How to use deductibles to lower workers’ compensation premiums

Mark MaGinn, Vice President, CompManagement, Inc.

Mark MaGinn, Vice President, CompManagement, Inc.

The Deductible Program was implemented in 2009 by the Ohio Bureau of Workers’ Compensation (BWC) as another alternative for employers to control their costs while promoting workplace safety. Over the past few years, the program has been enhanced to include a small and large deductible program so that employers of different sizes, hazard groups and risk tolerance levels have options that best fit their organization.

“The Deductible Program can be financially beneficial for those employers that have a focus on their safety efforts and are able to keep their claim costs low,” says Mark MaGinn, vice president at CompManagement, Inc. “An employer should consider having a feasibility study performed by their third-party administrator prior to participating in order to analyze the deductible levels available and ensure it is the best program for their organization.”

Smart Business spoke with MaGinn about how this alternative rating program works.

How does the Deductible Program work? 

Similar to other insurance deductible plans, an employer agrees to pay the portion of a workers’ compensation claim that falls below their selected deductible level in exchange for an upfront premium discount. Claims costs are paid in full by the BWC, then the employer reimburses the BWC for the claim costs up to the selected deductible level. The employer will receive monthly invoices from the BWC until the selected deductible level is reached. All deductible bills must be paid within 28 days of the invoice date.

What deductible amounts are available to choose from?

Deductible levels range from $500 to $200,000. The small deductible program includes levels of $500, $1,000, $2,500, $5,000 and $10,000. The large deductible program includes levels of $25,000, $50,000, $100,000 and $200,000. There is no deductible level available between $10,000 and $25,000. An employer is limited to 25 percent of its annual premium if the deductible selected is less than $10,000, and 40 percent of annual premium if the deductible is $25,000 or more.

How does an employer join the Deductible Program?

An employer must complete a BWC Application for Deductible Program (U-148) to enroll in the Deductible Program, and meet eligibility requirements. The enrollment deadline for private, state-funded employers is the last business day in April for coverage beginning July 1, and for public employers it is the last business day of October for coverage beginning Jan. 1. Changes to the deductible level or withdrawal from the program are not allowed until the next policy year.

Is there any method to cap the annual out of pocket?

Employers selecting a deductible level of $25,000 or more have the option to request an annual aggregate stop-loss limit of three times the deductible, allowing them to cap the potential annual out-of-pocket expense that may arise from participating in the program.

How is the Deductible Program savings projection calculated?

Based on the deductible level chosen and the employer’s hazard group, which is based on the employer’s manual classifications and risk level, the BWC will establish the savings percent. This discount can range anywhere from 1.4 to 26 percent for small deductible options and is applied to the employer’s standard premium.

An example for a mid-sized service company selecting a $5,000 deductible within the small deductible program:

• Payroll — $5,000,000.

• Individual premium — $460,000.

• Deductible discount savings — $32,000.

• Premium with discount — $428,000.

• Plus estimated deductible billing — $10,000.

• Net premium — $438,000.

• Net savings — $22,000.

In addition to this savings, deductible payments under the small deductible program will not be charged to the claim, therefore possibly reducing future rate calculations.

Savings reflected above do not include the additional savings that can be realized by also participating in programs compatible with either the small or large deductible program, such as the Go Green or Safety Council discounts.

Mark MaGinn is vice president at CompManagement, Inc. Reach him at (800) 825-6755, ext. 65868 or [email protected]

Save the date: Deductible Program enrollment for private employers ends April 30 for the 2013 policy year.

Insights Workers’ Compensation is brought to you by CompManagement, Inc.



Why Group Retrospective Rating may be a solution for your organization

Heather Vogus, vice president, Comp Management, Inc.

Over the past few years, many employers in Ohio have been looking at the Group Retrospective Program implemented in 2009 by the Ohio Bureau of Workers’ Compensation (BWC) as another option to garner savings when it comes to their workers’ compensation premium. Enrollment numbers have doubled each year, especially with employers that are of medium size and debit-rated by the BWC.

