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Home Ergonomics Advice Reduces Workers Comp Costs

March 4, 2021 By JL Risk Management Consultants Leave a Comment

Home Ergonomics Advice Learned From Recent Webinar 

Recently, I viewed (or should it be attended?) a webinar on home ergonomics advice from TeamErgo that is owned by Mindy Smith.  I have seen her present at least five or six times over the last 15 years.  If you contact her, she may share the whole presentation with you.  

She graciously allowed me to use a few slides from her presentation.  I decided to use three of them to not delve too far into what is an area I know so little about – except that it saves Workers Comp $$ even reducing injuries from home. 

My decision to cover ergonomics came from this post on in-home injuries that went viral a few months ago.

If you think that ergonomics may not be worth the time or effort, then check out how ergonomists reduced Carpal Tunnel Syndrome by 50% in the workplace saving employers millions in workers’ compensation budgets.

Ergonomics is Risk Management in its most basic form – hands-on cost reduction.

If you click on the thumbnails that I provided below, you should be able to see the whole slide.  I will make comments below each slide. All have ErgoSmith as the copyright holder.  Please click the slide as these are thumbnails to see a larger version.

Slide From Home Ergonomics Advice

This slide covers one of the areas that I suffer from often – computer eye fatigue.  I had recently reviewed a claim where the injured worker had a healing torn cornea.   She worked at the computer 15 hours a day at home.  This slide might have prevented that reoccurrence of symptoms.  The injured worker’s claim was reopened with $40k in reserves as she may have needed corrective surgery. 

pic of home ergonomic devices

The advice on how to set up your home workstation/desk is simple yet stress and strain reducing if you sit at a desk at home all day.  This could even apply if/once you return to the office.   I know, stands and footrests seem like expensive options, correct?  Well, then check out slide three on home ergonomics advice – a shocker to me. 

No endorsement of brand or equipment- Amazon(c) 

A laptop-stand for $17 seems reasonable.  I had always thought that ergonomic equipment was extremely costly.  In some Workers’ Comp claims, I have paid 1,000% more for the same items. This slide from TeamErgo and many of the presentations I have seen by Mindy dispute this point very often.  Ergonomics can be reasonably done.  

Conclusion on Home Ergonomics Advice

I think we can call see that good reasonably price home ergonomics is available.   Ergonomics did not stop when your employer transitioned you from an office to home.  

This great home ergonomics advice can prevent you from having a remote workers comp incident. 

Filed Under: Risk Management Tagged With: ErgoSmith, graciously allowed, home ergonomics advice, reoccurrence of symptoms

Workers Comp Predictive Analytics Changed Loss Run Reviews Forever

March 4, 2021 By JL Risk Management Consultants Leave a Comment

Workers Comp Predictive Analytics – Do Not Ignore Old Open Claims 

One of the big changes with loss run reviews started with the carriers and now the whole insurance industry not ignoring the old open claims. Workers Comp predictive analytics has changed how old open claims are evaluated in underwriting. 

picture of workers comp claim analytics Aztec calendar

Public Use Wikimedia License – Keepscases

Years ago, I wrote numerous articles that pointed to only considering claims that were going to be fed into the Experience Mod system.   I even said that predictive systems would not work in workers’ comp.   That statement still stands.  I will cover it in the next heading. 

The scenario has changed so much in the last 10 years that I had to change my advice that I give to claims adjusters, employers, agents, and others. 

Does this discount the Experience Mod system?  No, it does not as the Mod is still the most common way to assess the risk of an employer.  

Times are changing though, on how the Workers Comp insurance industry evaluates employers to underwrite them.  One cannot ignore the Schedule Modification factors that carriers assign to employers. 

Read up here on Schedule Mods as more carriers are using algorithms to calculate your risk factor in addition to looking at your Experience Mod.  Schedule Mods can swing your premiums up to 50% in certain states.  

Two Types of Workers Comp Predictive Analytics 

The two areas of analytics as I view them are pre-claim analytics and post-claim analytics.  Pre-claim analytics seem to work well.  Post-claim analytics have not moved forward that far yet. 

