Understanding Workers' Compensation Insurance

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Understanding Workers’ Compensation Insurance

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Understanding Workers’ Compensation Insurance C.D. Moore

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Understanding Workers’ Compensation Insurance C.D. Moore Vice President, Career and Professional Editorial: Dave Garza Director of Learning Solutions: Matthew Kane Senior Acquisitions Editor: Rhonda Dearborn

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Printed in the United States of America 1 2 3 4 5 X X 10 09 08

Contents

PREFACE CHAPTER 1

vii HISTORY OF WORKERS’ COMPENSATION

Introduction What Is Workers’ Compensation Insurance? State and Federal Jurisdiction Over Workers’ Compensation

CHAPTER 2

PRICING A WORKERS’ COMPENSATION INSURANCE POLICY

Introduction Underwriting a Workers’ Compensation Policy Pricing a Workers’ Compensation Policy Purchasing a Workers’ Compensation Policy Policy Audits Employers’ Liability Reinsurance

CHAPTER 3

WHAT WORKERS’ COMPENSATION PAYS

Introduction Major Benefits Available to Injured Workers

CHAPTER 4

CREATING A CLAIM

Introduction Filing a New Claim Determining Coverage Claims Department Creating a Claims File

CHAPTER 5

CLAIMS HANDLING

Introduction Claims Investigation Setting Reserves Medical Management of the Claim Indemnity Payments on a Claim Recovery Department

1 1 2 6

15 15 15 16 20 30 36 37

45 45 46

73 73 73 80 81 82

87 87 88 89 92 93 97

v

vi

Contents

Loss Prevention/Safety Fraud Investigation Closing the Claim Legal Actions

CHAPTER 6

WORKERS’ COMPENSATION MEDICAL BILLING

Introduction Reviewing and Paying Workers’ Compensation Medical Bills CMS-1500 (HCFA) and UB-04 Forms

CHAPTER 7

PAYMENT OF WORKERS’ COMPENSATION MEDICAL BILLS

98 99 100 100

105 105 105 116

135

Introduction Bill Payment Department The Bill Payer Bill Payment Process Evaluation and Management Negotiated Discount Explanation of Benefits/Explanation of Review Reconsideration/Appeal

135 136 136 137 142 147 148 154

Glossary Index

165 171

Preface

Understanding Workers’ Compensation Insurance was written because there is not, to my knowledge, a book that dedicates itself strictly to workers’ compensation for education and training purposes. There are books covering particular areas of the subject, but not one that looks at workers’ compensation as a whole. Over my many years of hiring and training employees, even those that have come out of medical coding programs, I have found there is a definite lack of knowledge about workers’ compensation insurance and a particular need to look at the process through the eyes of the workers’ compensation carrier and not just the provider. Having served on an advisory board for a large career college that included medical coding training as part of its curriculum, I learned firsthand that students were not getting all the training they needed in the area of workers’ compensation. Most of the courses focused on health insurance, and workers’ compensation was not addressed at all or was addressed very little in these courses. Because of this lack of training, students were not prepared for jobs in the workers’ compensation insurance field. They did not know how workers’ compensation bills were paid, what was needed for the proper payment of medical bills, or how the claims handling process operates, nor did they even have a general understanding of what workers’ compensation really is. Without this basic knowledge, it is a hard transition from the classroom to the workforce. A basic understanding of workers’ compensation, in addition to medical coding, can be a beneficial part of the training of billing staff in a physician’s office, a hospital, or any of the other medical specialties. New hires in any insurance company or agency would also greatly benefit from a basic understanding of workers’ compensation since it is a large part of the insurance market. Having a practical knowledge of workers’ compensation insurance and an understanding of what it is and why it was created can help anyone in the medical insurance arena. The book is meant to assist with all areas of workers’ compensation. It covers how a policy is written, what a policy covers, the basics of premium calculations, proof of coverage, changes to policies, Current Procedural Terminology (CPT) and International Classification of Diseases, 9th Revision, Clinical Modification (ICD9 CM) codes, medical terminology, calculating indemnity payments, paying medical bills, and understanding the explanation of benefits (EOB) form.

AUDIENCE The text is meant to be a working text that the student can take to the job site when he or she completes the course and can refer to for assistance with general workers’ compensation questions. The book will be helpful for anyone working in a provider’s billing office as well as for a new employee in a workers’ compensation insurance company who needs an overview of the industry. Anyone needing or wanting to have a simple, straightforward knowledge of workers’ compensation insurance would benefit from the text.

vii

viii

Preface

ORGANIZATION OF THIS TEXT The book is organized in specific stages to take the reader from the beginning to the end of the workers’ compensation process in order to give a global overview of workers’ compensation. The areas covered in this book are as follows: Chapter 1 addresses the history of workers’ compensation, explaining why it was created and when it was created, and includes timelines of the creation of workers’ compensation as we know it today. Chapter 2 discusses how a workers’ compensation policy is priced. It allows the student to begin to learn the basics of National Council on Compensation Insurance (NCCI) classification codes, how to calculate policy premiums, and how to complete a workers’ compensation application. The chapter also covers policy endorsements, certificates of insurance, and policy audits. Chapter 3 covers benefits the injured worker is entitled to, including medical and indemnity payments. It also looks at the different types of indemnity payments, including temporary and permanent benefits, as well as death benefits. Chapter 4 addresses the role of the claims department in an insurance company and looks at the job of a claims adjuster. In this chapter, the first report of injury is discussed, along with the structure and importance of the claims file. Chapter 5 is dedicated to claims handling, which includes setting reserves, thirdparty investigations, loss prevention, and fraud. It also discusses claims closing and claims settlements. Chapter 6 talks about medical billing for workers’ compensation. This chapter looks at state fee schedules and introduces at a basic level CPT codes, ICD9 codes, medical terminology, and medical abbreviations, which are all a part of the medical billing process. Chapter 7 takes a closer look at the process of workers’ compensation medical bill payment. This chapter addresses proper payment of medical bills and includes additional information on medical reports, preferred provider organization (PPO) networks, negotiated discounts, EOBs, and reconsiderations.

FEATURES Each chapter of the book encompasses the following: Objectives—Lets the student know what will be addressed and learned in each chapter. Key Terms—Identifies important vocabulary that will be presented in the chapter. Introduction—Provides a brief overview of the chapter. Case Studies—Give the student hands-on practice with areas covered in the chapter. Summary—Reviews major areas covered in the chapter. Chapter Review—Tests the student’s knowledge of each area covered in the chapter.

SUPPLEMENTS The instructor’s manual for this textbook was created to help the instructor work through the review exercises at the end of each chapter. In addition, each chapter of the instructor’s manual includes lecture notes, case studies, and class work suggestions.

Preface

ix

ABOUT THE AUTHOR C.D. Moore has worked in the insurance arena for more than 35 years, with emphasis on workers’ compensation. Most of her time has been spent in management roles in the areas of bill payment, customer service, and office administration. During this 35-year period she was employed for 25 years by one of the leading writers of workers’ compensation insurance. She has spent the last ten years with a company devoted exclusively to workers’ compensation. The author has worked closely with both providers and payers in the workers’ compensation arena and has a broad perspective on the needs of both. She has been responsible for hiring and training personnel and has written in-house procedure manuals for her employers.


Reviewers

Gary Argro, BSN President of Academics The Orlando Academy Orlando, FL Marilyn Burgos Linzan President/Instructor Management Enrichment Solutions, LLC Bloomfield, NJ Joan M. Cadenhead, MBA—Information Technology Management Healthcare Systems Business Analyst/Senior Consultant and Adjunct Instructor Colorado Technical University Online Valley Stream, New York Cindy Conley, RHIT HIM Instructor Ozarka College Melbourne, Arkansas Michelle H. Cranney, MBA, RHIT, CCS-P, CPC Program Director Virginia College Online Birmingham, AL Barbara Desch, LVN, CPC, AHI Instructor San Joaquin Valley College, Inc. Visalia California Marla Duenwald Landt, CCS-P Medical Coder Providence Alaska Medical Center Anchorage, Alaska Pat King, MA, RHIA Adjunct Faculty Baker College of Cass City Cass City, MI June Petillo, MBA, RMC Instructor Manchester Community College & Capitol Community College Manchester, Connecticut & Hartford, Connecticut Implementation Specialist Women’s Health USA Avon, Connecticut

xi


Chapter 1 History of Workers’ Compensation KEY TERMS competitive state fund death benefits elective workers’ compensation exclusive state fund indemnity benefits injured employee insurance insurance policy

lost wages mandatory workers’ compensation medical benefits “no fault” occupational injury/illness payer provider

rehabilitation benefits self-insured self-insured trust social insurance state fund workers’ compensation board/commission

LEARNING OBJECTIVES Upon completion of this chapter the learner should be able to: 1. Identify when workers’ compensation was first created. 2. Understand why workers’ compensation was created. 3. Identify the first country to institute workers’ compensation. 4. Identify the first state in the country to have workers’ compensation.

5. Recognize which individuals the federal government covers under workers’ compensation. 6. Recognize which individuals state governments cover under workers’ compensation. 7. List the types of benefits available to an injured worker.

INTRODUCTION

injured employee Individual that is injured on the job in the course and scope of her employment.

Workers’ compensation was created to accomplish two primary objectives: to protect employees hurt or injured on the job and to protect the employer from catastrophic losses that might result in the loss of business. Prior to the creation of workers’ compensation, employees hurt during the course of their job could only seek compensation for damages through a common law system that heavily favored employers. As a result, most injured employees were not properly compensated for their injuries and employers had to suffer through sometimes lengthy and expensive court battles. The introduction of workers’ compensation allowed for a more favorable approach to addressing workplace injuries that benefited both employees and employers.

1

2

Chapter 1

medical benefits Benefits that an injured worker receives to cover any medical expense resulting from the on-the-job injury. rehabilitation benefits Benefits received by the injured worker to help her return to her job or find a new job that she can perform. indemnity benefits Benefits paid to injured worker to cover all or part of wages lost due to on-the-job injury.

Under workers’ compensation, four types of benefits are paid to an injured employee: (1) medical benefits, (2) rehabilitation benefits, (3) indemnity benefits, and (4) death benefits. Workers’ compensation covers all the medical expense an injured worker incurs due to an accident or injury on the job. Along with covering the ordinary medical expenses, workers’ compensation also covers the cost of rehabilitating the worker so she can return to her normal job. Workers’ compensation will also cover the cost of retraining a worker for a new job. In addition to medical and rehabilitation expenses, workers’ compensation also covers the worker’s lost wages while she is unable to work due to an injury. The amount received by the worker for these lost wages is based on fees and calculations determined by the state or federal government. Workers’ compensation is also responsible for death benefits that pay compensation to the survivors of a deceased worker as well as paying the deceased worker’s funeral expenses.

CASE STUDY 1–1 Write, in your own words, why workers’ compensation was created and the need it covered.

WHAT IS WORKERS’ COMPENSATION INSURANCE? death benefits Benefits paid to the surviving dependents of a worker that dies due to an on-the-job injury. lost wages Money the injured worker loses due to the on-the-job injury. insurance A contract where one party guarantees to protect another party against loss. insurance policy Promise of security if someone gets injured.

Most people ask the question, “What is workers’ compensation insurance?” Because most people don’t know what it is, they don’t know how it began or what benefits are available if someone gets hurt on the job. Everyone that is employed should have at least a basic understanding of workers’ compensation in order to know what is available to them if they get injured on the job. In particular, anyone working in the medical field or insurance industry, regardless of their job, needs to know the basic concepts of workers’ compensation in order to better perform their job. Workers’ compensation, while not the most frequent type of injury treated at a physician’s office, is the insurance that pays the largest part of the income for physicians and hospitals. Because of this, it is extremely important for anyone working in a physician’s office to have a thorough understanding of workers’ compensation. Insurance is coverage by contract whereby one party undertakes to guarantee another against loss by a specified peril. The word “insurance” comes from the Latin word for “security” and the word “policy” comes from the Italian language meaning “promise”. Therefore, an insurance policy is a promise of security if someone gets injured.

History of Workers’ Compensation

3

The need for a fair and equitable system of workers’ compensation insurance evolved during the Industrial Revolution. As economic and industrial activities flourished, the number of work injuries also grew. The increasing use of machinery, new concepts of producing goods, and the increased demand for products resulted in more injury problems with no solutions for either the employee or the employer. The very first evidence of insurance appeared in China around 3000 BC, when merchants divided their cargo among several ships, thus protecting their investments and dividing any losses among themselves. This practice continued to evolve, and by 1750 BC the Babylonians had a system whereby a merchant who borrowed money to finance the shipment of goods could pay the lender an additional sum of money. In exchange for this additional sum, the lender agreed to cancel the loan should the shipment be lost or stolen. The Romans are credited with developing life and health insurance through clubs around 600 AD.


social insurance Insurance program funded by the government.

Workers’ compensation insurance has a long history that began in Europe. Under common law, which was in place at the time of the Industrial Revolution in the eighteenth century, an employer who was negligent was held responsible for the injury or death of the employee. An employer who was found to be negligent was required to pay for the employee’s on-the-job injuries. In order for the injured worker to be able to collect these benefits, however, the worker had to sue the employer in a court of law and prove the employer was negligent. Few workers were in a position to sue their employer and establish negligence. As a result, workers and their families suffered greatly when the main source of income for the family was injured at work. At the turn of the nineteenth century, society realized that something needed to be done for the injured employee and many states adopted employers’ liability acts that were designed to modify the laws and improve the employee’s position. These acts, however, were soon found to be ineffective since the injured worker still had to prove the employer was negligent. Because of these injustices, the need for a workers’ compensation system was realized. Germany took the lead in the protection of injured workers in 1838 by passing legislation protecting railroad employees and passengers in the event of accidents. Further changes were made in 1854 when a law was passed requiring certain employers to contribute to sickness funds, and in 1876 a voluntary insurance act was passed. A compulsory plan was enacted in 1881, which was implemented by the German states and finalized in 1884, and is the model for our present system. The beginning of the twentieth century saw Great Britain and the United States follow Germany’s lead in implementing workers’ compensation legislation (Figure 1–1). In 1911, Wisconsin became the first state in the United States to adopt a workers’ compensation system. By 1948, all 48 states had at least some form of workers’ compensation insurance. Today, in addition to the 50 states, the District of Columbia, Puerto Rico, and the Virgin Islands also have workers’ compensation laws in effect. This new system was a trade-off between the employer and employee: the injured worker would be given appropriate medical care and rehabilitation without regard to who was at fault for the injury, and in exchange, the injured worker would not sue the employer. Actually, workers’ compensation is a form of social insurance, much the same as unemployment compensation and Social Security; indeed, it is the oldest form of social insurance there is. Prior to the establishment of workers’ compensation, there were many injustices done to the injured worker. If the worker was in any way responsible for her injury, the employer was not at fault. Regardless of how hazardous the exposed machinery of the day was, any worker who slipped and lost an arm or leg was not entitled to any compensation. This was established in the United States through the case of Martin v.

4

Chapter 1

Great Britain 1900s

Germany 1838

U.S.A. 1911

Figure 1–1 Timeline of creation of workers’ compensation.

The Wabash Railroad, in which a freight conductor fell off his train. Although inspectors blamed a loose handrail for the injury, the injured worker did not receive compensation because inspecting the train for faulty equipment was one of his job duties. Employers were required to provide safety measures that were considered appropriate in the industry as a whole. In the nineteenth century, this often was not done. Assumption of risk was often formalized at the beginning of employment; many industries required contracts in which workers gave up their right to sue for injury. These became known as the “worker’s right to die,” or “death contracts.” If the injured worker tried to receive compensation from her employer she usually lost the battle and many times, because of this, she did not try to get compensated. Instead, she ended up having to bear the entire expense of the medical treatment and lost everything she and her family had.

State Coverages Workers’ compensation, which is generally administered state by state, has turned out to be a win-win for both workers and employers. Workers are guaranteed medical treatment and disability pay for their on-the-job injuries, and employers avoid the possibility of lawsuits for work-related injuries. Workers’ compensation is a compromise


mandatory workers’ compensation insurance Workers’ compensation insurance that a state requires employers to have. elective workers’ compensation coverage Coverage provided in those states that do not require the employer to carry workers’ compensation insurance.

5

between business and labor. It sets standards for employers’ liability and requires financial reserves for such liability, thus cushioning the economic effect of work injury and illness for the employer. In many states, certain employers are not required to purchase workers’ compensation insurance. The common exceptions are small employers (those who employ fewer than three to five employees); farmworkers; and domestic servants (usually only those employed in or about a private home). Workers’ compensation coverage is either mandatory or elective. In some states, compulsory laws require employers to accept workers’ compensation; in other states, elective laws give employers the option to accept or reject workers’ compensation. There are only two states, New Jersey and Texas, where workers’ compensation is elective and not mandatory. In mandatory states, employers with fewer employees than a minimum stipulated by law are not required to provide workers’ compensation coverage to their employees, but do allow the employer to provide workers’ compensation if they choose to. Once the employer makes the decision to provide the coverage, the workers’ compensation law applies as if it were mandatory.

Medical and Lost Wages Coverages As mentioned earlier, workers’ compensation insurance covers the cost of medical care and rehabilitation for injured workers. Some of the costs associated with medical care and rehabilitation are:

occupational injury/illness Injury or illness arising out of employment.

• Physician visits: Costs associated with visits to any physician for treatment of an injury or illness related to the course and scope of employment. • Hospital stays: Costs associated with visits to emergency rooms and inpatient or outpatient treatment, including surgery. • Physical therapy: Costs associated with visits to a physical therapist for treatment in either the physical therapist’s office or in a hospital setting. • Occupational therapy: Costs associated with visits to an occupational therapist for treatment in either the occupational therapist’s office or in a hospital setting. • Vocational rehabilitation: Costs associated with rehabilitating the injured worker so the worker can return to her present job, or retraining the worker so that she can perform some type of new job after medical treatment has been completed. This benefit includes the cost of evaluating the injured worker’s current job to see if the employee is able to return to the original job or to determine if retraining for a new job is necessary to get the injured worker back to work. • Mileage payments: Costs associated with reimbursement (based on state rates) for miles driven to physicians, hospitals, pharmacies, or anyplace else to receive medical treatment. • Drugs: Costs associated with reimbursement for any drugs prescribed to treat an occupational injury/illness that is job related. • Death benefits: Costs associated with funeral expenses that are owed to the surviving spouse and children upon an employee’s death. These benefits and expenses are based on individual state guidelines. Workers’ compensation also compensates injured employees for lost wages, also known as indemnity benefits, and (as discussed above) provides death benefits for their dependents if they are killed in a work-related accident. Indemnity benefits for lost wages are calculated based on the injured worker’s salary at the time of the

6

Chapter 1

“no fault” Provision of benefits regardless of who is responsible for a workplace injury. provider Individual, group, or facility that provides medical treatment.

accident and on the individual state or federal regulations in force at the time of the injury. Workers’ compensation also compensates for sickness that is a direct result of one’s occupation and injuries that happen over the course of many years at a specific job, such as a strained back, carpal tunnel syndrome, or lung disease. Workers’ compensation laws rely on a “no-fault” rule that provides benefits regardless of who is responsible for a workplace injury. There are exceptions, however, for employees who hurt themselves due to reckless behavior or drug or alcohol abuse. Also, employees who cause self-inflicted injuries or injure themselves while off duty or while engaged in a criminal act usually do not qualify for workers’ compensation benefits. Payment to providers (professionals that provide medical/rehabilitation care to the injured worker) is governed by state fee schedules or federal fee schedules, depending on the employment of the injured worker.

STATE AND FEDERAL JURISDICTION OVER WORKERS’ COMPENSATION Federal and state law requires employers (not including the exceptions noted earlier in this chapter) to have workers’ compensation coverage to cover on-the-job injuries and work-related illnesses. The U.S. Department of Labor Office of Workers’ Compensation administers workers’ compensation for the following programs: • Energy Employees Occupational Illness Compensation Program: Provides lumpsum compensation and health benefits to eligible Department of Energy nuclear weapons workers and their survivors. • Federal Black Lung Program: Provides monthly payments and medical treatment to coal miners disabled from black lung disease, and monthly payments to their surviving dependents. • Federal Employees Compensation Act Program: Provides compensation benefits to civilian employees of the United States for disability due to injuries sustained while in the performance of duty. • Longshore and Harbor Workers’ Compensation Program: Provides compensation benefits due to an injury occurring on the navigable waters of the United States or in adjoining shoreside areas. • Federal Employment Liability Act: Provides compensation for railroaders injured on the job. • Jones Act (merchant marines): Provides compensation to seamen injured on ships, offshore oil rigs, barges, tug boats, tankers, riverboats, casino crew boats, shrimp boats, trawlers, fishing boats, ferries, water taxis, and all vessels on the ocean and all intracoastal rivers and canals; divers and underwater personnel are also typically covered. workers’ compensation board/commission Entity responsible for administering the workers’ compensation laws within a state; also handles appeals and disputes.

Most employees, others than those that fall into the above categories, are covered by a workers’ compensation program governed by a state-run workers’ compensation board/commission. These state-run workers’ compensation boards and commissions are responsible for administering the workers’ compensation laws and handling appeals and disputes.

Available Types of Workers’ Compensation Coverage The rules governing workers’ compensation vary from state to state because each state has its own set of guidelines and regulations. The amount a person is paid for lost wages and the medical benefits provided are determined by the state the


payer One that pays benefits, such as an insurance company, selfinsured group, or state fund. state fund Workers’ compensation insurance that is provided and administered by the individual states. self-insured Describes an employer that has set aside enough assets to cover workers’ compensation benefits for employees and so does not purchase a workers’ compensation policy. self-insured trust Group of self-insured employers that contribute premiums to the trust to cover the claims of an injured worker.

7

worker is in when the injury occurs. The medical benefits paid to medical providers are generally determined by the state or federal medical fee schedule established. A payer (one that pays benefits, such as an insurance company, self-insured group, or state fund) is bound by state and/or federal law to pay according to the appropriate fee schedule.

Self-Insured Funds An employer can also self-insure, which means they have enough assets to set aside a sufficient amount of money to cover medical payments, wages, and any other benefits to the injured employee. Sometimes employers band together to form a group self-insured trust to cover the cost of paying for the benefits of their injured workers. All members pool their normal workers’ compensation premiums to pay claims and related services, loss control services, general administrative services, premiums for required insurance and bonds, and any other related expenses. Excess workers’ compensation insurance is purchased to reduce the exposure of the trust to catastrophic claims. Typically, the expenses associated with self-insurance trusts are lower than those of traditional workers’ compensation insurance plans. Self-insurance is not permitted in all states. The following states do not permit self-insurance: • North Dakota • Wyoming Under the various workers’ compensation systems, insurance is purchased or provided by employers through individual insurance companies, funds, or self-insurance plans to provide their workers with the indemnity and medical benefits required by laws or acts of the various states. The Jones Act, Harbor Workers’ Act, Longshoremen’s Act, and Federal Workers’ Compensation Act are administered by the federal government, but the purpose of these laws is the same: to compensate the injured worker for loss of wages and to provide medical benefits. Most states adopted workers’ compensation laws between 1911 and 1920. The first state to adopt workers’ compensation was Wisconsin and the last state to adopt was Mississippi. Table 1–1 addresses the following questions: 1. Which states require employers to purchase workers’ compensation insurance? 2. Can an employer buy insurance from a private insurance carrier or must it purchase the insurance from the state fund? 3. Which states allow an employer to self-insure?

State Funds As noted in Table 1–1, five states require that workers’ compensation be purchased from the state fund. The five states are: • • • • •

North Dakota Ohio Washington West Virginia Wyoming

8

Chapter 1

TABLE 1–1

Types of Workers’ Compensation Allowed

State

Workers’ Compensation Insurance Required?

Can Insurance Be Purchased from Private Carrier?

State Fund Available?

Alabama

Yes

Yes

No

Alaska

Yes

Yes

No

Arizona

Yes

Yes

Yes—Competitive

Arkansas

Yes

Yes

No

California

Yes

Yes

Yes—Competitive

Colorado

Yes

Yes

Yes—Competitive

Connecticut

Yes

Yes

No

Delaware

Yes

Yes

No

District of Columbia Yes

Yes

No

Florida

Yes

Yes

No

Georgia

Yes

Yes

No

Hawaii

Yes

Yes

Yes—Competitive

Idaho

Yes

Yes

Yes—Competitive

Illinois

Yes

Yes

No

Indiana

Yes

Yes

No

Iowa

Yes

Yes

No

Kansas

Yes

Yes

No

Kentucky

Yes

Yes

Yes—Competitive

Louisiana

Yes

Yes

Yes—Competitive

Maine

Yes

Yes

Yes—Competitive

Maryland

Yes

Yes

Yes—Competitive

Massachusetts

Yes

Yes

No

Michigan

Yes

Yes

No

Minnesota

Yes

Yes

Yes—Competitive

Mississippi

Yes

Yes

No

Missouri

Yes

Yes

Yes


competitive state fund State fund that competes with other insurance companies in the state for business. exclusive state fund State fund that is the only source of workers’ compensation in a state.

Montana

Yes

Yes

Yes—Competitive

Nebraska

Yes

Yes

No

Nevada

Yes

Yes

No

New Hampshire

Yes

Yes

No

New Jersey

No—Elective

No—Elective

No

New Mexico

Yes

Yes

Yes—Competitive

New York

Yes

Yes

Yes—Competitive

North Carolina

Yes

Yes

No

North Dakota

Yes

No

Yes—Exclusive

Ohio

Yes

No

Yes—Exclusive

Oklahoma

Yes

Yes

Yes—Competitive

Oregon

Yes

Yes

Yes—Competitive

Pennsylvania

Yes

Yes

Yes—Competitive

Rhode Island

Yes

Yes

Yes—Competitive

South Carolina

Yes

Yes

No

South Dakota

Yes

Yes

No

Tennessee

Yes

Yes

No

Texas

No—Elective

No—Elective

Yes—Competitive

Utah

Yes

Yes

Yes—Competitive

Vermont

Yes

Yes

No

Virginia

Yes

Yes

No

Washington

Yes

No

Yes—Exclusive

West Virginia

Yes

No

Yes—Exclusive

Wisconsin

Yes

Yes

No

Wyoming

Yes

No

Yes—Exclusive

9

Note: “Competitive” means there is a state fund and it competes with other insurance companies in the state for business. “Exclusive” means workers’ compensation in that state can only be purchased through the state fund.

10

Chapter 1

Figure 1–2, based on information from the American Association of State Compensation Insurance Funds (AASCIF), indicates which states have a state fund for workers’ compensation insurance. Table 1–2 is a timeline of the history of workers’ compensation in the United States. Prior to the dates cited in the table, Germany passed the Industry Compensation Act (1884) and England passed the Working Man’s Compensation Act (1897).

NH

WA

VT ND

MT

MN

MA

OR ID

WI

SD

NY RI

MI

WY NV

PA

IA

NE

IL

UT

CO

CA

KS

ME

OH

IN

NJ WV

MO

CT

VA

KY

DE MD

NC TN OK

AZ

NM

SC

AR MS

TX

AL

GA

LA FL

AK HI PR

Figure 1–2 States with workers’ compensation state funds.

