Outsourcing vs. Insourcing When it makes sense to do both: Managing Workers Compensation Broward County Public Schools

Transcription

1 Outsourcing vs. Insourcing When it makes sense to do both: Managing Workers Compensation Broward County Public Schools COUNCIL OF THE GREAT CITY SCHOOLS Chief Human Resource Officers & Chief Information Officers Joint Meeting February 6, 2018

2 BCPS Foundation. BCPS Foundation MISSION AND VISION 2

3 DISTRICT PROFILE 3

4 BCPS Foundation. Core Business TEACHING & LEARNING 4

5 DISTRICT PROFILE 5

6 Outsourcing and the SMART Program The District amended its approach to implementing its capital program in anticipation of the SMART Program A NEW DELIVERY MODEL 6

7 Outsourcing and the SMART Program Three Primary Reasons to Outsource: 1. History of Poor Execution in Construction 2. Not Core Business 3. Scalable to need Awardees / Partners Program Manager Cost & Program Controls A NEW DELIVERY MODEL 7

8 SMART Program Continues to Progress MOVING FORWARD AND ON TRACK 8

9 Workers Compensation 101 Workers Compensation (WC) is a statutorily mandated (Chapter 440, Florida Statutes) entitlement program for covered employees, who become injured or ill from a work related accident or exposure. When appropriate, WC provides specific guaranteed benefits such as relevant medical care and partial wage replacement. THE BASICS 9

10 Three Primary Stakeholders INJURED WORKER EMPLOYER MEDICAL KEY PARTIES INVOLVED 10

11 BCPS Workers Comp History Pre-CBM Early CBM Pre- Self Administered Current CBM July 1, 2006 July 1, 2009 July 1, 2013 Self-Insured 2005 Pre-CBM Structure Fully Outsourced TPA Subcontracted medical network/services Full Compliance with statutory requirements but costs significantly rising FOUR DISTINCT PERIODS OF HISTORY 10

12 Pre CBM Prior to July 1, 2006 Experience Development $18,000,000 $18,257, $18,160, $16,000,000 $16,066, $17,043, FY $14,000,000 FY FY $12,000,000 $10,000,000 Total Experience is one year of claims. Experience = paid + outstanding reserve FY FY FY $8,000,000 PRE-CRITERIA BASED MODEL 11

13 June 22, 2005: BCPS Internal WC Audit Major Findings Lack of an Integrated System Lack of Medical Consumerism Lack of Employer Oversight Passive Return-to-Work Program Program Compliance Program Performance A TURNING POINT 12

14 New Program Structure July Program Reform Still Fully Outsourced TPA-Single Provider of Services SBBC Private Label Network Nurses on every claim Stay-at-Work Program Dedicated BCPS WC Specialist Based on the Criteria-Based Model (CBM) FUNDAMENTALS 14

15 Comparison of Models Traditional Model Financial-Based Model Paper Notification of Injury Coordinated by SBBC location staff Priority Driver Early Intervention CBM Model Medical-Based Model Real-Time Telephonic Notification of Injury Coordinated by Dedicated Triage Nurse Discount Medicine Focused on Minimizing Unit Costs Large Contracted Clinician Network with Minimal Inclusions Private Label Network Enhanced Reimbursement Structure Based on Clinical Outcomes (Pay for Performance) Concentrated Network of Trained Clinicians Based on Performance Subcontracted Nurse Case Mangers on Select Claims for Specific Tasks (Fee for Service) Employee/Clinician Driven Medical Utilization "Cookbook" Medicine Employee Primary Conduit of Information with Supervisor Passive Return-to-Work Program Medical Consumerism Communication Return to Work In-house Nurse Case Manager on Every Claim Throughout Life of Claim (Service Inclusive) Evidenced-Based Medical Philosophy (C.A.R.P.) Adjuster/Nurse Primary Conduit for All Communication Aggressive Stay-at-Work Program TRADITIONAL VS. CBM 15

16 Early CBM 7/1/06 6/30/09 Experience Development $18,000,000 $18,257, $17,043, $16,000,000 $16,066, FY FY FY $14,000,000 FY $12,000,000 $12,620, $13,083, Transition Year between Audit & CBM FY FY FY FY $10,000,000 $9,926, $8,966, FY FY $8,000,000 TREMENDOUS FINANCIAL IMPROVEMENT 16

17 Early CBM 7/1/06 6/30/09 Experience at 36 Months Fiscal Year Total Incurred at 36 months FY $ 18,404, FY $ 17,309, FY $ 17,534, FY $ 17,489, FY $ 17,885, FY $ 17,184, FY $ 11,808, FY $ 8,768, FY $ 9,343, FY $ 10,937, Average Savings of 45% or $7.9 million per claim year TREMENDOUS FINANCIAL IMPROVEMENT 17