Pre-claim Analytics

Analytics on the front-end of the Workers Comp insurance process has become almost the norm in most underwriting departments.  Carriers, Third Party Administrators, Captives, and other entities that provide coverage can now import the claims data, analyze it, and come up with a score that may vary somewhat from the Experience Mod system. 

Many companies have sold and now sell analytics packages that have simplified the front-end rating processes on insureds.  

Agencies are now more prone to have a set of algorithms that analyze current and potential clients for many types of loss ratios.   

Inside of pre-claim analytics, the old claims count significantly more than with the Experience Mod rating systems used by the rating bureaus (NCCI, WCIRB, etc.).   

Numerous old open claims on a loss run (more than five years old) may have little effect on your E-Mod/X-Mod.  They will have a greater effect on pre-claim analytics.   Closing out the old claims has become more important over time.  

Check out this article on reopened claims causing problems if they are included in any analytic evaluations.  Reopened claims sometimes have the same numbers reset on the claim, as when the claim was originally closed.  These reopened claims can spike an E-Mod or any type of workers comp predictive analytics. 

Post-Claim Analytics 

Post-claim analytics, according to my opinion, attempt to predict claim values using various factors surrounding the claims.  I still have not seen a package that can analyze the healing of the human body with a predicted return to work date or the amount of medical treatment required for a return to gainful employment.   

Over my career, I have reviewed thousands of claims and loss runs.  I have often seen this situation – a group of injured employees have the same:

  • Employer
  • Socioeconomic factors
  • Age, Sex, pre-injury health
  • Treating physician 
  • Injury type
  • Other similar factors. 

The healing and return to work period vary widely for a similar group as the human body does not heal the same.  No algorithm that I have seen predicts the outcome of these claims.  

I still want to be proven wrong.  I have reviewed some of the systems that were good at pre-claim analytics including the level of safety provided to the employees as a predictive factor.   I have not seen one to date taking post-claim data and using it for a model.   

Old Claims Now More Critical – Workers Comp Predictive Analytics 

Workers Comp predictive analytics looks at more of a longer horizon than the usual.  Even most actuarial analyses are giving more weight to older claims.    

In 2010 – 2011 and before, I would usually ignore claims that were more than five years old.  Why should I ask an employer or insurance agency to pay me to close files that made no difference to the Experience Mod or a self-insured Loss Development Factor?  

Any claims that appear on loss runs, including old open claims, now require treatment as if they were open new claims.  Workers Comp predictive analytics now give them much more weight when analyzing an insured. 

Filed Under: predictive analytics Tagged With: Age, front-end rating processes, human body, longer horizon, Socioeconomic factors

Workers Comp COVID-19 Vaccinations – Part of Return To Work

February 25, 2021 By JL Risk Management Consultants Leave a Comment

Employers Require Return to Work Workers Comp COVID-19 Vaccinations?

I started pondering how the Workers Comp COVID-19 vaccination process would work if an employee were returning to work with or without vaccination.

This morning, I was reading a blog post from a Law Professor from Wyoming University.  I found it through a WorkCompCentral article, but the article is behind a paywall. 

Picture of Workers Comp COVID-19 Vaccination s virus

Public Use Copyright – US NIH

WorkCompCentral still has a freebie daily newsletter.  I signed up for a paid subscription in 2014 (worth it).   

Mr./Dr. Michael Duff (smarter than me) said that the presumption of an injury might be removed if the injured employee refused a vaccination.  

The article started my brain up (after two Keurigs, ok three) with the thought that what happens to a regular return to work and workers’ comp injury return to work if the employee has not been vaccinated for COVID-19 (at least the first shot)? 

Illinois Says No Comp If No COVID-19 Vaccination – Wow

Referring back to Attorney Duff’s article – Illinois may enact a law that says this:

A workers’ compensation bill filed in the Illinois House on February 19 provides, “no compensation shall be awarded to a claimant for death or disability arising out of an exposure to COVID-19 if the employee has refused a vaccination.” 820 ILCS 305/7.5 new

If one reads further down the blog page, Arkansas was also in the midst of legislative wrangling on the same matter.  

My slightly twisted thinking then said – What happens if an injured worker is released to return to work and they are unvaccinated or have refused a Workers Comp COVID-19 vaccination?  

Workers Comp Return To Work Disputes Spike?