“If you are an employer in Ohio who has some claims in your experience — as accidents will happen — but also has a solid safety program in place, Group Retrospective Rating may be an option. Organizations that do not qualify for a Group Rating program or are seeing little savings from this program should consider Group Retrospective Rating as an alternative,” says Heather Vogus, vice president at CompManagement, Inc.

Group Retrospective Rating enrollment for private employers ends April 30 for the 2013 policy year.

Smart Business spoke with Vogus about the program and why it has the attention of businesses across Ohio.

What is Group Retrospective Rating? 

Group Retrospective Rating is a performance-based incentive program designed to recover a portion of premiums for employers that reduce injury rates and lower associated claims costs. It is similar in concept to Group Rating, as companies are grouped together to be rated as if the group was one big company. However, with this program, companies continue to pay their own individual premium but have the opportunity to receive retrospective premium adjustments, such as refunds or assessments, at the end of each of the three evaluation periods performed by the BWC.

How are groups evaluated by the BWC?

Three evaluations are performed by the BWC at 12, 24 and 36 months after the end of the policy year. At the end of each period, the BWC looks at the expected losses of the group and compares those to the actual losses to calculate the group’s Retrospective Premium. If the premium calculated is less than the group’s total Standard Premium, the participants receive a refund for that period. However, if the premium is greater, an assessment will be levied by the BWC, but each group limits the maximum assessment by selecting a premium cap that can be factored into your budget so that your organization is prepared. Before entering a program, be sure to have a feasibility study created to ensure this program fits the risk tolerance of your organization and has the ability to garner appropriate savings.

Why should my organization participate?

If your organization is committed to improving workplace safety and accident prevention, as well as taking action to reduce the frequency and severity of accidents involving your employees, this program has the ability to attain premium savings to boost your bottom line. The BWC has just released statistics showing that the 2009 private employer Group Retrospective Rating program has refunded a grand total of $12.4 million to date, for an average of $33,940 per employer.

How is the Group Retrospective savings projection calculated?

First, the overall group premium is calculated. As an example, suppose the Standard Premium for the group is $4 million and the Minimum Premium, assuming 25 percent, is $1 million. Add Developed Losses, which is incurred losses multiplied by the BWC developmental factor of  $1.4 million, and that equals the Retrospective Premium — the minimum premium plus developed losses — to give you $2.4 million.

The Group Retrospective Refund, which is the Standard Premium minus Retrospective Premium, is  $1.6 million, and the Estimated Refund Percentage is 40 percent.

Using the estimated refund percentage of 40 percent from the group example above, a mid-sized service company, assuming a payroll of $1 million, may expect:

• Individual Premiums of $62,500

• Group Retrospective Rating Premiums of $37,500

• Group Retrospective Rating Savings of  $25,000.

Savings reflected above do not include the additional savings that can be realized by also participating in programs compatible with Group Retrospective Rating such as Destination Excellence Go Green and Safety Council (participation rebate).

Heather Vogus is vice president at CompManagement, Inc. Reach her at (800) 825-6755, ext. 65440 or [email protected]

Insights Workers’ Compensation is brought to you by CompManagement, Inc.


How Group Rating allows employers to lower their premium expense

John Logue, vice president, CompManagement, Inc.

Across the country, every business continues to look for ways to save money and reduce operational expenses in order to reinvest in their people, technology and other business practices. Workers’ compensation premiums are one operational expense that may be reduced if your organization has implemented safe work practices and adopted claims management best practice techniques.

“If you are an employer in Ohio, there are many solutions available to you for discounted workers’ compensation premium. Group Rating remains one of the best programs available as a solution for your company with high discounts and program compatibility options,” says John Logue, vice president at CompManagement, Inc.

Smart Business spoke with Logue about why every employer in Ohio should review options for workers’ compensation discounts regardless of size.

What is Group Rating and why should my organization participate?

The Ohio Bureau of Workers’ Compensation (BWC) designed Group Rating in the early 1990s as an incentive program for those employers who establish and maintain safe working conditions. Employers with a better-than-average safety record and little if any claim costs pay at or below the base premium rates established by the BWC. The BWC looks at the group of employers and adjusts the rates as if the group was one big company, thus potentially giving employers much lower premium rates than they could attain on their own. Discounts typically range between 15 percent and the maximum discount available from BWC, which for policy year 2013 is 53 percent for private employers.

