Helping home health care providers and hospice organizations gain control – and even reduce – their Workers’ compensation insurance costs involves a number of measures, including having an aggressive loss prevention program in place. For home health care and hospice, the primary areas of focus include auto accident reduction, employee safety and employee biomechanics. Safety programs and a proactive light-duty return-to-work program are key ingredients to reducing your insured’s overall claims.
Also critical in helping to manage Workers’ Compensation costs and outcomes is for a home health care organization to understand the role of its experience modification (ex-mod) in determining insurance premiums. Go over the basic formula (classification rate multiplied per $100 per payroll multiplied by the experience modification plus fees and assessments) used in determining how the premium is calculated. Explain how the organization’s experience rating on which the ex-mod is based benchmarks an individual employer’s historical claim experience against others in the same industry. Also, review the factors taken into consideration to determine an organization’s ex-mod: company size, unexpected large losses and the difference between loss frequency and loss severity. Frequent losses carry more weight than larger, infrequent losses.
In addition, review with your insured how the comparison with other similar companies in the home health care industry is expressed as a percentage – the ex-mod –which is applied to the insured’s Workers’ Comp premium. An ex-mod greater than 100% (or 1.00) increases the cost of the premiums, while an ex-mod less than 100% (or 1.00) decreases the cost. The ex-mod functions as an indicator that gauges the “health” of the organization, and aids in forecasting whether the organization’s loss experience is better or worse than that of the average employer in the industry.
There are steps an organization can take to lower its ex-mod, including:
- Ensuring the ex-mod is accurate, which you can review by making sure the data is correct and complete.
- Creating a sound proactive safety program to prevent injuries.
- Developing or improving an effective return-to-work program to minimize claims costs.
- Reporting injuries promptly. Studies reveal that prompt injury reporting reduces the cost of claims. Take a look at some interesting stats (NCCI):
- 2-week reporting lag time: Claims costs 18% higher than those reported the same day as the injury
- 3-week reporting lag time: Claims costs 29% higher than those reported the same day as the injury
- 5-week reporting lag time: Claims costs 45% higher than those reported the same day as the injury
- Implementing an active claims management program to manage outstanding loss reserves and focus on efficiently resolving open claims with the insurance carrier.
- Training supervisors how to manage injured employees. These individuals play a key role in managing the injury and recovery process. When there’s a good relationship between the injured employee and management, chances are the organization will get better results.
- Practicing due diligence during the hiring process. Hiring employees that are not a good fit for the essential functions of the jobs will increase the risk of injuries.
Manchester Specialty focuses on providing the home health care and hospice industry with Workers’ Compensation insurance solutions. Through our carrier partners, we offer a wide range of loss control and prevention resources as well as return-to-work plans for insureds to help drive down costs. For more information about our programs and coverages, please contact us today toll free at 1-855-972-9399.