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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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Communication and injury management

Communication and Injury Management

“A New Approach to Lower Work Comp Costs”

By: Carl Zeutzius, CIC, CWCA, MWCA

Tom Champoux, CPCU, AIC, CWCA, Licensed Consultant


What is a certified workcomp advisor
What is a Certified WorkComp Advisor?

  • An insurance professional who has been trained by the Institute of WorkComp Professionals and has passed a certification test.

  • There are only about 300 Certified WorkComp Advisors in the U.S.

  • In October of 2010 UNICO Group was named the National Work Comp Agency of The Year by the Institute.

  • 2009 Accident Fund’s National Work Comp Agency of The Year

  • We have clients from coast to coast

    including Alaska.



Injury problems
Injury Problems???

Wonder Why?

Employee/ Patient

Insurance Company

Family

Employer

Doctors

Supervisors

Government

Nurse Case Manager

Third Party Administrator

Lawyers


Workers compensation
Workers Compensation

Acts As a

On

Workplace Injuries




Most influential people after injury1
Most Influential People After Injury

Decides whether to support the recovering employee through a Back-On-The-Job Program

EMPLOYER


Confusion can cost you money
Confusion can cost you money!

  • Do your employees know what is expected by them, you and the doctor when they get hurt?

  • Help your employees navigate the workers’ compensation highway.


Communication and injury management


Lag time
Lag Time step to help your employees understand what lies ahead for them when they are hurt.

Source: NCCI Summer 2000 Issues Report, “The High Cost of Delays: Findings on Lag-Time Study” by Glen-Roberts Pitruzello.


How to drive down employer s tax on injuries
How to Drive Down Employer’s Tax on Injuries step to help your employees understand what lies ahead for them when they are hurt.

Early Reporting

Train employees to report ALL injuries within 60 minutes of occurrence.

This will reduce your work comp costs!


Most influential people after injury2
Most Influential People After Injury step to help your employees understand what lies ahead for them when they are hurt.

DOCTOR

  • Diagnoses medical problem

  • Prescribes the treatment plan

  • Releases the employee back to work

  • Path to function or disability


Communication and injury management

Employer and medical response to employee injury can promote recovery, function, and well-being.

OR

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.


Communication and injury management

  • Identify local clinic promote recovery, function, and well-being.

  • Invite staff physicians to tour facilities

  • Review expectations of Return to Work program

  • Supply clinic with Return to Work forms


Provider ultimately dictates costs
Provider Ultimately promote recovery, function, and well-being.Dictates Costs


Communication and injury management


Most influential people after injury3
Most Influential People After Injury injuries

EMPLOYEE

  • Decides whether to try and get better as quickly as possible, or

  • Let the medical problem become a life- limiting event


Communication and injury management

Y injuriesour

Experience

Modification

Factor

Check


Myths we hear every day
Myths We Hear Every Day injuries

“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?)


The experience mod e mod
The Experience Mod (E-Mod) injuries

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 codes
IJ Codes injuries

IJ Codes

Medical Claim

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


The experience rating process formula
The Experience Rating Process & Formula injuries

This number is now 10,000


You can control your experience modification factor
You injuriescan control your Experience Modification Factor

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


Know and communicate your min e mod rate
Know and Communicate Your Min E-Mod Rate injuries

  • The current experience mod rate is: 1.00 but projected to increase to 1.24 on 04/01/12

  • Minimum Mod rate is: .75

-----$90,300


Communication and injury management
If no injurieswages are paid to the employee by the insurance company, your cost for the claim is reduced by 70%.

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!!!


Communication and injury management

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.


How can you lower your experience mod
How Can You Lower Your Experience Mod? 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.

  • Work Comp is the most controllable form of insurance you have. It isn’t a commodity and if you view it that way you are ultimately paying more than you should.

  • The goal is to increase profitability and understanding work comp can increase your profits.


Communication and injury management

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.


Did you know when you prevent a workplace injury you
Did You Know When You Prevent A Workplace Injury You.. 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.

