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Ask the Workers' Comp Expert: Internal Investigations Can Reduce Claims, Costs

Author DavidMalloy , 6/4/2012
Ask the Workers' Comp Expert: Internal Investigations Can Reduce Claims, Costs
by Robert G. Jones, Vice President, PMC Insurance Group

Recent "Ask the Expert" columns addressed certain aspects of return-to-work programs. Today, we address strengths and flaws within a workers’ compensation program focusing on reducing the number of claims and overall cost.

The number of lost time claims is a key metric and should be reviewed at least annually. If this number exceeds 25 percent of total claims, further investigation is recommended. Another important metric is the number of claims that are litigated. If this number exceeds 20 percent of all claims, a comprehensive internal investigation is necessary. Business owners experiencing significant numbers of lost time and/or litigated claims need to examine the root cause(s) driving these adverse claims results.

The business owner should review the following as a part of an internal investigation:
  • Is the hiring process effective in screening prospective employees? Background checks and drug testing at minimum. 
  • Are supervisors trained and accountable to build high performing teams that integrate workplace safety into job duties? Personal responsibility and employee morale are key components. 
  • How quickly are workers’ compensation claims reported to the insurance company? Within 24 hours is the goal. 
  • Are accidents and incidents investigated with findings documented and acted upon? How the business owner responds is an important component of organizational culture. 
  • Is communication with injured employees consistent and supportive? The goal being an early and successful return to work. 
  • Are wellness programs integrated into work activity? Tracking and communicating results reinforces the business owner’s commitment to a safe and healthy work environment. 

PMC Insurance Group’s only business is workers’ compensation. Our insurance professionals have extensive experience helping IIABNY members expand their marketing capabilities by providing workers’ compensation solutions for their clients, including offering guidelines to help business owners reduce the number of claims and overall cost.

Ask the Workers’ Comp Expert: NCCI to Change Experience Modification Formula

Author DavidMalloy , 5/8/2012
Ask the Workers’ Comp Expert: NCCI to Change Experience Modification Formula
by Robert G. Jones, Vice President, PMC Insurance Group

Typically, business owners paying $5,000 or more annually in workers’ compensation insurance premium qualify to be experience rated (some variations by state). The result is an insurance premium modification factor will be calculated annually for such businesses based upon individual three prior years’ payroll and loss history. This data is reported to the appropriate rating bureaus by the individual business owner’s past insurance companies.

In general, historical loss data for a particular business is compared to the average loss data for all similar businesses in its state of domicile. This comparison results in a debit or credit experience modification factor that is used to adjust the business owner’s annual workers’ compensation insurance premium. Most states use the National Council on Compensation Insurance to calculate experience modification factors for individual businesses. A few states, including New York, have their own separate workers’ compensation rating bureaus.

Effective January 2013, NCCI will implement a new formula for calculating experience modification factors. The key change in the formula is the increase in the loss per claim, from $5,000 currently to $15,000 in the new formula. Thus the size of losses per claim will have significantly greater impact on driving up the experience modification factors for business owners with large individual claims. (More information to come in the months ahead.)

PMC Insurance Group is IIABNY’s endorsed workers’ compensation specialist. Our insurance professionals have extensive experience helping IIABNY members expand their marketing capabilities by providing workers’ compensation solutions for their clients. Give Bob Jones a call at (440) 313-5002.  


 Operating in the Continental US!
 Phone: 1-877-PMC-COMP| (781)-449-7744
Email PMC | Visit our website

Controlling Medical Costs

Author DavidMalloy , 4/11/2012
PMC Insurance Group Ask the Workers’ Comp Expert: Controlling Medical Costs
by Robert G. Jones, Vice President, PMC Insurance

Business owners continue to look for ways to contain and reduce expenses. Reducing workers’ compensation medical costs may be one overlooked area. The National Council on Compensation Insurance reports that medical services represent 60 percent of workers’ compensation claim costs. Historically, indemnity costs were the largest portion of claims.

To an extent, business owners can contain and reduce medical costs through prescription drug plans, medical provider networks and other proactive cost-containment measures. However, a key driver to lower claim costs is the absence of workers’ compensation claims. In past columns, we presented the business case for a zero injury workplace embedded within an organizational culture of safety and employee wellness.

A culture of safety and employee wellness is essential in sustaining a zero-injury work environment. That said, employees filing bogus workers’ compensation claims remain an enormously costly and challenging problem. Business owners must also take proactive measures to identify and aggressively dispute fraudulent claims. The key to Identifying them is consistent and ongoing communication with medical providers.

Containing and reducing workers’ comp medical costs is all about hiring the right employees. Drug screening, background checks, testing and accurate job descriptions help business owners avoid hiring employees with high claim risk potential.