Let us talk about the treating physician or an Independent Medical Exam (IME) physician.  The word that is tantamount would be: 

Maximum Medical Improvement (MMI)

Please follow the link if you are not familiar with MMI.  One way to think of it is all the parties’ (employer, employee, claims adjuster, physician, and others) goal is and always will be a return to gainful employment.   

If the injured worker does not receive or refuses a vaccination, does the treating physician say that he/she is at MMI?

That would be a big question that the persons in the above paratheses very likely will have to handle as the pandemic eases and normal return to work occurs in late 2021. 

Could the injured worker’s refusal of a vaccine that keeps them out of work cause them to lose their weekly benefits?  The disputes would sharply spike. 

Workers Comp COVID-19 Vaccinations and The Presumption Legislation

Research into this subject today points to none of the State’s multiple-presumption Senate/Assembly Bills and laws considered this conundrum.  

Letting the Workers’ Comp Judges and Appeals Courts settle this matter may not be the best avenue.  Watch for the states to address this issue soon (or maybe not). Illinois has broken the ice in an indirect manner. 

Filed Under: return to work Tagged With: above paratheses, gainful employment, slightly twisted, tantamount

Workers Comp Test Audits – Pain or Preventative Measure

February 24, 2021 By JL Risk Management Consultants Leave a Comment

Workers Comp Test Audits – What Are They – Necessary Evil? 

Not too long ago, I had thought that Workers Comp test audits were not necessary and could be viewed as an intrusion on employer insureds’ busy schedules.  

pic worker comp test audits tube blue purple

Public Use License – Wiki-Amitchell125

Over time, I have come to realize that workers comp test audits may not be appropriate for every situation.   Many situations have come up in the last few years that have changed my viewpoint to a point.  

After speaking with quite a few carrier and independent auditors, their opinions on test audits changed and shaped my view of them to the point where I consider them necessary in some situations and not a necessary evil.  

Sending out a person with a completely different title than a premium auditor and retitling the audit as something like a risk analysis still seems an unfair situation.  How can an insured trust their carrier and agent with this when a test premium auditor has a different title completely? 

Let us look at a few aspects of test audits including:

  • Definition and Types
  • Rules
  • What is covered
  • Length of time to accomplish 
  • Industries 
  • Why they can be a way to avoid sticker shock at the final premium audit
  • Maximum per year – opinion 

Workers Comp Test Audit Definition

The definition of a workers comp test audit is twofold:

  • A premium audit during the early part of the policy year, usually with a new insured, often with State Funds or assigned risk policies.  The audit functions to establish the proper classification codes and payroll levels early in the policy year to avoid the sticker shock at the end of the policy term.
  • Each state may audit certain policies at random by requesting them directly from the carrier or by doing an in-person audit at employers (rare).  I am not referring to this type of test audit in this article.  These audits usually allow the Workers Compensation rating bureaus (NCCI, WCIRB) to affirm that the proper classification codes are being used for a certain type of employer or industry.

Workers Comp Policy Audit Rules 

Most policies read something like this on the premium audit rules – yes, it is in your policy.   I recommend your read your current policy:

We reserve the right to audit your worker’s compensation policies at a time and place convenient for your company.  We may perform an audit any time the policy is in effect and up to three years after the policy expiration (my quick summary).

What Is Covered In The Audit – Length of Time

The materials that are requested for review may be the same type of information requested at the final premium audit for the policy.   The review is usually shorter in time as your policy just started out with them.  One premium auditor commented at a conference that they like to “get in and get out quickly.”  Follow the previous link for a list of the materials that can be reviewed by the premium auditor. 

Type of Industries or Companies

The industries that I have seen test audited the most are:

  • Employment agencies
  • Trucking firms 
  • Construction companies 
  • Very large corporations
  • Companies in the assigned risk pool 
  • Any company that may have a large amount of premium base 

Workers Comp Test Audits = Avoiding Sticker Shock

One of the most devastating developments that may not have been budgeted by the business owner is a huge unexpected premium audit bill at policy expiration.   The workers comp test audits may help to avoid this situation by establishing the workers’ comp premium base at the beginning of the policy, especially in assigned risk pools. 