  • Keep Your Workers Comp Costs Down

  • You Help Your Company Remain Productive

  • You Increase/Preserve Workers Incomes

  • You Maintain/Improve The Quality of Employee’s Lives

  • Higher Incident of Divorce, Substance Abuse, Depression Among Seriously Injured

    All The More Reason To Be Proud Of What You Do


Safety attitude culture makes a difference
Safety Attitude-Culture Makes a Difference 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.

  • An attitude from the top to the bottom of the organization.

  • Prevents injuries

  • Keeps the company OSHA compliant

  • Prepares for the unexpected

  • Improves work environment and morale


Loss causes
Loss Causes 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.

Many companies fail in their loss prevention efforts because they are not based on correct principles of organization and effectiveness.

  • 88% of all employee injuries, liability & vehicle losses are caused by unsafe acts of employees.

  • 10% of all employee injuries, liability & vehicle losses are caused by unsafe physical conditions.


A strong safety culture brings other savings benefits
A strong safety culture brings other Savings & Benefits 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.

  • When a company has claims there are indirect costs associated with the claim.

  • These costs are not covered by insurance.

  • These expenses come directly out of the bottom-line of the company.


Communication and injury management

  • Insured Costs 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.

  • Medical

  • Compensation

$1

…….

  • Uninsured Miscellaneous Costs

  • Investigation time

  • Cost of hiring and/or training replacements

  • Overtime

  • Extra supervisory time

  • Clerical time

  • Wages not compensated

  • Down time

  • Negative public image

  • Legal fees

  • Reduced employee morale

$4 to $10

…………...

The real cost of accidents can be measured and controlled


Impact of accidents on profits and sales
Impact of Accidents on Profits and Sales 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.

  • Direct Costs

  • Indirect Costs

  • Direct Costs + Indirect Costs = Total

  • Medical costs + Indemnity payments

  • Multiply direct costs by a cost multiplier

0 - $2,999 4.5

$ 3,000 - $4,999 1.6

$ 5,000 - $9,999 1.2

$10,000 + 1.1


Example
Example: 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.

Direct cost of injury:

Indirect cost of injury:

Total cost:

$25,000

$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)


Financial impact indirect costs
Financial Impact: 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.Indirect Costs

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


Communication and injury management

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.

Effective

Return-To-Work

Program


Recovery at work rtw myths
Recovery at Work (RTW) Myths 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 workers comp paradox
The Workers’ Comp Paradox 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.

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 is of the essence
Time is of the Essence 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.

Time away from work in weeks

At 12 weeks, employees have only a 50% chance of ever returning to work.


Study most lost time injuries can be avoided
Study: 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.Most Lost Time Injuries Can Be Avoided

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.


Communication and injury management
FACT 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.

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.”


Benefits to the employee
Benefits to the Employee 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.

  • Reduced or Eliminated stress, boredom and depression from the injury or illness and from being unproductive.

  • Shortened recovery time.

  • Injured worker remains active and productive.

  • Prevention of loss of physical fitness and muscle tone due to inactivity.

  • Feelings of dependency and lack of control are alleviated.

  • Reduced accident and injury related costs may help preserve benefits and jobs as well as contribute to improve work environment.


Benefits to the employer
Benefits to the Employer 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.


Essential components develop a formal plan
Essential Components: 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. Develop a Formal Plan

  • Develop a written policy

    • Policy should be approved/supported by management

  • Ensure employee understanding of policy

  • Explain thoroughly during new employee orientation program

    • Also, review periodically with current employees

  • Obtain employee sign off – their agreement to follow program in event of an injury


Early rtw ideas
Early RTW Ideas 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.

  • Don’t be afraid to be creative

  • Off-Site Transitional Duty Tasks if on-site is unavailable

  • Break down jobs into tasks

  • Organizing or cleaning drawers or cupboards

  • Making customer satisfaction or survey phone calls

  • Running needed errands

  • Viewing safety videos or CE requirements

  • Answering the phone

  • Miscellaneous clerical duties

  • Inventory


Communication and injury management

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

In Reviewing

Open Claim

Reserves


Reducing reserves
Reducing Reserves 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.


