Archives for October 2018

Two Great Workers Compensation Guides WCRI – Benchmarks RXs

October 25, 2018 By JL Risk Management Consultants

WCRI Releases Two Great Workers Compensation Guides in October

Workers Compensation Guides by WCRI (Workers Compensation Research Institute) were released in October. The ones that caught my eye were the two below. The Benchmark study can be broken up by state if you do not wish to download the report for all 18 states.

picture ireland england workers compensation guide

Public Use License

The second guide on state prescription rules and laws is very reasonably priced for what you receive in the download. The guide covers all 50 states as of January 1 of this year. It is to be considered a snapshot of the regulations at the first of 2018,

CompScope 19th Edition – The Venerable Guide to Workers Comp Medical Payment Statistics

The following are sample findings for some of the study states: “My comments are in quotes.”

California: The study shows a decrease in medical payments per claim, evaluated as of March 2017, as a result of the continuing impact of Senate Bill 863. “I had thought SB 863 would have no effects on medical costs. This is a great development for CA.”
Massachusetts: Medical payments per claim were the lowest of the 18 study states; many costs have been decreasing going back several years.
North Carolina: Decreases in medical payments per claim were the steepest of all study states (6 percent per year since 2013), likely reflecting the impact of recent fee schedule changes. “Fee schedules are one of the best ways that a state can reduce overall workers compensation costs without reducing the level of care for injured workers.”
Pennsylvania: Faster-than-typical growth in medical payments per claim was driven by faster growth in hospital outpatient payments per claim.
Texas: Medical payments per claim decreased from 2014 to 2016, following several years of increasing medical costs.
Wisconsin: In contrast to moderate to rapid growth in prior years, Wisconsin experienced little growth in medical payments per claim since 2014. “Without a fee schedule I still predict these costs will increase in the future. Usual and customary can only get you so far without a solid number to work with on medical costs/”

To download copies of the studies, visit https://www.wcrinet.org/reports/compscope-medical-benchmarks-19th-edition.

The 18 study states are Arkansas, California, Florida, Georgia, Illinois, Indiana, Iowa, Louisiana, Massachusetts, Michigan, Minnesota, New Jersey, North Carolina, Pennsylvania, Tennessee, Texas, Virginia, and Wisconsin. There are individual reports for every state except Arkansas and Iowa.

Prescriptions Drug Regulations All 50 States

Doctor Hand workers compensation guides Writing Prescription

By StockUnlimited

In early October, the WCRI released a new report that gathers in one place the numerous state regulations affecting prescription drugs in all 50 states, including those for injured workers.

The report, Workers’ Compensation Prescription Drug Regulations: A National Inventory, 2018, also provides information on some of the most prominent prescription drug issues stakeholders are concerned about in 2018, such as the following:

- Rules for Limiting and Monitoring Opioid Prescriptions
Medical Marijuana Regulations
Workers’ Compensation Drug Formularies
Prescription Drug Monitoring Programs
Price Regulations for Pharmacy- and Physician-Dispensed Drugs
Drug Testing Regulations

The tables in this report were compiled from completed surveys of two agencies for each of the 50 states and the District of Columbia. S

The report was authored by Karen Rothkin. For more information about this inventory or to purchase a copy, visit https://www.wcrinet.org/reports/workers-compensation-prescription-drug-regulations-a-national-inventory-201.

Please note that we receive no monies from WCRI to mention their publications. We publish them in the newsletter as they are superior workers compensation guides.

©J&L Risk Management Inc Copyright Notice

Workers Compensation Reserves Reduction Alternative Mini Guide

October 25, 2018 By JL Risk Management Consultants

Workers Compensation Reserves – Lowering Them Can Be Difficult

The Workers Compensation reserves on a file naturally generate controversy. Why is there so much discussion on them? How can you have a great conversation with your claims adjusters?

numbers moving workers compensation reserves

Wikimedia Public Use License Devit Meniem

A workers compensation claims adjuster’s daily activities include 12 more important tasks than lowering reserves. It is the nature of the system, not the individual adjuster’s fault.

Establishing Business Relationship To Monitor Workers Comp Reserves

By the way, if you are the person at your company who was given the responsibility of the Workers Compensation reserves and program, do you know who the adjusters are on your files?

