Andrea Collins
President
Sienna Staffing
andrea@siennastaffing.com

The historical gubernatorial election in California demonstrated that voters are willing to make dramatic changes in its leadership if passion, anger and money are fully utilized. The swiftness in which Californians changed governors was astounding. The passion and fervor of the election sent a clear message to the people who represent us that dumping the old guard might be in order if negative emotions reach this level again. It is no wonder that government officials are watching the electorate nervously and rightly so. The mood of the people is uncertain in the aftermath of a political firestorm.

The question is--- is what occurred in California a barometer for the nation? Have our collective frustration with the economy, war and the division between us and our elected officials sparked the same passion throughout America? Does this move by Californians foretell a greater movement in the United States to bring government back to fiscal responsibility and accountability for its actions?

Californians sit in the dust of change waiting for a new leadership to take charge, hoping they have made the right decision and wondering if what they have done will ignite the same passion for change across the country.

“Never doubt that a small group of concerned citizens can change the world. Indeed, it is the only thing that ever has”. -- Margret Mead

To: Honorable Senators Richard Alarcon & John Burton and Members of The Labor Committee

Some questions regarding SB228:

The Insurance Commissioner (IC) and The State Compensation Insurance Fund (SCIF) have praised this bill since last Friday, stating that it will keep benefits from increasing any further. (Www.adjuster.com and www.workcompcentral.com)
Can this bill justify the trading of a 12% ‘possible increase’ for a certain 80% increase in the cost to employers? The additional cost employers will now have to face for the cost of running the entire Workers Compensation System.
Are employers/workers to follow the path of Contractors and Sub-Contractors: not having to pay WC Insurance such as in the Construction Industry?

You propose eliminating the Industrial Medical Council (IMC). At the same time, you want the Administrative Director (AD) to adopt specified protocols concerning medical billing, fraud, etc., while having the Commission on Health Safety and Workers Compensation (The Commission) hire outside entities to make further annual or biannual studies in multiple areas. Eliminating the IMC is nothing more than a transfer of power – nothing to do with savings for Workers Compensation.

‘What is the logic & cost saving rationale’ for eliminating IMC, if not politics? Why eliminate an agency already in place to handle disciplinary action of physicians, accreditation, training, etc?
Rephrasing my question: are you trying to eliminate the concept of ‘Substantial Justice & Medical Evidence' in the evaluation and determination of disability? No more ‘basis in facts’ for indemnity benefits in WC as per Article 14 of California Constitution?

The other major constitutional change proposed in your bill is eliminating requirements that the State reimburse local agencies and school districts for the costs of mandated State Programs.

How many services and jobs will the local agencies and school boards have to cut to support the added cost of this legislation while the state bureaucracy remains intact?

Also proposed: (a) all medical bills to be paid in 45 days, (b) increasing non-payment penalties from 10% to15% and, (c) when ready, paying the electronically prepared/received/itemized bills of the PTP in 15 days?
How are employers saving in this area? How are others gaining from these changes, given the Increases in Penalty costs under Labor Code Section § 5814? Solicitors & barristers at the expense of injured workers?

Come to the real world for one week: sit in the desk of any Claims Examiner in any office of any provider in California. Then assess the true impact of the proposed changes.

Respectfully yours,

Luis Pérez-Cordero

William Nathans
Senior Claims Examiner
Athens Administrators
bill@adjustingworld.com

Now that the “reform” will take effect on January 1, 2004, let’s take a look at the effect of the new law.

One of the ways it is being touted as a major cost saving vehicle for employers is by limiting chiropractic and physical therapy visits to 24 per injury unless more are authorized in writing by the carrier. I know it sounds like a great idea, but lets see how it is going to work in the real world.

Around the 20th chiropractor or physical therapist visit a report will generate saying more visits are necessary. This will be supported by an opinion from a medical doctor. The adjuster will then get an opinion saying no more is needed and will deny further treatment. The next thing that will happen is that the injured worker will become represented. The applicant’s attorney will file for an expedited hearing in the issue of refusing to authorize medical treatment. The adjuster will refer the file out to a defense attorney to handle the hearing. This will result in the judge ordering more treatment for the injured worker (liberal construction and all). Then the questions of are we liable for a penalty under Labor Code section 5814 for unreasonably delaying medical treatment and will we have to go to back to the Board to end the treatment because we will be under an order to provide treatment will arise?

The medical examinations will cost about $500 each before the diagnostic testing requested. The attorney’s fees will run about $1,000 plus whatever is awarded to the applicant attorney plus other discovery costs, all this for the first hearing.

If he applicant should be unsuccessful in this scenario, the treating physician will submit a doctor’s first report of injury alleging a new cumulative trauma claim. A new claim will be set up, reserved, delayed and litigated. This will do wonders for the employers experience modification, the basis for the premium.

So if I understand it, two medical evaluations, attorney fees and a new claim are going to cut the costs of a claim.

Please e-mail at bill@siennastaffing.com with your comments.

