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]

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

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]

How new options can help Ohio employers reduce their workers’ compensation premiums

Mark MaGinn, Vice President, CompManagement, Inc.

Over the past year, the Ohio Bureau of Workers’ Compensation (BWC) has focused its attention on creating more program options for employers that encourage the correct behaviors and rewards them for achieving performance outcomes that reduce lost work days for injured employees while controlling costs.

“We highly recommend that, regardless of size, each employer in Ohio examines the many program options available today to assist them in lowering their premium expense, as many may fit right into their overall risk management plan,” says Mark MaGinn, vice president for CompManagement, Inc.

Smart Business spoke with MaGinn about the options available for your business.

Are there any discount programs an employer can participate in without having to wait until the next policy period?

In October, the BWC created a new program called Grow Ohio, which provides new employers the option of participating in a group rating program or receiving a 25 percent discount on their workers’ compensation premiums immediately. A new employer (defined as a new business entity or an out-of-state business that creates one or more jobs in Ohio on or after July 1, 2011) has 30 days from filing an initial application for workers’ compensation coverage to select an option. If it selects the group rating option, the employer receives an additional 30 days to enroll in a group program. In the past, it would have to wait until the next policy period to participate in group rating, losing the ability to save immediately on premiums. Any new employer entering the state between July 1, 2011, and June 30, 2012, may be eligible to receive up to a maximum discount of 51 percent for the 2011 policy year through the group option.


Will there be any new programs in 2012?

The BWC has several new programs available in 2012 that focus on improving return-to-work and management of associated claim costs. All fall under the Destination: Excellence program:

Industry Specific Safety Discount — establishes prevention strategies based on the unique nature of individual industries; employers can earn a 3 percent upfront discount for engaging in specific safety strategies like completing a risk assessment, providing data to BWC and completing safety activities that are intended to reduce accidents.

Transitional Work Grants — prepares employers to bring injured workers back in a modified capacity while allowing them to recover from injury; the program will allow employers to apply for grant money to implement a transitional work program, as well as earn up to a 10 percent bonus for utilizing the program in claims with lost-time.

Go Green Discount — program will provide employers with a 1 percent upfront premium discount (up to $1,000 every six months) for managing their account online.

Lapse-Free Discount — program is designed to encourage employers to pay premium in a timely manner and will provide a 1 percent upfront premium discount (up to $1,000 every six months) if an employer has not incurred a lapse in premium in the past 60 months; a one-time forgiveness to stay current can be utilized.

Private employers will be able to enroll in these programs until the last business day of April 2012 for the July 1, 2012, policy year. Public employers will need to enroll by the last business day in October 2012 for the      Jan. 1, 2013, policy year.

Are there any changes to be made to existing programs in 2012?

BWC has made several productive changes to existing programs for the July 1, 2012, private rate year and the Jan. 1, 2013, public rate year.

100 percent EM Cap — Participation has been expanded to allow credit-rated employers (employers with better-than-average loss experience paying a rate lower than the base rate); the 10-Step Business Safety plan requirements have also been replaced with a half-day industry-specific training session that needs to be completed in the first year and online training for subsequent years.

Small Deductible — Payments made under the deductible program will now be excluded from an employer’s experience calculation.

Group Retrospective Rating — Participants are now eligible to earn a 2 percent upfront discount for participating in a Safety Council program.

One Claim Program — The discount is reduced from 40 percent off of the base rate for four years to 20 percent year one, 15 percent year two, 10 percent year three and 5 percent year four.

Salary Continuation — is now compatible with all programs.

Can an employer participate in multiple programs?

Yes, many programs are compatible with each other, giving an employer the ability to ‘stack’ discounts together beyond the maximum credibility table discount (currently 53 percent for the private employer July 1, 2012, policy year). However, only programs that encourage best practices and are not cost-based are compatible. Employers should be aware that there are different eligibility requirements for each program, as well as expectations that must be met to obtain eligibility.

How does an employer know which programs to participate in to maximize its discount?

An employer should contact its workers’ compensation third-party administrator to request a ‘feasibility study.’ A feasibility study is a tremendous tool for an employer to evaluate the many different rating/discount programs in order to see how they can impact the costs associated with their workers’ compensation program. In addition, a feasibility study should include which rating programs can be ‘stacked’ together for greater discount potential if qualifications are met.

