Workers Compensation:Take control of your pool funding

in an uncertain market

What we’ll Cover

• Developing Workers Comp issues• Emerging issues to watch• Steps you can take to reduce claims and protect

your bottom line

Workers Comp Issues

• Claims frequency is expected to rise as the economy recovers– 20 years of declines are slowing • Frequency declines in a recession,

and increases as employers add workers– Severity increasing during past 30 years• Indemnity tracks opposite the economy; medical doesn’t

- NCCI

Workers Comp Issues

• Injured employees are staying outof work longer– Mean duration for injuries increasing:

• 123 days in 2006• 141 days in 2009

– Unemployment nearly doubled in the same period

• Impact of:– Economy– Litigation– Cultural mindset

Workers Comp Issues

• Medical costs continue to rise– They are 58% of total claims– Medical treatment costs are rising– Prescription costs are 18% of total• Use of compound drugs skyrocketing in many states• Repackaging or physician dispensing

increases cost, usage, and duration

Workers Comp Issues

• Narcotics abuse rampant– 25% of all prescribed drugs– Claims costs rise along with litigation, lost time– Workers treated with narcotics stay away from

work up to 69 days longer

• Most jurisdictions require payment for rehabilitation

Workers Comp Issues

• Mental stress claims are compensable in a growing number of states

– California and Oregon mental/mental claims may be a spreading trend

– Medical marijuana legislation being considered in several states

Workers Comp Issues

• More claims being litigated• Economy reduces job options• Additional consequential injuries

– Stress, sleep disorders, sexual dysfunction– Ability to compete in the labor market

Emerging Trends

• Presumption legislation– More jurisdictions eliminating need for medical evidence– May reflect the influence of unions– Do you need to fund for change?• NCCI expects an increase in comp legislation this year

Emerging Trends

• Medicare set asides– Actuarially difficult to determine• Difficulty settling claims • Claims taking longer to close

– Legislation not likely to help make this easier

Summary

• Cost trends on rise– The number of claims is rising slightly– The cost of those claims is raising slightly

• Medicare set asides are a growing issue• Funding for pools must increase

– Base funding decisions on your state’s political pressure points

Impact of Health Care Reform

• Health care reform– Will comp claims decrease because everyone is insured?– Will the cost of claims decrease because of medical

fee schedules?– Community health centers and wellness

Opportunities

• Wellness programs– Multiple benefits to promoting wellness

• Benefit plan savings• Healthy workers heal more quickly• Improves employee morale

Your Greatest Opportunity

• An engaged workforce will reducethe cost of claims

– Frequency– Severity– Duration– Medical costs– Litigation

Why this Matters

• Municipal employees have more reasons to be disengaged– Layoffs– Furloughs– Pension reforms– Public criticism

Why Engagement is Critical

“The Relationship between Engagement at Work and Organizational Outcomes” - Gallup 2009 study

– Difference between the top quartile of employers with engaged workforces vs the bottom quartile of disengaged workforces

• 18% gain in productivity

• 37% reduction in absenteeism

• 49% reduction in safety incidents

Why Engagement is Critical

• American Society for Training and

Development report – Engaged employees 5x less likely to have a safety incident– 7x less likely to have a lost time incident– Cost per claim of disengaged employees was 7x higher

Employee Engagement

• What you can do to help improve employees’ level of engagement

• Your role as leaders in the process• Result:

Combination will save your pool’s money

Improving Engagement

• What front line employees care about• 4 most important responses for engagement

–Best friend at work–Someone cares (supervisor)–Praised on my performance in past 7 days–Supervisor discussed performance in past 6 months

What You Can Do As Leaders

• Engagement comes from leaders– Mediation effect

• Frontline employees are 59% more likely to be engaged when supervised by highly engaged managers

- Gallup

– Spend more time leading people, not managing tasks

- Clint Swindoll, Engaged Leadership

– Focus on two areas: • Mission • Purpose

What the Pools can do

• Large group meetings –The level of engagement skyrockets when

employees representing all parts of an organization gather together to give input…

– North East Human Resource Association

• Train managers• Assign a point person• Promote awareness

–Everyone wants to like their job

Employee Engagement Summary

• Creating and maintaining an engaged workforce – Improves productivity, retention– Reduces sick time, claims

Summary

• Is it really so grim?• You can reduce your pool funding needs– Return to work programs– Medical cost containment– Wellness– Culture

• Improving these areas benefits everyone, from the pool to the worker

Resources

• Engagement:– “Drive” Daniel Pink– “The 8th Habit” Steven Covey– “Integrity” Henry Cloud– Gallup Organization and the Gallup Management Journal

• Wellness:– Welcoa.org– Limeade.com– Gallup-Healthways Well-Being Index