Tag Archives: delaware

Oregon Study Shows Which States Are Next

The biennial study on workers’ compensation premium rates issued by the Oregon Department of Consumer and Business Services (DCBS) was released last week, and, as always, is worthy of a review by those of us entrenched within the industry. The study ranks all 50 states and Washington, D.C., based on rates that were in effect Jan. 1, 2014. This year’s results show that major reforms don’t always gain the results that were intended or marketed to the industry; and while the results may not accurately reflect legislative intentions of the past, the report may be a better predictor of major reforms to come.

The study shows that, despite extensive reforms designed to lower costs, California now has the most expensive rates in the nation, followed by Connecticut. North Dakota had the least expensive rates. In the Northwest, Idaho’s rates were the 14th most expensive, followed by Washington. Oregon researchers also compared each state’s rates to the national median (midpoint) rate of $1.85 per $100 of payroll — California, for instance, was almost twice the median

According to Mike Manley, one of the co-authors of the survey, “We continue to see a trend in the distribution of state index rates in our study clustering in the middle of the distribution. A record 21 states are within plus or minus 10% of the 2014 study median. This makes the rank values more volatile from one study to the next. I would recommend that states look also to their ‘Percent of study median’ figure for comparisons over time.”

Because states have various mixes of industries, the study calculates rates for each state using a standard mix of the 50 industries with the highest workers’ compensation claims costs in Oregon. Details about how the study was conducted can be found here. A summary of the study was posted Wednesday, Oct. 8; the full report will be published later this year.

The summary report, available here, provides the complete ranking of the states premium rates. I have taken that data and added a comparative column that shows at a glance how far up or down the scale a state has moved since the last report in 2012. The table presents an interesting view, particularly juxtaposed with the knowledge of what states have undergone significant reforms in the past few years.

table1bob

We can see that there were major drops in premium rank for both Kentucky and Wisconsin. Kentucky moved from 22nd-highest in the nation to 40th, improving by 18 positions. Wisconsin moved down 11 spots, from 12th-highest to 23rd. While Wisconsin did enact some changes in 2012, neither state is considered to have been a major reform state over the last few years.

For a couple of those states undergoing dramatic reforms, Oklahoma and Tennessee, it is too early to tell the effect, as they are just implementing changes this year. Others, however, including California and Kansas, saw premium costs as a comparative rise despite reforms intended to do otherwise. Illinois, another reform state, did see some positive movement, but it is probably not statistically significant given the weight of the costs and issues in that state.

I would postulate based on this report that people in New Mexico, Hawaii, Missouri and Delaware may be thinking of what changes should be in order, because they had dramatic negative movement on the scale this year. Even if past reforms overall are not creating significant improvement in these numbers, I am pretty sure they will be a better predictor of what states may be facing reform in the future.

Oregon has conducted these studies in even-numbered years since 1986, when Oregon’s rates were among the highest in the nation. The department reports the results to the Oregon legislature as a performance measure. Oregon’s relatively low rate today reflects the state’s workers’ compensation system reforms and its improvements in workplace safety and health.

Here are some key links for the study/workers’ compensation costs:
• To read a summary of the study, go here.
• Prior years’ summaries and full reports with details of study methods can be found here.
• Information on workers’ compensation costs in Oregon, including a map with these state rate rankings, is here.

Same-Sex Marriage: An Update on Handling Claims

The pace of legislative and judicial activity surrounding same-sex marriage has quickened.

Currently, 17 states plus the District of Columbia allow same-sex couples to marry. Several states have expanded the legal rights available to spouses in same-sex relationships through civil unions and domestic partnerships. On June 26, 2013 the U.S. Supreme Court ruled in  Windsor v. United States, No. 12-307 that section 3 of the federal Defense of Marriage Act (DOMA), which defines marriage, is unconstitutional. Since this decision, several state attorneys general have announced that they will no longer defend their state’s same-sex marriage bans.

Here is an update on the issue of same-sex marriage and claims handling considerations:

Same-Sex Marriage Overview

In the states that recognize these unions, the legal status of same-sex marriages is identical to opposite-sex marriages.

