Monetizing workers’ compensation managed care services in Ohio

Ohio employers now have the opportunity to select a managed care organization (MCO) to coordinate the medical aspects of workers’ compensation claims.

During MCO Open Enrollment, materials are published that attempt to compare MCOs’ effectiveness and service. Ultimately, employers must select an MCO based on what is most important to them. The MCO’s responsiveness, level of engagement, ability to control expenses and lost workdays, and help injured employees recover and return to work should drive the decision.

Smart Business spoke with Quinn Guist, president of CompManagement Health Systems, to learn more about factors to consider when choosing an MCO.

What aspects of an MCO’s services help control costs?

It can be difficult to assess MCOs in terms of financial impact. When we think about controlling costs for Ohio workers’ compensation, we typically think of premium discount and rebate programs administered by third party administrators that provide financial relief. We may also think of disputing a questionable claim to prevent unnecessary costs and preserve lower premium rates. These factors have clear implications for an employer’s premium, but the MCO’s ability to coordinate medical treatment, resolve workers’ compensation claims and help employees get back to work can have a tremendous impact on your organization’s costs and should not be overlooked.

What cost drivers may go unrecognized?

Qualifying for a premium discount or rebate depends on claim costs relative to an employer’s size. Claim costs are mainly driven by lost workdays. The MCO’s primary focus is to facilitate a prompt, safe return to work, limiting lost workdays and helping injured employees recover.
Severe injuries may result in substantial time off work. Lost time incurred on a claim drastically accelerates costs, and directly impacts the employer’s premium rates and options for discounts or rebates. In cases like these, the MCO’s role is crucial to the financial future of the employer.

Consistently engaging the injured employee and physicians to keep them focused on the return-to-work goal is critical. Every claim is different and there is no magical formula that guarantees painless results, but an employer should feel informed and confident that their injured employees are receiving the most appropriate and effective treatment.

What does a high-performing MCO look like?

One sign that an MCO is performing at a high level is in its response to treatment requests. Most treatment requests are appropriate for the injury and approved by the MCO. Occasionally, a request will seek to treat issues unrelated to the claim and may be denied. But even with appropriate requests, there are often opportunities to coordinate with the treating provider to encourage more beneficial treatment and/or shorter durations to keep the recovery process moving quickly. This requires a thoughtful MCO that finds opportunities to shorten periods of disability and minimize the burden of the claim on both the employer and the injured employee.

MCOs can also play a key role in matching a physician’s assessment of their patient’s physical ability with the employer’s flexibility to accommodate work restrictions. Throughout this process, there are therapy and rehabilitation resources available to help employers and employees continue to close the gap on working full duty, and the MCO is the access point for these services.

Another sign of increasing importance is the MCO’s involvement in reviewing medications prescribed in claims. While the Ohio Bureau of Workers’ Compensation utilizes a pharmacy benefits manager to oversee the prescription drugs in claims, it also allows MCOs to refer cases to be reviewed for excessive or inappropriate medications. It is well known that the costs of prescription medications can be exorbitant and it is not uncommon for an individual to be unable to work solely because of the side effects of some of these drugs. Examining medications for appropriateness and identifying alternatives have become crucial steps in medical management and important services employers should expect from their MCO.

Insights Workers’ Compensation is brought to you by CompManagement Health Systems

How a better relationship with your MCO contributes to financial success

Every state-funded employer in Ohio utilizes the services of a managed care organization (MCO), whose central purpose is to manage the medical aspects of workers’ compensation claims.

“What that actually means in practical application can seem mysterious,” says Lance Watkins, vice president of client services at CompManagement Health Systems. “By clearing up confusion about the MCO’s impact, employers may find new opportunities to leverage their MCO to help control costs, and also more confidently evaluate the effectiveness of their services.

Smart Business spoke with Watkins about what MCOs can do for companies.

Why is an MCO important?

The resolution of any claim — in a way that limits its future impact on your rates, premium and discount options — depends on injured employees recovering quickly and safely. Your MCO works closely with employees and their physicians to facilitate timely and appropriate medical treatment. MCO case managers keep all parties focused on the return-to-work goal. Your connection to your MCO ensures that lost work days are kept to a minimum.

How does an MCO help reduce lost time?

Depending on the type of injury and your company’s ability to adapt job requirements, your MCO may be able to help develop modified duty options that can drive a quicker return to work and lower claim costs.

