News and Analysis
BWC Board Ratifies Rate Reduction
At it’s May meeting, the Bureau of Workers’ Compensation (BWC) board of directors was expected to – and did – adopt a reduction in workers’ compensation base rates for private employers by an average of 4 percent beginning July 1.
According to the BWC, the cut is expected to save employers approximately $65 million.
The overall drop in base rates includes a 7 percent decrease in the average rate for the manufacturing industry group.
BWC Projects New Drug Formulary will Save $15 Million through 2012
The Bureau of Workers’ Compensation (BWC) board of directors last week approved BWC’s first ever formulary of medications for the outpatient treatment of injured workers.
It was established to improve the efficiency and effectiveness of treatment, limit the inappropriate use of medications and lower BWC’s prescription costs.
BWC’s Pharmacy and Therapeutics Committee, which consists of pharmacists and physicians who advise BWC leadership on issues related to the use of medications, will oversee the formulary.
The formulary is expected to become effective by early September.
Texting While Driving … While Working
Under the Occupational Safety and Health Act, employers a have legal responsibility to safeguard drivers at work, whether they drive full-time or only occasionally to carry out their work, and whether they drive a company vehicle or their own.
According to OSHA, employers should: 1) prohibit texting while driving, 2) declare their vehicles “text-free zones,” 3) establish work procedures and rules that do not make it necessary for workers to text while driving in order to carry out their duties, 4) set clear procedures, times, and places for drivers’ safe use of texting and other technologies for communicating with managers, customers, and others, 5) incorporate safe communications practices into worker orientation and training and 6) eliminate financial and other incentive systems that encourage workers to text while driving.
OMA/Safex Recorded Webinar: Personal Protective Equipment (PPE) Assessments 05/26/2011
Participants of this webinar will be able to: Document the PPE Assessments in accordance with 29 CFR 1910.132; explain the steps of conducting a PPE Assessment; review current program for compliance with OSHA standard and identify facility tasks that should be prioritized for assessment.
OSHA Still Working on Employer Reporting of MSDs
The U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) will reopen the public record on a proposed rule to revise the Occupational Injury and Illness Recording and Reporting Requirements regulation.
According to OSHA’s press release, reopening the record will allow interested individuals to comment on the issues raised during the small business teleconferences that OSHA and the Small Business Administration’s Office of Advocacy co-sponsored on April 11 and 12. OSHA held the teleconferences to gather information from small businesses about their experiences in recording work-related musculoskeletal disorders (MSDs) and how they believe they would be impacted by OSHA’s proposed rule.
In January 2010, OSHA proposed to revise its Occupational Injury and Illness Recording and Reporting Requirements regulation to restore a column to the OSHA 300 log that employers would have to check if an incident they already have recorded under existing rules is an MSD. The National Association of Manufacturers has actively opposed the proposed rule as it puts employers in a position of diagnosing conditions they are not qualified to do.
Workers’ Comp “Privatization” Contemplated
After several months of dormancy, a Senate panel reconvened a meeting this week to consider opening the Ohio market to commercial workers’ compensation insurers.
The National Council on Compensation Insurance, Inc. (NCCI) described how a few states have transitioned from public to private models. The presentation was largely focused on delivery structure and, unfortunately, did not address the cost-drivers in the system.
The chairman of the committee, Senator Tim Grendell, announced a second hearing would be held in June.
When he visited with members of the OMA Safety and Workers’ Compensation Committee in March, Bureau of Workers’ Compensation Administrator Steven Buehrer indicated the administration was unlikely to address workers’ compensation until autumn.
BWC Describes Requirements for Earning Safety Council Participation Rebates
Employers that are or become a member of an Ohio safety council by July 31, 2011, can qualify for a rebate of their workers’ compensation premium in the 2012 policy year by meeting certain eligibility criteria. The Bureau of Workers’ Compensation recently released documentation (and more) that describes the program.
Non-group rated employers can earn a two percent rebate by meeting program participation requirements and another two percent performance bonus by meeting frequency and severity reduction targets, for a total rebate of four percent.
Group rated employers (assuming BWC Board approval this month) will be able to earn the two percent performance bonus for meeting frequency and severity targets.
Say Cheese for Safety
This week, the U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) announced a nationwide photography contest: Picture It! Safe Workplaces for Everyone. The goal of the contest is to raise awareness about workplace safety and health.
The contest is part of OSHA’s year long 40th anniversary celebration and runs through August 12.
Photographers may interpret “images of workplace safety and health” in any way they choose.
BWC Actuarial Committee Recommends Good Rate News for Private Employers
This week’s meeting of the actuarial committee of the Bureau of Workers’ Compensation (BWC) board of directors reported out mostly good news for private employers.
The committee will recommend to the full board an overall base rate decrease for private employers of four percent to be effective July 1, 2011. The proposed rate effect specifically on manufacturing manual classifications is a reduction of seven percent. Manufacturing employers will pay an average rate of $2.77 assuming the board approves the committee’s recommendation; refer to page 15 of the meeting materials to see specific recommendations for base rates and expected loss rates by manual class.
Chief actuary for the BWC, John Pedrick, told the committee that as of 2009 data, the gap is not fully closed on the premium disparity paid by group rated employers versus non group rated employers, but is closer than before. He noted that the most recent data available is for 2009, the first year the ‘breakeven factor’ applied to premiums of group rated employers, so “the jury is still out” on whether the mechanisms implemented are sufficient to collect the right premium from all employers. The breakeven factor allows more premium to be collected from group rated employers in order to more accurately reflect the risk they bring to the system.
The committee allowed the action announced last month by Administrator Buehrer to enable employers participating in the state’s Safety Councils to qualify for a two percent premium discount on top of their group rating discount if they meet certain claims frequency and severity reductions.
The committee addressed several concerns, including the adequacy of the Disabled Workers’ Relief Fund (DWRF), a special fund that supplements the benefits received by permanently and totally disabled injured workers whose benefits fall below the current cost of living. All employers contribute to the fund as a percent of payroll. The BWC has more than $2 billion in liabilities in the program, but only $1.8 billion to cover the expenses. Pedrick noted that BWC’s actuarial partner, Deloitte, is studying the matter but predicted an increase in DWRF assessments.
Finally, public employers (including state departments and state colleges/universities but not school districts, cities, and counties) will see an overall increase in base rates of 15.12 percent effective July 1, 2011, if the committee’s recommendation is adopted by the board. Public sector premium collected was insufficient to meet losses. Another 15 percent increase is expected next year for public employers.
Lawsuit Against BWC Could Cost $1 Billion
A group of northeast Ohio businesses is pursuing a class action lawsuit against the Ohio Bureau of Workers’ Compensation (BWC). The lawsuit was initiated in 2007 (by an aggressive trial lawyer) and alleges that the group rating program violates Ohio law by shifting costs from one group of employers to another.
Late last week, the 8th District Court of Appeals denied an appeal sought by the BWC to prevent class-action status. If it goes against the bureau, the case could require that damages be paid to 100,000 businesses. The Plain Dealer reported that such an outcome could cost $1 billion.