When is the best time to do a test audit?  From the numbers I have seen, 100 days into a policy would be the best time to perform test audits.   That way enough current documentation exists to establish many of the facets of the premium audits.

Maximum Number Per Policy Year

One of the caveats that I pondered as I wrote this article was how many times per year should a carrier be allowed to perform a workers comp test audit.   

Each policy is unto itself. I do not want to issue a blanket statement.  However, one test audit and the final premium audit should suffice for almost any employer that the carrier considers as a candidate for a test audit process.  

Filed Under: Workers Comp Premium Audit Process Tagged With: get in and get out quickly, Length of time to accomplish, most devastating developments, not a necessary evil, retitling, viewpoint to a point

WCIRB 8871 Webinar – What California Insureds Need To Know

February 18, 2021 By JL Risk Management Consultants

California’s Rating Bureau WCIRB 8871 Webinar Today – Some New Insights 

I just finished watching the WCIRB 8871 webinar.   The webinar was only 30 minutes.  Then again, how long can a group talk about the new classification code?

Very few changes were introduced from the previous WCIRB 8871 webinar that you can find here.  

The Main Issues Learned Today – Important Ones 

WCIRB will begin with the same rate as 8810 until they have enough data to start with an 8871 rate.  Last year, two different premium auditors told me this was going to happen at the beginning. 

WCIRB 8871 Webinar Slide

(c) WCIRB – please click to see a larger image

Please click the thumbnail below to see the complete slide.  The WCIRB will use almost the same rules as NCCI’s 8871 Classification Code.

The most important part of the classification code is the amount of time worked in the office or at home.  If more than 50% of the employee’s time is in the office, the correct classification code is 8810.    

WCIRB 8871 Webinar Answered my Question 

I had sent in a question posed by one of our clients in Orange County, CA.   How about 8868 – the teacher’s classification code – are we going to see any of the teachers considered as 8871 employees?

The answer was what I had thought – 8868 Teachers, Professors, Instructors is an inclusive code.  So, any Standard Exceptions including 8871 (a standard exception code) would be considered 8868.  Online teachers are still 8868.  

NCCI – 8868 COLLEGE—PROFESSIONAL EMPLOYEES & CLERICAL – cross-referenced as School—Professional Employees & Clerical

WCIRB – Classification 8868, Colleges or Schools – private – not automobile schools – professors, teachers or academic professional employees, was amended to clarify its intended application and provide direction as to how related operations should be classified.   

COLLEGES OR SCHOOLS – private – not automobile schools – professors, teachers or academic professional employees

8868
Academic professional employees consist of but are not limited to, deans, chancellors, vice-chancellors, directors, principals, assistant principals, presidents, vice presidents, librarians, registrars, curriculum developers, psychologists, speech therapists, and counselors. The responsibilities of such employees typically include planning, directing, administering, counseling, or curriculum development.

This classification also applies to teachers’ aides, tutors, athletic team coaches, or library employees. This classification also applies to Independent Living Skills (ILS) instructional programs that are administered through state-contracted Regional Centers.

The above represents just the basic classification code rules for 8868, I did not include the alternate definitions of 8868 that would be under alternate class codes. 

Telecommuters Are Part Of Your Company – even if not in CA

The reason that I have covered Telecommuters so much is that unless your company is in one of a few states that do not have 8871 as a classification – you are going to deal with this code for what could be a long period of time.   

Many companies have now said (Microsoft(c), etc.) that employees will be working from home for a very extended period. 

The presentation from today should be available by Friday. I will post a link to the webinar next week.  I recommend watching the recording of the WCIRB 8871 webinar even if you do not have a business in CA. 

 

Filed Under: classification code Tagged With: Orange County, PROFESSIONAL EMPLOYEES & CLERICAL, speech therapists, teachers, thumbnai

Workers Comp Website – 10 Things To Know When Switching Providers

February 18, 2021 By JL Risk Management Consultants

Workers Comp Website – 10 Lessons Learned Since Last Week’s Switch

J&L moved its workers comp website provider last week.  Many problems came up that need to be shared so that our article and newsletter readers will not have or be prepared for the same type of problems. 

