1 The Cost of a Workers’ Compensation Claim Presented by: Ann Kensy, CWCP, RWCS, CRM, CIC

2 Facts – Statistics An employee who files a Workers’ Compensation(WC) claim for lost time is twice as likely to file another WC within 3 years 26% of employees with a prior WC claim who remained employed with the same employer are more likely to file another claim with employer The second claim filed for this employee has more than a 50% likelihood of being a back injury

3 Measurable Costs of the WC Claim Medical Costs Medical/Physician Costs Diagnostic Costs Nurse Case Management Conservative Treatment Physical Therapy Prescriptions Surgery Costs – should claim escalate

4 Measurable Costs of the WC Claim Indemnity Costs Lost Wages Employee Attorney Fees Schedule Loss of Use Awards Permanency Award Allocated Loss Expenses Independent Medical Exams Surveillance Attorney Fess for Employer Workers Compensation Board Costs/Hearings

5 Indirect Costs Loss of production of employee Replacement costs (overtime, agency fees) Staffing issues Training for new/agency personnel Supplemental wage continuation – benefit continuation

6 Indirect Costs (Continued) Internal Management Time: Manager/Safety Person – Investigates the claim for safety reasons-report completion Unit Manager- Involved in the notification of claim reporting, address staffing issues, monitoring of replacement personnel to unit standards Corporate Management – Monitor claim administration, report on trends, pay the administrator for services, etc. Finance Department – letters of credit, premiums, deductible payments, liability booking on balance sheet, payroll for wage continuation

7 Employee Costs Injury: Pain, discomfort Time waiting for care Travel time to various medical providers Delay in wages Unable to perform daily functions Unable to participate in hobbies Family impact

8 How are the Costs Evaluated Medical Costs: Initial care and evaluation Diagnostic testing/results Follow up care – specialists, physical therapy, surgeons Costs/Reserves are set to WC Fee Schedule

9 How are Costs Evaluated (Continued) Indemnity Costs: Statutory Wages $550 for accident dates of 7/1/2008 through6/30/2009 $600 for accident dates of 7/1/2009 through 6/30/2010 State Average Weekly Wage (SAWW) from 7/1/2010 forward Claimant Attorney Fees – Set by the WCB

10 How are the Costs Evaluated Indemnity Costs – Continued Schedule Loss of Use Awards (SLU) To compensate the individual for loss of earning capacity Percentage is provided by the physician or Independent Medical Exam (IME) provider Workers’ Compensation Rate x number of weeks based on the percentage and body part – paid indemnity = SLU award Tax free benefit

11 Claim Example – Before SPHM Implemented Facts: Nurse, age mid 30’s Injury Description: Felt pain in neck when transferring a patient Initial Evaluation and Reserve Setting: Medical Reserve Setting = $3,000 Emergency room visit, chiropractic treatments 3x week for two months, diagnostic testing, prescriptions Indemnity Reserve Setting: 8 weeks at the $400 benefit rate

12 Claim Example Before SPHM Implemented First 60 Days: Medical Paid$1, Emergency room visit, 12 chiropractic treatments, x-rays prescription Indemnity Paid $3,200 Employee remains out of work New Facts Employee is not able to return to work, MRI being scheduled, now has additional complaints of upper back injury, unable to lift more than 5lbs.

13 Claim Example – Before SPHM Implemented Medical and Indemnity Reserves need to adjusted to reflect exposure MRI returns negative for disc herniation IME scheduled $695 Expense IME results – unable to lift more than 5 lbs, enroll in physical therapy Medical Reserve Increase:$3,000 Physical therapy, chiropractic treatments, neurologist consult

14 Claim Example – Before SPHM Implemented Indemnity Reserve Increase:$6, weeks at $400 rate Paid: Medical$1, Indemnity$4,800 Expense$948 IME and medical bill review costs

15 Claim Example – Before SPHM Implemented Updated Facts: Physician evaluation, allows employee to return to transitional duty, no lifting over 25lbs. Employee continues to treat with a chiropractor as complaints continue for neck and back Employee returns to transitional duty with restrictions, third day into return employee aggravates the injury again while transferring a patient

16 Claim Example – Before SPHM Implemented Medical Reserve Increase:$5,000 Diagnostic testing, chiropractic treatments, surgeon evaluation, physical therapy and prescriptions Indemnity Reserve:$1,600 remaining from prior evaluation Additional Facts: MRI completed and reveals a herniated disc Neurosurgeon requests and is granted surgery, discectomy Employee opts to treat conservatively for an additional 2 years

17 Claim Example- Before SPHM Implemented One year post accident evaluation: Employee remains disabled and treating actively Paid: Medical$7, Indemnity$20,800 Reserves have been adjusted and need to reflect additional exposure IME performed – agrees with neurosurgeon, employee remains totally disabled from duties

18 Claim Example- Before SPHM Implemented Second year post accident evaluation: Employee opts to have surgery Reserves need to be revised to include surgery, post rehab and recovery along with wage continuation Medical Reserve Increases$15,000 Indemnity Reserve Increases$20,800 Benefits for one year post surgery at $400 rate Re-evaluate after one year post surgery

19 Claim Example – Before SPHM Implemented Five years post accident evaluation: Employee can no longer work as a Nurse Employee in early 40’s, and is now classified at the WCB as permanently partially disabled Claim remains open with the following reserves and payments

20 Claim Example – Before SPHM Implemented Paid: Medical$49, Indemnity$104, Expense$10, Reserves: Medical$30, Indemnity$420, Expense$5,492

21 Claim Example – Before SPHM Implemented Medical reserve reflects treatments and prescriptions for 3 years Looking to settle case asked Center for Medicare to provide an evaluation of medical exposure CMS estimates $320,000 for medical Indemnity reflects life exposure of claim

22 Claim Example – SPHM Implemented Facts: Nurse, age 42 Description of Injury: Felt pain in lower back when transferring patient using slip sheets Reserves for the first 60 days: Medical$3,000 Indemnity$4,000 8 weeks at $500 rate

23 Claim Example- SPHM Implemented First 60 days after accident evaluation: Paid: Medical$ Indemnity$2,500 5 weeks x $500 rate Employee returned to work with restrictions of lifting, accommodations made with unit manager Lost time ceases transitional duty assignment is adhered by manager and employee allowing for full duty release 6 months from accident

24 Claim Example – SPHM Implemented Reserve Evaluation: Medical – remains the same to pay for continued treatment until employee reaches full duty status Indemnity – employee returned to work transitionally, recovered to full duty no additional wages paid Final Evaluation of claim: Paid: Medical$4, Indemnity$2,500 Expense$ File closed employee returned to full duty as a nurse

25 Lessons Learned Transitional return to work programs can be utilized with supervision and will assist in cost controlling the claim Safe Patient Handling Equipment allows transitional returns for employee as restrictions can be adhered to by the staff and employee SPHM equipment reduces the severe back injuries

26 Lesson Learned What do you do about the old claims that costs seem to escalate? How do you measure for the indirect costs that your facility has to account for but are not reflected in the cost of the claim from a workers’ compensation perspective? What resources are available for your company?

27 Tools Utilize your TPA/Carrier to assist in settling old claims Be an active participant with your TPA/Carrier on handling of claims Place special handling instructions on your files Get the managers involved Claim Reviews – Action plans to be discussed, reserving philosophy and justifications Hold your TPA accountable for claim handling

28 Tools Measuring Indirect Costs: Create spreadsheets/cost centers Create accountability/allocation to facilities, units Measure your transitional return to work programs Resources available: TPA/Carrier – accountability for claim handling Loss Prevention Create platforms –continuity of program administration internal and external