TABLE 1–2

Year States Enacted Workers’ Compensation Laws

State

Year State Legislature First Enacted Law

Wisconsin

1911

California

1911

Illinois

1911

Kansas

1911

Massachusetts

1911

New Hampshire

1911

New Jersey

1911

Ohio

1911

Washington

1911


Maryland

1912

Michigan

1912

Rhode Island

1912

New York

1913

Arizona

1913

Connecticut

1913

Iowa

1913

Minnesota

1913

Nebraska

1913

Nevada

1913

Oregon

1913

Texas

1913

West Virginia

1913

Louisiana

1914

Kentucky

1914

Colorado

1915

Indiana

1915

Maine

1915

Montana

1915

Oklahoma

1915

Pennsylvania

1915

Vermont

1915

Wyoming

1915

Delaware

1917

Idaho

1917

New Mexico

1917

South Dakota

1917

Utah

1917

Virginia

1918

11

(continued)

12

Chapter 1

TABLE 1–2 (continued) State

Year State Legislature First Enacted Law

Alabama

1919

North Dakota

1919

Tennessee

1919

Missouri

1919

Georgia

1920

North Carolina

1929

Florida

1935

South Carolina

1935

Arkansas

1939

Mississippi

1948

SUMMARY Workers’ compensation insurance was established to protect injured workers and also protect employers from catastrophic losses. Prior to the creation of workers’ compensation insurance anyone hurt on the job had to seek benefits through a common-law system.

CHAPTER REVIEW Short Answer Insert the correct word to complete the following questions. 1. When was the first evidence of insurance recorded?

2. What country had the first form of any type of insurance?

3. What year was workers’ compensation first created?

4. What country first had workers’ compensation?


13

5. Who was the next country to have workers’ compensation?

6. Which was the first state in the United States to have workers’ compensation?

7. Which was the last state in the United States to have workers’ compensation?

8. What year did the first state in the United States institute workers’ compensation?

9. What year did all the states have workers’ compensation?

10. What are the common exceptions to employers having to purchase workers’ compensation insurance?

11. List the states where employers must purchase workers’ compensation insurance through the state fund.

12. List the types of coverage handled by the federal government.

13. List the three state coverages available to employers.

14. Describe what self-insured means.

15. Describe what state funds are.

16. Explain why workers’ compensation was created.

17. Name the two states where workers’ compensation insurance is not mandatory.

14

Chapter 1

Vocabulary Define the following terms. 18. injured employee

19. medical care

20. lost wages

21. rehabilitation

22. death benefits

23. occupational injury/illness

24. state fund

25. workers’ compensation board/commission

26. “no fault”

27. self-insured

28. provider

Chapter 2 Pricing a Workers’ Compensation Insurance Policy KEY TERMS auditor audit premium adjustment classification codes expense constant

experience modification factor manual rate NCCI payroll

ratemaking reinsurance remuneration underwriter

LEARNING OBJECTIVES Upon completion of this chapter the learner should be able to: 1. Understand the basics of NCCI class codes. 2. Understand how the cost or premium of a workers’ compensation policy is calculated. 3. Calculate the premium for a basic insurance policy. 4. Understand the underwriting process.

5. Understand the audit process. 6. Complete a basic workers’ compensation insurance application. 7. Calculate simple audit adjustments

INTRODUCTION Insurance companies are in the business of taking risks, and the risks they take are financial. The main focus of a workers’ compensation insurance company is to protect a business from financial disaster and at the same time provide medical and indemnity (lost wages) benefits to the injured worker. This is a huge balancing act on the part of the insurance company. It has to charge the correct premium (cost of the policy) for the insurance policy—one that at the same time is competitive and is fair to the business that is buying the insurance.

UNDERWRITING A WORKERS’ COMPENSATION POLICY Workers’ compensation insurance is not easily priced like other insurance policies because each state, through its insurance department, regulates the rates used by insurance companies in that particular state. Also, insurance is priced before the cost of providing the coverage is really known by the insurance company.

15

16

Chapter 2

payroll Wages a company pays out as salary to employees.

Underwriting an insurance policy is an extensive process of determining exactly what the nature of the business is; how much risk is involved in the business; what the payroll (the salary paid to employees) of that particular business is; and how safe a workplace there is. All of these things figure into the cost of the insurance policy. In most states, employers are required to handle their workers’ compensation liability (responsibility) by purchasing an insurance policy. In some states, if a company is large enough, it is allowed to self-insure (have enough assets to cover all necessary claims payments), but generally this option is only for employers with very large payrolls in a particular state. Texas is an exception to this. In Texas, you are not allowed to self-insure without being penalized. Most employers need to buy an insurance policy to cover workers’ compensation.

PRICING A WORKERS’ COMPENSATION POLICY remuneration Payroll wages. classification code Code associated with the risk of the workplace, used to calculate premium.

When a policy is purchased by an employer, the basic pricing is calculated on a rate per hundred dollars of remuneration (payroll wages) times the classification code (the code associated with the risk of the workplace, which is used to calculate premium). There are different classifications that apply to different types of work performed. The higher the risk of the work, the higher the classification becomes. The theory is that the rate should vary to reflect the varying exposure to injury of different kinds of work. For example, an office worker is normally subject to considerably less risk of workplace injury than a roofer; therefore, the rate for the office worker’s classification code will be much lower than the rate for the roofer’s classification code.

Classification Codes

National Council on Compensation Insurance Largest provider of workers compensation and employee injury data and statistics in the nation.

Determining the proper classification code can be complicated because one business can have many different types of workers. The workers may perform different types of jobs, and the risks of those jobs could be quite different. Most states use the National Council on Compensation Insurance (NCCI) system. There are approximately 600 workers’ compensation classification codes. For workers’ compensation insurance, businesses are classified in a way that tries to give a fair evaluation of their potential loss, and the classification codes are the basis for figuring the cost of the insurance policy (in NCCI system). There are two key rules that underlie the classification codes: 1. Employers are grouped according to the exposures they have in common. For example, all toy stores, from a small store to a national chain, will have basically the same type of risk. From a workers’ compensation standpoint, there is nothing particularly hazardous in a toy store, regardless of its size or location. Because they have common “exposures” to loss, toy stores, as a group, will receive the same classification. 2. It is the business of the employer that is classified, not the separate employments within the business. In the toy store, for example, it is not necessary to separately classify the salespeople, stockroom staff, and janitors. All of these jobs are considered a normal part of the toy store business.

Pricing a Workers’ Compensation Insurance Policy

17

The first step in determining the proper premium for a business is to identify the correct classification for the business. Each classification is represented by a four-digit number, which groups together businesses that share common exposure to hazards. The classification rate reflects the exposure to workplace injury common to similar employers. For example: • Dairy farmers are grouped together using Code 0036—Farm: Dairy. • Plumbers are grouped together using Code 5183—Plumbing. The rate is different for these two classes because their exposure to workplace injury is different. When NCCI establishes a classification, the following factors are considered: • There must be a large enough group of employers that a statistically credible rate can be produced. • The businesses must be readily identifiable. • Businesses within the group must have similar operations from one business to the next, resulting in similar exposures to hazards. If a classification system did not exist, the premium paid by high-hazard businesses would not be sufficient to cover their exposure and the premium paid by low-hazard businesses would be excessive. Insurance companies would be hesitant to write policies for high-hazard operations because the rate would not cover the cost of the risk. Generally, only a few classification codes will apply to each policy. Following are examples of premium calculations for workers’ compensation insurance using the payroll and classification codes and the following formula: Payroll/100 3 Class Code = Premium 1. If payroll for a company is $300,000 per year, its premium (cost) would be calculated as follows: $300,000 divided by 100 5 $3000 Class rate code 5 15.00 $3,000 3 15.00 5 $45,000 per year 2. If payroll for a company is $500,000 per year, its premium (cost) would be calculated as follows: $500,000 divided by 100 5 $5000 Class rate code 5 12.00 $5,000 3 12.00 5 $60,000 per year 3. If payroll for a company is $700,000 per year, its premium (cost) would be calculated as follows: $700,000 divided by 100 5 $7000 Class rate code 5 11.00 $7000 3 11.00 5 $77,000 per year

18

Chapter 2

CASE STUDY 2–1 underwriter Individual that prices the insurance policy and determines if company will accept the risk.

1. An underwriter (an individual who prices the insurance policy and determines if company will accept the risk) has a potential new client and needs to calculate what the client’s estimated premium will be if the policy is written. Here is the information gathered by the underwriter; complete the pricing worksheet based on this information: The company name is Palm Tree Plumbing and is located at 1234 Rhonda Road in Palm Beach, Florida. They have 15 employees, including the owner. Fourteen of the employees make $2000 per month each and the owner makes $4000 per month. The class code for the plumbing company has been determined to be 5183, which has a rate of $7.15.

Workers’ Compensation Policy Pricing Worksheet Name

Address

City

State Phone Number Type of Business Class Code Class Code Rate Payroll Estimated Premium


19

2. An underwriter has a potential new client and needs to calculate what the client’s estimated premium will be if the policy is written. Here is the information gathered by the underwriter; complete the pricing worksheet based on this information: The company name is ABC Dairy Farm and it is located at 9988 Junction Road, Marion, Wisconsin. ABC Dairy Farm has 10 employees, each making $1000 per month. The class code for the dairy farm has been determined to be 0036, which has a rate of $5.20.

Workers’ Compensation Policy Pricing Worksheet Name

Address

City

State Phone Number Type of Business Class Code Class Code Rate Payroll Estimated Premium

ratemaking Pricing of worker’ compensation coverage.

Using the proper classification code ensures the proper rate will be charged when calculating the cost of an insurance policy. A classification system based upon the business of the employer recognizes that it is the employer that purchases the policy and is provided the insurance protection. This system encourages businesses to promote a safe workplace because preventing accidents can impact the classification rate. The process of ratemaking, otherwise known as the pricing of workers’ compensation coverage (insurance coverage that is required by state and federal law to provide benefits for workers who are injured on the job in the course and scope of their employment) is

20

Chapter 2

a very specialized job. Rates are mathematically based, producing an objective pricing system. Rates are established using things such as actual premiums paid by businesses, payroll paid out by businesses, and what the cost of past claims has been. The proper rate covers the weekly benefits paid to an injured worker and the medical cost of an injured worker. Rates must be sufficient to pay for those benefits and to cover the cost of operating the insurance company that provides these benefits to the injured worker. Insurance premiums are paid up front when a policy is purchased, while injured worker benefits are paid over a period of years. Insurance is unusual because the price is set before it is known how many claims a business will have or how much will have to be paid out on each claim. Therefore, the pricing of an insurance policy is extremely important. The person that determines what an insurance company will charge an employer for workers’ compensation insurance is the underwriter. Insurance underwriters calculate the risk of loss, set premium rates, and write policies. They set the premium amount with the intention of covering any losses that might occur as well as trying to make a profit for the insurance company. They have to set the premium high enough to limit the risk of the insurance company while still trying to keep the cost competitive. Pricing the insurance policy correctly is a balancing act of not charging too little and not charging too much.

PURCHASING A WORKERS’ COMPENSATION POLICY The person who is buying the insurance policy fills out an insurance application, which the underwriter reviews. The underwriter must analyze the information given on the application and determine how much of a risk would be involved if they were to write this insurance policy. The underwriter then determines if the risk is acceptable. Another part of the underwriter’s job is to reject applications that he feels are not profitable for the insurance company. If the underwriter determines the risk involved is acceptable, he must then determine how much to charge for each individual policy.

Workers’ Compensation Application As you can see in Figure 2–1, all pertinent information about the business is on the application. Following is the important information that must be on an application: • • • • • • • •

Business name and mailing address Business’s federal tax identification number Location of the business Effective dates of coverage Employer’s liability limits Classification code Payroll Estimated premium

The underwriter uses various types of information in determining if a risk is acceptable to insure. Some of the information used relates to past claims, the seriousness of past claims, the potential customer’s financial standing, and its safety programs. The underwriter also determines what states the potential policyholder needs coverage in; a policy can be written to cover employees in only one state or in all of the states. The cost of the insurance policy will be affected by how many states are covered under the policy. All of these things are considered before an underwriter decides whether to write the workers’ compensation policy or not.


WORKERS’ COMPENSATION APPLICATION AGENCY

COMPANY

DATE (MM/DD/YYYY)

UNDERWRITER

ABC Insurance Company Main Insurance Agency Hwy 1 Anywhere, USA

APPLICANT NAME

Smith Plumbing E-MAIL ADDRESS

MAILING ADDRESS (including ZIP code)

PHONE (A/C. NO): FAX (A/C. NO): E-MAIL ADDRESS:

5678 Main Street Anywhere, USA SIC

YRS IN BUS

CODE:

x

INDIVIDUAL

5

PARTNERSHIP

CORPORATION

CREDIT BUREAU NAME:

SUB CODE:

OTHER:

ID NUMBER:

FEDERAL EMPLOYER ID NUMBER

AGENCY CUSTOMER ID

LLC

SUBCHAPTER “S” CORP

OTHER RATING BUREAU ID OR STATE EMPLOYER REGISTRATION NUMBER

NCCI ID NUMBER

99-9999999 BILLING INFORMATION

STATUS OF SUBMISSION QUOTE

AUDIT

PAYMENT PLAN

BILLING PLAN

ISSUE POLICY

BOUND (Give date and /or attach copy)

AGENCY BILL

ANNUAL

ASSIGNED RISK (Attach ACORD 133)

DIRECT BILL

SEMI-ANNUAL

OTHER:

QUARTERLY

% DOWN:

AT EXPIRATION

MONTHLY

SEM-ANNUAL

OTHER:

QUARTERLY

LOCATIONS LOC #

1

STREET, CITY, COUNTY, STATE, ZIP CODE

5678 Main Street, Anywhere, USA

POLICY INFORMATION PROPOSED EXP DATE

PROPOSED EFF DATE

6/5/07

NORMAL ANNIVERSARY RATING DATE

PARTICIPATING

6/5/08 PART 2 - EMPLOYERS LIABILITY

PART 1 - WORKERS’ COMPENSATION (States)

$ 100,000

CO

PART 3 - OTHER STATES INS

DEDUCTIBLES

EACH ACCIDENT

$ 100,000

DISEASE-POLICY LIMIT

$ 500,000

DISEASE-EACH EMPLOYEE

DIVIEND PLAN/SAFETY GROUP

RETRO PLAN

NON-PARTICIPATING AMOUNT/%

OTHER COVERAGES

MEDICAL

U.S.L. & H.

INDEMNITY

VOLUNTARY COMP

MANAGED CARE OPTION

FOREIGN COV

ADDITIONAL COMPANY INFORMATION

RATING INFORMATION

STATE

LA

LOC #

CLASS CODE

1

8798

STATE:

# EMPLOYEES

DESCR CODE

CATEGORIES, DUTIES, CLASSIFICATIONS

Plumbing

FACTOR

FULL TIME

ESTIMATED ANNUAL REMUNERATION

PART TIME

6

FACTORED PREMIUM

50,000

FACTORED PREMIUM

FACTOR

TOTAL

$

EXPENSE CONSTANT

N/A

$

INCREASED LIMITS

$

TAXES/ ASSESSMENTS

N/A

$

DEDUCTIBLE

$

DEDUCTIBLE

$

ESTIMATED ANNUAL PREMIUM

N/A

$

EXPERIENCE OR MERIT MODIFICATION

$

N/A

$

LOSS CONSTANT

N/A

$

$

ASSIGNED RISK SURCHARGE

$

ARAP

$ $

SCHEDULE RATING

$

CCPAP

$

TOTAL EST ANNUAL PREMIUM

STANDARD PREMIUM

$

MINIMUM PREMIUM

$

PREMIUM DISCOUNT

$

DEPOSIT PREMIUM

$

PLEASE COMPLETE REVERSE SIDE

Figure 2–1 Sample workers’ compensation application.

RATE

.50


$ 2,500

SPECIFY ADDITIONAL COVERAGES / ENDORSEMENTS

21

22

Chapter 2

CASE STUDY 2–2 Complete an application for workers’ compensation insurance based on the following information: 1. Black Insurance Company, located at 7656 South Street, Boston, Massachusetts, is writing a workers’ compensation policy for Mandy Meats, located at 1110 West Street, Boston, Massachusetts. Mandy Meats is a corporation that has been in business for 10 years and its federal employer identification number is 11-223344. The policy will be effective 1/1/09 and will be in force for a year. Mandy Meats has two locations, both in Boston: one at 1110 West Street and another at 886 Minden Street. Mandy Meats wants employers’ liability at 100/100/500. The class code for Mandy Meats is 8006 with a rate of 2.45. Mandy Meats has 20 employees with a combined payroll of $85,000 per year.



DATE (MM/DD/YYYY)

UNDERWRITER

COMPANY

APPLICANT NAME

E-MAIL ADDRESS



SIC

YRS IN BUS

CODE:

CORPORATION

PARTNERSHIP


CREDIT BUREAU NAME:

SUB CODE:

STATUS OF SUBMISSION

OTHER:

ID NUMBER: OTHER RATING BUREAU ID OR STATE EMPLOYER REGISTRATION NUMBER

NCCI ID NUMBER


AGENCY CUSTOMER ID

LLC

INDIVIDUAL

BILLING INFORMATION

QUOTE

AUDIT

PAYMENT PLAN

BILLING PLAN

ISSUE POLICY


AGENCY BILL

ANNUAL

ASSIGNED RISK (Attach FORM 133)

DIRECT BILL

SEMI-ANNUAL

OTHER:

QUARTERLY

% DOWN:

AT EXPIRATION

MONTHLY

SEM-ANNUAL

OTHER:

QUARTERLY

LOCATIONS LOC #



PROPOSED EFF DATE


PARTICIPATING

RETRO PLAN

NON-PARTICIPATING PART 1 - WORKERS’ COMPENSATION (States)

PART 2 - EMPLOYERS LIABILITY


DEDUCTIBLES

EACH ACCIDENT DISEASE-POLICY LIMIT

AMOUNT/%

U.S.L. & H.

INDEMNITY

VOLUNTARY COMP

MANAGED CARE OPTION

FOREIGN COV

DISEASE-EACH EMPLOYEE DIVIEND PLAN/SAFETY GROUP

OTHER COVERAGES

MEDICAL


RATING INFORMATION

STATE

LOC #

CLASS CODE

STATE:

# EMPLOYEES

DESCR CODE


FACTOR

FULL TIME

FACTORED PREMIUM


PART TIME

FACTORED PREMIUM

FACTOR

TOTAL

$

EXPENSE CONSTANT

$

INCREASED LIMITS

$

TAXES/ ASSESSMENTS

$

DEDUCTIBLE

$

DEDUCTIBLE

$


$

LOSS CONSTANT

$


$

ARAP

$

$ $


$ SCHEDULE RATING

$

CCPAP

$


STANDARD PREMIUM

$

MINIMUM PREMIUM

$

PREMIUM DISCOUNT

$

DEPOSIT PREMIUM

$

$


RATE



23

24

Chapter 2

CASE STUDY 2–2 (continued) 2. White Insurance Company, located at 1122 North Street, New Orleans, Louisiana, is writing a workers’ compensation policy for Joe’s Drinks, located at 789 3rd Street in New Orleans, Louisiana. Joe’s Drinks is a corporation that has been in business for 15 years and their federal employer identification number is 22-223366. The policy will be effective 3/1/09 and will be in force for a year. Joe’s Drinks has only one location. Joe’s Drinks wants employers’ liability at 100/100/500. The class code for Joe’s Drinks is 1157 with a rate of 3.25. Joe’s Drinks has 35 employees with a combined payroll of $175,000 per year.



DATE (MM/DD/YYYY)

UNDERWRITER

COMPANY

APPLICANT NAME

E-MAIL ADDRESS



SIC

YRS IN BUS

CODE:

CORPORATION

PARTNERSHIP


CREDIT BUREAU NAME:

SUB CODE:

STATUS OF SUBMISSION

OTHER:

ID NUMBER: OTHER RATING BUREAU ID OR STATE EMPLOYER REGISTRATION NUMBER

NCCI ID NUMBER


AGENCY CUSTOMER ID

LLC

INDIVIDUAL

BILLING INFORMATION

QUOTE

AUDIT

PAYMENT PLAN

BILLING PLAN

ISSUE POLICY


AGENCY BILL

ANNUAL

ASSIGNED RISK (Attach FORM 133)

DIRECT BILL

SEMI-ANNUAL

OTHER:

QUARTERLY

% DOWN:

AT EXPIRATION

MONTHLY

SEM-ANNUAL

OTHER:

QUARTERLY

LOCATIONS LOC #



PROPOSED EFF DATE


PARTICIPATING

RETRO PLAN

NON-PARTICIPATING PART 1 - WORKERS’ COMPENSATION (States)

PART 2 - EMPLOYERS LIABILITY


DEDUCTIBLES

EACH ACCIDENT DISEASE-POLICY LIMIT

AMOUNT/%

U.S.L. & H.

INDEMNITY

VOLUNTARY COMP

MANAGED CARE OPTION

FOREIGN COV

DISEASE-EACH EMPLOYEE DIVIEND PLAN/SAFETY GROUP

OTHER COVERAGES

MEDICAL


RATING INFORMATION

STATE

LOC #

CLASS CODE

STATE:

# EMPLOYEES

DESCR CODE


FACTOR

FULL TIME

FACTORED PREMIUM


PART TIME

FACTORED PREMIUM

FACTOR

TOTAL

$

EXPENSE CONSTANT

$

INCREASED LIMITS

$

TAXES/ ASSESSMENTS

$

DEDUCTIBLE

$

DEDUCTIBLE

$


$

LOSS CONSTANT

$


$

ARAP

$

$ $


$ SCHEDULE RATING

$

CCPAP

$


STANDARD PREMIUM

$

MINIMUM PREMIUM

$

PREMIUM DISCOUNT

$

DEPOSIT PREMIUM

$

$


RATE



25

26

Chapter 2

Policy Premium Calculations

manual rate Rate per hundred dollars of payroll times the classification code. experience modification factor Factor calculated by NCCI comparing the experience for a specific company to the average losses of similar companies.

Once the decision by the underwriter is made to write the policy, the appropriate premium has to be calculated. As stated above, the basic pricing is calculated on a rate per $100 of remuneration (payroll wages) times the classification code. This is called the manual rate (premium) and is calculated by multiplying payrolls by appropriate rates before the application of experience modifier, schedule credit, or premium discount. This manual rate can then be adjusted by an experience modification factor, which is a factor calculated by NCCI that compares the experience of a specific company to the average loss experience for the same type of risk in the same state. It is based on the ratio between losses and premium, which either reduces or increases the amount of the premium for a policy. It applies to all but very small businesses. Under this plan, employers are charged a reduced premium if they have a better-than-average safety record. Those with a worse-than-average safety record are charged more for their policy. The average experience modification factor is 1. A better-than-average rating would be below 1, and a worse-than-average rating would be above 1.

Policy premium calculations using an experience modification factor: Let’s assume two businesses in a state have the same basic classification. They will begin with the same manual rate but their experience modification factor is different. Here are examples of how this will change their premium. 1. Safe Plumbing Company, Inc. Manual Rate 5 $15.00 Payroll 5 $200,000 Manual Premium 5 $30,000 ($200,000/100 3 $15.00) Experience Rating 5 .85 (15% credit for good past experience) Total Modified Premium 5 $25,500 ($30,000 3 .85) 2. Not Safe Plumbing Company, Inc. Manual Rate 5 $15.00 Payroll 5 $200,000 Manual Premium 5 $30,000 ($200,000/100 3 $15.00) Experience Rating 5 1.15 (15% add-on for bad past experience) Total Modified Premium 5 $34,500 ($30,000 3 1.15) 3. Safe Manufacturing Company, Inc. Manual Rate 5 $10.00 Payroll 5 $400,000 Manual Premium 5 $40,000 ($400,000/100 3 $10.00) Experience Rating 5 .85 (15% credit for good past experience) Total Modified Premium 5 $34,000 ($40,000 3 .85) 4. Not Safe Manufacturing Company, Inc. Manual Rate 5 $10.00 Payroll 5 $400,000 Manual Premium 5 $40,000 ($400,000/100 3 $10.00) Experience Rating 5 1.15 (15% add-on for bad past experience) Total Modified Premium 5 $46,000 ($40,000 3 1.15)


27

As you can see from the examples, when a company has a safe, accident-free workplace, it not only benefits the employees but it also helps the company pay less for its workers’ compensation insurance.

CASE STUDY 2–3 Calculate and fill in the proper numbers: Company XYZ Manual Rate Payroll Manual Premium Experience Rating Total Modified Premium Company ABC Manual Rate Payroll Manual Premium Experience Rating Total Modified Premium Company XXX Manual Rate Payroll Manual Premium Experience Rating Total Modified Premium

$21.75 $100,000 .90

$8.55 $275,000 .70

$3.70 $99,000 1.20

Assigned Risk If no one is willing to write a company’s workers’ compensation insurance, then the company must be placed in an assigned risk pool. This is sometimes the only way a company can get insurance if its claims history is bad and/or it has an experience modification factor higher than 1.00. When a company gets its insurance through an assigned risk pool, it increases its premium substantially over what others are paying for the same coverage. This is another reason for companies to have safe workplaces. There are other premium discounts and deviations that can be made to certain workers’ compensation insurance policies, but those are more applicable to larger, more complicated policies, which will not be discussed at this time.

Policy Changes During the policy year the policy may need to be altered due to changes in the type of work that is performed by a company, the place where the work is performed, or any of numerous other numerous circumstances that could affect a business. The most common reasons for altering a policy are: • • • •

To broaden the coverage To restrict the coverage To modify the coverage To comply with state laws

If a policy does need to be amended during the policy year, it is done by attaching an endorsement to the policy (Figure 2–2). This endorsement is a written agreement attached to the policy to add or subtract coverage. It thus changes the original terms of the policy. Adding endorsements frequently occurs during the life of a policy.

28

Chapter 2

Policy Endorsement ABC INSURANCE COMPANY 456 Main Street Anywhere, USA

Jones R-retail Store Tax ID No. 99-9999999 This endorsement reflects that the name of your business has changed from Jones Brothers to Jones Retail Store. The effective date of this change is 2/1/09.

Endorsement #1 Signed:

Figure 2–2 Policy endorsement.


29

CASE STUDY 2–4 Prepare an endorsement to the workers’ compensation policy based on the following information: First Insurance Company writes the workers’ compensation policy for ABC Company. There have been no other changes to the policy since it was initially written on 5/1/08. Now the company is changing its name from ABC Company to Delmont Company. The change will be effective on 3/3/08.

Policy Endorsement

Tax ID No. Change: The effective date of this change is

Endorsement # Signed:

30

Chapter 2

Certificate of Insurance There are times when a policyholder has to provide proof of insurance. This could be the case, for example, if a contractor is remodeling a building. The owner of the building would want to verify that the contractor had workers’ compensation insurance in order to protect the building owner from financial loss. If the contractor did not have workers’ compensation insurance then the building owner could be responsible if someone got injured on the job while remodeling the building. When proof of insurance is required, the insurance company will complete a certificate of insurance, which verifies the insurance. It shows the company name, the name of the insurance company providing the coverage, the dates the insurance policy is active, and what states are covered under the workers’ compensation policy (Figure 2–3). The important information on a certificate of insurance is: • • • • • •

Business name Insurance company providing insurance Dates the coverage is effective States where the coverage is effective Policy number Employers’ liability limits

POLICY AUDITS

auditor Verifies that policy is appropriately priced.