How are groups formed?

Third-party administrators (TPAs) that represent sponsoring organizations, such as trade associations and chambers of commerce, review an employer’s experience (current year and past four years). Once the employer has signed a Temporary Authorization to review their information, the TPA will review both the employer’s claim costs and payroll. Group participation is a year-to-year enrollment. If the employer’s experience meets the sponsor’s guidelines for the policy year, then they are invited to participate in the program. Many employers are already members of trade associations or chambers of commerce in their community, so it is worthwhile to investigate whether or not it includes this member benefit.

If eligible for Group Rating, what other programs should my organization consider?  

While participating in Group Rating, an employer may also earn additional discounts through Destination Excellence, Drug Free Safety Program and Safety Council, to name a few. Some of these programs include elements of things companies are already doing today, such as making payments online, paying on time, being active in local safety councils and reducing the frequency/severity of claims, and establishing drug-free workplace policies. An employer should contact the group sponsor’s program administrator to evaluate the multiple 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.

How is the group savings projection calculated?

Group savings will differ between sponsor programs with those with larger groups offering more stability and accuracy in projected savings. It is very important to make sure that your organization provides the most current payroll information and any future budget impacts when comparing quotes between sponsoring organizations, as payroll, claim costs and industry are major factors in determining the premium for your organization.

An example of the potential savings for a mid-sized service company:

•  Payroll — $3,990,000

•  Individual discount — 16 percent

•  Individual premium — $14,683

•  Group discount — 53 percent

•  Group premium — $9,632

•  Group savings — $5,051

John Logue is vice president at CompManagement, Inc. Reach him at (800) 825-6755, ext 6574 or [email protected]

Save the date: Group Rating enrollment for private employers ends Feb. 28 for the 2013 policy year

Insights Workers’ Compensation is brought to you by CompManagement

How to reduce annual workers’ compensation premium through limiting claim costs

Nick Principe, vice president of claims, CompManagement, Inc.

The Ohio Bureau of Workers’ Compensation calculates an employer’s annual premium based on three factors: the employer’s industry, claim costs and payroll. In order to begin to control claim costs, organizations at a minimum should have written work rules that are enforced uniformly and consistently, implement best practices for injury reporting, and have written guidelines and procedures for supervisors to follow for proper injury investigation.

“One of the most important phases in the life of a claim starts at the very beginning, when the claim is first acknowledged,” says Nick Principe, vice president of claims at CompManagement, Inc. “Every organization should have policies in place for reporting injuries, investigating and documenting accidents, offering transitional duty and having ongoing communication with injured workers.”

Smart Business spoke with Principe about what all employers should be doing when a claim occurs in their workplace.

How do I know the difference between an injury and an incident?

An injury, or claim, is when an employee seeks outside treatment instead of onsite first aid, an accident report is completed and submitted to a supervisor instead of filing an incident report, and a supervisor investigates the ‘accident’ instead of a supervisor investigating the ‘incident’ or ‘near miss.’

What is key information to communicate to an employee prior to any injuries occurring?

Make sure all employees understand the reporting protocol, such as the time frame for reporting, who should complete an accident report and to whom it should be submitted, and whether failure to comply with the company policy could result in disciplinary action.

Failure to properly report injuries also results in loss of calendar and disability days and does not allow the employer to address workplace hazards that may exist.

How do I know if a claim is compensable in Ohio?

Ohio has a ‘no-fault’ workers’ compensation system, which means injuries are compensable regardless of negligence by any party. The only exceptions to this are when an injury results from drugs and/or alcohol; a self-inflicted injury, or an injury resulting in or arising from ‘horseplay.’ With a substantial aggravation or worsening of symptoms, a pre-existing condition can be considered compensable.

Should I always certify a claim?

