1. Lower workers’ compensation costs? Presented by: Diana Blaha

2. Challenges Aging workforce Medical costs and inflation Managing care and costs Return to work and indemnity costs

3. Aging Workforce Average age is 40+ Vision and hearing issues Back pain – 40/20/20 Economy and unemployment Claims Severity Obesity

4. Meeting the Challenges Connected to wellness Safety programs Technology improving safety Early identification Prompt management

5. The Cost of Care National trends: NCCI and WCRI Pharmacy and narcotics Costly treatments Multiple surgeries

6. Are small medical-only claims becoming lost time?

7. Variance in States

8. © 2011 CorVel Corporation. Medical Cost Drivers State Reforms Understanding the Drivers Managing vs. Paying Pro-active analysis Controlling the Costs

9. © 2011 CorVel Corporation. $1.4B Narcotic Spend Brand Usage Over-Utilization Boutique Drugs Unmanaged Medicare Pharmacy is 10-15% of Total Medical Spend Pharmacy

10. Narcotic Study Average Total, Medical and Indemnity Benefits by Opiate Agonist Level Indemnity Claims Only Data for 3 years of incidents Average Paid Benefits % Payment Increases by Level of Opiate Agonist Prescriptions # of OpiatesTotal BenefitsMedicalIndemnityTotal BenefitsMedicalIndemnity No Opiates$14,346$7,633$6,713 1 Script$14,722$9,108$5,6142.6%19.3%-16.4% 2-3 Prescriptions$34,264$17,031$17,233138.8%123.1%156.7% 4-7 Prescriptions$37,508$21,782$15,726161.5%185.4%134.3% >7 Prescriptions$71,178$30,550$40,628396.2%300.3%505.2%

11. © 2011 CorVel Corporation. The Right Prescription Pharmacy Benefits Manager (PBM) Utilization management State initiatives Complete data Clinical modeling Target narcotic use

14. © 2011 CorVel Corporation. Over utilization Unmanaged Few state initiatives Reimbursement drivers Physical Therapy is 30% of Total Medical Spend Physical Therapy

15. © 2011 CorVel Corporation. Flexing Your Muscles Managed program Clinical indicators Take advantage of state initiatives

16. Sample Results for Physical Therapy $222,000 Savings in the First Year

17. © 2011 CorVel Corporation. Inherent Delays Lag time in reporting Lack of referral Inappropriate care Adversarial environment Managing Care as Well as Costs

18. WC Lost-Time Claim Frequency Increased in 2010

19. © 2011 CorVel Corporation. Medical Cost Drivers Nurse Triage Channeling Provider Panels Case Management Managed Programs HealthCare Approach Proactive vs. Reactive

20. © 2011 CorVel Corporation. Return to Work Lack of a RTW program More with Less Union challenges RIFs Indemnity Costs

21. Only 50% return to work if on disability for 6 months. Only 5% return to work if on disability over 12 months.

22. Good News: Indemnity Claims Costs Declined in 2010

23. © 2011 CorVel Corporation. Return to work, stay at work Nurse triage Early attention Transitional duty

24. © 2011 CorVel Corporation. Social Media Mobile Computing Connecting quicker Information at fingertips Address inherent delays Communication methods

25. © 2011 CorVel Corporation. Making the Impact Understand Your Workforce Manage Care and Cost Focus on Return to Work Reduce Cost of Risk

26. Thank you.