Although it appears the Affordable Care Act (ACA) was not intended to affect the workers’ compensation system, it may influence it. Ohio may be less likely to experience some of the hypothetical outcomes discussed for other states, but there is a correlation and potential impact.
Smart Business spoke with David D. Kessler, medical director at CompManagement Health Systems, about how the ACA might affect workers’ compensation.
What aspects of the ACA could be used in the workers’ compensation system?
An important concept with the ACA is the reference to Accountable Care Organizations, which are groups of health care providers who coordinate the care given to their patients. This requires sharing information for informed decision-making among stakeholders.
Workers’ compensation has many moving parts that involve multiple interested parties, creating variable goals. These have the potential to introduce inefficient processes, escalating costs and compromising care for injured workers. Sharing clinical information between parties helps with enhanced decision-making and permits the use of evidence-based best practices. Coordination on this level should reduce duplication of services, potentially reduce medical errors and enhance recovery from an injury, permitting a timely and safe return to work.
It is generally accepted that fee-for-service payment methodology has a tendency to increase utilization for optimizing provider revenues. Although a higher frequency of care in the acute phase may increase initial costs, it can mean achieving long-term goals and better outcomes, lowering costs to employers.
How could the ACA’s expanded benefits affect workers’ compensation?
The ACA may result in healthier employee groups because it covers those who previously had no health care benefits, allowing them to address primary health care needs. A healthier employee population should have lower risks for claim frequency or severity, reducing associated costs from disability and medical care post-injury. Although employers may fear increased exposure for filing claims or prolonged use of services initially, this may lessen when other health care options are offered. However, high deductibles or co-pays may create financial stress to the beneficiary, discouraging greater use of health insurance.
Another common situation in workers’ compensation is when an employee’s current health status or pre-existing condition prolongs recovery and requires additional care, successively producing greater costs. Accurate diagnosis and complete records help the Managed Care Organization (MCO) determine if the requested services are necessary for treatment in a claim. Engagement and personal responsibility from the individual through accessing available health care that may be external to workers’ compensation can help decrease barriers affecting response to treatment.
How might the ACA affect the kind of care provided through workers’ compensation?
Another component of the ACA that affects the workers’ compensation arena is the Patient-Centered Outcomes Research Institute (PCORI), which is designed to improve health care delivery and outcomes. In a comparable process, MCOs in Ohio are required to use Official Disability Guidelines (ODG), which are a meta-analysis of evidence-based protocols that serve as the basis for evidence-based care collaboration. When providers are reluctant to cooperate and discuss evidence-based practices, it impedes achieving ideal outcomes. Utilization management of requested services from the MCO industry is enriched through use of tools such as ODG, and should serve as an educational opportunity for informed decision-making for injured workers, employers and providers. PCORI’s success could facilitate applicable use in the workers’ compensation system.
Although the ACA may not directly impact Ohio workers’ compensation, its focus on the interactive communication of evidence-based medicine for informed decision-making, regardless of the payer or administrative organization, should be the guiding message driving quality, cost-effective, patient-centered care. ●
David D. Kessler, DC, MHA, CHCQM is Medical Director at CompManagement Health Systems. Reach him at (614) 760-1788 or firstname.lastname@example.org.
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Settlement of a claim and a handicap reimbursement award are two cost containment strategies available to employers to manage claim costs and impact annual premiums. A settlement fixes the claim cost, which then allows the premium to reflect the settlement amount and possibly reduce the employer’s premium. If a handicap award is granted, a portion of the costs of the claim will be charged to the Surplus Fund and not to the employer’s experience.
“By removing costs from an employer’s experience, an employer may be able to lower its annual premium rate calculated by the Ohio Bureau of Workers’ Compensation (BWC), thus reducing its annual spend,” says Lisa O’Brien, director of rates and underwriting services for CompManagement, Inc. “Employers should always review these two very effective cost containment strategies when managing their workers’ compensation claims to make an impact to their bottom line.”
Smart Business spoke with O’Brien about these cost containment options available to employers in Ohio.
What is a settlement?