If you do not know your claims adjusters names, please find that out quickly. After all, these are the persons that are putting up reserves on your file. A caveat comes from the sometimes heavy turnover in the industry.

One of the most common complaints we hear from employers and the claim staffs centers on the change of adjuster multiple times on a file. Regardless, keeping up with who is the adjuster on a certain file is critical. You may actually know more about the file than the adjuster that has been on a 5 year old file for two months.

Email communications are the best way to communicate with your adjuster. That way you and the adjuster both have an easy way to track the communications on the file even if you have to copy and paste them into a file. Trust me on this one. It will make your adjuster very happy.

Do not forget the ever critical medical only claims adjuster – they are putting up workers compensation reserves on your files even though the amounts may not be large. Check out these two articles on medical only claims – they can cost your company dearly if not monitored.

Woman Doctor workers compensation reserves Doing Report

By StockUnlimited

Let All The Adjusters Know Your Injury Reporting, Dr. Network and Return to Work Programs

Many claims adjusters will use the background of the insured as one of their reserving factors. In fact, it was the most important to me when I worked a claims desk. I still today advise on reserving to employers. If you do not have programs for the three areas mentioned in the previous heading, the reserves will be higher than the company that has them in place.

The Six Keys To Saving On Workers Comp claims cover other areas to reduce workers compensation reserves.

Data Access Will Help Reduce Your Workers Compensation Reserves

Online claims access remains a critical factor. I have mentioned this subject for over 10 years.. Receiving a paper loss run report quarterly or even monthly just will not do if you want to control your workers compensation reserves. You need to know your reserves up the minute, not from a three week old report.

Zombie Reserve Phone Call

I just coined that term thanks to coffee. A zombie reserve phone call starts with the claims adjuster receiving a call from the employer, agent, etc that consist of “the #$^$& reserves are too high. You are killing me. Bring them down. The adjusters reading this are shaking their heads up and down while smiling.

Adjusters are the most independent-minded people just behind oilmen and truck drivers. Receiving a call like that can only ruin the business relationship (see the first heading) that you have established with your claims adjusters. Do not do it. Just don’t. Your workers compensation reserves will thank you later.

BE A MASSIVE INFORMATION PROVIDER

Man workers compensation reserves Speaker

By StockUnlimited

The heading is in all caps as this is so important. Send in every piece of information that you can to the adjuster. Scanning and emailing is the best way. Everything is the motto here. The more information provided the lower the reserves on files. Once again, trust me on this one.

Do you have a designated person in your company for the adjuster to speak with concerning your Workers Compensation claims? See the first heading again – establishing a business relationship.

Avoid the rumor mill on this one. Do not email the adjuster that the someone heard that someone heard the employee was mowing their lawn. Now, if they hear that the injured employee works at another employer while being out on workers compensation benefits, that needs to be reported to the adjuster ASAP.

Understanding The Workers Compensation Reserve Authority Levels

Bill Zachary recently wrote an article on how reserve levels can cause delays. He was correct in the article to say that claims adjusters may not have the proper authority level even at meditations to settle a file.

The other side of the coin is that large reserves pass through many hands/desks. The adjuster alone may not have been responsible for the reserve level on the file. Excoriating them on a very high reserve may not be the best tactic. Below are synthetic reserve levels in a claims department:

Medical Only Adjuster – $2,500
Adjuster trainee – $10,000
Adjuster – $25,000 to $40,000
Senior Adjuster – $40,000 to $ 60,000
Supervisor – $50,000 to $80,000
Manager – $75,000 to $135,000
Vice President/Examiner -Unlimited
Big meeting with all parties – Mega-claims

In those numbers exists one big key. When mega-reserves are sitting on a claim and they need to be reduced, the same people have to approve the lessening of reserves. Motivating the adjuster who has very limited time on their hands to spend hours on a reserve reduction through the levels of authority takes a special willingness to lightly push the adjuster along. Many adjusters want to close out any excess reserves at the file closing. This delay may cause an Experience Mod to stay high.

I had a claims VP tell me approximately five years ago that my client’s reserves were too high, but he was not going to reduce them. Every party up to his level agreed the reserves should be reduced – the file has $540,000 in reserves at the time. It closed within $10,000 of my recommended $145,754 reserve recommendation. The bottom line – the adjuster may not be the one responsible for the reserves. Do not ruin your relationship with them. Once again, see subheading #1.

