1. Workers’ Compensation Insurance Coverage in the Massachusetts Personal Care Attendant (PCA) Program US DHHS/ASPE sponsored Government and Vendor F/EA Workshop November 1, 2007 Presented by Lois Aldrich, MS, LCSW Director of Community Services, MassHealth Office of Long Term Care Executive Office of Elder Affairs

2. 1 Today’s Presentation Overview of the MassHealth PCA program Overview of the MassHealth PCA program -Fiscal Intermediary (FI) Services (Vendor F/EA services) Provision of Workers’ Compensation Insurance in the MassHealth PCA Program Provision of Workers’ Compensation Insurance in the MassHealth PCA Program Lessons Learned Lessons Learned Contact Information Contact Information

3. 2 Overview of the MassHealth PCA Program Massachusetts Medicaid state plan service Massachusetts Medicaid state plan service Consumer- directed since inception in 1970’s Consumer- directed since inception in 1970’s - Surrogates allowed since 1980’s 28 Personal Care Management (PCM) Agencies 28 Personal Care Management (PCM) Agencies - Performance based contracts with MassHealth -PCMs provide assessment and evaluation; intake and orientation; functional skills training 3 Fiscal Intermediaries (FI) 3 Fiscal Intermediaries (FI) - Performance based contracts with MassHealth -FIs provide PCA payroll services on behalf of all “Option One” PCA consumers

4. 3 FY 2000 FY 2007 % Increase Consumers5,40115,084179% PCM Agencies 1228131% FIs43-25% PCAs10,40221,824 ( July 1, 2007) 69% PCA payroll $98,297,017$265,092,508169% FI admin costs $3,379,285$8,106,178133% PCM agency costs $3,800,798$10,754,785178% PCA hourly wage $8.87$10.8422% PCA hourly rate $10.03$12.2822%

5. 4 Overview (continued) 19% of consumers are under 22 years old 19% of consumers are under 22 years old 55% are between the age of 22 and 64 55% are between the age of 22 and 64 26% are 65 years old or older (fastest growing population) 26% are 65 years old or older (fastest growing population) 62% of consumers have surrogates 62% of consumers have surrogates 3,314 new consumers began receiving services in FY 2007 3,314 new consumers began receiving services in FY 2007 PCA regulations amended March 1, 2006 to allow family members, except legally responsible relatives, to be paid as PCAs. 2,000 family members hired as PCAs since September, 2006. PCA regulations amended March 1, 2006 to allow family members, except legally responsible relatives, to be paid as PCAs. 2,000 family members hired as PCAs since September, 2006.

6. 5 Fiscal Intermediary (FI) Services Fiscal Intermediary ConsumerSurrogatePCAs PCM Agency Mass Health State & Federal tax Authorities Workers’ Compensation Investigative Authorities Payroll Sub- Contractor

7. 6 Fiscal Intermediary Services (continued) The FIs operate as Vendor Fiscal/Employer Agents under Section 3504 of the IRS code and IRS Revenue Procedure 70-6 and as modified by Proposed Notice 2003-70 The FIs operate as Vendor Fiscal/Employer Agents under Section 3504 of the IRS code and IRS Revenue Procedure 70-6 and as modified by Proposed Notice 2003-70 FI model began with 4 FIs in 1999, 3 now operating FI model began with 4 FIs in 1999, 3 now operating Performance based contracts with MassHealth Performance based contracts with MassHealth FI services include: FI services include: -Customer Service - Administrative functions - Payroll -Contract Management -Financial Management

8. * FIs subcontract with a reporting agent to peform these tasks Fiscal Intermediary Services (continued) FI payroll functions FI payroll functions -Receiving, reviewing and processing PCA timesheets Pay period is every two weeks Pay period is every two weeks Over 10,000 timesheets processed weekly Over 10,000 timesheets processed weekly -Withholding, filing and paying federal and state income tax withholding and employment taxes and issuing IRS Forms W-2* -Withholding, filing and paying federal and state income tax withholding and employment taxes and issuing IRS Forms W-2* -Facilitating resolution of tax issues -Facilitating resolution of tax issues