The first states that allowed same-sex marriage did so as a result of court decisions—Massachusetts in 2004, Connecticut in 2008 and Iowa in 2009. However, most states and the District of Columbia provided for same-sex marriage through legislation. Below is a summary of changes in the states over the past two years on this fast-moving issue:

2012

Washington

Legislation establishing same-sex marriage was approved February 2012, but opponents gathered enough signatures to put the issue on the November 2012 ballot. Voters upheld the law, and same-sex marriages began on Dec. 6, 2012.

Maryland

Gov. Martin O’Malley signed same-sex marriage legislation into law on March 1, 2012. However, opponents of the legislation obtained enough signatures to file a referendum challenging the law during the November 2012 election. The law was upheld by the voters and became effective on Jan. 1, 2013.

Maine

During the November 2012 election, voters approved a ballot measure legalizing same-sex marriage. The measure became effective Dec. 29, 2012.

New Jersey

The legislature passed a same-sex marriage bill in February 2012, but the measure was vetoed by Gov. Chris Christie. A legal challenge was raised to the state’s law that only provided civil unions for same-sex couples, and a lower court ruled that the state had to allow same-sex couples to marry beginning Oct. 21, 2013. After the New Jersey Supreme Court denied an appeal for delay, Gov. Christie announced that the state would drop its appeal, making same-sex marriage legal in New Jersey.

2013

Rhode Island

Gov. Lincoln Chafee signed legislation that legalized same-sex marriage, eliminated the availability of civil union and recognized civil unions and same sex marriage from other states on May 2, 2013. This bill became effective Aug. 1, 2013.

Delaware

Gov. Jack Markell signed into law on May 7, 2013, same-sex marriage legislation that also recognized civil unions and same-sex marriage from other jurisdictions. The law became effective July 1, 2013.

Minnesota

Following the defeat of a constitutional prohibition of same-sex marriage during the November 2012 election, the legislation passed a bill allowing same-sex marriage May 2013. The law went into effect on Aug. 1, 2013.

California

On June 26, 2013, the U.S. Supreme Court declined to decide the California challenge to Proposition 8, concluding that it had no authority to consider the question in the case. The effect of that decision was to reinstate the federal district court decision overturning Proposition 8, thus allowing same-sex marriage in California.

Hawaii

During a special session held in October and November 2013, same-sex marriage was passed after both houses agreed to the addition of an amendment that strengthened the exemption of religious organization from being required to provide facilities, goods or services for the marriage or celebration of the marriage if it violates their religious beliefs. Gov. Neil Abercrombie signed the bill on Nov. 13, 2013, and it became effective on Dec. 2, 2013.

Illinois

Gov. Pat Quinn signed Senate Bill 10 into law on Nov. 20, 2013, and same-sex marriages will be available beginning June 1, 2014. A ruling by a U.S. district judge allowed residents of Cook County, Ill., to begin marrying on Feb. 21, 2014.

New Mexico

The New Mexico Supreme Court ruled on Dec. 19, 2013, that same-sex couples are allowed to marry. The ruling went into effect immediately.

Of the 33 states that still prohibit same-sex marriage, 29 have done so through constitutional provisions. Efforts to overturn state constitutional prohibitions have been initiated in the federal courts and have moved, or are about to move, into four federal appellate courts.

  • The Virginia case, Bostic v. Rainey, is expected to be appealed to the U.S. Court of Appeals for the 4th Circuit in Richmond, Va.
  • The Oklahoma case, Bishop v. U.S., 04-cv-848, U.S. District Court, Northern District of Oklahoma (Tulsa) is to be heard before the U.S. Court of Appeals for the 10th Circuit in Denver, Colo., along with the Utah case, Kitchen v. Herbert, 13-cv-00217, U.S. District Court, District of Utah (Salt Lake City). Oral arguments are scheduled to be heard separately for these two cases in April 2014.
  • The Nevada case, Sevcik v. Sandoval, 12-17668, will be heard before the U.S. Court of Appeals for the 9th Circuit in San Francisco, Ca.