Our last workers comp website became slower and slower as we added graphics and SEO information into the articles.  We took the plunge last week.   Next up are the 10 problems to prepare for during the switch.   The switch looked so easy.  It was not as easy as advertised. 

pic Workers Comp Website nuclear blast

Public Use License – US National Archives

Switching a workers comp website (or any other type) –

The lessons learned were:

  1.  Having an IT background does not matter – I have an intensive background, but not in new programming languages or website structures.  I tried to import the website manually and boom and use importer software (see picture) that is what our website looked like.  
  2. Pay for someone to do the switch at the new provider – an extension of my #1.  After spending a whole Saturday freaking out as my IT background did not save the day.  It was the best $30 J&L spent.
  3. It takes a week for the website to completely switch over – save your old website and emails for awhile.  I switched back three times to my old website provider over the last three years as the grass was not greener in the new pasture.  Most hosting services let you try out their website for 30 days.  I switched back last time after 28 days.
  4. Delete (be careful) your old website on the old provider after you are sure the new provider worked for you and your company.  Google HATES duplicate content – they will consider your new content as a copyright violation.  Yes, they will do that very quickly.   A website can be unranked very quickly by Google. 
  5. Do it over a weekend as you will probably lose a few emails.  I bcc:’ed all my outgoing emails back to another company email address to make sure the outgoing mail server was working.  
  6. Find a good provider – not the cheapest – check the ratings
  7. Be extremely patient – a huge key to success, the Cutcompcosts website switch. 
  8. Speed is now key in the Google ranking – UX is the new term for getting ranked. Google now measures how the website functioned for your visitors.  Phone UX will become the new setting checked more by Google.   
  9. Understand the difference between WordPress.com and WordPress.org.   The second one is more of a freelance type of hosting service and web provider.  The first one- WordPress.com websites can be very hard to move to another provider. 
  10. Do not forget the visitors and users of your workers comp website.   If you keep them in mind, your website will show it.  Google now pushes user experience as the #1 consideration (makes sense).
  11.  Bonus – The web is the new home of many shysters.  One of the most recommended website providers in some articles is the one we just moved away from due to slowness and bad customer service.  Check out this in-depth review of providers by type.  Remember that cheap is not best. 
  12. Bonus-Do not forget about phone and tablet access.  Almost 1/3 of our visitors come from a phone.  Your nice big website may need to be repurposed for the phone.   

Filed Under: Cutcompcosts Tagged With: graphics, hosting service, intensive background, Phone UX, whole Saturday freaking out

Workers Comp Zoom Presentation – Top Four Hard Lessons Learned

February 11, 2021 By JL Risk Management Consultants

Workers Comp Zoom Presentation From Last Week – Lessons Learned 

My Workers Comp Zoom presentation for the Academy of Insurance last week taught me a few lessons that came from doing a remote presentation.  I had used Microsoft Meetings and Zoom for meetings which had always gone well, or at least I had thought they were satisfactory.  

As text underlines were used in the article, any outgoing links will be in crimson. 

pic of Microsoft Camera Workers Comp Zoom Presentation uses

Public Use License – Microsoft

You can check out the aftershow of the presentation here.  If you want more on Workers’ Comp info – Frank Pennachio is providing a presentation today on Hidden Concerns with Workers Comp Rates.  

Workers Comp Zoom Presentation Lessons 

Lesson 1 – Do not use your laptop’s microphone. 

The microphone did not accurately reflect that I had a very deep voice.  I have a Microsoft Lifestyle 3000 microphone that I should have used even if it is a rather old one.  I had used it before in presentations.  You can see a picture of the camera/microphone over on the right side.

I think a headset would have caused a distraction.  I went with the laptop’s microphone.   The laptop microphone performed well, but not to my satisfaction. 

Lesson 2- Check out your system again before the presentation starts

This lesson was covered in an article I wrote concerning a bad web presentation I attended late last year.  I should have listened to my own advice.   

Well, I did check out the Zoom platform a few days before to make sure my laptop’s microphone and speakers were working well. 

When Patrick (a good guy to work with) at the Academy ran me through a sound and video check 20 minutes before the starting time, my laptop had a fit.  Why?   I had installed eSet web security earlier in the week. 

