Reported this morning is that a "reform" deal in California has been agreed upon by Labor and Industry, and is getting ready to ride the coattails of an existing bill via the "gut and amend" process.
Generally there are only two real avenues in workers' compensation to generate cost savings because there really are only two BIG benefits: medical services and indemnity.
We know there won't be any hair cuts to the indemnity portion of the great bargain because the Schwarzenegger reforms did that and one of the stated goals of this reform cycle is to reinstate, if not inflate, the value of being disabled.
That means medical services.
The Division of Workers' Compensation (DWC) had been moving public attention away from medical services by attacking lien claims and photocopy services.
And surely liens and photocopy services will be part of this new reform package - but those items alone can not produce any savings worthy of an indemnity increase. There simply are not enough costs (if any) that can be attributed to those two line items.
The projected cost offset will come at the expense of specialist physicians through adoption of a medical fee schedule that is based on the resource-based relative value scale (RBRVS) used by Medicare.
There have been attempts in the past to adopt an RBRVS system in California but those attempts had been defeated through strong lobbying.
And while reform observers are hoping for time to review and evaluate any proposed package, the reality is that in all likelihood we will see a process more akin to Schwarzenegger reform, where a complex package is rolled out and strong-armed through the Legislature in the midnight hours - for with only days left before the Legislature adjourns that is the only possible avenue if anything is going to the Governor's desk this calendar year.
If a reform package is introduced, it will be through a process called “gut and amend,” in which the provisions are stripped out of an existing bill and replaced with new language. The deadline for policy committees such as Assembly Insurance to review and pass bills has passed, so any amendments will have to be adopted on the floor of the Senate or Assembly.
Assembly Rule 77.2 states that any substantial amendment made on the floor of the Assembly or the Senate “may be referred by the Speaker to the appropriate committee.”
This can only mean a streamlined process if anything is going to be passed this year, which means little time for outside review, analysis and comment. It also means that whatever has been agreed upon behind closed doors is very likely what will come out of the Legislature.
It also means that while there will be politically inspired projections of savings those numbers will not have been independently vetted or critiqued.
Angie Wei, a lobbyist with the California Labor Federation who is also chairwoman of the Commission on Health and Safety and Workers’ Compensation (CHSWC), told Sacramento Bee reporter Laurel Rosenhall that, "We're going to find cost savings in the system by establishing fee schedules where they didn't have them before."
There you go - "fee schedules where they didn't have them before."
Well, there's always been some sort of medical treatment fee schedule, but not like RVRBS. And a photocopy service fee schedule didn't exist before at all, so I'm sure that's a shoe-in. I'm sure there will be a few extra add-on tweaks as well just for good measure.
In the normal world of politics that surrounds workers' compensation, it's another rush to the alter.
We won't get to see what the guest list looks like until we're at the reception.
Postscript: The Los Angeles Times also reported this morning the likelihood of a bill rushing through the Legislature and pulling savings out of a new medical fee schedule.
Thursday, August 9, 2012
Wednesday, August 8, 2012
CA Reform Can't Deliver ANY Savings Now
The suspense is killing me!
In 23 calendar days the California Legislature adjourns and presently there are three workers' compensation bills that have been determined to have "significant fiscal impact", meaning a projected fiscal impact of $50,000 or more on the General Fund or $150,000 or more on any other account or fund, and are sent to the appropriations suspense file. Bills can only be moved off the suspense file by a vote of the committee.
AB 808, by Nancy Skinner, D-Berkeley, could cost the state up to $108,000 for claims that are approved when a hospital worker contracts MRSA, according to the fiscal analysis. The state, which operates seven acute-care hospitals, could incur additional costs if a MRSA injury results in permanent disability, the analysis says.
AB 2493, by Roger Hernandez, D-San Gabriel Valley, authorizing the Department of Industrial Relations to certify interpreters and maintain a list of interpreters who can serve at administrative hearings and medical examinations, would cost up to $190,000 from the Workers’ Compensation Administrative Revolving Fund in fiscal years 2012 and 2013, according to the fiscal analysis. Charging interpreters certification fees could offset up to $120,000 a year, but the bill was still sent to the suspense file.
Also placed on the suspense file was AB 1687, by Paul Fong, D-Cupertino, which would authorize attorney fees when an injured worker with an award of future medical care hires an attorney who successfully appeals a utilization review determination to deny or modify treatment. The fiscal analysis says the bill would lead to an “unknown, likely significant increase annually in state workers’ compensation costs" based on 2011 stats reflecting that there were 206,000 utilization review decisions on 43,000 open cases, of which 34,500 were denied and 10,000 were modified.