In all four cases, the rulings are stayed pending appeal, meaning marriages cannot occur at this time. It is anticipated that the U.S. Supreme Court will be again asked to review this issue in 2015 or soon thereafter. Meanwhile, more action through legislation and ballot initiatives is expected to occur this year.

Civil Unions

A civil union is a category of law created to extend rights to same-sex couples. These rights are recognized only in the state where the couple resides, and no federal protection is included.

In 2013, the Colorado legislature passed a bill to establish civil unions for same-sex couples. The bill also provides recognition of civil unions from other jurisdictions. Gov. John Hickenlooper signed  SB 11 into law on March 21, 2013, and it became effective on May 1, 2013.

Delaware and Rhode Island replaced their civil union provisions with same-sex marriage, as previously occurred in Connecticut, New Hampshire and Vermont.

In Hawaii, civil unions remain available to same-sex and opposite-sex couples alike. The status of civil unions in Illinois and New Jersey are not yet clear with the legalization of same-sex marriage.

Domestic Partnerships

Domestic partnership is a civil contract between same-sex or opposite-sex, unmarried, adult partners who meet statutory requirements. Laws vary among states, cities and counties for domestic partnerships. Several states register these partnerships.

Washington has recently announced that registered domestic partnerships for same-sex partners will be converted to marriages on June 30, 2014, if marriage has not occurred or the partnership has not been dissolved by that time. The conversion will not apply to the domestic partnerships of heterosexual couples.

Reciprocal Beneficiaries

A reciprocal beneficiary agreement is a consensual and signed declaration of relationship for two adults unable to marry each other. Reciprocal beneficiary laws in Colorado, Hawaii and Maryland allow some benefits of marriage such as workers’ compensation survivor and health-related benefits.

Claim-Handling Considerations and Suggestions

The definitions of “spouse,” “dependent” and “marriage” are changing, and these changes affect the handling of casualty claims as we determine who is an eligible dependent or has legal standing to file certain causes of action. It is important that we are mindful of the state laws and any case law in the particular jurisdiction relating to same-sex unions.

Some state insurance departments have issued bulletins regarding their compliance expectations. For example, the Minnesota Departments of Commerce and Health issued  Administrative Bulletin # 2013-3 to advise property and casualty insurers that any policy issued in Minnesota on or after Aug. 1, 2013, providing dependent coverage for spouses must make that coverage available on the same terms and conditions regardless of the sex of the spouse. The bulletin reminds insurers that defining a spouse in a way that limits coverage to an opposite-sex spouse would be discriminatory and unfair and a violation of Minnesota Statutes section 72A.20, subdivision 16.

When evaluating the eligibility of dependents, one area of uncertainty involves same-sex couples that have a valid marriage but move to a state that does not recognize their marriage. The U.S. Supreme Court decision in Windsor did not address Section 2 of DOMA, which does not require states to give effect to same-sex marriages performed under the laws of other states. In the past, most federal laws looked to the state of residence at the time benefits are sought, rather than where the marriage occurred.

In response to the U.S. Supreme Court DOMA decision, the U.S. Department of Labor published  Technical Release  2013-4 on Sept. 18, 2013. This release indicates that the rule of recognition to be applied is based on the state where the marriage was celebrated, regardless of the married couple’s state of domicile. Guidance is also provided on the meaning of “spouse” and “marriage,” as these terms appear in the provisions of the Employee Retirement Income Security Act of 1974 (ERISA), and the Internal Revenue Code that the department interprets.

This release likely also applies to the following four major disability programs administered by the Department of Labor's Office of Workers’ Compensation Programs (OWCP):

  • Longshore and Harbor Workers' Compensation Program and its extensions, including the Defense Base Act
  • Energy Employees Occupational Illness Compensation Program
  • Black Lung Benefits Program
  • Federal Employees' Compensation Program

Additional recommendations include:

  1. Ascertain whom the employer shows as the spouse.
  2. In addition to determining marriage or civil union, domestic-partnership registration should be confirmed.
  3. If interviewing a claimant in a jurisdiction that recognizes same-sex unions, in addition to “spouse” add the terms “domestic partner or designated beneficiary” to the questions.
  4. It might be necessary to find out when and in what state the marriage occurred.
  5. Any questions or concerns should be discussed with your supervisor, team leader, manager or defense attorney.

