1. 1 Office of Risk Management and Insurance Services Workers’ Compensation Program Update Audit, Business and Technology Committee October 5, 2004 David Holmquist, Director of Risk Management and Insurance Services

2. 2 Workers’ Compensation 2003-2004 Summary Goals and Results 2003-2004 Goals and Results 2003-2004 Additional Achievements/Initiatives Additional Achievements/Initiatives Legislative Update Legislative Update Goals and Objectives 2004/05 Goals and Objectives 2004/05

3. 3 ORMIS Program Objectives and Results Standard6/30/03 Baseline6/30/04 GoalResults Number of Claims Filed701870006818 Amount Paid Board Reports$108 million$110 million $117 million Number of Open Claims902873007789 Average Cost Per Claim$23,500 TBD Number of Lost Work Days * 200,000140,000105,983 Number of Litigated Claims473040003460 Allocated Litigation Costs$11 million$9.5 million$8.1 million Workers' Comp TrainingNone35 sessions33 sessions Reserve Fund Balance$289 million Growth toward full funding ($566 million) $333 million Source Sedgwick CMS Goals and Results 2003-04 *W orkers’ compensation temporary disability days paid

4. 4 Claims Reported by Fiscal Year 3.8% reduction in the number of claims filed in the last fiscal year 717870856818 Source Sedgwick CMS Goals and Results 2003-04 ** * * Claims w/time lost due to disability

5. 5 Focusing on Prevention to Reduce the Number of Claims Office of Risk Management & Insurance Services (ORMIS)/Office of Environmental Health & Safety (OEHS) Committee Office of Risk Management & Insurance Services (ORMIS)/Office of Environmental Health & Safety (OEHS) Committee –Joint site visits on Illness and Injury Prevention Plan to promote safety –OSHA Reporting District-wide Training District-wide Training –33 sessions in 03-04 fiscal year Increased awareness of fraud prevention program Increased awareness of fraud prevention program Goals and Results 2003-04

6. 6 Payments Over Last Fiscal Year Our WC program costs increased only 5.7% over the last fiscal year Our WC program costs increased only 5.7% over the last fiscal year Despite: Despite: –23% increase in Temporary Total Disability rate –Approximately 8% increase in maximum Permanent Disability rate –4.4% increase in the cost of medical care* –Initiative to close older claims * Bureau of Labor Statistics (CPI) Goals and Results 2003-04

7. 7 WC Costs by Fiscal Year Source: Sedgwick CMS Goals and Results 2003-04 * * Payments for permanent disability & lost time $ $ $ $ $ $

8. 8 Fiscal Year 2003-2004 Payments Related to Claims Filing Date Add Slide Add Slide Source: Sedgwick CMS Total Paid as of 6/30/04: $116,250,912 88.8% of the 2003-2004 costs were on claims filed in previous fiscal years Goals and Results 2003-04

9. 9 Results of Current Medical Management Programs (8/10/03 - 6/30/04) Pharmacy management program (Medical Services Company) Pharmacy management program (Medical Services Company) –$894,181 reduction Bill Review – adjustments per fee schedule and PPO rates Bill Review – adjustments per fee schedule and PPO rates –$40,162,798 reduction Utilization Review Utilization Review –$190,203 reduction Goals and Results 2003-04

10. 10 Number of Open Claims Source: Sedgwick CMS * Data Conversion completed in November, 2003 * Goals and Results 2003-04

11. 11 Closed Claims by Fiscal Year Source: Sedgwick CMS Goals and Results 2003-04

12. 12 Claims Currently Open 20.5% reduction accomplished due to: Increased involvement of ORMIS staff Increased involvement of ORMIS staff Block settlement conferences Block settlement conferences File review conferences File review conferences Comprehensive claims handling by Sedgwick CMS Comprehensive claims handling by Sedgwick CMS Goals and Results 2003-04

13. 13 Training ORMIS (in conjunction with OEHS) trained: ORMIS (in conjunction with OEHS) trained: –Administrators –Managers and Supervisors –School Administrative Assistants –School Police –Other employee groups Training Topics Training Topics –How and when to report WC injuries –Accident Prevention –Time reporting –Stay-At-Work –Fraud Prevention Goals and Results 2003-04

14. 14 Stay-At-Work Program Reduction of lost work days Reduction of lost work days –200,000 (FY 02/03) –105,983 (FY 03/04) Specific Initiatives Specific Initiatives –Mandatory policy approved 09/03 –Procedures and guidelines developed 03/04 –Stay-At-Work Program staffed 06/04 –Coordinated procedures with other District departments and Sedgwick CMS –Integration of disability-related functions –Fraud Awareness Goals and Results 2003-04

15. 15 LITIGATION MANAGEMENT ActivityFY 02-03FY 03-04 Block Settlement Conferences 15 Attorney Referrals Approved 780355 Law Firm Bill Reviews 012 Automated Legal Bill Review None TyMetrix Effective July 1, 2004 (First quarterly report due 10-1-04) Goals and Results 2003-04

16. 16 Fraud and Abuse Reduction/Elimination (FARE) Program Task Force Task Force Communication Communication Identification Identification –ORMIS –Sedgwick Fraud Unit and Claims Adjusters –School Police Results Results –Referrals –Other Next Steps Next Steps –Notice on leave forms and checks –Newsletter –Alternative prosecution efforts –Website Goals and Results 2003-04

17. 17 Additional Accomplishments Collaboration with Bargaining Units Collaboration with Bargaining Units Website thru www.lausd.net link Website thru www.lausd.net linkwww.lausd.net Workers’ Compensation Reference Guide Workers’ Compensation Reference Guide Workers’ Compensation and Act of Violence Leave Processes Workers’ Compensation and Act of Violence Leave Processes Goals and Results 2003-04

18. 18 Legislative Changes AB749 (1/01/03) AB749 (1/01/03) SB 899 (4/19/04) SB 899 (4/19/04) SBX4 2 (9/13/04) SBX4 2 (9/13/04)

19. 19 Initiatives for This Fiscal Year TyMetrix TyMetrix Medical Network Medical Network Claims Audit Claims Audit Study Alternative Charge Back System Study Alternative Charge Back System Staff Development Staff Development Actuarial Study Actuarial Study Goals and Objectives 2004-05

20. 20 Goals and Objectives Fiscal Year 2004-2005 A d d c h a r t A d d c h a r t Standard6/30/04 BaselineRevised 6/30/05 Goals Number of Claims Filed68186650 Amount Paid Board Reports$117 million$115 million Number of Open Claims77897000 Average Cost Per Claim Pending Actuarial Evaluation Number of Lost Work Days105,98380,000 Number of Litigated Claims34602950 Allocated Litigation Costs$8.1 million$6.5 million Workers' Comp Training 33 sessions50 sessions Reserve Fund Balance$333 million$373 million Goals and Objectives 2004-05

21. 21 Thank you for your support and consideration