Archives for June 2016

Work Comp Reserves – Why is June 30th Most Crucial Day?

June 30, 2016 By JL Risk Management Consultants

Work Comp Reserves And The Unit Statistical Date

Why do Work Comp reserves become so crucial on June 30th of each year? Please follow along as there are a few steps to this assumption / reality.

calendar pen and eye glass work comp reserves emblem from website

As mentioned often in this blog, the most workers comp policies renew on January 1st of each year. If your company or organization renews on January 1st, you should consider moving that renewal date to later in January.

Save your company or organization time as a major time waster occurs each year with December reserve reviews on a January 1 renewal date. You are wasting your time unless you are planning six months ahead.

The Unit Statistical Date occurs when your Total Incurred (paid + work comp reserves) pegs to your Experience Mod. This happens 6 months after policy expiration, not upon policy expiry.

Hand Illustrating Work Comp Reserves Analytics Concept

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A January 1st renewal date usually guarantees a Unit Statistical Date of July 1st. On June 30th at midnight, your company has what it has for Total Incurred, with very few exceptions. Most companies receive their new E-Mod (X-Mod) 90 – 120 days after the Unit Statistical Date directly from the Rating Bureau or from their agent/broker.

One should study the E-Mod or X-Mod Rating Sheets very closely upon receipt as the Total Incurred figures are included in those sheets.

The Work Comp reserves should be negotiated with the insurance carrier before the Unit Statistical Date if possible. At the close of business today, all policies with a January 1, 2017 renewal date will have their 2017 E-Mod pegged by the respective reserves.

Have you looked over your loss runs? If not, it is never too late to start analyzing your Paid, Reserves, and Total Incurred for each claim. Monitoring work comp reserves can be time consuming yet well worth the effort.

©J&L Risk Management Inc Copyright Notice

James Moore Presenter Insurance Academy Webinar On Adjusters

June 27, 2016 By JL Risk Management Consultants

James Moore Presenter Insurance Academy Webinar – Adjusters

J&L Risk Management Consultants founder James Moore will be presenting a very unique and informative webinar on July 14th, 2016. The sponsor of the webinar is The Insurance Journal’s Insurance Academy.

The title of the webinar is “Make the Work Comp Adjuster Your Friend: Getting the Best for Your Client.” The sign up page is here.

The topic is one that few persons or companies outside of the Workers Comp claims environments have analyzed or discussed as a way to build a team. Building a good employer/adjuster relationship will be the main takeaway.

According to James Moore –

“The WC insurance adjuster sets the reserves on files which eventually result in an insured’s Experience Mod (E-Mod or X-Mod). The Total Incurred values feed directly into the E-Mod formula. For self insureds, the critical budgeting phase for future WC expenditures is based on the reserves. A positive familiarity with the insured does have an effect on the reserves.

One thing to remember is that adjusters usually communicate more with the insured employers than any other party. The adjusters can be an intricate part of the team that provides a satisfactory experience for the insureds. If an employer is unhappy with their adjusters, an agent or any other insurance personnel may not be able to overcome this dissatisfaction. The adjuster/insured relationship heavily affects the insurance renewal process.”

The webinar will cover (in detail) the best way to “team up” with the insurance carriers’ claims adjusting staff including the:

Adjuster’s daily tasks and priorities
Art of reserving a file
Quickest way to team up with the adjuster
Best time and how to discuss reserves with the adjuster

There are six areas that can make or break the adjuster/insured relationship. Those areas will be covered to help facilitate this important relationship.

©J&L Risk Management Inc Copyright Notice

Work Comp Adjusters – Settlement And Reserve Authority From Insureds

June 21, 2016 By JL Risk Management Consultants

Work Comp Adjusters – A Controversial Subject

Most Work Comp adjusters have a very strict authority level in the internal working of a claims department. The subject of having to receive authority from the employer/insureds can often be an exercise in frustration.

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The previous blog article that I had written on this subject generated many questions by work comp claim adjusters and employers.

The claims adjuster trainees, claim adjuster, senior claims adjuster, supervisor, manager and Vice President all have an increased authority level for settlements and/or reserves. The adjuster may have to hold six or seven meetings just to have the reserves or settlements approved internally.

Certain employers may request a type of special claims handling on a file. This results in the adjuster after having several meetings internally to hold a meeting with a person or persons that may not completely understand the Workers Comp process.

Technology has eliminated many of the adjusters’ concerns that they may not know the level of when an employer is to be contacted before a settlement offer is made or large reserves are pending. The claims department’s computer system may not allow the settlement offer or large reserves without having internal approval.