The most important day of the year it s not what you think
The most important day of the year – It’s not what you think!

  • Too many Workers Compensation policyholders think that the most important date of the year is their renewal date. Guess what, it’s not.

  • Without question, the far more important date of the year is six months after your renewal date. If your broker doesn’t know this, or talk about the importance of the Unit Statistical report and the Valuation date, you have the wrong broker.


Many agents and brokers state that they monitor and review claims
Many Agents think! and Brokers state that they ‘monitor and review’ claims

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.


Unicomp claim reserve monitoring
UNICOMP Claim think!Reserve Monitoring

From 2006 to 2013

We helped lower open claim reservesby over $10 million.

This resulted in experience modification factors decreasing substantially!


Communication and injury management


Reserve reductions
Reserve Reductions work comp claim reserves by over $2,800,000!

Claimant:

DOL: 03/38/09

Insured:

Policy period: 04/23/08 – 04/23/09

Claim #: 101478998

Adjuster: Jeanie

Ins. Co.:

Close date: 10/08/09

Paid Amount

$0.00

$11,424.39

$30.86

$11,455.25

Reserves

$0.00

$0.00

$0.00

$0.00

Total Incurred

$0.00

$11,424.39

$30.86

$11,455.25

Indemnity

Medical

Expense

Total

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.


Reserve reductions1
Reserve Reductions work comp claim reserves by over $2,800,000!

Surveillance:Surveillance is not warranted.

Litigation:

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.

Reserve Reduction/Recovery:$40,175.61


Reserve reductions2
Reserve Reductions work comp claim reserves by over $2,800,000!

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!


New ncci changes that will impact you
New NCCI Changes That Will Impact You work comp claim reserves by over $2,800,000!

  • The new filing calls for an increase in the split point to an inflation-adjusted $15,000 over a three-year transition period, and will further increase this amount thereafter on an annual basis using a countrywide inflation index. The details are as follows:

  • In Year 1, initially increase the split point to $10,000

  • In Year 2, increase the split point to $13,500

  • Beginning in Year 3 and annually thereafter, increase the split point to the indexed value for $15,000, where the index would be based on annual changes in the average cost of a claim


New ncci changes that will impact you1
New NCCI Changes That Will Impact You work comp claim reserves by over $2,800,000!

  • On an individual risk basis, most employers currently receiving credit mods generally will see larger credits under the proposal.

  • Most employers currently receiving debit mods generally will see larger debits under the proposal.

  • It has been over 20 years since NCCI has made a change like this.

  • Your claims NOW will be affected by this change!


Changes in annual claim cost
Changes In Annual Claim Cost work comp claim reserves by over $2,800,000!


We quote it out to three or four agents each year

“We quote it out to three or four agents each year” work comp claim reserves by over $2,800,000!

“We put them all on a spreadsheet and pick the lowest price”


Living breathing service timeline

Living Breathing Service Timeline work comp claim reserves by over $2,800,000!

Occ Med Provider

Loss Control Review

Alt Financing Options

Investigations

E-Mod Explanation Ltr

Discuss Industry Changes

Audit Results

Rehab Facilitator

Audit

Unit Stat Prep

Claims Status

New E-Mod

Certificates

EE handbook Rework

Implementation Meeting

Q1 Review

Q4 Review

Q3 Review

Q2 Review

JAN

FEB

MAR

APR

MAY

JUN

JUL

AUG

SEP

OCT

NOV

DEC

Loss Control

Safety Implementation

Injury Process

Inception

Audit Prep

UNIT STAT

Forecasting

Carrier Introductions

Renewal

Marketing

RTW Program

Back to Work Practices


Utilize the services and the resources available to you
Utilize the services and the resources available to you. work comp claim reserves by over $2,800,000!

Use a broker that has a proven

track record with outcomes that

will help you increase your

profitability


Communication and injury management

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