A settlement is an agreement among the employer, the injured worker and the BWC for a specific amount to settle one or more workers’ compensation claims. All three parties must agree to the settlement amount before a claim can be settled either in full, which settles all allowed conditions and benefits, or a partial settlement, which settles only certain conditions and/or benefits, either medical or indemnity (compensation).
What happens when a claim is settled?
When a claim is settled, the injured worker will receive a lump sum payment from the BWC. Settlement affords injured workers the freedom to manage their treatment priorities, on their timeline and on their schedule.
If the claim is settled for both the indemnity and medical portions, the injured worker will receive no additional compensation or medical benefits in the settled claim. If the claim is settled for either medical only or indemnity only, the injured worker can no longer receive the benefit type that has been settled (either medical or indemnity).
For employers, settlement can help manage costs and bring closure to a claim for their employee. Settling the claim removes reserves (indemnity, medical or both depending on the type of settlement) associated with the claim from all future rate-making. However, costs already paid out, plus the settlement amount, will continue to be charged to and impact the employer’s premium rate.
When will a settlement impact the employer’s premium?
Settlement of a claim will affect an employer’s premium rate only going forward. In order for a settlement to be included in the employer’s upcoming year’s rate, the fully executed settlement application (signed by both the employer and the injured worker) must be filed by May 15 for public employers or by Oct. 15 for private, state-funded employers.
These deadlines do not apply for settlements that occur through the court of common pleas. Common pleas settlement inclusions in the employer’s experience are based on the date the settlement is paid.
For a court of common pleas settlement to be included in an employer’s upcoming rates, the settlement must be paid to the injured worker before the applicable survey date, June 30 for public employers and Dec. 31 for private employers.
What is a handicap reimbursement?
The BWC encourages employers to hire and retain employees with handicapped conditions. To help offset the challenges those with handicaps often experience in the job market, the BWC offers the Handicap Reimbursement program as a means for employers to reduce their claim costs. Ohio law defines a handicapped employee as one who has a physical or mental impairment, whether congenital or due to injury or disease, whose impairment jeopardizes the person’s ability to obtain employment or re-employment. Also, the impairment must be due to one of the 25 eligible diseases or conditions that Ohio law recognizes.
The most commonly recognized conditions are arthritis, ankylosis, diabetes, cardiac disease and epilepsy.
When should an employer file an application for handicap reimbursement?
If an injured worker suffers a lost-time claim (eight or more days away from work) and a handicap condition is met, the employer can file a CHP-4 application with the BWC requesting reimbursement of claim costs charged. The employer must show the handicap is a pre-existing condition (prior to the date of injury) and that it either caused the claim or contributed to increased costs or a delay in recovery. Applications are reviewed and awards are granted by the BWC’s Legal Operations Department. Once awarded, the BWC will apply the handicap reimbursement award to chargeable claim costs, thereby reducing costs and possibly premium rates.
Private, state-funded employers must file handicap reimbursement applications by June 30 of the calendar year no more than six years from the year of the date of injury. Public employers must file handicap reimbursement applications by Dec. 31 of the year no more than five years from the year of the date of injury.
Claims with a handicap reimbursement can be settled and settled claims can continue to be considered for handicap reimbursement.
What is the typical range of handicap reimbursements awarded?
Per BWC public information, handicap reimbursements typically range between 5 and 100 percent, depending on the degree to which the handicap condition impacts the claim. On average, current public information shows a handicap award to be approximately 26.17 percent.
Lisa O'Brien is the director of rates and underwriting services for CompManagement, Inc. Reach her at (800) 825-6755, ext. 65441, or Lisa.Obrien@sedgwickcms.com.
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As an employer, does your organization have departments with tasks or duties that never seem to get done? If you are like many employers in Ohio, the answer to this question is yes.
One possible solution to create a win-win scenario for both your organization and your injured workers is to consider implementing a transitional work program with the assistance of grants offered by the Ohio Bureau of Workers’ Compensation (BWC). Transitional work is a cost containment strategy for workers’ compensation that helps injured workers return to productivity in the workplace by providing modified job duties that accommodate their medical restrictions due to work-related injuries. In turn, the employer reduces the costs associated with long-term claims and improves overall company productivity.