In June AB 1145, by Gil Cedillo, D-Los Angeles, was added to the suspense file based on the potential to significantly increase benefit payments. The measure would make a $6,000 vocational retraining voucher available when the treating physician determines the worker is permanent and stationary and there will be some degree of permanent impairment.
Three measures by Sen. Ted Lieu, D-Torrance, are also currently in the Assembly inactive file, including:
While no legislation has been introduced to date, sources have told WorkCompCentral there is a possibility legislation could be ready as early as next week. If a reform bill is enacted, the next question is how much data the Rating Bureau will have available to accurately predict the impact because implementing new statutes often requires regulatory change, and that can take quite a bit of time.
So whatever does get served up to the Legislature and ultimately to the Governor's desk CAN'T deliver any cost savings, if any, for several years regardless of what the current Administration projects.
In 23 calendar days the California Legislature adjourns and presently there are three workers' compensation bills that have been determined to have "significant fiscal impact", meaning a projected fiscal impact of $50,000 or more on the General Fund or $150,000 or more on any other account or fund, and are sent to the appropriations suspense file. Bills can only be moved off the suspense file by a vote of the committee.
AB 808, by Nancy Skinner, D-Berkeley, could cost the state up to $108,000 for claims that are approved when a hospital worker contracts MRSA, according to the fiscal analysis. The state, which operates seven acute-care hospitals, could incur additional costs if a MRSA injury results in permanent disability, the analysis says.
AB 2493, by Roger Hernandez, D-San Gabriel Valley, authorizing the Department of Industrial Relations to certify interpreters and maintain a list of interpreters who can serve at administrative hearings and medical examinations, would cost up to $190,000 from the Workers’ Compensation Administrative Revolving Fund in fiscal years 2012 and 2013, according to the fiscal analysis. Charging interpreters certification fees could offset up to $120,000 a year, but the bill was still sent to the suspense file.
Also placed on the suspense file was AB 1687, by Paul Fong, D-Cupertino, which would authorize attorney fees when an injured worker with an award of future medical care hires an attorney who successfully appeals a utilization review determination to deny or modify treatment. The fiscal analysis says the bill would lead to an “unknown, likely significant increase annually in state workers’ compensation costs" based on 2011 stats reflecting that there were 206,000 utilization review decisions on 43,000 open cases, of which 34,500 were denied and 10,000 were modified.
In June AB 1145, by Gil Cedillo, D-Los Angeles, was added to the suspense file based on the potential to significantly increase benefit payments. The measure would make a $6,000 vocational retraining voucher available when the treating physician determines the worker is permanent and stationary and there will be some degree of permanent impairment.
Three measures by Sen. Ted Lieu, D-Torrance, are also currently in the Assembly inactive file, including:
- SB 777 would designate the director of the DIR as the public official who determines the reasonableness of requests to share data among state agencies during investigations into whether employers are carrying workers’ compensation insurance.
- SB 863 would prohibit filing a lien after three years from the date services were provided prior to July 1, 2012, and 18 months from the date services were provided after July 1.
- SB 959 would eliminate the Labor Code section allowing hospitals to bill separately for the cost of equipment used in spinal fusion procedures.
While no legislation has been introduced to date, sources have told WorkCompCentral there is a possibility legislation could be ready as early as next week. If a reform bill is enacted, the next question is how much data the Rating Bureau will have available to accurately predict the impact because implementing new statutes often requires regulatory change, and that can take quite a bit of time.
So whatever does get served up to the Legislature and ultimately to the Governor's desk CAN'T deliver any cost savings, if any, for several years regardless of what the current Administration projects.
Tuesday, August 7, 2012
Special Report: NY's Wildly Bizarre System
"It's a wildly bizarre system," said Tom Lynch, the founder of workers' compensation cost-consulting firm Lynch Ryan. "It's a system that runs on vested interests, and you can start with attorneys. It's a volume-based business for attorneys, and every single thing that happens has to be okayed by a judge."
"It's like if you want to go from Albany to New York City, you've got to by way of Santa Fe," he said. "Over time, it's just become a ridiculous system."
WorkCompCentral reporter Michael Whiteley found out as much when he prepared his special report on the state's workers' compensation system, published Monday.
A review of data from the workers' compensation systems in California, Florida, Illinois and Texas and interviews with experts inside and beyond the Empire State, show:
"It's like if you want to go from Albany to New York City, you've got to by way of Santa Fe," he said. "Over time, it's just become a ridiculous system."
