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? • 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??? Wonder Why? Employee/ Patient Insurance Company Family Employer Doctors Supervisors Government Nurse Case Manager Third Party Administrator Lawyers
Workers Compensation Acts As a On Workplace Injuries
Insurance Companies Don’t Pay for Employee Injuries Employers Do!
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! • 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.
Providing an injury packet or injury guide is a good first step to help your employees understand what lies ahead for them when they are hurt.
Lag Time 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 Early Reporting Train employees to report ALL injuries within 60 minutes of occurrence. This will reduce your work comp costs!
Most Influential People After Injury DOCTOR • Diagnoses medical problem • Prescribes the treatment plan • Releases the employee back to work • Path to function or disability
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.
Identify local clinic • Invite staff physicians to tour facilities • Review expectations of Return to Work program • Supply clinic with Return to Work forms
Sell your employees on clinic’s specialty: work-related injuries • Communicate frequently with employee • Show concern for well-being • Discuss return to work expectations
Most Influential People After Injury EMPLOYEE • Decides whether to try and get better as quickly as possible, or • Let the medical problem become a life- limiting event
Your Experience Modification Factor Check
Myths We Hear Every Day “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) 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 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 This number is now 10,000
You can 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 • 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
If no wages 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!!!
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? • 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.
Did You Know When You Prevent A Workplace Injury You.. • 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 • 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 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 • 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.
Insured Costs • 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 • 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: 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 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 Effective Return-To-Work Program
Recovery at Work (RTW) Myths “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 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 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 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.
FACT 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 • 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.