Once the policy is approved by the underwriter and the premium is calculated, the insurance company will issue an insurance policy that is generally good for a 12-month period. At the end of the policy period an audit will be performed. Because a policy is written on estimated payroll of the business, it is necessary for an audit to be done at the end of the policy year to determine the actual payroll for that time and see if the premium charged was appropriate. Based on the audit, the premium for the past year could either be increased or decreased for the policyholder (the company that purchases the policy). The auditor will provide either a handwritten or computerized worksheet detailing the calculations used to determine the audited premium. It is the responsibility of the insurance auditor to do several things at the time of the audit: • Verify what the actual payroll was for the policy period. • Verify the operations of the business to be sure that the policy has the correct classification codes on it. • Verify that the operations of the business have not changed during the policy year. • Assist the policyholder with record keeping, if necessary. • Determine what the final premium should be for the particular policy period. After the audit is completed, the policyholder will know if the premium that was calculated at the beginning of the policy was correct or not. If the premium was not calculated correctly, then the policyholder will either owe more money or get a refund.


Figure 2–3 Certificate of insurance.

31

32

Chapter 2

CASE STUDY 2–5 Prepare a certificate of insurance based on the following information: Jones Insurance Company writes the workers’ compensation policy for Quick Tools, Inc. The policy runs from 1/1/09–1/1/10 and covers the states of Missouri and Tennessee. The policy number is WC789-0 and the employers’ liability limits are 100/100/500.


33

34

Chapter 2

Here are examples of how an audit at the end of the policy year can change the cost of the policy:

1. At the beginning of the policy the premium was calculated as follows: ABC Company, Inc. Manual Rate 5 $12.00 Payroll 5 $150,000 Manual Premium 5 $18,000 ($150,000/100 3 $12.00) Experience Rating 5 .85 (15% credit for good past experience) Total Modified Premium 5 $15,300 ($18,000 3 .85) At audit, the auditor determined that the payroll was incorrect; there was actually more payroll during the policy year than was estimated at the beginning of the policy. Manual Rate 5 $12.00 Payroll 5 $215,000 Manual Premium 5 $25,800 ($215,000/100 3 $12.00) Experience Rating 5 .85 (15% credit for good past experience) Total Modified Premium 5 $21,930 ($25,800 3 .85) The difference between the premium that was originally estimated ($15,300) and the actual premium ($21,930) is $6630. The policyholder will now have to pay an additional $6630 in premium at the end of the policy year. 2. At the beginning of the policy the premium was calculated as follows: XYZ Company, Inc. Manual Rate 5 $17.00 Payroll 5 $300,000 Manual Premium 5 $51,000 ($300,000/100 3 $17.00) Experience Rating 5 1.15 (15% add-on for bad past experience) Total Modified Premium = $58,650 ($51,000 3 1.15) At audit, the auditor determined that the classification code(s) was/were incorrect. XYZ Company, Inc. Manual Rate 5 $21.00 Payroll 5 $300,000 Manual Premium 5 $63,000 ($300,000/100 3 $21.00) Experience Rating 5 1.15 (15% add-on for bad past experience) Total Modified Premium 5 $72,450 ($63,000 3 1.15) The difference between the premium that was originally estimated ($58,650) and the actual premium ($72,450) is $13,800. The policyholder will now have to pay an additional $13,800 in premium at the end of the policy year.


35

These examples show why it is very important that the correct payroll and proper classification be determined when the policy is first written: it can cost the policyholder additional money at the end of the policy year if either of these is incorrect. This additional cost will be something the policyholder has not anticipated and could bring hardship to the company.

CASE STUDY 2–6 Calculate the new policy premium after audit: Company 1 At the beginning of the policy this information was used to calculate the policy premium: Manual Rate $11.00 Payroll $85,000 Manual Premium $9350 After audit: Manual Rate $14.50 Payroll $85,000 Manual Premium Company 2 At the beginning of the policy this information was used to calculate the policy premium: Manual Rate $8.50 Payroll $125,000 Manual Premium $10,625 After audit: Manual Rate $8.50 Payroll $125,000 Manual Premium Company 3 At the beginning of the policy this information was used to calculate the policy premium: Manual Rate $10.00 Payroll $250,000 Experience Rating .80 Manual Premium $21,250 After audit: Manual Rate $10.00 Payroll $375,000 Experience Rating .80 Manual Premium Company 4 At the beginning of the policy this information was used to calculate the policy premium: Manual Rate $6.30 Payroll $130,000 Experience Rating 1.20 Manual Premium $9828 After audit: Manual Rate $7.10 Payroll $140,000 Experience Rating 1.20 Manual Premium

36

Chapter 2

EMPLOYERS’ LIABILITY There is a second part of a workers’ compensation insurance policy that is called employers’ liability. We will not go into great detail on this portion of the policy but it is available to cover the insured in cases where workers’ compensation would not cover the damages and the employee can sue his employer. Most work injuries fall under the workers’ compensation part of the policy (part 1) and do not fall under the employers’ liability section of the policy (part 2). Employers’ liability has standard limits of coverage of 100/100/500, which means: • $100,000 each occurrence bodily injury • $100,000 each occurrence for employee disease • $500,000 employee disease aggregate A policyholder can increase these limits of liability by a percentage based on the cost of the policy. The formula for calculating the premium with increased liability limits is as follows: Premium 3 Increased Limits Percentage 1 Premium 5 New Policy Premium For example, if a policyholder wanted to increase the liability limits to 500/500/500, the increased limit percentage was 1.7 percent, and the current policy premium was $6000 the new premium would be calculated as follows: $6000 3 1.7% 5 $102 $6000 1 $102 5 $6102 (New policy premium with increased liability limits) expense constant Charge that covers the expense of issuing the policy.

Most states also have what is called an expense constant, which is added on to the cost of the insurance policy and is usually $150. This expense constant covers the expenses of issuing the policy. The expense constant is applied to all policies. Following is the formula for including the expense constant in the final premium figures: Current Premium 1 Expense Constant 5 Final Premium Cost

CASE STUDY 2–7 Calculate the new premium with increased employers’ liability limits and expense constant: 1. Current premium 5 $10,000 Increased employers’ liability limit percentage 5 1.66 Expense constant 5 $150

Current Premium 3

Increased Employers’ Liability Limits 1 Expense Constant Percentage

5 Final Premium Cost


37

2. Current premium 5 $16,000 Increased employers’ liability limit percentage 5 1.5 Expense constant 5 $200

Current Premium 3



3. Current premium 5 $78,000 Increased employers’ liability limit percentage 5 1.2 Expense constant 5 $100

Current Premium 3



REINSURANCE reinsurance Insurance policy purchased by an insurance company to protect itself from large, unforeseen losses.

Because the risk is high for insurance companies when writing an insurance policy, they sometimes purchase reinsurance. Reinsurance is actually insurance for insurance companies. It is a way for the insurance company to protect itself from extraordinary losses. Reinsurance limits the amount of risk an insurance company has to bear by sharing the risk with one or more other insurance companies. An insurance company, for example, could handle any loss up to $1,000,000, purchase reinsurance for any loss above $1,000,000 and up to $4,000,000, and then purchase additional reinsurance for any losses above $4,000,000. There are many ways that an insurance company can structure its reinsurance to make sure all losses are covered and also limit its own risk. Reinsurance helps insurance companies stabilize their business. This is a littleknown but very important side of the insurance market.

SUMMARY Insurance companies that write workers’ compensation policies are in the business of taking risks. They must protect the injured worker as well as make a profit. The underwriter is the person responsible for determining the risk involved in writing a particular workers’ compensation policy and also responsible for charging the correct price for the policy. If the underwriter decides to take the risk and write the policy, then the cost of the policy is based mainly on the type of business the company is doing and what the annual payroll of that company is. The type of business determines what classification code will be used in calculating the cost of the policy. The more risk involved in the business, the more costly the class code that will be used to calculate the premium, or cost, of the policy. Past claims, how bad those claims are, and how a company stacks up against the same types of businesses in the area of accidents also play a large part in the cost of the insurance policy. A good claims history can reduce the manual rate, or basic cost, of the policy, and a bad claims history can increase the manual rate of the policy.

38

Chapter 2

audit premium adjustment An adjustment to the insurance premium based on the results of an audit.

There are times when a policyholder needs to provide proof of insurance in order to do business. When proof of insurance is needed, a certificate of insurance is provided that gives all the information necessary to show that a certain business does have workers’ compensation insurance. At the end of the policy year, most insurance companies audit their policyholders’ books, including payroll records. When the policy is initially written, the premium is based on estimated payroll (what the policyholder thinks he will pay out in payroll in a given year). What is estimated at the beginning of the year and what is actually paid out in payroll can vary up or down. Therefore, an audit is necessary to get the true and accurate amount of payroll. Along with auditing the payroll, the auditor will verify that the policy was written with the correct classification codes. A difference in payroll as well as a different classification code can change the amount the insurance company actually will charge for the insurance policy. At the end of the policy year, a policyholder could get money back or be billed for additional premium; this is called an audit premium adjustment.

CHAPTER REVIEW Matching Match the definition in the right column with the correct term from the left column. a. Rate per $100 of payroll x classification code

1. Payroll 2. Remuneration

b. Factor created by calculation of past losses

3. Classification code

c. Charge for issuing policy

4. NCCI

d. Payroll wages

5. Manual rate

e. Insurance for insurance company

6. Experience modification factor

f. Person that determines insurance risk g. National Council on Compensation Insurance

7. Underwriter 8. Auditor

h. Money paid out to workers

9. Reinsurance

i. Person that verifies premium at end of policy year

10. Expense constant

j. Defines type of work performed

Fill in the Blanks Fill in the blanks in the following statements. 11. Insurance companies are in the business of .

39


12. The title of the person that decides whether to write a policy or not is called a(n) . 13. Basic pricing is calculated on a rate per

dollars of

. 14. Most states use codes.

to determine the classification

15. Insurance premiums are paid when a policy is

.

16. The underwriter can either accept the application for insurance or the application for insurance. 17. The manual premium can be adjusted by a(n) , which can either increase or decrease the cost of the insurance policy. 18. If proof of insurance is required, a(n) is provided. 19. At the end of the policy year, the insurance company will perform a(n) . 20. The auditor verifies the actual

amount for

the year and also verifies that the correct was applied to the policy.

Calculations Premium Calculations—Figure the cost of a policy based on the following information: 21. Company ABC has a payroll of $50,000 and its class code is 5188 5 $7.50.

Premium

40

Chapter 2

22. Company 123 has a payroll of $75,000 and its class code is 0011 5 $10.00.

Premium 23. Company XYZ has a payroll of $125,000 with a class code of 5574 5 $8.00 and an experience modification factor of .84.

Premium 24. Company 456 has a payroll of $200,000 with a class code of 4564 5 $10.50 and an experience modification factor of 1.20.

Premium


41

25. ABC Company’s base premium is $5000, but it want to increase its liability limits to 500/500/500. The increased liability limit percentage is 1.5 percent and the expense constant is $150. Calculate the new premium for this policyholder.

New Premium 26. Jones Radiator Shop has a base premium of $10,000 and wants to increase its liability limits to 500/500/500. The increased liability limit percentage is 2.1 percent and the expense constant is $150. Calculate what the new premium will be.

New Premium

42

Chapter 2

Audit Calculations—An auditor has performed end-of-year audits at the following companies. In this exercise, calculate the original premium for the policy at the beginning of the year and then “adjust” the premium for the past year based on the findings of the auditor. 27. At the beginning of the policy, the premium was calculated on the following: Payroll 5 $50,000 Class Code 1234 5 $5.00 Experience Modification Factor 5 1 After the audit, the following is the correct information: Payroll 5 $40,000 Class Code 1234 5 $5.00 Experience Modification Factor 5 1

New Adjusted Premium 28. At the beginning of the policy, the premium was calculated on the following: Payroll 5 $100,000 Class Code 1254 5 $6.00 Experience Modification Factor 5 1 After the audit, the following is the correct information: Payroll 5 $125,000 Class Code 12544 5 $6.00 Experience Modification Factor 5 1

New Adjusted Premium


29. At the beginning of the policy, the premium was calculated on the following: Payroll 5 $75,000 Class Code 4567 5 $11.00 Experience Modification Factor 5 1.25 After the audit, the following is the correct information: Payroll 5 $75.00 Class Code 4884 5 $14.00 Experience Modification Factor 5 1.25

New Adjusted Premium 30. At the beginning of the policy, the premium was calculated on the following: Payroll 5 $80,000 Class Code 7722 5 $15.00 Experience Modification Factor 5 .85 After the audit, the following is the correct information: Payroll 5 $85.00 Class Code 8814 5 $12.00 Experience Modification Factor 5 1.25

New Adjusted Premium

43


Chapter 3 What Workers’ Compensation Pays KEY TERMS death benefits indemnity benefits medical benefits mileage payments

permanent disability precerted provider spendable earnings

temporary disability vocational rehabilitation waiting period

LEARNING OBJECTIVES Upon completion of this chapter the learner should be able to: 1. Understand injured worker benefits. 2. Name injured worker basic benefits. 3. Describe injured worker benefits in some detail.

4. Identify particular states’ indemnity benefits. 5. Identify particular states’ death benefits. 6. Perform basic benefit calculations.

INTRODUCTION

medical benefits Benefits that an injured worker receives to cover any medical expense resulting from the on-the-job injury. indemnity benefits Benefits paid to an injured worker to cover all or part of wages lost due to on-the-job injury.

State and federal laws mandate that persons injured on the job are entitled to benefits. The benefits are in place to help the injured worker have a speedy recovery of health and be able to return to work. Each state sets its own guidelines for what it will pay for medical benefits and indemnity (lost wages) benefits. Some states allow the injured worker to choose her own treating physician and other states require an injured worker to be treated by a physician of the state’s choice. If an employee is killed on the job, the surviving spouse and children are entitled to benefits for a specified period of time and are also entitled to payment up to a set limit for burial cost. In this chapter we will go into detail, by state, on what is available to the injured worker when she is injured on the job.

45

46

Chapter 3

MAJOR BENEFITS AVAILABLE TO INJURED WORKERS There are many different benefits available to the injured worker but the major benefits are: • Medical expenses • Indemnity (lost wages) payments for temporary and permanent disability (total and partial) • Physical and vocational rehabilitation • Death benefits In this chapter we will take a closer look at each of these benefits. At the end of the chapter you should have a clearer understanding of each of them.

Medical Benefits

provider Individual, group, or facility that provides medical treatment.

All injured workers are entitled to all medical services that are required due to an injury at work. Injured workers are entitled to the payment of reasonable related medical services rendered by a physician or other health care provider. Employees never pay a medical deductible or co-payment for this medical service. All but seven states have laws requiring the insurer to provide complete medical coverage without limitation. The states with special provisions limiting medical coverage are: • • • • • • •

precerted Authorized medical treatment.

Arkansas Florida Hawaii New Jersey Ohio Montana Tennessee

Some states have the right to choose the physician an injured worker goes to and other states allow the injured worker to choose her own physician. Various states also require that some types of expensive medical treatment, such as surgery and physical therapy, be precerted (approved before treatment begins) before the injured worker can receive them. This is done to make certain that the treatment is needed and that it will result in the improvement of the injured worker’s condition. Medical benefits pay for necessary medical care to treat a work-related injury or illness. Workers’ compensation insurance companies pay medical benefits directly to the health care provider who provides the medical treatment. Medical benefits are paid only for the treatment of a work-related injury or illness. The insurance carrier does not pay for the treatment of other injuries or illnesses, even if the treatment was provided at the same time treatment was received for the work-related injury. The health care provider may not bill the injured worker for treatment related to a work-related injury or illness, but may bill the injured worker for treatment of other injuries or illnesses. Medical providers cannot try to get the injured worker to pay them using any of the following methods: • • • •

Sending a bill when the injured worker did not request an information copy Having a collection agency send a letter or contact the injured worker Filing a lawsuit in court against the injured worker Filing a claim with the injured worker’s private health insurance

What Workers’ Compensation Pays

47

CASE STUDY 3–1 Read the following treatment details of a workers’ compensation injury, and then list the issues that were not properly handled: A worker gets injured on the job by falling off a ladder. She breaks her leg and the insurance company is notified. The injured worker goes to the physician and the physician recommends surgery be done to make repairs to the broken leg. The injured worker has surgery the next week and then calls the insurance company and tells them she has had surgery on her leg. After surgery the physician recommends physical therapy. The worker begins treatment and two days later notifies the insurance company that she is receiving physical therapy. The worker sends in mileage statements to the insurance company for the miles to and from physical therapy, along with miles driven while taking her daughter to school each morning. The physician and the physical therapist send their bills to the injured worker for payment and when the bills are not promptly paid, they continue to bill the injured worker. Eventually they assign the bills to a collection agency in order to receive payment. List the areas that were incorrectly handled in this case study:

mileage payments Benefit that reimburses an injured worker for miles driven to and from medical treatment.

Medical coverage for an injured worker includes a broad spectrum of treatment. Visits to the physician are covered, as are emergency room visits. Among the other areas of treatment that are paid for are hospital stays, surgery, orthopedic appliances, medicine, medical supplies, dental care, and transportation (Figure 3–1). Transportation reimburses the injured worker for mileage going to and from the medical provider for treatment (mileage payments) and also includes mileage for getting prescriptions and medical supplies. Transportation also includes the cost of a taxi or other means of transportation to get to and from medical treatment. The amount reimbursed to an injured worker for mileage varies by state. To get reimbursed for the mileage cost, the injured worker must submit a form to the insurance company listing the date, purpose of trip, and miles and the insurance company then reimburses the injured worker for the miles driven. Figure 3–2 is an example of a mileage reimbursement statement. If the rate for mileage reimbursement for the state the injured worker lives in is 40 cents per mile, the reimbursement to the injured worker would be calculated as follows: 73 miles 3 .40 5 $29.20 If the rate for mileage reimbursement for the state the injured worker lives in is 35 cents per mile, the reimbursement to the injured worker would be calculated as follows: 73 miles 3 .35 5 $25.55

48

Chapter 3

Figure 3–1 Examples of services covered by medical benefits.

Mileage Statement: Date

Purpose of Visit

Miles

6/1/06

Dr. Jones

20

6/2/06

Special Drug Store

8/15/06

Dr. Smith

32

8/19/06

Physical therapy

15

Total

73

Signed:

(Injured Worker)

Figure 3–2 Mileage reimbursement.

6


49

CASE STUDY 3–2 Calculate the mileage reimbursement for an injured worker from the following information: 1. Injured worker had 200 miles of medical travel due to her work-related injury; the rate for mileage paid in the state where the injured worker lives is 40 cents per mile.

2. Injured worker had 1250 miles of medical travel due to her work-related injury; the rate for mileage paid in the state where the injured worker lives is 44 cents per mile.

3. Injured worker had 300 miles of medical travel due to her work-related injury. One hundred miles of travel should be paid at 38 cents per mile and 200 miles should be paid at 40 cents per mile because the mileage rate allowed by the state was increased. States periodically increase the mileage rate based on the current economy; this happens generally once a year.

Indemnity Payments Injured workers are entitled to indemnity (lost wages) benefits if they are injured on the job and unable to work for a period of time. There are several types of indemnity benefits: • Temporary total disability: Benefit paid to injured worker if an employee is unable to work for a temporary period of time. • Temporary partial disability: Benefit paid to injured worker if the employee can only work in a capacity where her earnings are less than what she would receive under temporary total disability; for example, if an employee can only work part-time. • Permanent partial disability: Benefit paid if an employee has a permanent medical condition that resulted from a work-related injury. • Permanent total disability: Benefit paid if an employee is totally and permanently disabled from an injury that was work-related. temporary disability Condition of being unable to work for a set period of time. permanent disability Permanent disability due to onthe-job injury. waiting period Time injured worker must be off of work before workers’ compensation indemnity benefits begin.

When an employee is permanently and totally disabled and has state workers’ compensation, benefits for both temporary and permanent disability pay between 66 ⅔ percent and 80 percent of lost wages, up to varying set dollar maximums. Temporary disability means the injured worker is only temporarily disabled and permanent disability means the injury has left the worker permanently disabled. Depending on the disability, such as whether it is temporary or permanent, the state guidelines vary on how much the injured worker will receive. Most states have a minimum amount the injured worker can receive for lost wages as well as a maximum amount. Generally there is a waiting period before indemnity payments are received. State law sets the waiting period; usually the injured worker has to be out of work from three to seven days before receiving indemnity benefits.

50

Chapter 3

Table 3–1 contains information from the U.S. Department of Labor outlining indemnity payment benefits for temporary total benefits by state (as of 1/1/06):

TABLE 3–1

Temporary Total Indemnity Benefits

State

% of Worker’s Wage Paid

Minimum Paid

Maximum Paid

Alabama

66 ⅔

$173.00

$629.00

Alaska

80% of worker’s $110.00 spendable earnings

$875.00

Arizona

66 ⅔

–

$374.01

Arkansas

66 ⅔

$20.00

$488.00

California

66 ⅔

$126.00

$840.00

Colorado

66 ⅔

–

$697.20

Connecticut


$1005.00

Delaware

66 ⅔

$181.18

$543.53

District of Columbia 66 ⅔

$255.50

$1022.00

Florida

66 ⅔

$20.00

$683.00

Georgia

66 ⅔

$45.00

$450.00

Hawaii

66 ⅔

$156.00

$622.00

Idaho

67

$81.45

$488.77

Illinois

66 ⅔

$100.90

$1034.56

Indiana

66 ⅔

$50.00

$588.00

Iowa


$1173.00

Kansas

66 ⅔

$25.00

$467.00

Kentucky

66 ⅔

$126.24

$631.22

Louisiana

66 ⅔

$121.00

$454.00

Maine

80% of worker’s after-tax earnings

–

$542.40

Maryland

66 ⅔

$50.00

$801.00

Massachusetts

60

$191.72

$958.58


Michigan

80% of worker’s – spendable earnings

$706.00

Minnesota

66 ⅔

$130.00

$750.00

Mississippi

66 ⅔

$25.00

$351.14

Missouri

66 ⅔

$40.00

$696.97

Montana

66 ⅔

–

$520.00

Nebraska

66 ⅔

$49.00

$600.00

Nevada

66 ⅔

–

$690.93

New Hampshire

60

$224.70

$1123.50

New Jersey

70

$184.00

$691.00

New Mexico

66 ⅔

$36.00

$585.89

New York

66 ⅔

$40.00

$400.00

North Carolina

66 ⅔

$30.00

$730.00

North Dakota

66 ⅔

$330.00

$604.00

Ohio

2% of first 12 weeks; $234.67 thereafter 66.67% of workers’ wages

$704.00

Oklahoma

70

$30.00

$577.00

Oregon

66 ⅔

$50.00

$948.24

Pennsylvania

66 ⅔

$372.50

$745.00

Rhode Island


$785.00

South Carolina

66 ⅔

$75.00

$592.56

South Dakota

66 ⅔

$267.00

$533.00

Tennessee

66 ⅔

$99.45

$729.00

Texas

70% of worker’s $81.00 earnings over $8.50/hr. 75% of all others

$540.00

Utah

66 ⅔

$45.00

$589.00

Vermont

66 ⅔

$317.00

$950.00

Virginia

66 ⅔

$193.24

$773.00

Washington

60–75

$43.17

$905.17

51

(continued)

52

Chapter 3

TABLE 3–1 (continued)

spendable earnings Workers’ earnings less withholdings.

State


Minimum Paid

Maximum Paid

West Virginia

66 ⅔

$144.20

$568.78

Wisconsin

66 ⅔

$20.00

$744.00

Wyoming

66 ⅔

–

$606.32

Note: Spendable earnings equal a worker’s earnings less withholdings.

Here are examples of how indemnity payments are figured for an injured worker that qualifies for temporary total disability: Example A: Employee works in Maryland; employee earns $500 per week. Maryland pays 66 ⅔ percent of employee’s salary, with a minimum payment of $50 and a maximum payment of $801. Indemnity payment calculation: $500 3 66 ⅔% 5 $333.50 2 amount injured worker would receive per week Example B: Employee works in West Virginia and earns $1500 per week. West Virginia pays 66 ⅔ percent of employee’s salary with a minimum of $144.20 and a maximum of $568.78. Indemnity payment calculation: $1500 3 66 ⅔% 5 $1000.50; however, maximum in West Virginia is $568.78, so that is the amount the injured worker would receive.

Table 3–2 contains information from the U.S. Department of Labor outlining indemnity payment benefits for permanent total benefits by state (as of 1/1/06).

TABLE 3–2

Permanent Total Indemnity Benefits

State


Minimum Paid

Maximum Paid

Alabama

66 ⅔

$167.00

$629.00

Alaska


$875.00

Arizona

66 ⅔

–

$374.01

Arkansas

66 ⅔

$20.00

$488.00

California

66 ⅔

$126.00

$840.00

Colorado

66 ⅔

–

$697.20

Connecticut


$1005.00


Delaware

66 ⅔

$181.18

$543.53

District of Columbia 66 ⅔

$255.50

$1022.00

Florida

66 ⅔

$20.00

$683.00

Georgia

66 ⅔

$45.00

$450.00

Hawaii

66 ⅔

$164.00

$654.00

Idaho

67

$244.35

$488.70

Illinois

66 ⅔

$404.37

$1078.31

Indiana

66 ⅔

$50.00

$588.00

Iowa


$1173.00

Kansas

66 ⅔

$25.00

$467.00

Kentucky

66 ⅔

$126.24

$631.22

Louisiana

66 ⅔

$121.00

$454.00

Maine

80% of worker’s after-tax earnings

–

$542.40

Maryland

66 ⅔

$50.00

$801.00

Massachusetts

60

$191.72

$958.58

Michigan


$706.00

Minnesota

66 ⅔

$504.00

$750.00

Mississippi

66 ⅔

$25.00

$351.14

Missouri

66 ⅔

$40.00

$696.97

Montana

66 ⅔

–

$520.00

Nebraska

66 ⅔

$49.00

$600.00

Nevada

66 ⅔

–

$690.93

New Hampshire

60

$224.70

$1123.50

New Jersey

70

$184.00

$691.00

New Mexico

66 ⅔

$36.00

$585.89

New York

66 ⅔

$40.00

$400.00

North Carolina

66 ⅔

$30.00

$730.00

53

(continued)

54

Chapter 3



Minimum Paid

Maximum Paid

North Dakota

66 ⅔

$330.00

$604.00

Ohio

66 ⅔

$352.00

$704.00

Oklahoma

70

$30.00

$577.00

Oregon

66 ⅔

$50.00

$712.96

Pennsylvania

66 ⅔

$372.50

$745.00

Rhode Island


$785.00

South Carolina

66 ⅔

$75.00

$592.56

South Dakota

66 ⅔

$267.00

$533.00

Tennessee

66 ⅔

$99.45

$663.00

Texas

75

$81.00

$540.00

Utah

66 ⅔

$45.00

$501.00

Vermont

66 ⅔

$317.00

$950.00

Virginia

66 ⅔

$84.00

$736.00

Washington

60–75

$43.17

$905.17

West Virginia

66 ⅔

$144.20

$568.78

Wisconsin

66 ⅔

$20.00

$744.00

Wyoming

66 ⅔

144.20

$568.78

As mentioned earlier, each state has rules set regulating when an injured worker will begin receiving indemnity payments. Most states have a waiting period before the first indemnity payment is issued. If an employee is still off of work after the specified amount of time, then the employee is paid for the waiting period. Table 3–3 on page 58 shows how long an injured employee must be off of work before indemnity payments are started and also shows how long an employee must be off of work before the waiting period is paid.