I did not have eSet(c) prepared for doing a Workers Comp Zoom video presentation.   eSet provides a great web security solution – this time it was working too well.  Luckily,  I had a heavy tech background and did a workaround on the fly – whew! 

Lesson 3 – If you are going to plug directly into the wireless router, check to make sure you have a good cable – CAT5 or USB  

An hour before the presentation, I decided to be safe that I would plug directly into the router.  Check out my recommendations from last year for attending webinars. 

Once again, the laptop and the wireless router had a fit – nothing would work, so my laptop would turn back on the wireless connection that I was trying to avoid and eSet was also worrying about a direct connection. 

The answer was a simple bad cable that is now in the local recycling center.  

Lesson 4 – Remove or move away from distracting paintings or pictures in the background

When I was hooking up the CAT5 cable directly into the back of the wireless router, I moved very near to the router.  I ran a camera test to make sure everything was working well.   

I realized I had a very distracting painting behind me – think Picasso – that I had to quickly remove.  

Have we not all seen the Zoom presentation where the presenter decided that a painting would be a good background and then we end up paying more attention to the painting?  

Presentation Disaster Avoided 

The bottom line was the presentation went off without any problems and was a great experience.   If I had waited to minutes before testing everything the results might have turned out more negatively. 

 

Filed Under: Workers Comp Presentation Tagged With: camera/microphone, eSet web security, Frank Pennachio, Microsoft Meetings, Zoom for meetings

Experience Mod Increases While Loss Runs Show No Changes – WTR?

February 10, 2021 By JL Risk Management Consultants

Upset Reader Says Experience Mod Increases – Loss Run Had No Changes  

One noticeable complaint tread from our article and newsletter readers recently comes from Experience Mod increases while their company’s loss runs show no changes.  

chart of experience mod increases over time

Wikimedia Public Use License – Hellisp

Many of them have become clients to have J&L examine their loss runs compared to the Experience Mod increases. 

By the way, WTR is a clean replacement for WTF.  It is What’s The Reserve?

Two Quick Definitions

Experience Modification Factor – (E-Mod or EMR or X-Mod) – the rating bureaus (WCIRB – California, and NCCI – 40 states) compare your company’s Actual Losses with businesses similar to yours (Expected Losses).   

Loss Runs – your company’s insurance carrier provides a listing of your claims that you have had while insured by that carrier.  

Why your Experience Mod Increases With The Same Total Losses

Your losses on your loss run are usually broken up into three categories each having paid, reserved, and total incurred figures. 

  1. Indemnity – benefits paid directly to the injured employee such as weekly Temporary Total, etc.
  2. Medical – paid to medical providers for treatment 
  3. Expenses – paid by the carrier to adjust the files  

One of the main concepts to remember is the Expenses figure.   Unless your company has a special agreement such as with Large Deductible policies #3 above is not responsible for Experience Mod increases.   Why? 

Because Expense figures never show up on Experience Modification sheets that contain the Total Incurred figure the carrier reports to the rating bureaus.   

Expenses are: (Also known as allocated expenses or ALAE)

  • Attorney fees to defend the file 
  • Private investigator fees 
  • Rehabilitation nurse fees – (debatable) 
  • Any fees the carrier pay for adjusting the file

Under the Radar Experience Mod Increases

One thing should be said now – I have not seen except in a few instances where the claims adjusters have intentionally increased the reserves to affect the Experience Mod.  

Let us look at how an Experience Mod increases without any changes to the loss run totals.

Workers Comp File #09123ABN – no cents or dollar signs for readability.  The $182,000 is reported to the rating bureaus for figure your Experience Mod. 

File #09123ABNPaid Reserves Total Incurred 
Indemnity55,00025,00080,000
Medical100,0002,000102,000
Expense 23,50028,00051,500
Total178,50055,000233,500

The adjuster negotiates a settlement with the claimant’s attorney for $53,000.  Instead of having to go through multiple levels of approval, the claims adjuster decides to shift the Expense reserves for 28,000 to cover the settlement check.  

File #09123ABNPaid Reserves Total Incurred 
Indemnity55,00053,000108,000
Medical100,0002,000102,000
Expense 23,500023,500
Total178,50055,000233,500

The carrier would now report $210,000 to the rating bureau, not the $182,00 as in the first table.   Wow, so the Total Incurred reported to the rating bureau just increased by 15.4% on this one file.  Yes, that would affect the Mod under most circumstances. 

