When an obscure insurance factoid comes up 5 times in 2 days at the Whiteboard offices, that’s when we know it’s time to write a post.
You may have heard that as of January 1st, 2017 some major workers’ compensation changes came into effect for Californians. The formula for the Ex-Mod changed, the split point became variable based on company size, and incident reporting became more strict. Now, when looking at any of these changes individually, they seem fairly arbitrary and not a big deal. If you missed the full version of what changed, here are the cliff notes:
The Ex-Mod Formula is now entirely about Primary Claims Cost, which means that it now focuses more on frequency than severity of losses.
The split point that determines how much counts as Primary Claims Cost for your company is now variable depending on the size of your company instead of being $7,000 for everyone.
It used to be optional for companies to report “first aid” incidents as claims, but it is now mandatory that all incidents that are given medical attention are reported.
Apart from each other, all those things seem relatively harmless. I mean, what’s the big deal, right?
Well, we’re so glad you asked!
If we think about this like a Venn Diagram, you’ll see we have a circle for each of the changes. Like any other Venn Diagram, the important part is that little triangle of overlap, and in this particular instance, that triangle is all about claim frequency.
I mean, that thing is the Bermuda Triangle of claim frequency. The new reporting rules make claims more frequent than ever before, the new ex-mod formula focuses almost solely on claim frequency, and the variable split makes sure that those frequent claims can pack more of a punch than they ever have. The bottom-line is that implementing these three changes in conjunction with one another creates a situation that will drive ex-mods up for many companies.
And that’s why this has come up so much in the last few days. Companies that used to use some sort of on-site medical care provider in order to make sure small first-aid incidents didn’t become work comp claims aren’t able to use that strategy anymore. By the new laws, any incident that is given medical attention must be reported as a claim.
So, how do businesses that see minor first aid incidents on a regular basis avoid getting buried in ridiculous premiums due to an over-inflated experience mod?
The answer is to replace medical attention and treatment with medical recommendations and self-treatment.
Now, our goal here is not to oversimplify a complicated issue. For those of you that haven’t dealt with this issue first hand, the moral of the story is that you need to be aware of how these new rules work and how they affect you. Make sure that you are aware of what your company’s new split point is and how it will change you ex-mod (and premiums) going forward.
For those of you that are in the middle of trying to sort out a solution for this, the moral is that there is hope. Your business’ ex-mod future isn’t a forgone conclusion. Give us a call or shoot us an email and ask about how a nurse triage hotline can make the difference.
And no matter which of those groups you fall into, know this: No matter what changes they make to the work comp system, your ex-mod can be kept under control and in your company’s favor.