Want in on one of the best kept secrets in the Oil and Gas Industry? Believe it or not, there is a way to avoid up front deposits and annual audits associated with your workers compensation coverage while also reducing labor cost for your company?
To the surprise of many owner/operators within the Oil and Gas Industry the opportunity for significant discounts in your workers compensation premiums (sometimes as much as 30-40%) is available and amazingly easy to acquire. Think about this-what if there was a way that to avoid loss claims counting against your own workers compensation experience modifier? Wouldn't you be instantly interested in knowing what it and how you can take advantage of it? Is your first thought that it's too good to be true or what's the catch? Welcome to one of the best kept secrets in the oil industry. A secret that's really not a secret at all and has been around for years but unfortunately not a lot of people have been made aware of it in your industry.
So what's the big secret? Frankly, it's no secret at all. In fact, it's one of the fastest growing employee administration trends for all Industries across the nation. You can accomplish everything presented within this article through contracting with a Professional Employer Organization (PEO). The PEO concept was conceived over 30 years ago in the state of Florida to help businesses deal with the high cost of workers compensation coverage. The concept is simple, pool businesses together to leverage the power of large group number or small businesses to take advantage of their combined "economies of scale" and in doing so receive significant discounts on their workers' compensation costs. PEO's are able to provide their clients and their workforces with the savings, services, and benefits they provide through a "co-employer relationship." In a co-employer relationship the client company is recognized as the "on-site employer." Nothing changes on the outside the client company run's his day to day business as usual. The PEO does not run or interfere with how the client's business. However, the PEO is recognized as the "statutory employer." And this is where the power of this relationship really begins. Even though the client still has direction and controls of its business the PEO as the statutory employer takes on many of the liabilities and responsibilities that you once had. The key is that employee's are moved from the clients Federal Employer Identification Number (FEIN) to the FEIN of the PEO. This is what is called a game changer! By moving into this type of relationship the client company has taken advantage of a number of opportunities and has maximized and leverage several key components with its labor force.
Take for example workers compensation insurance. Now that the client's employees are on the PEO's policy the client avoids the usual up front deposits he has to face each year. In addition, the premiums are built into the billing rate that is billed every pay period so it is technically "paying as you go" each pay period. As a result, there is no need or concerns for annual audits. But that's not the half of it. If there are any loss claims made by your employee's no longer going to affect the clients experience modifier but instead reported on the PEO's experience claims.
But let's talk about cost. By using a PEO service that has a strong workers compensation policy the client company can enjoy significant discounts on premiums due to the law of large numbers or economies of scale. Instead of using a dozen to perhaps a few hundred employees of a client company to leverage pricing why not use thousands of other client's employees as well? Due to the size of many strong PEO services they enjoy significant premium discounts that they are able to pass along to their customers. But wait, it doesn't stop there. According the State of Texas Professional Employer Organization Act the PEO may be required (based on the workers' comp carrier's interpretation of the law) to use the client companies experience modifier in the initial pricing component. Therefore, if the client has a discount modifier that can be utilized by the PEO along with the discounted premiums of the PEO, then the client would be able to enjoy even greater savings through contracting with a PEO. Many companies have taken advantage of this opportunity and to a PEO service to avoid anticipated future worker's comp rate increases.
But what if you already have an ad-on modifier as a result of past claims? Well, the Texas PEO Act also states that after a client has been in a PEO relationship after two years the PEO may then use its own modifier when developing the client company's rates. This gives the client company the ability to work his rates down faster and keep them down (keeping mind that the PEO's rates typically remain much lower due to the PEO discounts to begin with than one would have dealing with the impact of those costs on their own stand alone policy.)
And finally, due to the fact that the PEO recognizes the liabilities it is taking on from each client company as a result of the co-employer relationship they have a vested interest in keeping your employee's safe and healthy. Therefore, a PEO service will provide safety and risk management services, customized safety manuals, regular training sessions and consulting when needed and/or requested. Along with site inspections of job sites and facilities they will also provide relief from worker compensation claims management and the filing of first report of injury to the state. Furthermore, the PEO's defense of fraudulent workers' comp claims is a significant advantage for client companies.