Avoiding Experience Mod Increase Confusion

This comparison means that your loss run review should examine the Total Incurred for the medical and indemnity totals when compared to the loss runs. 

Why am I bringing this up now?  Today, I reviewed two loss runs where this happened on multiple claims. 

No, the claims adjuster really did nothing wrong by shifting the reserves unless it violated an internal rule.  Make sure that you separate out the Expense figures to make the  Experience Mod increases make sense.    

Filed Under: E-Mod X-Mod Tagged With: cents or dollar signs, claimant's attorney, Indemnity, Private investigator fees, shifting

Workers Comp Allocated Expenses – Who Pays For Which Bills?

February 5, 2021 By JL Risk Management Consultants

Workers Comp Allocated Expenses – The Hidden Premium Charges You May Not Owe 

A long-running debate still exists today on how workers comp allocated expenses are charged to employers’ accounts.  Let us cover the: 

  • Definition of the expenses
  • Process of charging the allocated expenses to the employer’s Experience Mod
  • Sources of payment confusion
  • Specialized programs for large deductible policies
  • New important finding – reserve shifting 
  • Which workers comp bills that mistakenly end up paid as medical charges 
  • How to audit workers comp allocated expenses on loss runs 
pic hidden lighthouse workers comp allocated expenses

(c) Wikimedia Public – psyberartist

 

Workers Comp Allocated Expenses Definition

The definition of allocated expenses is:

(also known as ALAE) are expenses charged to a Workers Comp term file that are not indemnity or medical benefits. They are associated with the adjusting of the file. Expenses for defending claims such as attorney fees, private investigators, independent medical exams, and many others are considered as Allocated.

Process of Charging Allocated Expenses To Employer’s Mod

The expenses for a file such as attorneys, private investigators, and rehabilitation nurses are usually paid by the worker’s comp carrier.  The charges usually appear under the Expenses column in a loss run.   The other two types of payments appear under Indemnity and Medical.  

Sources of Payment Confusion

When a new or inexperienced payment processor comes across a bill,  they are left to choose which one of the three payment types to add the payment to when cutting a check.  Some payment systems will not allow a medical bill to be paid under the indemnity.   Very few systems prevent a payment that should be under the workers comp allocated expenses from going under medical.  

If payment is paid under medical, how is that caught by the system? 

When the bill payment is issued becomes critical to make sure the bill is charged to the employer or the insurance carrier.

Reserve Shifting 

Reserve shifting occurs when a claims adjuster does not have enough funds to pay a certain benefit,  Instead of increasing the reserve category (medical, indemnity, or expenses),  reserves are moved from one reserve category to another. 

The reserve shifting makes sense when one looks at a workers’ comp file.   The one drawback is when monies are moved from the workers comp allocated expenses reserve to indemnity or medical.  

The insured Experience Mod, in essence, just incurred a reserve increase without the total file reserves being increased.  The indemnity or medical reserve increase from the reserve shifting will cause a file that seems to be the same reserve size to have gotten much larger.

J&L sees this occurring more often each year.  I have one now on my screen that I am reviewing for an agency in California where this very situation occurred very recently.   The amount of $43,500 was moved from allocated expenses to medical. 

This shift may seem like a harmless adjustment of the reserves, but the employer experienced a $43,500 bump to the amounts that count into their Experience Mod. 

Yes, if the adjuster just raised the file $43,500 it would have had the same effect, but this would have increased the total amount of the file which would make the increase in reserves and eventually the Mod more obvious.  

Workers Comp Bill – Medical or Allocated Expense?

The bills that usually end up mistakenly input into the medical payments are Rehabilitation Nurses.  This happens frequently.  Rehabilitation nurse bills should routinely be paid under the Allocated Expense category, not medical. 

Independent medical exams are a grey area.  The bills are medical appointments but are they not essentially adjustment expenses on the file and not true medical treatment. 

The debate still yet occurs on these two types of bills yet even today.

When I have attended the NCCI data conferences in West Palm Beach, the determination was made that allocated expenses were s any type of funds that were not incurred to assist the injured employee medically.  