Sometimes, our duties as claims examiners are affected by laws seemingly unrelated to insurance. It is important that we consider the impact of headlines and changes in the law on our handling of workers’ compensation claims.

Oklahoma And Beyond: Significant State Workers' Compensation Reforms In 2013

The cost of providing workers’ compensation insurance is one of the top issues for companies of all sizes and across industries. Because it is regulated at the state level, companies need to stay abreast of issues in any state in which they do business. To date in 2013, nine states have seen significant workers’ compensation reform bills signed into law. Highlights from the legislation in each of the nine states follows.

Oklahoma
Oklahoma’s workers’ compensation reform laws have received the most attention lately because of the inclusion of an opt-out provision, known as the Oklahoma Option. This legislation takes effect on February 14, 2014, and applies only to injuries occurring on or after January 01, 2014.

The ability to opt out has been a significant component of the Texas workers’ compensation system for a number of years. Wyoming also has a limited opt-out provision. Approximately one-third of employers in Texas participate in the opt-out, including many large national retailers. The significant cost savings employers saw in Texas was one of the driving forces behind the Oklahoma Option.

The Oklahoma Option’s application form is significantly different from that in Texas. Employers that opt out in Texas cannot simply endorse their excess liability policy to cover Oklahoma. Rather, employers in Oklahoma that choose the option are required to provide a written benefit plan that serves as a replacement for the workers’ compensation coverage. This benefit plan must provide for full replacement of all indemnity benefits offered in the workers’ compensation system. The plan can be self-insured, or coverage can be purchased from a licensed carrier. At this time, carriers are developing policies to provide both first-dollar and excess self-insurance coverage for the benefit plans under the Oklahoma Option.

The key component of the Oklahoma Option for employers is that it gives them full control of the medical treatment through their benefits plan. More than 60% of workers’ compensation costs are medical treatment. With full medical control, employers will be able to ensure that injured workers receive the appropriate medical care from medical providers who follow widely accepted occupational medicine treatment protocols. This will eliminate doctor shopping, which is a significant cost driver in many states. The hope is that full employer medical control will eliminate unnecessary treatment, produce shorter periods of disability, and ultimately improve medical outcomes for the injured workers.

Unlike the Texas opt-out, the Oklahoma Option does not permit employees to pursue a negligence action through the civil courts. Workers’ compensation is usually the exclusive remedy for an injured worker for any work-related injuries. In other words, the employee cannot usually pursue a separate tort action in civil court. In Texas, injured workers for employers who opted-out are free to pursue remedy in the civil courts. With the Oklahoma Option, any litigation must proceed through the normal workers’ compensation administrative processes. This exclusive remedy has a narrow exception for injuries that were intentionally caused by the employer. Attorneys will have to overcome this very high burden of proof in order to pursue a civil complaint for a work injury.

Another difference between the Oklahoma and Texas opt-out scenarios is that the Oklahoma system is backed by a guarantee fund, which provides benefit payments in the event that a carrier or self-insured employer becomes insolvent and is unable to continue paying claims. The Oklahoma Option coverage offers guarantee funds for both self-insured employers and carriers. These are separate from the workers’ compensation guarantee funds.

The Oklahoma reforms also include the switch from a court-based system to an administrative system. Oklahoma was one of the few remaining states where all workers’ compensation disputes were adjudicated in the civil courts. Civil litigation is both very expensive and time-consuming. This change to an administrative system should reduce employer costs associated with litigation and produce more timely decisions, which are key elements of controlling claims costs.

Overall, the changes made in Oklahoma are positively viewed by employers and should improve Oklahoma’s ranking as a top ten state for loss costs.

Delaware
The recently passed reform bill in Delaware was designed to control medical costs and encourage return-to-work efforts.