Janet Phinick
President
Axon Services, Inc.
janet@axonxmod.com
www.axonxmod.com

On October 22, 2003 John Garamendi spoke before the LA Athletic Club. Although his reform platform is hard line, is it watertight? His agenda includes:

• Create a more objective permanent disability rating system;
• Institute 24-hour care and allow employers to delay claims for up to a year;
• Push District Attorneys and Law Enforcement Officers to root out fraud schemes;
• Require claims examiners to become certified;
• Implement more rational penalty structures.

What is the average small business owner to think of this tall order? Here is my take on the Commissioners’ wish list:

• Over the last 14 years approximately 7 significant reforms have gone into effect. The great majority of them supported the cause of the injured worker. Few were in favor of the employer or made little impact on permanently reducing rates.
• The permanent disability rating system was reformed in 1996 after years of collecting dust. It took several years for the state to accomplish this task. Part of the problem was the poor evaluation reports provided by the doctors, who take the injured workers’ word as gospel when reporting restrictions or pain levels. The Industrial Medical Council sets the reporting standards for final reports, but the WC legal system decides on reporting adequacy. It’s a broken system.
• HMO/HCO 24-hour care has been on the table for years, with no takers. How are they going to force this hand? And, delay claims for a year? I guess the disabled employee collects State Disability during this time, if they are entitled to it?
• Push District Attorneys and Law Enforcement Officers to enforce fraud? I guess this would work if you were pushing them in a wagon full of money. My understanding of this issue – there is no money.
• Require claims examiners to be certified? Most people don’t know this, but the gene pool for examiners has been shrinking over the last 6 years. No training, no money, no skilled examiners, no certified examiners. The math is easy. The certification test isn’t.
• Implement more rational penalty structures? What’s irrational about them now? Shouldn’t the carriers be held accountable for not getting a check out on time? They have two weeks and it’s only 10%. The solution is easy: insurers need to put less financial resources into marketing and more into claims service. If you improve your claims processes and hire more trained staff, you won’t have penalties. This is not rocket science here.

So will the players in the system go along with these measures if they pass? This is to be seen. Given the culture of the WC legal system, the liberal Applicant Attorneys and WC Judges may chip away at these reforms until they wash away any short-term savings. For instance, the latest reform cuts therapy and chiropractic down to 24 visits over the life of the claim. This is down from 50 to 75 visits on many claims. It’s not a stretch to think that this is going to result in additional benefits. It could result in more surgeries, more “Pain Centers”, higher permanent disability ratings, or longer temporary disability.

The Bottom Line

What can a policyholder do to create savings on their WC insurance premium?

• They can locate a broker that specializes in WC claims management;
• Or they can hire an outside consultant or consulting firm to monitor their claims;
• Keep their employees happy. This sounds optimistic for some employers, but when was the last time you asked your employees about their needs?

Just remember- the more time you put into seeing that these options succeed, the better results you are likely to enjoy. The time you invest can be your own or delegated to a critical thinking staff member. The quality of the delegated contact is tied to your savings, because good communication and documentation can result in direct savings. Cost controls are also tied to the strength of your relationship with your employees before, during and after the claims have occurred. ”Reading” your employees to understand their needs can make or break a company.

Axon Services is a WC Insurance claims consulting firm, whose services include the development and implementation of Experience Modification (X-Mod) reaction plans.

Cindy Delgado, BA, CPDM
Matiecris
Return to Work Services
cindydelgado@matiecris.com
www.matiecris.com

Under the Workers Compensation reform of 2002 the Administrative Director was mandated to establish the Return-to-Work Program and Workers’ Compensation Return-to-Work Fund, to be operative July 1, 2004. The Return-to-Work Program promotes the early return to work of an employee following an injury or illness and the Return-to-Work Fund will be the source of reimbursement funds to qualifying employers.

Although the Fund is not operative until July of 2004, many employers are already implementing return-to-work programs specifically designed for their company and have realized significant cost savings by reducing their major cost drivers.

Employers that meet specific criteria are eligible for reimbursement. An employer reimbursement is allowed for up to 50% of wages paid to the employee for a period not to exceed 90 days, or until the employee is released to full duty or becomes permanent and stationary, whichever occurs first. Reimbursement occurs after submission of documentation of eligibility and wages paid. The modified or alternative position must be within the employee’s medically documented work restrictions. The employer will then be reimbursed for expenses incurred for a maximum of $1,250.00 to accommodate each temporarily injured employee and a maximum of $2,500.00 to accommodate each permanently injured employee, when workplace modifications are made to accommodate the employee’s return to work.

Early intervention is imperative in order to be successful with the implementation of a return-to-work program. There is a common misconception that return-to-work programs are too costly when in reality these programs are more cost effective than the other alternatives.

One of the many benefits of having a return-to-work program in place is that employers are quickly able to identify a viable transitional position should an injury or illness occur. This type of program creates a positive relationship between employees and management. Research has shown that productivity and efficiency increases in an environment where the employees and management are working together constructively.

Return-to-work programs can be developed for small and large employers with the result being reduced lost time. With the increased costs of workers compensation and changes in legislation, it is prudent to take proactive steps early rather than later in a case.

Results of the October Poll

Is the self-insured exam the best measure of a claims handler's abilities?

25% Yes
75% NO

Poll results are as of October 14, 2003