9. * FIs subcontract with a reporting agent to perform these tasks 8 Fiscal Intermediary Services (continued) Issuing PCA checks to consumers, including providing a “check stub” identifying hours worked and rate of pay * Issuing PCA checks to consumers, including providing a “check stub” identifying hours worked and rate of pay * - Direct deposit available for PCAs Purchasing workers’ compensation insurance Purchasing workers’ compensation insurance

10. 9 Workers’ Compensation (WC) Background Background Key Players and Their Roles Key Players and Their Roles Challenges in Securing WC Coverage Challenges in Securing WC Coverage MA-specific 0918 Classification Code MA-specific 0918 Classification Code Workers’ Compensation Insurance Data Workers’ Compensation Insurance Data Lessons Learned Lessons Learned Contact Information Contact Information

11. 10 Background Massachusetts General Laws c. 152 requires all employers to provide workers’ compensation (WC) insurance coverage to employees. Massachusetts General Laws c. 152 requires all employers to provide workers’ compensation (WC) insurance coverage to employees. - Workers are covered by WC insurance if they are injured on the job or contract a work-related illness. -Workers’ compensation insurance pays for any necessary medical treatment related to the injury, and also pays partial compensation for lost wages, after the first five days of disability.

12. 11 Background (continued) MassHealth FI contract requires FIs to purchase WC coverage for each PCA consumer. MassHealth FI contract requires FIs to purchase WC coverage for each PCA consumer. PCA consumers are the common law employers of their workers PCA consumers are the common law employers of their workers FIs purchase WC for all “Option One” consumers through single insurance broker and insurance carrier FIs purchase WC for all “Option One” consumers through single insurance broker and insurance carrier

13. 12 Background (continued) All Option One consumers are covered immediately upon enrollment with FI. All Option One consumers are covered immediately upon enrollment with FI. WC rate is based on per $100 of payroll and applies to payroll for whole program during coverage period (Feb.1- Jan. 31). WC rate is based on per $100 of payroll and applies to payroll for whole program during coverage period (Feb.1- Jan. 31). Payroll estimates are provided by FIs at beginning of coverage year; audit is conducted at end of coverage year to reconcile any differences. Payroll estimates are provided by FIs at beginning of coverage year; audit is conducted at end of coverage year to reconcile any differences. Premium paid 2/1/06-2/1/07: $3,849,000 (averages $286 per policy) Premium paid 2/1/06-2/1/07: $3,849,000 (averages $286 per policy)

14. 13 Key Players Workers’ Compensation Rating and Inspection Bureau of Massachusetts (WCRIB) Workers’ Compensation Rating and Inspection Bureau of Massachusetts (WCRIB) Division of Insurance (DOI) Division of Insurance (DOI) Division of Industrial Accidents (DIA) Division of Industrial Accidents (DIA) Hub International New England, LLC ( insurance broker) Hub International New England, LLC ( insurance broker) Atlantic Charter (insurance carrier) Atlantic Charter (insurance carrier) 3 Fiscal Intermediaries 3 Fiscal Intermediaries

15. 14 Key Players (continued) Workers’ Compensation Rating and Inspection Bureau of Massachusetts (WCRIB) Workers’ Compensation Rating and Inspection Bureau of Massachusetts (WCRIB) Private, non-profit association of insurers that is licensed by the Massachusetts Division of Insurance as a rating organization for workers’ compensation insurance in Massachusetts (since 1915). Private, non-profit association of insurers that is licensed by the Massachusetts Division of Insurance as a rating organization for workers’ compensation insurance in Massachusetts (since 1915). Collects policy, claims and financial data from all carriers licensed to sell WC insurance in Mass. Collects policy, claims and financial data from all carriers licensed to sell WC insurance in Mass.