CASE STUDY 3–3 Calculate the indemnity payment for the following injured workers: 1. Injured worker lives in Massachusetts and makes $1200 per week. Indemnity Calculation Worksheet Injured Worker’s Name Date of Injury Average Weekly Wage State Where Injury Occurred Minimum State Rate Maximum State Rate Waiting Period

2. Injured worker lives in Arizona and makes $670 per week. Indemnity Calculation Worksheet Injured Worker’s Name Date of Injury Average Weekly Wage State Where Injury Occurred Minimum State Rate Maximum State Rate Waiting Period

55

56

Chapter 3

CASE STUDY 3–3 (continued)

3. Injured worker lives in Florida and makes $900 per week. Indemnity Calculation Worksheet Injured Worker’s Name Date of Injury Average Weekly Wage State Where Injury Occurred Minimum State Rate Maximum State Rate Waiting Period


TABLE 3–3

57

Indemnity Waiting Period

State

Waiting Period

When Waiting Period Is Paid

Alabama

3 days

21 days

Alaska

3 days

More than 28 days

Arizona

7 days

14 calendar days

Arkansas

7 days

2 weeks

California

3 days

14 days

Colorado

3 days

More than 2 weeks

Connecticut

3 days

7 days

Delaware

3 days

7 days

District of Columbia

3 days

More than 14 days

Florida

7 days

More than 21 days

Georgia

7 days

21 consecutive days

Hawaii

3 days

None

Idaho

5 days

More than 2 weeks

Illinois

3 days

14 days or more

Indiana

7 days

More than 21 days

Iowa

3 days

More than 14 days

Kansas

7 days

3 consecutive weeks

Kentucky

7 days

More than 2 weeks

Louisiana

7 days

6 weeks

Maine

7 days

More than 14 days

Maryland

3 days

More than 14 days

Massachusetts

5 days

21 or more calendar days

Michigan

7 days

2 weeks

Minnesota

3 days

10 days

Mississippi

5 days

14 days

Missouri

3 days

More than 14 days

Montana

4 days

No provision (continued)

58

Chapter 3


Waiting Period

When Waiting Period Is Paid

Nebraska

7 days

6 weeks

Nevada

5 days

5 or more consecutive days

New Hampshire

3 days

14 days or more

New Jersey

7 days

7 days

New Mexico

7 days

4 weeks

New York

7 days

More than 14 days

North Carolina

7 days

More than 21 days

North Dakota

4 days

5 days

Ohio

7 days

2 weeks

Oklahoma

3 days

None

Oregon

3 days

14 days

Pennsylvania

7 days

14 days or more

Rhode Island

3 days

10 days

South Carolina

7 days

More than 14 days

South Dakota

7 days

7 consecutive days

Tennessee

7 days

14 days

Texas

7 days

2 weeks

Utah

3 days

More than 14 days

Vermont

3 days

7 days

Virginia

7 days

More than 3 weeks

Washington

3 days

14 days

West Virginia

3 days

More than 7 days

Wisconsin

3 days

More than 7 days

Wyoming

3 days

More than 8 days


59

Here are examples of when indemnity payments would begin: Example A: A person gets hurt in West Virginia, begins losing time from work on June 1, and is off of work until June 30. Indemnity payments would begin on June 4 (three days off of work) and the waiting period would be paid on June 8 (more than 7 days off of work). Example B: A person gets hurt in Louisiana, begins losing time from work on May 1, and is off of work until May 20. Indemnity payments would begin May 8 (seven days off of work) but no waiting period would be paid because the injured worker was back at work before the six-week waiting period was up.

CASE STUDY 3–4 List the length of the waiting period for the following states and when the indemnity payment is made. Length of Waiting Period:

Days injured worker must miss work before waiting period is paid

1. Georgia 2. California 3. Missouri 4. Illinois 5. Idaho

CASE STUDY 3–5 1. Write a brief scenario of an injury that would be covered by workers’ compensation and state the reasons why it would be covered.

2. Write a brief scenario of an injury that would not be covered by workers’ compensation and state the reasons why it would not be covered.

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Chapter 3

Rehabilitation Benefits Rehabilitation benefits include medical rehabilitation and vocational rehabilitation. Vocational rehabilitation is the process of rebuilding work skills as part of recovering from an injury or illness. Sometimes an injured individual can eventually return to her previous job. If an injury places long-term or permanent limitations upon the person, retraining for a new type of job may be necessary. Depending upon the law of the individual state, the injured worker may be entitled to vocational rehabilitation services as part of the workers’ compensation benefits. The amount and types of vocational rehabilitation provided to injured employees vary from state to state. Some of the vocational-rehabilitation services an injured worker may be entitled to include: • On-the-job training • Transferable-skills analysis and testing • Résumé and job-application services • Interview coaching • Labor-market surveys • Job analyses • Job-search assistance • Wage-assessment evaluations • Counseling • Ergonomics assessment • Education and tuition payments for retraining The actual vocational-rehabilitation benefits an injured employee will be entitled to are determined not only by the employee’s specific situation, but also by state statutory and regulatory limitations. Medical Rehabilitation Medical rehabilitation covers the cost of such things as physical and occupational therapy that help improve the physical functioning of the injured worker. Physical and occupational therapists are licensed professionals who use their skills to help the worker through exercise programs, evaluations, training programs, and therapies to get back to work as quickly as possible and have full recovery from her injury. When a worker is injured, steps must be taken to alleviate the pain and heal the injured body part so that the worker is ready to go back to work. Some of the tools used in physical therapy to get the injured worker back to work are: • Functional Capacity Evaluation (FCE): This is done, usually soon after the injury, to determine the patient’s ability to perform certain tasks; this gives the therapist important information used to establish a treatment program for the injured worker and gives a baseline to measure improvement of the injured worker during treatment. • Work Hardening: Work hardening is a highly specialized rehabilitation program that copies the workplace activities and surroundings of the injured worker in a monitored environment to prepare the worker to return to work. • Work Conditioning: Work conditioning is a program that trains the patient to return to a particular job. The program provides educational sessions, a complete exercise program, and simulated work activities. An injured worker may have to participate in physical therapy for weeks or months in order to have a full recovery. The therapist will create a treatment plan to determine what treatments are necessary to promote a full recovery for the injured worker.


vocational rehabilitation Providing training in a specific trade to help injured worker gain employment.

medical case manager Person that works with injured worker and physician to monitor medical care.

61

Vocational Rehabilitation Vocational rehabilitation is a program of services designed to enable people with disabilities to become or remain employed. Originally mandated by the federal Rehabilitation Act of 1973, vocational rehabilitation programs are carried out by individually created state agencies. In order to be eligible for vocational rehabilitation, a person must have a physical or mental disability that results in a substantial handicap to employment. In additional to being eligible for state vocational rehabilitation services, in many states, a person injured at work with a resulting permanent disability is also entitled to vocational rehabilitation services provided as a benefit due from their employer. Vocational rehabilitation counselors are usually required to have a master’s degree and state or federal certification in order to provide rehabilitation services to the disabled. The work of the vocational rehab counselor typically involves facilitating the return of the injured worker to a productive lifestyle by establishing the injured worker’s physical abilities, determining her educational and transferable skills and abilities, and providing job-seeking skills, training, and vocational guidance in order to assist her in identification of and placement in appropriate work. Under each state’s worker’s compensation system, an injured worker is entitled to medical care and treatment that is reasonable, necessary, and related to the work injury. A medical case manager may be assigned to the claim and she will usually be a registered nurse with specialized certifications and experience, and will handle the planning, coordination, and delivery of care in an efficient and cost-effective manner to achieve the goal of medical rehabilitation for the injured worker. The first goal of the vocational rehab counselor is to return the injured employee to her job of injury or to a modified job with the employer of injury. In order to have the treating physician make this determination, the vocational rehab counselor will complete an on-site job analysis, often with pictures, that details the cognitive and specific physical requirements of that job. If a modified or transitional job is available, the vocational rehab counselor will also complete a modified-duty job analysis of that position. The treating physician then will determine whether the injured worker, who now has a permanent physical impairment, is capable of performing the job of injury. If not, she will determine if the injured worker can return to work in the modified or transitional duty position made available by the employer of injury. For a worker who cannot return to her employer of injury, the vocational rehab counselor will then employ a variety of techniques and activities in order to assist the injured worker in returning to the workforce in an appropriate capacity. The vocational rehab counselor will complete a thorough vocational assessment of the injured worker that includes: • Transferable Skills Analysis: A systematic analysis of the cognitive activities and skills used by the injured worker in successfully performing her previous jobs and hobbies. This data is then combined with the worker’s residual functional capacities to identify a set of occupations that the worker should be able to perform. • Testing: Academic, ability, and interest testing are administered and interpreted and this data is also used to identify appropriate alternate jobs. Once the vocational assessment and appropriate job identification is complete the vocational rehab counselor will provide the injured worker with job-seeking skills training that includes: • Résumé and job application completion training • Interview skills and techniques assistance • Job search assistance The vocational rehab counselor will then assist the injured worker in the identification of and application to employers with appropriate, open positions through a labor market survey to identify appropriate, open positions in the local job market. Wage

62

Chapter 3

assessment evaluations are also generated by the vocational rehab counselor during this process. If no appropriate open positions are located in the local job market, the vocational rehab counselor will look into training options with the injured worker. These typically include: • On-the-Job-Training: Short-term on-the-job training is often offered by employers to train new workers in specific tasks. In workers’ comp cases, the insured will sometimes share the cost of this training with the new employer by supplementing the injured worker’s wage during the training. • Education and Tuition: Payments for retraining can be provided to injured workers from the federal government’s vocational rehabilitation program if the injured worker meets all federal qualifications.

CASE STUDY 3–6 1. A worker breaks her arm and, after it is healed, needs treatment to regain strength in the arm. Would the injured worker need physical therapy or occupational therapy? 2. What level of education does a vocational rehabilitation counselor generally need? 3. What types of tests are generally given during a vocational assessment?

Death Benefits death benefits Benefits paid to the surviving dependents of a worker that dies due to an on-the-job injury.

Spouses and children of fatally injured employees receive workers’ compensation death benefits that include payment for burial. The payment for burial can vary from state to state and ranges from $3000 to $15,000. Spouses with children receive a greater amount of workers’ compensation benefit than those without children. Generally children are paid benefits until they reach the age of 18 unless they are disabled. Also, in some states remarriage can affect the spouse’s benefits. Table 3–4 contains information from the U.S. Department of Labor outlining death benefits by state (as of 1/1/06):

TABLE 3–4

Death Benefits

State

% of Employee’s Wage–Spouse Only

Spouse and Children

Minimum Paid

Maximum Paid

Alabama

50

66 ⅔

$173.00

$629.00

Alaska

80% of worker’s spendable earnings

Up to 100% of worker’s spendable earnings (depending on number of children)

$110.00

$875.00


Arizona

66 ⅔

66 ⅔

–

$369.27

Arkansas

35

35; 15 for each child

$20.00

$488.00

California

66 ⅔

66 ⅔

$224.00

$840.00

Colorado

66 ⅔

66 ⅔

$174.30

$697.20

Connecticut



$20.00

$1005.00

Delaware

66 ⅔

80

$181.18

$652.23


50

66 ⅔

$255.50

$1022.00

Florida

50

66 ⅔

$20.00

$683.00

Georgia

66 ⅔

66 ⅔

$45.00

$450.00

Hawaii

50

66 ⅔

$164.00

$654.00

Idaho

45

60

$244.35

$325.80

Illinois

66 ⅔

66 ⅔

$404.37

$1078.31

Indiana

66 ⅔

66 ⅔

$50.00

$588.00

Iowa



$140.27

$1173.00

Kansas

66 ⅔

66 ⅔

$309.00

$467.00

Kentucky

50

75

$126.24

$473.42

Louisiana

32 ½

65

$121.00

$454.00

Maine



–

$542.40

Maryland

66 ⅔

66 ⅔

$50.00

$801.00

Massachusetts

66 ⅔

66 ⅔

$110.00

$958.58

Michigan



$392.16

$706.00

Minnesota

50

66 ⅔

–

$750.00

Mississippi

35

66 ⅔

$35.00

$365.47

63

(continued)

64

Chapter 3


% of Employee’s Wage–Spouse Only

Spouse and Children

Minimum Paid

Maximum Paid

Missouri

66 ⅔

66 ⅔

$40.00

$696.97

Montana

66 ⅔

66 ⅔

$260.00

$520.00

Nebraska

66 ⅔

75

$49.00

$600.00

Nevada

66 ⅔

66 ⅔

–

$690.83

New Hampshire 60

60

$213.90

$1069.50

New Jersey

70

70

$184.00

$691.00

New Mexico

66 ⅔

66 ⅔

–

$585.89

New York

66 ⅔

66 ⅔

$40.00

$400.00

North Carolina

66 ⅔

66 ⅔

$30.00

$730.00

North Dakota

66 ⅔

66 ⅔

$440.00

$604.00

Ohio

66 ⅔

66 ⅔

$352.00

$704.00

Oklahoma

70

100

–

$577.00

Oregon

66 ⅔

66 ⅔ and 10% for each child

$475.39

$950.59

Pennsylvania

51

66 ⅔

–

$745.00

Rhode Island

75

80

–

$785.00

South Carolina

66 ⅔

66 ⅔

$75.00

$592.56

South Dakota

66 ⅔

66 ⅔

$267.00

$533.00

Tennessee

50

66 ⅔

$99.45

$663.00

Texas

75

75

–

$540.00

Utah

66 ⅔

66 ⅔

$45.00

$501.00

Vermont

66 ⅔

76 ⅔

$317.00

$950.00

Virginia

66 ⅔

66 ⅔

$184.00

$736.00

Washington

60

70

$185.00

Varies depending on date of injury

West Virginia

66 ⅔

66 ⅔

$144.20

$545.36


Wisconsin

66 ⅔

Varies

$20.00

$744.00

Wyoming

–

–

–

$606.32

65

Table 3–5 is from the U.S. Department of Labor and outlines the burial allowance authorized by each state when an employee is killed on the job.

TABLE 3–5

Burial Allowance

State

Maximum Burial Allowance

Alabama

$3000

Alaska

$5000

Arizona

$5000

Arkansas

$6000

California

$5000

Colorado

$7000

Connecticut

$4000

Delaware

$3500


$5000

Florida

$7500

Georgia

$7500

Hawaii

Funeral expenses will be paid to the mortician at an amount not to exceed 10 times the maximum weekly benefit rate.

Idaho

$6000

Illinois

$4200

Indiana

$7500

Iowa

$7500

Kansas

$5000

Kentucky

If death occurs within four years of the date of injury, as a direct result of a work-related injury, a lump sum payment of $62,002.42 shall be paid to the deceased’s estate, from which the cost of burial shall be paid. (continued)

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Chapter 3


Maximum Burial Allowance

Louisiana

$7500

Maine

$4000 (plus an additional $3000 as incidental compensation)

Maryland

$5000

Massachusetts

$4000

Michigan

$6000

Minnesota

$15,000

Mississippi

$2000

Missouri

$5000

Montana

$4000

Nebraska

$6000

Nevada

$5000

New Hampshire

$5000

New Jersey

$3500

New Mexico

$7500

New York

Funeral expenses are limited to amounts established in a fee schedule of charges and costs for funeral services established by the chair of the New York Workers’ Compensation Board.

North Carolina

$3500

North Dakota

$3500

Ohio

$5500

Oklahoma

Up to $10,000 will be paid if there are surviving beneficiaries; otherwise up to $8000.

Oregon

Cost of burial cannot exceed 10 times the state’s average weekly wage.

Pennsylvania

$3000

Rhode Island

$15,000

South Carolina

$2500

South Dakota

$5000

Tennessee

$7500


67

Texas

$6000

Utah

$8000

Vermont

$5500

Virginia

$10, 000

Washington

Maximum burial reimbursement is 200% of the state’s average monthly wage.

West Virginia

Funeral expenses will be reimbursed in an amount to be set from time to time by the insurance commissioner.

Wisconsin

$6500

Wyoming

$5000

CASE STUDY 3–7 1. What benefit would the spouse of a deceased employee receive in Utah?

2. What benefit would the spouse and children of a deceased employee receive in Ohio?

3. What benefit would the spouse of a deceased employee receive in Hawaii?

4. What benefit would the spouse and children of a deceased employee receive in Alabama?

5. What is the burial allowance for the following states? Louisiana Mississippi Wisconsin Missouri

SUMMARY As you can see, there are many benefits in place to help the injured worker to recover both physically and financially. The cost of these services is expensive but worth it to get the worker back on the job. The benefits available include replacement of lost wages (indemnity payments); medical benefits, which cover the cost of medical treatment; death benefits, which provide benefits for the survivors; and rehabilitation services, which include both medical rehabilitation and vocational rehabilitation. All states have workers’ compensation laws in place to help the injured worker make a full recovery from the injury and return to gainful employment.

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Chapter 3

CHAPTER REVIEW Matching Match the correct answer from the list of benefits to the below cases. Some answers will apply to more than one case. 1. Funeral costs of worker killed by falling off ladder at work

A. Medical expenses

2. Physician bill for treatment due to on-the-job injury

B. Indemnity (lost wages) payments for temporary and permanent disability (total and partial)

3. Physical therapy treatment for hurting back horseback riding

C. Physical and vocational rehabilitation

4. Lost wages due to slip and fall at work

D. Death benefits

5. Funeral expenses of worker killed in automobile accident while on vacation 6. Physician bill for slamming finger in car door at son’s football game 7. Cost of crutches needed for broken ankle due to fall at work

Vocabulary Define the following terms. 8. Medical benefits

9. Indemnity payments

10. Mileage payments

11. Death benefits

12. Vocational rehabilitation

13. Temporary disability

14. Permanent disability


69

15. Spendable earnings

16. Waiting period

17. Functional Capacity Evaluation

18. Work conditioning

19. Work hardening

20. On-the-job training

21. Labor market survey

True or False Answer the following questions with either True or False. 22. Some states limit medical coverage to injured workers. True

False

23. In all states you can choose what physician you go to for workers’ compensation medical treatment. True

False

24. If an injured worker goes to the physician for a work-related injury and while she is there gets the physician to treat her for the flu, workers’ compensation insurance will cover the cost of everything. True

False

25. Workers’ compensation insurance will not cover your mileage for driving to the pharmacy to pick up a prescription that is related to the workers’ compensation injury. True

False

26. If you are injured on the job in California, your indemnity payments will be 80 percent of your salary. True

False

27. In Georgia you will begin receiving your indemnity payments the first day you begin losing time from work. True

False

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Chapter 3

28. Workers’ compensation pays for physical therapy and occupational therapy. True

False

29. Workers’ compensation insurance will not pay for vocational rehabilitation. True

False

30. In Minnesota, a surviving spouse with dependent children will receive 80% of the deceased worker’s pay. True

False

31. The burial allowance in the state of Louisiana is $7500. True

False

Calculations Read the following examples and then calculate and/or list the benefit that would be paid to the injured worker. 32. An injured worker submits a mileage statement to the insurance company to be reimbursed for her mileage driving to and from the physician, pharmacy, and physical therapist. The mileage rate in the state the worker was injured in is 45 cents per mile; calculate what the injured worker will be reimbursed for this mileage statement.

Mileage Statement Date

Purpose of Visit

Miles

8/1/06

Dr. Smith

30

8/22/06

Corner Drug Store

18

9/15/06

Dr. Smith

30

10/20/06

Physical therapy

19

Total

97

Signed:

(Injured Worker)

Mileage Paid


71

33. A worker is injured on the job in New Mexico and is temporarily totally disabled. Her weekly salary is $400. Calculate what her weekly indemnity payment will be in the state of New Mexico.

Indemnity Payment 34. A worker is injured on the job in Arkansas and is permanently and totally disabled. Her weekly salary is $800. Calculate what the weekly indemnity payment will be in the state of Arkansas.

Indemnity Payment 35. A worker is injured on the job in Indiana and begins losing time from work right away; she is off of work for two months. When will the worker receive her first indemnity payment? When will the worker receive payment for the waiting period in Indiana? 36. A worker is injured on the job in Alabama and begins losing time from work right away; she is off of work for 20 days. When will the worker receive her first indemnity payment? When will the worker receive payment for the waiting period in Alabama? 37. What is the maximum burial allowance in the following states? Connecticut Kansas Nebraska Michigan North Carolina


Chapter 4 Creating a Claim

KEY TERMS claims adjuster claims department claims file

electronic filing first report of injury policy term

recorded statements subpoena third party

LEARNING OBJECTIVES Upon completion of this chapter the learner should be able to: 1. Understand clearly how a claim originates. 2. Describe the process for creating a new claim. 3. Understand, at a basic level, the steps to creating a claim.

4. Understand why each of the steps is a necessary part of the process. 5. Understand the necessity of completing a first report of injury.

INTRODUCTION

first report of injury Form used to notify insurance company of a workers’ compensation injury.

Once a workers’ compensation policy is written, workers’ compensation coverage protects both the injured worker and the employer. The injured worker’s right to medical benefits and lost wages will be protected, and the employer will be protected against financial loss. When an on-the-job injury happens, the claims process begins. As soon as the accident happens, the employer of the injured worker should immediately seek medical treatment for the injured worker and then complete a first report of injury on the accident. Most policies require that a claim be filed within a certain amount of time after the accident happens, while others state only that a claim must be filed promptly.

FILING A NEW CLAIM The first report of injury is the first notice the insurance company has that an employee has been injured at work; it is the responsibility of the employer to immediately notify the insurance company of an on-the-job injury. It is very important that an on-thejob injury be immediately reported to the insurance company so there is no delay in the injured worker receiving the benefits due him, including medical treatment and indemnity payments, if applicable.

73

74

Chapter 4

There are several ways that an insurance company can be notified of an accident:

electronic filing Submitting first report of injury online.

• Telephone: Most major insurance companies have call centers that are staffed to take the first report of injury over the telephone. They will ask for all the pertinent information about the accident and the injured worker. Generally they will also want a written first report of injury to follow once the telephone report is completed. • Fax: Sending a fax of the completed first report of injury is another way to notify the insurance company that there has been an on-the-job injury. This satisfies both the necessity of speed and the need for a completed first report of injury form. • Electronic filing: Most large insurance companies have websites that allow employers to fill out the first report of injury online and send the information to the insurance company in electronic form. Again, this satisfies the need for speedy reporting and a first report of injury form. • Mailing in first report of injury: This is the way most employers notify the insurance company that an on-the-job accident has occurred.

First Report of Injury The information on the first report of injury is critical to the processing of the claim (Figure 4–1). Without timely and correct information, the claim cannot be processed as quickly or accurately as it should be. If, for example, the injured worker’s correct contact information such as address and phone number are not on the first report of injury, it will be difficult for the insurance company to contact the injured worker and start the benefits. The most critical information on the first report of injury is as follows: • Injured worker’s personal information such as name, address, phone number, and Social Security number: This information is used to identify the worker and is also necessary so the insurance company can contact the worker. • Whether the employee is married and/or has dependents: This could affect death benefits in case the injured worker dies. • Date and time of injury: This determines if the accident happened while the policy was in force. • Whether the injured worker lost time from work: This will determine if the worker is due indemnity payments. • Whether the injured worker returned to work by the expected return-to-work date: This helps the insurance company know whether or not indemnity payments are due. • How the accident happened: This will help decide whether or not it is truly a workers’ compensation injury. • What body part was involved: This will let the insurance company know the severity of the injury as well as what treatment they are responsible for. • Whether the employee was doing his regularly assigned job: If the employee was doing an unfamiliar job, this could impact safety training at the employer’s place of business. • Whether there were witnesses to the accident: This helps confirm what happened as well as help to verify that the accident is covered by workers’ compensation. • Name and address of treating physician: This allows the insurance company to contact the treating physician to check on status of the injured worker’s recovery. • Name and address of the insured business: This allows the insurance company to verify that there is coverage for this particular accident.

Creating a Claim

75

First Report of Injury

1. EMPLOYEE SOCIAL SECURITY #

2. OSHA Case #

4.

3. DATE OF CLAIMED INJURY

2/2/09

TIME OF INJURY 8:30

AM

AM

5. TIME EMPLOYEE BEGAN WORK ON DATE OF INJURY 7:30

PM

7. GENDER

6. EMPLOYEE NAME (last, first,middle)

Smith, John D.

M

9. HOME ADDRESS

4567 State St

F

PM

8. MARITAL

Married

STATUS

Unmarried

10. HOME PHONE #

11. DATE OF BIRTH

999-999-9999

4-09-61

CITY

STATE

ZIP CODE

12. OCCUPATION

13. DEPT/LOCATION CODE

14. DATE HIRED

Anywhere

MI

12345

Welder

Welding

3-17-94

15. AVERAGE WEEKLY WAGE

16. RATE PER HOUR

17. HOURS PER DAY

18. DAYS PER WEEK

19 EMPLOYMENT

600.00

15.29

8

5

STATUS

20. WEEKLY VALUE OF:

Meals

Lodging

2nd Income

Full-time Seasonal

Part-time Volunteer YES

21. APPRENTICE

NO

Examples: "Worker was driving lift truck with a pallet of boxes when the truck tipped, pinning worker's left leg under the drive shaft." "Worker developed soreness in left wrist over time from daily computer entry. Welding and burned arm

22. TELL US HOW THE INJURY OR ILLNESS OCCURRED AND WHAT THE EMPLOYEE WAS DOING BEFORE THE INCIDENT (GIVE DETAILS).

23. WHAT WAS THE INJURY OR ILLNESS (INCLUDE THE PART(S) OF BODY)?

Examples: chemical burn

24. WHAT TOOLS, EQUIPMENT, MACHINES, OBJECTS, OR

left hand, broken left leg, carpal tunnel syndrome in left wrist. Right forearm

SUBSTANCES WERE INVOLVED? Examples: chlorine hand sprayer, pallet lift truck, computer keyboard, Welding machine

25. DID INJURY OCCUR ON EMPLOYER'S PREMISES?

27. EMPLOYER PAID FOR LOST TIME ON DAY OF INJURY (DOI)

26. DATE OF FIRST DAY OF ANY LOST TIME

Yes No if no, indicate name and address of place of occurrence.