Employees are sometimes taken off work due to the potential side effects of a prescribed drug. MCOs can discuss over-the-counter or alternative options to lower medical costs and allow employees a wider range of activities without medication-related impairment concerns.

A physician may prescribe treatment programs that could require an employee to be off of work. Additionally, physicians commonly take patients off work until they can be re-evaluated after physical therapy. Thinking creatively, your MCO can consult with you, the doctor and the physical therapist on options to support recovery with less downtime. Work activities could be incorporated in a physical therapy program.

While every injury and patient is different, it is important to keep the treating physician informed of the extent of lost time anticipated for each specific injury. Official Disability Guidelines provide this data based on the history of similar diagnoses.

How do MCOs directly impact businesses?

  • Initiating new claims — Thoroughly documenting and quickly submitting new injury reports to your MCO reduces ambiguity and expedites allowance decisions by the Ohio Bureau of Workers’ Compensation. An accurate and efficient injury reporting process speeds medical treatment and resolution.
  • Reviewing and paying medical bills — When opportunities to pay for medical services at lower reimbursement rates arise, your MCO may be able to reduce the costs applied to your premium rates.
  • Exploring vocational rehabilitation options — ‘Voc rehab’ can support employees as they prepare to return to work. It can also help employers defer significant claim costs and limit the impact on premium costs. All parties must agree on the utilization of voc rehab services, and partnering with your MCO in this process is essential.
  • Facilitating treatment requests — A physician or attorney may appeal an MCO’s decision to deny a specific treatment request, typically leading to delays, a series of hearings with the Industrial Commission, and significant time, energy and emotion invested by all involved. Your MCO can sometimes help avoid these delays by engaging the treating physician, exploring alternative treatment options to keep the claim moving toward resolution, and helping the employee return to work sooner.

An MCO’s focus on safe, efficient recovery will help ensure not only the health and productivity of your employees, but also your workplace. Employers often focus on premium rates and options for discount and rebate programs, which is appropriate. But these options depend largely on controlling your claim costs. Working closely with your MCO to limit lost work days and control medical expenses will help you secure premium advantages in coming years.

Insights Workers’ Compensation is brought to you by CompManagement Health Systems

Don’t become part of the statistic — reduce new hire injuries

Today, many employers struggle to maintain sufficient staff and are always on the lookout to find qualified people. This shortage may cause employers to do the minimum for safety orientation requirements, which often results in a new hire injury.

“Employees are expected to follow the safety standards set both by the Occupational Safety and Health Administration (OSHA) and those set by their company,” says Doug Newman, senior risk services analyst at CompManagement. “Before employees can follow these standards, they must be aware of them. This requires access to information on standards and the hazards they cover.”

Smart Business spoke with Newman about the importance of new employee training and what should be included.

Why conduct safety training?

No matter the size or nature of your business, the general duty clause of the Occupational Safety and Health Act states that each employer shall furnish to each of their employees a place of employment that is free from recognized hazards that are causing or are likely to cause death or serious harm to the employees. It is also an opportunity to influence new employees on the safety culture and safety expectations within the company.

Three key reasons to conduct new employee safety orientation can be found in statistics collected from OSHA, which reports that: 40 percent of workers who are injured have been on the job less than a year; one of every eight workplace injuries occurs to employees on their first day; and new hires are five times as likely to be injured on the job as experienced workers.

When should safety orientation training be conducted?

Safety orientation training should be conducted when the employee is first hired; when the employee is given a new job assignment or transfer; and when introducing new substances, equipment, processes or when a previously unrecognized hazard is identified. An orientation session should be held prior to the time an employee undertakes any work.

A general training session for all employees should be held at the beginning of the year or season, and regular five- to 10-minute safety meetings should be held throughout the year or season. At these meetings, managers and employees should be encouraged to report any potential safety hazards and any accidents or near accidents from the previous week should be discussed. This will keep safety awareness at a high level and help to prevent recurring accidents.

What topics should be covered?

Creating an employee orientation checklist is a good way to ensure all orientation items are completed. The training also needs to be conducted in a manner and language the employee understands.

