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Group Rating Fix Awaits Governor’s Signature

December 19, 2008

Group Rating Fix Awaits Governor’s Signature

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Legislation to fix a statutory problem that would have had the disasterous effect of banishing group rating programs was completed before the general assembly adjourned this week.  Responding to a trial court decision in Cuyahoga county, the Ohio Senate and House made revisions and passed substitute H.B. 79, sponsored by Representative Bill Batchelder (R – Medina).  The OMA advocated in support of the law changes.  Governor Strickland is expected to sign the bill into law.

OMA members with OMA group-rating proposals for the 2009/10 plan year should plan to accept their proposals to protect their savings. 

OMA Testifies to Protect Group Rating

December 12, 2008

OMA Testifies to Protect Group Rating

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Workers’ compensation group rating would end under a recent court ruling.  Legislation (House Bill 79) to “fix” the ruling is in the Ohio Senate, and this week the OMA urged quick passage.

On behalf of OMA member companies, George Wilkinson, attorney with Dinsmore & Shohl in Cincinnati, testified that “(i)t would be detrimental to the state economy to allow this court ruling to immediately reverse the intent and practice that has developed over the past eighteen years without extensive debate.  I’m sure I don’t need to remind the committee of the hardships and challenges facing our employers and our state.  If unchecked, one-third of Ohio’s private employers could soon be facing significant premium increases, many doubling and much higher.”

The legislature is being asked to delete one word from the statute.  That word is ‘retrospective,’ because it mischaracterizes how the actual Ohio group-rating program operates.

A vote on the measure is scheduled for next week, the final days of the “lame duck” session. 

Court Invalidates BWC Group Rating

December 5, 2008

Court Invalidates BWC Group Rating

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On Tuesday, November 18, 2008, the Cuyahoga County Court of Common Pleas granted plaintiffs’ request to prohibit the Ohio Bureau of Workers’ Compensation from continuing the Group Rating Program beginning with the next rating year on July 1, 2009. This decision has been widely reported by Ohio media.  From OMA Connections Partner, Bricker & Eckler LLP

Changes to BWC Drug-Free Grant Program

November 7, 2008

Changes to BWC Drug-Free Grant Program

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Effective immediately the BWC will only process drug-free workplace and drug-free EZ work place grant applications for services an employer has already implemented; that is, the BWC won’t entertain grant applications if the employer has not yet implemented the services for which the funds are to be used.
Employers can still apply for grants up to $10,000 to defray certain costs associated with implemented drug free programs, i.e. costs associated with employee education and supervisor training.  Other changes effective November 17 include new reimbursement guidelines for grant monies.  OMA’s Connection Partner for all things drug-free is Working Partners®;  please contact them. 

Ohio Workers’ Comp Council Hears First Deloitte Study on BWC

October 31, 2008

Ohio Workers’ Comp Council Hears First Deloitte Study on BWC

Homepage » Communities » Safety and Workers’ Compensation Management » Archive » 2008 » Ohio Workers’ Comp Council Hears First Deloitte Study on BWC

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On October 29, the Workers’ Compensation Council, a legislative agency created to measure and assess performance and competitiveness of the Ohio workers’ compensation system, heard from Jan Lommele, Principal, Deloitte Consulting LLP.  Deloitte was hired by the BWC, pursuant to HB 100, to perform an independent review of the actuarial operations of the BWC.  Lommele reviewed findings from a portion of the 36 tasks that the Deloitte study encompasses; the study is described by BWC Administrator, Marsha Ryan, as more comprehensive than any in memory.

Deloitte conclusions are many and include the following that are applicable to group-rating.  (The linked report addresses findings from groups 1 & 2 of the 36 tasks addressed.)

• Ohio base rates are much higher than peer states, primarily due to large off-balance factors resulting from group-rating in particular.
• Deloitte is unaware of any state that has a program that functions like group-rating in Ohio.
• Because group-rating group memberships churn, they are not actuarially sound; Deloite concludes there should be a minimum number of years of experience for a group to qualify for a discount, e.g. 3 years.
• Apply a phase-in period of at least two years to new group members prior to receiving the full group discount, e.g. 1st year, 25% of discount, 2nd year, 50% of discount.
• Evaluate alternative programs to group-rating including a group-dividend plan which provides dividends based on profits the group may generate or group-retro plans in which premiums are adjusted up or down depending on the loss experience of the group.
• Eliminate the programs that exclude claims from an employer’s experience, including the $15K medical program and the salary continuation program.
• The Premium Discount Program and the Drug Free Workplace programs appear to be functioning ineffectively.
Leadership Briefing will keep you posted on significant operating changes BWC makes as a result of the Deloitte study or other management action. 