2/2/09

Yes

No

No lost time on DOI

28. DATE EMPLOYER WAS NOTIFIED OF INJURY

29. DATE EMPLOYER WAS NOTIFIED OF LOST TIME

2/2/09

2/2/09

30. RETURN TO WORK DATE

31. DATE OF DEATH

2/11/09 32. TREATING PHYSICIAN (name, address, and phone)

33. HOSPITAL/CLINIC (name and address) (if any)

34 EMERGENCY ROOM VISIT

Dr. Joe Jones 567 Main St. Anywhere, USA

Yes

No

35. OVERNIGHT INPATIENT

Yes

No

37. EMPLOYER DBA NAME (if different)

36. EMPLOYER LEGAL NAME

ABC Welding Co. 38. MAILING ADDRESS

39. EMPLOYER FEIN

P. O. Box 123

12-7777777

CITY

STATE

ZIP CODE

41. EMPLOYER'S CONTACT NAME AND PHONE #

Anywhere

USA

11111

Harry Smith 999-999-9999

42. PHYSICAL ADDRESS (if different)

43. WITNESS

40. UNEMPLOYMENT ID#

(name and phone)

659 Dublin Ave CITY

STATE

ZIP CODE

Anywhere

USA

11111

46. INSURER NAME

44. NAICS CODE

45. DATE FORM COMPLETED

Insurer TPA

51. CLAIMS ADJUSTER (CA) name (check one)

Liberty Insurance 47. INSURED LEGAL NAME

52. CA ADDRESS

P.O. Box 64 48. POLICY # OR SELF-INSURED CERTIFICATE #

CITY

STATE

ZIP CODE

WC5566

Boston

MA

11333

49. INSURER FEIN

50. DATE INSURER RECEIVED NOTICE

53. CA PHONE #

54. CLAIM #

Figure 4–1 Completed first report of injury.

• The injured worker’s salary: This figure is needed to calculate the indemnity payments, if appropriate. • Name of the person completing the form and/or the injured worker’s supervisor: This gives the insurance adjuster a contact to get in touch with to discuss the claim.

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Chapter 4

third party Another person/company that could be financially responsible for all or part of the workers’ compensation accident.

• Whether a third party (someone else that could be responsible for the cause of the accident) was involved: If there is a third party involved, the insurance company may be able to recoup the money paid out on the claim. An example of third-party involvement would be if a worker got hurt operating machinery and the machinery was defective because the manufacturer of the machine failed to properly design it. • Whether the injured worker has an attorney: If the injured worker has hired an attorney to handle his workers’ comp claim, this could impact how the claim is handled and who in the claims department handles the claim.

CASE STUDY 4–1 Complete the first report of injury based on the following information: Mary Jackson, who lives at 1145 Maryland Road, Jackson, Tennessee, was hit in the shoulder by a falling board on 7/6/08 while at work at Pine Timber Company, 9098 Normandy Road, Jackson, Tennessee. Mary was taken to Memorial Clinic, located at 778 Rose Avenue, Jackson, Tennessee, that day and was seen by Dr. Ralph McGee. Two fellow workers, George Bronson and Polly Mays, witnessed the accident and Mrs. Jackson’s supervisor, Jack Best, completed the first report of injury. Rose is a female, 44 years old. Rose has been working for Pine Timber for three years. She is married and has three children. She makes $15 per hour and works 40 hours per week at Pine Lumber Company. Pine Timber Company has workers’ compensation insurance with ABC Company, 845 Temple Street, Jackson, Tennessee. The policy is effective from 1/1/08–1/1/09. Rose retained an attorney after she was hurt; her attorney’s name is Marie Moore, and her address is 7766 Julian Road, Jackson, Tennessee.

Creating a Claim

MAIL TO: WORKERS’ COMPENSATION INSURER

Employee Social Security Number Employer UI Account Number

EMPLOYER REPORT OF INJURY/ILLNESS

Employer Federal ID Number

This report is completed by the employer for each injury/illness identified by them or their employee as occupational. A copy is to be provided to the employee and the insurer immediately.

PURPOSE OF REPORT: (Check all that apply) More than 7 days of disability Possible dispute Injury resulted in death Lump sum compromise/settlement Amputation or disfigurement Other 1. Date of Report MM/DD/YY

2. Date / time of Injury MM/DD/YY Time AM

AM

PM

PM

7. Date Employer knew of injury MM/DD/YY

6. If Fatal Injury, Give Date of Death MM/DD/YY

10. Employee Name First

3. Normal Starting Time Day of Accident

Middle

Last

4. If Back to Work Give date MM/DD/YY

5. At same wage?

8. Date Disability began MM/DD/YY

9. Last Full Day Paid MM/DD/YY

Date Received

12. Employee Phone #

Naics:

11.

Male Female

13. Address and Zip Code

15. Date of Hnc

16. Date of Birth

19. Place of Injury—Employer’s Premises? Yes No

Medical only (DO NOT mail copy to state agency)

17. Occupation

Yes

(

DO NOT WRITE IN THIS COLUMN

No

)

14. Parish of Injury

State-Parish

18. Dept/Division Employed

Occupation

Nature

20. If No, Indicate Location-Street, City, Parish and State

21. What work activity was the employee doing when the injury occurred? (Give weight, size and shape of materials or equipment involved.) Explain what employee was doing with them. Indicate if correct procedures were followed.

Part of Body Source Event NCCI

22. What caused injury to happen? (Describe fully the events which resulted in injury or disease. Explain what happened and how it happened. Name any objects or substances involved and and explain how they were involved. Give full details on all-factors which led to or contributed to this injury or illness.)

23. Part of Body injured and Nature of Injury or Illness (ex. left leg: multiple fractures)

24. If Occ. Disease—Give Date Diagnosed

25. Physician and Address

26. If hospitalized, give name & address of facility

27. Employer’s Name

28. Person Completing This Report — Please print

30. Employer’s Telephone Number

29. Employer’s Address and Zip Code

( 31. Employer’s Mailing Address If Different From Above

33. Wage Information (optional)

Employee was paid

)

32. Nature of Business-Type of Mfg. Trade, Construction, Service, etc.

Daily

Weekly

Monthly

Other The average weekly wage was $

per week.

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CASE STUDY 4–2 Complete the first report of injury based on the following information: Andy Brown, who lives at 2445 9th Street, Roanoke, Virginia, hurt his back when lifting boxes on 4/6/08 while at work at Paul’s Packing Plant, 767 Bridgemill Street, Roanoke, Virginia. Andy was taken to the office of Dr. Edward Burns, located at 5432 Peach Street, Roanoke, Virginia, that day and was seen by Dr. Burns. A fellow worker, Molly Johnson, witnessed the accident and her supervisor, Matt Moore, completed the first report of injury. Andy is a male, 27 years old. Andy has been working for Paul’s Packing for two years. Andy is not married. Andy makes $11 per hour and works 40 hours per week at Paul’s Packing Plant. Paul’s Packing Plant has workers’ compensation insurance with Boston Insurance Company, 963 River Street, Boston, Massachusetts. The policy is effective from 2/1/08–2/1/09. Andy did not retain an attorney after the accident.

Creating a Claim

MAIL TO: WORKERS’ COMPENSATION INSURER

Employee Social Security Number Employer UI Account Number

EMPLOYER REPORT OF INJURY/ILLNESS

Employer Federal ID Number

This report is completed by the employer for each injury/illness identified by them or their employee as occupational. A copy is to be provided to the employee and the insurer immediately.

PURPOSE OF REPORT: (Check all that apply) More than 7 days of disability Possible dispute Injury resulted in death Lump sum compromise/settlement Amputation or disfigurement Other 1. Date of Report MM/DD/YY

2. Date / time of Injury MM/DD/YY Time AM

AM

PM

PM

7. Date Employer knew of injury MM/DD/YY

6. If Fatal Injury, Give Date of Death MM/DD/YY

10. Employee Name First

3. Normal Starting Time Day of Accident

Middle

Last

4. If Back to Work Give date MM/DD/YY

5. At same wage?

8. Date Disability began MM/DD/YY

9. Last Full Day Paid MM/DD/YY

Date Received

12. Employee Phone #

Naics:

11.

Male Female

13. Address and Zip Code

15. Date of Hnc

16. Date of Birth

19. Place of Injury—Employer’s Premises? Yes No

Medical only (DO NOT mail copy to state agency)

17. Occupation

Yes

(

DO NOT WRITE IN THIS COLUMN

No

)

14. Parish of Injury

State-Parish

18. Dept/Division Employed

Occupation

Nature

20. If No, Indicate Location-Street, City, Parish and State

21. What work activity was the employee doing when the injury occurred? (Give weight, size and shape of materials or equipment involved.) Explain what employee was doing with them. Indicate if correct procedures were followed.

Part of Body Source Event NCCI

22. What caused injury to happen? (Describe fully the events which resulted in injury or disease. Explain what happened and how it happened. Name any objects or substances involved and and explain how they were involved. Give full details on all-factors which led to or contributed to this injury or illness.)

23. Part of Body injured and Nature of Injury or Illness (ex. left leg: multiple fractures)

24. If Occ. Disease—Give Date Diagnosed

25. Physician and Address

26. If hospitalized, give name & address of facility

27. Employer’s Name

28. Person Completing This Report — Please print

30. Employer’s Telephone Number

29. Employer’s Address and Zip Code

( 31. Employer’s Mailing Address If Different From Above

33. Wage Information (optional)

Employee was paid

)

32. Nature of Business-Type of Mfg. Trade, Construction, Service, etc.

Daily

Weekly

Monthly

Other The average weekly wage was $

per week.

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Figure 4–2 Extreme bending to lift heavy object.

Figure 4–3 Substance abuse on the job.

Some examples of work injuries might be: • • • •

Slipping and falling at work Lifting something heavy and pulling a muscle in the back (Figure 4–2) Getting cut while operating a machine Falling off a roof while putting on a new roof Some examples of injuries that might not be covered by workers’ compensation are:

• Fighting at work • Using drugs or alcohol while on the job (Figure 4–3) • Slipping and falling at home

DETERMINING COVERAGE claims department Department of an insurance company that handles injured workers’ claims.

policy term Duration of an insurance policy.

When a new claim is received by an insurance company, it is generally the responsibility of the claims department (the part of the insurance company dedicated to handling claims) to determine if there is coverage for the accident. The first thing that must be done when a claim is filed is to make sure that there is insurance coverage for the claim. It must be verified that the insurance policy is in effect and has not expired or been cancelled for any reason, such as failure to pay, and that the accident happened in the period of time covered by the policy. For example, if the policy term (period of time the policy covers) is from January 1, 2007, to January 1, 2008, and the accident happened on December 30, 2006, there would not be coverage for this accident. The accident must have happened during the term of the policy. The insurance company must also be sure that the accident happened while the person was at work and not somewhere else. Workers’ compensation does not pay for every type of accident. For example, accidents that happen driving from home to work and from work to home are not covered, nor are accidents that result from horseplay on the job. When a claim is received, the claims adjuster reviews the claim information and confirms the policy name, address, and location of the accident. The effective dates of the policy are also confirmed along with whether the policy is active. The adjuster

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makes sure the accident happened while the injured worker was performing his job at work. The adjuster might also contact any witnesses to the accident to verify that this is a work-related accident. He also verifies that the accident happened in the state where there is coverage. Some workers’ compensation insurance policies cover more than one state. A business could have operations in many states, and therefore the insurance company must verify that there is coverage under the policy for the state where the accident happened. Most insurance companies have their policy information stored on a computer and have access to all the information necessary to verify coverage is readily available to the claims department. If the policy is not stored on a computer, then a hard copy of the policy is used to determine if there is coverage for the accident.

CASE STUDY 4–3 Determine from these examples if there is workers’ compensation coverage for the following accidents: 1. Employee cut his hand on a machine at work on 1/1/09 while performing his job; his employer has a workers’ compensation policy that is in effect from 2/15/08–2/15/09. Is there coverage?

2. Employee trips and falls in his driveway on his way to work on 3/4/08; his employer has a workers’ compensation policy that is in effect from 3/1/08–3/1/09. Is there coverage?

3. Employee falls on wet floor at work on 11/9/07; his employer has a workers’ compensation policy that is in effect from 11/15/07–11/15/08. Is there coverage?

CLAIMS DEPARTMENT The claims department is responsible for promptly, fairly, and accurately resolving claims made against the insurance company. The claims department is just one of the departments that make up an insurance company. Larger insurance companies may have their own legal department, medical department, information technology department, audit department, and underwriting department, while smaller companies could have one or more of these departments and then hire other companies to handle the other areas. The claims department is generally seen as the service center of insurance companies. They are tasked with providing the best of customer service because proper handling of a claim not only gets the injured worker back to work in a timely fashion, but it can also impact the finances of an insurance company. If a claim is not properly handled and the insurance company pays out more than it should for claims, there will be a definite impact on the insurance company. Insurance companies pool all the money they receive from their policyholders to pay for the workers’ compensation claims. The main reason businesses buy workers’ compensation insurance is to protect them in case an employee gets injured on the job; it protects them financially and it assures the injured worker that he will be able to receive the proper care and benefits.

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claims adjuster Individual that is responsible for managing a claim.

Also, for some people the only time they have contact with insurance company is when there is a claim and their only impression of the company is the claims personnel; this will determine a company’s professional reputation. If the injured worker is not treated with respect and given all the benefits he deserves because of the on-thejob injury, then the company’s reputation could be effected. If the accident is not covered for the reasons previously listed, then it is the claims department’s responsibility to notify the insured (policyholder) that there is no coverage for the accident. Once coverage is established then the “claim” cycle begins. There are many steps to setting up a claim and processing the claim for the entire time the worker is off work and/or receiving medical treatment. Generally the claims adjuster is responsible for the handling of the claim through the entire process. Different insurance companies have different titles for the person handling the claim, but generally it is a claims adjuster that has this responsibility. Some insurance companies have adjusters that are part of their regular staff and other insurance companies outsource their claims adjusting to outside vendors. Also, if the injured worker is not losing time from work due to the injury, the person assigned to handle the claim could be a less experienced claims adjuster than the adjuster that would handle the claim if the injured worker was losing time from work and had a serious injury. Handling a claim has various steps in the process including, as stated above, confirming there is coverage, investigating the claim, overseeing medical and indemnity (lost wages) payments, assigning vocational rehabilitation, if needed, recovering money from third parties if applicable, handling any legal issues if they arise, settling the claim if appropriate, and finally closing the claim.

CASE STUDY 4–4 Would the following jobs be performed by a claims adjuster? Answer “yes” or “no” in the spaces provided. Determining indemnity payments for the injured worker Treating the injury of the injured worker Interviewing witnesses to the accident Speaking with the physician about the injuries sustained by the worker Driving the injured worker to physical therapy

CREATING A CLAIMS FILE claims file Location where all pertinent claim information is stored.

When the first report is received and coverage is verified, then an actual claims file is created. The actual claims file, whether it is paper or electronic, is where all the pertinent information pertaining to the claim is stored. Included in most claims files is the following information: • Injured worker information: Complete information about the injured worker, including name, address, age, dependents, and first report of injury • Accident details: Details of the accident, including how it happened, witness names and contact information, body part injured, date and time of accident, and supervisor name

Creating a Claim

recorded statement Statement taken from an injured worker and/or witnesses that is written down or electronically recorded.

subpoena Legal document requiring someone or something to appear in court and/or provide evidence; the process of using a subpoena to compel these actions.

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• Medical records: Reports of all treatment given by physicians, hospitals, physical therapists, chiropractors, vocational rehabilitation therapists, etc. This is a very important part of the file because it allows the claims adjuster to keep up with the progress of the injured worker, helps the adjuster determine the proper reserves for the claim, and potentially helps predict when the injured worker might be able to return to work. • Investigation notes: This would contain any and all notes made by the adjuster as a result of talking to or visiting with the injured worker, witnesses to the claim, or any medical provider, plus notes of discussions with the insured and the injured worker’s attorney, if there is one, and any other pertinent information related to the claim. This section could also contain notes of any discussions between the claims adjuster and his supervisor related to the handling of the claim. • Medical bills: All medical bills related to the workers’ compensation injury, both paid and unpaid • Wage information: This would include wage statement information from the employer, which would be used to determine the injured worker’s indemnity benefits, if applicable. • Legal documents: Any correspondence to or from an attorney relating to the accident • Recorded statements: Actual statements taken and recorded from the injured worker, witnesses, the employer, etc. • Photographs: Photographs of the accident site, if needed. The claims file is what the claims department uses to manage the claim. All important documentation is kept in one place, whether it is a paper file kept in a file cabinet or an electronic file kept on a computer. The claims file must contain supporting documentation for every action taken on a claim. If possible, all documentation should be dated. All notes and documentation must be clear and concise in the event other people need to review the information in the course of handling the claim. At the beginning of the claim, the claims file may only contain a few items, but the longer the life of the claim, the larger the claims file becomes. The information in the claims file is the core of the claim. The claims file can even be subpoenaed (required to be produced as evidence) if the claim were to go to court. Many states require that a claims file be kept to be sure the claim is properly handled. This, again, makes it imperative that all documents be included in the file and be clear and concise.

CASE STUDY 4–5 Put an X by the items that would be included in a claims file: Medical reports Injured worker’s favorite restaurant Letters from an attorney Information on where the injured worker lives Pictures of the accident scene Picture of the injured worker’s child Figure 4–4 is a flowchart showing what happens from the time a claim is received until the claims file is created.

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Insurance company is notified of injury.

Telephone

Fax

Electronic Filing

Mail

First report of injury is called in to insurance company.

Completed first report of injury is faxed to insurance company.

First report of injury is sent over the Internet.

Completed first report of injury is mailed to insurance company.

Claims department verifies coverage of the claim.

Did claim happen during the effective coverage dates of the policy?

Was the employee at work when the accident happened?

Was the employee on drugs or alcohol when the accident happened?

Is there coverage for the state in which the accident happened?

Coverage is verified.

Claims file is created.

Figure 4–4 Claims creation flowchart.

SUMMARY As noted in this chapter, there is a defined process in place that all insurance companies follow when a claim is created. The insurance company must determine that there is an insurance policy in place for the company where the injured worker is employed. Also, the insurance company must be certain that the injury happened while the employee was at work and was performing his job. Once coverage is determined, then the claims creation process begins.

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85

CHAPTER REVIEW Vocabulary Define the following terms: 1. claims department

2. policy term

3. electronic filing

4. third party

5. claims adjuster

6. recorded statement

7. claims file

8. subpoena

True or False Identify the following statements as either true or false. 9. The only way a first report can be accepted by an insurance company is through the mail. True

False

10. Slipping at work on a wet floor is normally considered a workers’ compensation injury. True

False

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11. Falling off your roof at home and not being able to work is grounds for a workers’ compensation claim. True

False

12. On occasion, the claims adjuster will take a statement from the injured worker and accident witnesses. True

False

13. Coverage does not have to be verified until the day the injured worker begins receiving medical treatment. True

False

Chapter 5 Claims Handling

KEY TERMS claimant claims evaluation claims investigation claims resolution ergonomic fraud independent medical examination (IME)

loss prevention maximum medical improvement medical case manager outsourced overpayments precerted preferred provider organization (PPO) recovery department

reserves second injury funds second medical opinion (SMO) settlement state fee schedule surveillance third-party recovery

LEARNING OBJECTIVES Upon completion of this chapter the learner should be able to: 1. 2. 3. 4.

Understand setting reserves. Explain how medical management of a claim works. Understand indemnity payments. Explain what third-party investigations are.

5. 6. 7. 8.

Recognize overpayments. Understand loss prevention/safety. Identify fraud. Explain what claims closings/settlements are.

INTRODUCTION claims investigation Process of gathering all information to determine if there is coverage for an accident. claims evaluation Process of determining what is owed and when payment should begin.

Once a claim is created, then the job of handling the claim begins. The claims adjuster (or other assigned claims person) is responsible for the management of the claim. There are many steps involved in managing a claim and in this chapter we will go over the main functions in the management of a claim. The claims adjuster completes the claims investigation (gathering all information to determine whether there is coverage for the accident); claims evaluation (if there is coverage, determining what is owed and beginning payment); and finally claims resolution (bringing the claim to a conclusion and closing the file).

claims resolution To bring claim to a conclusion and close the file.

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CLAIMS INVESTIGATION Timely investigation of a claim is essential so that all the facts of the accident can be gathered quickly and accurately. The policyholder is contacted to verify the facts about the accident, the injured worker is contacted to verify his condition and how the accident happened, witnesses to the claim are identified and interviewed, and the physician is contacted to ascertain the extent of the injury and how long, if at all, the injured worker will be off from work. The first question to be asked when investigating a claim is whether work duties caused the injury. It must be shown that the injury occurred during work hours and was caused by activities that are required to be performed to do the job. A detailed description is important to determine exactly what part(s) of the body was injured at the time of the accident. This will aid the claims representative in determining the extent of the injury and how long recovery will be, which in turn will help determine when the injured worker can return to work. There have been instances where an injured employee initially alleged to have injured one part of the body, and at a later time described an injury to another part of the body. It is not unusual for employees to include injuries to other parts of their bodies months after the original accident. Witnesses to the accident are also important to the accident investigation. They are contacted, and on occasion recorded statements are taken from the injured worker and all the accident witnesses, including the injured worker’s supervisor. Claims investigation begins with an analysis of the information available when the claim is first filed. There could be a small amount of information at the beginning of the claim, or a great deal of information, but the objective is to gather as much information as possible to determine if there is coverage for the particular accident. The insurance company has the authority to investigate the accident based on the agreement and conditions of the insurance policy. The policy gives the insurance company the right and obligation to investigate and settle the claim and it also requires that the insured cooperate with the claims department in the investigation of the claim. Failure of the insured to cooperate could result in the claim being denied. Some of the most common tools used to determine coverage are: • Documentation: This would include the first report of injury, which gives the date of the accident, location of the accident, details of the accident, and the injured worker’s information, as well as the insured’s pertinent information. Other documentation could include the claim adjuster’s signed and dated report about the claim, notes about phone calls with the injured worker and the insured, and notes from the treating physician. • Written or recorded statements: Statements are information obtained from the injured worker and any witnesses to the claim. Statements can be either written, recorded, typed, or videotaped, and generally are signed by the person who made the statement. These statements are used to record and verify the facts of the accident. claimant The injured worker.

The claimant (the injured worker) should be contacted as soon as possible for several reasons. The main reason is to let the injured worker know the claims person is working on the claim. Also, the sooner the injured worker is contacted, the easier it is for her to remember the particular details of the accident. This principle also applies to any witnesses, because the sooner they are contacted the more reliable their information will be. • Physical evidence: Physical evidence includes site visits to the scene of the accident as well as photographs of the site of the injury. • Insurance policy: The policy must be checked to see if the loss is covered. The main areas to be checked are the policy coverage dates, the appropriate state covered, and the insured’s information, such as name and location.

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89

It is important to handle all claims investigations promptly, efficiently, and courteously; not doing this could greatly impact the insurance company’s reputation. A timely investigation tells the injured worker that the insurance company is working hard to resolve the claim and makes for a more cooperative relationship between the injured worker and the insurance company. The injured worker is not obligated to talk with the claims adjuster, but if the injured worker understands that the claims adjuster needs the information to properly handle the claim, then the injured worker may be more willing to cooperate.

CASE STUDY 5–1 Put an “x” next to the correct ways to investigate a claim. Contact the injured worker within two weeks of the accident. Take a recorded statement from the injured worker and any and all witnesses. Take for granted that there is coverage and do not look at the insurance policy. Be courteous and helpful to the injured worker. Write all your notes from the investigation in a notebook and do not put them into the claims file.

SETTING RESERVES reserves Estimate of what a claim will cost.

Reserves (an estimate of what the claim will cost) are set on a claim at the very beginning of the claims process. Adequate reserves are critical for an insurance company because they must know what they are expected to pay out for all their claims at any given time, and without this information they will be unable to predict their losses for any given year. Also, as stated in an earlier chapter, a policyholder’s rates are partially based on their past claims experience, so if reserves are not properly set it could affect the cost of the policy for the policyholder. Reserves are adjusted as needed; for example, if the injured worker has to have unexpected surgery, the reserves must go up, and if the injured worker returns to work sooner than expected, the reserves are adjusted downward. Once the claims investigation determines that there is coverage for the accident, the claims adjuster will evaluate the loss to determine how much will be paid on the claim. The claims adjuster then sets reserves for the claim. This an extremely important part of the claims handling process because the reserved amount tells the insurance company what they can expect to pay out on the claim and also lets them know how much money they need to set in reserve for this claim. Insurance companies must have enough money at all times, based on what the reserves are on all their claims. Much has to be considered when setting the reserves on a claim. Some of the areas to be considered are: • Severity of the injury: Was the injury minor and can the worker return to work immediately, or is this a severe injury that will require long medical care? • Projected medical expenses: This is a major area of expense for all insurance companies. If the injury is minor and the injured worker only requires minimal medical care, then the reserve will probably be set low. On the other hand, if the injured worker has a serious injury, surgery could be involved along with an extended hospital stay and physical therapy treatment, and the reserve would have to be set much higher. • Projected lost time from work: The injured worker could only miss a few days from work. If so, there would not be a need to set high reserves on the claim, but if the injury is serious and the worker could be off work for an extended period of time, the case would need higher reserves.

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• Whether the injured worker will be able to return to her regular job: If the injured worker was so severely hurt that she could not return to her regular job, then the case would require a higher reserve. The worker may require vocational rehabilitation in order to get retrained for a different type of job, or the injured worker may never return to work, in which case the insurance company would have to pay indemnity benefits for an unlimited period of time. • Death benefits, if applicable: If the worker died due to the on-the-job injury, then the worker’s survivors would be entitled to benefits along with funeral expenses. Some examples of how a reserve would be set are as follows:

Worker A cut her finger on the job, went to the physician, and then returned to work. The reserve for this claim could be calculated as follows: $200 for physician visit $15 for mileage to and from the physician $50 for medicine $0 lost wages This could be reserved at around $265. Worker B fell off a roof and has a herniated disc in her back. She had surgery and was off work for several months. $1000 for emergency room visit $20,000 for back surgery $50,000 for hospital stay $3000 for medicine $1500 for mileage expense $4000 for physical therapy $30,000 for lost wages The reserve for this claim could be estimated at $110,500.

As shown in the examples, reserves on a claim can vary greatly depending on the type of injury and the projected cost of medical expenses and lost wages.

CASE STUDY 5–2 1. Estimate the reserves on the following claim: • Lost wages: Injured worker makes $300 per week and is expected to be off work for 10 weeks.

Claims Handling

• Physician visits: Injured worker is seeing a physician once a month at an average cost of $75 per visit; it is anticipated that she will see the physician for four months.

• Physical therapy: Injured worker is seeing a physical therapist twice a week for four weeks at an average cost of $124 per visit.

Medical reserve Indemnity (lost wages) reserve 2. Estimate the reserves on the following claim: Medical (anticipated medical cost) • Six physician visits—$100 per visit • Surgery (physician charges)—$1000 • Hospital stay—$5000 • Wheelchair—$1200

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Lost wages (anticipated lost wages) • Injured worker is due $300/week for lost wages and will be off work for 44 weeks.

Medical reserve Indemnity (lost wages) reserve

MEDICAL MANAGEMENT OF THE CLAIM

medical case manager Person that works with injured worker and physician to monitor medical care.

precerted Authorized medical treatment.