It is also important to note that there are PEO services that assist their clients in the development of the necessary safety programs to qualify for the ISNET World or Compliance Depot. As you know this is paramount the oil industry to obtain contracts.
Keep in mind that this article has only covered one aspect of what a PEO provides its client companies. We haven't even mentioned the tremendous leverage used in the payroll side of the co-employer relationship. Once again because the employee's are on the FEIN of the PEO then PEO service is responsible for calculating, filing and remitting quarterly payroll 940 and 941 reports and deposits. The client is relieved from having to deal with producing W-2's and handling all the employee questions at the end of the year. They are also relieved from processing employee deductions and garnishments. And probably one of the most powerful tools deals with SUTA (State Unemployment Tax) administration and claims management. If a client's former employee makes an unemployment claim it is counted against the PEO SUTA rate and not that of the client companies. Once again a huge advantage and cost savings associated with using a PEO!
And now that the PEO has entered into this relationship with the client company and has taken on these employee administration liabilities and many more. It behooves the PEO to provide the client company with a strong Human Resource support program. The PEO's HR Department, assist their client's with everything from customized employee handbooks, process unemployment claims, to ongoing consultative support, training and workshops. The PEO's HR Professionals, work to make sure that the client company is in compliance with the multitude of state and federal governmental rules and regulations. The PEO will also perform various background checks and drug testing programs when needed. Additionally, the PEO's HR experts will work with the client to establish well defined job descriptions, prepare for and conduct job candidate interviews, while also assisting with hiring, discipline, and termination decisions and issues.
And finally, a PEO can take advantage of its large number of combined client workforce to provide a very strong benefits package to its clients. These services include Major medical insurance plans, voluntary or supplemental insurance products, and 401k retirement plans. All of which provides more relief to the client from all the benefits administration of making payments to the record keeping. Each of these services is handled by top experts in each field. Keeping in mind that these various services and benefits are optional and typically do not require any contribution from the client company.
It's also important to note that although these PEO services provide the same four core service (Payroll, Workers Compensations, Benefits, and Human Resources), PEO's do vary somewhat in the services and benefits that they provide. Every PEO will have their own specialties and niches of industries that they serve. So how does one find the right PEO service for their specific business needs? Well, that's where a PEO brokerage firm like StroudLink comes in. StroudLink represents only the top PEO Service Providers in the industry and prides itself in providing the best fit for each business according to their needs and expectations.
So if your company is looking for ways to think out side of the box and to get leaner, significantly reduce liabilities, have better cost controls, and become more competitive. Then a PEO service Provider might be your perfect solution. The bottom line is that if you hire a PEO, they will take care of the non-revenue generating side of your business that is key and vital to its survival and success. Allowing the business owner to get back to why he started in business to begin with.
Giving Your Business Peace of Mind
Identifying, Preventing and Controlling Complex Claims
Some claims are truly catastrophic in nature. These are the rare, unfortunate instances in which a traumatic accident occurs resulting in a life-altering injury. Identifying and engaging the critical stakeholders and subject matter experts needed from the onset results in the development and execution of a blue print necessary to put the claim on the right path to secure a good outcome. However, most complex claims are not initially defined as catastrophic. It is the claim’s progression and path that lead to the increased complexity. Hindsight is always 20/20 and it is easy to look back and see when a claim went in the wrong direction. Being able to recognize warning signs and effectively address issues in real time can make a profound difference in the overall outcome. Important steps to prevent claims from becoming complex include identifying key indicators and then deploying targeted strategies to mitigate and resolve them. The cases with the highest propensity for becoming complex claims frequently include opioid utilization, comorbidities, psychosocial issues, consequential injuries and litigation. Without the right approach and resources to help the employee recover, a simple wrist strain has the potential to become a complex claim.