18 Early CBM 7/1/06 6/30/09 Total Experience at 36 Months $20,000,000 $18,000,000 $18,404,399 $17,534,834 $17,885,819 $16,000,000 $14,000,000 $12,000,000 $11,808,906 $10,937,414 $10,000,000 $8,768,790 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $ FY FY FY FY FY FY FY FY FY FY Average Savings of 38% or $5.9 million per claim year TREMENDOUS FINANCIAL IMPROVEMENT 18

19 Early CBM 7/1/06 6/30/09 Average Experience $8,000 $7,000 Net Claims represent WC claims filed which have expenses associated with them.. An increase in report only claims will not impact the average incurred figures. $6,000 $5,000 $4,000 $3,000 $7,224 $6,672 $5,833 Average Experience per Net Claim ( 12 months) $2,000 $3,616 $3,522 $3,867 $1,000 $ BEST YEARS 19

20 Early CBM 7/1/06 6/30/09 30,000 Lost Work Days 25,000 20,000 24,535 Over 65% reduction in first year of CBM Program. And 80% reduction by year 3. 15,000 10,000 5,000 8,028 5,882 5, TOTAL LOST DAYS (ILD AND INDEMNITY) 20

21 Early CBM Early CBM 10 Self-Insured WC Self-Insured Reserve Reserves 7/1/06 6/30/09 7/1/06 6/30/09 CBM-TPA $95,000,000 $90,000,000 $90,640,000 $85,000,000 $80,000,000 $75,000,000 $70,000,000 $65,000,000 $60,000,000 $55,000,000 Reserve has decreased over $19 million in first 3 years of new WC Model at 75% confidence level, 100% funded. $71,346,000 $50,000, TREMENDOUS FINANCIAL IMPROVEMENT 21

22 Pre- Self Administered 7/1/09 6/30/13 Program Complacency TREND BEGINS TO TURN 22

23 Pre- Self Administered WC Experience Development 7/1/09 6/30/13 Experience Development $18,000,000 $17,043, $16,000,000 FY FY $14,000,000 FY FY FY $12,000,000 FY FY $10,000,000 $8,000,000 NEGATIVE TREND 23

24 Pre- Self Administered 7/1/09 6/30/13 Total Experience at 36 Months $20,000,000 $18,000,000 $17,309,559 $17,489,066 $17,184,305 $16,000,000 $14,000,000 $13,981,535 $12,000,000 $10,891,394 $10,000,000 $9,343,700 $8,000,000 $7,274,134 $6,000,000 $4,000,000 $2,000,000 $- TREMENDOUS FINANCIAL IMPROVEMENT 24

25 Pre-Self Administered 7/1/09 6/30/13 Average Experience per Claim $8,000 Average Experience per Net Claim ( 12 months) $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $7,224 $6,672 $5,833 $3,616 $3,522 $3,867 $4,431 $5,144 $5,046 $3,756 $1,000 $ BEST YEARS 25

26 Pre- Self Administered 7/1/09 6/30/13 30,000 Lost Work Days 25,000 24,535 20,000 15,000 10,000 5,000 8,028 5,882 5,033 6,232 5,635 5,954 6, TOTAL LOST DAYS (ILD AND INDEMNITY) 26

27 Pre- Self Administered 7/1/09 6/30/13 Industry Environment MERGERS & ACQUISITIONS 24

28 Current CBM 7/1/13 Present Industry Environment In order to insulate SBBC WC program and the CBM model from TPAs and industry as a whole: Bring in-house core operations and staff to manage the fundamental decision-making including claims and medical consumerism components of the CBM Continue to outsource non-core decision-making services, as it specifically relates to the CBM Claims management software system, bill review, etc. 28

29 Current CBM 7/1/13 Present Reasons to Insource WC Program 1. BCPS program very unique under CBM model. 2. CBM model proven successful when executed faithfully. 3. Inconsistences in TPA administrations / Volatile Insurance Industry 29

30 Current CBM 7/1/13 Present Current CBM Current Program Structure 7/1/13 Ongoing CBM Self Admin In-House SBBC WC Unit Outsourced TPA Select Service Contract 28 Positions Program Mgmt. Claims Mgmt. Medical Mgmt. & Consumerism SAW/RTW Strategic Admin Support Services and Operations Intake & Triage (24/7/365) Claims System/Software Medical Bill Review, Repricing & Payment Contract Administration & Vendor Mgmt. INSOURCE CORE DECISION MAKING 26