Why Should You Care?

Department Of Insurance workers compensation Building in Texas

Public Domain License

Voluntary Market Insureds

The key for employers with a regular workers compensation insurance policy is the E-Mod (sometimes call X-Mod). The mechanics of the E-Mod calculation will not be covered here. There are many articles already written on the subject in this website.

Keeping up with your claims and paying attention to the loss adjusting will usually lower your workers compensation reserves. Some companies consider workers comp as just a tax of doing business, which can be a large mistake.

One caveat here is to think that only the last four years of claims go into the E-Mod, so the old claims do not make any difference. That thought causes many companies to not be able to find lower cost policies. Carriers examine ALL claims now as far back as a company’s loss history can be traced.

Data analytics are here to stay. All claims now count. I have examined many analytic reports. Most of them left me asking even more questions. Many data analytic software packages now look at 10 years of claim data at a minimum.

Self Insureds And Other Similar Programs

Self insureds, very large deductibles, most captives, and alternative risk programs fit into this category. As posted very often in these articles, I have heard self insureds say ” We are outside of the Workers Compensation system.”

Actually, self insureds and other similar programs are more in the workers compensation system than another group. The voluntary market insureds have a buffer of the E-Mod. If they have a $540,000 loss, there premiums are not going to increase by that amount. If you are a self insured, then it comes directly from your budget – write the check.

Self insured must work very closely with their TPA to make sure that the reserves are appropriate. Under-reserving can cause a budget shortfall. Over-reserving can cause the budget to be too inflated. Either situation can wreak havoc on an insurance budget.

Notice No Technical Advice

Men Talking workers compensation In Office

By StockUnlimited

Why was there no technical advice given in this article? Many times we are called into a situation where the insured employer has caused an increase in their reserves, not a reduction after reviewing their losses and workers compensation reserves with the claims staff.

How can this happen? Sometimes a reserve review can serve as a reminder to an adjuster to recommend a reserve increase on a certain file. Knowing which files to address is critical.

To avoid the situation – unless you have a claims background of seven to ten years, use the alternative- this mini guide to help lower your workers compensation reserves.

©J&L Risk Management Inc Copyright Notice

Why Are Workers Comp Pharmacy Benefits So Expensive – In One Picture

October 18, 2018 By JL Risk Management Consultants

Workers Comp Pharmacy High Costs – One Pic Explains It All

A Workers Comp Pharmacy comparison can be shown in the picture below. My comparison is not for a Workers Comp claim that I have presently. Instead, a simple picture shows the source of the high costs of name-brand medications regardless if the benefits are health or workers compensation.

picture of inhalers from Workers Comp Pharmacy

Taken by article author

The one on the left is brand name. The inhaler on the right is a generic version. Each one of them provides 200 doses.

Every year, I have to use an inhaler when I catch the usual upper respiratory infection at an airport or in an airplane. I use air travel just enough to have the usual travel maladies.

I was explaining to a friend of mine in another country that an inhaler here retails for approximately $175. I will not mention the drug company or the drug in the inhaler. He said let me check on that as I think they sell here over the counter without a prescription for $4. I thought he was out of his mind.

Then, one day I received a package from his present home country. I will keep the country anonymous as well. I had remarked to my good friend that the inhaler was running low and I would have to pay for a Doctor’s visit and an extremely high price, even with health insurance, for the inhaler.

I opened up the package and there was an inhaler from his home country from the same pharmaceutical company. With postage, it cost him less than $10 including the cost of the inhaler.

I had thought that it could not be the same medicine. I was wrong. IT WAS THE EXACT SAME MEDICINE manufactured by the same company overseas. So the inhaler can be obtained without a physician visit in his country – amazing, and it was the dollar equivalent of $4.

Let us look at the comparison:

US – $25 for office visit, $175 (let’s not count in the insurance copay) = $200
Foreign country – $4 + 6 postage = $10

by StockUnlimited

Why does it cost 2,000% more for the same drug manufactured by the same company? I then honed in on Workers Comp Pharmacy expenditures. The light bulb went on quickly. Why are name brand pharmaceuticals so expensive for Workers Comp? I think it may be that the generics are produced in the same factories as was the inhaler.

By the way, there is no generic version of the inhaler, unless you live in another country. Why? The domestic patent has not expired yet.

Workers Comp pharmacy costs for the inhaler would be full bore at $175, right?

