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WCRI-New York Reforms Working Well In Some Areas

September 4, 2014 By JL Risk Management Consultants

New York Reforms Working Well

The New York reforms are working well in some areas. WCRI-New York – The Workers Compensation Research Institute (WCRI) recently published a study on the New York reforms enacted in 2007.

Coincidentally, we have had an uptick in contact from New York for our services. Most of the inquiries concerned searching for alternative and less costly WC coverages than being in the NYSIF.

Two prior WCRI studies in this blog were heavy New York opioid use and the prior years’ study on New York reforms.

The major areas that the WCRI study covered were:

an increase in the maximum weekly benefit;
caps on permanent partial disability duration;
medical treatment guidelines to be created and implemented;
adoption of a pharmacy fee schedule;
creation of networks for diagnostic services and thresholds for pre-authorization; and
administrative changes to increase speed of case resolution.

Some of the major highlights from the study were:

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The number of visits per indemnity claim decreased notably for chiropractors and physical/occupational therapists when compared with the prior year. (2012 as compared to 2011). This is a very positive result for employer WC savings.
From 2007 to 2010, for PPD/lump-sum cases at an average 24 months of experience, there was a nearly 15 percentage point decrease in cases that received PPD payments only (with no lump-sum payment) and a nearly 12 percentage point increase in cases with a lump-sum settlement only (with no PPD payments). This is a very positive result in reducing the indemnity payment portion of claims.
From 2007 to 2011 (for claims at an average 12 months of experience), there was a 4 percent increase in the number of visits for major radiology services by nonhospital providers. The percentage of indemnity claims with major radiology services also grew over that same period, from 45 percent to 52 percent.
There was little change in the average defense attorney payment per claim from 2009 to 2010, but an increase of nearly 9 percent in 2011.

The study uses open and closed indemnity and medical-only claims with dates of injury from October 2005 through September 2011, with experience as of March 2012. The data are representative of the New York system.

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Filed Under: New York, reform, WCRI Tagged With: chiropractor, NY, occupational therapist, physical therapist, radiological

WCRI Study – Louisiana New York Have Highest WC Opioid Use

May 15, 2014 By JL Risk Management Consultants

WCRI Study

Oklahoma recently enacted new rules for opioid use as 8% of the general population were long term users of painkillers. WCRI recently performed a startling study on Workers Compensation opioid use which indicated that Louisiana and New York injured workers were ingesting massive amounts of opioids.

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The WCRI study was titled – Interstate Variations in Narcotics Use – 2nd edition. Graphics are usually not in the article on this blog. However, the graph at the end of this article is “worth a thousand words.” The graph below says it all concerning opioid use.

I usually do not like to cut/past right out of press releases, but WCRI’s Dr. Victor said it better than I could on WC opioid abuse. The complete study is available here. If you are a risk manager, adjuster, or anyone involved with WC claims, this is a very thorough study that should receive your attention.

The dangers of narcotic misuse resulting in death and addiction constitute a top priority public health problem in the United States and are shared by the workers’ compensation community,” said Dr. Richard Victor, WCRI’s executive director. “This study will give public officials, employers, worker advocates, and other stakeholders the ability to see how the use and prescribing of narcotics in their state compares to others.”

According to the study, the average injured worker in New York and Louisiana received over 3,600 milligrams of morphine equivalent narcotics per claim (double the number in the typical state). To illustrate, this amount is equivalent to an injured worker taking a 5-milligram Vicodin® tablet every four hours for four months continuously, or a 120-milligram morphine equivalent daily dose for an entire month.

Besides New York and Louisiana, the amount of narcotics per claim was also higher in Pennsylvania and Oklahoma (32–48 percent higher than the typical state). Michigan had the highest amount of narcotics per claim among the Midwest states included in this study. It is worth noting that Michigan was among the states with lower use of narcotics per claim compared with the typical state in 2008/2010.

The study found that narcotics are frequently used in the workers’ compensation system. In 2010/2012, about 65 to 85 percent of injured workers with pain medications received narcotics for pain relief in most states. A slightly higher proportion of injured workers with pain medications in Arkansas (88 percent) and Louisiana (87 percent) received narcotics.

The study is based on approximately 264,000 workers’ compensation claims and 1.5 million prescriptions associated with those claims from 25 states. The claims represent injuries arising from October 1, 2007, to September 30, 2010, with prescriptions filled up to March 31, 2012. The underlying data reflect an average of 24 months of experience.

The following states are included in this study: Arkansas, California, Connecticut, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Missouri, New Jersey, New York, North Carolina, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, and Wisconsin.

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Filed Under: Louisiana, New York, Oklahoma, Opioid, Pennsylvania, WCRI Tagged With: average, interstate variations, narcotic, Narcotics, rules

New York – Analysis Of Complicated State Work Comp System – WCRI

October 24, 2013 By JL Risk Management Consultants

New York – WCRI

The Workers Compensation Research Institute (WCRI) recently completed a study of the New York Workers Compensation system. The new study by WCRI tracks the results of the sweeping 2007 reforms.

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Even though you may not interface with the New York Workers Compensation system, some of the reforms may be coming to your state as most of the reforms are very similar to what other states have or will be enacting in the near future.

WCRI is not influenced by any outside sources. Their studies are to the point and very accurate. I have quoted some of their studies in the past – one just last week.