Mark MaGinn is the 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]

How claims impact your workers’ compensation premium

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

Ohio employers are required to provide workers’ compensation coverage for their employees to cover costs associated with workplace injuries. Very large employers may qualify to self-insure, but the majority of employers must obtain coverage through the Ohio Bureau of Workers’ Compensation’s State Insurance Fund.

As with any insurance, employers commonly want to know how much an allowed claim will actually cost them. The Ohio Bureau of Workers’ Compensation (BWC) sets rates and collects premium based on many different factors, including an employer’s loss history and participation in various alternative rating plans, such as group rating and group retrospective rating. This means that the answer to that question may not be as simple as one would expect.

Smart Business spoke to Randy Jones, senior vice president of TPA Operations for CompManagement, Inc., about how a workers’ compensation claim can affect your bottom line.

If I have a claim, when will I see the effect of that claim on my premium rate?

BWC sets rates using claims and payroll history from the oldest four of the most recent five years. For example, 2012 policy year rates are set using claims and payroll filed from 2007 to 2010. This means that a claim filed in 2011 would not actually affect your rates until the 2013 policy year.

The actual cost of the claims used in the rate calculation is determined at an annual survey date. The BWC survey date for private employers is Dec. 31 of the year preceding the rating year, and private employers’ rating years begin July 1. For example, for the July 1, 2012 policy year, claim costs are based on all claims incurred from 2007 to 2010 with costs incurred as of Dec. 31, 2011.

Because employers pay BWC premiums in arrears, these rates would be reflected in the premium payments made in February and August of 2013.

What types of claims costs does BWC use in calculating rates?

Claim costs fall into three main categories — compensation payments, medical payments and reserves. The most common compensation payments are reimbursements for lost wages from time off work. Medical payments are made directly to providers and then charged to the overall claim costs. The reserve is an estimate of future claims costs for both compensation and medical payments. Reserves will decrease as medical and compensation activity decreases. Over time, with no activity, the reserve will decrease to zero.

How are these claims costs factored into my rate calculation?

As explained earlier, BWC determines rates based on four years of historical claims and payroll information. BWC uses the actual payroll an employer has reported on its semi-annual payroll report to determine Expected Losses. These Expected Losses essentially tell BWC how much in claims losses an employer with that level of payroll in that particular industry is expected to have incurred over that same four-year period.

BWC then compares the actual claims costs incurred for that four-year period to the Expected Losses. If the employer’s actual losses are less than Expected Losses, the employer will pay at a rate below the established base rates. If the employer’s actual losses are higher than Expected Losses, the employer will pay at a rate above the established base rates.

One important consideration is that BWC looks at the total cost of the claims (not the total number of claims) on your policy, so many small, seemingly insignificant claims can add up to have the same effect on your rates as one very large, expensive claim such as a back surgery or knee replacement.

How can I reduce the costs of the claims used in my rate calculation?

The best way to reduce your chargeable claims costs is to prevent the claims from occurring in the first place. There are several simple steps an organization can implement to create an awareness of safety, such as:

  • Holding monthly safety training meetings focused on specific topics
  • Ensuring that adequate personal protective equipment is available and that employees know how to access and utilize it properly
  • Posting warning signs where appropriate as reminders for best safety practices, as well as marking all hazardous areas
  • Verifying that all equipment has appropriate safety devices installed and is checked regularly for proper working condition
  • Appointing someone within your organization to do a monthly safety checklist review of the entire workplace
  • Ensuring first aid kits are available and easily accessible throughout the building

Unfortunately, not all claims are avoidable through proper safety programs. Once you have an allowed claim, aggressive claims management from the onset can prevent costs from getting out of control. Also, the BWC has several alternative rating programs that offer discounts toward annual premiums, whether up front or retrospectively. These programs are Group Rating, Group Retrospective Rating, Individual Retrospective Rating, Small and Large Deductible Programs, Drug Free Safety Program, Safety Council, One Claim Program and Self Insurance.

Some programs are also compatible with one another, allowing employers to ‘stack’ discounts together up to the maximum discount allowed, determined annually by BWC. There are different eligibility requirements for each program, as well as expectations that must be met in order to participate and maintain eligibility. However, each program has the goal of rewarding an employer for its focus on safety in the workplace and controlling claim frequency and severity. Implementing workplace safety, aggressive claims management and cost containment strategies, and utilizing alternative rating programs will all help to offset the impact of a claim to your bottom line annual premium expense.