WorkCompCentral reporter Michael Whiteley found out as much when he prepared his special report on the state's workers' compensation system, published Monday.
A review of data from the workers' compensation systems in California, Florida, Illinois and Texas and interviews with experts inside and beyond the Empire State, show:
- New York State Workers' Compensation Board's (SWCB) 94 judges held 266,046 hearings last year. SWCB reported it held the most hearings in the nation, although that is arguable. California, which has a civilian labor force nearly twice as large, reported judges held 151,728 hearings and another 128,537 conferences involving judges, for a total of 280,265. Still, New York had nearly six times more hearings than Illinois and 25 times more than Florida.
- New York has nearly three times the number of judges than Florida and more than three times as many judges as Illinois. California has 149 administrative law judges and 21 presiding judges. New York has 85 judges, called claims referees, and 9 senior claims referees.
- Despite its volume of hearings, SWCB and its judges closed 329,319 claims last year – nearly 2.5 times more than the number of cases closed in California and about five times the number of cases closed in Florida and Illinois.
Data on claims costs and assessments needed to fund SWCB's $200 million operating budget and pay claims from special funds also show New York is an outlier:
Whiteley reviews claims of widespread patronage that controls (some say choke) New York's system detailing how Board members obtain their seats and return rewards for the privilege.
Interviewees say former Gov. Mario Cuomo and the New York Legislature took a major step to end patronage in 1994, when they ended the political appointment of workers' compensation law judges.
The Legislature technically "fired" all the judges, said one former board official, and required the judges to pass civil service exams to regain their jobs.
"In those days, for lawyers who were important people and who needed jobs, the New York Workers' Compensation Board was the likely place for them to land," Rosasco said.
"But my experience is that politics at the Workers' Compensation Board has actually decreased, and the board has much more credibility than it ever did in past years," Troy Rosasco, former co-chairman of the New York Workers' Compensation Alliance, a political action committee for claimants' attorneys and an executive board member of the New York Injured Workers' Bar Association, said. "During past years, during former Democratic administrations, we had a sea of favorable workers' compensation decisions, and then you would have Republican administrations come in and the decisions would shift 180 degrees."
Whiteley also reviews how stenographers have essentially attained traffic cop status in New York's system and that efforts at the top to streamline procedures have effectively been rebuffed.
SWCB Chairman Robert Beloten is attempting to replace stenographers at hearings with digital recorders as part of a broader initiative to reduce the number of hearings in New York and allow judges to resolve disputes with proposed rulings, called "desk orders."
Beloten said in a regulatory announcement last September that transcripts are called for in about 3.5% of the board's hearings.
"Verbatim reporters spend approximately 70% of their work time recording hearings that will never be transcribed and only 30% of their work time transcribing the hearing minutes and performing other job-related duties," Beloten said.
The practice of awarding attorney fees throughout the life of a case is also coming to an end.
The report review many other aspects of the Empire State's system and the issues facing the state, but is much too lengthy for publication in this blog, but particularly if you're from California, Florida or Illinois, this report will allay any feelings of inadequacy or unjust criticism. I have made it available for download it here.
- Total average costs per lost-time claim in New York had reached $73,055 by policy year 2008 and are projected to exceed $100,000 this year, according to the actuarial firm Oliver Wyman, which adjusts claims each year to reflect costs for future years. The New York Compensation Insurance Rating Board (NYCIRB), which only projects costs for nine years, put lost-time claims costs in New York at $68,796 for 2010.
- Oliver Wyman reported that, for policy year 2007, Delaware ranked first in average lost-time claims costs at $83,013. Louisiana ranked second at $77,231, and New York ranked third at $66,501.
- Lost-time claims accounted for 36% of all claims in New York, compared to a national average of 25%.
- Assessments for New York self-insured employers, which comprise about a third of the state's workers' compensation market, reached 48.5 cents for every dollar paid out in indemnity costs in 2011 and were the highest in the nation.
- Assessments collected by insurers were 20.2% of standard premium – the highest rate in the nation and more than five times the national average, according to the New York Workers' Compensation Policy Institute.
Whiteley reviews claims of widespread patronage that controls (some say choke) New York's system detailing how Board members obtain their seats and return rewards for the privilege.
Interviewees say former Gov. Mario Cuomo and the New York Legislature took a major step to end patronage in 1994, when they ended the political appointment of workers' compensation law judges.
The Legislature technically "fired" all the judges, said one former board official, and required the judges to pass civil service exams to regain their jobs.
"In those days, for lawyers who were important people and who needed jobs, the New York Workers' Compensation Board was the likely place for them to land," Rosasco said.
