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Oct 1, 2014

Five Reasons For Sharp E-Mod Increases

Over the last few weeks, we have had many inquiries on why an employer's E-Mod (X-Mod) has increased very significantly in just one year.   Five reasons for the sharp Mod increases are:

  1. The E-Mod may have grown gradually without notice.   Checking back to see the E-Mods (X-Mods) over the prior five to seven years may show a pattern starting to develop that went unnoticed as there was no one big jump. 
  2. Your company's safety program is just not working properly.   This would be the reason for the largest number of sharp E-Mod increases.  The X-Mod system is specially designed to require larger premium payments from unsafe employers.   A large number of injuries in even one year can easily penalize an employer for being unsafe.   We have seen many employers eliminate or severely cut back their safety programs.  The old adage - "Pay it now or pay it later" is very true. 
  3. Your company does not review your loss runs.  Online access to your claims can be golden in monitoring your current claims situation.   Many posts have been published in this blog regarding  reviewing loss runs and online claims access.   The loss runs can be seen as a map to find your way to what is occurring in your WC claims. 
  4. Not following the Six Keys To Workers Comp Savings.  Use the search box in the upper right corner of the blog for the Six Keys.   It is worth your time.   I wrote the first four over 20 years ago.  They have not changed since my initial article in the '80s.  
  5.  Workers Comp is not the main priority - even in the insurance budgeting.   Over the past three years, the new health insurance regulations have become a higher priority until a massive Workers Comp audit bill is received from the carrier.   Once a large increase in an X-Mod or premiums is in place,  expert advice is usually the best method to reduce your WC budget. 
This list is a small percentage of the reasons for a larger premium bill or X-Mod (E-Mod) increase.   Each WC situation has some unique aspects.  This list is the most common reasons that we see overall.  

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Sep 30, 2014

Upcoming WCRI Teleconference on Predicting WC Outcomes - One to Put on Your Calendar

WCRI (Workers Compensation Research Institute) has scheduled a a one-hour webinar on Thursday, October 16, 2014 at 2 p.m. ET (1 p.m. CT, 12 p.m. MT, and 11 a.m. PT) to discuss this new research.  The cost of the seminar is only $79 for non-members.  

This is a rare opportunity to see statistics from the "other side of the table." as the data was compiled directly from the injured workers.   I will be listening on this one as we have many clients in the states WCRI will be covering on the 16th.  

Some of the areas that WCRI will cover are:
  • Why was trust one of the more important predictors of worker outcomes?
  • What role did comorbid medical conditions have on an injured workers ability to return to work?
  • How do things like severity and type of injury as well as other characteristics (age, sex, education, language, marital status and job history) impact worker outcomes?
  • Do labor market conditions, such as local urbanization and the unemployment rate, have an impact?
WCRI is the only research provider of Workers Comp that actually performs studies by directly contacting the injured employees.  The studies are based on telephone interviews with 3,200 injured workers across eight states:
  • Indiana
  • Massachusetts
  • Michigan
  • Minnesota
  • North Carolina
  • Pennsylvania 
  • Virginia
  • Wisconsin. 
The studies interviewed workers who suffered a work place injury in 2010 and spent at least 7 days away from work. The surveys were conducted during February through June 2013—on average, about three years after these workers sustained their injuries.

I attended WCRI's March 2013 annual conference where the speakers covered the same subject.  The presentation was very  interesting.   For more information or to register go to the teleconference page. 

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Sep 25, 2014

23rd National Annual Workers Compensation and Disability Conference - 25% Discount Code In Article

The largest yearly Workers Compensation conference will be in  Las Vegas  November 19 - 22, 2014.   If you register before November 3rd and use discount code MOORE, you will receive the 25% discount.  Most of the discount codes have already expired for the conference.

MOORE must be in all caps.  

I will be attending if my schedule permits.  

Go here to register

These are the breakout sessions.

CM = Claims Management
MM = Medical Management
PM = Program Management
DM = Disability Management
LR = Legal and Regulatory Issues

Wednesday, Nov. 19
11 a.m. - 12:15 p.m.
Wednesday, Nov. 19
2:30 - 3:45 p.m.
Thursday, Nov. 20
8:30 - 9:45 a.m.
Thursday, Nov. 20
10:45 a.m. - 12 p.m.
Thursday, Nov. 20
1:30 - 2:45 p.m.
Thursday, Nov. 20
3:45 - 5 p.m.
Friday, Nov. 21
10 - 11:15 a.m.
-
Wednesday, Nov. 19
11 a.m. - 12:15 p.m.
Wednesday, Nov. 19
2:30 - 3:45 p.m.
Thursday, Nov. 20
8:30 - 9:45 a.m.
Thursday, Nov. 20
10:45 a.m. - 12 p.m.
Thursday, Nov. 20
1:30 - 2:45 p.m.
Friday, Nov. 21
10 - 11:15 a.m.

