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California's landmark workers' compensation reforms, in particular SB 899, balance the needs of both employers and employees. The use of objective standards such as those from the American College of Occupational and Environmental Medicine, the establishment of employer-sponsored medical networks for occupational injuries, and upcoming modifications in the disability schedule will no doubt change the system.
To get the most out of the reforms, businesses will need to review and even re-think their own internal workers' compensation programs and procedures. Employers with California exposures must take action if they are going to maximize cost-saving opportunities.
What will you say when they ask what happened?
Executives who want to take advantage of the new savings opportunities based on SB 899 reforms should ask themselves the following questions:
- Have we thought about forming or selecting a medical provider network?
- Will our return-to-work program empower us to manage the 30 percent swing in permanent disability awards?
- Are we able to make timely compensability decisions that are based on robust accident investigations?
- Is now a good time to begin an aggressive claims closure project in light of changes in the medical-legal process brought about by SB899 reforms?
- How are we going to measure and track our success with these new programs?
Who’s looking out for you?
In response to these and many other questions, Marsh has developed a series of end-to-end solutions designed to help employers take advantage of the savings opportunities in SB 899.
Medical Provider Networks (MPN): With an approved MPN, employers can maintain medical control over the life of a claim, beginning January 1, 2005. Without a network, employers lose medical control after 30 days. Since medical expenses are, on average, more than 55 percent of total claims costs, the introduction of MPNs is critical to controlling costs. The right MPN—including not only occupational medicine experts, but also specialists and hospital locations convenient to the workplace—will ensure high-quality and appropriate medical care, as well as employee support.
Marsh consultants have the expertise and knowledge to help employers either build their own networks or rate and choose the right network partners. The process includes an analysis of loss data and injury patterns and then rates providers and networks against individual employer needs.
Return to Work: SB 899 offers employers financial incentives for returning injured employees to gainful employment. After an employee is determined to be permanent and stationary, the employer has 60 days to offer a regular, modified, or alternative work assignment. With no offer, permanent disability payments are increased by 15 percent. With an offer, each permanent disability payment will decrease by 15 percent.
Employers should ensure that current programs encourage early return to work as well as identify suitable jobs for employees with permanent restrictions, when possible. To help employers get the most out of this change, Marsh has developed an operationally managed return-to-work program, known as the Employee Management Program, that engages front-line managers and supervisors in the return-to-work process. Physical capacity testing—the ability to measure and document functional job requirements—can be used to find the right transitional or permanent job after an injury.
For more informtion about returning employees to work, please visit our Return to Work & Physical Capacity Testing page.
Compensability: The timeliness and quality of compensability investigations are more important than ever before. In California, employers now are responsible for up to $10,000 of medical care before compensability is determined and must authorize treatment within one day after the claim is filed. Marsh has developed an on-line compensability investigation management tool to help employers streamline the fact-gathering process and give claims adjusters quality information that will assist them in making a timely, accurate, and factual compensability decision.
This Marsh process empowers front-line managers and supervisors to become involved in fact gathering, but not responsible for the compensability decision. In addition to the on-line tool, Marsh will train managers on key fact-finding and research techniques that create and sustain lines of communication and rapport with injured workers.
Claims Closure: For many employers, recent California workers' compensation reforms have created a heightened awareness of the need to proactively close old program claims. In addition, changes effective January 1, 2005 such as the revision of the permanent disability schedule, the qualified medical evaluation (QME) process, and control of medical care through a medical provider network may encourage claims settlement.
Employers with California exposures can use the reforms as an opportunity to review the current claims inventory and reserves, but also address run-off claims with previous service providers. The Marsh-developed process can be used to assess current inventory and identify claims closure opportunities.
For more information on closing claims, please vistit our Claims Inventory Workout page.
Scorecard: Effective management of a workers' compensation program requires the measurement of key metrics to identify core cost drivers, prioritize efforts to achieve the greatest impact on costs, design effective solutions that meet business needs, and measure the success of the program. Marsh has a range of expertise—in loss control, occupational health and safety, claims management, injury management and employment practices—to measure an organization's progress across the entire workers' compensation program continuum.
Learn more about Marsh's solutions for reducing California workers' compensation costs.
If you have any questions or would like additional information, please contact us.
If you are seeking information about insurance and related services, please visit marsh.com.
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