"But my experience is that politics at the Workers' Compensation Board has actually decreased, and the board has much more credibility than it ever did in past years," Troy Rosasco, former co-chairman of the New York Workers' Compensation Alliance, a political action committee for claimants' attorneys and an executive board member of the New York Injured Workers' Bar Association, said. "During past years, during former Democratic administrations, we had a sea of favorable workers' compensation decisions, and then you would have Republican administrations come in and the decisions would shift 180 degrees."
Whiteley also reviews how stenographers have essentially attained traffic cop status in New York's system and that efforts at the top to streamline procedures have effectively been rebuffed.
SWCB Chairman Robert Beloten is attempting to replace stenographers at hearings with digital recorders as part of a broader initiative to reduce the number of hearings in New York and allow judges to resolve disputes with proposed rulings, called "desk orders."
Beloten said in a regulatory announcement last September that transcripts are called for in about 3.5% of the board's hearings.
"Verbatim reporters spend approximately 70% of their work time recording hearings that will never be transcribed and only 30% of their work time transcribing the hearing minutes and performing other job-related duties," Beloten said.
The practice of awarding attorney fees throughout the life of a case is also coming to an end.
The report review many other aspects of the Empire State's system and the issues facing the state, but is much too lengthy for publication in this blog, but particularly if you're from California, Florida or Illinois, this report will allay any feelings of inadequacy or unjust criticism. I have made it available for download it here.
Monday, August 6, 2012
Mark Twain's Workers' Compensation
The one thing about statistics is it's all about how the data is gathered and interpreted.
Which is why I'm not terribly excited about the latest published study from the National Academy of Social Insurance (NASI) which claims that employers on average paid less for workers’ compensation insurance and injured workers collected less in benefits in 2010 than in 2009.
At first blush this statement would contradict all of the more recent news from various states that costs are increasing, along with the normal cycle of calls for reform.
But the study (“Workers’ Compensation: Benefits, Coverage and Costs, 2010”), headed by John F. Burton, professor emeritus at Rutgers and Cornell universities and chairman of the NASI, measures costs as a share of paid wages.
When measured thusly, NASI found employer costs were lower in 2010 than in any year since 1980.
Employer costs in 2010 were $1.23 per $100 in payroll, down 4.7%. Costs per $100 of payroll in 2010 were 30.1% lower than the $1.76 recorded in 1980, according to the NASI report.
Workers’ compensation programs in all 50 states and the District of Columbia, as well as federal programs, paid a total of $57.5 billion in benefits in 2010, down 0.7% from the $57.9 billion paid in 2009.
Indemnity benefits increased 0.7% to $29.5 billion from $29.2 billion in 2009, while medical payments decreased by 2.1% to $28.1 million from $28.7 billion over the same period.
Frank Neuhauser, a researcher with the University of California, Berkeley and author of numerous studies of the California workers' compensation system, also served on the NASI study panel that prepared the report.
Neuhauser explained to WorkCompCentral that the NASI study calculates employer cost per $100 of payroll, including overtime payments, which are typically not included for workers’ compensation premiums. He said that about 10% of payroll doesn’t apply toward premiums.
In addition Neuhauser doesn't believe that NASI's estimate of self-insured employer costs is accurate.
When estimating the cost for self-insured employers, NASI uses dollars paid and adds about 15% to cover overhead and administrative costs. Neuhauser said it should be closer to $1 for $1.
“I think they’re underestimating the costs for self-insured employers and public agencies,” he said. “That probably accounts for about 30% of costs, which means NASI is about 30% low as a percent of payroll.”
The Bureau of Labor Statistics estimates the cost to all non-federal employers per $100 was $1.87 in 2010, compared to the $1.23 estimated by NASI.
Which goes to show that Mark Twain's beguilement with numbers ("There are three kinds of lies: lies, damned lies, and statistics") is completely understandable.
And which caused Neuhauser to state that while the NASI numbers may seem low, they are calculated consistently so there is still value to the study in analyzing trends, and that, “It does tell us that costs are not accelerating in ways that rating bureaus are concerned.”
Which is why I'm not terribly excited about the latest published study from the National Academy of Social Insurance (NASI) which claims that employers on average paid less for workers’ compensation insurance and injured workers collected less in benefits in 2010 than in 2009.
At first blush this statement would contradict all of the more recent news from various states that costs are increasing, along with the normal cycle of calls for reform.
But the study (“Workers’ Compensation: Benefits, Coverage and Costs, 2010”), headed by John F. Burton, professor emeritus at Rutgers and Cornell universities and chairman of the NASI, measures costs as a share of paid wages.