16. 15 Key Players (continued) Files rates, classifications, and rating plans with the Division of Insurance on behalf of member insurers. Files rates, classifications, and rating plans with the Division of Insurance on behalf of member insurers. Acts as WC statistical agent and Assigned Pool Risk Administrator for the Division of Insurance. Acts as WC statistical agent and Assigned Pool Risk Administrator for the Division of Insurance. Acts as coverage verification entity for the Department of Industrial Accidents. Acts as coverage verification entity for the Department of Industrial Accidents. Issues experience modifications and classification rulings for employers. Issues experience modifications and classification rulings for employers.

17. 16 Key Players (continued) Massachusetts Division of Insurance (DOI) Massachusetts Division of Insurance (DOI) -Oversees insurance market in Massachusetts -Serves as consumer representative in hearings on the appropriateness of rates filed by insurance industry -Collects and analyzes data -Reviews rates filed by the WCRIB and other insurance entities -Approves, disapproves or limits rate filings and classifications

18. 17 Key Players (continued) Division of Industrial Accidents (DIA) Division of Industrial Accidents (DIA) -Administers Massachusetts’ WC system -Ensures employers meet the requirements of M.G.L. c. 152 -Ensures prompt and fair compensation to victims of occupational injuries and illness -Provides dispute resolution of workers’ compensation cases through due process and adjudication

19. 18 Key Players (continued) Hub International New England, LLC Hub International New England, LLC -Broker for all Option One PCA consumers in the MassHealth PCA Program -Secured a voluntary WC insurance carrier for program -Represents the buyer (MassHealth, FIs, and each PCA consumer) in coordinating all aspects of services for the program -Calculates pricing of WC in PCA program based on data supplied by FIs

20. 19 Key Players (continued) -Processes enrollments and disenrollments -Coordinates audit at end of each coverage period -Attends claims reviews with Atlantic Charter on open active claims -Supplies MassHealth with rate information and summary reports for overall program -Monitors any changes coming out of the WCRIB and informs MassHealth of such changes

21. 20 Key Players (continued) Atlantic Charter Atlantic Charter -Voluntary workers’ compensation insurance carrier for all Option One PCA consumers in the MassHealth PCA program -Writes WC insurance policies for consumers policyholders -Pays WC claims for consumer policyholders --Provides data to WCRIB Massachusetts specific code 0918 is currently used solely by MA Medicaid PCA program Massachusetts specific code 0918 is currently used solely by MA Medicaid PCA program

22. 21 Key Players (continued) Fiscal Intermediaries Fiscal Intermediaries Inform Hub when consumers enroll or disenroll Inform Hub when consumers enroll or disenroll Provide Hub and Atlantic Charter with historical payroll information as needed Provide Hub and Atlantic Charter with historical payroll information as needed Provide Hub with annual estimates of payroll at beginning of coverage period Provide Hub with annual estimates of payroll at beginning of coverage period Provide Hub with final payroll figures at end of coverage period to complete and reconcile WC audit Provide Hub with final payroll figures at end of coverage period to complete and reconcile WC audit Provide feedback on individual cases as needed Provide feedback on individual cases as needed Pay WC premiums as calculated by Hub on monthly basis Pay WC premiums as calculated by Hub on monthly basis

23. 22 Challenges in Securing WC Coverage Exposure and risks unknown Exposure and risks unknown No experience history No experience history No applicable job classification code No applicable job classification code Qualifications, training, knowledge, skills and proficiency of PCAs not known Qualifications, training, knowledge, skills and proficiency of PCAs not known Hiring practices not clearly defined Hiring practices not clearly defined Insurer cannot physically look at risk involved (such as stairs in home, whether or not consumer is on 2 nd floor, equipment used, etc.) Insurer cannot physically look at risk involved (such as stairs in home, whether or not consumer is on 2 nd floor, equipment used, etc.)