BWC Sets New Hospital Fee Schedule

October 15, 2008

BWC Sets New Hospital Fee Schedule

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The BWC Board of Directors recently established a new rule and fee schedule  for payment of inpatient hospital services for injured workers in 2009.  The BWC uses as a foundation the standard Medicare pricing methodology, Medicare Severity Diagnosis Related Groups (MS-DRG) that is updated annually.
This year the BWC revised its outlier methodology and its payment adjustment factors.  The bureau’s aim is to distribute payments “more equitably among inpatient bill types.” 

An outlier is a case in which costs are much higher than average for a particular service.  BWC’s outliers have been significantly higher than Medicare’s.  To correct this, the BWC will use Medicare’s methodology to identify outliers.

The agency benchmarked four states’ method of establishing payment adjustment factors.  Those states were Texas, California, North Dakota and South Carolina.  For 2009, BWC will have a “two-tiered adjustment method: MS-DRGs to be reimbursed at 120% of the Medicare rate and MS-DRG outliers to be reimbursed at 175% Medicare.”  2009 aggregate payments are projected to be similar to those of 2008.

BWC Plans to Cap 2009/10 Premiums Under Certain Conditions

October 9, 2008

BWC Plans to Cap 2009/10 Premiums Under Certain Conditions

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There are some changes in motion at the Bureau of Workers’ Compensation (BWC) that will affect employer premiums for the 2009-10 premium period:
As previously reported, the BWC board of directors has voted to reduce the maximum credibility, and thus, group credits, for all groups from the current 85% to 77% effective July 1, 2009.  This continues the BWC’s rate reforms to better balance premium and risk.  The BWC has reported repeatedly that current group rating discounts are too high, which causes non-group rated employers to subsidize group rated employer premiums.  Coincidently, this will cause base rates to overall decrease.

For employers who are in group rating now and will be group eligible for 2009-10, but whose premiums will be negatively affected by the reduction in the maximum credibility from 85% to 77%, there will be a cap on how much the premium can increase.  The BWC has not released details of this cap yet; however, this cap will only apply if the only change in premium from 2008-09 to 2009-10 is related to the reduction in the credibility table.

For employers who may find themselves ineligible for group rating for the 2009-10 plan year, the experience modifier will be capped so that the premium impact is somewhat mitigated.  The experience modifier will be no greater than double, whereas previously there was no limiter. 

BWC Working on New Products

September 26, 2008

BWC Working on New Products

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The BWC staff is working this fall to prepare proposals to present to the BWC Board in December that would enable the Ohio system to offer more insurance product choices to Ohio employers that buy their workers’ compensation insurance from the state.

The BWC is benchmarking other markets for three types of new products: 1) a deductible program whereby an employer could agree to pay (by refunding BWC) a set portion of every claim, for example, $1,000.  In exchange the employer would have a lower overall premium; 2) a group retrospectively rated program whereby a group of employers could be banded together for experience rating, each paying an initial ‘standard premium;’ if their total experience improved over a set time, they would receive a refund of premium, and if it deteriorated, they would pay an assessment; 3) a safety dividend program whereby if an employer cost the BWC less than projected for a set period of time, the employer could receive a refund of a portion of premium, or a dividend, for being safe.

These programs, particularly the deductible and the safety dividend program might be able to be combined with a group-rating plan so employers could attain the greatest premium savings.
In addition, the BWC is considering a modification to the group rating program so that groups would be required to stay together for a set period of years; the BWC asserts that continuous groups are actuarially stable.  Employers would have to agree to multi-year commitments to a specific group.  The BWC is exploring this change because their studies indicate groups do not collect sufficient premium for their eventual claims because they can disband and reform each year.

Finally, all new programs and plans are being vetted by the BWC’s actuarial consultants so that each program adds to the stability and fairness of rate-setting in Ohio. 

OMA Staff Presents 2008 Babington Awards

September 12, 2008

Safety and Workers’ Compensation Management 2008 Archive

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Ohio Healthy Families Act – What does it mean for your business?

August 8, 2008

Ohio Healthy Families Act – What does it mean for your business?

Homepage » Communities » Safety and Workers’ Compensation Management » Archive » 2008 » Ohio Healthy Families Act – What does it mean for your business?

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Ohio businesses may face yet another challenge if the proposed Ohio Healthy Families Act (OHFA) passes in November 2008.  From OMA Connections Partner, Buckingham Doolittle & Burroughs, LLP