Recommended topics include:

  • Company safety and health rules and policies — explain all safety and health company policies and ensure they have been acknowledged, signed and dated.
  • Safety training — provide general safety training and training specific to the employee’s position.
  • Emergency procedures — go over emergency procedures and show eye wash stations, first aid kits, fire blankets, exits, fire alarm pull boxes, etc.
  • Illness/injury reporting — review injury, illness and near miss reporting procedures. The policy must be acknowledged, signed and dated.
  • Applicable OSHA programs — review all applicable OSHA compliance programs.
  • Safety team — discuss the purpose of the safety team and introduce the new employees to its members.
  • Contacts — review emergency contacts with new employees.
  • Safety responsibilities — review employee safety expectations and responsibilities.

How should temporary workers be trained?

Host employers and staffing agencies have joint responsibilities to maintain a safe work environment for temporary workers. Host employers should provide temporary workers with safety training that is identical or equivalent to that provided to the host employer’s own employees performing the same or similar work. OSHA may cite both the host employer and staffing agency if violations are found in the training.

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Tips on how to prevent, respond to and recover from workplace violence

Workplace violence affects more than 2 million American workers annually and is currently the fourth leading cause of fatal occupational injuries in the U.S.

“Workplace violence has become a growing concern for employers and employees across the country,” says Cassy Taylor, senior risk services analyst at CompManagement. “Employers face not only the physical and emotional suffering of their employees, but also bear potential costs related to workers’ compensation losses, temporary staffing, overtime, higher turnover, and hidden costs such as lack of productivity and lower morale.”

Smart Business spoke with Taylor about how employers can prevent, respond to and recover from workplace violence incidents.

What is workplace violence and who is the most vulnerable?

Workplace violence is any act or threat of physical violence, harassment, intimidation or other threatening disruptive behavior that occurs at the work site.

Those at an increased risk include those who exchange money with the public, deliver goods and services, work alone or in small groups, work late at night or early morning, work in high crime areas or have extensive contact with the public. Other vulnerable occupations include home health care and social work, hospital staff, probation officers and community workers, such as utility workers, phone/cable installers, mail carriers, retail workers and taxi drivers.

What types of workplace violence exist?

There are four types of workplace violence:

  • Criminal intent — violent acts by criminals who have no connection with the workplace.
  • Customer/client/partner — violence against employees providing services to the public.
  • Co-worker — current or former employees.
  • Personal relations — a family member or someone with a personal relationship who does not work at the facility.

What are the key elements of a workplace violence protection plan?

The primary elements of a program include planning, policies, training, physical security and evaluation.

Consider establishing a threat assessment team that will assess current conditions, establish and implement policies, develop an employee assistance and training program, conduct practice drills, survey employees to help identify how they feel about their safety while at work, prepare a crisis response plan, and regularly test and improve the program.

How can employers protect employees?

The best step to take is to implement a zero tolerance policy toward workplace violence and create a prevention program. Ensure that all employees know your policy and that all incidents of violence will be investigated.

To protect employees:

  • Provide a safety education program so employees know what conduct is not acceptable.
  • Secure the workplace: video surveillance, extra lighting, alarm systems, minimize access by outsiders through use of identification badges/electronic keys, train employees on situational awareness, and incorporate scenarios of potential violence for your workplace in emergency drills.
  • Instruct employees not to go where they feel unsafe, introduce a buddy system, or provide an escort or police assistance in potentially dangerous situations.

What should be done after an incident of workplace violence?

Always ensure that the appropriate medical evaluation and treatment occurs first, and that the incident is reported to the police. Also be sure to:

  • Require that employees report and log all incidents and threats of workplace violence.
  • Discuss the circumstances of the incident with staff.
  • Encourage employees to share information about ways to avoid similar situations in the future.
  • Offer stress debriefing sessions and post-traumatic counseling services to help workers recover from a violent incident.
  • Investigate all violent incidents and threats, monitor incidents by type of circumstances and institute corrective action.

Insights Workers’ Compensation is brought to you by CompManagement

Address safety in your workplace with a safety committee

The best injury is the one that never happens, but how is this achieved in a work environment? Regardless of the task at hand, safety is everyone’s responsibility from a top-down approach.

“Safety is a team effort and one of the most effective ways to start addressing safety in the workplace is by developing a safety committee,” says Doug Newman, senior risk services consultant at CompManagement.

Smart Business spoke with Newman about some of the key components of a safety committee.

What should companies consider before setting up a safety committee?

Prior to creating a safety committee, gathering management commitment is imperative. The involvement of management in the committee allows committees to secure funding or support to address safety hazards, and their involvement helps committees make more realistic decisions and recommendations.