You may have seen a chart in the hospital documenting a patient’s pain level from 0 to 10. It is only natural that we all want this to be 0. However, the mechanisms pursued to secure this goal are not always the most appropriate. The inappropriate use of narcotic type medications to treat work-related injuries can have an extreme impact on the employee’s quality of life. Increased claim costs and disability durations, increased likelihood of permanent impairment and resulting prolonged claim durations are all driven by unnecessary opioid use. Claims open greater than 180 days drive 80 to 90% of total claim costs and become unnecessarily complex. How can an examiner impact a physician’s philosophy on pain management and prescribing habits? Many states rely on pharmacy management and evidence-based medicine to guide what medications and treatments are appropriate for injuries, and some have adopted pharmacy formularies that disallow narcotic medication. Statutory and regulatory guidelines may help in this regard, but the bigger solution is education and collaboration. Deploying clinical experts to educate providers and negotiate an appropriate medication from the onset is the key. Looking out for the employee’s best interests and working with all stakeholders to map an appropriate treatment plan will stop unnecessary opioid use before it starts.
The impact of unrelated medical issues
Comorbidities are strong indicators that a claim could become complex. Some of the most prevalent comorbidities today are obesity, hypertension, type 2 diabetes and heart disease. Obesity coupled with a work injury to a lower extremity can present real challenges for the employee, employer and medical provider. Surgery can be delayed due to uncontrolled diabetes or hypertension. These issues result in more time lost from work, a greater likelihood for permanent impairment and higher medical costs. In some jurisdictions, the employer may be responsible for supplying the necessary care to get the comorbidity under control to facilitate recovery from the work-related injury.
It is also possible for the work injury to exacerbate unrelated medical conditions. Inactivity due to a painful joint injury can make regular exercise difficult and lead to weight gain and high blood sugar levels for a type 2 diabetic.
So, what is an examiner to do in these instances? How can they make an impact? The worst thing they can do is ignore the secondary medical issues. That will most certainly lead to the claim becoming complex. They must enlist the help of medical professionals such as nurse case managers and peer reviewers to help bridge group health efforts with the treatment plan for the work-related injury. The treatment must be harmonized so the employee can succeed in their recovery. However, it is not always easy and some instances will require a different approach to correctly apportion, separate and treat the unrelated health issues and the work-related injury. Second opinions and medical and legal evaluations may be required. This process can also be costly as it adds time and complexity to the claim. Assessing secondary medical issues can take months and all the while, the employee is not getting better and may start claiming additional illnesses or body parts as part of the original claim. In some instances, it becomes evident that the employee is not complying with the harmonized treatment plan. The employee’s participation is essential and without it, the claim will likely become complex. It is important for the examiner to identify these markers in real time and look to effectuate an immediate, appropriate resolution. It is important that the resolution helps mitigate future exposure while providing funds for future work-related treatment needs.
Improving outcomes when psychosocial issues are present
The ability to cope and apply an optimistic outlook to a rather challenging situation can set apart individuals who will recover quickly from those who will not. Examiners and medical providers can quickly gauge the presence of psychosocial issues during initial interactions with the injured employee. Symptom magnification, statements around an inability to recover or a heightened fear around the process are clear signs that these issues are present. In these cases, it can be challenging for the employee to relate to the claims team and the provider, and to participate actively in their care; making it more difficult for them to secure a good outcome.
Just like comorbidities, it is a huge mistake to ignore psychosocial issues. Doing so will almost guarantee the claim will become complex. Examiners often times are concerned that by recognizing and helping to treat these issues, their client will end up with an admitted psyche component. This is not necessarily the case and no psychological diagnosis is required to treat psychosocial impediments. Cognitive behavioral and problem solving therapy can help equip the employee with the tools required to succeed and medical professionals will provide exercises to promote a more positive outlook. Deploying this extra step at the right time can help the employee reach a better outcome and resolution.
Managing migratory claims
Some claims are catastrophic because of the nature of the incident or diagnosis, but there are also claims that migrate from ordinary to complex based on the injury expanding from one part of the body to another. There are some common threads with these migratory claims such as a diagnosis of continuous trauma, opioid drug use and litigation.