Medical cost savings will be achieved by:

  • Suspending for two-years the annual inflation increase on medical fees.
  • Lowering the inflation index on hospital fees.
  • Creating new cost-control provisions on pharmaceuticals.
  • Establishing a statute of limitations for appealing utilization review decisions.
  • Expanding the fee schedule to capture items that were previously exempted.

Other changes included more emphasis on return-to-work efforts, which will be considered in calculating the workplace credit safety program.

These changes are expected to lower employer workers’ compensation costs in Delaware.

Florida
The use of physician-dispensed medication has been a significant issue in Florida workers’ compensation. Physicians were charging several times what the same medication would cost from a retail pharmacy, and the costs were not regulated by a fee schedule. SB 662, which was recently signed into law, creates a maximum reimbursement rate for physician-dispensed medication of 112.5% of the average wholesale price, plus an $8 dispensing fee. Although the bill is expected to produce cost savings for employers in Florida, the fee schedule amount for physician-dispensed medications is still significantly higher than that for the same medications at retail pharmacies. There are savings; however, this will continue to be a cost driver in the state.

Another issue impacting workers’ compensation costs in Florida is that the First District Court of Appeals, in two separate rulings, has found sections of the workers’ compensation statutes unconstitutional. Under the Westphal decision (Bradley Westphal v. City of St. Petersburg, No. 1D12-3563, February 2013), the court decided that the 104-week cap on temporary total disability (TTD) benefits was “unfair” and violated the state’s constitutional right to access the court and “receive justice without denial or delay.” Injured workers are currently limited to 260 weeks of TTD benefits, which was the cap under the prior law. There is concern that the arguments used in Westphal could also be used to invalidate the 260-week limit. The Court has agreed to review this decision en banc, so the ruling is not final.

In the Jacobson case (Jacobson v. Southeast Personnel Leasing, Case 1D12-1103, June 5, 2013), the court found unconstitutional a section of the Act that prevented injured workers from hiring an attorney for motions for costs on disputed claims, as this violated their right to due process.

The Jacobson case is very narrow in scope and has limited impact, but the Westphal decision has potential to significantly increase employer costs. With these cases, there is growing concern in Florida that attacks on the constitutionality of the workers’ compensation statutes will continue, further eroding prior reforms that produced significant employer savings.

Despite savings produced via the fee schedule for physician-dispensed medications, if the court upholds the decision in Westphal, the associated costs will outweigh any savings from the recent legislation.

Georgia
Legislation passed in Georgia should have a positive impact on workers’ compensation costs for employers. Effective July 1, 2013, medical benefits for non-catastrophic cases are capped at 400 weeks from the date of accident, whereas previously, injured workers were entitled to lifetime medical benefits for all claims. This change significantly shortens the claims tail for non-catastrophic cases. By eliminating exposure for lifetime medical coverage on all claims, it also reduces the potential exposure on any Medicare Set-Aside, as Medicare’s rights on a workers’ compensation claims are confined to the parameters of the state law.

In order to receive this concession from labor on the medical costs, employers agreed to increase the indemnity rates for temporary partial disability (TPD) and TTD. The indemnity rate increases are as follows:

  • TPD: $334 to $350 for a period not exceeding 350 weeks from the date of injury.
  • TTD: $500 to $525 per week for a period not exceeding 400 weeks from the date of accident.

Indemnity rates in Georgia had not increased since 2007.

Another change involves a requirement that an injured worker make a legitimate effort to return to work when a modified-duty position is offered. The employee must complete a full work shift or eight hours, whichever is longer. If the injured worker feels that he or she is unable to work beyond that, benefits must be reinstated and the burden is on the employer to show the work offered was suitable. If the employee does not complete that full shift, then the burden of proof does not shift back to the employer and the employer can suspend benefits.

The cost savings from capping the medical benefits is expected to slightly outweigh the cost increases associated with the indemnity maximum rate increase. Thus, the net impact to employers should be a slight reduction in workers’ compensation costs.

Indiana
Research indicates that workers’ compensation medical fee schedules lower medical costs. In Indiana, legislation was passed that establishes a hospital fee schedule at 200% of Medicare rates. This is consistent with other states that base their fee schedules on Medicare rates. The bill also capped the price for repackaged drugs and surgical implants. Since repackaged drugs and surgical implants were previously outside the fee schedule, these caps will help to reduce employer costs. The fee schedule takes effect on July 1, 2014.

