Ohio Workers’ Compensation

When the BWC switched from the old tabular system to the new MIRA reserving system, the intent was to be revenue neutral.  However, based on a review of thousands of claims from the 2002 through 2007 it appears the switch to MIRA reserving had a far more significant impact on public employers than on private employers. 

From 2002-2004, the BWC calculated reserves for private employers using both reserving methods.  For our sample, the average MIRA reserve was 8.4% higher than the tabular reserves.  From 2005, the BWC just used the MIRA reserving system.  The MIRA reserves from our sample for 2005-2007 was 7.77% higher than the MIRA reserves from 2002-2004.  Assuming the tabular reserves would have remained constant, the average increase in MIRA reserves over tabular reserves from 2005-2007 was 17.53%.

For public employers, the MIRA transition period was from 2003-2005.  During this period, the average MIRA reserve was 58.59% higher than the average tabular reserve.  For 2006-2007, the average MIRA reserve was about the same as it was from 2003-2005.  Therefore, the impact of the MIRA reserving system was more than 3 times as great for public employers than for private employers.

The reason for this is almost solely due to the reserves set for percent permanent partial (%PP) claims and the fact the public employees are much more likely to file %PP claims than private employees.  About 6% of all private claims are coded as a %PP claim, while almost 16% of all public claims are coded as %PP. 

The result of this is quite significant because the average MIRA reserve for %PP claims exceeds $14,000, while the tabular reserves average less than $4,000.  The combined factors of more %PP claims and a much higher average MIRA reserve on those claims resulted in a much greater reserve burden for public employers versus private employers.  The impact of just the MIRA reserving resulted in between an 8%-10% increase in premium for public employers since 2006.  The premium increase for private employers is around 2%-3%.

Next I’ll look to see if the switch from tabular to MIRA created a more accurate reserving system justifying the increase in reserves, especially for %PP claims.

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Workers’ Compensation fraud could be a significant contributor not only for the employer but to the nation’s annual insurance.  

• Claimant can never be reached at home
• Tips from Co-Workers
• Injury Description is not consistant with normal job duties
• No Witnesses to the accident
• Date, time, and place of injury is unknown
• Company layoffs
• Early Retirement
• Same attorney or physician who handled previous claims
• Claimant refuses diagnostic procedures
• Summer vacation plans. Hunting or Hobby seasons
• Claimant making company complaints
• Claimant moving out of state
• Cross out, White out, and erasure marks

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What are some casual factors employers can use when reviewing their accident investigation reports?

When an occupational injury occurs, there are a lot of casual factors that employer’s can use to prevent the next accident from reccurring.

1. Tasks - Ergonomics, safe work procedures, safety devices.
   Example:  Employee’s are not following the proper work procedure and
   are finding ways to hurry to get their job done.
2. Material - Equipment  Failure, Machinery Guarding, any Hazard Substances
   Example:  No notification to management of any minor problems with the machines or tools
3. Environment - Weather Conditions, Noise Levels, Personal Protective Equipment
   Example: Winter weather such as ice and sleet causing slips and falls
4. Human Factor - This could be personal such as Level of Experience, Internal Training, and Stress
   Example:  Management not taking the time to give proper training 
5. Management - Management Support and Safety Policies
   Example: Not enough upper management support to enforce safety policies

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Employers get it!  Document.  Document.  Document.  It has been drilled into their heads for years.  Clear and accurate employment manuals.  Work Rules.  Safety Training.  Injury reporting.  Safety Training.  Alcohol/Drug Testing.  Do it.  Make sure your records show you did it and that your employees attended.

So, you do all the right things and you still end up at the Industrial Commission.  A hearing officer holds your fate in his/her hands.  What matters to them?  What should you do to maximize your opportunity to prevail?  I talked with some of those that represent you at hearings.  Here is what they have to say:

1. The most believable person is the one acting in a reasonable fashion.  No eye rolling.  No exhaling in disgust.  These tactics will weaken your position.  If you want to make a statement, keep it concise and to the point.  Do not come off as if this is a personal issues and please, please do not complain about the high cost of your premiums-the hearing officers do not set them and most do not understand them. (Continued)

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Just another way to control your Workers’ Comp cost - The $15,000 Medical Only Program:
 
- BWC sponsored program which helps keep costs from appearing on your rating experience
- Will help keep rates and premiums lower despite claim activity
- Makes the employer the manager of medical only claims
- The employer agrees to pay up to $15,000 in medical costs per claim
- The employer can pick and choose which claims they want to be a part of this program
- The employer can also withdraw a claim from the program at any time even if they have not paid the full $15,000 yet
- The employer must pay all invoices in a timely manner
- The employer also must keep a payment log as the BWC can audit these files

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This is the first of a series of postings regarding the MIRA  reserving system. This first posting will give a brief history of the BWC’s reserving system. Subsequent postings will look at the impact of recent changes in the reserving method on public versus private employers and analyze the efficacy of different reserving methods.