“Implementing a transitional work program is an ideal way to keep injured workers engaged in their employment and assist them with their income stream,” says Randy Jones, senior vice president, TPA Operations for CompManagement, Inc. “But it also offers the employer an alternative to downtime, the retention of knowledgeable and experience employees, and lower premium costs by preventing a loss in wages and payment of compensation by BWC.”
Smart Business spoke with Jones about the monies that are now available for your business in Ohio.
Who is eligible to receive a grant?
All active employers, both public and private, participating in the state-funded workers’ compensation program are eligible for the grant. Self-insured employers and state agencies are not eligible.
An employer must also be current with respect to all payments due to the BWC and have no cumulative lapses in coverage in excess of 40 days within the 12 months preceding the application date. Employers that received a transitional work grant through the BWC’s prior program from 2001 to 2006 will not be eligible for a new grant but will be eligible for a performance bonus. Employers that may have an existing transitional work program without use of a prior grant are also eligible only for a performance bonus after their current program is reviewed and approved by BWC.
Why should my organization apply for this grant and implement a transitional work program?
A transitional work program provides an alternative to lost time and allows an employer to minimize workers’ compensation disability costs associated with lost work days, compensation, and reserves. Often with minor modification in job duties or hours, an employee is able to return to work following an injury. The idea is to return an injured employee to gainful employment activities as soon as possible to avoid the so-called ‘disability trap.’
Injured workers receive a full paycheck, with the goal of returning to their original job. The advantages include a reduction in costs associated with long-term claims, improved productivity, lower injury downtime, improved employee recovery time, increases in employee morale and a protection of your work force investment, as the loss of experienced employees will result in costs associated with hiring new employees.
How is the amount of the grant determined?
BWC determines the amount of the grant based on employer size and the complexity of services needed for transitional work. Factors include the employer’s payroll, job classifications, job analyses needed and collective bargaining units.
How does the application for grant monies work?
Applications are received and reviewed by BWC. The application form is available on its website at www.ohiobwc.com. Key components will include policies and procedures, job analyses, program evaluation criteria, medical provider listing and employee education.
Who can develop a transitional work program for my organization?
Transitional work developers certified to participate in the Health Partnership Program as a vocational rehabilitation case manager, occupational therapist or a physical therapist can assist your organization. Your developer of choice must also complete BWC-sponsored transitional work development training prior to delivering programs and have verified experience in developing programs or verified mentoring experience according to BWC’s transitional work policy.
Any costs associated with a transitional work developer preparing and submitting a proposal to an employer are not reimbursable under the grant.
Can my organization receive additional monies for participation?
A separate application may be filed to receive a performance bonus of up to 10 percent. The calculation occurs at six months following the end of the applicable policy year (June 30 for private employers, Dec. 31 for public) and is dependent on the number of eligible claims and successful use of the program.
All claims with injury dates within the applicable policy year will be evaluated to determine how many had the potential for transitional work services and how many of those actually utilized those services. Say an employer had 12 claims during the policy year and 10 met the requirements for transitional work. Of those 10, five injured workers were offered and accepted transitional work services. Because 50 percent of eligible claims were helped by transitional work, the employer would receive 50 percent of the possible 10 percent bonus, which equals 5 percent.
Are there deadlines for applying for the grant?
There is no deadline for applying for the grant, but there is for the performance bonus. For private employers the deadline is the last business day of April; for public employers it is the last business day of October.
Randy Jones is the senior vice president of TPA Operations for CompManagement, Inc. Reach him at (800) 825-6755, ext. 65466, or Randy.Jones@sedgwickcms.com.
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In Ohio, group and group retrospective ratings remain the highest discount programs offered by the Ohio Bureau of Workers’ Compensation (BWC) for employers to reduce their annual premiums. Sponsors of public and private employer workers’ compensation group rating, or group retrospective rating programs, are in the evaluation process to determine eligibility for the Jan. 1, 2013, policy year for public employers and the July 1, 2013, policy year for private employers.
“Now is the time to have your program evaluated,” says Mark MaGinn, vice president for CompManagement, Inc. “Employers should submit the BWC AC-3 form (Temporary Authorization to Review Information) to the workers’ compensation third party administrator of the sponsor’s program of interest to evaluate the many different discount programs available to impact their costs.”
