California WCIRB Issues Mandate on Filing First Aid Claims

The California WCIRB is the workers compensation insurance rating bureau for specifically the Golden State. The WCIRB produces notices of rule changes that will affect California employers.

British Red Cross First Aid kit California WCIRB green bag

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One that I wanted to call attention to (even though it was published in November 2016) concerns the handling of First Aid and Small Medical Only claims. I have written many articles on WCIRB’s conferences, webinars, rulings, etc. over the last fifteen years. As with most rating bureaus, California WCIRB has provided me with great assistance and almost always a very positive attitude. See my conclusions on the new rule at the bottom of this article.

Reporting of Small Medical Only or First Aid Claims – California WCIRB

Bulletin 216-25

The Insurance Commissioner recently approved amendments to the California Workers’ Compensation Uniform Statistical Reporting Plan—1995 (USRP) effective January 1, 2017, to clarify the reporting requirements for small medical only or “first aid” claims. The Insurance Commissioner’s Decision (CDI File No. REG-2016-00018), dated October 14, 2016, approved amendments that specifically reference first aid as defined in California Labor Code Section 5401(a), to clarify that insurers must report the cost of all claims for which any medical care is provided and medical costs are incurred, including those involving first aid treatment, even if the insurer did not make the payment.

Man Injured California WCIRB With First Aid Briefcase

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These changes can be found at Section II, Definitions, Rule 24, Medical Only or Medical Claims Only, and Section V, Loss Information, Subsection A, General Loss Reporting Instructions, Rule 1, Reporting Losses, of the USRP and are provided below for your reference. As indicated in the Insurance Commissioner’s Decision, the reporting of first aid claims has been an enduring concern. It has been the long-standing position of the CDI and the WCIRB, as communicated in several prior WCIRB Bulletins, that insurers are required to report the medical costs incurred on first aid claims, even if paid by the employer, as any other medical loss.

By explicitly citing first aid in the definition of medical claims and the reporting of losses, the amendments clarify the intent of the regulations and what has been communicated in prior WCIRB Bulletins.

There are no special or unique coding requirements related to the reporting of claims meeting the Labor Code Section 5401(a) definition of first aid. The reporting requirements in Part 4 of the USRP applicable to the reporting of medical costs incurred on any other medical only claim also apply to the medical costs incurred on claims meeting the first aid definition.

Part 4, Unit Statistical Report Filing Requirements, Section II, Definitions: 24.

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Medical Only or Medical Claims Only A claim or injury for which no indemnity is incurred, but for which medical treatment costs are incurred is a “medical only” claim or injury, regardless of whether the cost of medical treatment, including first aid, is paid by an employer or insurer, or regardless of whether a Workers’ Compensation Claim Form (DWC 1) is filed.

“Medical Only” claims or injuries include but are not limited to all compensable injuries in which the disability does not extend beyond the waiting period specified in the workers’ compensation laws of California, or injuries for which immediate medical treatment has been provided prior to a determination of compensability pursuant to Labor Code Section 5402(c).

Part 4, Unit Statistical Report Filing Requirements, Section V, Loss Information, Subsection A, General Loss Reporting Instructions

1. Reporting Losses Any and all claims, including those involving first aid as defined in California Labor Code Section 5401(a), in which Indemnity Losses or Medical Losses are incurred or Allocated Loss Adjustment Expenses are paid must be reported individually. All loss amounts are on a direct basis (excluding reinsurance assumed and adjustment for reinsurance ceded) and must be reported on a gross basis prior to the application of any deductibles.

Good

Hand Showing California WCIRB Solution Icon

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Requiring employers to report all claims no matter the seriousness results in two great developments:

Twilight Zone phone calls from medical providers wanting medical authorization
Claims festering (c) avoidance – some of the worst claims start as ignored minor claims
The WCIRB also included small medical only claims in the rule which should always be reported

Bad

The other side of the coin indicates that for a reported First Aid claim

Almost all carriers assign $500 to $1,000 to any first report of injury received – possibly skewing an Experience Modification Factor for a claim or group of claims that never really existed
The paperwork involves a large increase in recordkeeping – more regulations?

Solution

The rule stands. Report all your claims. The California WCIRB enforces the legislated rules. They do not create the rules. Do not try to work around the rule.
Contact your agent/carrier when your renewal date approaches to see if they have a Reportable Only category. Most do, make sure you get out the most important tool for policy renewals – the proverbial highlighter – and see how your carrier charges and reports Reportable Only claims.

Yes, I do realize the Rating Bureaus supply credits for reporting Medical Only claims.

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California Physical Premium Audits

The rules for California physical premium audits have changed recently. The WCIRB (California’s Rating Bureau) recently released a reminder memo on the upcoming changes for 2014 Workers policies that have payroll developed under what is called a High Wage/Dual Wage Classification.

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Physical audits will be required for all new policies regardless of the amount unless it is a renewal policy that has been physically audited in the past two years.

According to the WCIRB –

Currently, the USRP at Part 3, Standard Classification System, Section VI, Administration of Classification System, Rule 4(a)(2) states: “Each policy producing a final premium of less than $10,000 shall be physically audited at sufficient intervals to ensure determination of proper payrolls.” The Insurance Commissioner’s Decision adds a new audit requirement for policies effective on or after January 1, 2014.

The new audit requirement provides that each policy producing a final premium of less than $10,000 and developing exposure in a high wage, dual wage construction classification must be physically audited unless the policy is a renewal and the insurer physically audited one of the two immediately preceding policy periods. This new audit requirement also applies to policies issued to Owner Controlled Insurance Programs (also known as “wrap up” policies).

Picture Woman Pressing Colleague's Head Against Table California Physical Premium Audits Classifications

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This means that new small policies will be physically audited even if they are under $10,000. The recordkeeping requirements for physical audits are:

“An audit of payroll, whether conducted at the policyholder’s location or at a remote site, that is based upon an auditor’s examination of the policyholder’s books of accounts and original payroll records (in either electronic or hard copy form) as necessary to determine and verify the exposure amounts by classification.”

The bottom line is that if you have a small construction company with premiums less than $10,000 it is wise to make sure you have all payroll figures correctly recorded. The old rule was that if your policy was under $10,000 your company may have not been required to go through physical audits. This will cause a large number of physical premium audits for policies that have less than $10,000 in premiums.

The list of high wage/dual wage classifications is available here.