Controlling Costs Through Claims Management

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Controlling Costs Through Claims Management
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Why Claims Management?
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Web Sites

• BWC ohiobwc.com
• IC www.ic.state.oh.us

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Rate Making

• The main question is
• How does BWC determine what an employer pays in
  premium?
• BWC must collect enough money in premium to pay
  claims costs.
• Costs must be equitably divided among all
  employers.

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Four-Year Calculation

• Private employers
• For policy year beginning July 1, 2009, BWC used
  data from calendar years 2004, 2005, 2006 and
  2007 for rate-making purposes.
• Each year, the oldest year drops off and a new
  year is added.
• For policy year beginning July 1, 2010, BWC will
  use data from calendar years 2005, 2006, 2007
  and 2008 for rate-making purposes.
• Public employers rating year begins on Jan. 1

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BWC Rating Concept

• Compare
• actual claims cost
• and
• expected claims cost

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BWC Rate Making

• Once actual claims costs and expected claims
  costs are obtained, BWC uses that information to
  determine the rate that the employer will pay.
• Note that the BWC is revenue neutral when it
  comes to rate making.

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Claims Costs

• Medical
• Indemnity
• Reserves

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Claims Costs

• Medical
• Money paid for doctor bills,
• diagnostic tests, drugs, etc.

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Claims Costs

• Indemnity (compensation)
• Money paid to injured workers to compensate for
  lost wages
• Money paid to injured workers to compensate for
  permanent damage

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Claims Costs

• Reserves
• A reserve is the anticipated future cost in a
  claim.
• A reserve is set only on claims that are
  designated as lost-time claims.

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Result

• A large reserve has a significant impact on the
  value of a claim.
• Claims with large reserves can be the driving
  factor in an employers rates.

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Maximum Value Claim

• Each employer is assigned a maximum value for
  each individual claim.
• Its based on employer size and determined by
  expected losses.
• This prevents large claims from negatively
  impacting small employers.
• Injured employee receives all benefits due.
• Amounts over the maximum value are assigned to
  surplus fund (a shared liability).

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Experience Rating

• Credit-rated
• An employer has less claims cost than BWC would
  expect. The experience modifier (EM) is less than
  1.00.
• Debit (penalty)-rated
• An employer has more claims cost than BWC would
  expect. The EM is greater than 1.00.

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Simply put

• claims costs
• drive
• rates.

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Types Of Claims

• Medical only seven or fewer days of lost work
• Lost time eight or more days lost from work
• Does not have to be consecutive

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Timely Reporting Of Claims

• Company policy to report injuries on same work
  shift?
• Immediate reporting of claim allows faster/more
  appropriate treatment.
• Reporting more than seven days increased
  costs.1
• 11 to 20 days 29 increase
• 21 to 30 days 39 increase
• Over 30 days 50 increase
• More than 31 days 113 increase in litigation
  (i.e. attorney involvement).2

1Kemper Insurance 1993 2International Assoc. of
Ind. Accident Boards Commissions
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Accident Analysis
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Why is accident analysis in a claims management
class?
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Why Analyze?

• Prevent recurrences
• Evaluate data
• Make specific recommendations
• Show critical behaviors
• Compare trends
• Identify needs

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What is an accident?
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Accident

• Its an unplanned event that interrupts the
  completion of an activity and includes injury,
  illness, or property damage.
• Worker seeks medical treatment.

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What is an incident?
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Incident/Near Miss

• Its an unplanned event that interrupts the
  completion of an activity without directly
  involving the worker(s).
• The worker does not seek medical treatment.

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When Recording Accidents And Incidents/Near Misses

• Always document and keep them simple.
• Clearly communicate process.
• Review for trends (like injuries, locations, same
  equipment).
• Goal should always be prevention.

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Types Of Tracking Forms

• Shift logs
• OSHA 300 logs
• FROI form
• Incident reports
• First aid logs
• Accident analysis reports

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Five Causal Factors

• Task
• Material
• Environment
• Human/personal
• Management/process failure

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Task

• Was a safe work procedure used?
• Had conditions changed to make normal procedures
  unsafe?
• Were appropriate tools and materials available
  and working properly?
• Were safety devices working properly?

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Material

• Was there equipment failure?
• What caused it to fail?
• Was machinery poorly designed?
• Were hazardous substances involved?
• Should the worker have used personal protective
  equipment?

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Environment

• What were the weather conditions?
• Was poor housekeeping a problem?
• Was noise a problem?
• Was there adequate light?
• Were toxic gases, dusts, fumes present?