Consider this example of a migratory claim – an employee strains her wrist from continuous data entry, quickly develops tennis elbow, then a rotator cuff strain, later neck pain and then the other arm starts hurting due to overuse. The examiner’s job is to provide benefits for what is related to the work injury and separate out the rest, but that can be very difficult to do. Securing a substantive medical opinion very early on from the primary treating physician regarding what is related and effectively communicating this with the employee can help. These issues never get better with age. It is essential to reassure the employee of their remedies and avenues to receive appropriate care and lost time benefits both inside and outside of the workers’ compensation landscape. It is not about denying benefits to the employee, but really about which bucket those benefits will be paid out of. The claims administrator will pay for what is related to the workplace injury or illness out of the workers’ compensation bucket, and the non-work related matters will be paid for through disability and/or group health benefits.
A subsequent consequential diagnosis like arthritis, fibromyalgia or complex regional pain syndrome can be very challenging to handle. When an employee is diagnosed with a consequential medical issue that the examiner and employer do not feel is legitimate, they instinctively will want to dig in and defend the matter. This is reasonable and in some cases necessary as it is difficult to justify providing funds to resolve something that clearly appears non-industrial in nature. It is often difficult to quantify the value of these cases without a final report valuing permanency. However, the defense of the matter is often protracted and expensive while the employee’s consequential injury continues to progress and in most cases gets worse. A case that began with a reserve of $10,000 can quickly progress to $500,000 or more. It is important to recognize the adverse potential these consequential injuries pose and work to secure a resolution as early as possible.
Litigation can also result in migratory claims, complexity and higher costs. Once an attorney is involved, the claim costs will increase substantially related to lost time, permanent impairment benefits and medical costs. It is common for the initial legal filing, especially in states like California, to include additional body parts migrating from a specific injury to continuous trauma. Deploying strategies to avoid litigation is the best solution to control these costs and prevent the claim from becoming complex. However, this is not always possible. Once the claim becomes litigated, the focus should be on mitigation and resolution. The examiner must recognize, again in real time, when to push for the right resolution. In some instances, the parties can end up litigating disagreements over smaller less impactful items, for example whether or not the employee is entitled to mileage reimbursement for a period of self-procured treatment. Meanwhile, the claim progresses and a settlement that may have cost $50,000 quickly triples in value. The examiner must recognize “when to say when” and direct the defense counsel to resolve the claim at the right time so the value clearly matches the exposure.
Problems and solutions
It is easy to understand that if someone broke their leg in three places and hurts their back falling off a ladder, it is going to be an expensive, complex claim, but employers become disenchanted with the workers’ compensation process when a claim starts out as a lower back strain and two years later they have $750,000 in reserves.
Best practices should help in identifying the key markers around complex claims. Deploying a team approach that includes subject matter experts working together to develop the right plan can make the difference. This may include using predictive analytics, analyzing injury types, identifying comorbidities, flagging litigation combined with specific diagnosis, curbing opioid utilization and helping employees through psychosocial issues. Great claims resolution hinges on identifying these markers in real time and working to ensure the employee gets appropriate, quality medical care for the claim while mitigating and resolving unrelated matters.
Austin, TX – Texas Mutual Insurance Company, a policyholder-owned company, recently awarded a dividend of $721,113 to the Lone Star Auto Dealers (LSA) safety group. The dividend was earned based on the group members’ dedication to making safety a priority in their businesses and therefore keeping the group’s loss ratio low.
“At Texas Mutual, we believe that good safety practices should be rewarded,” said Texas Mutual President and CEO Rich Gergasko. “This dividend recognizes the safe practices of LSA safety group employers who are committed to workplace safety.”
Since 1999, Texas Mutual has distributed more than $125 million in safety group dividends among qualifying safety groups. Many group members also qualify for individual policyholder dividends from Texas Mutual based largely on their companies’ loss ratios.
In addition to potential dividends, LSA safety group members also receive discounts on their workers’ compensation premiums and have access to free workplace safety materials related to their industry.