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 focusing on wellness can reduce workers’ comp costs

Vice President and Medical Director, CompManagement – OH

Ohio ranked 45th out of 50 states in the 2010 Gallup-Healthways Well-Being Index, which assesses the overall health of U.S. residents based on several qualifiers including emotional health, physical health, work environment and basic access to health care. Many employers are turning to preventive measures like wellness programs to improve their employees’ health and, in turn, reduce health care, disability and workers’ compensation costs.

“This is a big issue in workers’ compensation because we mostly deal with injury management, but if we don’t understand the preventive side and how it affects someone’s overall health, it will certainly delay recovery, impact disability and increase health care costs to employers,” says David D. Kessler, DC, MHA, CHCQM, vice president and MCO medical director — OH for CompManagement Health Systems, Inc., a workers’ compensation managed care organization (MCO).

“Wellness programs offer the ability to monitor physical or mental health issues, but they require the employer to be fully engaged in its work force. Senior leadership must understand the current status of its work force and, as that changes, be prepared to change course if needed.” Smart Business spoke with Kessler about how wellness initiatives are helping employers control costs.

Why are many employers focusing on wellness as an important part of their health care plans?

The biggest reason is today’s escalating health care costs. Wellness is seen as preventive care, used to reduce the severity, frequency or disability associated with illnesses and/or injuries. To see how preventive or wellness measures can control costs, consider the aging population. As employees age, they have more chronic conditions. That process can be time-consuming, with more frequent doctor visits and trips to the ER. Employers need to be aware of this and have a plan in place to address those issues.

Small employers may be at a disadvantage, because they don’t have the resources a large employer does. But they still have access to certain plans, or can group with other small employers. These employers can reach out to their insurance agent or MCO for guidance.

How can wellness and preventive health programs help companies reduce workers’ comp costs?

Studies show that health promotion programs have average absenteeism reductions of 28 percent, health care cost reductions of 26 percent and workers’ comp and disability reductions of 30 percent. It works because health management and risk management go together. Wellness and safety are two concepts most employers understand.

From a workers’ comp or MCO perspective, we need to have an injury management focus with disease management collaboration. We can’t do it all, but we need the ability to help an injured worker get back to work as soon as possible in a safe manner and understand the benefits of being engaged at work without risk to themselves or their coworkers.

How are health plans addressing wellness?

Traditionally you’ll have a health risk assessment (HRA) performed. That process accumulates aggregate data, not individual data, which would be a violation of HIPAA. So we have to make sure we look at the entire population, not just individuals. Looking at analytics through the HRAs is only the first step. Ongoing engagement and participation is critical to the success of any wellness program.

What are the keys to creating and implementing a successful wellness program?

Senior leadership has to be part of the process. They have to take a stand that this is what’s good for the organization. But to be successful, it also has to focus on what it can do for individuals both inside and outside the workplace. Maybe they want to play better golf, or be able to enjoy playing with grandchildren, or maybe they like to garden.

To that end, you have to know your audience. Some people value monetary incentives, some value paid time off to participate in a health program.

How can an employer ensure a program is a good fit for their company?

You have to have benchmarks. When you look at wellness programs, two factors are assessed: direct costs and indirect costs. Direct costs are easy to measure: simply look at medical costs and how the program impacted those costs. For example, if you ran a smoking cessation program, review how it decreased instances of pulmonary or cardiovascular disease.

Indirect costs include productivity, absenteeism and presenteeism. Measuring indirect costs requires defined and established parameters because senior management will want to track results related to the invested resources. Most studies show ROI anywhere from two-to-one to six-to-one. However, the length of time is anywhere from two to five years, which shows that wellness is not a short-term fix.

What types of issues should a wellness program focus on?

The three big issues are tobacco cessation, stress management and weight management. The good news is tobacco use is declining; the bad news is obesity is increasing.

Employers can research local health clubs and negotiate favorable rates. Some employers consider partial reimbursement of services, as long as there is a plan in place and some way to measure the outcome.

Some program components could be as simple as employee education. You could bring in an expert to do a presentation on yoga and other relaxation methods to reduce stress in the workplace. From a workers’ comp perspective, a heightened level of stress is a barrier to an employee’s recovery from injury or illness.