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Human/Personal

• Were workers experienced?
• Were they adequately trained?
• Were they physically capable of doing the work?
• Were they tired?
• Were they under stress (work or personal)?

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Management/Process Failure

• The process designed and administered by
  management is responsible for 94 of all
  outcomes, including accidents.
• Larry Hansen, Wausau Insurance

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Management/Process Failure

• Were safety rules in effect and enforced?
• Was adequate supervision and training given?
• Were there regular safety inspections?
• Had hazards previously been identified?
• We unsafe conditions corrected?
• Was regular equipment maintenance carried out?

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Why document an accident or incident/near miss?

• Prevention
• Consistency
• Data analysis
• Legal Issues

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Steps Of An Accident Analysis Process

• Written program
• Information gathering
• Analysis
• Recommendation/corrective action

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Written Program

• Who will conduct the analysis?
• What forms are available?
• Where do you obtain them?
• When should the incident be reported?
• When will the accident be analyzed?

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Information Gathering

• Analysis kit
• Physical evidence
• Interviews
• Background information

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Analysis

• Accident tree
• BWC accident analysis form

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Recommendations/Corrective Action

• Recommendations are made to management.
• Management takes corrective action.

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• Accident analysis should always be to gather
  facts and never to lay blame.
• Your main objective is prevention!

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Accident Analysis

• Share your successes!

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Case Study
What happened to Herbie?
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Claims Management
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Initiatives

• Bureau of Workers Compensation (BWC)
• Industrial Commission of Ohio (IC)

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Claims Management Through Partnership

• BWC
• Managed Care Organization (MCO)
• Employer
• Injured worker
• Provider
• Representatives

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Reporting Injuries

• Injured worker completes accident report.
• Injured worker seeks treatment.
• Certified providers
• Provider contacts MCO.
• MCO electronically transmits to claims to BWC.
• BWC issues a claim number and notifies all
  parties by letter, notifies MCO electronically.

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Advantages To Employer Reporting

• Claim will be submitted with the correct policy
  number.
• Claim will be submitted with the correct manual
  number.
• Claim will have a complete accident description.
• The injured worker will have a claim number at or
  near the time of the initial treatment.
• BWC will know whether or not the employer
  certifies the facts of the claim.

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Additional Information What should employers
report?

• Incident report
• Witness statements
• Certification
• Wages
• Transitional work opportunities
• Job description
• Note, as the employer, you should also consider
  sharing both the job description and transitional
  work opportunities with the treating provider.
  Ask the provider if the injured worker can
  perform any of these duties.

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Claims Flow Process What happens after
reporting an injury?

• Contact made with injured worker, employer and
  their representatives if appropriate.
• Investigate details and verify information.
• BWC collaborates with MCO case manager and
  develops action plan.
• As an employer, you may ask to be part of the
  return to work plan.
• Review with appropriate team members.
• Request physician review if appropriate.

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Making A Decision

• Weigh the evidence factual and medical.
• Accidental in character
• In course and arising out of employment
• Injury is physical in nature
• If necessary, apply ORC 4123.95.
• Place a BWC Order.

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What do I do once I receive A BWC Order?

• File a Notice of Appeal (IC-12) to the BWC Order.
• Submit a Waiver of Appeal (C-108).

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IC

• Presenting evidence
• Attending hearings
• Hearing process

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Outcome Management

• Develop a plan of action by establishing goals,
  developing interventions and identifying
  barriers.
• Continually work with injured worker, employer,
  their representatives and the treating provider
  to facilitate an early return to work.
• Review treatment plans.
• Review rehabilitation potential.

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Vocational Rehabilitation
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The Importance Of Early Return-To-Work (RTW)

• medical care costs correlate not with the
  severity of diagnosis, as might be predicted, but
  the length of time workers remain out on
  disability.
• Disability Management
• Akabas, Galvin and Gates
• The American Management
• Association

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Benefits Of Early RTW Programs

• Reduces costs
• Reinforces managements commitment to employee
  welfare
• Maintains quality/production
• Enhances Americans with Disabilities Act
  compliance
• Increases safety and prevents future injuries
  (i.e. ergonomic improvements)

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Referral For Rehabilitation

• Who makes the referral?
• Anyone
• Why would the employer or injured worker want
  rehab services?