It is also important for committee members to see that their suggestions have an effect on workplace safety. If the decisions of the committee are deemed too costly or are never used, enthusiasm within the committee may decrease. Management involvement also shows employees that safety is important to management, which can have a positive effect on their own safety values.

How large should a safety committee be and how should it be structured?

Your safety committee team should consist of 10 to 12 members. Take volunteers first and make sure all key areas are represented. Clearly define the purpose and objectives of the team and determine the length of the committee members’ terms, which should be more than six months.

Determine the roles of the team members — team leader, note taker, timekeeper, facilitator, members — then set goals to effectively review safety practices, make recommendations and implement measures upon management approval.

What should the duties and key elements of the safety committee be?

Safety committees should be involved in developing safe work practices, writing safety programs, facilitating safety training with the organization, conducting inspections of the workplace and investigating any reported accidents. An effective safety committee needs to hold meetings on a regular basis; publish meeting agendas in advance; keep minutes of each meeting that include the issues discussed, proposed action to be taken, and the member that is responsible for follow-up; make the meeting minutes available to all employees; document the committee’s accomplishments; and develop a way to recognize any individuals or groups within the company that make significant contributions to the safety program.

What safety policies and procedures should safety committees develop?

It is recommended that employers have:

  • Safety policies — review on an annual basis.
  • Written compliance programs — the type of business will determine Occupational Safety & Health Administration (OSHA) required programs.
  • Preventative maintenance programs — regular equipment inspection and documentation.
  • Standard operating procedures — guidelines should be provided to employees.
  • Written incident and accident reporting procedures — include near misses.
  • Medical provider relationships and a return to work program — develop relationships and maintain communication.

How can companies keep safety committee members and employees engaged?

Safety committees may struggle to maintain member enthusiasm. Consider inviting noncommittee front-line workers to participate in a meeting and discuss hazards that they encounter daily. This will allow the committee to rotate their focus on a variety of topics. To get everyone engaged at your workplace, tell employees how they can be of assistance to the committee, encourage employees to report hazards and unsafe work practices to a committee member, act on employee recommendations, keep the committee visible and promote all activities and accomplishments.

Insights Workers’ Compensation is brought to you by CompManagement

What Ohio employers need to know now that medical marijuana is legal

This past September, Gov. John Kasich signed Ohio House Bill 523, which continued the nationwide trend of states legalizing medical marijuana. The new law allows people with one of 20 qualifying conditions to use marijuana with a doctor’s recommendation.

“Employers may still establish and enforce drug-free workplaces that prohibit and test for any drug that is illegal under federal law, and employees under the influence of marijuana are still not covered by workers’ compensation,” says Stephanie McCloud, government/industry relations counsel at CompManagement.

Smart Business spoke with McCloud about this new law and what employers should do now.

When does the law actually become operable?

The state officially began establishing the Medical Marijuana Control Program, which will serve as the infrastructure to regulate the industry, on Sept. 8, 2016. Patients with one of the 20 qualifying medical conditions will not actually gain access from within the state to medical marijuana until the program is established, which is expected to be no more than two years after the effective date.

Who will regulate the law?

The Ohio Department of Commerce will regulate the licensure of medical marijuana cultivators and processors, as well as the laboratories that test medical marijuana. The State of Ohio Board of Pharmacy will license retail dispensaries and register patients and their caregivers. The State Medical Board of Ohio will regulate physicians’ requirements and procedures for applying for and maintaining certificates to recommend medical marijuana. It will also maintain the list of conditions for which medical marijuana can be recommended.

What are the impacts of the new law related to workers’ compensation?

Impacts are limited to Ohio’s workers’ compensation system and the Ohio Bureau of Workers’ Compensation’s (BWC) Drug-Free Safety Program is not affected. The law does not require BWC to pay for patient access to marijuana nor is an employee found to be under the influence of marijuana covered by workers’ compensation.

Is medical marijuana reimbursable under workers’ compensation if recommended for an injured worker?

Although the law does not address reimbursement for medical marijuana that may be recommended for injured workers, there are already rules and statutes that limit what medications are reimbursable by BWC. Drugs covered by BWC are limited to those that are approved by the Food and Drug Administration. Marijuana has not been approved and remains a Schedule I illegal drug under federal law. In addition, prescriptions funded by BWC must be dispensed by a registered pharmacist from an enrolled provider. Under the new law, medical marijuana will be dispensed from retail marijuana dispensaries, not from enrolled pharmacies.

