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The Cost of a Workers’ Compensation Claim
Presented by: Ann Kensy, CWCP, RWCS, CRM, CIC
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Facts – Statistics
An employee who files a Workers’ Compensation(WC) claim for lost time is twice as likely to file another WC within 3 years
26% of employees with a prior WC claim who remained employed with the same employer are more likely to file another claim with employer
The second claim filed for this employee has more than a 50% likelihood of being a back injury
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Measurable Costs of the WC Claim
Medical Costs Medical/Physician Costs Diagnostic Costs Nurse Case Management Conservative Treatment Physical Therapy Prescriptions Surgery Costs – should claim escalate
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Measurable Costs of the WC Claim
Indemnity Costs Lost Wages Employee Attorney Fees Schedule Loss of Use Awards Permanency Award
Allocated Loss Expenses Independent Medical Exams Surveillance Attorney Fess for Employer Workers Compensation Board Costs/Hearings
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Indirect Costs
Loss of production of employee Replacement costs (overtime, agency
fees) Staffing issues Training for new/agency personnel Supplemental wage continuation –
benefit continuation
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Indirect Costs (Continued)
Internal Management Time: Manager/Safety Person – Investigates the claim for
safety reasons-report completion Unit Manager- Involved in the notification of claim
reporting, address staffing issues, monitoring of replacement personnel to unit standards
Corporate Management – Monitor claim administration, report on trends, pay the administrator for services, etc.
Finance Department – letters of credit, premiums, deductible payments, liability booking on balance sheet, payroll for wage continuation
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Employee Costs
Injury: Pain, discomfort Time waiting for care Travel time to various medical providers Delay in wages Unable to perform daily functions Unable to participate in hobbies Family impact
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How are the Costs Evaluated
Medical Costs: Initial care and evaluation Diagnostic testing/results Follow up care – specialists, physical
therapy, surgeons Costs/Reserves are set to WC Fee
Schedule
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How are Costs Evaluated (Continued)
Indemnity Costs: Statutory Wages $550 for accident dates of
7/1/2008 through6/30/2009 $600 for accident dates of 7/1/2009 through
6/30/2010 State Average Weekly Wage (SAWW) from
7/1/2010 forward Claimant Attorney Fees – Set by the WCB
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How are the Costs Evaluated
Indemnity Costs – Continued Schedule Loss of Use Awards (SLU)
To compensate the individual for loss of earning capacity
Percentage is provided by the physician or Independent Medical Exam (IME) provider
Workers’ Compensation Rate x number of weeks based on the percentage and body part – paid indemnity = SLU award
Tax free benefit
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Claim Example – Before SPHM Implemented
Facts: Nurse, age mid 30’s
Injury Description: Felt pain in neck when transferring a patient
Initial Evaluation and Reserve Setting: Medical Reserve Setting = $3,000
Emergency room visit, chiropractic treatments 3x week for two months, diagnostic testing, prescriptions
Indemnity Reserve Setting: 8 weeks at the $400 benefit rate
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Claim ExampleBefore SPHM Implemented
First 60 Days: Medical Paid $1,131.33
Emergency room visit, 12 chiropractic treatments, x-rays prescription
Indemnity Paid $3,200 Employee remains out of work
New Facts Employee is not able to return to work, MRI being
scheduled, now has additional complaints of upper back injury, unable to lift more than 5lbs.
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Claim Example – Before SPHM Implemented
Medical and Indemnity Reserves need to adjusted to reflect exposure
MRI returns negative for disc herniation IME scheduled $695 Expense
IME results – unable to lift more than 5 lbs, enroll in physical therapy
Medical Reserve Increase: $3,000 Physical therapy, chiropractic treatments,
neurologist consult
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Claim Example – Before SPHM Implemented
Indemnity Reserve Increase: $6,400 16 weeks at $400 rate
Paid: Medical $1,325.18 Indemnity $4,800 Expense $948
IME and medical bill review costs
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Claim Example –Before SPHM Implemented
Updated Facts: Physician evaluation , allows employee to
return to transitional duty, no lifting over 25lbs.