I am not a Pharmacy Benefit Manager (PBM) expert. However, the numbers are the numbers – PBM or not. If you wish to comment, below, please explain the $173 difference and if the inhaler would be cheaper with a Workers Comp Pharmacy network.

©J&L Risk Management Inc Copyright Notice

IAASE Conference – Not Quite Live Posting October 7 – 9

October 12, 2018 By JL Risk Management Consultants

Notes From The IAASE Conference

IAASE – Insurance Auditors Association of The Southeast

I was going to post the IAASE Conference from earlier this week live. So much helpful information was covered that I found it better to write it down and then post the presentations from the IAASE Conference later in the week.

Wikipedia – Darwinek

The conference was held at the University of South Carolina (Columbia). The conference also provided a career fair for any Gamecock students that were interested in premium auditing or insurance in general. I took notes on some of the presentations.

IASSE Conference Keynote Speaker

Robert P. Hartwig, PhD, CPCU

Clinical Associate Professor, Finance Department and Director, Center for Risk and Uncertainty Management

Darla Moore School of Business

University of South Carolina

____________________________

Dr. Hartwig has been quoted by me and presented at some of the conferences I have attended over the years. Dr Hartwig used to work for the Insurance Information Institute. He covered so much good information so quickly I could not blog it live. Some of the notes I took from his presentation:

University of South Carolina has the 3rd largest Risk Management program in the US
New Tax Laws adjustments will show up more in 2019
P&C Insurance Industry $60 billion net income after taxes
ROE (Return on Equity) is in single digits
Combined Ratio receded from 1.14 last year to .96 this year
Domestic Reinsurance 13 – 15% growth, probably due to new tax laws repatriation of assets
$30 billion in mergers and acquisitions
Trumponomics – tax reform, deregulation, infrastructure investment, Fair Trade, and other programs from the new administration resulted in 4.2% economic growth. The 4.2% growth has increased insurance exposures
Economy drives P&C insurance growth
Job growth drives the economy
Commercial lines much more volatile than personal lines
Workers Comp – downward growth trend – why?
- Returning to rate adequacy from prior year
- Safety and Risk Management (?)
- Rates are decreasing

___________________________________________________

The Honorable Ray Farmer – South Carolina Insurance Commissioner –

Three main concerns for the Insurance Commission –

Affordable Care Act – only one carrier left in the state, no competition
Long Term Care Insurance – steep increases in older policies
Coastal Insurance Coverage – Flood Insurance – Hurricane Florence was devastating

South Carolina Workers Compensation System

Favorable and Stable
- 20% rate decrease
- Premium Growth – Total $827 million in 2017
Market
- 300 participating insurers
- Small 4% residual market
- Largest insurer writes 9%
Biggest Challenges
- No in-state burn center, so insurers pay full out-of-state rates for treatment
- Opioid abuse
- No guaranty fund for self insureds in SC – I did not know this

___________________________________________________

Presentation on Managing Remote Workforce

Keith West -Excel Tips For Premium Auditors – IAASE Conference

Flash Fill – great time saver
Filter
Transpose
Text to Columns – Another great time saver
Pivot Table
V lookup

The IAASE Conference had many more great presentations. I decided to write notes on the above three presentations.

Feel free to check out the handouts and the other presenters from the IAASE Conference.

North Carolina Insurance Commissioner Issues Warning On Steerage

October 5, 2018 By JL Risk Management Consultants

North Carolina Insurance Commissioner Warns On Steering Hurricane Damage Repair – Big No No

graphic map north carolina insurance commissioner

Wikipedia – Alexrk2

This morning I received a general memo from current North Carolina Insurance Commissioner – Mike Causey. The first thing I noticed was that it was not directly addressed to me – whew!

Unlike Workers Compensation directed care for injured employees in most states, an adjuster just cannot make any recommendations. My question always was, what if the home or property owner asks for names of a few companies – but the answer is still NO.

Whenever I do property damage claims, yes, I do those – I recommend the insured contact their agent or the Department of Insurance. That always deflected a question that can really cause problems for an adjuster or damage repair company.

Most states have these laws in place. Many property and casualty adjusters read our newsletter and articles. I forwarded the memo to a few friends. I doubt they were ever steering clients to certain repair companies.

