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Blips on the 2012 Work Comp Radar
Posted By Preston Diamond On January 3, 2012 @ 3:49 pm In Health & Safety Best Practices | No Comments
In 2010, Steve Klingel, NCCI President & CEO, described the state of the workers’ compensation industry as “precarious,” while adding that the industry faces “a number of difficulties that will confront market stakeholders in the weeks and months to come.”
Here are a few areas that should be given attention as we head into the New Year.
The Aging Workforce: Their coming was foretold in 2008, when the first Baby Boomer hit 62 and filed for Social Security. The Institute on Aging at the University of North Carolina has released data showing that 20% of workers will be 55 or older by 2020.
Although older workers tend to get injured less on the job, when they do get hurt we find larger claims and more days off the job. According to a report by The National Council on Compensation Insurance (NCCI) a determining factor in the high claims cost can be traced back to older workers having higher salaries so their compensation for loss-work time is higher.
According to the Bureau of Labor Statistics (BLS), older workers take an average of 15 days off per injury compared to one day off for younger workers. Plus, they require more extensive medical treatment then, say, a teenage worker. Factor in the statistics showing older workers are less likely to return to work after an injury (in some cases over 80% less likely, compared to 12% for a worker in his 20s), and you see a disturbing trend.
The best we can do when it comes to getting an aging workforce back on the floor is to make a concentrated effort to customize the return-to-work program based on the severity of the injury, age, existing medical conditions, etc. In other words, ease workers back into the fold and make the workplace conducive to them, even it’s simply making sure there is enough bright light in the work area (the eyes always seem to be the first thing to go ).
Off-Site Workers: In an age of technology, where more and more workers are doing their jobs from their homes, we are seeing a whole new can of Work Comp worms open up.
According to World at Work’s “2011 Survey on Workplace Flexibility,” in 2010, 26.2 million U.S. workers conducted business outside the office. Companies see the advantages of home-based work (i.e. a decrease in absenteeism, reduced stress), but overlook an untapped area of risk. Two recent cases illustrate what may be a disturbing trend. A New Jersey court granted workers’ compensation survivor benefits to the family of a woman who dies of a blood clot while sitting at her computer doing work. That same month in Oregon, a court ruled in favor of a claim brought by a woman who broke her wrist when she tripped over her dog while carrying supplies from her home to her car.
So how do employers monitor “at-home” risk? Perhaps it is as simple as having someone visit the home and make sure everything is ergonomically in order and void of any clutter or potential hazards. It’s also been suggested that the employer photograph the workspace. A more extreme maneuver would be to invest funds in the workspace and set it up for the worker. This could be a one-time cost versus a much higher cost down the road should the worker somehow suddenly fall out of their chair and break a hip.
As for making sure any injury happens on “work time,” experts suggest having the worker log in on their computer so time at work and time off can be tracked. No employer wants to pay a claim because one of their workers hurt his back while lifting a turkey out of the oven on Thanksgiving.
Rising Medical Costs and Prescription Drugs: Medical costs continue to soar and it can be attributed to several factors which are, in some ways, related. In many states, employers let the employees choose what doctor they want to see when injured, and employees are most likely to choose their family doctor. The problem here is the family physician sees the worker as their client. So if the employee asks for a week off, the doctor will grant it. Why not? Most family physicians have no experience with occupational medicine or the importance of getting employees back to work.
Another area of growing concern is the type of drugs being prescribed to injured workers and their long-term effects. According to a recent article in USA TODAY, the biggest drug problem in America isn’t the heroin being mainlined in a back alley or the cocaine being ingested in some run-down crack house. In actuality, it’s the prescription painkillers sitting in a medicine cabinet in Middle America, to the point that they kill 18,000 people per year. And don’t think this hasn’t raised an eyebrow to workers’ compensation payers, who are on the lookout to ensure that addictive drugs that are over-prescribed by doctors aren’t affecting workers’ comp cases. Evidence has shown that some doctors are prescribing pain medication usually targeted for cancer patients for simple back strains.
According to Gregory L. Johnson, a health care management consultant, “There is an increase in medical costs as a percentage of all claims; there is an increase in pharma as a percentage of all medical costs. And there is an increase in opioids as a percentage of pharma. So it’s driving a lot of overall loss results in workers’ comp.”
Another industry expert contends that employers may find themselves not only paying for the medication but also funding detox programs, drug overdose claims and treatment for long-term side effects. It’s imperative that employers, doctors, claimants and insurance carriers all get on the same page to make sure such abuse does not occur.
The Need for Wellness Plans: Healthier employees lead to lower premiums. If companies can help their workers improve their health without cutting benefits or shifting more premium costs to employees, why aren’t smaller companies using this proven method to lower their health care costs?
Randy Boss, a Risk Architect with Ottawa Kent Insurance in Grand Rapids, MI, helps companies implement successful wellness programs. And he says he can understand how employers feel. “They’re frustrated because most likely they have tried things that didn’t work,” says Boss. “Businesses tend to think short-term and not long-term, and expect to see solid and immediate savings on their healthcare costs.”
Yet, the benefits of having healthy workers transcend reduced health care costs, including Workers’ Compensation and lower absenteeism. Healthy workers are less prone to injury and when injured, they recover quicker than less healthy workers. If workers change and modify their lifestyle and reduce their health risks, medical costs decline.
A University of Michigan study of a Midwest utility company’s workplace wellness program found that over nine years, the utility company spent $7.3 million for the program and reaped $12.1 million in savings. Medical and pharmacy costs, time off and Worker's Compensation factored into the savings. The study, which took into account a number of costs, including indirect costs of implementing wellness programs, such as recruitment and the cost of changing menus, showed that wellness programs work long-term even though employees aged during the course of the study.
Companies need to make a commitment to helping their employees stay in better shape. Says Randy Boss, “If companies don’t have the ability to fire all their old workers and hire young workers, then they need to concentrate on what they can control...the risk factors. That's where a health & wellness program comes in. But to be successful you need high participation… preferably over 85%. We’ve been fortunate to have a 94% record without having to pay employees to participate. We do this by motivating and educating employees so they take the action steps to get the results.”
An effective wellness plan only works if implemented from the top down. “We see participation rates up to 70%-80% with management support and incentives, but only 10%-20% without it,” says Susan Butterworth, director of Oregon Health Sciences University Health Management Services.
New NCCI Rulings: NCCI has recently made significant changes to the split point that will ultimately affect the experience mod.
The split point will be increased from $5,000 to $15,000 over a 3-year transition period. After the transition, the split point will be indexed for claim inflation in subsequent updates. Filing for these changes will likely be made in 3rd quarter this year. This change will take effect in 2013, based on each state's usual rate filing date. For some, it will be 1/1/13, for others later in the year.
NCCI's data indicates that close to 80% of experience mods will change plus or minus five points. The modification of the split point will most substantially impact the very best and very worst mods. Each company will be affected differently based on the costs of their employee injuries.
A big positive for all businesses is that every company’s lowest possible mod will drop. This means that employers will have greater control over what they pay for workers' compensation than they have before. For companies that take command of their workers' comp program, the opportunities have never been better to reduce their costs, even though rates are increasing in many states.
In summary, we may just be skimming the surface of what’s in store for our industry in 2012. But unless the Mayan calendar had it right and everything comes to a screeching halt on December 21, 2012, you can pretty much bet 2013 will be even more exciting.
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