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Rehabilitation Referrals

• There are two main types
• Remain at work services (RAW)
• For medical only claims
• Vocational rehabilitation services
• For lost time claims

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RAW Services

• Goal To prevent a medical-only claim from
  becoming a lost-time claim.
• Eligibility
• A Physicians Request for Medical Service or
  Recommendation for Additional Conditions for
  Industrial Injury or Occupational Disease (form
  C-9) from the provider of record (POR) or
• Notes in a claim file by the managed care
  organization (MCO) documenting contact with the
  employer, injured worker and/or POR that the
  injured worker is experiencing difficulty
  transitioning back to his/her position of
  employment due to the allowed condition in the
  claim.

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Remain At Work Services

• The injured worker has not missed any, or fewer
  than 8 days, of work due to the allowed
  conditions in the claim.
• The injured worker is having difficulty
  performing his job.
• The injured worker is working light duty, but
  there is no sequential plan for the injured
  worker to progress to regular work duties.

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Remain At Work Services

• Remain at Work Program is suitable for both
  situations
• Contact your MCO and discuss the types of
  services you wish to offer the injured worker.

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RAW Services

• Transitional work
• Ergonomic study
• Gradual return to work
• Functional capacity evaluation
• Physical or occupational therapy (on site)
• Purchase of tools and equipment
• On-the-job training
• Job modification
• Job analysis
• RAW field case management

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RAW Services

• Who pays for remain at work services?
• Employer through the policy or out of pocket

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Goal Of Vocational Rehabilitation

• To prevent a lengthy disability by creating a
  time limited, individualized voluntary program
  for injured workers with a lost-time claim to
  safely return to work or retain employment

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Vocational Rehabilitation Services

• Provided for claims in which the injured worker
  has lost eight or more days of work due to the
  allowed conditions in the claim.

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Benefits Of Vocational Rehabilitation

• The employer benefits when an experienced worker
  remains productive and costs associated with
  hiring and training a new employee are reduced.
• Medical and indemnity costs under an approved
  rehab plan are charged to the surplus fund. Thus,
  these dollars are excluded from the employers
  loss history for rate-making purposes.

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Injured Worker Benefits From Vocational
Rehabilitation

• Recovers more quickly
• Experiences a smoother transition back to regular
  duty
• Keeps jobs skills current
• Maintains work relationships
• Reduces problems related to inactivity

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Referral Contacts

• MCO
• The assigned BWC customer care team in the
  customer service office

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Rules

• Ohio Administrative Code 4123-18-03
• Reasonable probability that with vocational
  services the injured worker will return to work

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Eligibility Criteria For Vocational Rehabilitation

• Injured worker must have a significant impediment
  to return to work as direct result of allowed
  conditions in claim and one of the following
• Receiving temporary total, non-working wage loss,
  or permanent total compensation as of the date of
  referral
• Granted a loss of use award
• Granted a PP award and has POR restrictions
• Reached MMI and has POR restrictions related to
  allowances in claim.

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Eligibility Criteria For Vocational Rehabilitation

• Injured worker is receiving Job Retention
  Services
• Injured worker sustained a catastrophic injury
  and a vocational goal can be established
• Injured worker was receiving living maintenance
  wage loss not more than 90 days prior to
  referral, has continuing restrictions related to
  allowances in claim and lost most recent job
  through no fault of his/her own

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Job Retention Services

• Job retention services eligibility
• POR must provide written statement indicating
  injured worker has work limitations due to
  allowed conditions in the claim that are
  affecting his/her ability to maintain employment
• Injured workers current employer describes the
  problems to MCO who documents these problems in
  the claim

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Feasibility For Vocational Rehabilitation

• MCO determines if there are medical,
  psychological or other barriers to injured
  workers ability to fully participate in the
  return to work focused rehabilitation plan.

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RTW Hierarchy

• Same job, same employer
• Different job, same employer
• Same job, different employer
• Different job, different employer
• Skill enhancement, short-term training may help
  at any step in return to work.

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Vocational Rehabilitation Services

• Employer Incentive Contract (EIC)
• Gradual Return To Work (GRTW)
• Job modifications
• Tools and equipment
• On-the-Job Training (OJT)
• Work trial

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EIC

• Compensates for loss of productivity for injured
  workers who return to work before they are
  capable of performing regular job duties (up to
  50 of injured workers salary)
• 13 week limit

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GRTW

• Allows injured worker to return to work on a
  graduated basis building up from four hours a day
  to full time work status.
• BWC can pay the injured worker for lost wages due
  to hours not worked or can reimburse the employer
  for wages paid to the injured worker for hours
  not worked
• 13 week limit

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Other Services

• Job modifications
• Removal or alteration of physical barriers that
  prevent injured workers performing essential job
  functions
• Tools and equipment
• Provides tools and equipment necessary for
  employment to the injured worker