When measured thusly, NASI found employer costs were lower in 2010 than in any year since 1980.
Employer costs in 2010 were $1.23 per $100 in payroll, down 4.7%. Costs per $100 of payroll in 2010 were 30.1% lower than the $1.76 recorded in 1980, according to the NASI report.
Workers’ compensation programs in all 50 states and the District of Columbia, as well as federal programs, paid a total of $57.5 billion in benefits in 2010, down 0.7% from the $57.9 billion paid in 2009.
Indemnity benefits increased 0.7% to $29.5 billion from $29.2 billion in 2009, while medical payments decreased by 2.1% to $28.1 million from $28.7 billion over the same period.
Frank Neuhauser, a researcher with the University of California, Berkeley and author of numerous studies of the California workers' compensation system, also served on the NASI study panel that prepared the report.
Neuhauser explained to WorkCompCentral that the NASI study calculates employer cost per $100 of payroll, including overtime payments, which are typically not included for workers’ compensation premiums. He said that about 10% of payroll doesn’t apply toward premiums.
In addition Neuhauser doesn't believe that NASI's estimate of self-insured employer costs is accurate.
When estimating the cost for self-insured employers, NASI uses dollars paid and adds about 15% to cover overhead and administrative costs. Neuhauser said it should be closer to $1 for $1.
“I think they’re underestimating the costs for self-insured employers and public agencies,” he said. “That probably accounts for about 30% of costs, which means NASI is about 30% low as a percent of payroll.”
The Bureau of Labor Statistics estimates the cost to all non-federal employers per $100 was $1.87 in 2010, compared to the $1.23 estimated by NASI.
Which goes to show that Mark Twain's beguilement with numbers ("There are three kinds of lies: lies, damned lies, and statistics") is completely understandable.
And which caused Neuhauser to state that while the NASI numbers may seem low, they are calculated consistently so there is still value to the study in analyzing trends, and that, “It does tell us that costs are not accelerating in ways that rating bureaus are concerned.”
Friday, August 3, 2012
Brokers and Reform - Forcing a Conversation on Relevancy?
Insurance brokers aren't typically associated with being behind legislative attempts to change substantive workers' compensation laws.
So imagine the surprise when I read that a broker backed interest group is seeking new legislation in California to constrict benefits to injured workers claiming cumulative trauma (CT) and psyche injuries, and taking on chiropractors and "AGO" (Almaraz/Guzman & Ogilvie - a pair of court opinions that critics say detrimentally eroded objective disability ratings contrary to the intent of the 2004 reforms implementing the AMA Guides 5th).
Jamie Reid, a broker at the Michael Ehrenfield Co. Insurance Agents & Brokers firm in San Diego County, together with broker Gabe Erle, last year started Workers’ Compensation Fraud Fighters.
They are seeking laws that would:
The group uses the same tired arguments for "reform" that have been tirelessly used in the past and which just don't hold water: employer flight, carrier contraction, increasing costs.
Reid said Nevada and other states have been targeting California business owners using workers’ compensation costs as one of the reasons to relocate.
Nevada has always targeted California businesses with a more favorable tax situation, cheaper real estate, and cheaper labor. Nevada would LOVE California businesses to come rescue the worst unemployment rate in the nation - but let's face it, that AIN'T happening.
The insurance market is hardening - that is no surprise. Reid says the market has already hardened. I don't think so. Yes, rates are going up, and carriers are being more selective in their risks, but there are only a few that seek double digit increases and they are small carriers with very little market share. The big market share is relatively stable - it is still a competitive market.
The experience modification standards are changing, but that is an attribute of the Workers' Compensation Insurance Rating Bureau (WCIRB) fixing a system that hasn't changed in many years and didn't reflect economic growth and other changes.
And of course costs are increasing - they always increase. That's called inflation. It is a normal fact of financial life. Where they increase, how much they increase, and what stimulates the increase are more what the issues and debate should be about.
Why does there need to be a different rating system for CT claims? That makes no sense. On one hand this group wants consistency in ratings, and on the other they want a different standard for CT claims - completely illogical.
Labor Code 3208.3 was put into law in the late 1990s to curb psyche claim abuse - mainly targeted at psyche "mills" that used the lax standard of "injury" to generate profits for reporting and treatment for mental issues that the general population would not consider injurious.
Chiropractors were targeted with limitations on the quantity of treatments they could provide without further authorization to curb the endless cycle of lifetime care some would prescribe that would go beyond generally accepted recommendations.