Claim reserves are estimates of future claim costs. Prior to 2002, the BWC reserved claims based on a tabular reserving method. This method took just three factors (the date of injury, the last type of compensation awarded, and the last date the claimant was off work) to calculate the reserve on the claim. This system allowed anyone with a reserve table to determine the reserve on a claim and, importantly, to project future reserves on a claim.

The drawback is that this method was not viewed as being accurate at the individual claim level. For example, it made no distinction between herniated disc claims, which could drag on for years and simple contusions or abrasions. Additionally, claims with ongoing lost time could be subject to quite high reserves. In this scenario, a claimant who happened to be off work on temporary total compensation at the wrong time of the year could have a reserve set at well over $200,000. These extravagant reserves were hard to justify and could be quite damaging to an employer.

In 2002, the BWC decided to transition from the old tabular reserving method to the new MIRA reserving system. The MIRA reserving system looks at scores of variables associated with a claim to determine the most significant cost drivers of a claim. Among the primary cost driver is the diagnosis code, which makes a distinction between, say, herniated discs and contusions. Ostensibly, the MIRA reserving system would more accurately reserve individual claims. The drawback is that the reserve calculation is hidden from employers so there is no way to determine future reserves. And other than the BWC having incorrect information, a wrong diagnosis code for example, employers can not even challenge the reserves established thru this method.

The BWC transitioned private employers from the tabular reserving method to the MIRA reserving method from 2002 to 2004 and public employers from 2003 to 2005. During this transition period reserves were calculated using both methods and the method yielding the lower total reserves for an employer was used in that employers rate calculation.

My next posting will look at the impact the switch from tabular reserves to MIRA reserves had on employers.

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Having a relationship with a provider prior to an accident occurring is a simple way to control costs and help ensure that your employee receives the necessary appropriate care.

Benefits of having a preferred provider:

• Provider will already know that you have transitional duty available and will be more likely to release an employee to restricted duty.
• Your employee will receive appropriate care and appropriate referrals.
• If your employee feels that they are being cared for, they may be less inclined to seek an attorney or respond to the marketing calls of providers that may not have your employee’s best interests first and certainly not your costs in mind.
• Having a preferred provider helps in unnecessary treatment being rendered and billed to your experience.

The provider is critical in management of the claim. By maintaining an open relationship with the provider, you increase your chances of returning an injured employee to full duty in an appropriate time frame.

Understanding the importance of the medical provider in managing a workers compensation claim can have a major impact in controlling the overall cost of the claim.

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On Wednesday, November 14th, a first in BWC history took place in the BWC’s auditorium in Columbus, Ohio.  For over three hours, sixty (60) employers and trade association representatives appeared before the members of the BWC Board of Directors’ Actuary Committee to offer public comment and input to the members of the Board in attendance.   One Hundred Fifteen (115) additional witnesses submitted written testimony only.  The Committee had requested public testimony in response to the BWC Administrator’s proposal to decrease the maximum available credibility discount to employers in the Ohio group rating program from 90% to 80%.  BWC alleges group-rated companies are actuarially being subsidized by non-group-rated companies by an estimated $200 million a year.  At the September board meeting, at the request of the Administrator, the Board had referred the matter to the Actuary Committee for study and to recommend a maximum discount percentage.

(Continued)

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The Occupational Safety and Health Administration (OSHA) requires employers to maintain records of occupational injuries and illnesses. 

Here are 10 important facts to remember:

1. Employers must maintain the Log of Work-Related Injuries and Illnesses (Form 300) and the Summary (Form 300A)
2. Records must be kept on a calendar year basis
3. If an employer has ten or fewer employees, you are NOT required to maintain the OSHA recordkeeping forms
4. Record injuries that result in death, loss of consciousness, days away from work, restricted work activity or job transfer, or medical treatment beyond first aid
5. The annual summary (300A Form) must be posted every year from February 1st to April 30th (the year following the year covered by the form)
6. An employer must retain the Log and Summary for 5 years following the year to which they pertain
7. Employees can request copies of the forms and employers must provide access or copies within the next business day
8. Work related deaths must be reported within 8 hours
9. Employers do not have to send in completed forms to OSHA unless requested to do so
10. Failure to maintain the Recordkeeping Logs and Post Log Summary will result in penalties of approximately $2,000.00  

The Bureau of Workers’ Compensation offers courses in OSHA Recordkeeping. 

For additional information, please visit www.ohiobwc.com or www.osha.gov.

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