“Texas Mutual offers valuable information that helps keep auto dealers in this state safe,” said Brad Wicker, LSA program manager. “Their premium discounts and safety services help group members save money on their workers’ compensation insurance and keep the cost of doing business low.”
Texas Mutual has distributed $1.8 billion in safety group and individual policyholder dividends since 1999. The majority of that total – $1 billion – has been distributed in the last seven years.
While Texas Mutual has awarded dividends each year since 1999, they are based on performance and therefore not guaranteed. Additionally, dividends must comply with Texas Department of Insurance regulations.
Source: Texas Mutual
WCRI Study: Medical Payments Per Claim in TX Rose 7% in 2013, Faster than Median
Cambridge, MA – Medical payments per workers’ compensation claim with more than seven days of lost time in Texas rose 7 percent from 2012 to 2013, a faster rate than in the median of 17 states, according to a recent study by the Workers Compensation Research Institute (WCRI).
The report, CompScope™ Medical Benchmarks for Texas, 16th Edition, pointed to the following factors:
Hospital payments per inpatient episode increased 16.6 percent from 2012 to 2013, having risen just 0.4 percent annually in the previous four years.
Prices paid for office visits and physical medicine services grew moderately.
Payments per claim for physical medical services increased, both in nonhospital and hospital outpatient settings. Physical medicine includes procedures and modalities such as exercises to develop flexibility, activities to improve function, and application of electrical stimulation.
“Texas’ 7 percent increase was a change from most prior years,” said Ramona Tanabe, executive vice president and counsel for WCRI. “From 2008 to 2012, growth averaged a more moderate 3 percent annually, with some year-to-year fluctuation.”
Payments per claim in Texas, though, remained lower than the typical state WCRI studied. Prices paid for some medical services remained below the norm, despite large increases. In addition, there were large decreases in utilization of medical care?though even after the decreases, Texas injured workers received more medical services than did those in other states for some key services, such as chiropractic care, office visits, and neurological/neuromuscular testing.
WCRI studied medical payments, prices and utilization in 17 states, including Texas, looking at claim experience through 2014 on injuries that occurred in 2013 and prior. WCRI’s CompScope™ Medical Benchmark studies compare metrics of medical costs and care from state to state and across time. Data in the Texas report likely reflect nearly all effects of House Bill 7, a 2005 reform focused on workers’ compensation medical costs.
Managing claims requires navigation and coordination of a variety of influences, each with an affect on a claim as unique as the claim itself. In particular, comorbidities and chronic pain and its treatment can profoundly impact claim outcomes.
Comorbidities are health conditions that co-exist with the workers’ compensation injury or illness and as such, can impact the claim and an injured workers’ recovery. Common comorbidities include aging, obesity, depression, insomnia, hypertension, cardiovascular disease, arthritis, diabetes, and substance use. When comorbid conditions complicate the treatment of a compensable injury the overall cost of the claim may escalate and the duration of the claim may extend. Proactive management of these conditions at every stage is therefore important.
Chronic Pain and its Treatment
Chronic pain is often treated with opioid analgesics. Many are aware of the risks of misuse and abuse associated with using opioid analgesics, but often overlooked is the impact this potent medication can have on the body. Opioid analgesics have the potential to affect every major body system, which can be compounded with the existence of comorbid conditions or the use of multiple opioids. One way to determine if a claim with multiple opioid analgesics requires additional caution or monitoring is to understand the morphine equivalent dose (MED), which can be used as part of a medication management program.
Other factors influencing claim outcomes include the body part affected and the nature of the injury, as well as:
The number of prescribers treating the injured worker
The number of pharmacies utilized to fill prescriptions
Prescribing behaviors and medication patterns
Both patient and prescriber demographics
Employing medication monitoring or a medication agreement
Application of a multidisciplinary approach
Use of ancillary services
Understanding the various factors that can affect claim outcomes allows for more proactive medication management, providing a path to brighter outcomes – both clinically and financially.