Communication and Injury Management. “A New Approach to Lower Work Comp Costs”. By: Carl Ze utzius, CIC, CWCA, MWCA Tom Champoux, CPCU, AIC, CWCA, Licensed Consultant. What is a Certified WorkComp Advisor?.
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“A New Approach to Lower Work Comp Costs”
By: Carl Zeutzius, CIC, CWCA, MWCA
Tom Champoux, CPCU, AIC, CWCA, Licensed Consultant
Nurse Case Manager
Third Party Administrator
Acts As a
Decides whether to support the recovering employee through a Back-On-The-Job Program
Source: NCCI Summer 2000 Issues Report, “The High Cost of Delays: Findings on Lag-Time Study” by Glen-Roberts Pitruzello.
Train employees to report ALL injuries within 60 minutes of occurrence.
This will reduce your work comp costs!
Employer and medical response to employee injury can promote recovery, function, and well-being.
Response can lead to needless, disability and disruption of social and economic lifestyle.
Communication and teamwork between all parties is so crucial to make it a win-win situation for everyone.
“Class codes are class codes – and the rates are determined by the state – so the only way to lower my E-Mod score is to reduce my claims” (myth)
“What kind of rates do you offer?”
“Work comp is simple – my E-Mod score goes up when the number of injuries goes up” (myth)
“We had a huge claim that sent our score through the ceiling” (myth)
We just had a GREAT year - safest one ever – and our E-Mod went up! (why?)
Specific to your industry, size, and state
Statutorily used by the NCCI to punish or reward businesses
Created by the NCCI
Controlled by the NCCI
Calculations are promulgated by the NCCI
IJ Code 1 Death
IJ Code 2 Permanent Total Disability (PTD)
IJ Code 5 Temporary Total or Temporary Partial Disability (TTD/TPD)
IJ Code 6 Medical Only
IJ Code 7 Contract Medical or Hospital Allowance
IJ Code 9 Permanent Partial Disability (PPD)
States Using NCCI or similar methodology States that have approved ERA
AL AR AZ CT DC FL HI IA ID IL
IN KS KY LA MD ME MI MN MO MS
MT NC NE NH NV OK RI SC
SD TN UT VA VT WI
AK AL AR AZ CA CO CT DC FL GA HI
IA ID IL IN KS LA MA MD ME MI MN
MO MS NC NE NH NM NV NY OK OR RI
SC SD TN TX UT VA VA VT WI
This number is now 10,000
Know the gap between your Current Mod and Minimum Mod
CURRENT MOD 1.09 = $115,450
Minimum Mod 0.61 = $ 64,050
Controllable Mod .48 = $ 50,400
Case Example - 70% Rule:
$2,000 Medical Only claim vs. $2,100 Med/Indemnity claim
MED ONLY - $2,000
(reduced by 70%)
IJ Code: 6
3-year Premium Cost $1,800
MED/INDEMNITY - $2,100
($2,000-Med plus $100-Indem)
IJ Codes: 3,4, and 5
3-year Premium Cost $6,600
The $100 Indemnity Payment
costs $4,800 in increased premium!!!
For those states under NCCI jurisdiction, only Colorado, Massachusetts and Oregon will not be ERA states after Alaska (1/1/2013), Georgia (3/1/2013), and Louisiana (5/1/2013) adopt the rule in 2013.
Demonstrate Your Commitment to Injury Prevention Massachusetts and Oregon will not be ERA states after Alaska (1/1/2013), Georgia (3/1/2013), and Louisiana (5/1/2013) adopt the rule in 2013.
All The More Reason To Be Proud Of What You Do
Many companies fail in their loss prevention efforts because they are not based on correct principles of organization and effectiveness.
$4 to $10
The real cost of accidents can be measured and controlled
0 - $2,999 4.5
$ 3,000 - $4,999 1.6
$ 5,000 - $9,999 1.2
$10,000 + 1.1
Direct cost of injury:
Indirect cost of injury:
$25,000 x 1.1 = $27,500
$25,000 + $27,500 = $52,500
Impact on Profitability
= 0.04 (profit margin)
= $1,312,500 (sales)
$ 340,000 (total profits)
$8,500,000 (total sales)
$ 52,500 (total costs)
0.04 (profit margin)
Indirect Costs Affect Profitability
Per OSHA Statistics: One $2,300 claim costs your company $12,650
Assume a 10% profit margin
Additional sales required to offset one $2,300 claim: $126,500
Have an Massachusetts and Oregon will not be ERA states after Alaska (1/1/2013), Georgia (3/1/2013), and Louisiana (5/1/2013) adopt the rule in 2013.
