Highlights of the 2019 NCCI Symposium

Posted on by davidrleng

Each year, the National Council on Compensation Insurance (NCCI), which gathers data, analyzes industry trends and legislation, and prepares insurance rate and loss cost recommendations, holds an Issues Symposium. The theme of the program is always described in one word that describes the current workers’ compensation environment.

Bill Donnell, president and CEO, identified the 2019 word as “delivering.” “…we should never, never lose the thought that we deliver for injured workers. So this idea of delivering on a 100-year-old promise is a very powerful statement. It distinguishes workers’ compensation from other safety nets.” A short,compelling video, Back to Work: The Faces of Workers Compensation, told the story of how workers comp supported four employees to find the strength and commitment to recover from devastating injuries. Focusing on and motivating the person behind the injury is key to successful outcomes.

State of the Line

Presented by NCCI’s chief actuary, Kathy Antonello, highlights of the State of the Lineinclude:

  • Net written premiums for private carriers rose from 39.8 to 43.2 billion. Most of this increase can be attributed to tax law changes and carriers keeping the money onshore.
  • While payroll increased, this was offset by lower rates so the overall direct written premium was flat 2017 vs 2018.
  • Workers compensation combined ratios decreased 6% from 89% to 83%. 2018 was the lowest workers’ compensation combined ratio on record since the 1930s. This was attributed to the improvement in the underlying loss ratios as a result of underwriting discipline in a low-interest environment.
  • California, Illinois, and Florida saw an overall decrease in premiums as declining premiums offset increased payroll.
  • Overall reserve position for carriers is $5 billion redundancy. “A redundant workers’ compensation reserve position has not been observed in at least 25 years.”
  • In 2018, every NCCI state except Hawaii saw rate decreases. The most significant was Tennessee with a 19% decrease.
  • Indemnity claim severity in NCCI states increased 3%.
  • Medical lost time severity increased 1%.
  • Accident claim frequency decreased by 1%. This is the lowest decrease since 2011. The tight labor market, which means less qualified, younger, and more deconditioned workers in the workforce, could have contributed to the lower decline in frequency. Carriers also saw an increase in slip/fall claims due to the harsher winter in 2018.

Can this good news continue is a common question. While there is no way to predict the future, NCCI CEO Bill Donnell speculated that large swings might be mitigated by two factors. Improved analytics and faster access to data allow stakeholders to see the impact of their decisions and quickly make corrections, and investment in competencies around core processes, such as claims handling, underwriting, and reserving processes add to stability.

On the other hand, the regulatory landscape always has a big impact on the workers’ compensation world, as well as domestic and global affairs. Issues such as marijuana, opioids, opt-out, and post-traumatic stress disorder loom large in states, and the lack of infrastructure spending and a trade war with China could spell bad news for the comp industry looking forward.

Recent studies

Barry Lipton, Practice Leader and Senior Actuary for NCCI discussed a variety of recent NCCI studies .

Key takeaways:

  • Group Health (GH) vs. Workers’ Comp (WC) pricing: Costs for physician services are 77% higher in WC than GH. Price differences were mainly driven by the quantity of services not fees for service. On average, WC prices were about 12% higher per service than GH. However, WC performed 60% more services on similar injuries than GH.
  • NCCI Experience Rating Modification: Mods are good predictors of loss outcomes across all industries and Mod types. NCCI sees opportunities to improve predictive power and accuracy and is undertaking a major review of the system.
  • Mega claims: The number of mega claims (over $10 million) reported in 2017 and 2018 has dropped back down to long-term average values from an uptick in 2016. However, it remains a top concern and more studies are expected.

Physicians’ view of workers compensation

A panel discussion highlighted the challenges physicians face in working within the workers’ comp system. There is a dearth of occupational medicine physicians in the US (3300) and occupational medicine is not part of education in most medical schools. Many treating physicians don’t understand the medical benefits of work and the effects on patients who are out of work for extended periods of time.

Both primary care and occupational medicine physicians have substantial recordkeeping requirements, discouraging specialization in these areas for other more financially rewarding areas. Moreover, case management time is often not billable. Payers and patients complain that they are not getting enough information. Too much time is spent filling out the forms on the computer, which often means clicking boxes rather than a narrative.

Quality of care, return to work, and medical outcomes do not get the priority they should. Network referral requirements can prohibit the best care options. Telemedicine is gaining traction in the group health setting but much less in workers’ compensation and some feel it is best used for follow-up in comp. Personal interaction can keep the return to work messaging on track.

