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Workers Compensation Reserves – Fee Schedule Hidden Benefit


Workers Compensation Reserves More Accurate With Fee Schedules

Workers Compensation reserves (Total Incurred minus Paid) receive an accuracy boost with fee schedules.    Why? – Let us go into the mind of an adjuster getting ready to set permanent file reserves at 60 days.

picture of archer workers compensation reserves target
Wikimedia License – Jethrothompson

BTW, this articles stems from an article I wrote last week.  I promised in that article to mention how fee schedules help increase reserve accuracy.

Very few adjusting staffs  sit down with a medical reserve and read it out of the state fee schedule.   Usually, the adjuster has a list of blanks to fill in to come up with the file reserves.    Areas such as surgery, hospitalization fees, physical therapy, etc. are listed on the sheet.

The Workers Compensation reserves  at the 60 day mark are for the life of the file.   An experienced adjuster with 7+ years into their career has a great feel for reserving in a state with fee schedules.   The states with Usual & Customary (U&C) are more of a negotiated price.   If you have ever received a U&C bill in a health insurance matter, you are shaking your head – yes.   It is by zip code and area of specialty and on and on.

With fee schedules, the adjuster can easily say -OK- the price of treatment for a  non-compound ulna fracture (after filling in the aforementioned blanks) is $23,545.00.   With U&C,  the adjuster creates even more of an estimate as the adjuster has to know the price of medical treatment for every specialty in every zip code.   Whew! – that is not easy.

man wrapping injured workers compensation reserves woman
by StockUnlimited

I became very experienced in the U&C area after I received two boxes of paper files from a failed captive in a run-off situation.   Some of the providers had not been paid for quite some time.   All the injured employee bills originated in non-fee schedule states.   The ever complicated negotiation was on – by each zip code, and even some of the U&C Zip Codes were split.

In a fee schedule based state, I could have sent the bills for processing through a bill review company.  The charges would have been paid – possibly with an applicable late fee.  The task turned out to be not that easy.

Workers Compensation reserves with a fee schedule state have one set of numbers to use in the complete state – in most cases.   A few fee schedules have a synthetic add-on such as BR (By Report).

A disclaimer – I am not a U&C health insurance expert.  I am more versed in Workers Compensation reserves.


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James J Moore - Workers Comp Expert

Raleigh, NC, United States

About The Author...

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