24. 23 Mass-Specific 0918 Classification Code Developed by WCRIB in 1999 Developed by WCRIB in 1999 - Rate is per $100 of payroll, subject to manual rates Division of Medical Assistance (MassHealth) and Executive Office of Health and Human Services advocated with WCRIB and DOI to assign a new code specific to work performed by PCAs Division of Medical Assistance (MassHealth) and Executive Office of Health and Human Services advocated with WCRIB and DOI to assign a new code specific to work performed by PCAs -Government administered program providing consumer- directed services to disabled population and distinct from home health

25. 24 Mass-Specific 0918 Classification Code (continued) -Needed to collect data and establish experience ratings specific to PCA program -Size of exposure was considerable (over 6,000 workers) - Needed to ensure that all PCAs were covered Concerned about the potential of 5,000 applications being submitted to the risk pool (WCRIB administers risk pool) Concerned about the potential of 5,000 applications being submitted to the risk pool (WCRIB administers risk pool)

26. 25 Mass-Specific 0918 Classification Code (continued) FIs agreed one insurance broker for whole program would work most efficiently. FIs agreed one insurance broker for whole program would work most efficiently. FIs contacted C.J. McCarthy Insurance (now Hub International) to find the best carrier(s) for the PCA program. FIs contacted C.J. McCarthy Insurance (now Hub International) to find the best carrier(s) for the PCA program. - C.J. McCarthy successfully marketed to First Return, then to Atlantic Charter when First Return went out of business.

27. * WCRIB Circular letter # 1824 issued July 13,1999 26 Mass-Specific 0918 Classification Code (continued) Domestic Workers—Inside—Physical Assistance Applies to domestic workers who provide physical assistance in activities of daily living to the elderly or to persons who are convalescent, acutely or chronically ill, or physically or mentally disabled. For purposes of assigning code 0918, physical assistance in activities of daily living shall mean the performance of one or more of the following functions: physically assisting a household member with…… In addition to providing physical assistance with activities of daily living, a domestic worker properly assignable to this new classification may also perform functions such as cooking, laundry, shopping, housekeeping, providing transportation or assistance with paperwork or reading.* Applies to domestic workers who provide physical assistance in activities of daily living to the elderly or to persons who are convalescent, acutely or chronically ill, or physically or mentally disabled. For purposes of assigning code 0918, physical assistance in activities of daily living shall mean the performance of one or more of the following functions: physically assisting a household member with…… In addition to providing physical assistance with activities of daily living, a domestic worker properly assignable to this new classification may also perform functions such as cooking, laundry, shopping, housekeeping, providing transportation or assistance with paperwork or reading.*

28. 27 Mass PCA Program Workers’ Compensation Insurance Data Premium Development Premium Development Historic Rates Historic Rates Claims History Claims History Ad hoc Reports Ad hoc Reports

29. 28 WC Data: Premium Development The WC premium is calculated by Hub International prior to beginning of new coverage period, based on estimated payrolls provided by the FIs for the coming year. The WC premium is calculated by Hub International prior to beginning of new coverage period, based on estimated payrolls provided by the FIs for the coming year.

30. 29 WC Data: Premium Development (continued) Example (2006-2007) Estimated payroll: $216,500,000 Estimated payroll: $216,500,000 Total policies:12,900 Total policies:12,900 Average payroll per policy: $16,783 Average payroll per policy: $16,783 $16,783 X.76 (WCRIB rate) $128 per policy $16,783 X.76 (WCRIB rate) $128 per policy + additional WC costs ($158) $286 per policy + additional WC costs ($158) $286 per policy $286 X 12,900 $3,689,400 $286 X 12,900 $3,689,400 total annual premium

31. 30 WC Data: Premium Development (continued) PCA program rate = $1.704 per $100 payroll PCA program rate = $1.704 per $100 payroll -Total annual / premium total payroll -Incorporated into the MassHealth PCA hourly rate paid to the FIs

32. 31 WC Data: Historic Rates Year Cost per Policy WCRIB Rate Program Rate PCA Payroll Audited Premium 99- 2000 $378$2.000 $74,300,000 $74,300,000$1,485,000 00-01$445.94$2.000 $96,400,000 $96,400,000$1,928,000 01-02$455.94$2.000$119,385,000$2,387,000 02-03$281.79$1.740$145,270,000$2,527,000 03-04$278.79$1.690$173,000,000$2,923,000 04-05$328.89$1.777$192,345,000$3,417,000 05-06$307.89$1.696$213,654,000$3,623,000 06-07$286.76$1.704$225,878,000$3,849,000