It is also the responsibility of the claims adjuster to manage the medical portion of the claim. The claims adjuster is responsible for seeing that the injured worker receives the appropriate medical care in order to get back to work and have a complete recovery from the injury. The claims adjuster should see that the injured worker gets prompt medical treatment as soon as the injury occurs. The claims adjuster typically will contact the injured worker and the physician right away to be sure the injured worker is receiving proper medical care. On occasion, if there is a serious injury, a claims department will assign a medical case manager to a claim—a person that works with the injured worker and his physician to monitor medical care and to get the injured worker back on the job as quickly as possible. The medical case manager assists the claims adjuster with the medical portion of the claim. The claims adjuster will make sure that the injured worker is able to get the necessary physician appointments needed for treatment of the workers’ compensation injury. If the injury is severe enough, the injured worker may need to go to a physician other than the initial treating physician, such as a specialist. The claims adjuster will arrange for the necessary appointments with any additional physicians needed. Some states can dictate which physician an injured worker treats with, and other states give the injured worker the right to choose the physician she wants to go to. Some states require that certain medical treatment be precerted (authorized) before the injured worker can receive the treatment; treatments that would fall into this category include, among others, surgery, physical therapy, and occupational therapy. The need for services to be precerted is codified in the state workers’ compensation laws.

Claims Handling

preferred provider organization (PPO) Group of health care providers organized by an insurance company to provide medical care.

state fee schedule Schedule determined by a state that lists the amount to be paid for each type of medical treatment. second medical opinion (SMO) Examination by a second physician to determine medical condition of injured worker. independent medical examination (IME) Medical evaluation performed by a physician that is not involved in the patient’s care.

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Some insurance companies participate in preferred provider organization (PPO) networks that allow them to get discounts from the physicians in the networks. Usually with a PPO there is an agreement between the insurance company and the physician that the physician will give the insurance company a discount if the insurance company will refer patients to the physician’s practice. Also, the physicians agree to do what is necessary to give the injured worker the best possible care and return them to work as quickly as possible. The claims adjuster is generally also responsible to see that all medical bills are promptly and accurately paid according to the appropriate state fee schedule (schedule determined by the state that lists the amount to be paid for each type of medical treatment for a workers’ compensation claim). Most state fee schedules have a timeline for how soon bills must be paid; this varies from state to state. If the injured worker does not seem to be improving under the current treatment regimen, the insurance company may request a second medical opinion (SMO) from another physician to see why the patient is not improving and if there is better treatment available for the injured worker. If there is a disagreement between the treating physician and the SMO physician, an independent medical examination (IME) can be requested. An IME physician will examine the patient and report his results to the insurance company. The claims adjuster will also be involved in getting the injured worker set up with physical therapy, occupational therapy, or vocational rehabilitation if it is needed in order for the injured worker to return to work.

CASE STUDY 5–3 A worker was injured on 5/6/09 and the insurance company was notified the same day. The claims adjuster contacted the injured worker on 5/16/09 to see how bad the injury was and found out that the injured worker had surgery and was getting physical therapy after surgery. The injured worker was seen by a physician that was not part of the PPO that the insurance company used. The injured worker also told the claims adjuster that it had taken him seven days to get an appointment with the physician. List all the things that the claims adjuster did incorrectly in handling this claim.

INDEMNITY PAYMENTS ON A CLAIM Indemnity payments are calculated based on the injured worker’s salary. The claims adjuster calculates and verifies the average weekly wage of the injured worker and sets up weekly indemnity payments based on the state’s guidelines. The claims adjuster must verify the injured worker’s wages by contacting the employer for written verification of the actual wages. A wage statement is requested from the insured to verify the wages of the injured worker. The wage statement normally includes how the worker is paid (hourly, weekly, monthly, etc.). It includes the actual amount paid along with how many hours per week the employee works (Figure 5–1). State workers’ compensation benefits for both temporary and permanent disability pay between 66 ⅔ percent and 80 percent of lost wages, up to varying set dollar maximums. Indemnity payments also are subject to time limits. Depending on the nature of the disability, payments are made for life, the duration of the disability, or a specified number of weeks.

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In California, a worker who is determined to have a temporary total disability receives payments for the duration of the disability. Those with a permanent total disability receive the state’s temporary disability benefit—up to $490 per week—for life. Temporary and permanent disabilities are also classified as partial or total. This affects workers’ compensation benefits as well. Permanent partial disabilities, enabling employees to return to work in the same or a different function, pay lower benefits than permanent total disabilities. In Alabama, carriers must pay 66 ⅔ percent of an employee’s lost wages for 300 weeks if she suffers a permanent partial disability. Individuals with permanent total disabilities receive 66 ⅔ of their lost wages for the duration of their permanent disability. As discussed in an earlier chapter, the first indemnity check is issued after the waiting period is over as specified by the state in which the accident happened. After the waiting period, the injured worker receives a weekly indemnity check as outlined in the relevant state rules. It is the claims adjuster’s responsibility to see that the weekly indemnity check is issued each week in a timely manner and either mailed to the injured worker or directly deposited into the injured worker’s bank account.

Workers’ Compensation Wage Statement Employee Name

Social Security Number

Date of Injury

Date Form Completed

Form Completed By

Mary Smith

123-66-9999

7/8/08

7/10/08

S. Moss

Week Ending

No. of Days Paid

Base Pay

4/25/08

5

$375.00

$375.00

5/2/08

5

$375.00

$375.00

5/9/08

5

$375.00

$375.00

5/17/08

5

$375.00

$375.00

5/24/08

4

$300.00

$300.00

5/31/08

5

$400.00

$400.00

6/1/08

5

$400.00

$400.00

6/8/08

5

$400.00

$400.00

6/15/08

5

$400.00

$400.00

6/22/08

4

$320.00

$320.00

6/29/08

4

$320.00

$320.00

Signed: Mark Bolton

Overtime Pay

Company Name: XYZ Tire Company

Title: Supervisor

Figure 5–1 Sample wage statement.

Other Pay

Total Paid

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CASE STUDY 5–4 Complete the wage statement and calculate the appropriate indemnity payment for the following injured worker: Injured worker is paid on an hourly basis as follows: Week 1 worked 40 hours at $11 per hour Week 2 worked 36 hours at $11 per hour Week 3 worked 40 hours at $13 per hour Week 4 worked 32 hours at $13 per hour Week 5 worked 40 hours at $13 per hour Week 6 worked 37 hours at $13 per hour

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CASE STUDY 5–4 (continued) Workers’ Compensation Wage Statement Employee Name:

Week Ending:

Signed: Title:

Social Security Number:

No. of Days Paid

Date of Injury:

Base Pay

Date Form Completed:

Overtime Pay

Other Pay

Company Name:

Form Completed By:

Total Paid

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RECOVERY DEPARTMENT recovery department Department of an insurance company that focuses on recovering money paid out on a claim. overpayments Incorrect payments on a claim.

Most insurance companies have a recovery department (a department that focuses on recovering money paid out on a claim if possible). The purpose of the recovery department is to recover money from overpayments (when an incorrect amount is paid on a claim), second injury funds (funds set up in some states to help pay the cost of workers’ compensation benefits when an injured worker has a previous injury) and third-party recovery (available when another party may be totally or partially responsible for the injury/accident).

Overpayments second injury fund Fund set up in some states to help pay the cost of a claim if the injured worker has a previous injury. third-party recovery Another party that may be totally or partially responsible for the injury/accident and may be liable for some of the cost of the claim.

Overpayments can result from anything from calculating the payroll incorrectly for the indemnity payment to paying a medical bill that was not related to the workers’ compensation injury. Following are some examples of overpayments:

Overpayment of indemnity: Worker is entitled to 66 2/3 percent of weekly salary, which is $200, but when claims adjuster calculates the indemnity payment the salary figure of $300 is used; therefore the injured worker is receiving payment based on $300 instead of the correct amount of $200. Overpayment of medical benefits: Worker has a neck injury and a bill comes into the claims department for $375 for treatment of a foot injury that happened at home; in error, the $375 bill for the treatment of the foot injury gets paid.

In both of these examples, the recovery department would ask for the return of the money overpaid to the injured worker and to the physician.

Second Injury Fund Some states have established a second injury fund to protect the employer and the insurance company from higher workers’ compensation costs. When an employer hires an employee with a preexisting disability, the employee gets hurt on the job, and the preexisting condition makes the cost of the claim substantially more than the work injury alone would have cost, then the insurance company can file with their state’s second injury fund to recover some of the money paid out on the claim. The amounts that can be recovered vary state to state.

Third Party If the work-related injury was the result of the negligence of a third party, the insurance company will seek to recover the money paid out on the claim from the third party.

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Injured worker cuts hand while operating a piece of machinery; in investigating the claim, the claims adjuster discovers that a part on the machine was defective and caused the accident. The insurance company can go back to the manufacturer of the machine to recover the money paid out on the claim.

LOSS PREVENTION/SAFETY loss prevention Preventing or reducing workplace accidents. outsourced Describes a corporate function that is performed by people hired outside the company.

Many insurance companies have a safety or loss prevention (preventing injuries from happening) department. This service may either be provided in house or outsourced (done by people hired outside the company to perform a function). Loss prevention is a very important part of the insurance process. Safety or loss prevention engineers work with the employer and employee to prevent accidents before they happen. They also will go out to an accident site after an accident has happened to try and find out why the accident happened and what can be done to prevent future accidents. Another reason this is important is that the fewer accidents a company has, the less expensive their insurance cost will be, so it is to the advantage of the employer to make a safe workplace. Safety or loss prevention personnel will visit a jobsite and do a thorough investigation of all aspects of the site, write a report of their findings, and send it to the employer so that he can make any corrections or adjustments that need to be made in order to promote a safe work environment. Some examples of what a safety person might suggest to an employer after a safety inspection are: • To prevent slips and falls, maintain good housekeeping and schedule regular safety inspections of the property. Remove anything that obstructs a pathway and hold regular safety meetings with all personnel. • To prevent motor vehicle accidents, give all drivers defensive drivers’ training. • To prevent injuries from lifting, have a limit on how much weight a person should lift without the aid of a mechanical device. Some of the areas safety personnel help with are:

ergonomic Study of the interaction of a person with a machine, desk, workstation, etc.

• • • • •

Company safety meetings Proper employee training Drug testing prior to employment Drug testing immediately following an accidents Ergonomic assessment of the workplace. (Ergonomics is the study of the interaction of a person with machines, desks, workstations, etc.) For example, injures can occur if a person works with a machine all day and has to strain in order to operate the machine.

Safety is a vital part of a workplace. It can prevent accidents from occurring, thus saving the worker from injury by identifying potential safety hazards. After an accident, the safety department can do a thorough investigation and find the cause of the accident and the employer can make all the necessary changes to prevent a similar accident from happening again.

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FRAUD INVESTIGATION fraud Deception related to injury, payroll, etc.

Insurance companies always have to be on the lookout for fraud (deception) when workers’ compensation insurance is involved. There are several types of fraud that can occur: • • • •

Employer concealing payroll Employer classifying employees in the incorrect class code Worker filing a false a claim Worker faking seriousness of an injury

When the claims adjuster investigates a claim, these are areas that must be looked at and, if found, brought to the attention of the fraud investigator. Like other departments of an insurance company, fraud investigation can be done by staff investigators or it can be outsourced to an outside investigator. Some of the signals that there might be fraud are:

surveillance Observation.

• Employer concealing payroll: Claims adjuster investigates the claim and notices that the payroll reported to the insurance company for premium purposes is much less than what it should be. Claims adjuster might see that there are 100 people working for the employer but employer’s reported payroll would only cover a staff of 50. This may or may not be realized at the annual audit of the insurance policy, so it is important for the claims adjuster to be aware of these kinds of things. • Employer classifying employees in the incorrect class code: Claims adjuster investigating the claim knows that workers’ compensation application shows workers are classified as clerical workers but actually are doing roofing. The clerical classification of employees is much less expensive than those doing roofing, so this could be premium fraud and would need to be reported to the insurance company. • Filing a false claim: During claims investigation there are many signs that could point to someone falsifying a claim. Some of the signals could be that there are no witnesses to the accident; the injured worker has had accidents at all previous jobs; or the injured worker has an unstable work history. These are all things the claims adjuster has to be aware of. • Faking seriousness of the injury: If the injured worker is getting proper treatment and does not appear to be responding to the treatment, this could be a signal that something is wrong. If all reports from the physician indicate that the worker should be better but there is no obvious progress, then this could a sign of a problem. At this point the insurance company might consider putting the claimant under surveillance. Some of the types of surveillance are videotaping the injured worker during the day to see if the injured worker is performing tasks that she says she cannot perform, and verifying that the injured worker is not working for another company while she is receiving workers’ compensation benefits for the current injury. Most state funds are required to have a fraud unit to handle fraud investigations, and many private carriers also follow this same practice. It is critical that any fraud, of any type, be confronted and handled in a timely manner. Techniques used to perform a fraud investigation include obtaining written statements, conducting face-to-face interviews, collecting documents, and even performing video surveillance to document what subjects actually do throughout the day.

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CLOSING THE CLAIM

maximum medical improvement Condition that exists when an injured worker has reached the point that no more medical improvement is expected.

settlement An agreed-on amount of money paid to an injured worker in order to close his or her claim.

The ultimate goal of any insurance claims department is to get the injured worker back to work at the same job she was doing when the accident occurred, and close the file. A claim is ready to be closed when the injured worker has reached maximum medical improvement (she has recovered from the injury or her medical condition has stabilized to the point that more improvement is not expected). If an injured worker is not able to perform her original job, the claims adjuster will work with the employer to see if there is any other type of work available for the injured worker to return to. If there is another job available and it pays less than the original job, most insurance companies will supplement the injured worker’s income. Some injuries are so serious that the injured worker may never be able to return to the original job or may even never be able to work again. In these circumstances, sometimes the insurance company will offer the injured worker a settlement (an agreed-on amount of money paid to the injured worker in order for the insurance company to close the claim and not be responsible for future payments). Settlements can be structured in many different fashions. Some types of settlements release the insurance company from any further indemnity or medical payments; another type only releases the insurance company from the duty to make indemnity payments and requires it to continue to pay medical costs. Generally settlements are worked out between the insurance company, the injured worker, and the injured worker’s attorney, if there is one. Also, some states require that a settlement be approved through the court system before it can be accepted. Once a settlement is reached the claims file can be closed.

LEGAL ACTIONS There are times when a claim can end up in the court system because the injured worker and the insurance company cannot agree on certain issues. When a claim ends up in the courts, both the insurance company and the injured worker will bring in an attorney to represent them in this legal matter. Some insurance companies have inhouse attorneys that work solely for the insurance company. When this is not the case, the insurance company will hire an attorney to represent them. Situations that can bring a claim to court are: • • • •

Denial of coverage by the workers’ compensation insurance company Refusal to pay a medical bill because it is not job-related Failure to authorize certain treatment for the injured worker Late payment of indemnity and medical benefits

It is in the best interest of all parties to avoid going to court if possible, because it is a costly and time-consuming process. The better approach is to try and work out any differences before the issue ends up in the legal system.

SUMMARY In this chapter we covered claims handling from the very beginning of a claim until the claim is closed. The steps in between these two points entail a lot of work and a variety of specialized claims personnel. The claims must be evaluated at the first notice of the claim and reserves set so the insurance company can estimate the cost of the claim.

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101

During the claims process, the claims adjuster works to get the injured worker prompt, appropriate medical care and return her to work, while at the same time managing the cost of the claim for the insurance company. The claims adjuster must calculate the benefits due the injured worker, and verify that the cause of the accident has been corrected, if necessary, and also investigate to be sure there was not a third party responsible for the accident. The claims adjuster must also be sure the claim is legitimate and no fraud is involved. The ultimate goal is to get the worker back to her original job in the shortest time possible; once this is done then the claim can be closed.

CHAPTER REVIEW Vocabulary Define the following terms: 1. claims investigation

2. claims evaluation

3. claims resolution

4. reserves

5. medical case manager

6. precerted

7. PPO

8. state fee schedule

9. SMO

102 Chapter 5 10. IME

11. recovery department

12. overpayments

13. second injury funds

14. third-party recovery

15. ergonomic

16. fraud

17. surveillance

18. maximum medical improvement

19. settlement

Fill in the Blanks Fill in the blanks in the following statements. 20. The first question to be asked when investigating a claim is: Did cause the injury? 21.

is information obtained from the injured worker and any witnesses to the claim.

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103

22. It is also the responsibility of the to manage the medical portion of the claim. 23. If there is a disagreement between the treating physician and the SMO physician, a/an can be requested. 24.

work with the employer and employee to prevent accidents before they happen.

25. Claims begins with an analysis of the available information when the claim is first filed. 26.

payments are calculated based on the injured worker’s salary.

27. Adequate are critical for an insurance company because they must know what they are expected to pay out for all their claims at any given time and they need to be able to predict their losses for any given year. 28. Some insurance companies participate in networks that allow them to get discounts from the physicians in the networks. 29. Sometimes the insurance company will offer the injured worker a in order to close the claim.

Multiple Choice Choose the answer that best completes each question. 30. Witnesses to accidents: a. Are never contacted by the insurance company b. Are important to the accident investigation c. Do not give recorded statements 31. Coverage documentation would include the following documents: a. First report of injury b. Notes from treating physician c. Claims adjuster report d. All of the above 32. When setting reserves, the following is taken into consideration: a. How tall the injured worker is b. Where the injured worker lives c. Severity of the injury 33. A preferred provider organization is: a. A network of physicians that allows discounts on treatment b. A group of injured workers c. A claims adjusters’ organization 34. Overpayments can include the following type of payments: a. Payments to the employer b. Payments to the legal system c. Payments to the physician


Chapter 6 Workers’ Compensation Medical Billing KEY TERMS asterisked procedures bilateral CMS-1500 (HCFA) form Current Procedural Terminology (CPT) codes

International Classification of Diseases, 9th Revision, Clinical Modification (ICD9 CM) codes modifier

suffixes UB-04 form usual and customary

LEARNING OBJECTIVES Upon completion of this chapter the learner should be able to: 1. Pay workers’ compensation medical bills. 2. Understand state fee schedules. 3. Understand some of the requirements mandated by the fee schedule pertaining to medical bill payment.

4. Explain, at a basic level, ICD codes, CPT codes, and medical terminology.

INTRODUCTION This chapter will give an overview of workers’ compensation medical billing including the codes, forms, and language that are used in this process.

REVIEWING AND PAYING WORKERS’ COMPENSATION MEDICAL BILLS In order to process and pay workers’ compensation medical bills the bill processor must have an understanding of: • • • •

state workers’ compensation fee schedules ICD9 CM codes CPT codes medical terminology

If you do not have knowledge in all of these areas, you will have a hard time properly processing and paying a workers’ compensation medical bill.

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106 Chapter 6 State Workers’ Compensation Fee Schedules

usual and customary Amount that is commonly paid for a particular treatment.

Most states, but not all, have established a workers’ compensation fee schedule that mandates what will be paid for any given treatment. Some state fee schedules are based on what Medicare pays. Generally those states without a fee schedule require payment to be made on a usual and customary (what is commonly paid for a particular treatment) basis. The states that allow payment of workers’ compensation at usual and customary rates are: • • • • • • • • •

Delaware District of Columbia Indiana Iowa Missouri New Hampshire New Jersey Virginia Wisconsin

Those states with a fee schedule mandate what can and cannot be paid for the treatment of an injured worker. The workers’ compensation fee schedule is a legal document that contains the rules for payment of medical bills related to treatment given to an injured person for their work-related injury. Most fee schedules have a mandated timeline for payment of medical bills, and insurance companies are bound by law to pay bills in the timeframe designated. Following are some samples of the timeline for payment for some states:

• • • • •

Alaska Michigan North Carolina Louisiana Tennessee

14 days from receipt of bill 30 days from receipt of bill 60 days from receipt of bill 60 days from receipt of bill 31 calendar days from receipt of bill

The state fee schedules have many variations on medical treatment. Some states will let the injured worker choose his physician, while other states allow the employer or insurance company to choose the treating physician. Various states also impose medical limitations on treatment; here are a few examples of these limitations. • California: Limits chiropractic, physical therapy, and occupational therapy to 24 visits. • Montana: After the initial emergency room visit, requires the injured worker to pay a co-payment of $25 for each subsequent visit to a hospital emergency room unless the visit is for treatment requested by the insured. • Florida: Requires the injured worker to pay a $10 co-payment for medical services once maximum medical improvement has been reached. • Arkansas: Denies liability for medical treatment if, six months after the injury, there is no lost time from work or a maximum of $10,000 has been paid. The insurance commission can extend the time and dollar limits if they see fit to do so.

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The payment amount for medical treatment can vary greatly among the states. Following is a sample of the differences in what each state will pay for the same type of treatment:

Routine evaluation and management–office visit (CPT code 99213) • • • • •

Louisiana Minnesota Pennsylvania Massachusetts New Mexico

$68.00 $79.94 $63.27 $55.97 $67.07

Treating rib fracture (CPT code 21800) • • • •

Alabama Connecticut Arizona New York

$205.80 $152.03 $96.00 $254.02

ICD9 CM CODES International Classification of Diseases, 9th Revision, Clinical Modification (ICD9 CM) codes Numeric codes used to describe symptoms, diseases, conditions, and other reasons for seeking medical care.

Current Procedural Terminology (CPT) Code set that identifies medical, surgical, and diagnostic procedures.

International Classification of Diseases, 9th Revision, Clinical Modification (ICD9 CM) codes are a useful tool for classification of medical records, medical treatment, and statistics. An ICD9 code is a set of three to five numeric and alphabetical characters. These codes are used to describe symptoms, diseases, conditions, and other reasons for seeking medical care. To accurately describe the patient’s condition, the ICD9 code must be correct. All billing and medical records must be documented with an ICD9 code. An incorrect ICD9 code can affect patient care and treatment. An incorrect ICD9 code could also cause the patient’s bill not to be paid correctly. If the insurance company has a first report of injury for a broken leg and the ICD9 code on the bill is for an eye infection then the bill will not be paid by the insurance company because the diagnosis (ICD9 code) does not match the injury. The ICD9 code is used along with the Current Procedural Terminology (CPT) code; the CPT code describes the treatment and the ICD9 code describes the diagnosis. It is the combination of these two codes that allows proper billing and/or payment of benefits for an injury. The worker must have a working knowledge of both of these areas to properly understand medical billing for workers’ compensation.

Some examples of ICD9 codes are: • Fracture of rib

• Dislocation of shoulder • Dislocation of elbow • Sprains and strains of shoulder and upper arm • Sprains and strains of wrist • Open wound or shoulder and upper arm

807.0 (1 rib) 807.2 (2 ribs) 807.3 (3 ribs) 831.0 832.0 840.0 842.0 880.0 (shoulder)

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• Open wound of hip and thigh

• Rupture of rotator cuff

880.3 (upper arm) 880.9 (multiple sites) 890.0 (without mention of complication) 890.1 (complicated) 90.2 (with tendon involvement) 840.4

As you can see from the examples of ICD9 codes, there is a numerical sequence to all the codes, and the more a person works with the codes, the better understanding he will have of their meaning.

CASE STUDY 6–1 An injured worker fell and broke two ribs and dislocated his shoulder. What ICD9 codes would be assigned to this injury?

CPT Codes

modifier Suffix to add to CPT code as an indicator that a service or procedure has been altered.

Current Procedural Terminology (CPT) codes are used to identify the treatment that is given to a patient. They provide a systematic coding of procedures and services performed by the physician. Each CPT code is five digits long, and like an ICD9 code, it has a numeric sequence. The CPT code is used when issuing a bill to let the payer know what treatment was given to the injured/ill person; this helps the payer determine that the treatment is related to the workers’ compensation injury. CPT codes are published and established by the American Medical Association. CPT codes also on occasion have a modifier attached to them. The modifier is a way for the physician to state that a service or procedure has been altered by a specific circumstance. Some reasons for using modifiers are: • • • • • •

21–prolonged evaluation and management services 52–reduced services 22–unusual procedure 55–postoperative management only 76–repeat procedure by same physician 77–repeat procedure by another physician

The CPT code manual is broken down into six main parts. The main sections and their corresponding CPT range of numbers are: • Evaluation and management • Anesthesiology • Surgery • Radiology • Pathology and laboratory • Medicine (except anesthesiology)

99201–99499 00100–01999 99100–99140 10021–69990 70010–79999 80002–89399 90281–99199 99500–99602


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CASE STUDY 6–2 An injured worker was seen by a physician, had lab work, and then had surgery. What three code ranges would these treatments fall into?

Evaluation and Management CPT Codes Within the Evaluation and Management section the breakdown of codes is: • 99201–99205 • 99211–99215 • 99217–99220 • 99221–99223 • 99231–99236 • 99238–99239 • 99241–99245 • 99251–99263 • 99271–99275 • 99281–99285 • 99291–99292 • 99301–99333

Initial office visits Follow-up office visits Hospital observation care Initial hospital care Follow-up hospital care Hospital discharge care Office consultations Hospital consultations Confirmatory consultations Emergency services Critical care services Nursing home care

Anesthesiology CPT Codes Anesthesiology CPT codes are broken down as follows: • 00100–00222 • 00300–00352 • 00400–00474 • 00500–00580 • 00600–00670 • 00700–00884 • 00900–01190 • 01200–01522 • 01710–01784 • 01810–01860 • 01904–01922 • 01990–01999 • 99141–99142

Procedures on the head Procedures on the neck Procedures on the thorax and shoulder girdle Procedures of intrathoracic nature Procedures on the spine and spinal cord Procedures on the abdomen Procedures on the perineum and pelvis Procedures on the leg and knee Procedures on the upper arm and elbow Procedures on the forearm, wrist, and hand Radiological procedures Miscellaneous anesthesia services Sedation

Surgical CPT Codes Surgical CPT codes range from 10040 to 69990. The codes are broken down as follows: • 10040–19499 • 20000–29909 • 30000–39599

Integumentary system Musculoskeletal system Respiratory system

110 Chapter 6 • 40490–49999 • 50010–59899 • 60000–69990

Digestive system Genitourinary systems Endocrine/nervous/ocular/auditory systems

Some of the modifiers that could be added to a surgery bill are: • 50–Bilateral (two-sided) procedures • 51–Multiple procedures • 80–MD/surgical assistant • 81–Non-MD

Asterisked Procedures/Starred Procedures Asterisked procedures Minor surgical procedures that are usually done in an office setting.

Asterisked procedures, also known as starred procedures, are minor surgical procedures that are usually done in an office setting. Asterisked procedure codes are marked in the CPT books.

