Understanding and Controlling Workers Compensation Costs

1. Understanding and Controlling Workers Compensation Costs Michael Housley M.D. Intermountain Workmed February 2008 Michael.Housley@imail.org (435) 716-5478

2. Disclaimer I am a physician

4. Direct costs Workers Comp premium Medical costs Lost time costs Indirect costs Decreased productivity Absent/impaired employee Training Employee turnover Morale Cost to society Effect of injury on employee’s life away from work Cost of an Injury

6. The Anatomy of a Workers Compensation Insurance Premium • Classification of Operation • Payroll • Experienced Rating (emod)

7. Classification of Operations • National Council on Compensation Insurance (NCCI) • Rates based on loss experience from Utah accompanies • Proper classification is critical • Classification list is dynamic • Rates can vary dramatically

8. Does it make a difference? • Example: • $ 100,000 X 11.98 = $ 11,980 • $ 100,000 X 8.49 = $ 8,490 • Premium difference $ 3,490 • This is the initial rate difference. Additional factors influenced the final premium.

9. Who sets rates? • NCCI develops rates • State Insurance Department accepts, declines, or modifies rates for insurance carriers in Utah • Rates generally accepted as presented • State Insurance Department occasionally adjusts rates for specific classifications

10. Payroll • Initial rate determination (see previous slide) • Factor in experience modifier calculation

11. Experience Modifier • Minimum premium amount • 3 years of data • Carriers submit payroll and claims data for each company

12. Experience Modifier Calculation(Simplified) • Expected loss rate X payroll = expected loss • Actual loss compared against expected loss = experience modifier

13. Comparison of Mod Change to Company X • Employees: 10 drivers, 1 dispatch • 11.98 X 500,000 = $59,900 • .30 X 20,000 = $ 60 • Total $59,960 • $59,960 X 1.25 = $74,960 • $59,960 X .92 = $55,163 Difference $19,787

14. Experience Modifier • Accurate payroll data • Accurate claims data • Trend towards lower claims desirable

16. Death Perm total Perm partial Days away from work Restricted/transfer days Medical treatment First-aid when bill generated Death Loss of consciousness Days away from work Restricted/transfer days Medical treatment Specific diagnoses Improving EmodInsurance Data vs OSHA Data

17. Using OSHA Log as a Tool to Improve Emod

18. Death Perm total Perm partial Days away from work Restricted/transfer days Medical treatment First-aid when bill generated Death Loss of consciousness Days away from work Restricted/transfer days Medical treatment Specific diagnoses Improving EmodInsurance Data vs OSHA Data

19. Minimizing OSHA Recordables • What • Days away from work • Job restriction/transfer • Medical treatment • How • Ready access to experts in occupational medicine, workers compensation, OSHA

20. Maximizing Non-Recordables • What • First-aid • Injury prevention • How • Ready, convenient to access to trusted health and safety personnel. • Appropriate administrative and health care support

21. First-Aid per OSHA • CFR 29 Part 1904.7 • (ii) What is “first aid”? For the purposes of Part 1904, “first aid” means the following: • (A) Using a non-prescription medication at nonprescription strength (for medications available in both prescription and non-prescription form, a recommendation by a physician or other licensed health care professional to use a non-prescription medication at prescription strength is considered medical treatment for recordkeeping purposes); • (B) Administering tetanus immunizations (other immunizations, such as Hepatitis B vaccine or rabies vaccine, are considered medical treatment);

22. First-Aid per OSHA • (C) Cleaning, flushing or soaking wounds on the surface of the skin; • (D) Using wound coverings such as bandages, Band-AidsTM, gauze pads, etc.; or using butterfly bandages or Steri-StripsTM(other wound closing devices such as sutures, staples, etc., are considered medical treatment); • (E) Using hot or cold therapy; • (F) Using any non-rigid means of support, such as elastic bandages, wraps, non-rigid back belts, etc. (devices with rigid stays or other systems designed to immobilize parts of the body are considered medical treatment for recordkeeping purposes); • (G) Using temporary immobilization devices while transporting an accident victim ( e.g., splints, slings, neck collars, back boards, etc.). • (H) Drilling of a fingernail or toenail to relieve pressure, or draining fluid from a blister;

23. First-Aid per OSHA • (I) Using eye patches; • (J) Removing foreign bodies from the eye using only irrigation or a cotton swab; • (K) Removing splinters or foreign material from areas other than the eye by irrigation, tweezers, cotton swabs or other simple means; • (L) Using finger guards; • (M) Using massages (physical therapy or chiropractic treatment are considered medical treatment for recordkeeping purposes); or • (N) Drinking fluids for relief of heat stress. • (iii) Are any other procedures included in first aid? No, this is a complete list of all treatments considered first aid for Part 1904 purposes.

24. Injury Prevention Goals • Promote safe work environment • Promote employee health • Promote company culture of safety

26. Injury Prevention Ideas • Proactive safety program with support • Job description, job demand and ergonomic analysis, appropriate employee screening • Evaluation of “frequent injury environments” • Near-miss reporting program • Encourage employee suggestions for improvement • Employee health and fitness promotion • Etc.

27. Noitatneserp sdrawkcab • Proactive prevention • First aid • Appropriate medical care with appropriate restrictions when necessary • Goal ZERO • Let OSHA and the claims data be • Indirect cost reduction will naturally follow • Stand clear of the lightning rod

29. Acknowledgments and Thanks • Howard Leaman M.D. Intermountain HealthCare • Eric Torgersen WCF of Utah • Joyce Sewell (Retired) Utah Labor Commission • The great health & safety staff at several Cache Valley Businesses