"Objectivity" in the medical-legal sense is a subjective term - even the authors of the AMA Guides essentially admit that there is no way to objectify every element of impairment and converting impairment to disability is still fraught with subjective determinations.
So I am perplexed at what this group is really trying to accomplish, and why it is coming from insurance brokers - a group of insurance professionals that are more concerned generally with the underwriting process rather than the claims process.
Jesse Ceniceros, president of Voters Injured at Work, opined to WorkCompCentral that he thought that this latest maneuver was just changing the topic of conversation - a distraction to the present undercurrent of reform talks going on at the highest levels of the Brown Administration.
Ceniceros said injured workers won’t allow a repeat of 2004 and would consider a ballot initiative in 2013 “to eliminate work comp as we know it” if the reform proposal doesn’t provide fair and adequate benefits for injured workers.
“If the injured worker can’t be protected by these laws, what we need to do is eliminate (comp) and start over again,” he said. “If it can’t be reformed properly, we need to eliminate it altogether.”
Now THAT would be disruptive to the economy!
So imagine the surprise when I read that a broker backed interest group is seeking new legislation in California to constrict benefits to injured workers claiming cumulative trauma (CT) and psyche injuries, and taking on chiropractors and "AGO" (Almaraz/Guzman & Ogilvie - a pair of court opinions that critics say detrimentally eroded objective disability ratings contrary to the intent of the 2004 reforms implementing the AMA Guides 5th).
Jamie Reid, a broker at the Michael Ehrenfield Co. Insurance Agents & Brokers firm in San Diego County, together with broker Gabe Erle, last year started Workers’ Compensation Fraud Fighters.
They are seeking laws that would:
- Determine an objective disability rating system for cumulative trauma.
- Eliminate the ability for injured workers to file psychological claims or other stress claims.
- Prohibit chiropractors from serving as medical evaluators and eliminate the requirement that a medical provider network include chiropractors.
- Restore the objectivity in disability rating that has been eroded by the Almaraz/Guzman and Ogilvie court decisions.
The group uses the same tired arguments for "reform" that have been tirelessly used in the past and which just don't hold water: employer flight, carrier contraction, increasing costs.
Reid said Nevada and other states have been targeting California business owners using workers’ compensation costs as one of the reasons to relocate.
Nevada has always targeted California businesses with a more favorable tax situation, cheaper real estate, and cheaper labor. Nevada would LOVE California businesses to come rescue the worst unemployment rate in the nation - but let's face it, that AIN'T happening.
The insurance market is hardening - that is no surprise. Reid says the market has already hardened. I don't think so. Yes, rates are going up, and carriers are being more selective in their risks, but there are only a few that seek double digit increases and they are small carriers with very little market share. The big market share is relatively stable - it is still a competitive market.
The experience modification standards are changing, but that is an attribute of the Workers' Compensation Insurance Rating Bureau (WCIRB) fixing a system that hasn't changed in many years and didn't reflect economic growth and other changes.
And of course costs are increasing - they always increase. That's called inflation. It is a normal fact of financial life. Where they increase, how much they increase, and what stimulates the increase are more what the issues and debate should be about.
Why does there need to be a different rating system for CT claims? That makes no sense. On one hand this group wants consistency in ratings, and on the other they want a different standard for CT claims - completely illogical.
Labor Code 3208.3 was put into law in the late 1990s to curb psyche claim abuse - mainly targeted at psyche "mills" that used the lax standard of "injury" to generate profits for reporting and treatment for mental issues that the general population would not consider injurious.
Chiropractors were targeted with limitations on the quantity of treatments they could provide without further authorization to curb the endless cycle of lifetime care some would prescribe that would go beyond generally accepted recommendations.
"Objectivity" in the medical-legal sense is a subjective term - even the authors of the AMA Guides essentially admit that there is no way to objectify every element of impairment and converting impairment to disability is still fraught with subjective determinations.
So I am perplexed at what this group is really trying to accomplish, and why it is coming from insurance brokers - a group of insurance professionals that are more concerned generally with the underwriting process rather than the claims process.
Jesse Ceniceros, president of Voters Injured at Work, opined to WorkCompCentral that he thought that this latest maneuver was just changing the topic of conversation - a distraction to the present undercurrent of reform talks going on at the highest levels of the Brown Administration.
Ceniceros said injured workers won’t allow a repeat of 2004 and would consider a ballot initiative in 2013 “to eliminate work comp as we know it” if the reform proposal doesn’t provide fair and adequate benefits for injured workers.
“If the injured worker can’t be protected by these laws, what we need to do is eliminate (comp) and start over again,” he said. “If it can’t be reformed properly, we need to eliminate it altogether.”