Claim documentation should be reviewed to determine if, as the employer, you are in agreement with the injury description and each condition listed, and then the claim may be certified. The claim should be continually monitored to ensure that only appropriate medical benefits and compensation are being paid. A valid reason for not certifying a claim is always needed. Rejecting a valid claim only delays recovery time and may increase your workers’ compensation costs. If you believe the claim is invalid, information must be gathered to support rejection of the claim.

What are some key points an employer should look for when a new claim is filed to help with the certification decision?

• Injury reporting: Watch for lapses between the date of injury and the first notice to the employer. This could indicate that the injury occurred outside of the workplace.

• Timing of the injury: Watch for injuries reported prior to holidays or before/after the weekend. Some may view an injury as an opportunity to extend a holiday, weekend or take a vacation.

• Witness statements: Watch for injuries that have no witnesses or that contain conflicting statements. This can lead to credibility issues and opportunities to reject the merits of the incident.

• Accident descriptions are subjective or vague: Watch for accident descriptions that do not paint a clear picture of what happened. You should be able to visualize the accident and draw conclusions from the description. Be on the lookout for changes to statements or inconsistencies in recollection of the accident/injury.

• Work performance: Watch for injuries following disciplinary actions. These types of injuries are often retaliatory in nature and either lack the objective evidence to support them or can be viewed as self-inflicted.

• Multiple claims: Watch for injuries to similar body parts or claims filed around the same time of the year, for example, a reinjury to the same body part or a link to outside activities such as hunting season, sports or hobbies.

How can I prevent significant ongoing costs in a claim if one does occur?

One cost containment strategy that may be utilized is developing a transitional work program. 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. The idea is to return an injured employee to gainful employment activities as soon as possible to avoid the so-called ‘disability trap.’ With transitional work, the injured worker receives a full paycheck with the ultimate goal of returning to his/her original job. The advantages to implementing a transitional work program include a reduction in costs associated with long-term claims, improved productivity, lower injury downtime, improved employee recovery time, increase in employee morale and a protection of your work force investment, as the loss of experienced employees will result in additional training costs associated with hiring new employees.

NICK PRINCIPE is the vice president of claims for CompManagement, Inc. Reach him at (800) 825-6755, ext. 65819, or [email protected]

Insights Workers’ Compensation is brought to you by CompManagement, Inc.

How to reduce ultimate workers’ compensation spend through settlements and handicaps

Lisa O’Brien, Director of Rates and Underwriting Services, CompManagement, Inc.

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 [email protected]

Insights Workers’ Compensation is brought to you by CompManagement

Transitional work grants available for employers in Ohio

Randy Jones, Senior Vice President, TPA Operations, CompManagement, Inc.

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 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 [email protected]

Insights Workers’ Compensation is brought to you by CompManagement, Inc.





How to ask the right questions when selecting a group sponsor for your workers’ comp plan

Mark MaGinn, Vice President, CompManagement, Inc.

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 [email protected]

Insights Workers’ Compensation is brought to you by CompManagement, Inc.

The role of MCOs and how they operate in the workers’ compensation system

Lance Watkins, vice president of client services, CompManagement Health Systems

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 protected]

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How wellness programs can impact workers’ compensation costs and how new grants can help

Randy Jones, Senior Vice President, TPA Operations, CompManagement, Inc.

Employers today are experiencing escalating health care costs associated with the significant increase in health risk factors, such as obesity, chronic disease and an aging work force. The impact these conditions and others have on workers’ compensation costs is generally left out of the equation. Studies have shown that workplace wellness programs have the ability to generate a significant reduction in return-to-work days, frequency and severity of claims, as well as presenteeism or absenteeism and the cost of health care benefits. Depending on accepted metrics, the return on investment (ROI) for employers can reach $6.50 for each dollar of investment.

“Implementing workplace wellness programs not only can improve the health and well-being of Ohio’s employees, but also impacts one of the largest operational expenses for an employer, workers’ compensation premium. With grant monies now available from the Ohio Bureau of Workers’ Compensation (BWC), even small employers have the ability to access resources that usually only the larger employer can afford,” says Randy Jones, senior vice president, TPA Operations for CompManagement, Inc. Smart Business spoke with Jones about the monies that are now available for your business in Ohio.