The legislation also included changes to indemnity benefits:

  • Gradual average weekly wage (AWW) increase of 20% over three years, beginning with a 6% increase on July 1, 2014, and up to 20% over current AWW by July 1, 2016.
  • An increase of 25% in permanent partial impairment or disability (PPI or PPD), from $1,400 per degree from 1 to 10 degrees to $1,750, gradually over three years. Higher PPI ratings, above 10 degrees, increased from 16% to 22% incrementally over the same period.

Indiana had not increased its maximum indemnity benefit for many years, so the general consensus is that the increase was overdue.

Given that medical costs typically account for 60% of the total workers’ compensation expenditure, the decrease in medical costs from these reforms should offset the increase in indemnity benefits. The expectation is that this legislation will produce a small degree of savings for employers.

Minnesota
Minnesota joined most other states in amending its statutes to allow for mental-mental injuries (a psychiatric disorder without a physical injury). The law provides that the employee must be diagnosed with post-traumatic stress disorder (PTSD) by a licensed psychiatrist or psychologist in order to qualify for benefits. However, PTSD is not recognized as a work injury if it results from good faith disciplinary action, layoff, promotion/demotion, transfer, termination, or retirement.

Other changes include a cap on job development benefits and a restructuring of how attorney fees are paid. There is also an increased cost-of-living adjustment (COLA) for permanently disabled workers and an increase on the maximum indemnity rate. Lastly, rulemaking authority is now in place to include narcotic contracts as a factor in determining if long-term opioid or other scheduled medication use is compensated.

The job development benefits and narcotic use in Minnesota are significant cost drivers, so these are positive limitations for employers. However, the increase in indemnity rates, COLA, and coverage of mental-mental claims all add to employer costs. Thus, a slight overall increase in claim costs is expected as the result of the legislation passed in 2013.

Missouri
Missouri’s reforms were focused on addressing the insolvent second injury fund and returning occupational disease claims to the workers’ compensation system.

The Missouri Second Injury Fund has been plagued by problems for several years. It was heavily utilized by injured workers to supplement permanent partial disability awards. The fund became insolvent when prior reforms capped assessments that were supporting it while not reducing the claims that were covered by it. Under these new reforms, which are effective January 01, 2014, PPD claims are excluded from the second injury fund. Access to the fund will be limited to permanent total disability (PTD) claims where the total disability was caused by a combination of a work injury and a pre-existing disability. In addition, employer assessments to cover the funds’ liabilities are increased by no more than 3% of net premiums. These increased assessments expire December 2021.

The new law also indicates that occupational diseases are exclusively covered under the workers’ compensation statutes with some exceptions, which are noted below. The Act also establishes psychological stress of police officers as an occupational disease under workers’ compensation.

Bringing occupational disease claims back under workers’ compensation came at a cost. Trial lawyers in Missouri had significant influence in crafting this legislation. The act defines “occupational diseases due to toxic exposure” and creates an expanded benefit for occupational diseases due to toxic exposure other than mesothelioma — equal to 200% of the state’s average weekly wage for 100 weeks to be paid by the employer. For mesothelioma cases, an additional 300% of the state’s average weekly wage for 212 weeks shall be paid by employers and employer pools that insure mesothelioma liability. These expanded benefits are in addition to any other traditional workers’ compensation benefits that are paid. Also, these enhanced benefits are a guaranteed payout to the injured worker or his or her estate. It is very unusual to see guaranteed payout of benefits in workers’ compensation, so there is potential that this will lead to an increase in toxic exposure claims being filed under workers’ compensation.

In addition, employers will no longer have subrogation rights on toxic exposure cases. This is a potentially significant issue. Often, attorneys do not bother filing for workers’ compensation on such cases, as their focus is on larger awards available on the tort side. Attorneys know any workers’ compensation benefits have to be repaid under subrogation. There is concern from some employers and defense attorneys that eliminating subrogation rights will actually encourage filing more toxic exposure claims under workers’ compensation.

