First Aid Claim Reporting and Potential Future Changes to Experience Rating

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1 W o r k e r s C o m p e n s a t i o n I n s u r a n c e R a t i n g B u r e a u o f C a l i f o r n i a WCIRB Mod Talks First Aid Claim Reporting and Potential Future Changes to Experience Rating The webinar will begin shortly. Notice The information provided in this Presentation was developed by the Workers Compensation Insurance Rating Bureau of California (WCIRB) solely for the purpose of discussion during this Presentation. The WCIRB shall not be liable for any damages, of any kind, whether direct, indirect, incidental, punitive or consequential, arising from the use, inability to use, or reliance upon information provided in this Presentation Workers Compensation Insurance Rating Bureau of California. All rights reserved. No part of this work may be reproduced or transmitted in any form or by any means, electronic or mechanical, including, without limitation, photocopying and recording, or by any information storage or retrieval system without the prior written permission of the Workers Compensation Insurance Rating Bureau of California (WCIRB), unless such copying is expressly permitted by federal copyright law. No copyright is claimed in the text of statutes and regulations quoted within this work. Workers Compensation Insurance Rating Bureau of California, WCIRB, WCIRB California, WCIRB Connect, WCIRB Inquiry, X-Mod Direct, escad and the WCIRB California logo (WCIRB Marks) are registered trademarks or service marks of the WCIRB. WCIRB Marks may not be displayed or used in any manner without the WCIRB s prior written permission. Any permitted copying of this work must maintain any and all trademarks and/or service marks on all copies. To seek permission to use any of the WCIRB Marks or any copyrighted material, please contact the WCIRB at customerservice@wcirb.com. Webinar Presenters Dave Bellusci EVP & Chief Actuary Sharon Faggiano-Callaway Managing Director Customer Experience 2 1

2 Webinar Agenda WCIRB Mod Talks is a series of webinar discussions on experience rating. Today s session includes: Introduction & background Reporting requirements related to first aid claims Department of Industrial Relations (DIR) Workers Compensation Insurance Rating Bureau (WCIRB) Potential future changes to experience rating Question and answer session 3 Introduction & Background First Aid Claims Under-reporting of small medical only or first aid claims a longstanding concern Experience rating fairness Can limit injured worker s access to medical benefits Can create difficulties in managing claim that may later deteriorate Uneven playing field to insurers, providers and producers WCIRB in consultation with California Department of Insurance (CDI) has issued several bulletins on this issue Significant confusion exists 5 2

3 Current WCIRB and Insurance Related Requirements First Aid Claims Uniform Statistical Reporting Plan (USRP) has required insurers to report cost on all claims (no first aid exception) Experience Rating Plan (ERP) requires that the cost of all claims be used in experience rating (no first aid exception) California Labor Code and standard policy contract do not provide for an exception to insurer s liability for workplace injuries WCIRB in consultation with the CDI has published several bulletins that specify that all claims with costs incurred must be reported 6 DIR Requirements on First Aid Claims Employers are not required to provide claim form (DWC-1) to injured worker on first aid claims (Labor Code Sec. 5401(a)) Employers are not required to submit the Employer s First Report of Occupational Injury or Illness (5020) to DIR on first aid claims (Labor Code Sec ) Physicians who attend to any injured employee are required to file a Doctors First Report of Occupational Injury or Illness (5021) on all claims in which they provide treatment including first aid claims (Labor Code Sec. 6409(a)) Only a physician or registered professional personnel can determine whether an injury or illness arising out of and occurring in the course of employment qualifies as first aid 7 3

4 Labor Code Section 5401(a) Definition of First Aid (F)irst aid means any one-time treatment, and any followup visit for the purpose of observation of minor scratches, cuts, burns, splinters, or other minor industrial injury, which do not ordinarily require medical care. This one-time treatment, and followup visit for the purpose of observation, is considered first aid even though provided by a physician or registered professional personnel. 8 DIR Requirement for Medical Only Claims The injury results in lost time beyond the employee s work shift at time of injury, but no more than 3 days of medically authorized disability Within one (1) working day of notice or knowledge of injury the employer must provide the injured employee with a claim form and notice of potential eligibility (DWC 1) Within five (5) days after notice or knowledge the insured employer must file an Employer s First Report of Occupational Injury or Illness (5020) with their insurer Treatment is beyond that of first aid 9 4