Radiology CPT Codes Radiology codes range from 70010 to 79999. These codes are listed in the CPT manual according to body area and type of treatment. Radiology can be used for diagnosis and for treatment. Following is the breakdown of CPT codes in the CPT manual: • 70010–70559 • 71010–71555 • 72010–72295 • 73000–73225 • 73500–73725 • 74000–74190 • 74210–74363 • 74400–74485 • 74710–74775 • 75552–75556 • 75600–75790 • 75801–75893 • 75894–75989 • 75992–75996 • 76000–76499 • 76506–76999 • 77261–77799 • 78000–79999

Head and neck Chest Spine and pelvis Upper extremities Lower extremities Abdomen Gastrointestinal tract Urinary tract Gynecological and obstetrical Heart Aorta and arteries Veins and lymphatics Transcatheter procedures Transluminal atherectomy Other procedures Diagnostic ultrasound Radiation oncology Nuclear medicine

Pathology and Laboratory CPT Codes Pathology and laboratory CPT codes are separated into the following categories: • 80048–80076 • 80100–80103

Organ- or disease-oriented panels Drug testing


• 80150–80299 • 80400–80440 • 80500–80502 • 81000–81099 • 82000–84999 • 85002–85999 • 86000–86804 • 86805–86849 • 86850–86999 • 87001–87999 • 88000–88099 • 88104–88199 • 88230–88299 • 88300–88399 • 88400 • 89049–89240 • 89250–89356

Therapeutic drug assays Evocative/suppression testing Consultations Urinalysis Chemistry Hematology and coagulation Immunology Tissue type Transfusion medicine Mocrobiology Anatomic pathology Cytopathology Cytogenetic studies Surgical pathology Transcutaneous procedures Other procedures Reproductive medicine procedures

Medicine CPT Codes General medical code ranges are as follows: • 90281–90399 • 90471–90472 • 90476–90749 • 90780–90781 • 90801–90899 • 90918–90999 • 92002–92499 • 92502–92599 • 93303–93350 • 93501–93556 • 93875–93990 • 94010–94799 • 95004–95199 • 95805–95999 • 95970–95975 • 96100–96117 • 96400–96549 • 96900–96999 • 97001–97546 • 98925–98929 • 99000–99199

Immune globulins Immunization for vaccines/toxoids Vaccines/toxoids Infusions Psychiatry Dialysis Ophthalmology Otorhinolaryngology Echocardiology Cardiac catheterization Non-invasive vascular diagnostics Pulmonary Allergy and immunology Neurology Neurostimulators Central nervous system assessments Chemotherapy Dermatological procedures Physical medicine and rehab Osteopathic manipulation Special procedures

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CASE STUDY 6–3 An injured worker had the below treatments. Assign the correct range of CPT codes for each treatment: Follow-up office visit X-ray of spine Visit with psychiatrist Discharge from hospital Drug test

Medical Terminology A broad knowledge of medical terminology and abbreviations is not only helpful, but is necessary when working with workers’ compensation medical bills. The more you know about medical terminology and abbreviations, the easier it will be to understand the medical bill as well as any medical reports that are submitted with the bill. We will look at a brief overview of some of the examples of medical terminology and abbreviations as they might apply to workers’ compensation. Most medical words are composed of two or more terms that together have a direct medical meaning. An example of this would be the word “pericarditis.” We break the word down to understand the meaning as follows: • peri • card • itis

= = =

around heart inflammation

Therefore the meaning of pericarditis is “inflammation around the heart.” Another example would be the word “oncology” • onco • logy

= =

tumor study of

Putting these two together gives us the meaning: oncology is “the study of tumors.” Some more samples of basic medical terminology are: • • • • • • • • • •

acu bio ambul bar dolor gel hist pyret therm vir

= = = = = = = = = =

needle life, living to walk pressure pain to freeze tissue fever heat virus

There is also medical terminology that tells where treatment, injury, pain, and other phenomena are located. Such terms would include: • ab• inter-

= =

away from between


• • • • • • suffixes Groups of letters at the end of a word.

laterperipostsubsupertrans-

= = = = = =

113

side around after, behind under, beneath above, beyond across

Surgical procedures have specific suffixes (letters or syllables at the end of a word) that have particular meanings: • • • • • • • • •

-centesis -desis -ectomy -plasty -rrhaphy -sect -stomy -tomy -tripsy

= = = = = = = = =

surgical puncture of a cavity surgical fixation, fusion surgical removal surgical repair suture cut surgical opening surgical incision crushing, breaking

CASE STUDY 6–4 1. A patient had acupuncture; do you think a needle or a surgical knife was used for this treatment? 2. A patient had a hysterectomy; was something removed or repaired? 3. A patient has dermaplasty; what was done to the skin? 4. A patient had an arthrotomy; was there an incision made for this procedure?

Medical Abbreviations Medical abbreviations are commonly used by the medical profession, and anyone working with medical bills and reports needs a broad understanding of the common medical abbreviations in order to understand the documents they are dealing with. Table 6–1 provides a brief list of some commonly used abbreviations in the medical field. These are sample abbreviations used for drug administration.

TABLE 6–1

Medical Abbreviations

Abbreviation

Meaning

Ac

before meals

AM

before noon

Bib

drink (continued)

114 Chapter 6 TABLE 6–1

(continued)

Abbreviation

Meaning

Dc

discontinue

Npo

nothing by mouth

Hs

at bedtime

Qn

every night

Sos

if necessary

Table 6–2 lists abbreviations used in diagnostic testing.

TABLE 6–2

Diagnostic Testing Abbreviations

Abbreviation

Meaning

EKG

electrocardiogram

ECHO

echocardiography

MRI

magnetic resonance imaging

CT

computed axial tomography

RBC

red blood cell count

TFT

thyroid function test

US

ultrasound

XR

x-ray

Some of the abbreviations for health assessment are listed in Table 6–3.

TABLE 6–3

Health Assessment Abbreviations

Abbreviation

Meaning

BP

blood pressure

Abn

abnormal

CA

chronological age

C&A

conscious and alert

PH

poor health

S/S

signs and symptoms


115

Some direction and location abbreviations are included in Table 6–4.

TABLE 6–4

Direction and Location Abbreviations

Abbreviation

Meaning

AE

above the knee

BE

below the elbow

LLE

left lower extremity

L&R

left and right

L&U

lower and upper

R

right

UE

upper extremity Table 6–5 looks at some abbreviations used to identify body systems.

TABLE 6–5

Body System Abbreviations

Abbreviation

Meaning

B, bl, bld

blood

WBC

white blood count

C section

cesarean section

NB

newborn

Abd

abdomen

IH

infectious hepatitis

Bx

biopsy

M

muscle

RSI

repetitive stress injuries

ARD

acute respiratory disease

AROM

active range of motion

Jt, jnt

joint

LBP

low back pain

THR

total hip replacement

It takes training and experience to become efficient in interpreting all the medical terms and abbreviations used in the medical field, but having a basic understanding can help lay the groundwork for the process.

116 Chapter 6

CASE STUDY 6–5 1. A patient is told to take medicine “Hs;” when would the medicine be taken? 2. A patient is scheduled for an “EKG;” what procedure is that? 3. A patient is “in PH;” describe what that is. 4. A patient has a cut on the right arm “BE;” where is that located? 5. A patient has “LBP;” what is that?

CMS-1500 (HCFA) AND UB-04 FORMS CMS-1500 form Form used by providers (other than hospitals) to bill for treatment.

Whether you are filling out the forms to request that a medical bill be properly paid, or are on the other end and are paying a workers’ compensation medical bill, proper completion of the CMS-1500 (HCFA) form and UB-04 form is essential.

CMS-1500 Form UB-04 form Form used by hospitals to bill for treatment.

We will first take a look at the CMS-1500 form, which is used for billing when the treatment is not done in a hospital. The CMS-1500 form should be filled out completely and have all the necessary information to identify the injured worker, the company he works for, the treatment dates, type of treatment, charge, and the treating physician or medical person who rendered the service. It is very important to completely fill out the CMS-1500 form so that the payer will have all the necessary information to determine if payment should be made and how much will be paid for the treatment. Incomplete CMS-1500 forms may be returned for correction and this will delay payment Figure 6–1 shows a sample CMS-1500 form and detailed instructions for completion of the form. Table 6–6 provides the information that should be completed in each block of the form when the physician applies for payment from the insurance company.


117

CARRIER

1500 HEALTH INSURANCE CLAIM FORM APPROVED BY NATIONAL UNIFORM CLAIM COMMITTEE 08/05 PICA

PICA

MEDICARE

MEDICAID

(Medicare #)

(Medicaid #)

TRICARE CHAMPUS (Sponsor’s SSN)

GROUP HEALTH PLAN (SSN or ID)

CHAMPVA (Member ID#)

3. PATIENT ’S BIRTH DATE MM DD YY

2. PATIENT ’S NAME (Last Name, First Name, Middle Initial)

OTHER 1a. INSURED’S I.D. NUMBER

FECA BLK LUNG (SSN)

(ID) 4. INSURED’S NAME (Last Name, First Name, Middle Initial)

SEX M

5. PATIENT ’S ADDRESS (No., Street)

F

6. PATIENT RELATIONSHIP TO INSURED Self

CITY

STATE

Child

Spouse

(

7. INSURED’S ADDRESS (No., Street)

Other

8. PATIENT STATUS

STATE

CITY

Single

Married

Other

Employed

Full-Time Student

Part-Time Student

TELEPHONE (Include Area Code)

ZIP CODE

(For Program in Item 1)

ZIP CODE

)


(

)

9. OTHER INSURED’S NAME (Last Name, First Name, Middle Initial)

10. IS PATIENT ’S CONDITION RELATED TO:

11. INSURED’S POLICY GROUP OR FECA NUMBER

a. OTHER INSURED’S POLICY OR GROUP NUMBER

a. EMPLOYMENT? (Current or Previous)

a. INSURED’S DATE OF BIRTH MM DD YY

b. OTHER INSURED’S DATE OF BIRTH MM DD YY

b. AUTO ACCIDENT?

SEX

PLACE (State)

c. EMPLOYER’S NAME OR SCHOOL NAME

c. OTHER ACCIDENT?

c. INSURANCE PLAN NAME OR PROGRAM NAME NO

YES d. INSURANCE PLAN NAME OR PROGRAM NAME

d. IS THERE ANOTHER HEALTH BENEFIT PLAN?

10d. RESERVED FOR LOCAL USE

YES READ BACK OF FORM BEFORE COMPLETING & SIGNING THIS FORM. 12. PATIENT ’S OR AUTHORIZED PERSON’S SIGNATURE I authorize the release of any medical or other information necessary to process this claim. I also request payment of government benefits either to myself or to the party who accepts assignment below. SIGNED 14. DATE OF CURRENT: MM DD YY

NO

If yes, return to and complete item 9 a-d.

13. INSURED’S OR AUTHORIZED PERSON’S SIGNATURE I authorize payment of medical benefits to the undersigned physician or supplier for services described below.

DATE ILLNESS (First symptom) OR INJURY (Accident) OR PREGNANCY(LMP)

F

b. EMPLOYER’S NAME OR SCHOOL NAME

NO

YES

F

M

SEX M

NO

YES

PATIENT AND INSURED INFORMATION

1.

SIGNED

15. IF PATIENT HAS HAD SAME OR SIMILAR ILLNESS. 16. DATES PATIENT UNABLE TO WORK IN CURRENT OCCUPATION DD YY MM DD YY MM DD YY GIVE FIRST DATE MM FROM TO

17. NAME OF REFERRING PROVIDER OR OTHER SOURCE

18. HOSPITALIZATION DATES RELATED TO CURRENT SERVICES MM DD YY MM DD YY FROM TO

17a. 17b. NPI

19. RESERVED FOR LOCAL USE

20. OUTSIDE LAB? YES

21. DIAGNOSIS OR NATURE OF ILLNESS OR INJURY (Relate Items 1, 2, 3 or 4 to Item 24E by Line) 1.

$ CHARGES NO

22. MEDICAID RESUBMISSION CODE ORIGINAL REF. NO.

3.

2. 24. A. MM

DATE(S) OF SERVICE From To DD YY MM DD

YY

B. C. PLACE OF SERVICE EMG

4. D. PROCEDURES, SERVICES, OR SUPPLIES (Explain Unusual Circumstances) CPT/HCPCS MODIFIER

E. DIAGNOSIS POINTER

F.

H.

G.

$ CHARGES

I.

J. RENDERING PROVIDER ID. #

EPSDT ID. Family Plan QUAL.

DAYS OR UNITS

1

NPI

2

NPI

3

NPI

4

NPI

5

NPI

6

NPI

25. FEDERAL TAX I.D. NUMBER

SSN EIN

26. PATIENT’S ACCOUNT NO.

27. ACCEPT ASSIGNMENT? (For

govt. claims, see back)

YES 31. SIGNATURE OF PHYSICIAN OR SUPPLIER INCLUDING DEGREES OR CREDENTIALS (I certify that the statements on the reverse apply to this bill and are made a part thereof.)

SIGNED

DATE

32. SERVICE FACILITY LOCATION INFORMATION

a.

NUCC Instruction Manual available at: www.nucc.org

Figure 6–1 CMS-1500 form.

NPI

b.

NO

28. TOTAL CHARGE $

29. AMOUNT PAID

33. BILLING PROVIDER INFO & PH #

a.

30. BALANCE DUE

$

NPI

$

(

)

b.

APPROVED OMB-0938-0999 FORM CMS-1500 (08-05)

PHYSICIAN OR SUPPLIER INFORMATION

23. PRIOR AUTHORIZATION NUMBER

118 Chapter 6 TABLE 6–6 Block Number

1.

Instructions to Complete the CMS-1500 Form Instructions

Not required for workers’ compensation

1a.

Claim number

2.

Patient name

3.

Patient birth date

4.

Insured’s name

5.

Patient address

6.


7.

Insured’s address

8.

Patient status

9.


10.

Put an “x” in 10a (indicating condition related to employment)

11.

a. Not required for workers’ compensation b. Same as 4 c. Workers’ compensation insurance company d. Not required for workers’ compensation

12.

Patient signature

13.

Patient signature

14.

Date of injury

15.

Date of same or similar illness

16.

Dates patient unable to work

17.

Name of referring physician (if applicable)

18.

Dates patient was in hospital for any related service

19.

(Blank)

20.

Indicate if lab work sent out to be processed


119

21.

Diagnosis–ICD 9 codes

22.


23.

Precertification number (if treatment required precertification)

24.

a. Dates of service b. Place of service c. Not required for workers’ compensation d. Procedures (CPT codes) and modifier (if applicable) e. Diagnosis code from block 21 f. Charges g. Days or units rendered for each service h. Not required for workers’ compensation i. Not required for workers’ compensation j. Not required for workers’ compensation k. Not required for workers’ compensation

25.

Federal tax ID number of provider

26.

Patient account number

27.


28.

Total charges

29.

Amount paid (if any)

30.

Balance due

31.

Provider signature

32.

Name and address of location where services were performed

33.

Billing name and address a. NPI number of physician b. Not required for workers’ compensation

120 Chapter 6

CASE STUDY 6–6 Complete the CMS-1500 form based on the following information: The injured worker is Janice Bolton, 6794 Horton Avenue, Dallas, Texas. Janice is married and was born 8/5/56. She was injured on the job on 9/4/08 when she dislocated her right shoulder while lifting a stack of boxes. Janice went to see Dr. Joseph Brown, 2266 Hillcrest, Dallas, Texas, on the day of the injury and as of now is unable to work. Dr. Brown is the physician sending in the CMS1500 form to get paid for his treatment of Janice Bolton. He is billing for a mid-level office visit ($130.00). Dr. Brown’s federal tax ID number is 99-9999999.


121

CARRIER


PICA

MEDICARE

MEDICAID

(Medicare #)

(Medicaid #)







FECA BLK LUNG (SSN)


SEX M


F


CITY

STATE

Child

Spouse

(


Other

8. PATIENT STATUS

STATE

CITY

Single

Married

Other

Employed

Full-Time Student

Part-Time Student


ZIP CODE


ZIP CODE

)


(

)








b. AUTO ACCIDENT?

SEX

PLACE (State)

c. OTHER ACCIDENT?






NO




F


NO

YES

F

M c. EMPLOYER’S NAME OR SCHOOL NAME

SEX M

NO

YES


1.

SIGNED




17a. 17b. NPI

20. OUTSIDE LAB?


YES 21. DIAGNOSIS OR NATURE OF ILLNESS OR INJURY (Relate Items 1, 2, 3 or 4 to Item 24E by Line) 1.

$ CHARGES NO


3.

MM


YY




F.

H.

G.

$ CHARGES

I.



DAYS OR UNITS

1

NPI

2

NPI

3

NPI

4

NPI

5

NPI

6

NPI


SSN EIN

26. PATIENT ’S ACCOUNT NO.




SIGNED

DATE


a.


NPI

b.

NO

28. TOTAL CHARGE $

29. AMOUNT PAID


a.

30. BALANCE DUE

$

NPI

$

(

)

b.



23. PRIOR AUTHORIZATION NUMBER 2. 24. A.

122 Chapter 6 UB-04 Form Just like the CMS-1500 form, the UB-04 form must be filled out correctly in order for payment to be made in a timely manner. This is the form that hospitals use to bill for their charges. Incorrect or missing information will likely delay payment to the hospital. Hospitals typically bill with revenue codes instead of CPT codes, although both may be used on certain procedures. This is a complicated billing system and merits a course all to itself. For now we will just give you an overview of revenue codes. The below are a few of the standard revenue codes that might be used in completing a UB-04 form for a workers’ compensation injury. There are a large number of revenue codes that are used to bill on the form, but we will look at some of the most common revenue codes that might be used when billing for workers’ compensation. Here are examples of commonly used revenue codes for workers’ compensation billing: • 100–199 • 200–249 • 250–259 • 270–272 • 278 • 300–310 • 320–324 • 340–344 • 360 • 370–371 • 420–439 • 450 • 600–612 • 710–719

Room and board Room and board Drugs Supplies Implants Lab Radiology Bone scan Operating room Anesthesia Occupational therapy/physical therapy Emergency room MRI Recovery room

Figure 6–2 is an example of a UB-04 form.

CASE STUDY 6–7 If a workers’ compensation patient went into the hospital through the emergency room and had x-rays and physical therapy while in the hospital, what three revenue code ranges would be used to bill the treatment?

If a workers’ compensation patient was admitted to the hospital for three days and while there had surgery, an MRI, and lab work, what four revenue code ranges would the hospital use to bill for this?

123


1

4

3a PAT. CNTL # b. MED. REC. #

2

6

5 FED. TAX NO.

8 PATIENT NAME

9 PATIENT ADDRESS

a

10 BIRTHDATE

11 SEX

31 OCCURRENCE CODE DATE

12

DATE

a c

ADMISSION 13 HR 14 TYPE 15 SRC 16 DHR 17 STAT


18

19

20


33 OCCURRENCE DATE CODE

7

STATEMENT COVERS PERIOD FROM THROUGH

b

b

TYPE OF BILL

CONDITION CODES 24 22 23

21

35 CODE

25

26

27

36 CODE

OCCURRENCE SPAN FROM THROUGH

d 28

e

29 ACDT 30 STATE

37


a

a

b

b

38

39 CODE

40 CODE

VALUE CODES AMOUNT

41 CODE

VALUE CODES AMOUNT

VALUE CODES AMOUNT

a b c d 42 REV. CD.

44 HCPCS / RATE / HIPPS CODE

43 DESCRIPTION

45 SERV. DATE

46 SERV. UNITS

47 TOTAL CHARGES

48 NON-COVERED CHARGES

49

1

1

2

2

3

3

4

4

5

5

6

6

7

7

8

8

9

9

10

10

11

11

12

12

13

13

14

14

15

15

16

16

17

17

18

18

19

19

20

20

21

21 22

22

PAGE

23

OF

CREATION DATE

50 PAYER NAME

52 REL. INFO

51 HEALTH PLAN ID

53 ASG. BEN.

TOTALS

23

55 EST. AMOUNT DUE

54 PRIOR PAYMENTS

56 NPI

A

57

A

B

OTHER

B

PRV ID

C

C

58 INSURED’S NAME

59 P. REL 60 INSURED’S UNIQUE ID

62 INSURANCE GROUP NO.

61 GROUP NAME

A

A

B

B

C

C

65 EMPLOYER NAME

64 DOCUMENT CONTROL NUMBER

63 TREATMENT AUTHORIZATION CODES A

A

B

B

C

C

66 DX

67 I

A J

69 ADMIT 70 PATIENT DX REASON DX PRINCIPAL PROCEDURE a. 74 CODE DATE

B K a

b

C L

OTHER PROCEDURE CODE DATE

b.

OTHER PROCEDURE DATE CODE

e.

c

D M

71 PPS CODE OTHER PROCEDURE CODE DATE

E N 75

72 ECI

F O a 76 ATTENDING

G P b NPI

LAST c.


d.


77 OPERATING

81CC a

UB-04 CMS-1450

APPROVED OMB NO.

Figure 6–2 UB-04 form.

78 OTHER

b

LAST

c

79 OTHER

d

LAST

68

73

QUAL FIRST

NPI

LAST 80 REMARKS

H Q c QUAL FIRST

NPI

QUAL FIRST

NPI

QUAL FIRST

THE CERTIFICATIONS ON THE REVERSE APPLY TO THIS BILL AND ARE MADE A PART HEREOF.

124 Chapter 6 Table 6–7 shows the detailed instructions needed to properly complete a UB-04 form.

TABLE 6–7 Block Number

Instructions to Complete a UB-04 Form Instructions

1.

Name and address of hospital/facility

2.


3.

a. Patient account number b. Not required for workers’ compensation

4.

Type of bill (hospital inpatient, hospital outpatient, etc.)

5.

Hospital/facility federal tax identification number

6.

Dates of service

7.


8.

Patient name

9.

Patient address

10.

Patient birth date

11.

Patient sex

12.

Date patient admitted to hospital/facility

13.

Time patient admitted to hospital facility

14.

Type of admission (emergency, elective, etc.)

15.

Source of admission (physician referral, transfer from another facility, etc.)

16.

Time patient was discharged from hospital/facility

17.

Patient discharge status (discharged to home, discharged to nursing facility, etc.)

18.–28.


29.


30.

Date accident occurred

31.–34.

Occurrence codes (04 for workers’ compensation) and date

35.–36.


37.

Blank

38.

Responsible party name and address


39.–41.


42.

Revenue code (describes type of service)

43.

Description of service

44.

Other codes

45.

Dates service was provided

46.

Units of service

47.

Total charges

48.

Noncovered charges

49.

Blank

50.

Name and address of insurance company

51.


52.

Release of information (yes or no)

53.

Assignment of benefits (yes or no)

54.

Indicate if any prior payments

55.


56.

Provider NPI number

57.


58.


59.

Patient’s relationship to insured

60.


61.


62.


63.

Precertification number

64.

Blank

65.

Employer name

66.

ICD9 codes

67.

Principal ICD9 code

68.

Blank

69.

Admitting ICD9 code

125

(continued)


(continued)

Block Number

Instructions

70.

ICD9 code that identifies patient’s reason for visit

71.

Not required

72.

ICD9 code pertaining to external cause of injuries

73.

Blank

74.

ICD9 code that identifies principal procedure performed and date of procedure

75.

Blank

76.

NPI of attending physician

77.

NPI of operating physician

78.–79.

NPI of any other physicians

80.

Remarks and provider signature

81.


CASE STUDY 6–8 Complete the pertinent information (blue block numbers) on the UB-04 from the following information: Matt Johnson, 123 Fifth Street, Newport, Missouri, was injured on the job on 3/21/08. Matt is a male and his birth date is 1/23/54. Matt was admitted to Pinewood Hospital, 7846 Pines Road, Newport, Missouri, on 3/21/08 at 11:30 a.m. Matt stayed in the hospital for five days. The bill type for inpatient is 0111. The revenue codes for the bill are as follows: 0110—Room and board—$700/day 0250—Pharmacy—$1500 (3/22/08) 0270—Medical supplies—$660 (3/21/08) 0300—Laboratory—11.00 (3/25/08) While in the hospital, Matt was treated by Dr. Jim Crofton, NPI number 2222222222, and the principal ICD9 code for this hospital stay is 842.0.

127


1

4


2

6

5 FED. TAX NO.

8 PATIENT NAME

9 PATIENT ADDRESS

a

10 BIRTHDATE

11 SEX


12

DATE

a c



18

19

20



7


b

b

TYPE OF BILL


21

35 CODE

25

26

27

36 CODE


d 28

e

29 ACDT 30 STATE

37


a

a

b

b

38

39 CODE

40 CODE

VALUE CODES AMOUNT

41 CODE

VALUE CODES AMOUNT

VALUE CODES AMOUNT

a b c d 42 REV. CD.


43 DESCRIPTION

45 SERV. DATE

46 SERV. UNITS

47 TOTAL CHARGES


49

1

1

2

2

3

3

4

4

5

5

6

6

7

7

8

8

9

9

10

10

11

11

12

12

13

13

14

14

15

15

16

16

17

17

18

18

19

19

20

20

21

21 22

22

PAGE

23

OF

CREATION DATE

50 PAYER NAME

52 REL. INFO

51 HEALTH PLAN ID

53 ASG. BEN.

TOTALS

23

55 EST. AMOUNT DUE

54 PRIOR PAYMENTS

56 NPI

A

57

A

B

OTHER

B

PRV ID

C

C

58 INSURED’S NAME



61 GROUP NAME

A

A

B

B

C

C

65 EMPLOYER NAME



A

B

B

C

C

66 DX

67 I

A J


B K a

b

C L


b.


e.

c

D M


E N 75

72 ECI

F O a 76 ATTENDING

G P b NPI

LAST c.


d.


77 OPERATING

81CC a

UB-04 CMS-1450

APPROVED OMB NO.

78 OTHER

b

LAST

c

79 OTHER

d

LAST

68

73

QUAL FIRST

NPI

LAST 80 REMARKS

H Q c QUAL FIRST

NPI

QUAL FIRST

NPI

QUAL FIRST


128 Chapter 6

SUMMARY The knowledge necessary to pay workers’ compensation medical bills includes an understanding of state fee schedules, ICD9 codes, CPT codes, and medical terminology. When paying a medical bill, you have to know what each individual state allows for all the different medical procedures. ICD9 code and CPT code knowledge is essential in order to be able to understand the diagnosis and treatment given to the injured worker and verify that the injury and treatment are related to the workers’ compensation injury. Proper completion and understanding of the billing forms—the CMS-1500 and UB-04 forms—is essential to the handling of a workers’ compensation claim. The forms must be complete and contain all the information necessary to get the bill paid promptly and correctly. A workable knowledge of medical terminology and medical abbreviations will speed up the worker’s ability to recognize and identify the terminology used in the medical field. All of the above components are what it takes to properly handle the workers’ compensation medical bill payment process.

CHAPTER REVIEW Vocabulary Define the following terms. 1. usual and customary

2. ICD9 CM codes

3. CPT codes

4. modifier

5. bilateral

6. suffixes


129

7. CMS-1500 form

8. UB-04 form

Short Answer Insert the correct word to complete the following questions. 9. Name two states that allow workers’ compensation payments to be made at usual and customary rates.

10. How long do you have to pay a medical bill in the state of Tennessee?

11. What is the description of CPT code 99201?

12. What is the definition of CPT code 80100?

13. ICD9 code 807.0 is a diagnosis for what?

14. What is the meaning of the word part “card”?

15. What is the meaning of the word part “peri”?

16. What are the meanings of the following suffixes? -sect -tripsy -ectomy 17. Give the definitions of the following abbreviations used to identify body systems: WBC ABD Jt LBP M

130 Chapter 6 18. What information goes into the following blocks on the CMS-1500 form? Block 02 Block 14 Block 24A Block 24E Block 31


131

CARRIER


PICA

MEDICARE

MEDICAID

(Medicare #)

(Medicaid #)







FECA BLK LUNG (SSN)


SEX M


F


CITY

STATE

Child

Spouse

(


Other

8. PATIENT STATUS

STATE

CITY

Single

Married

Other

Employed

Full-Time Student

Part-Time Student


ZIP CODE


ZIP CODE

)


(

)








b. AUTO ACCIDENT?