Is an injury compensable if the injured worker is found to be using marijuana for medical purposes?

The law does specify that marijuana is covered under ‘rebuttable presumption,’ which means that an employee whose injury was the result of being under the influence of marijuana is not eligible for workers’ compensation. This is the case regardless of whether the marijuana use is recommended by a physician.

What should employers do now?

There are certain sections of the new law that reference the use of medical marijuana in violation of an employer’s drug-free workplace policy, zero-tolerance policy or other formal program or policy. If employers do not have a drug-free workplace policy in place, now is the time to do so. If an employer does have an existing policy, now is also a good time to review it and update as necessary.

This article is informational only and should not be construed as legal advice.

Insights Workers’ Compensation is brought to you by CompManagement

The basics of OSHA/PERRP reporting

Under the Occupational Safety & Health Administration’s (OSHA) record keeping regulation, certain covered private employers — entities run by private individuals or groups — are required to prepare and maintain records of serious occupational injuries and illnesses using the OSHA 300 Log. In Ohio, public employers — cities, counties, public schools, villages, etc. — are also required by the Ohio Public Employer Risk Reduction Program (PERRP) to maintain the same records on the PERRP 300P log.

“The information is intended to help employers evaluate the safety of their workplace as well as help implement protection for their workers in order to reduce and/or eliminate hazards,” says Cassy Taylor, senior risk services analyst at CompManagement.

Smart Business spoke with Taylor about some of the fundamentals of maintaining these records and the approaching deadlines for posting.

Who is responsible for keeping injury and illness records?

Private employers with 10 or more employees at any point during the year, with the exception of certain low-risk industries, are required to keep an OSHA 300 log. The list of certain low-risk industries may be viewed on OSHA’s website. Private employers with 10 or fewer employees for the entire year are required to keep records if directed to do so by OSHA. All public employers are required to keep a PERRP 300P log. There are no exemptions for public employers.

What is a recordable injury or illness?

Employers must record each fatality, injury or illness that is work-related; if it is a new case or meets one or more of the criteria contained in the OSHA/PERRP record keeping instructions that include death, days away from work, restricted work or transfer to another job, medical treatment beyond first aid, loss of consciousness or diagnosis of a significant injury/illness by a physician or other practicing licensed health care professional.

What cases are considered work-related?

An event or exposure in the work environment that either caused or contributed to the resulting condition, or an event or exposure in the work environment significantly aggravated by a pre-existing injury or illness.

Are there any exceptions?

Yes, there are a few exceptions to the record keeping rule that include being present as a member of the general public; voluntary participation in wellness program, medical, fitness or recreational activity; eating, drinking or preparing food or drink for personal consumption; symptoms arising in work environment that are solely due to a non-work-related event or exposure; personal tasks outside assigned working hours; personal grooming, self- medication for non-work-related condition, or intentionally self-inflicted; a motor vehicle accident in a parking lot/access road during a commute; common cold or flu; and mental illness, unless the employee voluntarily provides a medical opinion from a physician or licensed health care professional having appropriate qualifications and experience that affirms work-relatedness.

How long do records need to be kept on file and is there a deadline to post?

OSHA 300 and PERRP 300P logs cover one calendar year and must be kept on file for five years. The information on the OSHA 300 and PERRP 300P logs must be transferred to the OSHA 300A and PERRP 300AP summary forms for posting. Private employers must post the 300A for all employees to see from Feb. 1 to April 30 of each year; there is no need to submit the log to OSHA unless asked to do so. Public employers must post the 300P for all employees to see from Feb. 1 to April 30 of each year as well as submit the report to the Ohio Bureau of Workers’ Compensation by Feb. 1.

Are all recordable injuries or illnesses also workers’ compensation claims?

No. For example, if the injured party only received treatment from an in-house physician, a workers’ compensation claim may not need to be filed. If the treatment was beyond first aid, it must be recorded on the 300 or 300P log.

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Understanding the coverage process in Ohio

It’s the law in Ohio for all state-funded employers with one or more employees to have workers’ compensation coverage.

“Typically employers apply for coverage because they’re a new business or because of an acquisition, merger, or purchase or sale of an existing business,” says Scott Westerman, rate specialist at CompManagement.

Smart Business spoke with Westerman about who needs coverage and how to apply.

Who actually needs workers’ compensation coverage?