5 OSHA First Aid Requirements First aid refers to medical attention that is usually administered immediately after the injury occurs and at the location where it occurred. It often consists of a one-time, short-term treatment and requires little technology or training to administer. First aid can include cleaning minor cuts, scrapes, or scratches; treating a minor burn; applying bandages and dressings; using hot or cold therapy; using temporary immobilization devices the use of non-prescription medicine; draining blisters; removing debris from the eyes; using eye patches; removing splinters or foreign material from areas other than the eye; using finger guards; using massages; and drinking fluids to relieve heat stress. First aid claims need not be logged for OSHA reporting Refer to (b)(5)(ii) for OSHA s complete definition of first aid 10 First Aid Claims WCIRB Working Group WCIRB working group formed on the issue in 2015 Broad participation among stakeholders Goals to provide WCIRB understanding of issues surrounding reporting of first aid claims and identify potential regulatory changes Group met in 2015 & 2016 Findings & recommendations Requirements in USRP not always being followed consistently which can create fairness issues, questions of access to benefits and reduced ability to control the cost of claim Recommend clarifying unit statistical reporting requirements Recommend that WCIRB consider eliminating small medical only claims (losses less than $250) from the X-Mod computation 11 5

6 WCIRB Regulatory Filing Process Update Clarifying changes to WCIRB reporting requirements related to first aid claims were filed by the WCIRB in June 2016 and approved by the Commissioner to be effective January 1, 2017 Experience rating change to eliminate losses below $250 from x- mod computation being reviewed by WCIRB committees If approved by WCIRB committees will be filed with CDI in June 2017 Will be proposed to be effective January 1, 2019 and included with proposal to simplify x-mod formula 12 WCIRB Reporting Requirements USRP Definition of Medical Only Claims Adopted Effective 1/1/17 A claim or injury for which no indemnity is incurred. In general, such claims include, but for which medical treatment costs are incurred is a medical only claim or injury, regardless of whether the cost of medical treatment, including first aid, is paid by an employer or insurer, or regardless of whether a Workers Compensation Claim Form (DWC 1) is filed. Medical Only claims or injuries include but are not limited to all compensable injuries in which the disability does not extend beyond the waiting period specified in the workers compensation laws of California., or injuries for which medical treatment has been provided prior to a determination of compensability pursuant to Labor Code Section 5402(c). 13 6

7 USRP Reporting Requirements Reporting of Claims Adopted Effective 1/1/17 Any and all claims, including those involving first aid as defined in California Labor Code Section 5401(a), in which Indemnity Losses or Medical Losses are incurred or Allocated Loss Adjustment Expenses are paid must be reported individually. 14 WCIRB Reporting Requirements Related to First Aid Claims Clarified Formalizes what was communicated in prior WCIRB bulletins Provides that all claims in which medical costs were incurred must be reported (including first aid claims paid by policyholder) No exception for payments made to clinic or any other provider for medical treatment All medical costs paid for treatment whether paid for by an employer or insurer, must be reported to the WCIRB by the insurer First aid claims are to be reported to the WCIRB like any other medical only claim Approved changes are CDI requirements on insurers to report claim costs (no special WCIRB or CDI fines or penalties apply) 15 7

8 Potential Future Changes to Experience Rating Plan Eliminating the Cost of Small Claims from Formula WCIRB reviewed alternative loss elimination thresholds - $250, $500 and $1,000 Larger thresholds eliminated too many claims, significantly reduced plan accuracy and significantly increased loss-free x-mods $250 threshold will reduce incentive to not report first aid claims without significant loss of plan accuracy or decrease in the claim-free credit The first $250 of all claims would be eliminated from computation Potential Plan change being reviewed by WCIRB committees If accepted will be proposed to CDI in June 2017 to be effective 1/1/19 16 Potential Future Changes to Experience Rating Plan Eliminating the Cost of Small Claims from Formula % of All Claims Eliminated by Alternative Threshold Amounts 60% 54% % of Total Claims Eliminated 50% 40% 30% 20% 10% 15% 36% 0% First $250 of Claim Eliminated First $500 of Claim Eliminated First $1,000 of Claim Eliminated 10 8

9 Potential Future Changes to Experience Rating Plan Simplifying the Experience Modification Formula Current Formula: Cp Ep 1 Cp Ae Ce 1 Ce E Ap = Actual Primary Losses Ae = Actual Excess Losses Cp = Credibility Primary Value Ce = Credibility Excess Value Ep = Expected Primary losses Ee = Expected Excess Losses E = Expected losses *Current variable split indications are for 100% primary credibility (Cp) and 0% excess credibility (Ce). 18 Potential Future Changes to Experience Rating Plan Simplifying the Experience Modification Formula With Cp = 1 and Ce = 0, the experience rating formula simplifies to: Ap Ee E Ap = Actual Primary Losses Ee = Expected Excess Losses E = Expected losses 21 9