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More than a few work comp adjusters are concerned they may increase the reserve levels or initiate a settlement offer without an employer’s approval. The adjuster very rarely handles files for one or two employers. Some systems will advise the adjuster to contact the employer when a reserve or settlement offer (for instance) is over $100,000.

I have actually seen an employer contact request when any reserve, compensation payment, or medical bill was more than $5,000. The adjuster(s) spent more time asking for employer authority which made the file handling for that employer suffer over time.

There is a delicate balancing act on requesting that an adjuster make contact with a settlement or reserve authority request and not interfering with the 13 daily responsibilities of work comp adjusters.

©J&L Risk Management Inc Copyright Notice

Workers Compensation Cost Cutting – Silent Fifth Key

June 16, 2016 By JL Risk Management Consultants

#1 Workers Compensation Cost Reduction Technique

The art of Workers Compensation cost cutting is one of those specialized areas that may have been put on the “back burner”. The new healthcare laws and other concerns have dominated the employer landscape over the last few years.

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Workers Compensation cost concerns seem to now focus on how to find the “bargain.” Actually, the bargain that I see most of the time is the shopping of policies. That is one of many techniques that an employer can use to cut their bottom line.

In 1989, I first wrote the Three Keys To Workers Compensation Cost Cutting. They were my bedrock for presentations where (gasp!) I used overhead slides. They are:

Immediate Reporting of Injuries – no exceptions or excuses – immediately.
Medical Treatment Network – spending time setting this up can make or break a WC program
Return to Work Program – takes more time to accomplish – the savings are huge
Employee Treatment – this one was added in the 1990’s
Adoption by Management – this one was added in 2005 – more on that one in a moment.
Understanding your E-Mod sheets and premium audits

How Workers Compensation Cost being planned

Wikimedia Commons – Intel Free Press

The main shortcoming I have seen by employers is actually #5. I am not saying that all employers do this whatsoever. Many employers do more than this list for their own type of business. Staying generic as possible is the best way for me to cover all 50 states in bullet points.

The Workers Compensation cost cutting technique #5 if ranked by most important would be #1. Without an effort by the “big cheeses” to cut Workers Compensation costs, all prior and future efforts are in vain.

A client will bring me back in after a few moths or years in some instances. The custom cost-cutting manual will sometimes still be on the shelf where I left it. If it is an electronic file, it shows the last time anyone accessed the file was the date I finished it previously.

This is the search to bring up the other articles that have keys to cut your workers compensation cost.

©J&L Risk Management Inc Copyright Notice

Workers Comp Premium Auditors Are Licensed In How Many States?

June 15, 2016 By JL Risk Management Consultants

Should Workers Comp Premium Auditors Be Licensed?

Are Workers Comp premium auditors actually licensed in any state? This question was posed to me on a contact form on this page.

Agents, adjusters, and other insurance personnel have a license requirement in most states. Why do all states not require workers comp premium auditors to have some type of license? I have posed this question many times over my career.

Workers Comp premium auditors do hold a very intricate financial duty and do examine very in-depth records of employers they audit for insurance carriers.

Licensing auditors would cause the following effects:

Generate a fee for the respective state government
Insure that they are properly trained by administering a test
A continuation of training due to the requirement of CEU’s every year.
Allow a state governing body such as the respective state’s Department of Insurance to have some type of enforcement action as they do with agents and claims adjusters
Weed out the bad apples in the premium auditing industry
Standardize audits at least on a state-basis

If any type of licensing requirement was enacted, the requirements would also have to be expanded to companies that perform premium audits for employers such as J&L Risk Management Consultants.

I have spoken to many auditors on this very subject with mixed results. Some think licensing is a great idea while some are vehemently against it.

The National Society of Insurance Premium Auditors (of which J&L is a member) is the closest thing to a license that I have seen in the industry. However, they do have no enforcement capabilities.

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California CWCI Independent Medical Reviews – Other Statistics

June 9, 2016 By JL Risk Management Consultants

California CWCI Publishes Quarterly Report on IMR Statistics – The Other Numbers

The California CWCI (California Workers Compensation Institute) recently published a spotlight report on the state’s Independent Medical Review (IMR) process. The IMR process was initiated due to Senate Bill 863.

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If a UR (utilization review) physician provides an opinion which denies the medical treatment, the injured employee has the right to dispute that finding.

If the injured employee decides to dispute the decision of the UR physician, the IMR process provides an avenue to have an independent physician review the denial of services. The IMR physician can overturn or uphold the decision.