Employee continues to treat with a chiropractor as complaints continue for neck and back
Employee returns to transitional duty with restrictions, third day into return employee aggravates the injury again while transferring a patient
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Claim Example –Before SPHM Implemented
Medical Reserve Increase: $5,000 Diagnostic testing, chiropractic treatments, surgeon
evaluation, physical therapy and prescriptions Indemnity Reserve: $1,600 remaining
from prior evaluation
Additional Facts: MRI completed and reveals a herniated disc Neurosurgeon requests and is granted surgery,
discectomy Employee opts to treat conservatively for an additional 2
years
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Claim Example-Before SPHM Implemented
One year post accident evaluation: Employee remains disabled and treating
actively Paid:
Medical $7,321.36 Indemnity $20,800
Reserves have been adjusted and need to reflect additional exposure
IME performed – agrees with neurosurgeon, employee remains totally disabled from duties
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Claim Example-Before SPHM Implemented
Second year post accident evaluation: Employee opts to have surgery Reserves need to be revised to include
surgery, post rehab and recovery along with wage continuation
Medical Reserve Increases $15,000 Indemnity Reserve Increases $20,800
Benefits for one year post surgery at $400 rate Re-evaluate after one year post surgery
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Claim Example –Before SPHM Implemented
Five years post accident evaluation: Employee can no longer work as a Nurse Employee in early 40’s, and is now classified
at the WCB as permanently partially disabled
Claim remains open with the following reserves and payments
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Claim Example –Before SPHM Implemented
Paid: Medical $49,354.78 Indemnity $104,000.00 Expense $10,007.00
Reserves: Medical $30,277.00 Indemnity $420,000.00 Expense $5,492
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Claim Example –Before SPHM Implemented
Medical reserve reflects treatments and prescriptions for 3 years
Looking to settle case asked Center for Medicare to provide an evaluation of medical exposure CMS estimates $320,000 for medical
Indemnity reflects life exposure of claim
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Claim Example – SPHM Implemented
Facts: Nurse, age 42
Description of Injury: Felt pain in lower back when transferring
patient using slip sheets Reserves for the first 60 days:
Medical $3,000 Indemnity $4,000
8 weeks at $500 rate
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Claim Example- SPHM Implemented
First 60 days after accident evaluation: Paid:
Medical $739.67 Indemnity $2,500
5 weeks x $500 rate Employee returned to work with restrictions
of lifting, accommodations made with unit manager
Lost time ceases transitional duty assignment is adhered by manager and employee allowing for full duty release 6 months from accident
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Claim Example – SPHM Implemented
Reserve Evaluation: Medical – remains the same to pay for continued
treatment until employee reaches full duty status Indemnity – employee returned to work transitionally,
recovered to full duty no additional wages paid Final Evaluation of claim:
Paid: Medical $4,092.49 Indemnity $2,500 Expense $762.39
File closed employee returned to full duty as a nurse
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Lessons Learned
Transitional return to work programs can be utilized with supervision and will assist in cost controlling the claim
Safe Patient Handling Equipment allows transitional returns for employee as restrictions can be adhered to by the staff and employee
SPHM equipment reduces the severe back injuries
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Lesson Learned
What do you do about the old claims that costs seem to escalate?
How do you measure for the indirect costs that your facility has to account for but are not reflected in the cost of the claim from a workers’ compensation perspective?
What resources are available for your company?
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Tools
Utilize your TPA/Carrier to assist in settling old claims
Be an active participant with your TPA/Carrier on handling of claims Place special handling instructions on your
files Get the managers involved Claim Reviews – Action plans to be discussed,
reserving philosophy and justifications Hold your TPA accountable for claim handling
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Tools
Measuring Indirect Costs: Create spreadsheets/cost centers Create accountability/allocation to facilities, units Measure your transitional return to work
programs Resources available:
TPA/Carrier – accountability for claim handling Loss Prevention Create platforms –continuity of program
administration internal and external