Opioid use and excess physical therapy are the biggest cost drivers on workers’ compensation claims. Other factors include co-morbid conditions, mental disorders, and legal involvement.

Takeaway: Good occupational medicine physicians are a valuable asset. Take time to understand the challenges they face and the best way to work with them.

Other presentations

For more information.

For Cutting-Edge Strategies on Managing Risks and Slashing Insurance Costs visit www.StopBeingFrustrated.com

Things you should know

Posted on by davidrleng

2018 WorkComp Benchmark Study released

The sixth annual Workers’ Compensation Benchmarking Study Report by Rising Medical Solutions, Inc. focuses on key issues influencing medical management performance and the most potent strategies to address these issues.

BLS report: Fatal injuries remain over 5,000

The number of fatal work injuries dropped slightly in 2017 to 5,147 down from 5,190 in 2016. Fatal falls were at their highest level in the 26-year history of the BLS’s reporting, accounting for 17.2% of employee deaths, while transportation incidents again account for the most deaths with 2,077, or 40.4%.

In 2017, 15.1% of fatally injured workers were age 65 or over – a series high. The number of deaths among Hispanic or Latino workers rose 2.7% to 903 in 2017.

Report: Injured restaurant workers miss an average of 30 days

AmTrust Financial Services Inc., a provider of workers compensation insurance, took a deep dive into common restaurant injuries, lost time, industry loss ratio trends and how to implement loss control best practices in its report, Restaurant Risk Report. Cafés and coffee shops had the highest lost time, on average 45% more time lost than all other restaurant types. Wrist injuries are the biggest danger for coffee shop workers, with “barista wrist” resulting in an average of 366 days to return to work.

Study: Musculoskeletal injuries to long-haul truck drivers

Nearly half of all musculoskeletal injuries reported by long-haul truck drivers are to their arms, backs or necks – the majority being sprains and strains – according to a recent study conducted by researchers from the University of Alabama at Birmingham. Drivers most often were injured because of a fall (38.9 percent) or contact with an object or equipment (33.7 percent).

Of those injured, 53 percent required time away from work, at a rate of 355.4 incidents per 10,000 full-time workers, which is more than double those of other hazardous professions. The researchers said the study suggests the need for injury prevention and interventions and ways to improve recovery when injuries occur.

Report ranks states by risk of violence from Black Friday

A report ranking states by risk of violence during Black Friday was recently released by Reviews.org. Included in the report are the employers that have the most incidents during Black Friday.

State News

Florida

  • Department of Economic Opportunity announced that the statewide average weekly wage paid to injured workers by employers will be $939 starting Jan. 1.

Minnesota

  • A total of 101 fatal work-injuries were recorded in Minnesota in 2017, an increase from the 92 fatal work-injuries in 2016 and 74 fatal work-injuries in 2015. More information

Missouri

  • The Department of Insurance is recommending a 3.5 percent decrease in workers’ compensation insurance loss costs for 2019, the fifth year in a row rates will decrease.

New York

North Carolina

  • The Workers’ Compensation Research Institute’s (WCRI) Benchmark shows that medical payments per workers’ comp claim decreased significantly since 2013, falling 6 percent each year through 2016.
  • The Industrial Commission has finalized settlement agreement rules, The “Group 2” rules aimed to clean up some inconsistent language and streamline the settlement process, as well as clarify wording relating to attorney’s fees. The rules took effect Jan. 1.
  • The Commission approved Group 1 rule changes, which took effect Dec. 1. Medical motions, responses and appeals on medical motions must be submitted electronically and must include the opposing party’s position on the matter.

Pennsylvania

  • Insurance commissioner approved two loss cost reductions that together will amount to a 14.74% decrease, starting Jan. 1. Loss costs are one of many factors that determine premiums for workers’ comp insurance.
  • Department of Labor and Industry reported that the maximum compensation rate will rise by 2.3%, to $1,049 per week, starting Jan. 1. It’s website offers a chart to determine compensation based on the employee’s average weekly wage.
  • Department of Labor and Industry announced that it has adopted the Red Book, published by Truven Health Analytics, to determine the average wholesale price of prescription drugs.

For Cutting-Edge Strategies on Managing Risks and Slashing Insurance Costs visit www.StopBeingFrustrated.com

Important takeaways from recent studies and reports

Posted on by davidrleng

Outlook for workers’ comp is stable, but rising medical and legal costs and payroll threaten profits – AM Best Co. Inc.