The main statistics that created a buzz in the Workers Comp blogosphere are:

90% of all denials were upheld
160,000 review letters
1/2 of the reviews were for medications (40% of the medication reviews were for opioids)

As they say in Monty Python(c), now for something completely different:

Over 20% of psychological services denials were overturned by the IMR physician
Almost 30% of the “evaluation and management” services denials were overturned by the IMR physician

Both of these two service categories did not make up a large amount of the IMR reviews. However, the percentage of overturned denials was remarkable.

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One area from the medication IMR statistics by CWCI was antidepressants. The IMR physicians had overturned almost 30% of the antidepressant denials. Even though antidepressants accounted for only 4% of the reviews, this was a striking number.

The most interesting statistic, in my opinion that came from the CWCI study was that the top 10% of medical providers that were mentioned in the IMR letters accounted for 75% of the reviews.

Will California’s Department of Workers Comp look more into that statistic? We shall see.

The study can be found here.

Do Work Comp Claim Analytics Really Work As Promised

June 8, 2016 By JL Risk Management Consultants

Have Work Comp Claim Analytics Arrived?

A Work Comp Claim Analytics package is something that I have been in search of for many years. Can software actually replace the thinking process of an experienced adjuster?

Hand Illustrating Work Comp Claim Analytics Concept

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Last year at the 2015 WCRI Conference I met a few analysts for one of the big insurance carriers. They had informed me the carrier was working on a database for “internal” work comp claim analytics. The package was not going to be sold to the public.

Last week, I noticed an article from a major third party administrator that is selling a claims analytics package. A few weeks ago I wrote about not being able to find any accurate analytics or predictive model packages.

Vector Graphic Of Work Comp Claim Analytics With Dollar Sign

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Some of the comments on the article suggested that there are great analytics on the front end (policies, loss portfolio, underwriting) . That may be true but I have yet to see any worthy claim analytics package.

However, if a TPA or insurance carrier had enough data, one would have to think they would be able to at least see if an injured employee fit some type of profile such as drug dependent personality or if a person from a certain zip code would take longer to heal than the expected norms.

I have demoed so much software at the National Workers Comp Conferences without really finding an analytics program for claims. One reason is the limited amount of data that the vendors would have had – except for the large TPA’s and carriers.

I will eventually have to let go of the old school way of thinking that an experienced adjuster is the best way to analyze a workers comp file and its associated reserves. Once I see a package that works, I will keep quiet about work comp claim analytics. Until then, I will keep commenting and searching.

Work Comp Laws For All 50 States And Canada – WCRI IAIABC

June 1, 2016 By JL Risk Management Consultants

Work Comp Laws

The Work Comp Laws for all 50 states and Canada used to be provided by the US Chamber of Commerce. I remember their manual as always being slightly out of date. However, it was a great summary to have on hand if you were handling or administering over a claims volume with multi-jurisdictions.

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I have always made the recommendation to multi-state employers (including trucking companies) to have a handy copy of the Work Comp laws for all 50 states. One reason is that the WALSH jurisdictional test may place an employee’s WC claim in an unexpected state.

The Workers Compensation Research Institute (WCRI) and the International Association of Industrial Accident Boards and Commissions (IAIABC) Work Comp Laws and Rules covers 98 pages with 16 tables. The two organizations have done a bang-up job on the manual. The manual was last updated January 1, 2016.

This is one of my favorite publications produced by the WCRI.

The 16 tables covered are:

Type of Law and Insurance Requirements
Coverage Exemptions from Workers’ Compensation
Workers’ Compensation Medical Benefits and Method of Physician Selection
Benefits for Temporary Total Disability Provided by Workers’ Compensation Systems
Benefits for Permanent Total Disability Provided by Workers’ Compensation Systems
Permanent Partial Disability Benefits Provided by Workers’ Compensation Systems
Maximum Benefit Payments for Selected Scheduled Permanent Partial Disabilities
Sequence of Disability Payments Made within Workers’ Compensation Systems
Coverage of Mental Stress, Cumulative Trauma, Hearing Loss, and Disfigurement
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Details on Disfigurement Claims
Fatality Benefits Paid under Workers’ Compensation Systems
Initial Payments, Waiting Periods, Retroactive Payments, and Time Frames for TTD
Rehabilitation Benefits Allowed under Workers’ Compensation Systems
Advocate and Attorney Fee Provisions under Workers’ Compensation Statutes
Workers’ Compensation Boards, Advisory Committees, and Other Commissions within Jurisdictions
Workers’ Compensation Second Injury Funds

According to WCRI

““In Canada and the United States, workers’ compensation is under the control of state and province legislative bodies and administrative agencies,” said Ramona Tanabe, WCRI’s executive vice president and counsel. “This survey provides the ability to understand the subtle differences between jurisdictions.”

You may purchase the manual here for a nominal fee. This will be one of my go to reference sources for Work Comp Laws.