Archives for September 2015

Indiana Workers Comp Fee Schedule Partially Enacted = Rate Increase

September 29, 2015 By JL Risk Management Consultants

Indiana Workers Comp Fee Schedule Partially Enacted

The Indiana Workers Comp Fee Schedule was partially enacted 7/1/2014. That was a great move except a point was missed as to the real reason for their true cost figures. Check out the chart below. Click on the chart to bring it in focus.

The chart is from the ICRB (Indiana Compensation Rating Bureau) generated by WCRI (Workers Compensation Research Institute).

I have harped on states without fee schedules causing employers to pay much more in Workers Compensation benefits or premiums. One may notice that Wisconsin is even higher. Yes, they have no fee schedule for medical benefits either.

The chart was produced before the 7/1/2014. The Indiana Workers Comp fee schedule that was enacted in 2014 exempted physicians which are a large part of the non-hospital charges. One has to wonder why there was not a complete fee schedule enacted in 7/2014.

As a side note, kudos to Indiana for doing something to cut medical costs. Sitting on the sidelines would have been a very expensive option.

According to Stephanie Goldberg – Business Insurance– (she writes very concise articles)

Nearly 75% of Indiana’s total benefit costs are medical, which is higher than most other states, NCCI said in the filing dated Sept. 21.

The state’s average medical costs have increased steadily since 2006, when the average medical cost per claim was $22,883, according to the filing. The average cost in 2013, the most recently available full policy year, was $35,953.

NCCI has now recommended an increase in rates of 3.2% for 2016. Would an all-encompassing fee schedule have been the better choice? I have confidence that Indiana will produce a full fee schedule in the near future.

Statistics Indiana Workers Comp Fee Schedule service

Wikimedia Commons – The Indus Hospital

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E-Mods LDFs Are Like Credit Scores From Hell NCPRIMA

September 22, 2015 By JL Risk Management Consultants

E-Mods LDFs Are Like Credit Scores

Are E-Mods LDFs like credit scores from hell? Over the past few months, I have presented this material at various conferences. I thought I would attach the PowerPoint that I used at the NCPrima Conference last week.

E-Mods and LDFs_NCPRIMA_presentation 2015

Man Climbing on Credit Score Number E-Mods LDFs Concept

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I have received a few requests for the PowerPoint slides. Ironically, the projector would not work when I presented the slides. Luckily, I had large-sized printed them on paper as a backup.

The interesting fact is all of the slides are taken from articles that were written in this blog over the last eight years. I had combined them for presentations. Actually, this blog was originally conceived as a way to have material on hand for presentations and to possibly write a book.

Credit scores have been used as an easy comparison to E-Mods and LDFs by me for a few years. The differences between credit scores vs. E-Mods LDFs are just as important.

The presentation slides may not seem to make sense. The links in the preceding paragraph will explain much of the information on the slides.

The main theme of the PowerPoint slides is that credit scores can be much more easily changed than E-Mods. The results of a credit file correction can show results in 30 days. E-Mods have many limitations on how they can be changed once the Total Incurred is reported to the Rating Bureaus.

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Five Things You Must Do To Have Very Good Safety Program

September 2, 2015 By JL Risk Management Consultants

Safety Program Five Things You Must Do

There are five things you must do to have a very good safety program according to our safety consultant, Glen DuLac.

Picture of Man Holding a Globe safety program Concept

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A ) Have the best bulletproof ( IIPP) Injury and Illness Prevention plan that you can create or modify. This need not be expensive. You can take a template, but you must modify it to reflect the hazards that are inherent in your company’s operation.

In my business, three years ago, I stopped charging clients for writing an IIPP. The key is to identify the foreseeable hazards, and then put your IIPP into action. Without execution the best plan is of no value.

B ) Do have regular safety training for all employees. Low hazard or moderate hazard industries may need between 6 to 24 safety meetings per year. High hazards may need more, for example, OSHA’s mandate for the construction industry is a weekly tailgate Do not delude yourself into thinking that one meeting a year will be enough, OSHA states regular safety training.

C ) Do get your employees involved. This can be done in 100 different ways, here are a few that work: Safety committees, incentive plans, a blue card system, recognition lunches or dinners, a Safety Newsletter.f you do have a safety recognition lunch, the President or a high level V.P. should hand out the a

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D ) Senior Management must get involved and lead by example. For example, if eye protection is required on the shop floor, no manager should be seen without his eye protection. Iwards along with an enthusiastic “ Way to go.”

E ) Make losing painful. There needs to consequences for the bad apples who violate your safety rules. Companies that issue Safety Citations to rule breakers will get compliance.

In my personal experience, companies that do not enforce the safety rules, are usually the ones with high Ex Mods. Speaking of high Ex Mods, did you know that the State of NC mandates a Safety Committee for companies that have high Ex Mods?

California Claims Adjustment Costs Are Massive – WCAN

September 1, 2015 By JL Risk Management Consultants

California Claims Adjustment Costs Very Expensive

The California claims adjustment costs are massive when compared to other states. The Workers Compensation Action Network (WCAN) published the above chart last week.

Picture of California Claims Adjustment Costs Files and Documents in Cabinet in Office

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A similar study was published in an article on this blog last week which covered the newest WCIRB Study (rating bureau for CA).

Most of the claims and premium data that I have analyzed pegs the ALAE (Allocated Adjustment Expense) at 15% – 17% for most claims. Even the national median in this chart seems high.

Having 28.2 cents of each dollar paid out for non-benefits shorts the injured employee and especially the employers that are paying the premiums.

Why does California have such high claims management expenses? According to WCAN:

The reasons for these high costs include:

Greater-than-average proportion of permanent disability claims (which are more complex to manage)
High litigation rates (particularly in the Los Angeles area)
Large number of active liens and
High frequency of independent medical reviews

According to Willis ALAE usually consists of:

Preferred Provider Organization
State Specific Networks
Physical Therapy Specialty Networks
Diagnostic Testing Specialty Network
Pharmacy Benefit Management
Prescription First Fill
Independent/Defense Medical Exam
Utilization Review
Telephonic Case Management
Field Case Management
Peer Review
Drug Testing
Vocational Rehabilitation
Medicare Set Aside Agreements (MSAs)
Mandatory Insurer Reporting (MIR)
24/7 Triage
Attorney Fees
Translation Services
Surveillance Fees
Transportation Services

How can these fees be reduced? This is one of the more difficult answers in WC today. The California claims adjustment costs may possibly only be reduced as a result of an overhaul (not Senate Bill 863) of the system.