PMC Insurance Group is IIABNY’s endorsed workers’ compensation specialist. Our insurance professionals have extensive experience helping IIABNY members expand their marketing capabilities by providing workers’ compensation solutions for their clients. Give Bob Jones a call at (440) 313-5002.  

Operating in the Continental US!

           Phone:  1-877-PMC-COMP | (781)-449-7744

Email PMC | Visit our website


Impact of an Aging Workforce on Costs

Author DavidMalloy , 4/9/2012
PMC Insurance GroupAsk the Workers’ Comp Expert: Impact of an Aging Workforce on Costs
by Robert G. Jones, Vice President, PMC Insurance

Much has been written and speculated about the impact of older workers and the presumed increased cost of workers’ compensation. The numbers of jobs held by baby boomers will more than double in the period from 1995 to 2020, due in part to older workers postponing retirement.

According to the National Council on Compensation Insurance, while the loss costs are higher for older workers due to the severity of their claims, those costs tend to be offset by higher premiums resulting from higher wages earned by older workers. Also, older workers file fewer claims than younger workers, which tend to offset their higher claim costs.

Research indicates that workers age 35 to 64 appear to have similar loss costs per worker. On the indemnity side, higher wages paid to older workers drive higher costs. For medical costs, older workers may require more treatments per claim, which drives total costs.

NCCI research indicates that frequency has fallen across all age groups, and differences in frequency by age have narrowed. Occupational mix does not present a material impact on frequency as in general workplaces keep getting safer for all occupations. Of note, the generation following baby boomers in the workplace is now proportionally a larger group. Currently, the impact of an aging workforce on higher loss costs is less than conventional wisdom had predicted.

PMC Insurance Group is IIABNY’s endorsed workers’ compensation specialist. Our insurance professionals have extensive experience helping IIABNY members expand their marketing capabilities by providing workers’ compensation solutions for their clients. Give us a call at (440) 313-5002.  

Operating in the Continental US!

           Phone:  1-877-PMC-COMP | (781)-449-7744

Email PMC | Visit our website


Internal Investigations Can Reduce Claims, Costs

Author DavidMalloy , 3/19/2012
Ask the Workers' Comp Expert: Internal Investigations Can Reduce Claims, Costs
by Robert G. Jones, Vice President, PMC Insurance Group Recent

PMC Insurance Group"Ask the Expert" columns addressed certain aspects of return-to-work programs. Today, we address strengths and flaws within a workers’ compensation program focusing on reducing the number of claims and overall cost.

The number of lost time claims is a key metric and should be reviewed at least annually. If this number exceeds 25 percent of total claims, further investigation is recommended. Another important metric is the number of claims that are litigated. If this number exceeds 20 percent of all claims, a comprehensive internal investigation is necessary. Business owners experiencing significant numbers of lost time and/or litigated claims need to examine the root cause(s) driving these adverse claims results.

The business owner should review the following as a part of an internal investigation:

  • Is the hiring process effective in screening prospective employees? Background checks and drug testing at minimum.
  • Are supervisors trained and accountable to build high performing teams that integrate workplace safety into job duties? Personal responsibility and employee morale are key components.
  • How quickly are workers’ compensation claims reported to the insurance company? Within 24 hours is the goal.
  • Are accidents and incidents investigated with findings documented and acted upon? How the business owner responds is an important component of organizational culture.
  • Is communication with injured employees consistent and supportive? The goal being an early and successful return to work.
  • Are wellness programs integrated into work activity? Tracking and communicating results reinforces the business owner’s commitment to a safe and healthy work environment.

PMC Insurance Group’s only business is workers’ compensation. Our insurance professionals have extensive experience helping IIABNY members expand their marketing capabilities by providing workers’ compensation solutions for their clients, including offering guidelines  to help business owners reduce the number of claims and overall cost.    

Call us today and put our expertise to work for you!

PMC Insurance Group (P) 877-PMC-COMP (P) 781-449-7744 (F) 781-449-7889
www.pmcinsurance.com info@pmcinsurance.com

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Formulating, Implementing Return to Work Programs

Author DavidMalloy , 3/7/2012

Ask the Workers' Comp Expert: Formulating, Implementing  Return-to-Work Programs
by Robert G. Jones , Vice President, PMC Insurance Group

PMC Insurance GroupLast month, we commented on cost containment and morale as they relate to effective, multi-faceted return-to-work programs. Today, our focus is on formulating and implementing. At the outset, business owners and employees need a clear understanding of the benefits of transitional duties that allow injured workers to return to the job.

Prior to program implementation, the business owner should meet with supervisors and employee representatives to identify duties and functions that are available and appropriate for transitional assignments. Written job descriptions are then developed and shared internally with employees and externally with appropriate medical providers.