David D. Kessler, DC, MHA, CHCQM, is vice president and MCO medical director – OH for CompManagement Health Systems, Inc. He can be reeached at (614)760-1788 or [email protected]

How outsourcing unemployment claims can help your business

Heather Vogus, vice president of unemployment services, CompManagement, Inc.

Unemployment compensation is complicated, which is one reason employers often end up spending more on benefits than they should.
Heather Vogus, vice president of unemployment services for CompManagement, Inc., says employers should consider outsourcing the management of their unemployment claims to an expert.
“By having an experienced partner help manage their claims and control costs, an employer is able to focus on what they do best — manage their business, service their clients, and produce their products,” Vogus says.
Smart Business learned more from Vogus about how employers can improve their handling of unemployment claims.

Why would an employer consider outsourcing management of its unemployment claims?

In one year, American businesses overpaid $17.5 billion in unemployment compensation with the average company paying out 11.2 percent more than they needed. By working with a company that has experience managing claims and controlling costs, the employer has the freedom to focus on the issues that keep its business running successfully.

What are the common separation issues the Ohio Department of Jobs & Family Services (ODJFS) uses to determine eligibility?

ODJFS determines eligibility based on the final incident whether that is lack of work, voluntary quit, or discharged from employment. If the final incident is lack of work, a claim will be allowed. If it is a voluntary quit, unemployment benefits can be contested and the burden of proof lies on the claimant. If it is a discharge from employment, benefits may also be contested but the burden of proof becomes the responsibility of the employer.

In a voluntary quit situation, what are examples of when benefits may be granted, and how can an employer avoid that situation?

In a voluntary quit situation, the claimant has to prove that he/she had no other alternative but to resign. Benefits are normally denied on quit issues.  However, benefits may be granted for the following reasons:
* Medical issues (if the claimant is able to work elsewhere)
* Change in terms of hire (i.e. hours or location change)
* Promises made and not kept
* Not allowed to work out notice, not paid
* Poor or unsafe working conditions
* Valid complaint to appropriate source without valid resolution
* Harassment
To avoid a voluntary quit situation, an employer should ask for a written resignation and retain that resignation in the employee’s file for three years. The employer should also pay the employee throughout the duration of his or her notice. If an employee refuses or ignores a recall from layoff, send a certified recall letter to the employee. ODJFS views this effort as a valid job offer and changes the status to quit, and benefits should be halted.

How can an employer defend against a discharge situation?

An employer has the responsibility of proving that the claimant was discharged for just cause. Benefits may be granted by ODJFS if there is no documentation provided by the employer, if the employer fails to follow its own policies and procedures, and if there is an illness on the part of the claimant and/or an immediate family member.
Some helpful tips for an employer to be able to defend a discharge include:
* Complete consistent and concise documentation at all times.
* Retain an acknowledgement of policy and procedures by the employee.
* Obtain witness statements when appropriate.
* Do not delay with termination after the final incident has occurred.
* Adhere to your own company policy.
* Provide the specific reason that the employee is being terminated.
* Keep all documentation for three years after the employment separation.

How can an employer be successful at an administrative hearing?

Preparation before the hearing is crucial. Be sure to coordinate any persons with firsthand knowledge and have them ready to appear at the hearing. In addition, be sure to submit all documentation prior to the hearing that you wish to present. Be mindful that information that has already been submitted must be reintroduced at the hearing. During the hearing be sure to listen closely to the questions asked, keep all answers simple and straightforward, and answer only what was asked of you.

What services should be expected by an outside vendor that would manage an employer’s unemployment compensation program?

There are five major components that a full-service unemployment administration company should offer. An employer that wishes to have a minimal time investment while reaching maximum cost effectiveness should look for a company that provides these services:
n Program review, recommendation and design — the effectiveness of any claims management program is directly linked to an employer’s personnel policies, procedures, rules, regulations and disciplinary procedures.
* Claims administration and reporting — scrutinize claim data for accuracy, completeness and eligibility; monitor all benefit charge statements to ensure minimum exposure.
* Hearing representation — coordination of the preparation of the case for an administrative hearing including submission of documentation and witness attendance.
* Tax management — review calculation of tax rates and offer recommendations on how rates can be reduced.
* Training and continuing education — programs that include the necessary elements of hiring, discipline, separation, employee relations and claims handling procedures.