Now THAT would be disruptive to the economy!
Thursday, August 2, 2012
Can More Paper Protect MA Temp Workers?
A while back I posited that most workers probably don't know what workers' compensation was, or cared, until they have an injury at work or unless they know someone who is "on comp".
Massachusetts is going to try to keep workers for temporary staffing firms informed about who the coverage provider with House Bill 4304, sponsored by Rep. Linda Dorcena Forry, D-Dorchester, called the "Temporary Worker Right to Know Act."
Proponents say the bill will help ensure that the more than 40,000 day laborers in Massachusetts are protected from injuries.
HB 4304 also requires temporary staffing firms to tell workers what safety equipment and training are required for the job.
The Workplace Safety Task Force of the Massachusetts Bar Association and the Massachusetts Coalition for Occupational Safety and Health (MassCOSH) has been pushing for passage of versions of HB 4304 for the past two years.
They argue that day laborers – primarily in the construction industry – are working without protection and often without knowing the identities of staffing company clients.
The bill exempts professional workers, secretaries and administrative assistants.
The bill requires staffing companies to provide a written job order that includes:
"There's definitely a day laborer issue. These are the folks who are picked up for some job at 6 a.m. and don't know where they are going. They get hurt on the job and find out there's no workers' compensation," Bill Vernon, Massachusetts director of NFIB, said. "But what (lawmakers) have done is sucked in legitimate companies, and the bill may create a real problem with compliance."
I tend to agree with NFIB. I'm not sure employees really care about workers' compensation, safety or training. They might care about safety if the engage in an activity that they believe might not be safe, but most of the time those workers are too worried about getting paid and putting food on the table than whether a particular job is safe.
Likewise whether training is required, equipment, licenses - not particularly important when each and every hour worked means another step away from poverty.
I hope that the Massachusetts law accomplishes its intended purpose - to help protect the state's temporary workers from injury and ensure access to care and benefits if the unfortunate happens.
I'm just not convinced that another couple of required pieces of paper are going to make a difference.
Massachusetts is going to try to keep workers for temporary staffing firms informed about who the coverage provider with House Bill 4304, sponsored by Rep. Linda Dorcena Forry, D-Dorchester, called the "Temporary Worker Right to Know Act."
Proponents say the bill will help ensure that the more than 40,000 day laborers in Massachusetts are protected from injuries.
HB 4304 also requires temporary staffing firms to tell workers what safety equipment and training are required for the job.
The Workplace Safety Task Force of the Massachusetts Bar Association and the Massachusetts Coalition for Occupational Safety and Health (MassCOSH) has been pushing for passage of versions of HB 4304 for the past two years.
They argue that day laborers – primarily in the construction industry – are working without protection and often without knowing the identities of staffing company clients.
The bill exempts professional workers, secretaries and administrative assistants.
The bill requires staffing companies to provide a written job order that includes:
- The name, address and telephone number of the staffing agency, its workers' compensation carrier, the employer at the worksite and contact information for the state Department of Labor Standards.
- The type of job and any requirements for training, equipment or licenses.
- The designated pay day, hourly rate and anticipated start and end times for the job.
- Any meals or transportation provided by the staffing company or the worksite employer and associated fees charged workers.
- A multilingual notice that the job order contains important information and should be translated.
- The bill also prohibits staffing companies from charging workers for registering with the state or for procuring the job.
"There's definitely a day laborer issue. These are the folks who are picked up for some job at 6 a.m. and don't know where they are going. They get hurt on the job and find out there's no workers' compensation," Bill Vernon, Massachusetts director of NFIB, said. "But what (lawmakers) have done is sucked in legitimate companies, and the bill may create a real problem with compliance."
I tend to agree with NFIB. I'm not sure employees really care about workers' compensation, safety or training. They might care about safety if the engage in an activity that they believe might not be safe, but most of the time those workers are too worried about getting paid and putting food on the table than whether a particular job is safe.
Likewise whether training is required, equipment, licenses - not particularly important when each and every hour worked means another step away from poverty.
I hope that the Massachusetts law accomplishes its intended purpose - to help protect the state's temporary workers from injury and ensure access to care and benefits if the unfortunate happens.
I'm just not convinced that another couple of required pieces of paper are going to make a difference.
Wednesday, August 1, 2012
Rate Filings Show CA Working As Well As It Can
Market hardening in California presages business anxiety making a perfect political climate to pass some reform either this year or next.
The state's Department of Insurance (DOI) released rate filings and a total of 56 carriers averaged increases of 10.8% in their pure premium filings.