These descriptions can be modified and combined to accommodate a returning injured worker. There is also a significant opportunity for the business owner to engage medical providers in constructive and cooperative communication. A collaborative approach with medical providers will go a long way to achieving good results in terms of returning injured workers to the job. Dr. Richard Pimentel, a national expert on disability management, notes that 20 percent of lost time from work injuries could be eliminated if the physician was given sufficient information about the transitional job possibilities. Remember to consider the provisions of the Family and Medical Leave and Americans with Disabilities Acts as part of this process.

Employee training is a key to successful program implementation. The organization’s philosophy, program benefits along with a copy of the return-to-work program and job descriptions, are part of this orientation. New employees should receive this information at the time of hire. As the program undergoes a process of continued improvement and evolution, it becomes embedded into the culture of the organization.

PMC Insurance Group’s only business is workers’ compensation. Our insurance professionals have extensive experience helping IIABNY members expand their marketing capabilities by providing workers’ compensation solutions for their clients including offering guidelines for formulating and implementing return-to-work programs.    

PMC Insurance Group
50 Cabot Street 
PO Box 920179 
Needham, MA 02492-0002 
Phone: 1-877-PMC-COMP, (781)-449-7744 Fax: (781)-449-7889 
e-mail: info@pmcinsurance.com 

Getting Injured Workers Back Involves Morale, Limiting Cost

Author DavidMalloy , 2/24/2012
Ask the Workers' Comp Expert: Getting Injured Workers Back Involves Morale, Limiting Cost
by Robert G. Jones, Vice President, PMC Insurance Group

In today’s challenging economy, the insurance industry has found itself under increased pressure to help return injured workers back to the job while effectively managing costs, according to John Shilts, Oregon Department of Consumer and Business Services. Business owners are under pressure to increase worker productivity while operating with reduced workforces. Getting injured workers back on the job is critical to cost containment and key to addressing employee insecurity following work-related injuries.

Generally, direct costs associated with workplace injuries account for less than one third of total claim cost. Indirect costs, including lost productivity, replacement worker expense, additional training costs and management time, account for the larger portion of total claim cost. A significant percentage of injured workers who are out of work for extended periods never return to the job.

A meaningful economic opportunity exists for business owners to control the cost of workplace injuries through effective, multi-faceted return-to-work programs. Two undisputed ingredients are a willingness to change organizational culture and commitment to necessary resources for the long term. There is often a void in the management of workplace injuries. Business owners must fill the void and manage their return-to-work programs from within. Effective programs also keep injured workers connected emotionally and physically to their employer, often promoting faster recovery and contributing to improved morale.

PMC Insurance Group’s only business is workers’ compensation. Our insurance professionals have extensive experience helping IIABNY members expand their marketing capabilities by providing workers’ compensation solutions for their clients, including offering guidelines for creating and implementing effective return-to-work programs.

 
 Operating in the Continental US! Phone: 1-877-PMC-COMP | (781)-449-7744 Email PMC | Visit our website

Hiring Independent Contractors is Not Risk-Free

Author DavidMalloy , 2/22/2012
Ask the Workers' Comp Expert: Hiring Independent Contractors is Not Risk-Free
by Robert G. Jones, Vice President, PMC Insurance Group

In today’s challenging economy, business owners have turned to hiring independent contractors in lieu of adding traditional employees. Advantages might include: completion of specific, short-term assignments; obtaining unique, project specific skill sets; reduced costs for administration; and the avoidance of benefits, taxes and legal issues surrounding the hiring and firing of traditional employees.

However, there are risks associated with this practice. Legitimately hired contractors might win disability, workers’ compensation and medical insurance benefits if they were misclassified to avoid paying such benefits. A business owner could also be held responsible for paying all withholding taxes, plus interest, if the Internal Revenue Service finds employees have been misclassified as independent contractors. And, the IRS and other governmental agencies could impose additional financial penalties.

The number of worker class action lawsuits that claim employers misclassified employees as independent contractors rose 50 percent in 2010 to a record 300 or so, according to Garry Mathiason of Littler Mendelson, one of the nation’s largest employment and labor law firms. One reason is that using independent contractors has become common practice in construction, trucking and home health care.

The IRS created a list of 20 common law factors to determine whether a contractor is actually an employee. Under common law, a worker is an employee if the business owner (person for whom services are preformed) has the right to control and direct the way they work including when, where and how the work is done. It is important to understand the difference between the IRS definition of employee versus the definition under statutory workers’ compensation protection.

PMC Insurance Group’s only business is workers’ compensation. Our insurance professionals have extensive experience helping IIABNY members expand their marketing capabilities by providing workers’ compensation solutions for their clients, including appropriate insurance protection when hiring independent contractors.

    
 Operating in the Continental US! Phone: 1-877-PMC-COMP | (781)-449-7744 Email PMC | Visit our website