All employees of a business operating in Ohio must be covered by workers’ compensation insurance, which for state-funded employers is provided exclusively by the Ohio Bureau of Workers’ Compensation (BWC). This includes corporate officers who are considered to be employees and therefore must be covered if actively working for the corporation.

Coverage for the owners of sole proprietorships, partnerships, and LLCs acting as sole proprietorships or partnerships is not required, although such owners may elect to cover themselves if they wish. The same is true for ordained ministers of religious organizations, family farm corporate officers and individuals who are acting as corporations with no other employees. Regardless of the coverage status of such owners, all regular employees must still be covered.

Are volunteers covered under workers’ compensation?

That depends. Volunteers for private companies are not covered by BWC. Emergency volunteers of public entities, such as volunteer firemen and auxiliary police, are required to be covered. Public entities may also elect to cover nonemergency volunteers by passing a resolution stating this intent and filing form U-69 Contract for Coverage of State Agency of Political Subdivision with BWC.

How do you apply for coverage with BWC?

A private company must file form U-3 Application for Ohio Workers’ Compensation Coverage, along with payment of $120 for the minimum annual premium. Coverage goes into effect the day of receipt by BWC, but it will probably take three to four weeks for BWC to issue the permanent policy number. A new public entity just needs to provide BWC with a copy of its charter or other founding documents and BWC will issue a policy.

How does an acquisition affect coverage?

If you buy another company, either outright or as an asset purchase, you will inherit the BWC claims and payroll history of that company. This essentially means that you are inheriting the rates, good or bad, of that company. If you buy only a part of another business, then you will inherit the claims and payroll history associated with the division or operation that you buy. For this reason, it is in your best interest to review the company’s BWC history as part of your due diligence. You may do so by filing form AC-4 Request for Business Transfer Information with BWC.

Is a new policy number always necessary when buying another company?

If the new owners do not have active coverage with BWC, they should file form U-3 to apply for a new policy. The only exceptions are when there is a sale within the immediate family or when there is a stock sale with no change in name or Federal Employer Identification Number (EIN). In these cases, the new owners may inherit the existing BWC policy of the former owner if they wish to do so.

Whatever the case, form U-118 Notification of Business Acquisition/Merger or Purchase/Sale must be filed with BWC. This form may be completed by the buyer, the seller or both. BWC will then combine the previous owner’s policy into the new owners’ policy, if applicable, and the new owners will inherit all outstanding liabilities associated with the predecessor policy.

What should be done if there is a restructure, but no change in ownership?

If you are just restructuring to a new legal entity, but there is no or very minimal change in the actual ownership of the company, then form U-117 Notification of Policy Update should be completed. BWC will update your existing policy with the new name, EIN or other information as necessary.

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Why having the right classifications is so critical

As businesses in Ohio set up shop or expand their operations, two critical items related to their workers’ compensation coverage involve their manual classification, which is based on their business operations and their reportable payroll. If this information is incorrect, not only is an employer paying incorrectly, but it could cause other employers across the state to pay incorrectly as well.

Smart Business spoke with Jarred Post, rate representative at CompManagement, about how manual classifications are assigned in Ohio and what an employer should be reporting regarding its payroll.

What are manual classifications and how are they assigned?

Ohio Bureau of Workers’ Compensation (BWC) assigns manual classification codes established by the National Council on Compensation Insurance (NCCI) based on the description of operations provided on an employer’s initial coverage application.

Manual classifications codes are divided into two types — basic and standard exception. Basic classifications describe a company’s general business operations. With over 500 basic classification codes, many companies may, however, find that they are so specialized in their operations that there is not a specific code for them. In these cases, BWC will assign the basic classification code most analogous to their operations.

There are five standard exceptions that apply to employees common to many businesses whose job duties are not described by a basic classification, such as clerical office employees. To qualify, employees generally cannot have any other duties within the company outside the scope of the standard exception.

Why is the correct manual classification so important?

Workers’ compensation premiums are based on these classifications. Every year, each classification is assigned a base, or starting premium rate that BWC calculates based on statewide claims costs and payroll for employers reporting under that code. If you are not reporting payroll and claims correctly, not only are you paying incorrect premiums, but you are also potentially causing other employers statewide to pay incorrectly. This can also result in an inaccurate calculation of your experience modification rate (EMR). Your EMR is the percentage above or below the base rate at which an employer will pay premium. Reporting payroll using the wrong classification can, in some cases, result in over-inflated workers’ compensation premium.

