Title: California%20Workers%20Compensation%20Reducing%20Cost
1California Workers CompensationReducing Cost
April 14, 2004 Women in HR Janice Berthold, CLU,
ChFC, CPCU Jberthold_at_allwestinsurance.com (408)
626-6000
2Claims Compensability
- AOE Arising out of Employment
- COE In the Course of Employment
3Causes of Inappropriate Claims
- Medical
- Indemnity
- Mistakes
- Lack of Understanding
- Resentment
- Unscrupulous Service Providers
4Some of the Solutions
- The Investigation
- A Joe Friday
- A Barbara Walters
- The Protocol
5Training
- Employees
- Management Team
- Benchmarking
6Indirect Costs The Rest of the Iceberg
- Work disruption
- Residual slowdowns
- Temporary help or overtime
- Hiring and training costs
- Ruined products
7Pre-Loss Initiatives
- Post-hire/pre-placement
- Safety and Health
8Post-Loss Initiatives
- Investigation
- Early Return-to-Work Programs
9Benefits of Early Return-to-Work
- Prevention of wage loss
- Faster recuperation
- Positive social reintegration
- Avoidance of disability syndrome
- Improved self-worth
10Climbing 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.
11Reasons 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
12Combined Loss Expense Ratios As of 12/31/02
177
171
161
153
141
140
127
116
13Marketplace Chaos Ensues
- 26 Carrier insolvencies
- Seven Carriers withdraw from the marketplace
- No new carriers coming into California
- Marketplace contraction, capacity crisis
14You Can Reduce Loss Costs
- Develop standards for accident and incident
investigation. - Offer modified duty and return to work.
- Monitor all indemnity claims.
- Consider surveillance.
15What 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.
16What 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.
17Indicators 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.
18Claims 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?
19Who Should Report the Accident?
NOT THE FILE CLERK! A fully trained employee
should have responsibility for reporting the
claims.
20Additional 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
21Highlights 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
22Conclusion
- 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.