Heather Vogus is the vice president of unemployment services for CompManagement, Inc. Reach her at (800) 825-6755, ext. 2440, or [email protected]

When to consider self-insuring workers’ compensation coverage in Ohio

Bill Bradbury, Vice President of Self-Insured Sales and Client Services, CompManagement, Inc.

Self-insurance is an alternative rating plan offered by the Ohio Bureau of Workers’ Compensation (BWC) for large private and public employers that are in a position to take on the responsibility of paying all compensation and medical payments for their injured workers.

In return for taking on all that risk, self-insuring employers have more control over their program and can reduce their overall workers’ compensation costs.

“A self-insured employer can self-administer its own program or administer the program along with its third-party administrator, and can realize potential savings in comparison to state fund premiums paid directly to BWC,” says Bill Bradbury, vice president of Self-Insured Sales and Client Services for CompManagement, Inc.

Smart Business spoke with Bradbury about how to determine whether self-insurance is the right choice for your company.

What are the requirements in Ohio for becoming self-insured?

To be able to self-insure, BWC requires that an employer have a minimum of 500 employees within Ohio, pay premiums within the Ohio state fund for at least two years, show the ability to administer a workers’ compensation program, and demonstrate strong financial stability. Financial requirements differ between public and private employers for self-insurance qualification in Ohio.

What should an employer consider in regards to self-insuring?

First and foremost, an employer should contact its third-party administrator to request a ‘feasibility study.’ This study will identify both the savings and costs of becoming self-insured in order to help the employer make a sound financial determination.

An employer needs to consider if it is set up to handle a self-insured program and is able to meet all of the responsibilities required by BWC and also if it is comfortable with the liability assumed with paying benefits directly. Employers should understand that self-insurance is not an immediate quick fix to reducing their annual premium, but can be a long-term benefit towards reducing overall workers’ compensation costs.

What are the advantages of self-insurance?

Self-insurance as an option has a number of advantages for an employer such as:

n More control of your program, immediate payment of medical and compensation, and employee recognition on the delivery of benefits by your organization versus BWC.

n Cash flow and budget control: pay claims as they occur versus a premium paid every six months based on payroll and claim experience; reserve on claims can be established and managed with the same philosophy of the employer along with input from its TPA versus the state-funded MIRA system; and the ability to budget based on actual claim experience.

n Medical management: review claims for appropriateness of treatment, utilization of preferred provider organization (PPO) networks and control of medical provider requiring justification of treatment in writing; utilization of effective prescription program; and claim and nurse case management develop timely expectations on return to work and treatment plan.

n Analysis of expense: reports can be generated immediately with accurate analysis; and flexibility in reporting losses by employer, department, shift, causation codes, etc.

What are the disadvantages of self-insurance?

Employers should be cognizant of three areas when approaching self-insurance:

n Financial stability: employer has unlimited claims liability (without purchase of excess insurance) as there is no maximum value of a loss as there is within the Ohio state fund system; responsibility of payment of claim expenses (including allocated expenses); and payment of excess insurance premiums and BWC self-insured assessments.

n Loss of State Fund Benefits: an employer no longer receives managed care organization services or BWC Safety & Hygiene services that are covered by its annual premium; in addition an employer can no longer receive handicap reimbursements and rehabilitation funds, and is no longer able to participate in premium discount programs offered to state fund employers.

n Responsibilities: all self-insured employers are expected to make timely payments of compensation and medical benefits, have an internal claims administrator, have a consistent date stamping process and ability to maintain claim files in an orderly manner, and will be audited by the BWC to ensure compliance with all program requirements.

How do I know if my organization is a good candidate for self-insurance?

An employer can get started by performing a simple financial measurement comparing its premium paid to the BWC for the past four years to its actual claim losses (as shown on its Experience Report provided annually by BWC). If premiums paid are higher than actual claim losses and it is a sizable employer, then a ‘feasibility study’ that can typically be prepared by any full-service third-party administrator should be completed. That study will compare an employer’s estimated state fund costs to the estimated costs of a self-insured program within a projected five-year period.

Be sure that all costs are captured in the feasibility study including those for BWC assessments, the self-insured guaranty fund, excess insurance and claims management administration fees. Investment earnings should also be accounted for.

In the end, if the savings projected outweigh the costs associated with participating in the state fund at a risk tolerance level acceptable to your organization, self-insurance may be a good option to affect your overall bottom line operational costs.