31 Current CBM 7/1/13 Present BCPS Foundation. WC Unit Mission The mission of the Broward County Public Schools Workers Compensation Unit is to effectively, efficiently, and ethically manage the Workers Compensation Program, thereby producing consistently superior outcomes in both human and financial terms. MISSION 31

32 Current CBM 7/1/13 Present Industry Environment One year into Self Administration District s TPA Acquired INDUSTRY PROVES US RIGHT 27

33 Current CBM 7/1/13 Present Average Incurred Per Net Claim $7,000 $6,000 $5,833 $5,000 $4,000 $3,616 $3,522 $3,867 $4,431 $5,144 $5,046 Self-Administration $3,756 $3,503 $3,432 $3,571 $3,370 $3,000 $2,000 $1,000 $0 AVERAGE INCURRED COST PER NET CLAIM (12 MONTHS) 33

34 Current CBM 7/1/13 Present Total Experience at 36 Months $20,000,000 $18,000,000 $17,885,819 $16,000,000 $14,000,000 $13,981,535 $12,000,000 $11,808,906 $10,000,000 $8,000,000 $9,343,700 $8,542,738 $9,886,956 $6,000,000 $4,000,000 $2,000,000 $- FY FY FY FY FY FY FY FY FY FY FY FY FY TREMENDOUS FINANCIAL IMPROVEMENT 34

35 Current CBM 7/1/13 Present Experience Development $20,000,000 FY FY $19,123,672 FY $18,000,000 FY FY $16,000,000 $14,000,000 $15,009,179 $16,066,210 $14,518,611 FY FY FY FY $12,000,000 $12,818,108 FY FY $10,000,000 $10,513,323 $10,029,314 $9,782,730 FY FY FY $8,000,000 $8,920,163 FY FY $6,000,000 $6,621,583 FY FY as of 6/30/2017 TOTAL COST PER CLAIM YEAR

36 Current CBM 7/1/13 Present Cash Flow $ $ Average reduction of $3.3M per year Millions $15 $ $5 $- CLAIMS COSTS - 4 BEST YEARS 36

37 Current CBM 7/1/13 Present 30,000 Lost Days 25,000 24,535 20,000 15,000 Average Reduction of 35% in past two years in-house 10,000 5,000 8,028 5,882 5,033 6,232 5,635 5,954 6,227 6,427 6,271 4,187 3,953 TOTAL LOST DAYS (ILD AND INDEMNITY) 37

38 Current CBM 7/1/13 Present Total Program Costs $3.8 M ADMINISTRATIVE AND CLAIM COSTS 38

39 Current CBM 7/1/13 Present Self-Insured Reserve $95,000,000 $90,640,000 $85,000,000 $84,849,000 $77,647,000 Reserves have decreased $42M in 11 years of new WC Model at 75% confidence level, 100% funded $75,000,000 $65,000,000 $55,000,000 Actual current reserve is $20,814,000, at the (50%) and confidence (50%) level. $56,033,000 $45,000,000 $48,440,000 75% CONFIDENCE LEVEL, 100% FUNDED 39

40 Current CBM 7/1/13 Present WC Self-Insured Experience Modification The Self-Insurer Experience Modification is used in the calculation of the District s annual WC state assessment. The rating is promulgated by the state based on a formula using payroll and loss reports submitted by the District. Fiscal Year Experience Modification State Self-Insurer Assessment $2,134, $1,561, $1,076, $650, $251, $321, $425, $484, $513, $381, $367, $378,707 LOWEST EXPERIENCE MOD SINCE CBM IMPLEMENTATION 40

41 Employee Satisfaction Triage / Initial Survey Mail-in Post Closure Survey Online 95% 77% RESULTS 41

42 Claim Counts 6,000 5,000 Average of 3% reduction 4,000 3,417 3,683 3,760 3,712 3,608 3,582 3,470 3,356 3,478 3,451 3,288 3,356 3,000 1,468 1,087 1,246 1,402 1,393 1,510 1,500 1,497 1,491 1,366 1,364 1,391 2,000 1,000 1,949 2,596 2,514 2,310 2,215 2,072 1,970 1,859 1,987 2,085 1,924 1,965 0 Net Claims Report Only FOCUS ON LOSS PREVENTION 42

43 IMPROVEMENTS DESPITE INFLATION 43

44 INDUSTRY INDICATIONS 44

45 Current CBM 7/1/13 Present Industry Environment It (almost) happened again. Self-Insured TPA services spared MERGERS & ACQUISITIONS 45

46 THANK YOU BROWARD COUNTY PUBLIC SCHOOLS - WORKERS COMPENSATION UNIT 46