How to Have an Impact on Your Comp Costs: Experience Modifiers & Claim Resolution

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Fay Payne
5 years ago
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1 How to Have an Impact on Your Comp Costs: Experience Modifiers & Claim Resolution

2 Compares actual losses to the actuarially expected losses Those entities whose actual losses are lower than expected, receive a credit mod Those entities whose actual losses are greater than expected, receive a debit mod

3 The formula examines a three year period, excluding the current policy year and the policy year immediately preceding the current one. As an example, if your coverage period is October 1, 2016 to Sept 30, 2017, the years used in your current mod formula would be , , and Individual losses in the formula are capped with regard to severity. Current cap is $42,500 per claim. PCRB is discussing going to a split-point system which would punish claims frequency more severely than the current process.

4 Upward and downward travel of the exp mod is limited to +/- 25% of the previous year s mod. There exists the potential a mod may continue to rise or fall in the future, because the entire impact was not able to be felt in one year, due to the +/- 25% limitation

7 Pennsylvania is a wage loss state for workers comp purposes Physical Disability vs. Economic Loss -- if fully recovered physically, but have no job to which to return, you are totally disabled -- if back to work, but paid less than full pre-injury wages, you are partially disabled Disability in PA workers comp means lost dollars

8 For full resolution, there are only a few options: Return to work at wages at least equal to the pre-injury rate Settle the claim via a Compromise & Release Agreement Have the claim terminated by a workers compensation judge, following litigation

9 Can be creatively crafted. A full C&R will include future indemnity and medical benefits Must be approved at a hearing by a workers comp judge. The judge will question the claimant with regard to their understanding of what the C&R will provide and if they understand that the agreement cannot be undone once approved.

10 Unreasonable expectations by the claimant Medicare Section 111 requirements HR issues Terminations Disability Pensions Old Age Pensions Medical benefits of dependents Heart & Lung Act

11 Requires that all insurers and claimants recognize the interests of the Center for Medicare/Medicaid Services (CMS) for the purpose of future medical treatment Any claimant who is currently a Medicare beneficiary, could become one within 30 months, or is currently receiving SSDI benefits qualifies under Section 111

12 For qualified claimants, prior to a claim resolution, CMS must sign off on a projection of lifetime medical costs. That projection is performed by CMS. That amount is required to be physically set-aside and administered over the years to pay future medicals In many cases, that set-aside amount is so large that it is not an economically viable option. In that case, a partial settlement may be reached which only covers the future indemnity benefits

13 Terminations quickest way to get your comp coverage cancelled. The PA Workers Comp system can view a termination of an employee who is on comp as retaliation Not saying you cannot terminate an employee who is on comp for cause, but it has to be coordinated with the comp coverage provider. In an ideal situation, the termination could be wrapped up with a C&R agreement ending the comp benefits. If that is not accomplished, theoretically you are guaranteeing lifetime indemnity benefits to that claimant

14 The workers comp provider is eligible for an offset of indemnity benefits equal to 50% of the amount the employer provided in contributions to the pension By effecting a C&R agreement prior to starting pension benefits, that offset is off the table. There is no off-set for disability pensions

15 It is vital that a disability pension be coordinated with the workers comp provider prior to the awarding of the benefit. Use of incorrect language can impair the ability of the comp provider to manage the future aspects of the claim

16 Termination of the H&L Benefit and Comp Use of the word permanent disability can impair the ability of the comp provider to resolve the claim at some point in the future The correct language to be used, as determined by the PA Commonwealth Court is: lasting and indeterminate in duration

DELVACCA presents. June 24, DELVACCA thanks BWH for their sponsorship of this event

DELVACCA presents. June 24, DELVACCA thanks BWH for their sponsorship of this event DELVACCA presents What In-House Counsel and Risk Managers should Know about Cost Containment and Limiting Exposure in Workers' Compensation and Medicare Set-Asides June 24, 2010 DELVACCA thanks BWH for