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California WC Reform

May 16, 2005. California WC Reform. A Self Insured Perspective. CA – Claims Management. Costco TPA is SCMS. Dedicated team of 25 claims professionals in Orange, CA. We receive 2100 claims per year; 500 IN & 1600 MO.

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California WC Reform

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  1. May 16, 2005 California WC Reform A Self Insured Perspective

  2. CA – Claims Management Costco TPA is SCMS. Dedicated team of 25 claims professionals in Orange, CA. We receive 2100 claims per year; 500 IN & 1600 MO. One Costco Regional Manager is responsible for CA results. She provides direction to claims team and oversees 2 claim reviews per year with the Costco locations.

  3. Loss of presumption of correctness for AP TTD capped at 104 Weeks Permanent Disability – Based on AMA 5th Apportionment RTW Incentives Medical Provider Networks – Approved 4/8 ACOEM Guidelines CA Reform Legislation

  4. Added 6 Bunch Nurses (In-House with SCMS) Utilization Review Complex Claims Consultation Peer Reviews Prospective Bill Review 8 Weeks of TTD Response to Reform - Claims

  5. Reserving Practices in 2004/2005 Elimination of presumption No reserve for voc rehab ($16K) ACOEM Guidelines Caps on Chiropractic and PT PD reserves based on AMA Guides Response to Reform - Claims

  6. WC costs affect the Bottom Line of Costco. Ultimate is a big number that takes 5 to 8 years to develop. Key is to control the ultimate cost each policy year. You can only manage/control what you can measure. What Do I Know?

  7. Break down ultimate loss costs for each policy year to a yearly target. Set clearly defined financial goals. Communicate goals appropriately. Implement a feedback loop. Reward your team. What Do I DO?

  8. Break Down Loss Costs

  9. Financial Goals = Payments Develop payment goals for each policy year. Manage the Money One adjuster can spend $60K to $250K per month without knowing it. Reserves are Important too Set Financial Goals

  10. Payments by Policy Year Payments by Bucket Indemnity Medical Expense Payments by Pay Code Manage Your Cash Flow

  11. Financial Goals for Program Management. Correct Analysis is Critical. Translate to expectations that supervisors and adjusters can execute and control. Communicate Appropriately

  12. Open IN over $100K Incurred Closing Goal for IN Claims by PY Closing Goal for IN Claims over 2 Yrs Investigation Expectations Medical Management Expectations Claim Handling Expectations WC Goals

  13. Manage Expenses Expectations for Utilization Management PPO Penetration Bill Review Savings Percentage Additional WC Goals

  14. Highest Quality of Claims Handling Use Current Laws to Our Best Advantage Use the Resources Costco is Providing Excellent Customer Service What Does Costco Expect?

  15. Share Information with your Team Don’t just Hope for the Best Develop a Report! Manage what you Measure Dig into the Details Continuously Train your Team Be Firm but Fair Feedback Loop

  16. Notice the team members that work hard for you. When expectations are met, Say Something. When expectations are exceeded – Do What you Can. Reward Your Team

  17. This approach is different than how I used to manage a WC program. Means no actuarial surprises. ACOEM Guidelines – Most Important CA Reform. FY04 loss rate was 7.08%. Now 5.56%. Conclusion

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