The establishment of a “Meso Fund” is also creating confusion. Employers must opt into this fund, and it is supported by additional assessments against the employers in an amount needed to cover the liabilities. If an employer does not opt into the Meso Fund, their liability for a mesothelioma claim is not subject to the workers’ compensation exclusive remedy and action may be pursued in the civil courts. Most employers do not have exposure to mesothelioma claims, so it is expected that the only employers who will join the Meso Fund are those who frequently see such claims and are looking to spread their risk to others.

Between the increased assessments, expanded benefits for toxic exposure, and the loss of subrogation on toxic exposure cases, it is expected that this legislation will increase costs for employers in Missouri.

New York
Governor Cuomo has indicated that the workers’ compensation reform legislation he recently signed into law will reduce employer costs by about $800 million annually. These savings are derived primarily by streamlining the assessment collection process and eliminating the 25-a fund and its associated assessments. New York’s workers’ compensation assessments are the highest in the nation, so employers welcome any relief in this area.

Many employers are questioning whether this legislation provides any real savings. Because the streamlining process is not known, whether or not assessments will be significantly lowered is still unclear.

The 25-a fund covered claims that were reopened for future medical treatment. Eliminating this fund does not save employers money. As occurred when the 15-8 fund (second injury fund) was eliminated under the last reforms, the claims previously paid by these funds will now be paid by employers directly, so there is no net savings realized. In addition, running off the 15-8 and 25-a funds will take several years, so the assessments — in particular those for the 15-8 — will continue. Because of the continued assessments, shutting down these funds will actually increase employer costs in the short-term. The long- term impact should be cost neutral, with the employers paying the claim costs directly, instead of through assessments.

Finally, the minimum weekly indemnity benefit was increased from $100 to $150. This will have a negative impact on employers who hire part-time workers earning near the minimum wage.

Until the impact of the streamlined assessments is known, it is impossible to quantify the overall impact this bill will have on employers. However, after the legislation passed, the New York Insurance Rating Board recommended a double-digit rate increase for the second consecutive year, indicating that they are skeptical the law will produce significant savings.

Tennessee
Tennessee also moved its workers’ compensation dispute resolution process from a court-based system to an administrative system, leaving Alabama as the only state that still uses the trial courts for all such litigation. As mentioned in regard to Oklahoma, this should reduce employer costs associated with litigation and provide more timely resolution of disputes.

Tennessee also amended its law to provide for strict statutory construction of the Workers’ Compensation Act. The law previously required that close disputes be adjudicated in favor of the injured worker. The switch means that the administrative courts no longer can favor either party and must strictly follow the statutes. In theory, this should lead to a much narrower interpretation of the statutes and reduce the courts’ expansion of what is covered under workers’ compensation. However, strict construction can work against the employer if the language in the statutes is vague. For example, several years ago Missouri switched to strict construction, which resulted in some unintended consequences. The courts in Missouri issued many decisions that were unfavorable to employers because the statutes in Missouri did not strictly indicate that occupational disease was subject to the exclusive remedy of workers’ compensation or that permanent total disability benefits stopped at the death of the injured workers.

Calculation of permanent partial disability (PPD) has also been changed in the new Tennessee law. The multipliers for not returning an injured worker to employment have been eliminated in favor of a system based primarily on the impairment rating. Overall, PPD is expected to decrease under the new system. Until cases are adjudicated under the new system, however, this remains to be seen.

Tennessee also now requires a higher burden of proof on causation. Employees must prove that the workplace is the primary cause of any injury, meaning that the employment contributed more than 50% percent in causing the injury. This is expected to significantly reduce claims where an employee’s pre-existing conditions are the main cause of the work injury.

Finally, a medical advisory committee was created to develop treatment guidelines for common workers’ compensation injuries. In other states, these treatment guidelines have helped to lower medical costs. Until these guidelines are actually in place, the exact impact is unknown.

The workers’ compensation legislation in Tennessee was designed to make the state more attractive for businesses. Employers should see lower costs as the result of the reforms.

