service was distinct or independent from other non-E/M services performed on the same day. Modifier 59 is used to identify procedures/services, other than E/M services, that are not normally reported together, but are appropriate under the circumstances. Documentation must support a different session, different procedure or surgery, different site or organ system, separate incision/excision, separate lesion, or separate injury (or area of injury in extensive injuries) not ordinarily encountered or performed on the same day by the same individual.

This leads one to wonder how many overcharges were experienced in the Workers Comp arena.

CMS points out the main misuse of the 59 modifier.

Modifier 59 is used inappropriately if the basis for its use is that the narrative description of the two codes is different. One of the common misuses of modifier 59 is related to the portion of the definition of modifier 59 allowing its use to describe a “different procedure or surgery.”

Number 59 Modifier Medical Bill Controversy

Wikimedia Commons – The Federal Government of Germany.

The code descriptors of the two codes of a code pair edit usually represent different procedures, even though they may be overlapping. The edit indicates that the two procedures should not be reported together if performed at the same anatomic site and same patient encounter as those procedures would not be considered to be “separate and distinct.”

The provider should not use modifier 59 for such an edit based on the two codes being “different procedures.” (See example 8) However, if the two procedures are performed at separate anatomic sites or at separate patient encounters on the same date of service, modifier 59 may be appended to indicate that they are different procedures on that date of service.

Are Telephonic Payroll Audits Legitimate- Reader Question

February 4, 2015 By JL Risk Management Consultants

Telephonic Payroll Audits Legitimate For Smaller Employers

Payroll audits, also known as premium audits can take many forms. Telephonic payroll audits have gained in popularity for smaller employers. There are different audit types such as:

Telephonic- yes they are legitimate but read on for more info
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Hybrid
Physical
Mail-in (Voluntary)
Estimated

Telephonic payroll audits are usually for very small employers. Many states have a minimum premium threshold which requires an in-person audit for establishing the proper premium.

Each state has its own specific rules on the minimum premium that would require a physical audit. For instance, as the reader is from California – the minimum rule from the WCIRB for payroll audits: (The 13,000 minimum premium was just changed from 10,000). This is a great example of the rules for most states.

Section VI

4. Audit of Payroll The audit and assignment of payroll shall be governed by the rules and classifications contained herein and the approved pure premium rates, subject to the following specific requirements:

a. The insurer shall audit the employer’s records for the purpose of determining the payroll in accordance with the

following (See Part 1, Section II, General Definitions, for the definition of “Physical Audit” and “Voluntary Audit” and Part 4, Section II, Definitions, for the definition of “Final Premium(s)”):

(1) Each policy producing a final premium of $13,000 or more shall be subject to a physical audit at least once a year. On policies subject to monthly, quarterly, or semiannual interim audits, voluntary audits may be accepted in lieu of interim physical audits. The last audit of the policy shall be a physical audit of the complete policy period.

(2) Each policy producing a final premium of less than $13,000 shall be physically audited at sufficient intervals to ensure determination of proper payrolls. For each policy that is not physically audited, a voluntary audit shall be performed.

Picture of Hand Presenting Payroll audits Concept

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(3) Each policy producing a final premium of less than $13,000 and developing exposure in a dual wage construction or erection classification that requires the regular hourly wage to equal or exceed a specified amount shall be physically audited, unless the policy is a renewal and the insurer physically audited one of the two immediately preceding policy periods.

(4) Notwithstanding the above, a physical audit shall be conducted on the complete policy period of each policy insuring the holder of a C-39 license from the Contractors State License Board. See California Insurance Code Section 11665(a) for additional requirements regarding the audit of C-39 license holders.

(5) In every instance, the audit report shall show the source or sources from which the payrolls were obtained. b. If a policy is not audited as required by this Rule, the insurer shall comply with the rules for reporting unaudited exposure on unit statistical reports found in Part 4, Section III, Rule 5, Estimated Audit Code, and Section IV, Rule 4, Exposure Amount, of this Plan.

Cutcompcosts Is Now Fully Mobile Compliant – Update

February 3, 2015 By JL Risk Management Consultants

Cutcompcosts Is Now Fully Mobile Compliant

Over two weeks ago, Google informed us (Cutcompcosts) that we are not mobile-compliant. As I have a heavy IT background, that seemed to be highly unacceptable.

Graphic of Shadow with Google Cutcompcosts Informed

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—We are having a few mobile rendering problems, which is to be expected with a new software system. Hang in there, it will look spiffy soon.

This is the message we received from Google. It sounds serious. I think it was more of a warning shot across the bow, so to speak.

To: the webmaster of cutcompcosts

Google systems have tested 1,100 pages from your site and found that 100% of them have critical mobile usability errors. The errors on these 1,100 pages severely affect how mobile users are able to experience your website. These pages will not be seen as mobile-friendly by Google Search, and will therefore be displayed and ranked appropriately for smartphone users.

Fix this now:<<<Idle threat???

1. Find problematic pages
View a report of the non-mobile-friendly pages found on your site, and the issues discovered. Inspect mobile issues

2. Learn about mobile-friendly design
There are a variety of techniques you can use to make your site mobile-friendly. Specifically, look for information about the issues brought up in Webmaster Tools. Follow our guidelines

3. Fix mobile usability issues on your site Fix the issues preventing your site from being mobile-friendly.

Over the weekend, I actually analyzed the Cutcompcosts inbound traffic. The inbound traffic for mobile devices was over 20%. I then realized we had reached the 80/20 rule. (Pareto Principle)

Cutcompcosts is now fully mobile compliant. Feel free to use us on your choice of a mobile device. The landing page is actually the blog and not the landing page for desktops or laptops.

If you swipe to the right part of your mobile, the index to the other pages of the website is there.

The theme is bland, but the blander it is, the easier it will be to use, and the faster it will render on your mobile device.

If for some reason, you have any difficulties, please let us know ASAP. We use page-loading accelerators that may interfere with your specific mobile device’s page rendering if not excluded from the accelerator.

I uploaded over 110 exclusions to the accelerator last night. Accelerators should recognize your mobile device. There are so many mobile devices that I am sure we left one or two out of the mix.

Our weekly newsletter is next up for mobile compliance.