OK State Chamber Discusses Lowering Workers’ Comp Costs

By Janice Francis-Smith

Want lower workers’ compensation costs? The State Chamber invited 10 speakers to share their best ideas on how to lower costs at Friday morning’s small business forum, held at Metro Technology Center’s Springlake campus in Oklahoma City.

It’s your money, said Mike Seney, senior vice president of operations for the chamber, encouraging business owners to educate themselves about workers’ compensation issues rather than just paying the bill for their coverage.

Diana Jones with the Oklahoma Department of Labor encouraged businesses to take advantage of the department’s Safety Pays program. Department of Labor staff members come out to the workplace free of charge and help businesses identify hazards in the workplace. The program is free, confidential, and can save businesses thousands of dollars in fees if the department gets there before the federal Occupational Safety and Health Administration does, said Jones.

And starting Jan. 1, certain businesses that participate in the program can become eligible for a $1,000 tax credit, she said. The department also has a Workers’ Compensation Premium Reduction plan, which rewards companies that have reduced their workers’ compensation costs by 10 percent or more with a 15 percent discount off their insurance premiums.

The state’s CareerTech centers also offer safety training programs at low cost or no cost to the employers, said Seney. Some insurance companies will factor in a business’s participation in safety training programs to help lower insurance costs.

Chris Lewis, manager of operations for WorkNet of Oklahoma, said medical costs have continued to rise despite a decline in the number of claims that have been filed over the past few years. Today, medical costs account for 52 percent of workers’ compensation costs. Lewis recommended businesses participate in Certified Workplace Medical Plans, or CWMPs, which manage how claims are handled. Using a CWMP can lower the average cost of claims by as much as 20 percent, he said.

Dan Simmons, president of CompChoice, said to keep a close eye on medical costs and utilization. Fee schedules limiting the cost of certain medical procedures don’t work unless there are also guidelines in place for how much and how often those medical services are provided. Physicians will often provide discounts to businesses participating in CWMPs or Preferred Provider Organizations, he said. Such organizations also review bills for medical costs, making sure the treatment matches the diagnosis and that promised discounts are provided.

Gerri Mooney, a counselor with the Oklahoma Workers’ Compensation Court, said it helps to educate the physician treating a workers’ comp claimant. Providing a written job description for the physician may help a physician better determine if the claimant is able to return to work.

Ann Seibel, director of claims for CompSource Oklahoma, said the number one problem she has encountered is that businesses don’t report injuries promptly. Some employers may try to pay the injured employee’s medical costs out of pocket in an effort to keep their insurance company from finding out about the injury and raising their insurance costs. However, that tact has backfired as medical costs for some claims spiraled out of control, or fraud is suspected. And all injuries must be reported to the Workers’ Compensation Court by law, added Mooney.

Also, employers often don’t consider that perhaps defective equipment is at fault for the injury, not employee error. But if injuries aren’t reported quickly, oftentimes the evidence that could have proven fraud or defective equipment is gone before CompSource gets a chance to investigate.

Karen Dixon, assistant attorney general for Workers’ Comp Fraud, said a surprising number of people are willing to inflict serious injuries upon themselves in order to file a workers comp claim. Again, prompt reporting helps her department conduct better investigations. A claimant’s co-workers can also be a wealth of knowledge, perhaps witnessing the incident or having additional knowledge that can prove fraud.

Dan Ramsey, president and CEO of the Independent Insurance Agents of Oklahoma, said to beware of workers’ comp insurers offering bargain pricing. Such companies are more likely to go out of business, unable to pay the claims they are responsible for.

You need an A-rated company, said Ramsey. Anything less is rolling the dice.

Sam Allen of CFR Inc., which manages The State Chamber’s Workers’ Comp Program, stressed the need for communication between insurer and insured, which helps to both foster a good working relationship and helps claims get resolved quickly and efficiently.

Seney also stressed that business owners should educate themselves as much as possible about their policies. Because Seney knew the meaning and significance of loss ratios and experience modifiers, he was able to identify an error in his business’s workers’ comp policy that resulted in the insurance company refunding $450,000 in overpaid premiums.

Terry McCullar, president and CEO of CompSource Oklahoma, said the re-insurance market – that is, insurance companies that insure other insurance companies for their losses – has had a huge effect on the rise in insurance premiums. Prior to Sept. 11, 2001, the reinsurance market was already on the decline, as re-insurers realized they were pricing their coverage too low. Prior to 9/11, CompSource was able to purchase $45 million worth of coverage for $60,000 a year; the same coverage today would require annual premiums of $1.8 million.

CompSource follows guidelines provided for the National Council on Compensation Insurance for determining how to classify employees, determining how much an employer should have to pay for coverage based on the danger level of the job. Employers can obtain a guidebook published by NCCI that can help them better understand the classification system, he said.

Oklahoma Insurance Commissioner Kim Holland encouraged business owners to use the Insurance Department as a resource for information. The department has much less control over the rates those companies are allowed to charge than the department had only a few years ago. Senate Bill 1X, passed in June 2005, allows insurers to file and use whatever rates they chose, eliminating the requirement that the Insurance Department approve their rates.

The change is expected in promote more competition in Oklahoma’s insurance market, and competition drives prices down. But since the department is charged with the financial health of insurance companies writing business in Oklahoma, Holland said the department may still tell an insurance company when the rates they are charging are too low.

Holland said she and other state officials are now most concerned with the issue of cost shifting. Health care providers currently have to shift the cost of treating the 20 percent of Oklahomans who don’t have any health care coverage onto those who can afford health insurance. And that contributes greatly to rising workers’ compensation insurance costs.

While the workers’ compensation reform legislation passed in 2005 was a good first start, said Holland, more work needs to be done. Holland encouraged business owners to contact their legislators and let them know what’s going on in Oklahoma’s workers’ compensation market.

One call can make a difference, Holland said.