Wednesday, Nov. 19
11 a.m. - 12:15 p.m.
Wednesday, Nov. 19
2:30 - 3:45 p.m.
Thursday, Nov. 20
8:30 - 9:45 a.m.
Thursday, Nov. 20
10:45 a.m. - 12 p.m.
Thursday, Nov. 20
3:45 - 5 p.m.
Friday, Nov. 21
10 - 11:15 a.m.

-Wednesday, Nov. 19
11 a.m. - 12:15 p.m.
Wednesday, Nov. 19
2:30 - 3:45 p.m.
Thursday, Nov. 20
8:30 - 9:45 a.m.
Thursday, Nov. 20
10:45 a.m. - 12 p.m.
Thursday, Nov. 20
1:30 - 2:45 p.m.
Friday, Nov. 21
10 - 11:15 a.m.
-
Wednesday, Nov. 19
11 a.m. - 12:15 p.m.
Wednesday, Nov. 19
2:30 - 3:45 p.m.
Thursday, Nov. 20
8:30 - 9:45 a.m.
Thursday, Nov. 20
10:45 a.m. - 12 p.m.
Thursday, Nov. 20
1:30 - 2:45 p.m.
Thursday, Nov. 20
3:45 - 5 p.m.
-

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Will Texas Opt Out Of Its Opt Out Program?

Texas has decided to join the Experience Rating System supplied by NCCI.   According to a fellow WC blogger, Texas may also look to remove the opt-out provisions in the law for the construction industry.   That is a major step in starting to remove the opt-out provision for Texas employers.  

One has to wonder if NCCI had an impact on or at least suggested the move to a full non-opt-out system in Texas.   The Law of Large Numbers may not be a concern as Texas is such a large state.  Then again, if a certain market segment opted out, then the law may be applicable.

One of the most surprising figures out of Texas is 50% of all construction workers in the state are undocumented immigrants.  Specialties like concrete and drywall probably have more than 50 percent undocumented workers according to the article.     

This may cause the  construction companies that opt-out to have a distinct price advantage over fully-insured companies when submitting bids on contracts.    

One has to also ask - if Texas decides to end its opt-out program for the construction industry, will Oklahoma follow suit in its opt-out program?    This would have seemed far-fetched until the state decided to join NCCI's rating system instead of their own. 














  

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Sep 24, 2014

Texas Officially Joins The NCCI System - A Good Move Overall

Texas officially joined the NCCI system today as the Department of Insurance files a petition to adopt NCCI’s Experience Rating Plan Manual.   

Earlier in the year, The Texas Department of Insurance signed order 3455 adopting NCCI’s Statistical Plan for Workers Compensation and Employers Liability Insurance (Statistical Plan), including Texas exceptions. This manual becomes effective for units with policy effective dates January 1, 2015 and subsequent, and is optional for prior policy effective dates.

The state of Texas will also have many exceptions to the NCCI manual.   The state may, over time,  decide to remove more of the exceptions.   

Adopting the manual does not mean Texas cannot reject any part of the NCCI manual.  They do not have to necessarily accept the rates promulgated by NCCI.   The next few years should be interesting as Texas was very independent in its WC operations.  

One area to note is that polices prior to January 1, 2015 may also be affected by the adoption of the NCCI rules.  

One has to wonder if NCCI will push Texas to not keep the opt-out system which is in place presently in Texas.   

See tomorrow's article on one major step that Texas has taken in the area of construction.  Texas has at least started the conversation on not allowing construction firms to opt-out of WC coverage. 

Most of the companies that we have consulted with that decided to opt out of  WC coverage for their employees have ended in disastrous results once they have a series of claims or a few severe accidents. 

West Virginia was very successful in adopting the NCCI manuals and ratemaking process.  There have been many reductions in the rates charged to policyholders since the switch to NCCI.   

Texas policyholders should see rate reductions in the future.  However, the opt-out system may be shown to be a violation of the Law of Large Numbers.   This may affect any type of rate reductions. 

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Sep 18, 2014

The Full NCPRIMA Presentation - Workers Comp Recommendations For Public Risk Managers

Last week, I presented at the NCPRIMA Annual Conference.  The slides for the presentation can be found here.

We received a few requests for a transcript of the presentation.  The rest of this post follows the slides.  The presentation was aimed at public Risk Managers. There are quite a few points that also apply to private industry.

Analyze Trends Not Paperclips - basically paying attention to one big claim, or variable may not be the best way to analyze Workers Comp risk.

