Workers’ Compensation - PowerPoint PPT Presentation

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Workers’ Compensation

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Group 4 Workers Compensation and The Three Parts Workers Compensation is a social insurance program that provides: Medical care Cash benefits Rehabilitation ... – PowerPoint PPT presentation

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Title: Workers’ Compensation


1
Workers Compensation
  • Group 4

2
Workers Compensation and The Three Parts
  • Workers Compensation is a social insurance
    program that provides
  • Medical care
  • Cash benefits
  • Rehabilitation services
  • Three coverages are provided workers
    compensation insurance, employers liability
    insurance, other-states insurance

3
Objectives and Eligibility Requirements of
Workers Compensation
  • Provide broad coverage
  • Substantial protection
  • Provide sufficient medical care/rehab
  • Reduction of job related accidents
  • Reduce litigation
  • Two principal eligibility requirements must be
    met

4
Workers Compensation Benefits
Keep the benefits coming!
  • Unlimited medical care
  • Disability-income benefits
  • Death benefits
  • Rehabilitation services

5
Workers Compensation Mess in California
  • Rates were falling due to set rates without state
    approval
  • Insurers competed for business
  • Carriers selling insurance at a loss to gain
    market share
  • Firms became insolvent

6
Workers Compensation Mess in California (Cont.)
  • Businesses pay highest premiums, but injured
    workers get the lowest benefits.
  • Costs paid by employers are the highest in the
    country.
  • Average employer pays 5.2 of payroll.

7
Problems Issues
  • 30 of claimants who miss work hire a lawyer
  • Doctors patients have little incentive to
    restrain costs
  • Employers often hire dueling doctors
  • California gives lots of discretion
  • Unnecessarily complex, difficult to administer,
    some cases outdated

8
Problems Issues (Cont.)
  • Difficulty finding workers comp. Insurance
  • California receive lowest disability benefits
  • California has highest litigation and medical
    cost
  • Last year, job based insurance premiums increased
    by an average of 10
  • Nearly 1 million claims filed each year

9
Problems Issues (Cont.)
  • Standards of disability awards
  • Stricter guidelines for permanent- partial
    disabilities
  • Physician choice
  • California exceeds national norm
  • Workers file more claims than elsewhere
  • Medical cost in California far above average

10
Problems Issues (Cont.)
  • Lack of fee schedule
  • Delays in updating existing fee schedules
  • No fault system
  • Rising medical inflations
  • Indemnity
  • Underwriting performance

11
Workers Compensation Fraud
  • What is workers compensation fraud?
  • The two most common types of workers
    compensation fraud
  • Premium
  • Benefit fraud
  • Health care provider or attorney assists the
    worker in fraudulent schemes, or participates in
    double billing.

12
Workers Compensation Fraud (Cont.)
  • In 2002-03 there were 660 fraud cases
    representing more than 54 million dollars in
    chargeable fraud
  • Humboldt man was charged with 6 Felony counts for
    defrauding workers comp.
  • 7.1 billion in 1993 to 29 billion in 2003
  • Fraud estimated to be between 1 to 3 billion

13
Workers Compensation Fraud (Cont.)
  • Fraud committed by companies
  • Falsely declaring number of workers
  • Falsely declaring number of hours
  • California passed AB227
  • Before legislation
  • 50,000
  • Now
  • 150,000
  • Investigation department

14
Video
  • Workers Comp. fraud
  • It affects us all

15
Current Claims and Costs in California
  • Reserves more than doubled from 9.5 billion in
    1995 to 25 billion in 2002.
  • Medical Expenditures skyrocketed from 2.6 - 5.3
    billion.
  • Claims have been declining, but savings have been
    offset by rising medical costs.

16
The Rise In Cost
  • Substantial increases in medical costs per claim
  • Average medical cost per claim in 2002 was
    31,000.
  • California employers pay more in Workers
    Compensation premiums than any other state.
  • 40 states premiums average less then 4.00 per
    100 of payroll
  • California averages 6.50 per 100 of payroll

17
Current Claims Cost (cont.)
  • California has difficult political environment
    for business.
  • Between 1997 and 2000, indemnity claims increased
    230.
  • 62 of claim dollars go to medical bills and not
    weekly benefits.
  • Excessive use of prescription pain medication.

18
Current Claims Cost (Cont.)
  • Hospital Cost totaled 1.1 Billion in 2002.
  • Chiropractor visits per claim up 70
  • Pharmaceutical service has grown 243
  • 86.4 million in 1997 to 296.6 million in 2002

19
(No Transcript)
20
Table 1 Service Utilization in California vs.
Other States
21
California Legislation
  • AB 749 was passed on February 4, 2002
  • Bill provides first increase in workers
    compensation benefits for injured workers since
    July 1, 1996.
  • Mandates return to work programs
  • Also provides pharmaceutical and outpatient
    surgery fee schedule
  • New requirements for enforcement of illegally
    uninsured employers.

22
Reform Plan
  • Propose to cut workers compensation rates in
    half.
  • Which would result in 5 Billion in savings.
  • Democrats have stated that the reform package
    would reduce workers compensation cost by 14.9.
  • Plan will also increase the burden of proof for
    claims of cumulative injuries that builds over
    time.

23
Proposed Solutions To Workers Compensation
  • To regulate the amount of chiropractic and
    physical therapy visits per claim.
  • Strict guide lines of medical treatments.
  • Make fees for outpatient surgery centers tied to
    Medicare rates and pharmaceutical prices tied to
    Medi-Cal rates.

24
THE END
  • For more information, please visit our Web site
    at
  • www.angelfire.com/biz7/workerscomp/index.html
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