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Home My WebLink AboutMINUTES - 04122005 - D2 To: BOARD OF SUPERVISORS It Ds2 FROM: John Sweeten, County Administrator .M� � Corltra DATE: April u. CA SUBJECT: Update on Workers' Compensation Cost Trends and Cost Containment Strategies �` Y. g � Cou. �nt, SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATIONS: 1. ACKNOWLEDGE receipt of this report on our workers' compensation program. 2. RECOGNIZE that to effectively contain and reduce the costs of our workers' compensation program, the County must continue to utilize a comprehensive approach. 3. ACKNOWLEDGE that recent program changes approved by your Board have resulted in a reduction in claims frequency and a slight decrease in our annual costs for the current year. 4. ACKNOWLEDGE a reduction in the frequency of ergonomic injury claims. 5. ACKNOWLEDGE a recent excellent rating of our workers' compensation claims administration by the CSAC Excess Insurance Authority auditor. BACKGROUND/REASONS FOR RECOMMENDATION: The Board previously took various steps and actions to address the rising costs of our workers' compensation program. These actions included: • Establishment of our Occupational Medical Program, which allows the County to assume medical control of injury claims for the first 30 days. • Entering into a joint partnership with the Contra Costa my Schools Insurance Group to reduce the cost of reviewing medical billings. r. x4tadl.4 RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMM r N TION OF BOARD COMMITTEE APPROVE OTHER SIGNATURE(S): ACTION OF BOARD ON A;,t VS APPROVED AS RECOMMENDED OTHER CA VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE AND CORRECT COPY OF AN ACTION TAKEN AND ENTERED ON THE MINUTES OF THE BOARD UNANIMOUSABSENT �.----- OF SUPERVISORS ON THE DATE SHOW { ) N. AYES: NOES: ABSENT: ABSTAIN: -- ��.,. 11fs- ATTESTED riskm2k31users$1jgriciuslMy DocumentslBoard JO SWEETEN,CLERK THE BOARD OF Orders1B020051WCCostTrnds.doc Contact: Ron Harvey (335-1443 UPERVISORS AND COUNTY ADMINISTRATOR ) cc: CAO, Risk Management / Auditor-Controller BY DEPUTY A4 SUBJECT: Update On Workers' Compensation Cost Trends and Cost Containment Strategies • Page 2 Date: April 14, 2005 BACKGROUND/REASONS FOR RECOMMENDATION: (Continued) • Implementation of a Medical Utilization Review Program, during the past year, to better manage medical costs within individual case files. • Establishment of an ergonomic injury prevention program to reduce the frequency of repetitive motion injuries—the most common form of workplace injury. • Creation of a web-based ergonomic and injury/illness prevention training program. These efforts have contributed to a 17.5% reduction in medical payments when compared to the prior year and a decrease of 14.3% in the frequency of ergonomic injuries since FY 02/03. In addition, the recent audit by the CSAC-EIA auditor, which rated our claims and administration excellent, claims administration will be further enhanced by added claims supervision and reduced examiner caseloads in 2005. Notwithstanding these efforts, Workers' compensation liabilities will continue to escalate due to annual increases for temporary and permanent disability benefits under AB 749, medical cost inflation and the high number of open claims. A comprehensive approach must continue efforts to reduce the number of injuries and their annual cost. Part of that approach requires the return of injured workers to meaningful work as quickly as possible. Our goal is to achieve a reduction in the length of disability, along with a decrease in benefit payments and medical costs. 