Transcript Health Risk Safety: Schaffer

National Claim Trends
Insight. In Touch.
Christopher E. Schaffer, Esquire
Vice President of National Sales
Spiraling Costs, Resource Drain &
Loss of Production
• Governments and
businesses in NC are
experiencing an increase in
WC costs that outpaces
other operating expenses
• Loss Costs expected to
increase by 18%
• What is the cause?
• What can be done?
National Claim Trends
• Total Cost is dependent on 2 factors:
– Claim Frequency
– Claim Severity
Claim Frequency is Down
2.0
1.7
Frequency down 35%
1.5
1.0
1.1
0.5
Freq per 100 workers
Source: NCCI (based on states where NCCI provides ratemaking services).
2006p
2005
2004
2003
2002
2001
2000
1999
1998
1997
0.0
Claim Frequency per $1M
Of Wage-Adjusted Payroll
Claim Frequency
Impact on Claim Severity
1.4
-24%
1.2
2001
2002
2003
2004
2005
1.0
0.8
0.6
0.4
0.2
-12%
-22%
0.0
Perm
Partial
Temp
Total
Med-Only
Source: NCCI (based on states where NCCI provides ratemaking services).
If Frequency in NC is Down, Why are
Costs Up?
• Claim severity has increased
• Medical costs have skyrocketed
• Claim management practices have not
been modified for current condition
• Fraud
What Can Be Done?
Claims Management
• Controlling the costs of workers’ compensation
coverage begins and ends with claims
management
• You should not rely on your TPA or insurance
company to control costs
• You need to commit to an active and sustained role
in the management of your workers’ compensation
claims
• The Employer, Insurer and Administrator all have
important roles in claims management
Evaluate Your TPA’s Ability to Contain
Medical Costs
• Double Digit Growth in
Medical in 3 of 4 years
• WC medical growth well
beyond medical CPI
• Causes are:
– Defensive Medicine
– Increased Volume &
Intensity of Treatment
– Cost of Prescriptions now
13% of medical
– Repeat Diagnostics
Medical Payments as
Percentage of Claim Cost
2006p
1996
Indemnity
41%
Medical
59%
1986
Medical
45%
Indemnity
48%
Medical
52%
Indemnity
55%
Source: NCCI (based on states where NCCI provides ratemaking services).
WC Medical Severity Rising Far
Faster than Medical CPI
14%
12%
WC medical severity is
rising twice as fast as the
medical CPI
10.3%
10.1%
9.5%
10%
8.3%
4%
8.7%
8.1%
9.1%
8.5%
4.3 pts
7.4%
8%
6%
12.3%
5.1%
4.5%
3.6%
2%
3.5%
3.2%
2.8%
4.1%
4.6% 4.7%
4.0% 4.4% 4.2%
Change in Medical CPI
Change Med Cost per Lost Time Claim
0%
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Sources: Med CPI from US Bureau of Labor Statistics, WC med severity from NCCI based on NCCI states.
Medical Containment Programs That
Should Be In Place
• Bill Auditing Software and PPO Networks
• WC Prescription Drug Programs
– Daily EDI
– First Fill
– Brand to Generic
– Home Delivery
• Diagnostic Programs
• Durable Medical Equipment
NCCI’s List of Factors that
Change Medical Severity
1. Changes in prices by service category
Quality
Bill
Review
Data
2. Changes
in theBill
number
of
treatments
Quality
Review
Data
Savings Percentage
Up 22%
within a service category
56.5%
60%
800
673
48%
53% 717
55%
750
3. Changes in the mix of service categories
700
50%
616
42%
600
40%
500
30%
400
20%
300
10%
200
0%
100
4. Changes
in the
358
352mix of diagnoses
337
336
5. Changes in the mix of treatments within
Down -6%
service
categories
2004
2005
2006
2007
QTR Sept.
0
2004
07
2005
2006
2007
Savings Percentage
Provider Chrg per Bill RecPmt Per Bill
Evaluating Your Reporting Process
• Do your employees know what to do when they are
injured on the job?
• Does your management know what to do?
• Evaluate lag times between Accident, Employee
Notice and Employer’s First Report.
• How quickly does your adjuster respond and begin
investigation?
Evaluating Your Investigative Process
• Separate witnesses and
claimant
• Obtain statements
• Photos of Accident Scene
• Confirm Facts
• Subrogation - Preserve
Evidence
• Drug/Alcohol Testing
• Occupational Health Clinic
• Documentation
Evaluate Your Modified Duty Program
• Helps to contain temporary disability
• Lessens disability period
– Keeps employee from watching lawyer
commercials while on couch with narcotics
– Doctors are more inclined to release to full duty if
modified duty was productive
• Helps retain employee in work force and active
• Can reduce workers’ compensation costs by 35%
Evaluate Your Claims Administrator
• Are they local?
• Do they provide on-line access to claims
information?
• What are the average LT and MO caseloads?
• Have they ever visited and do they understand your
operations?
• Do they investigate accidents, pursue subrogation
and obtain recorded statements?
• Are they responsive?
• Are they proactive or reactive?
Evaluate Your Communication Process
With Injured Employee
With Claims Adjuster
• Inquire how employee is
doing
• Show empathy and concern
• Express desire to see full
recovery
• Require employees to
communicate restrictions
and provide disability slips
after each appointment
• Require responsiveness
from your adjuster
• Conduct regular claim
reviews of WC claims
• Request status reports and
a plan of action on claims
• Request electronic access
to claim files
Claim Shift Economics
Current
Keep
Mix2% of LT Claims as MO
18
4
18
2
Percent
Incurred Per
MedOnly MedOnly
(MO atLT
(MO
at 90 days)
90On
days)
$412LTSavings
Every
Claim
LT
LT
Percent Incurred Per
of Total
Claim
of Total
Claims
78
80
Claim
Claims
Med Only
78%
$500
Med Only
80%
$500
Lost Time
22%
$21,100
Lost Time
20%
$21,100
$5,032
Weighted Average:
Weighted Average:
$4,620
Comments
Questions?