33. 32 WC Data: Claims History YearClaims # PCAs Covered Incurred 1999-200070$340,015 2000-20015110,402$330,779 2001-20026812,476$401,332 2002-20038212,670$738,100 2003-20046916,418$349,622 2004-20057417,135$796,287 2005-20066919,116$788,329 2006-20077321,824$882,421 TOTAL556$4,626,885

34. 33 WC Data: Ad hoc Reports Ad hoc reports are provided upon request. Ad hoc reports are provided upon request. Multiple claims filed by PCAs for same consumer Multiple claims filed by PCAs for same consumer -Possible training issue -Possible need for skills training Multiple claims filed by PCA for different consumers Multiple claims filed by PCA for different consumers Common reasons for filing claim Common reasons for filing claim -Car accidents, lifting -Pre-existing medical condition of PCA

35. 34 Lessons Learned Assign a specific job classification code for work performed by PCAs Assign a specific job classification code for work performed by PCAs - Establishes ratings based solely on experience for work performed by PCAs -Loss ratios are easily documented - Premium basis per payroll, not per capita Use one insurance broker and one carrier to provide WC coverage for the whole program Use one insurance broker and one carrier to provide WC coverage for the whole program -Regular accountability to MassHealth and to rating bureau on all WC data -All consumers have coverage for their PCAs immediately upon enrollment in PCA program -Carrier tracks claims activity; identifies trends/patterns/issues

36. 35 Lessons Learned (continued) Calculate annual premium based on estimated payroll for whole program, not individual employers Calculate annual premium based on estimated payroll for whole program, not individual employers -Streamlines payment and billing of WC -Annual audit ensures premiums paid accurately reflect payroll -Ensures timely WC coverage for all consumers -Facilitates establishment of MassHealth hourly rate for PCA Incorporate FI WC responsibilities into FI contract Incorporate FI WC responsibilities into FI contract

37. 36 Contact Information Workers’ Compensation Rating and Inspection Bureau (WCRIB) Workers’ Compensation Rating and Inspection Bureau (WCRIB) 101 Arch St. 101 Arch St. Boston MA 02110 617-439-9030 www.wcribma.org/mass

38. 37 Contact Information (continued) Massachusetts Division of Insurance Massachusetts Division of Insurance One South Station, 5 th floor Boston MA 02110-2208 617-521-7794 www.mass.gov

39. 38 Contact Information (continued) Massachusetts Department of Industrial Accidents Massachusetts Department of Industrial Accidents 600 Washington St. 7 th floor Boston MA 02111 617-727-4900 www.mass.gov/dia

40. 39 Contact Information (continued) Hub International New England, LLC Hub International New England, LLC 299 Ballardvale St. Wilmington MA 01887 John Riley, Sr. Vice President 978-661-6648 john.riley@hubinternational.com

41. 40 Contact Information Fiscal Intermediaries Fiscal Intermediaries -Cerebral Palsy of Massachusetts (CPMA) 43 Old Colony Ave. Quincy MA 02170 Larry Spencer, FI Manager 617-479-7443 X 111 -Stavros Center for Independent Living 210 Old Farm Rd. Amherst MA 01002 Seren Derin, FI Manager 413-253-4236 -North Shore ARC (NSARC) 6 Southside Rd. Danvers MA 01923 Vade Mohammed, FI Manager 978-762-8307

42. 41 Contact Information (continued) MassHealth Office of Long Term Care (OLTC) MassHealth Office of Long Term Care (OLTC) 1 Ashburton Place Boston MA 02108 Lois Aldrich, Director of Community Services Lois Aldrich, Director of Community Services617-222-7440 Lois.Aldrich@state.ma.us ois.Aldrich@state.ma.us Judith Nest-Pasierb, Program Manager Judith Nest-Pasierb, Program Manager617-222-7431 Judith.Nest-Pasierb@state.ma.us udith.Nest-Pasierb@state.ma.us