California%20Workers%20Compensation%20Reducing%20Cost

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California Workers CompensationReducing Cost
April 14, 2004 Women in HR Janice Berthold, CLU,
ChFC, CPCU Jberthold_at_allwestinsurance.com (408)
626-6000
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Claims Compensability

• AOE Arising out of Employment
• COE In the Course of Employment

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Causes of Inappropriate Claims

• Medical
• Indemnity
• Mistakes
• Lack of Understanding
• Resentment
• Unscrupulous Service Providers

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Some of the Solutions

• The Investigation
• A Joe Friday
• A Barbara Walters
• The Protocol

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Training

• Employees
• Management Team
• Benchmarking

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Indirect Costs The Rest of the Iceberg

• Work disruption
• Residual slowdowns
• Temporary help or overtime
• Hiring and training costs
• Ruined products

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Pre-Loss Initiatives

• Post-hire/pre-placement
• Safety and Health

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Post-Loss Initiatives

• Investigation
• Early Return-to-Work Programs

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Benefits of Early Return-to-Work

• Prevention of wage loss
• Faster recuperation
• Positive social reintegration
• Avoidance of disability syndrome
• Improved self-worth

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Climbing Costs

• The average medical cost per claim in California
  was 23 higher than the median states average
  medical cost per claim.
• Workers compensation claims payments to
  chiropractors in California averaged 2,066, 148
  higher than the median states studied (833) and
  70 higher than Illinois, the next highest state
  (1,215).
• More than 28 of the claims in California
  involved therapists, compared with 20 in the
  median state.
• Six out of eight workers comp back surgeries are
  unnecessary.

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Reasons for the Increase

• Cost shifting from non-occupational health care
  to workers compensation
• More sophisticated and expensive medical
  technologies
• Added costs associated with medical case
  management
• Over-utilization of medical services

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Combined Loss Expense Ratios As of 12/31/02
177
171
161
153
141
140
127
116
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Marketplace Chaos Ensues

• 26 Carrier insolvencies
• Seven Carriers withdraw from the marketplace
• No new carriers coming into California
• Marketplace contraction, capacity crisis

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You Can Reduce Loss Costs

• Develop standards for accident and incident
  investigation.
• Offer modified duty and return to work.
• Monitor all indemnity claims.
• Consider surveillance.

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What Else Reduces Cost?

• Complete incident reports showing as much detail
  as possible with eyewitness accounts if
  available.
• Monitor all treatment and medication to determine
  if they are appropriate.
• Keep continuous communication open between
  yourself and your Insurer to make sure case
  reserves are proper.

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What Else Reduces Cost? (Cont.)

• Assure claims are closed out as quickly as
  possible.
• Question anything that looks like Fraud.
• Make sure claims coded to you are in fact yours.

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Indicators of Workers Compensation Fraud

• Conflicting history of accident by claimant,
  hospital, doctor.
• Accident not witnessed OR an overly enthusiastic
  witness.
• Monday morning/Friday evening accident.
• Claimant is difficult to contact by mail/phone.
• Claim filed just prior to job completion.
• Claimant not at home during the day.
• Minor accident incurs major medical expenses.

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Claims Review

• Look for frequency - will usually require loss
  control.
• Watch open claims - are they still open?
• Track large reserves - can there be a reduction
  before Unit Stat Filing?

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Who Should Report the Accident?
NOT THE FILE CLERK! A fully trained employee
should have responsibility for reporting the
claims.
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Additional Cost Saving Ideas

• The Medical Triage System
• The Time Card Release Plan
• The 1-3-5 Plan
• Classification Pro-Action
• The 90-Day Delay Program

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Highlights of Work Comp Reform

• Repeals requirement that laws primarily favor the
  employee
• Requires ER sponsored physician only
• Requires that employment is predominant cause of
  injury
• Promotes objective medical findings
• Provides independent review of medical treatment
  disputes

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Conclusion

• Loss Control and Claims Management will reduce
  costs
• Make your Insurance Agent/Broker earn his money
  by assisting you in all claims matters
• Understand that what is measured is improved, and
  so continuously measure your results.