Why did the BWC start this grant initiative?

To meet the challenges of obesity, rising incidence of chronic diseases, and the aging work force, BWC recently established a Workplace Wellness grant. The objectives are to limit and control the escalating cost of workers’ compensation claims through addressing these health risk factors as well as to reduce health care costs for employers and improve the health of Ohio’s work force.

In 2010, 25 to 29 percent of Ohio’s adult population was considered obese (body mass index equal to or greater than 30) and the largest percent of our work force was between the ages of 45 to 54. Research has shown these challenges contribute to increased incidence and cost of workplace accidents and illnesses.

Who is eligible to receive a grant?

All employers (public and private) participating in the state-funded workers’ compensation program are eligible for the grant. Self-insured employers are not eligible. The employer may not currently have a wellness program in place, which consists of a tool that measures health risk factors plus programs that are designed to address those factors. If an employer does not have a tool or a program or lacks both, they will qualify for grant funding. If however, the employer uses a tool and designs programs based on the results from the tool, the employer will not qualify at this time. As an example, if an employer currently offers a Health Risk Assessment (HRA) but does not create any programs from the results of the HRAs, the employer would be eligible for a grant.

How much money is available under the Workplace Wellness grant initiative?

BWC has allocated $4 million for the Workplace Wellness grants over a four-year period. Grants are available to employers up to $15,000 over four years, which will allow for up to 50 employee participants per employer and $300 per participating employee. The amount per employee is graduated each year as BWC takes employee participation into consideration when awarding and renewing the grant. These funds are intended to supplement the cost of a wellness program, not fully fund it.

How does the application work?

Applications are received and reviewed by BWC on a first come, first served basis. The application form is available on their website at The major components of the application include a profile of your organization, an estimated budget for the workplace wellness plan, selection of a workplace wellness vendor, and a timeline for implementation of your program. A safety management self-assessment is also required.

What are the requirements for participation?

An employer must contract with a third party vendor that provides wellness program services in order to participate and submit an application to BWC. In addition, the employer must complete an online safety self-assessment, submit baseline data such as HRAs, biometrics, and a program plan within three months of receiving the grant funding, provide receipt documents, and submit an annual case study that explains what has been accomplished in creating and implementing a program as well as a plan for the upcoming year. Data elements pertaining to health risk factors such as cholesterol, blood pressure, etc. must also be reported annually in an aggregate format for all participating employees.

Why should my organization apply for this grant and implement a wellness program?

While workplace wellness programs help to reduce health risks, improve quality of life, and enhance personal effectiveness for your employees, studies show these programs also help to reduce workers’ compensation and disability costs for an employer by an average of 30 percent. This initiative is best suited for employers with measurable claims experience, a strong interest and desire to implement workplace safety and wellness programs, and a willingness to participate for four years.

How can my Third Party Administrator for workers’ compensation help with the process?

TPAs that provide safety services to their clients are well-suited to assist with this implementation. They will be able to develop occupational risk assessment tools as well as analyze data of health risk factors that contribute to the length and severity of incurred workers’ compensation claims. By linking safety and occupational health programs such as wellness together, an employer should see an overall reduction of workers’ compensation costs with enhanced employee morale and improved productivity.

Randy Jones is the senior vice president of TPA Operations for CompManagement, Inc. Reach him at (800) 825-6755, ext 2466 or [email protected]

How employers can focus on successful back-to-work initiatives

Quinn Guist, President, CompManagement Health Systems

Returning injured workers to their jobs has been a high priority for Managed Care Organizations (MCOs) and the Ohio Bureau of Workers’ Compensation (BWC) since the inception of the Health Partnership Program; however, we can always improve. MCOs, BWC, employers and providers must work collaboratively to advance return-to-work efforts.

Regardless of the greatest intentions and efforts of MCOs, Third Party Administrators (TPAs) and BWC, employers of all sizes and industries should have at least one thing in common — workers’ compensation must be a priority. This may not be a part of your business that welcomes you warmly when you come into the office each morning, but it is one that requires time and attention to keep from growing into an uncontrollable burden.