Bill Bradbury is the vice president of Self-Insured Sales and Client Services for CompManagement, Inc. Reach him at (800) 825-6755, ext. 2407, or [email protected]

How safety in the workplace benefits employees and the company’s bottom line

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

Designing programs and using best practices to keep your employees safe may feel like the right thing to do, but this decision does more than just ease your mind.

“By implementing best practices and a safety management program in the workplace, employers can not only protect their employees and prevent incidents from occurring, but they can also reduce their annual workers’ compensation costs,” says Randy Jones, the senior vice president of TPA Operations for CompManagement, Inc.

Smart Business spoke with Jones about how improving safety in the workplace benefits both employees and the bottom line, and about what employers can do to improve workplace safety.

Why should organizations focus on safety and how does doing so benefit an organization’s employees and its bottom line?

The most valuable asset that any organization has is its people. Employers should implement and use safety best practices and a safety management program in the workplace. By using those tactics, employers protect their employees and prevent incidents from occurring while also reducing their workers’ compensation costs.

Claim costs are one of the three major factors that determine an employer’s annual premium with the Ohio Bureau of Workers’ Compensation (BWC). Reducing and/or preventing workplace injuries and illnesses from happening dramatically impacts costs.

What are some steps organizations can take to improve safety?

In order for any safety program to be successful, an employer must be committed to safety. It is absolutely imperative for management to support the safety process.

There are several simple steps that an organization can implement to create an awareness of safety in their organization, such as:

  • Holding monthly safety training meetings focused on specific topics.
  • Having an emergency evacuation plan in place and practicing it regularly.
  • Ensuring that your organization always has adequate personal protective equipment and that employees know how to access and utilize properly.
  • Posting warning signs where appropriate as reminders for best safety practices, as well as marking all hazardous areas.
  • Ensuring that all equipment has appropriate safety devices installed and is checked regularly for proper working condition.
  • Appointing someone within your organization to do a monthly safety checklist review of the entire workplace.
  • Providing employee recognition for safe work habits.
  • Ensuring that first aid kits are available and easily accessible throughout the building.

Where should organizations look for safety training programs?

Many third-party administrators have in-house safety and loss control departments that offer a variety of onsite and online training programs. In addition, training is available from the BWC’s Division of Safety & Hygiene.

What types of safety grants are available and how can an organization apply for one?

The Ohio BWC has a Safety Intervention SafetyGRANTS program that is available to state-funded employers in business for at least two years. This program awards safety grants to employers for the purchase of ergonomic, safety and/or industrial equipment. Employers are eligible for a two-to-one matching grant up to a maximum of $40,000, which equates to a total of $60,000 ($20,000 from the employer and $40,000 from the BWC). The BWC requires that the employer provide ongoing documentation, case studies and access for staff to evaluate in order to determine the cost effectiveness of these interventions in reducing occupational injuries. The BWC also offers a safety grant for the implementation of a drug-free safety program and just recently announced a safety grant available for the wholesale/retail trade sector for the implementation of safety controls in their workplaces.

What are the advantages of participating in safety councils?

The BWC has more than 80 sponsored safety councils located throughout Ohio. By becoming an active member, an employer is able to receive a 2 percent rebate on its annual workers’ compensation premium. An additional rebate may be earned if your workplace reduces either the severity or frequency of injuries by 10 percent or keeps both at zero.

To qualify for the rebate, an employer must meet the following eligibility requirements: join a local safety council by July 31, 2011; attend 10 safety council meetings (at least eight through the local safety council; the additional two hours may be through attendance at BWC safety training courses or industry specific training); send a qualified senior-level manager to a safety council sponsored meeting; and submit semiannual workplace accident reports for the 2011 calendar year.

The program does not apply to self-insuring employers, state agencies and employers enrolled in the BWC group retrospective rating programs. Employers enrolled in the group rating program are eligible for the 2 percent performance rebate in addition to their group rating discount, but are not eligible for the 2 percent participation rebate.

How can an organization determine whether it is eligible for these safety improvement programs?

Your third-party administrator’s safety and loss control department should be able to review the different safety improvement programs with you and assist in identifying which ones are the best fit for your organization and management team. In addition, resources are available from the BWC’s Division of Safety & Hygiene at or (800) OHIOBWC.

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