Zurich American Insurance Co., which filed for an 8.3% increase in pure premiums in June, is the largest carrier to file for an increase with $227.6 million in written premium in 2011. It was the 6th largest carrier with a 2.9% share of the market.
The State Fund with nearly $1 billion in written premium and a 12.9% share of the market sought no change to its rates.
Most all carriers came in around the DOI's approved advisory pure premium rate increase of 8.26%.
There were some small carriers that filed increases in excess of 18%:
Castlepoint, the 26th largest carrier, with $81.8 million in written premium, in 2011 filed for an 18.1% increase.
Amguard, which had $24.4 million in premium in 2011 filed for a 20.5% increase, while Vanline, which wrote $8 million in premium last year, filed for a 23.3% increase.
HDI Gerling America Insurance Co., which reported $635,652 in written premium last year, filed for a 46% increase, the highest submitted in the past two months.
The DOI's figures don't take into account the market share of the carriers relative to weighting rate increases. Honestly I don't have the time to do this either.
But if The State Fund's 12.9% market share were to factor into the overall industry rate increases I suspect that the true average increase would be closer to 5% overall for the industry.
Which is why the DOI's rate publication needs to be read carefully - there are outliers which greatly distort the actual market impact of rate increases.
And rate increases don't tell the real story about the health of the market, whether it is hardening or softening, and whether any particular sector of the industry is disproportionately impacted.
Reform supporters will rally around the DOI rate publication for the proposition that the California workers' compensation system needs fixing to reduce costs because carrier's rates have increased nearly 10%, even though that statement is not accurate if weighting is to be included.
In addition, the reform debate in California is focused on liens and photocopy services as the cost centers upon which carriers will see savings so that an increase in permanent disability indemnity can be implemented without an increase in rates.
That argument isn't logical either because rates are going up regardless of any cost savings versus permanent disability offset.
I think what is most telling is that the state's single largest carrier with nearly 13% of the market is keeping rates level. That tells me that management of The State Fund feels confident they are adequately priced and reserved and that the underlying cost structures are being managed efficiently - in other words that the state's system is working as well as it can under the circumstances.
Is there a need for reform? Not if you're The State Fund. Everyone else in the system probably has a different reason for reform though.
The state's Department of Insurance (DOI) released rate filings and a total of 56 carriers averaged increases of 10.8% in their pure premium filings.
Zurich American Insurance Co., which filed for an 8.3% increase in pure premiums in June, is the largest carrier to file for an increase with $227.6 million in written premium in 2011. It was the 6th largest carrier with a 2.9% share of the market.
The State Fund with nearly $1 billion in written premium and a 12.9% share of the market sought no change to its rates.
Most all carriers came in around the DOI's approved advisory pure premium rate increase of 8.26%.
There were some small carriers that filed increases in excess of 18%:
Castlepoint, the 26th largest carrier, with $81.8 million in written premium, in 2011 filed for an 18.1% increase.
Amguard, which had $24.4 million in premium in 2011 filed for a 20.5% increase, while Vanline, which wrote $8 million in premium last year, filed for a 23.3% increase.
HDI Gerling America Insurance Co., which reported $635,652 in written premium last year, filed for a 46% increase, the highest submitted in the past two months.
The DOI's figures don't take into account the market share of the carriers relative to weighting rate increases. Honestly I don't have the time to do this either.
But if The State Fund's 12.9% market share were to factor into the overall industry rate increases I suspect that the true average increase would be closer to 5% overall for the industry.
Which is why the DOI's rate publication needs to be read carefully - there are outliers which greatly distort the actual market impact of rate increases.
And rate increases don't tell the real story about the health of the market, whether it is hardening or softening, and whether any particular sector of the industry is disproportionately impacted.
Reform supporters will rally around the DOI rate publication for the proposition that the California workers' compensation system needs fixing to reduce costs because carrier's rates have increased nearly 10%, even though that statement is not accurate if weighting is to be included.
In addition, the reform debate in California is focused on liens and photocopy services as the cost centers upon which carriers will see savings so that an increase in permanent disability indemnity can be implemented without an increase in rates.
That argument isn't logical either because rates are going up regardless of any cost savings versus permanent disability offset.
I think what is most telling is that the state's single largest carrier with nearly 13% of the market is keeping rates level. That tells me that management of The State Fund feels confident they are adequately priced and reserved and that the underlying cost structures are being managed efficiently - in other words that the state's system is working as well as it can under the circumstances.
Is there a need for reform? Not if you're The State Fund. Everyone else in the system probably has a different reason for reform though.
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