Smart Business spoke with MaGinn about what an employer should consider regarding a sponsor’s group rating or group retrospective rating program before deciding to participate.
What is the discount range available for group rating and the refund percentage range for group retrospective rating?
Group rating discounts typically range between 15 percent to the maximum discount available from the Ohio BWC which, for policy year 2012, was 53 percent for private employers and 65 percent for public employers for the 2013 policy year (59 percent with break-even factor included). The BWC board of directors evaluates the maximum discount on an annual basis setting it typically in the fall for private employers for the upcoming July 1 policy year and in the spring for the upcoming public employer policy year that begins Jan. 1. For group retrospective rating, most groups can expect to save between 5 and 45 percent with claim costs included.
Why is past performance history of the sponsor’s group important?
Past group performance is a good indicator of future results. Asking about this will help determine if the projection provided in the quote will meet the performance of the group. A group sponsor should be able to produce a history of obtaining the quoted discount, versus just an estimate designed to attract business. Employers should be leery of sponsors that consistently overproject but fail to deliver, as this creates loss savings that would not be forecasted in your annual operational budget.
How does having a large number of policies in a group impact an organization?
Large groups offer stability and allow sponsors to achieve projected savings, which, in turn, delivers the maximum savings available to your organization. Be wary of programs that do not have a substantial number of enrolled policies in its group. A low number of policies in a group may impact the possibility of the group actually being formed, and therefore, force your organization to find another group sponsor before the BWC filing deadlines.
Why is it essential to understand how a company’s claims experience compares to that of other group members?
Proper placement within the correct savings level of a group program will ensure that your organization is getting the discount rate that it deserves. If your claims-to-payroll ratio is substantially better than other members in the group, your organization may not be properly placed and should be moved to a higher-discount tier. However, if your claims-to-payroll ratio is significantly lower than other members, the group savings quoted may suffer with your enrollment. If the sponsor allows other prospective group members to enroll with similar low ratios, the savings level that you have been quoted may not be realistic.
When comparing quotes, is it crucial to have the payroll estimates utilized be the same?
Payroll figures may vary based on when the information was received from BWC.
Because different payroll estimates can skew quoted savings, it is important to make sure that the payroll is consistent on all quotes. If the payroll estimates are not consistent or do not reflect future budget impacts, be sure to contact the program’s administrator for an updated quote before making your enrollment decision.
What other critical factors should be considered when choosing a group sponsor?
Group savings may be the first factor your organization looks at in determining which group to join. The maximum possible discount an employer in the group rating program may receive is 53 percent.
However, it is just as important to know what else is being offered to protect your eligibility for future discounts. Employers should ask questions regarding the sponsor’s chosen program administrator’s services and the average length of experience its colleagues have in the workers’ compensation industry.
Full-service administrators with an experienced staff offer far more beyond group formation, such as claims administration, cost containment strategies, hearing representation, data trending, online system access, and in-house safety and loss control services.
Can a company stack discounts on top of a group rating or group retrospective rating discount?
Recent changes made by the BWC allow for the following stacking options while participating in either group rating or group retrospective rating.
- Group Rating — Destination Excellence, Drug-Free Safety Program, $15K Medical Only Program, Early Payment and Safety Council (performance bonus only)
- Group Retrospective Rating — Safety Council (participation rebate only) and Early Payment
An employer should contact the group sponsor’s program administrator to evaluate the options and discount percentages allowed, as well as be informed of the different eligibility requirements and expectations to be met for continued participation in the programs.
Mark MaGinn is vice president of Ohio state fund program management and business development for CompManagement, Inc. Reach him at (800) 825-6755, ext. 8168, or Mark.MaGinn@sedgwickcms.com.
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Every employer that has Ohio state-funded workers’ compensation coverage has a Managed Care Organization (MCO) assigned to its policy. However, the medical focus of an MCO’s core function can make it difficult to truly grasp its role in the workers’ compensation system, and evaluate its effectiveness for the employers it serves. We are about to see a flurry of activity in the workers’ compensation service industry related to Ohio employers’ MCO selection, so it makes sense to take a step back to gather some insight into MCOs and how they operate, says Lance Watkins, vice president of client services at CompManagement Health Systems.