One approach to handling workers’ compensation is simply to entrust your claims to vendors and allow them to manage on your behalf. MCOs, TPAs, BWC and workers’ compensation attorneys can all help administer this critical segment of your business. But most would agree a more effective approach is for employers to prepare themselves well and become proactive partners in managing workplace injuries. Here are some fundamental key principles employers can utilize to gain significant return for their effort.

Establish Basic Employee Guidelines

A policy for workers’ compensation injury management does not have to be all-encompassing from the start, but begin by addressing basic expectations for employee behavior. Why does this impact workers’ compensation? Two reasons:

Basic guidelines establish a foundation for evaluating and managing employees from the beginning. Challenging employees sometimes create challenging claims.

More importantly, guidelines allow you to specify employee behavior that facilitates transparency and communication throughout the life of a workers’ compensation claim. For example, you should require that injuries and incidents be reported to a supervisor within a specified time (e.g., before the end of the shift, 24 hours, etc.). You can also require employees to return medical documentation regarding their treatment and recovery to you directly (HIPAA laws do not apply to workers’ compensation claims).

Transitional Work

Known by many names — modified duty, light duty, work accommodations — transitional work simply means bringing an employee back to work and adjusting their job requirements while they recover from injury. A multitude of studies show an injured employee will recover more quickly while in their working environment. Transitional work may not be possible in every situation, however, the more creativity used in identifying productive work for an injured employee, the better your chances are of avoiding one of the most costly elements of workers’ compensation claims — lost workdays.

A key point: your employee’s physician decides when they may return to work. Early return-to-work amounts to a reconciliation between the physician’s determination of the employee’s physical capacity and your flexibility to accommodate the employee’s limitations while they recover. Depend heavily on your MCO to assist in informing the physician of modified work options available for the injured employee. It is important for the doctor to understand the actual nature of work you have and that performing those tasks will not put your employee at risk of re-injury.


Injury Reporting Protocols

Establishing a consistent procedure for documenting work-related injuries and initiating the claim-filing process is important in a successful return-to-work program. Timing is critical, as early intervention in a claim from you and your expert resources (MCO, TPA, BWC) helps bring clarity to the claim process. Having the opportunity to discuss return-to-work options with your employee and their treating physician in the early days and hours after an injury helps all parties approach the claim proactively with the goal of early return-to-work.

Many employers maintain a readily available supply of injury reporting forms, contact information and a list of simple instructions. Make sure management and supervisors are familiar with these forms and are prepared to assist injured workers in completing the information and obtaining medical treatment if necessary. The injury-reporting process is an opportunity to build employee trust and confidence by demonstrating a well thought-out game plan for injury management.

Relationships with Local Medical Providers

Remember, the physician has final say regarding return-to-work timing for an injured employee, and your MCO serves all parties by ensuring the physician is as informed as possible when making decisions about your employees’ return-to-work status. Take notice of the medical treatment options available in your area and ask your MCO for recommendations and advice. Build relationships with key physicians. Invite them to tour your facility so they can personally see the types of job duties your employees perform. Their understanding of your business contributes to their decision-making process regarding return-to-work.

Consider other medical services you may need as an organization (pre-employment physicals, drug testing, etc.) and position your organization as a wise consumer. Ohio employers cannot require employees to seek treatment with a specified physician, but you can certainly recommend excellent options and establish relationships with service providers to foster communication and trust.


Culture of Health with Your Employees

It only makes sense that a healthier work force tends to have fewer injuries or, once injured, employees who return to work more quickly. BWC will soon introduce a workplace wellness grant program; take advantage of this to create your own healthier work force and positively impact your workers’ compensation experience.

Putting all the pieces together in your workers’ compensation puzzle will optimize a safe and efficient return-to-work program that ultimately benefits all parties.

Quinn Guist is the President of CompManagement Health Systems. He has been in the workers’ compensation industry for more than 23 years, including 15 years focused on managed care. He can be reached at (614)760-2416 or [email protected]