The new WCRI study, Monitoring Changes in New York after the 2007 Reforms, is the latest edition of an annual report to regularly track key metrics of the performance of the state’s workers’ compensation system following the implementation of 2007 reforms.

The 2007 New York reforms :

Increased maximum statutory benefits
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Limited the number of weeks of permanent partial disability (PPD) payments

Created medical treatment guidelines

Adopted a fee schedule for pharmaceuticals

Established networks for diagnostic services and thresholds for pre-authorization and

Enacted administrative changes to increase speed of case resolution.

One of the main points of the study is what did not work with the reforms. The following are among the study’s key findings:

The average weekly temporary total disability benefit increased 26 percent after the implementation of three increases in the benefit rate between 2007 and 2009. The 26% is very high for just a three-year period.

The percentage of PPD cases with no lump-sum payments at an average 24 months of experience fell 13 points from 2007 to 2009, while there was a 10.5 point increase in cases with lump-sum settlements but no PPD payments.

The implementation and subsequent change of the pharmaceutical fee schedule decreased the average price per pill by 10 to 20 percent, depending on drug and dosage. Fee schedules are the best risk management and loss reduction strategies that governmental bodies can use to keep costs in line.

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Filed Under: fee schedule, New York, WCRI Tagged With: 2007 reforms, medical treatment, monitor, PPD, statutory benefits

NY Says Captives Are Shadow Insurance; NAIC Moodys Others Disagree

June 18, 2013 By JL Risk Management Consultants

NY Says Captives Are Shadow Insurance

Captives for Workers Compensation and other types of Shadow Insurance have long drawn scrutiny – sometimes undeservedly. This week, the Superintendent of the New York State Department of Financial Services.said that captives were nothing more than shell games and all state insurance departments should stop allowing them.

Picture Of Dollar Shadow Insurance In Gray Color

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The report called Shining A Light on Shadow Insurance, A Little-known Loophole That Puts Insurance Policyholders and Taxpayers at Greater Risk” violates one of the rules of financial studies. The title should never speak for the results in the financial study. The numbers should speak for themselves and then a conclusion should be drawn from those numbers. (If you follow the link, please note that it is a PDF file. )

One of the first sentences in the study was “The use of shadow insurance emerged in great part due to a desire from insurers to do an end-run around higher reserve requirements that states established for certain term and universal life insurance policies.”

Other comments included ” State insurance commissioners should consider an immediate national moratorium on approving additional shadow insurance transactions until those investigations are complete and a fuller picture emerges.”

Using the term Captive Insurance would have been much better than Shadow Insurance. Using such terms makes the study seem too one-sided. There may be a few legitimate concerns in the study. NY was the bunker for AIG’s failure. Geography can be a great influence.

The response from the insurance world was more surprising than the study itself. Many called the report sensationalism. The rating agency Moody’s totally disagreed with Captives being branded as shadow insurance.

Most of these comments and articles concern life insurance captives. Captives for Workers Compensation coverage has been alive and well for years. The NAIC questioned the need for a moratorium nationwide on captives.

Donelson, the head of the National Association of Insurance Commissioners (NAIC) said that the NAIC weighs standards rather than imposing regulations and that “one of those standards could be to implement what I consider a knee-jerk position of issuance of moratorium before the house is on fire.”

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One of the common themes throughout the responses to the NY report was that onshore and even offshore captives are scrutinized by state regulators. All this hubbub did not mention Workers Comp. The study was life-insurance based. Captive insurance for Workers Comp will likely be the next captive subject ran up the proverbial flagpole.

Many times I have often asked – “Did anyone consult with a (whatever line of insurance) expert or group of experts before we got to where we are today?” I usually receive blank stares or phone silence when I ask that question.

There are thousands of insurance prognosticators on LinkedIn. What if the question on Captives had been posted there? All sides of the question would have likely been covered with differing opinions possibly.

Donelson of the NAIC put it best when he said that If they would give me a holler and tell me what regulator they think is not doing its job, I’d be happy to reach out to that regulator and express to them New York’s concerns.”

There are many articles on captives in this blog written since 2007. Use the search box and type in captive.

Filed Under: captive, NAIC, New York Tagged With: Donelson, insurance, Moodys, moratorium, policyholder, Shadow

New York Policyholders – Should They Receive Excess Surcharges

January 5, 2011 By JL Risk Management Consultants

New York Policyholders Workers Comp Premiums

Should the excess surcharges be returned to New York policyholders? I was reading this article in a few of the online insurance publications. Some of the posted replies asked if New York should have returned the premiums to the policyholders and not the state. If the employers overpaid, should the employers not be reimbursed?

Insurers To Pay New York $120M for Premium Overcharges

Picture Of Woman Pulling New York Policyholders Giant Case With Money

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New York officials say four insurance groups have agreed to pay a total of about $120 million in excess workers’ compensation surcharges to the state.

The attorney general’s office says the companies collected too much in surcharges on premiums from policyholders after the state Workers’ Compensation Board in 2000 changed the way it calculates the annual fees it charges worker’s comp insurers, charges the insurers pass along to policyholders.

The four insurance groups are ACE, Zurich, Pennsylvania Manufacturers, and CNA, each a parent to a number of insurers operating in the state. The ACE companies will pay $70 million, Zurich $37.5 million, Pennsylvania Manufacturer $5.9 million and CNA $5.75 million.

Article posted in Insurance Journal on 1/4/11

Filed Under: New York Tagged With: online insurance publication