Counting paperclips is an old adage that means to not "sweat the small stuff".  The easiest method to examine WC risk is by sticking with trends.

Identifying trends that impact cost - Hundreds of analyzable trends exist in WC.   The key is to identifying the trends that are affecting your WC program the most.  The most popular trends in our claims data are:

• Insurance carrier/Third Party Administrator (TPA)

• Adjuster

• Type of claim

• Accident type

• Body part

Two charts of the same data are included in slide 3 and 5.   They are basically the same data.  We had a Virginia public employer ask us to assist with what they thought was over-reserving by an adjuster.

We examined the data and found the adjuster on their files actually had performed well.  If one enlarges the charts,  there is an obvious trend.

The department 991 had more larger claims.  The conclusion we drew that if the $$$ is ignored and the trend is analyzed, the public entity needed to  focus on the safety of Department 991, not the adjuster.

Develop a Mechanism for Tracking and Analyzing Trends

– Turn the chart sideways - as in our prior example, something as simple as rotating a chart is a simple yet very effective way to look at the numbers.

We have had more than one statistical intern - that knew nothing about WC claims - refer to claims as anomalies or outliers.   They considered claims as aberrations or a system failure.  Interns are great for unbiased opinions.

– Excel® is a great choice - The 2013 version has many statistical packages (and it is free to most public employers).

– Most software is free - There are many other free statistical packages that analyze data.  The internet is full of them.

SourceForge.net (caveat) - a great place to find free statistical packages.  The caveat is some of the software may not work.  Most of it has been checked for malware or viruses.

LDFs and E-MODS

LDFs and E-MODS Defined  - click on the links for the definitions

• Individualizes claims experience - one of the basic underpinnings of E-Mods - click here for more info.

• Should know last three years -  a public risk manager should be able to quote the last three years'  E-Mod or LDF.  These are similar to your personal credit score.  Not knowing them is going to make your job much more difficult

• LDF’s – basis for budgeting - if you have not had an LDF calculated for the self insured part of your program, you should obtain one soon.  LDF's can make basic budgeting much more easy for the public risk manager.

Large deductibles still reported - much to the surprise of many Risk Managers and company owners, large deductible policies do not remove your organization from the E-Mod system.  Your E-Mod is still reported and calculated in almost all instances.

– Impact of LDFs and E-Mods on Cost - there is a direct relationship between these two numbers and your budgeting. These are basically the scores of your safety and risk programs.

Access = $$$ The Value in Monitoring

Online claims access – Full - this is one of the best ways to control and monitor your WC program with your TPA or carrier.   Having immediate access to your WC claims will save your program $.

– 20% added value - In my humble opinion, having full claims access is worth 20% the value of what your entity pays a TPA or carrier.  When your TPA or carrier quotes your organization for WC, make sure you have reviewed their online claims system.

– Status reports - these are golden for Risk Managers.  They are basically the Executive Summaries for each one of your claims.  These are great time savers if they are provided online.

– Emailing adjuster - calling the adjuster will usually result in he/she saying that they will have to pull the file and get back with you.  This is one the major concerns that adjusters bring up in conversations about their insureds.  Emailing an adjuster allows time for a response and provides written documentation on both ends

Subrogation - defined follow the link.

– Identifying and Assisting in Recovery - This is where we see the most money being wasted in public or private funds.  Often, recoverable $$ is left on the table.  A simple letter or identification of a third party can recover funds spent in WC.

Opportunities

• First Report of Injury- give the adjuster as much information upfront on everyone involved in a WC accident may flag the system for subrogation from the start.

• Accident investigation forms -these are priceless for informing the adjuster of an accident scenario.  The more info that can be shared the better.

• Communication to adjuster - as the first two bullets in this section have pointed out, communication with the adjuster very important is cases of possible subrogation.

Maintaining a Subrogation Diary - this link will describe a subrogation diary.  As a Risk Manager, it is up to you to keep monitoring any recoverables.

• Outlook® Calendar - easiest one to use

• 60, 180, 365, adjuster change - communicating with the adjuster at these times in the claims can assist in recovering your subrogation funds.

Adjusters have been trained very well in Workers Compensation,   However, as a former all lines adjuster, recovering subrogation funds switches the file from WC to liability.  Liability adjusting is a different world than WC.

WC claims have many changes such as the adjuster or TPA assigned if assuming tail claims.  The diary enhances the tracking of subrogation $ as the claim progresses through changes.

The blog with much more information is at blogs.cutcompcosts.com – presentation with

links to articles that I referenced

One area that I could not over is the Six Keys To WC Savings.  Go to the blog and type in Six Keys to find that discussion.

• Six Keys To Cutting WC Costs



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