What is considered reportable payroll?

BWC reportable wages typically consist of gross wages — including overtime and bonuses — less employee contributions to health insurance, flexible spending accounts and dependent care savings accounts. The basic rule of thumb is that if something is not reportable to the IRS, then it is not reportable to BWC.

Are there any caps or limits regarding payroll reporting?

There are minimum and maximum payroll reporting limits for active executive officers of a corporation, owners of sole proprietorships, partners in a partnership, and individuals incorporated as a corporation with no employees. There is also a maximum weekly reporting cap for employees in the construction industry, which is the same as the weekly maximum for the people previously listed. However, there are no minimum or maximum reporting limits for regular, non-construction employees.  For the current rate year of July 1, 2016 to June 30, 2017, the payroll reporting minimum is $443 and the maximum is $1,328.

What if incorrect payroll is reported? 

If incorrect payroll has been reported, an employer can file an amended payroll report with revised payroll amounts. However, this could trigger an audit by the BWC. Usually an amended report that would result in a refund of over $5,000 in premium will be referred for audit. During an audit, BWC compares internal payroll records and reports to other agencies — IRS, Ohio Department of Job and Family Services — to validate information reported. They can audit up to two years, but usually audit only one.

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New option now available for employers operating in other states

The Ohio Bureau of Workers’ Compensation (BWC) is now authorized to offer workers’ compensation coverage in other states to eligible Ohio businesses. This new coverage gives companies a simple solution to protect their employees without having to manage multiple workers’ compensation policies in varying states with different laws.

“Up until now, the BWC provided coverage for Ohio employees working temporarily outside of the state, but many states did not honor that coverage,” says Kelly Lowry, client services manager at CompManagement. “This option allows employers to buy coverage for their exposure through the BWC and its partner versus separate coverage state by state.”

Smart Business spoke with Lowry about this new program and how it works for businesses with exposure outside of Ohio.

Why was Other States Coverage developed?

Historically, for employers that temporarily send employees outside of Ohio to work, there has been a risk that their coverage through the BWC was not sufficient as the BWC could not respond to a claim that was filed in another jurisdiction. In 2014, the Ohio General Assembly passed legislation granting the BWC the authority to contract with an insurer licensed in other states to provide coverage to eligible employers for out-of-state exposure. The policy is designed to prevent workers’ compensation gaps and protect employers from penalties and stop-work orders in other states.

What is the risk of not having coverage?

Each time an employee leaves Ohio, even for a short period, there is a risk that a work-related injury could occur and the injured employee could file a claim in a jurisdiction other than Ohio. The BWC does not and cannot respond to a claim filed in another jurisdiction. Therefore, that other state could find the employer to be uninsured and subject them to fines and/or other penalties, including the actual cost of the claim.

How is the BWC offering coverage?

The BWC is working with United States Insurance Services (USIS) and Zurich Insurance to offer optional coverage to employers that may face exposure while temporarily working outside of Ohio. It is not the intent of Ohio’s extraterritorial coverage to cover employees who regularly perform work outside of Ohio. A solution is available in all U.S. states except those that do not permit private workers’ compensation insurance.

How does the application process work?

Ohio employers apply directly to the BWC using the ACORD 130 application. Employers may seek assistance from their insurance agent who should be familiar with this form or contact the BWC’s Other States Coverage Unit directly. The BWC will determine eligibility and the premium cost for this coverage. The BWC will review the employer’s experience modifier, loss history, safety record and other pertinent information and then work with USIS and Zurich to secure a quote. If coverage is secured, the BWC will issue a policy via Zurich to cover out-of-state exposures. Zurich will handle all claims filed outside of Ohio under this program.

When should coverage be considered?

Employers should consider Other States Coverage when an employee is hired to do work in other states, when an Ohio-based employee is working in another jurisdiction for an extended period and when an employee is working in another state where the law requires specific coverage for temporary exposures.

Who is eligible?

An employer must have the majority of its business in Ohio, which equates to two-thirds of its total payroll for all related business operations in order to be considered for coverage. In addition, the employer must have active coverage with the BWC, have no lapses in coverage in the past 12 months at the time of application and have no past due balances. Self-insuring employers, temporary employment agencies, staffing entities and professional employer organizations are not eligible for coverage. Employers with operations that include certain high-risk manual classifications are also not eligible, which include but are not limited to aircraft exposures, grain mills and high-risk manufacturing.

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