Auditing Workers Comp Allocated Expenses on Loss Runs 

Reviewing workers comp payments without direct online access is next to impossible.   Obtaining online access can save time and headaches when reviewing files.

The best way to review these payments is to look at each payment to see what reserve type it was paid under for each check.  This can be confusing at times.  

Some carriers may have a backstop in their systems that will not allow, for example, a certain law firm to have a check issued from the medical reserves.   Most do not.  

Following the claims monthly for reserving, payment, and handling usually results in the best outcome.  

Please note that I have never seen an insurance carrier purposely pay workers comp allocated expenses under medical or indemnity reserves. 

Filed Under: ALAE Tagged With: allocated, determination, monies are moved, pay a certain benefit, routinely be paid

Workers Compensation Presentations Kawasaki Technique

February 4, 2021 By JL Risk Management Consultants

Workers Compensation Presentations And The Kawasaki Technique 

The basis for my current Workers Compensation presentations currently comes from a great book that I read when starting J&L Risk Management Consultants. 

pic of Kawasaki book workers compensation presentations

(c) Guy Kawasaki – all rights reserved

The Kawaski presentation technique comes from the great book by Guy Kawasaki – The Art of The Start 2.0.   If you are a budding entrepreneur or thinking about starting up a side business – this is the first book to read from front to back.  

I coined the term, Kawasaki Technique, after reading his great recommendations on how to do presentations when we could all meet in person. 

I am doing a workers compensation presentation online with the Academy of Insurance today.   The technique will be on full display on the webinar.  

Works For Any Online Workers Comp Presentations

The three main presentation concepts I found in his books are: (works in webinars) – avoids Death by PowerPoint(c). 

  1. Find out or estimate the oldest person that will be viewing your workers compensation presentation – Divide that person’s age by two.  That becomes your smallest font size.  I have had many presentation attendees thank me for the large typeset.   This recommendation works like a charm. 
  2. No one wants to look at a page of text in a presentation as we remember pictures – think a picture paints a thousand words.  Use pictures – this will keep the reader engaged.  The pictures will give the presenter visual cues without just reading the text – how many of us have seen recent webinars where the person just reads the text (Ugh!).  This was even worse in person.  Our attention spans are down to six seconds now from 20 minutes. 
  3.   End early – (20 to 30 minutes) harder to do with webinars – people appreciate the extra break time and will thank you with future business – trust me.   How many people can you remember at the old in-person presentation that run outside with their phone immediately after a presentation?
  4. Leave time for questions – immediate feedback on your webinar or presentation. 
  5. Please, please do not run overtime.  I still have a presenter stuck in my head from 2019 that went over 30 minutes.  I wanted to use the services that the company offered – after that overtime display – I moved on to another company.  In the last seminar where I was on the dais, the prior speaker left me 30 minutes out of an hour presentation.  
  6. My own recommendation – be highly presentable at any Zoom, Microsoft Meetings, or Skype meeting.  Professional appearance wins the day.   You have 3 seconds to make a favorable impression.
  7. Google Zoom meeting advice – there are hundreds of great articles on how to prepare and present.  
  8. Check out my two articles on recommendations on how to have a good video connection. I used my IT background to write them. 

Mini guide for workers comp webinars

Other ideas to speed up webinars

Guy Kawasaki’s book recommended one great thing that made my business start rolling in the early 2000’s – Quit planning, get off your *&^%$% and do something.  That was the best advice from the book for me.   

I hope this mini-guide makes your workers compensation presentations the best possible meetings. 

Filed Under: Workers Comp Presentation Tagged With: book, Kawasaki Technique, Skype meeting, visual cues, webinar or presentation

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James J Moore
Raleigh, NC, United States

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt 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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Recent Posts

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  • WCIRB 8871 Webinar – What California Insureds Need To Know
  • Workers Comp Website – 10 Things To Know When Switching Providers
  • Workers Comp Zoom Presentation – Top Four Hard Lessons Learned
  • Experience Mod Increases While Loss Runs Show No Changes – WTR?
  • Workers Comp Allocated Expenses – Who Pays For Which Bills?
  • Workers Compensation Presentations Kawasaki Technique
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