4L -ADDENDUM TO D.2 April 12, 2005 On this day the Board of Supervisors CONSIDERED accepting a report from.the County Administrator on the County Workers' Compensation Program. Mr. John Sweeten, County Administrator, introduced Ron Harvey,Risk Manager, and Mary JoCastruccio, Assistant Risk Manager, Workers Compensation. Tony Su,Works Compensation Consultant,made the presentation. Mr. Su began the workshop by presenting a power point slideshow depicting current trends in the Workers' Compensation program. Supervisor Gioia asked if there was a way to separate increased medical costs and inflation to get a clearer picture. Supervisor Gioia also requested that open cases be separated., Mr. Su responded,-noting that open cases had decreased 2.6%to 2,454 open claims since the beginning of FY01-02; Claim frequency fell 6.9%from FY0I-02 to FY03-04 with a further decline expected in FY04-05, and annual claim payments increased 18.9% from FYO I to FY04-05. For future liabilities by Benefit Type shown on the chart(page 2), Supervisor Uilkema requested Mr. Su to mark potential liabilities as well. She noted a claim filed does not translate into liability. In regard to future claim liabilities, Supervisor Glover requested information on the items that make up the increase for future claim liabilities, to which Mr. Su responded there is a report specifying this. Supervisors Gioia and Glover requested Mr. Su prepare a list of employees by departments that went out on disability retirement as opposed to workers compensation. Supervisor DeSaulnier said it would be helpful to get the information to compare the County to other agencies around the State, especially in the area of Public Safety. Supervisor Piepho questioned Mr. Harvey whether the Ergonomic training was mandatory. Mr. Harvey responded"not at this time". Supervisor Gioia suggested focusing on strategies within control such as prevention and the Return to Work program. He said it would be helpful to have a specific list of recommendations to keep costs down, and additional savings to be achieved. . 2, I 1 Contra Costa County's Workers'Compensation Program Io > .,,.. ...:.+r..,..303'!.!,K+':KtS%F'` .J, Program Status and Trends April 2005 Current Trends ...-. ._. '..:.. -.,,. .. Yi�yH.� RS�.^.IJO#ytT.34'tfiM�ACS.4 �1i►'W3M�}i,.'t�"..:'::'::' i.rr�r�r r�4�r�.rrrr�r.r�r r WC benefit costs continue to rise I M749 mandated indemnity rate increases through 2005 I Medical cast inflation r Future claim liabilities have increased by$23.2 million to $69.0 million since FY01-02, open cases have decreased 2.6%to 2,454 open claims since the beginning of FYOi-02, Claim frequency has fallen 6.9°x,from FYOi-02 to FY03- 04 with a further decline expected in FYO+05 r annual claim payments have increased 18.9%from FYOi-02 to FYO4-05 Total WC Future Liabilities i s� s�fs.� sus o s�os - �rrfrll � s415.8 tN!i lA r��.rirr�4 /G sM sm �r.rr.r.��4r�rrrrr�w.�rr� rrYr.rrri sio so ffol-02 FY42-03� FY03-M FY04-t15 *'Valva st 3/3vos 1 4 • Future Liabilities by Benefit Type K R r As of"VO FY Claim Frequency 2,400 /+v 1,200 1,359 1,349 1,406 A� g 1,000 U S00 - 600 400 FY01-42 FYI F�03-04 FY04-45" *M=Wized as of 3/31/45 Annual IIitC Claim Payments (Cash Now) - - _.?. ,:;: ..,r,:,:..rti.:e:;�-oc"�'srirc�iswsws.3:waa+a.�.a.c;,ro.-,s._:�._...-.•� S" S20 So s, 523.6 �520 �Q� SMO Si" SS so FY02-02 F�0?.-t�3 FY03-04 F'Yfl"5* *As of MaMh 31,205 Workers' Compensation Cost Drivers �AB749 -Continued disability benefit rate increases(temporary and permanent) Future medical exposures continue to grow ' Large Open Claim Inventory -Extended duration of disability Recommended Solutions i :--sae,,ro+�-,st„FLn•v'Fi+`7-[;ip, yr,,, .. ..<...x}rte xt+a.��£csx�ww:r .a�.°t` ro.,....._,�.._w-_• ,/Implement Injury Prevention and Ergonomic Program V Leverage medical controls provided by Labor Code V Enhance Risk Management Staffing resources Reduce or eliminate non-statutory WC Benefits Enhance County's Retum-to-Work program to reduce disability duration Results of Implemented Solutions Injury Prevention Program and Ergonomic Program Implementations have produced a 14.3%reduction In claim frequency since FY02-03 >Occupational Medical Program and Utilization Review Program have helped reduce medical benefit payments by 17.5%so far this year vs.FY03-04 Risk Management staffing will enhance claims supervision and reduce examiner caseloads 2005 CSAC-EIA audit rafted claims administration as excellent 3 Conclusion >WC cost and exposures continue to escalate due to: I benefit rate increases I medical cost increases I and the high number of open claims Again, a comprehensive approach is needed to curb WC cost growth including: I Reduce the number of injuries I Reduce cost of WC claims once a claim is filed I Return injured workers to their job sooner