What is an MCO and what does it do?
MCOs originated in the Ohio workers’ compensation system in 1997 as a result of the Health Partnership Program (HPP). MCOs are responsible for helping injured employees return to work in a timely and safe manner. They coordinate key details relating to the First Report of Injury (FROI), manage and authorize medical treatment and pay medical bills, as well as organize return to work with the injured worker, employer and the treating medical providers. MCOs are paid directly by the Ohio Bureau of Workers’ Compensation (BWC) from a portion of the premiums paid by Ohio employers. They are paid based on the activity (FROIs, bills, active employers and active claims) and receive an incentive based on return-to-work metrics. No money exchanges hands between an MCO and its client companies, and no contract exists between the two.
What is open enrollment?
Open enrollment occurs biannually, falling on the even years, and provides employers with the opportunity to change MCOs if they choose to do so. Employers have the opportunity to either select an MCO or have one randomly assigned by the BWC. To stay with their current MCO, an employer does not need to do anything. Open enrollment is generally four weeks in length and typically occurs during the month of May. The 2012 open enrollment period is scheduled for April 30 through May 25.
What differentiates one MCO from another?
There are larger MCOs managing premiums upwards of a few hundred million dollars and smaller MCOs managing premiums in the tens of millions of dollars. There are provider-based MCOs and also those with partner companies that are large third party administrators working with several trade associations. All MCOs have the same responsibilities and the BWC produces a report card every year that focuses on three key factors:
* Degree of Disability Management (DoDM) — an efficiency metric of return-to-work;
* FROI Turnaround — measures the efficiency of an MCO in processing an initial injury; and
* FROI Timing — measures the overall processing of a FROI from the date of injury to the date the FROI is reported to BWC.
DoDM takes into consideration an injured worker’s current diagnoses, as well as the type of job duties that the injured worker performs. For example, an employee with a back injury who works in an office setting should have an earlier return-to-work expectation than an employee with a similar injury who is a construction worker. For comparison purposes, a higher DoDM score demonstrates a quicker relative return-to-work achieved by the MCO.
What factors should an employer take into consideration when selecting an MCO?
An employer might want to determine if the MCO it is considering has experience working with other employers in the field in which it operates. For example, a school district might want to look at an MCO that has many school districts among its clients. Industry experience can come into play when managing return-to-work expectations.
Performance should also be a key factor in selecting an MCO. DoDM is important, as the only published return-to-work measurement the BWC uses to analyze an MCO’s performance. Another key factor is whether an MCO can meet the employer’s individual needs. Is the MCO flexible enough to meet that employer’s expectations? Is it big enough to handle larger employers? Can it provide the personalized attention that the client may be requesting? Are the MCO’s reporting capabilities sophisticated enough to help an employer recognize trends that provide opportunities to improve its overall workers’ compensation experience?
What else should an employer ask when selecting an MCO?
BWC manages MCOs very closely and can penalize MCOs that fail to meet performance standards. One question that can be asked of an employer’s current or prospective MCO is whether they have been placed ‘at capacity’ during the past year or two. Capacity is a form of penalty that BWC will apply to an MCO for failing to meet specific contractual metrics. This penalty entails not being able to take on new clients during the period of time that the MCO remains at capacity. Financial penalties can also be applied against an MCO for missing certain performance metrics. Employers should request information on whether the MCO has had any financial penalties over the past few years.
Many MCOs like to take information from BWC and tweak it in a fashion that might tell a more flattering story. Some may call these MCO marketing myths. A common myth used by some MCOs involves the manipulation of return-to-work statistics to focus only on specific claim types, suggesting inflated success rates. Employers should be aware of these creative statistics and make certain that they fully assess an MCO’s capabilities before making the decision to stay with their current MCO or to select a new MCO.
Also, many trade associations partner with or endorse an MCO that they believe provides the best services for their members. Before making a selection, employers may want to reach out to their trade association and ask which MCO they would recommend.
Lance Watkins is vice president of client services at CompManagement Health Systems. He has 19 years of experience in the workers’ compensation industry. Reach him at (614) 526-2524 or email@example.com.
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