1. Understanding and Controlling Workers Compensation Costs Michael Housley M.D. Intermountain Workmed February 2008 Michael.Housley@imail.orgMichael.Housley@imail.org(435) 716-5478 Michael.Housley@imail.org

2. Disclaimer I am a physician

4. Cost of an Injury Direct costs –Workers Comp premium Medical costs Lost time costs Indirect costs –Decreased productivity Absent/impaired employee Training Employee turnover Morale –Cost to society Effect of injury on employee’s life away from work

6. The Anatomy of a Workers Compensation Insurance Premium Classification of Operation Payroll Experienced Rating (emod)

7. Classification of Operations National Council on Compensation Insurance (NCCI) Rates based on loss experience from Utah accompanies Proper classification is critical –Classification list is dynamic –Rates can vary dramatically

8. Does it make a difference? Example: $ 100,000 X 11.98 =$ 11,980 $ 100,000 X 8.49 =$ 8,490 Premium difference$ 3,490 This is the initial rate difference. Additional factors influenced the final premium.

9. Who sets rates? NCCI develops rates State Insurance Department accepts, declines, or modifies rates for insurance carriers in Utah Rates generally accepted as presented State Insurance Department occasionally adjusts rates for specific classifications

10. Payroll Initial rate determination (see previous slide) Factor in experience modifier calculation

11. Experience Modifier Minimum premium amount 3 years of data Carriers submit payroll and claims data for each company

12. Experience Modifier Calculation (Simplified) Expected loss rate X payroll = expected loss Actual loss compared against expected loss = experience modifier

13. Comparison of Mod Change to Company X Employees: 10 drivers, 1 dispatch 11.98X500,000=$59,900.30X 20,000=$ 60 Total$59,960 $59,960 X 1.25=$74,960 $59,960 X.92=$55,163 Difference$19,787

14. Experience Modifier Accurate payroll data Accurate claims data –Trend towards lower claims desirable

16. Improving Emod Insurance Data vs OSHA Data Improving Emod Insurance Data vs OSHA Data Death Perm total Perm partial Days away from work Restricted/transfer days Medical treatment First-aid when bill generated Death Loss of consciousness Days away from work Restricted/transfer days Medical treatment Specific diagnoses

17. Using OSHA Log as a Tool to Improve Emod

18. Improving Emod Insurance Data vs OSHA Data Improving Emod Insurance Data vs OSHA Data Death Perm total Perm partial Days away from work Restricted/transfer days Medical treatment First-aid when bill generated Death Loss of consciousness Days away from work Restricted/transfer days Medical treatment Specific diagnoses

19. Minimizing OSHA Recordables What –Days away from work –Job restriction/transfer –Medical treatment How –Ready access to experts in occupational medicine, workers compensation, OSHA

20. Maximizing Non-Recordables What –First-aid –Injury prevention How –Ready, convenient to access to trusted health and safety personnel. –Appropriate administrative and health care support

21. First-Aid per OSHA CFR 29 Part 1904.7 (ii) What is “first aid”? For the purposes of Part 1904, “first aid” means the following: (A) Using a non-prescription medication at nonprescription strength (for medications available in both prescription and non-prescription form, a recommendation by a physician or other licensed health care professional to use a non-prescription medication at prescription strength is considered medical treatment for recordkeeping purposes); (B) Administering tetanus immunizations (other immunizations, such as Hepatitis B vaccine or rabies vaccine, are considered medical treatment);

22. First-Aid per OSHA (C) Cleaning, flushing or soaking wounds on the surface of the skin; (D) Using wound coverings such as bandages, Band-AidsTM, gauze pads, etc.; or using butterfly bandages or Steri-StripsTM(other wound closing devices such as sutures, staples, etc., are considered medical treatment); (E) Using hot or cold therapy; (F) Using any non-rigid means of support, such as elastic bandages, wraps, non-rigid back belts, etc. (devices with rigid stays or other systems designed to immobilize parts of the body are considered medical treatment for recordkeeping purposes); (G) Using temporary immobilization devices while transporting an accident victim ( e.g., splints, slings, neck collars, back boards, etc.). (H) Drilling of a fingernail or toenail to relieve pressure, or draining fluid from a blister;

23. First-Aid per OSHA (I) Using eye patches; (J) Removing foreign bodies from the eye using only irrigation or a cotton swab; (K) Removing splinters or foreign material from areas other than the eye by irrigation, tweezers, cotton swabs or other simple means; (L) Using finger guards; (M) Using massages (physical therapy or chiropractic treatment are considered medical treatment for recordkeeping purposes); or (N) Drinking fluids for relief of heat stress. (iii) Are any other procedures included in first aid? No, this is a complete list of all treatments considered first aid for Part 1904 purposes.

24. Injury Prevention Goals Promote safe work environment Promote employee health Promote company culture of safety

26. Injury Prevention Ideas Proactive safety program with support Job description, job demand and ergonomic analysis, appropriate employee screening Evaluation of “frequent injury environments” Near-miss reporting program Encourage employee suggestions for improvement Employee health and fitness promotion Etc.

27. Noitatneserp sdrawkcab Proactive prevention First aid Appropriate medical care with appropriate restrictions when necessary Goal ZERO Let OSHA and the claims data be Indirect cost reduction will naturally follow Stand clear of the lightning rod

29. Acknowledgments and Thanks Howard Leaman M.D. Intermountain HealthCare Eric Torgersen WCF of Utah Joyce Sewell (Retired) Utah Labor Commission The great health & safety staff at several Cache Valley Businesses