Presentation on theme: "1. 2Workers' Compensation Workers’ Compensation and The Three Parts Workers’ Compensation is a social insurance program that provides: Medical care."— Presentation transcript:
2Workers' Compensation Workers’ Compensation and The Three Parts Workers’ Compensation is a social insurance program that provides: Medical care Cash benefits Rehabilitation services Three coverages are provided: workers’ compensation insurance, employers liability insurance, other-states insurance
3Workers' Compensation Objectives and Eligibility Requirements of Workers’ Compensation Provide broad coverage Substantial protection Provide sufficient medical care/rehab Reduction of job related accidents Reduce litigation Two principal eligibility requirements must be met
4Workers' Compensation Workers’ Compensation Benefits Unlimited medical care Disability-income benefits Death benefits Rehabilitation services Keep the benefits coming!
5Workers' Compensation Workers’ Compensation Mess in California Rates were falling due to set rates without state approval Insurers competed for business Carriers selling insurance at a loss to gain market share Firms became insolvent
6Workers' Compensation Workers’ Compensation Mess in California (Cont.) Businesses pay highest premiums, but injured workers get the lowest benefits. Costs paid by employers are the highest in the country. Average employer pays 5.2% of payroll.
7Workers' Compensation Problems & Issues 30% of claimants who miss work hire a lawyer Doctors & patients have little incentive to restrain costs Employers often hire dueling doctors California gives lots of discretion Unnecessarily complex, difficult to administer, some cases outdated
8Workers' Compensation Problems & Issues (Cont.) Difficulty finding workers comp. Insurance California receive lowest disability benefits California has highest litigation and medical cost Last year, job based insurance premiums increased by an average of 10% Nearly 1 million claims filed each year
9Workers' Compensation Problems & Issues (Cont.) Standards of disability awards Stricter guidelines for permanent- partial disabilities Physician choice California exceeds national norm Workers file more claims than elsewhere Medical cost in California far above average
10Workers' Compensation Problems & Issues (Cont.) Lack of fee schedule Delays in updating existing fee schedules No fault system Rising medical inflations Indemnity Underwriting performance
11Workers' Compensation Workers Compensation Fraud What is workers’ compensation fraud? The two most common types of workers’ compensation fraud : Premium Premium Benefit fraud Benefit fraud Health care provider or attorney assists the worker in fraudulent schemes, or participates in double billing.
12Workers' Compensation Workers Compensation Fraud (Cont.) In 2002-03 there were 660 fraud cases representing more than $54 million dollars in chargeable fraud Humboldt man was charged with 6 Felony counts for defrauding workers’ comp. $7.1 billion in 1993 to $29 billion in 2003 Fraud estimated to be between $1 to $3 billion
13Workers' Compensation Workers Compensation Fraud (Cont.) Fraud committed by companies Falsely declaring number of workers Falsely declaring number of hours California passed AB227 Before legislation 50,000 50,000 Now 150,000 150,000 Investigation department
14Workers' Compensation Video Video Workers’ Comp. fraud: Workers’ Comp. fraud: It affects us all It affects us all Workers’ Comp. fraud: Workers’ Comp. fraud: It affects us all It affects us all
15Workers' Compensation Current Claims and Costs in California Reserves more than doubled from $9.5 billion in 1995 to $25 billion in 2002. Medical Expenditures skyrocketed from $2.6 - $5.3 billion. Claims have been declining, but savings have been offset by rising medical costs.
16Workers' Compensation The Rise In Cost Substantial increases in medical costs per claim Average medical cost per claim in 2002 was $31,000. California employers pay more in Workers’ Compensation premiums than any other state. 40 states premiums average less then $4.00 per $100 of payroll 40 states premiums average less then $4.00 per $100 of payroll California averages $6.50 per $100 of payroll California averages $6.50 per $100 of payroll
17Workers' Compensation Current Claims & Cost (cont.) California has difficult political environment for business. Between 1997 and 2000, indemnity claims increased 230%. 62% of claim dollars go to medical bills and not weekly benefits. Excessive use of prescription pain medication.
18Workers' Compensation Current Claims & Cost (Cont.) Hospital Cost totaled $1.1 Billion in 2002. Chiropractor visits per claim up 70% Pharmaceutical service has grown 243% $86.4 million in 1997 to $296.6 million in 2002
20Workers' Compensation Table 1: Service Utilization in California vs. Other States CA12-State MedianDifference Average Payment Per Claim $5,667$5,786Similar Services Per Visit3.63.2Similar Average Visits Per Claim 29.717.4+71% Average Price Per Visit$57$101-44%
21Workers' Compensation California Legislation AB 749 was passed on February 4, 2002 Bill provides first increase in workers’ compensation benefits for injured workers since July 1, 1996. Mandates return to work programs Also provides pharmaceutical and outpatient surgery fee schedule New requirements for enforcement of illegally uninsured employers.
22Workers' Compensation Reform Plan Propose to cut workers compensation rates in half. Which would result in $5 Billion in savings. Democrats have stated that the reform package would reduce workers’ compensation cost by 14.9%. Plan will also increase the burden of proof for claims of “cumulative injuries” that builds over time.
23Workers' Compensation Proposed Solutions To Workers Compensation To regulate the amount of chiropractic and physical therapy visits per claim. Strict guide lines of medical treatments. Make fees for outpatient surgery centers tied to Medicare rates and pharmaceutical prices tied to Medi-Cal rates.
Workers' Compensation 24 For more information, please visit our Web site at www.angelfire.com/biz7/workerscomp/index.html