Pending Legislation
At the time of this article, some state legislatures were still in session with pending workers’ compensation bills. It is important for companies to stay informed on state-level changes to workers’ compensation laws as they can have significant impact on costs and approaches to managing this key risk area.

Author’s Note: I would like to thank members of the National Workers’ Compensation Defense Network (NWCDN) for their assistance with this article. They are a tremendous resource in my efforts to monitor workers’ compensation developments nationwide.

Predictive Analytics In Workers' Compensation Made Easy And Affordable

It's a safe bet that claims will not have a happy ending if the treating physician has a history of being associated with poor claim outcomes. In fact, physicians rated poorly in analytic studies based on past performance are 100% predictive of high costs and inferior outcomes in future claims where they are involved. The question is, how can those providers be identified so they can be avoided?

Applying Analytics
Whether the cause of poor performance is misunderstanding Workers' Compensation or deliberate fraud, the claim results will be dismal. Nevertheless, in order to analyze provider performance, one must know where to find the data, what to look for, and how to apply the knowledge gained from analysis to achieve improved results.

Data can offer a clear picture of actual provider performance. Evaluating physician and other provider performance is a matter of scrutinizing the data using industry research to learn what to look for. In fact, leveraging published industry research is the way to skip the laborious and expensive regression analyses and other predictive modeling methods.

Industry Research Reveals What To Look For
Exposing substandard providers is a matter of integrating and analyzing the data to understand the course of the claim and the providers who were involved. Selecting the data items to monitor can be guided in the first instance by industry research. Organizations such as the National Council on Compensation Insurance, the California Workers' Compensation Institute, and the Workers' Compensation Research Institute continually publish their research based on data they collect from members. These organizations offer research regarding medical issues causing cost escalation in the industry, and usually make results available from their individual websites.

Search
Academia and other organizations produce and publish research, as well. The best way to access other research is to use Google or other search engines to find research studies regarding specific issues and interest areas. For instance, if the concern is low back pain, simply use Google to find research and scholarly articles on the topic as it relates to Workers' Compensation.

Indicators Of Performance
When the indicators of performance are identified, they can be tagged in the data to analyze individual providers. Providers associated with a preponderance of negative indicators will fall into the lowest class category. On the other hand, those whose results are exemplary will rise to the top — best in class.

Where To Find The Data
Billing data tells the story of diagnoses, treatments and the billed amounts. However, billing data by itself is never broad enough in scope to evaluate providers because it tells only a part of the story. Claim adjudication level data tells another part of the story. It describes the actual paid amounts, return to work, the amount of indemnity paid, and whether legal was involved. But there is more.

Analyzing Pharmacy Benefit Management data is imperative. Overuse of prescribed narcotic pain relievers is now a major concern in Workers' Compensation medical management. Prescribing excessive opioids is unconscionable, but the guilty are often not identified and avoided as they could and should be.

Provider performance should be scored by claim outcome combined with costs and other factors. Unless the initial injury was catastrophic, return to work following a workplace injury is often a function of medical management that should be measured. Analyzing multiple data indicators from disparate data sources is powerful in describing physician performance. It is also objective and fair.

Integrating The Data For Analysis
Any one Workers' Compensation data source by itself is inadequate for the purpose of evaluating provider influence. Only the broad scope of data concerning a claim can provide a clear picture of the claim and provider culpability in outcome. Therefore, collecting the data from its various sources (billing or bill review, claim adjudication systems, and pharmacy data), then integrating current and historical data are crucial steps in provider performance analytics. The next steps are identifying, evaluating, and monitoring the data elements that are indicators of performance both from the medical and Workers' Compensation viewpoints using research as a guide.

Link Analytics To Operations
Analytics results of any variety that remain in graphic form, in a brochure, or pinned to a wall are useless in the effort of actually containing costs. The findings must be functionally applied to operations to make them actionable. Information regarding best (and worst) in class doctors identified through the methods discussed here must be made available to network managers and others in a usable form. Moreover, the information should be specific, current, dynamic, easily accessible, and contain objective supportive detail. The work of analytics is not complete until its results are operationalized and actionable.