Currently, AM Best has a stable outlook on the U.S. workers’ compensation industry, the largest component of the U.S. commercial lines segment. However, the well-known rating agency sees some threatening headwinds that can alter the industry’s course. In 2017, growing payrolls helped offset rate decreases and overall soft-market conditions, according to the report. The agency believes that the use of technology, which has provided greater insights into underwriting, pricing and claims decisions, has helped support the line’s health and will continue to do so.

Despite the positive results, AM Best believes the trend of declining rates likely will trigger profit margin compression, possibly as soon as 2019. Unemployment has decreased steadily since 2010; however, AM Best notes that long unemployment rate declines typically are followed by sharp spikes in unemployment, and believes that workers’ compensation writers should be prepared for a downside scenario as well.

In addition, while there has been a decline in loss frequency, medical cost inflation, as well as the potential for accelerating frequency if employers hire less-qualified candidates are a concern. Rising medical loss cost severity, the declining benefit from prior accident year reserve redundancies and high average settlements on cases stemming from attorneys’ growing involvement and litigation, also put pressure on pricing.

Employer takeaway: The report is good news about the stability of rates in the short term. It also provides insights as to how insurers will be evaluating risk. The continued growth of technology in underwriting and pricing means that a company’s risk profile is critical. Insurance companies have become quite sophisticated and rates will be based on their perception of your risk. The way to get the best rates is to improve your risk profile – not bidding and quoting. There are trends and claims that are red flags for underwriters, including claim severity, high medical costs, and excessive attorney involvement. If you have claims in these categories, it’s a good idea to document special circumstances as well as actions taken to prevent future occurrences.

Employee care concern and satisfaction -WCRI

An average of 10.5% of workers across 15 states never return to work as the result of a workplace injury, and an average of 16.7% reported difficulties getting the health services they wanted or their physicians requested, according to Comparing Outcomes for Injured Workers reports by the Workers Compensation Research Institute (WCRI). Telephone interviews were conducted with close to 10,000 injured workers from 15 states who were hurt at work between 2010 and 2014. The workers interviewed live in Arkansas, Georgia, Kentucky, Florida, Iowa, Indiana, Tennessee, North Carolina, Virginia, Minnesota, Michigan, Pennsylvania, Wisconsin, Massachusetts, and Connecticut.

Among the findings:

  • An average of 10.5% of workers across 15 states never return to work as the result of a workplace injury, and an average of 16.7% reported difficulties getting the health services they wanted or their physicians requested.
  • Between 12% and 21% of injured workers reported “big problems” getting the service they or their primary provider wanted, with 10 of the states falling in the 17% to 18% range. Pennsylvania had the lowest rate of 12%.
  • Between 11% and 20% reported being “very dissatisfied” with their care.
  • Thirteen percent of workers said they did not return to work for at least a month after their injury.
  • Between 6% and 11% of injured workers report a significant loss of income due to injury at the time of the interview.

Employer takeaway: The data reinforces the message that employers must be proactive and vigilant in managing workers’ comp. This is not new “news” – recovery-at-work programs, medical management best practices, and open lines of communications among all stakeholders are the cornerstones of a successful program.

First-ever industry breakdown of drug use in the American workforce – Quest

Quest, a leading drug-testing provider, announces the rate of positive drug test results annually based on an analysis of 10 million urine tests. The new data marks the first time Quest has broken it down by industry.

The rate of positive test results for illicit drugs was highest in retail (5.3%), health care and social assistance (4.7%), and real estate rental and leasing (4.6%) sectors in 2017, while the utilities (2.8%) and finance and insurance (2.6%) sectors had the lowest rates. Drug use by the workforce increased each year, and by double-digits over the two years between 2015 and 2017, in five of 16 major U.S. industry sectors analyzed. The highest rates were in consumer-facing industries.

Marijuana was the most commonly detected substance, with the highest drug positivity rate of all drug classes across the majority of industry sectors. Marijuana positivity was highest in accommodation and food services, at 3.5 percent in 2017, more than 34 percent higher than the national positivity rate of 2.6 percent for the general U.S. workforce.

Employer takeaway: With low unemployment and tight job markets as well as legalized recreational marijuana in many states, many employers have dropped pre-employment drug tests for positions that aren’t safety sensitive. The analysis suggests that employers can’t assume that workforce drug use isn’t an issue in their industry. Employers are responsible for ensuring the safety of workers, customers, and members of the general public and this is one of the more vexing areas. Review your written drug policies, clearly communicate expectations and company rules to all employees, and be sure supervisors know how to recognize signs of impairment.

For Cutting-Edge Strategies on Managing Risks and Slashing Insurance Costs visit www.StopBeingFrustrated.com