To: All Insurance Companies and Other Entities Licensed Under Chapter 58 of the North Carolina General Statutes

From: Mike Causey, North Carolina Insurance Commissioner

Date: October 4, 2018

RE: Anti-Steering Laws

Tree Fall on North Carolina Insurance Commissioner House Damage

Wikimedia Commons – Win Henderson

I would like to thank all companies who have responded quickly and with compassion to the disaster in North Carolina resulting from Hurricane Florence. Several of the companies have also madea special effort to participate in the Insurance Camps that the Department has organized over the past three weeks. The Department recognizes that juggling schedules due to last minute site selections has been difficult, but, the effort was very much appreciated. It truly made a difference to those devastated by the storms to see the industry out in force trying to help.

On another note, the Department has also received some reports that some outside adjusters are insisting that consumers use the services of certain firms for damage repair. I would like to remind the companies that North Carolina has very strict anti-steering laws that prohibit companies, agents, adjusters, or appraisers from requiring consumers to utilize a particular service or source for repair of autos or property damage. I refer you to N.C. Gen. Stat. §§58-3-180 and 58-33-76, as well as other statutes and regulations, for review ofour anti-steering laws. Please ensure that any out-of-state adjusters or any in-state adjusters you use to adjust claims in North Carolina are familiar with and adhere to our anti-steering laws.

Thank you again for all that you do for our state.

Respectfully,

When Are Final Claim Reserves Set – Is There Exact Date?

October 4, 2018 By JL Risk Management Consultants

Final Claim Reserves Set Earlier Than Expected

The final claim reserves are set much earlier than one might expect in the reserving process.

Public License Auckland Public Museum

Most adjusters set the final reserves at 60 days into a claim. The exact timetable is:

14 days – initial reserve – usually made to the medical bills for first treatment and to start any indemnity benefits (if required). These reserves may not be accurate when examining a loss run
60 days- final claim reserves – regardless of claim severity the reserves are set “for the life of the claim.” The adjuster reviews the reserves every 30 days to make sure of adequacy to pay benefits, medical bills, and expenses. The 30-day reserve review can be very difficult to accomplish with the other 13 daily adjuster tasks. The claims supervisor usually has a diary at 50 days to analyze the reserves and ask the adjuster questions on the reserves. The review date for denied claims may be longer.
6 months – locked in reserves – any adjustment to the 60-day final claim reserves is analyzed at this point in the claims. At 6 months, the claims staff has sufficient knowledge of claim seriousness. The Claims Manager usually has a 6-month diary for any larger claims. For the very large claims, a diary for the Claims VP/Examiner may kick in at this point.
Repetitive diary -(Every)
- 30 days for claims adjuster
- 60 – 90 days for claims supervisor
- 6 months for Claims VP or Examiner
AdHoc – As needed – reserves are increased when:
- Reserves not sufficient to pay benefits or medical/expense bills
- Claim risk changes – usually an increase in severity
Varied Timetable – not all insurance carrier and Third Party Administrator claim reserve timetables match the above exactly. The overall idea is to have the employers participate in the process. The final claim reserves should have input from the employer before setting them.

Employer Responsibilities With Final Claim Reserves

Man final claim reserves holding a bag of Money

by StockUnlimited

The employer responsibilities to keep claim reserves in check are:

Establishing a business relationship with your adjusters – one of the quiet cost savers on claims. Adjusters who know their employer and vice-versa will always have lower reserves on those claims. Do not forget the critical medical only claims adjusters – another quiet cost saver.
Information flow – make sure the claims staff has all the information you receive on the claim ASAP. Investigate the claim occurrence onsite if possible. The more great info an employer can provide the adjuster before the 60 days Final Claim Reserves, the better the outcome. Do not make the adjuster go into protection mode on the reserves.
Avoid Twilight Zone phone calls from medical providers and the injured employee. These will result in tremendous reserves. Trust me on that one. I can remember those phone calls from the 1980’s.
Make sure the adjuster knows (overall and on the specific claim) that you have followed my Six Keys To Cut Workers Comp Costs.
Negotiate at policy renewal (if possible) a contact from the claims department is reserves are increased by X amount ($25,000 recommended). Many TPA’s have this built right into their systems.
Online claims access – you can check the progression of the claim without having to contact the claims adjuster. Do this – it will pay off in the long run. A knowledgeable employer always has lower reserves.