“What’s the big deal about recovery at work…this is why I buy workers compensation”
“Their peers get angry when they see someone doing light duty”
“My workers will never do that kind of job”
“RTW looks good on paper, but never works in real life”
“I don’t want my workers here if they can’t do their job”
“The doctor says that he can’t return to his / her job”
The frequency of job-related injuries is down 40% over the last 10 years
But the severity of injuries and total costs are up!
Time away from work in weeks
At 12 weeks, employees have only a 50% chance of ever returning to work.
Fewer than 10% of work-related injuries should require employees to take more than 3 days off work for medical reasons. (ManagedComp Survey)
Nationally, 24% of workplace injuries result in lost time greater than 3 days.
60% to 80% of lost time is avoidable.
OSHA - Only 4 out of every 100 claims reported to the NCCI in 2008 truly required the injured employee to miss more than 7 days – with no possibility of light duty return to work
Most business owners are not aware of just how many thousands of dollars they are wasting on injuries that could easily be light duty
After all, “…that’s why I have Workers Comp coverage.”
Stay Massachusetts and Oregon will not be ERA states after Alaska (1/1/2013), Georgia (3/1/2013), and Louisiana (5/1/2013) adopt the rule in 2013.Active
Do you actually see the data of the results they are obtaining for you?
Do you know the results of open claim reserves that they have monitored and lowered for you?
It is critical that your open claim reserves be reviewed and audited.
Open claims have a direct impact on your experience modification.
The key period is the 60-day window prior to your experience modification effective date.
From 2006 to 2013
We helped lower open claim reservesby over $10 million.
This resulted in experience modification factors decreasing substantially!
Policy period: 04/23/08 – 04/23/09
Claim #: 101478998
Close date: 10/08/09
Nature of Injury: The claimant sustained a broken wrist.
Accident Location: NE Compensable: Yes
Ave. Weekly Wage: $ Comp. Rate: $
Treatment: The claimant underwent open reduction internal fixation (ORIF) surgery on her wrist on 4/06/09.
Work Status: The claimant has not lost any time from work
Indemnity Payments: The claimant has not received any indemnity benefits
Maximum Medical Improvement (MMI)/Permanent Impairment Rating (PIR):
Dr. does not expect the claimant to reach maximum medical improvement until
around 1 year post op, which will be 04/06/10.
Surveillance:Surveillance is not warranted.
Claimant Attorney: Not Represented Defense Attorney: Not Represented
Settlement Status: At this time the claim has been closed.
Subrogation: Claim file does not support subrogation.
Special Disability Trust Fund (SDTF).Second Injury Fund (SIF): Claim file documentation does not support SDTF/SIF Recovery.
Reserve Reduction/Recovery Potential: Our audit began on 8/13/09. The unit stat filing date for insured is 10/23/09. Our audit revealed that the Clmt tripped while moving a pallet from the dock on 3/02/09. Clmt fell backwards which caused her to break her wrist. Clmt underwent open reduction fixation surgery on her wrist on 4/06/09. On 8/13/09, UNICO learned that there was no lost time from the injury. Dr. does not expect the clmt to reach MMI until around 4/06/10 (1-yr post op). The adjuster plans to follow up with the clmt in 6 months to see how she is getting along. On 10/02/09 UNICO asked the adjuster about the possibility of getting the reserves reduced as the clmt had not missed any time from work to date and most medical bills from surgery should be covered. The adjuster sent a referral to her spvsor for approval to lower the medical and TTD reserves before the unit stat filing date. The adjustor’s spvsor would not approve w/o contacting the clmt first regarding the need for further care. The adjuster has been unable to reach the clmt. UNICO will f/u with the adjuster in 1 week regarding the reserves. On 10/07/09 UNICO and the adjuster conference the clmt in on a phone call to determine if the clmt felt she would be in need of add’l care. Clmt stated that she feels her injury has healed completely and does not plan to return to the Dr. in the future. The adjuster advised the clmt that she would send a letter informing her that the claim was being closed. This caused the med/indem reserves to be wiped out resulting in a reserve reduction of $40,175.61. By closing the claim it will be kept medical only resulting in an ERA reduction of 70%. UNICO will continue to audit the claim and verify the accuracy of your reserves in preparation of the 10/23/09 unit stat filing date.
If your open claims are not being reviewed prior to the time those claims are sent to NCCI more than likely you have overpaid for your workers’ compensation premiums.
Result- Your profitability has been reduced from an inflated experience modification factor!
“We put them all on a spreadsheet and pick the lowest price”
Occ Med Provider
Loss Control Review
Alt Financing Options
E-Mod Explanation Ltr
Discuss Industry Changes
Unit Stat Prep
EE handbook Rework
Back to Work Practices
Use a broker that has a proven
track record with outcomes that
will help you increase your
“ work comp claim reserves by over $2,800,000!If you do what you’ve always done,
you’ll get what you always got.”
- W. Edward Deming