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OJT

• Allows injured worker to obtain or upgrade
  vocational skills through actual work experience
• Training is provided under the close supervision
  of an experienced person skilled in the job
• Employer will be reimbursed for trainers time to
  a pre-determined time
• The Specific Vocational Preparation length of
  time is determined by the Dictionary of
  Occupational Titles

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Work Trial

• Permits injured worker to attempt return to work
  in the original job, or at a new job
• Allows an employer to test evaluate and observe
  the worker at the actual job prior to hiring
• Injured worker is paid Living Maintenance while
  in Work Trial
• Maximum time is one month

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TW Goal

• To prevent a lengthy disability by creating a
  time limited, individualized work-site program
  for injured workers with restrictions progress to
  a specific job

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Prerequisites For A Successful Transitional Work
Program

• Buy-in by top management
• Labor/employee involvement
• Commitment for openness
• Confidentiality
• Policy that is logical and fair

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TW Eligibility

• Employers develop their own programs and can set
  their own parameters.
• MCO and BWC employer services specialist can
  assist with development of the program.

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Light Duty

• Light duty is open-ended.
• Light duty has no therapeutic goals defined.
• Light duty responsibilities of employer and
  employee are often not outlined.
• Light duty has no alternative plan if program
  fails.

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TW Services

• Progressive conditioning
• On-site work activities
• Education for safe work practices
• Job modification or alternative work assignments

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More About TW

• Sets a starting and ending date
• Offers work hardening or other therapeutic
  benefits
• Defines responsibilities clearly and in writing
• Has a developed alternative plan

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Case Study
What about Herbie?
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Outcome Management Developing A Plan Of Action

• Investigate the availability of modified duty or
  transitional work
• Address allowance of additional conditions
• Drugs
• Physician reviews
• Various programs
• Scheduling independent medical exams

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Fraud vs. Abuse

• Abuse
• Excessive use or misuse of workers compensation
  system
• Cannot be criminally prosecuted under the law
• Dealt with through administrative channels (IC)

• Fraud
• Requires knowledge and intent
• Overt act
• Intentional omission

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Computing And Paying Compensation

• Full weekly wage
• Average weekly wage
• Special circumstances
• Minimum and maximum award calculations
• When is compensation payable?

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Types Of Compensation

• Temporary total
• Salary continuation
• Living maintenance
• Living maintenance wage loss
• Wage loss

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Wage/Salary Continuation

• Employer continues to pay employee their normal
  wage.
• Reserves are suppressed.
• Employee continues to accrue seniority,
  retirement, leave, etc.
• Health insurance continues, if employer provides
  it.
• Not available with Deductible Program

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Types Of Compensation

• Violation of specific safety requirements
• Percentage of permanent partial
• Scheduled loss
• Facial disfigurement
• Permanent total disability
• Disabled Workers Relief Fund

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Types Of Compensation

• Settlement
• Settlement application is filed
• Determination is made on potential future cost
• Settlement amount is negotiated with all parties
• Settlement agreement is published
• 30-day hold period
• Settlement is paid/claim is closed

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Settlement

• A formal agreement should be completed at least
  45 days before the experience period snapshot.
• Submit by Nov. 15 for private employers.
• Submit by May 15 for public employers.
• 30 days must be allowed for IC approval.
• Reserve drops to zero.
• Money for settlements comes from BWC, not the
  employer.

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Case Study
More From Herbie.
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Other Cost Savings Impacts

• Handicap reimbursement
• Pursuit of settlement
• Subrogation

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Discount Programs And Optional Rating Plans

• Group-retrospective rating
• Deductible Program
• Drug-Free Workplace Program
• 100 Cap on EM Increase
• Individual-retrospective rating

• Safety Council Rebate
• 15K Program
• One Claim Program
• Self-insurance
• Group rating

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How can you impactclaims management?

• Work with treating provider to facilitate an
  early return to work.
• Work with immediate supervisor to ensure employee
  adheres to any restrictions.
• Use BWC Web site to monitor claims.
• Staff existing claims with customer care team to
  determine impact of pursuing settlement.
• Partner with BWC safety and hygiene personnel to
  determine possible injury prevention measures.

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How can you impactclaims management?

• Encourage employees to immediately report near
  misses and accidents.
• Ensure claims are reported to BWC as quickly as
  possible.
• Verify the facts of the claim in a timely manner.
• Maintain ongoing contact with the injured worker.
• Share availability of modified or transitional
  work information with the customer care team.

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Remember if you dont manage the claim ...
it will manage you!