SEX

PLACE (State)

c. OTHER ACCIDENT?






NO




F


NO

YES

F

M c. EMPLOYER’S NAME OR SCHOOL NAME

SEX M

NO

YES


1.

SIGNED




17a. 17b. NPI


20. OUTSIDE LAB? YES

21. DIAGNOSIS OR NATURE OF ILLNESS OR INJURY (Relate Items 1, 2, 3 or 4 to Item 24E by Line) 1.

$ CHARGES NO


3.

MM


YY




F.

H.

G.

$ CHARGES

I.



DAYS OR UNITS

1

NPI

2

NPI

3

NPI

4

NPI

5

NPI

6

NPI


SSN EIN

26. PATIENT ’S ACCOUNT NO.




SIGNED

DATE


a.


NPI

b.

NO

28. TOTAL CHARGE $

29. AMOUNT PAID


a.

30. BALANCE DUE

$

NPI

$

(

)

b.



23. PRIOR AUTHORIZATION NUMBER 2. 24. A.

132 Chapter 6 19. What information goes into the following blocks on the UB-04 form? Block 01 Block 04 Block 05 Block 12 Block 17 Block 42

133


1

4


2

6

5 FED. TAX NO.

8 PATIENT NAME

9 PATIENT ADDRESS

a

10 BIRTHDATE

11 SEX


12

DATE

a c




18

7


b

b

TYPE OF BILL

19

20



21

35 CODE

25

26

27

36 CODE


d 28

e

29 ACDT 30 STATE

37


a

a

b

b

38

39 CODE

40 CODE

VALUE CODES AMOUNT

41 CODE

VALUE CODES AMOUNT

VALUE CODES AMOUNT

a b c d 42 REV. CD.


43 DESCRIPTION

45 SERV. DATE

46 SERV. UNITS

47 TOTAL CHARGES


49

1

1

2

2

3

3

4

4

5

5

6

6

7

7

8

8

9

9

10

10

11

11

12

12

13

13

14

14

15

15

16

16

17

17

18

18

19

19

20

20

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Chapter 7 Payment of Workers’ Compensation Medical Bills KEY TERMS bill payer bill payment software system consultations down coded duplicate bill

evaluation and management (E/M) explanation of benefits/explanation of review (EOB/EOR) federal tax ID number medical reports

negotiated discounts preferred provider organization (PPO) network prognosis reconsideration/appeal

LEARNING OBJECTIVES After completion of this chapter the learner should be able to: 1. Understand the bill payment process. 2. Recognize the importance of medical reports. 3. Understand evaluation and management codes.

4. Read and understand an explanation of benefits/review. 5. Describe the reconsideration process.

INTRODUCTION In this chapter we will learn the basics of workers’ compensation medical bill payment. The areas we will cover are the role of the bill payer and the specialized software that is available to assist the bill payer. We will review the evaluation and management codes in detail and learn the components of the codes. We will also look at the proper documentation necessary to get a bill properly paid, along with the different types of discounts that can be taken on a medical bill, such as PPO network discounts, fee schedule reductions, and negotiated discounts. We will review how to handle a request from a physician to have additional payment made on a bill and identify the circumstances when additional payment can (and cannot) be made. When you are through with this chapter you should have a basic understanding of how medical bill payment occurs in an insurance company’s bill paying department.

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BILL PAYMENT DEPARTMENT Generally, insurance companies have a separate department dedicated to the payment of injured workers’ medical expenses. The department is set up with various levels of job responsibilities, depending on the workflow of the department and the experience level of the employees. Following is a typical setup for a bill review department: • Clerical personnel: Receive the medical bills from the mailroom, count them, date stamp them, and sort them. This position is typically an entry-level one and often is the starting point for a new employee to learn the bill payment process. • Data entry personnel: These workers enter the data from medical bills into the computer system. When data is entered, the information should be validated as to details like proper claim number, patient name, physician name, and location of accident. A worker in this position could also identify duplicate bills and send a request to the provider if additional information is needed before processing a bill. This is the next level of experience necessary to advance in a bill payment department. It requires some worker knowledge of the claims system and bill payment system. • Bill payer personnel: Bill payers process bills for payment. It is the responsibility of the bill payer to verify that the treatment matches the workers’ compensation injury; that the treatment was authorized; if necessary, verify that the bill is paid according to the proper state fee schedule; review any medical records; and determine if the bill is appropriate and ready for payment. This job generally requires someone that is trained and experienced in medical bill payment. • Senior bill payer personnel: Senior bill payers are generally the individuals that handle complex bills, questionable bills, and payments that are being disputed by the provider. Someone in this position would also deal with the different providers concerning payment disputes. This position would be held by the most experienced bill payer—someone who would have an in-depth understanding of all aspects of coding, billing practices, and claims functions.

CASE STUDY 7–1 1. Sally is applying for a job at a local insurance company in the bill payment department. Sally is just out of school and has no knowledge of workers’ compensation billing practices. What job would you think Sally would be suited for in the bill payment department?

2. John is applying for a job at a workers’ compensation insurance company in their bill payment department. John has three years of bill payment experience at another insurance company and has a good general knowledge of bill payment. What job do you think John would be suited for in the bill payment department?

THE BILL PAYER bill payer Individual that reviews and pays medical bills.

Paying a workers’ compensation bill can be a complicated process. The bill payer (the person that pays the workers’ compensation medical bills) must have a good working knowledge of the state fee schedule, if there is one for the particular state

Payment of Workers’ Compensation Medical Bills

bill payment software system Computer software used to assist with proper bill payments.

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in which the bill is being paid; have a comprehensive understanding of CPT codes; understand medical terminology and abbreviations; and know what an ICD9 code means. If a bill payment software system (computer software used to help pay bills properly) is used to assist in the payment of medical bills, the bill payer must have a complete knowledge of how the system works. Most insurance companies use some type of computer software to assist in the payment of medical bills. The bill payment software has the various state fee schedules programmed into it and some systems can also have added features such as the PPO network information and CPT and ICD9 code descriptions. The bill payment software system may also be the system used to print out the explanation of benefits that is sent to the provider to explain the payment made. There are numerous bill payment software systems on the market and depending on the software the bill payer is using, some or all of these feature may be available. The software helps with the bill payment but the bill payer still needs a thorough knowledge of how to pay bills. She uses the software to help with the payment of medical bills and speed up the process. The bill payer should have an aptitude for math, because calculations are an important part of the bill payment process. The person paying medical bills must be able to give attention to detail and handle confidential information, because medical bill payers typically have access to a large amount of personal information concerning the injured worker. The bill payer must also have a desire to provide good customer service to the physician as well as to the injured worker. Proper and prompt payment of the bill will allow for the physician to get her money timely and for the injured worker to get the medical treatment needed to return to work. In some states, the state fee schedule mandates a timeline in which the bill must be paid. Not paying the bill within this timeline may cause the insurance company to owe a penalty for late payment of the bill.

BILL PAYMENT PROCESS medical reports Reports sent by physicians or hospitals that describe the treatment being billed for.

duplicate bill Bill that has previously been sent and/or paid.

A medical bill, along with any necessary medical reports (reports from physicians stating treatment provided) and/or notes, can come into the possession of an insurance company in one of several different ways. The bill can be mailed to the insurance company, it can be electronically sent in, it can be faxed, or it can scanned and sent in. All of these types of transmission are acceptable ways to submit a medical bill. Physicians and other health care providers generally bill on the HCFA-1500 form, and facilities bill on the UB-04 form. Once the bill is received it is necessary to do a complete review of the bill and any attached documents. The major areas of review are: • Do the name, address, and Social Security number of the injured worker match the information on the bill? • Does the injury code (ICD9 code) match the injury reported to the insurance company? • Does the date of service fall after the date of injury? • If the treatment was required to be precerted before it was performed, was it precerted? • Was the form completely and correctly completed? • Is this a duplicate bill (one that was previously submitted and paid)? • Are the charges on the bill properly totaled? • Is the treatment appropriate for the workers’ compensation injury? • Does the body part treated match the injured body part identified on the first report of injury?

138 Chapter 7 If the answer to any of the above questions is no, then it might be necessary to return the bill for additional information before the payment process can begin. If all the necessary information is received, the payment process can begin. Remember that regardless of what is billed, in states where there is a workers’ compensation fee schedule, only the amount allowed by the fee schedule will be paid.

CASE STUDY 7–2 1. An insurance company receives an office visit bill for a broken toe for Mary Vigen that occurred on 8/8/08. Mary had an injury to her eye while at work on 8/11/08. Would this bill be paid under workers’ compensation?

2. A bill that does not have an ICD9 code on it is received for payment. The bill is for $50. Will this bill be paid by the insurance company?

3. A bill that was paid last month is received for payment. Will this bill be paid?

Documentation The bill payer must read all of the attached documentation to be sure that the bill is correctly coded. There should be documentation for everything that is being billed. For example, if there is a charge on the bill for an injection, the medical report should state that an injection was given. The report should be typed, if possible, and at a minimum include: • • • •

prognosis Prediction of outcome.

Chief complaint of the injured worker History and examination results Physician’s diagnosis of the patient Physician’s plan for future treatment

Medical reports are an important part of the bill payment process because they verify what treatment was given, the prognosis (a prediction of how the patient will do), what further treatment is necessary, and the length of time the injured worker will be off of work. All of this is valuable information to the workers’ compensation insurance company. This will establish for them what the estimated cost of the injury will be and how long they will have to cover medical care and pay indemnity benefits. The report could also detail if the injured worker had any previous injuries or illness that could complicate her recovery. The medical report and any other documentation are critical in determining if all or part of the bill will be paid by the insurance company.


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CASE STUDY 7–3 1. A medical report is received from the treating physician. The report gives the name of the patient and date of injury, and states that the patient will return in two weeks. Is this a complete medical report? Explain why it is or is not a complete report.

2. A medical report is received from the treating physician. The report gives the name of the patient, date of injury, and treatment given, and states that the injured worker should return in a month but is able to return to work. Is this a complete medical report? Explain why it is or is not a complete report.

CPT Codes The bill payer should verify that the correct CPT codes were used to bill the treatment and any modifiers, if necessary, are included on the bill. This is another reason that a bill payer must have a working knowledge of CPT codes. The bill payer should know what the CPT code represents and what the criteria are to bill with a particular CPT code. The CPT codes should align with the diagnosis code (ICD9); if the injury designated by the ICD9 code is, for example, for a stomach virus, and the CPT code is for a consultation, then a red flag should go up. A call or note to the physician’s office may be necessary to request clarification of why the treatment is being provided to the injured worker. There are occasions when a worker may have had a previous workers’ compensation injury that a physician treated, and when the worker returns to the physician for an illness or something else not work related, the physician’s office may send the bills to the workers’ compensation carrier because that is the only insurance listed in the patient’s file. Part of the job of the bill payer is to be certain that only bills relating to the workers’ compensation injury are paid. If a bill is erroneously paid that is not related to a workers’ compensation injury, then the money paid to the physician will have to be recovered from the physician.

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CASE STUDY 7–4 1. A bill is received for payment with an ICD9 code for injury to the left leg, which is the workers’ compensation injury. The physician bills with CPT codes for x-rays and office visit. Do you think this bill could be a workers’ compensation bill? Explain why or why not.

2. A bill is received for payment with an ICD9 code for head injury, which is an injury that occurred at work. The physician bills using CPT codes for office visit, x-rays, and a flu shot. Do you think this bill would be paid as a workers’ compensation bill? Explain why or why not.

PPO Network preferred provider organization (PPO) network Group of health care providers organized by an insurance company to provide medical care.

Before payment is made, the bill payer should determine if the particular provider is part of a preferred provider organization (PPO) network, and if so, if a discount is allowed off the bill. PPO contracts can be written in numerous ways; some contracts will allow for a flat percentage off either billed charges or fee schedule amounts. Other contracts can be written with a set amount for certain CPT codes. Another way contracts can be written is to give one percentage off services provided in the physician’s office and a different percentage off services provided in a hospital setting. The PPO contract can benefit both the physician and the insurance company. The physician gives the insurance company some type of discount off her charges, and the insurance company promises to send patients to the physician to help build her patient accounts. It is critical for bill payers to be able to read and understand PPO contracts in order to properly pay medical bills. A bill can be over- or underpaid if not paid precisely as the contract is written. If a bill is not properly paid, then it becomes necessary to either do a reconsideration of the bill and pay additional money or request a refund from the provider. Either process slows down the bill payment process and makes additional work for both the bill-paying operation and the physician’s office. Also, improper payment of the bill can affect the insurance company’s reputation, because it is a reflection of the type of customer service that an insurance company provides.


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Here are examples of bill payment scenarios:

1. A physician bills $100 for an office visit (CPT 99213); the fee schedule allows $50 for this CPT code. The provider is not part of a PPO network. The bill will be paid at $50, and not $100 as billed. 2. The physician bills $48 for an office visit (CPT 99212); the fee schedule allows $55 for this CPT code. The provider is not part of a PPO network. The bill will be paid at $48 as billed. 3. The physician bills $150 for initial hospital care (CPT 99221); the fee schedule allows for $90 and the provider is part of a PPO network that gives a 10 percent discount off fee schedule on hospital care. The bill will be paid as follows: $150.00 $ 90.00 $90.00 ($9.00) $81.00

billed amount fee schedule amount payment amount PPO discount (10 percent of $90) amount paid to physician

4. The physician bills $300 for an office consultation (CPT 99243); the fee schedule allows for $300 and the provider is part of a PPO network that gives a 15 percent discount off the billed amount. The bill would be paid as follows: $300.00 billed amount ($45.00) PPO discount (15 percent of $300.00) $255.00 amount paid to physician

CASE STUDY 7–5 1. A bill is received from Dr. James Black for $250 for an office visit. Dr. Black has a PPO contract with the insurance company for a 15 percent discount off fee schedule. The fee schedule allows $210 for this service. What would Dr. Black be paid?

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CASE STUDY 7–5 (continued) 2. Dr. Johnson bills for hospital care in the amount of $375. She is not part of a PPO network with the insurance company. The fee schedule allows $240 for this service. What would Dr. Johnson be paid?

3. A bill is received from Dr. Donohue for $110 for an office visit. Dr. Donohue has a PPO contract with the insurance company for 5 percent off billed charges, and the fee schedule allows $125 for this service. What would Dr. Donohue be paid?

EVALUATION AND MANAGEMENT evaluation and management (E/M) CPT codes used to bill for visits and/or consultations performed by a physician.

Evaluation and management (E/M) codes are some of the most common codes used and also some of the most difficult to interpret. Evaluation and management codes are divided into broad categories such as office visits, hospital visits, and consultations. Each of these categories is then divided into two or more subcategories. An example


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of this would be office visits, which are classified as “new patient” and “established patient.” The evaluation and management codes are further classified into levels of service. Levels of service seem to be the most problematic classification. There is a strict criterion for each level of service that must be met in order to bill with a specific code. Levels of service are determined by three main features: • History • Examination • Medical decision making The more complicated each of these three areas is, the higher the level of service will be. Table 7–1 shows the different levels for each of the categories. The lower levels of service are generally used for minor problems that require the physician to spend no more than five or ten minutes with the patient. As the severity of the problem presented and/or the time the physician must spend with the patient increases, the CPT code used will increase to a higher level. New patient E/M codes for treatment in an office range from 99201–99205. The proper code would be determined using the criteria from Table 7–1. Table 7–2 shows how to use the criteria from Table 7–1 to determine which codes to use for new patient levels of service. Three of the three key components listed must be present in order to use the CPT code.

TABLE 7–1 Level of Service Table History

Examination

Medical Decision Making

None

None

None

Problem-focused

Problem-focused

Straightforward

Expanded problem-focused


Low complexity

Detailed

Detailed

Moderate complexity

Comprehensive

Comprehensive

High complexity

TABLE 7–2

New Patient Level of Service CPT Code Table History

Examination


99201

Problem-focused

Problem-focused

Straightforward

99202



Straightforward

99203

Detailed

Detailed

Low complexity

99204

Comprehensive

Comprehensive

Moderate complexity

99205

Comprehensive

Comprehensive

High complexity

144 Chapter 7 Established patient E/M codes for treatment in an office range from 99211–99215. The proper code would be determined using the criteria from Table 7–1. Table 7–3 shows how to use the criteria from Table 7–1 to determine which codes to use for established patient levels of service. Two of the three key components listed must be present in order to use the CPT code. Hospital inpatient E/M codes for initial treatment in a hospital range from 99221–99223. The proper code would be determined using the criteria from Table 7–1. Table 7–4 shows how to use the criteria from Table 7–1 to determine which codes to use for hospital in-patient levels of service. All of the three key components listed must be present in order to use the CPT code. Hospital subsequent treatment E/M codes range from 99231–99233. The proper code would be determined using the criteria from Table 7–1. Table 7–5 shows how to use the criteria from Table 7–1 to determine which codes to use for hospital subsequent treatment levels of service. Two of the three key components listed must be present in order to use the CPT code.

Consultations consultations Type of services provided by a physician whose opinion or advice regarding evaluation and/or management of a specific problem is requested by another physician or another appropriate source.

Consultations are different from ordinary care. A consultation, as defined by the CPT coding manual, is “. . . a type of service provided by a physician whose opinion or advice regarding evaluation and/or management of a specific problem is requested by another physician or other appropriate source.” A consultation usually carries a higher

TABLE 7–3

Established Patient Level of Service CPT Code Table History

Examination


99211

None

None

None

99212

Problem-focused

Problem-focused

Straightforward

99213

Expanded Problem-focused


Low complexity

99214

Detailed

Detailed

Moderate complexity

99215

Comprehensive

Comprehensive

High complexity

TABLE 7–4

Hospital Inpatient Level of Service CPT Code Table History

Examination


99221

Detailed or comprehensive

Detailed or comprehensive

Straightforward or low complexity

99222

Comprehensive

Comprehensive

Moderate complexity

99223

Comprehensive

Comprehensive

High complexity


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fee and should only be used when a true opinion is given and the physician is not the treating physician. Many times treatment is incorrectly billed as a consultation when it is actually not a true consultation but rather a high level of service. Again, incorrect coding can delay payment of the medical bill. Office consultation E/M codes for treatment in the office for new or established patients range from 99241–99245. The proper code would be determined using the criteria from Table 7–1. Table 7–6 shows how to use the criteria from Table 7–1 to determine which codes to use for office consultation levels of service. All of the three key components listed must be present in order to use the CPT code. Initial inpatient consultation E/M codes for treatment in a hospital for new or established patients range from 99251–99255. The proper code would be determined using the criteria from Table 7–1. Table 7–7 shows how to use the criteria from Table 7–1 to determine which codes to use for initial inpatient levels of service. All of the three key components listed must be present in order to use the CPT code. Follow-up inpatient consultation E/M codes for treatment of established patients in a hospital range from 99261–99263. The proper code would be determined using the criteria from Table 7–1. Table 7–8 shows how to use the criteria from Table 7–1 to determine which codes to use for follow-up inpatient levels of service. Two of the three key components listed must be present in order to use the CPT code.

TABLE 7–5

Hospital Subsequent Treatment Level of Service CPT Code Table History

Examination


99231

Problem-focused

Problem-focused


99232



Moderate complexity

99233

Detailed

Detailed

High complexity

TABLE 7–6

Office Consultation Level of Service CPT Code Table History

Examination


99241

Problem-focused

Problem-focused

Straightforward

99242



Straightforward

99243

Detailed

Detailed

Low complexity

99244

Comprehensive

Comprehensive

Moderate complexity

99245

Comprehensive

Comprehensive

High complexity


Initial Inpatient Level of Service CPT Code Table History

Examination


99251

Problem-focused

Problem-focused

Straightforward

99252



Straightforward

99253

Detailed

Detailed

Low complexity

99254

Comprehensive

Comprehensive

Moderate complexity

99255

Comprehensive

Comprehensive

High complexity

TABLE 7–8

Follow-Up Inpatient Level of Service CPT Code Table History

Examination


99261

Problem-focused

Problem-focused


99262



Moderate complexity

99263

Detailed

Detailed

High complexity

It is critical that the person approving the medical bill for payment be able to read and understand the medical report that is sent with the bill. From the report the bill payer will be able to ascertain the level of service that was given and determine if the bill is properly coded before payment is made. It will also let the payer know that all the treatment that was billed has been performed.


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CASE STUDY 7–6 1. Patient A was seen by a physician in her office. The physician did a focused history and a detailed examination and had a low-complexity medical decision-making process. What code would be assigned to this visit?

2. Patient B was seen as an inpatient in the hospital. The physician did a detailed history and a comprehensive examination and had a low-complexity decisionmaking process. What code would be assigned to this visit?

3. Patient B was seen subsequently by the physician in the hospital. On her second visit the physician did a detailed history and a detailed examination and had a high-complexity medical decision making process. What code would be assigned to this visit?

4. Patient C had an office consultation. The physician did a detailed history and detailed exam and had a straightforward medical decision making process. What code would be assigned to this visit?

NEGOTIATED DISCOUNT

negotiated discount Agreed-upon discounts.

There are occasions when an insurance company, or an outside vendor hired by an insurance company, will approach a physician and see if she is willing to give a negotiated discount on the bill. Generally, the insurance company will not try to negotiate a discount with any physician that is part of a PPO network since a discount has already been agreed on with the PPO contract. The main reason for a physician to give a negotiated discount to an insurance company is to get their bill paid in a shorter period of time.

CASE STUDY 7–7 1. Dr. Jack agrees on 1/1/08 to a negotiated discount of 15 percent off her bill of $565; the insurance company agrees to pay the bill within 15 days because the physician agreed to the discount. What amount will the physician be paid? By what date should the bill be paid to meet the agreement? 2. Dr. Lynn agrees on 6/30/08 to a negotiated discount of 22 percent off her bill of $1157; the insurance company agrees to pay the bill within 10 days because the physician agreed to the discount. What amount will the physician be paid? What date should the bill be paid by to meet the agreement?

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EXPLANATION OF BENEFITS/EXPLANATION OF REVIEW explanation of benefits/explanation of review (EOB/EOR) Document that gives details of the payment made by the insurance company.

Once the payment is approved and the check is written, the payment is sent to the provider along with an explanation of benefits/explanation of review (EOB/EOR). It is critical that the EOB/EOR detail the following information: • • • • • •

Amount billed PPO reduction Fee schedule reduction Negotiated discount reduction Service denied Any other deductions due to lack of documentation or incorrect coding • Final payment amount This is the only way that a provider will know why the payment amount is what it is. It can also be used to notify the provider of any missing or incorrect information that they will need to provide in order to receive additional monies. The EOB/EOR has a variety of information on it in addition to the payment information. The payment information will usually include: • • • • • • • •

Date of service CPT code Description of CPT code Charges Fee schedule reduction PPO reduction Any other type of reduction Amount paid

Most EOB/EORs will include the following information:

federal tax ID number Identifying number of the provider for tax purposes.

Injured worker’s name Injured worker’s Social Security number Date of injury Physician’s name and address Claim number Date insurance company received bill Date insurance company paid bill ICD9 codes attached to bill Physician’s federal tax ID number (identifying number of the physician for tax purposes) or Social Security number • Notes explaining why there are reductions to the billed charges • Name, address, and telephone number of the insurance company • • • • • • • • •

In Figure 7–1, the provider billed with a 99215 code, which is the highest level of service at $176.00. In the state where this bill was paid, the fee schedule value for this code is $166.00, so a $10.00 reduction was taken. Also, this provider is a part of a PPO network with a 10 percent discount; therefore an additional $16.60 (10 percent of $166.00) was taken, making the total payment to the physician $149.40.


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Explanation of Review ABC Insurance Company 1 Main Street Anywhere, USA Provider: Dr. Jane Doe 1122 South St. Anywhere, USA

Provider Tax ID: 99-9999999

Page: 1 of 1

Adjuster: Jones

Claim No.: ABC123

Account No.: 577890

Claimant Name: B. Jack

Reviewer: George

Social Security No.: 123-45-6789

Date Bill Received: 4/5/07

Date of Injury: 12/01/06

ICD9 Codes: 887.3

Date 02/28/07

Code 99215

Code Description Office Visit

Totals

Mod.

Charge $176.00

Bill Review Reduction $10.00

$176.00

$10.00

Reduction codes: 22—above state fee schedule allowance 48—PPO reduction

Any questions should be directed to: ABC Insurance Company (800) 999-9999

Figure 7–1 Sample EOB/EOR.

PPO Reduction 16.00

Other Reduction

Allowed $149.40

$149.40

Reduction Code 22; 48

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Explanation of Review ABC Insurance Company 1 Main Street Anywhere, USA Provider: Dr. R.J. Jones 1234 First Street Anywhere, USA


Page: 1 of 1

Adjuster: Smith

Claim No.: 123456

Account No.: 987654

Claimant Name: S. Barber

Reviewer: Angie


Date Bill Received: 4/1/07 4/1/07


ICD9 Codes: 872.2

Date 02/28/07 02/28/07

Code 99214


Totals

Mod.

Charge $300.00


$300.00

$195.00

Reduction codes: 22 22—above – above state fee schedule allowance


Figure 7–2 Sample EOB/EOR.

PPO ppo Reduction

Other Reduction

Allowed $105.00

$105.00

Reduction Code 22


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Figure 7–2 shows that the provider billed with a 99214 code, representing the highest level of service, at $300.00. In the state where this bill was paid, the fee schedule value for this code is $105.00, so a $195.00 reduction was taken. Also, this provider is not part of a PPO network, so there was no PPO discount taken. The total payment to the physician was $105.00.

CASE STUDY 7–8 1. Complete the highlighted line details on the EOB form in Figure 7–3 based on the following fact pattern: Dr. Jane Doe billed with a 99213 CPT code for $185.00. In the state where this bill was paid, the fee schedule value for this code is $125.00. This provider is part of a PPO network and has agreed to a 5 percent discount off the fee schedule. 2. Complete the highlighted line details on the EOB in Figure 7–4 based on the following fact pattern: Dr. Jane Doe billed with a 99242 CPT code for $388.00. In the state where this bill was paid, the fee schedule value for this code is $390.00. This provider is not part of a PPO network but did agree to a negotiated discount of 18 percent.

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CASE STUDY 7–8 (continued) Explanation of Review ABC Insurance Company 1 Main Street Anywhere, USA Provider: Dr. Jane Doe 1122 South St. Anywhere, USA


Page: 1 of 1

Adjuster: Jones

Claim No.: ABC123

Account No.: 577890


Reviewer: George




ICD9 Codes: 887.3

Date 02/28/07

Code 99213


Totals Reason for reductions:


Figure 7–3 EOB (highlighted).

Mod.

Charge

Bill Review Reduction

PPO Reduction

Other Reduction

Allowed

Reduction Code


153

Explanation of Review ABC Insurance Company 1 Main Street Anywhere, USA Provider: Dr. Jane Doe 1122 South St. Anywhere, USA


Page: 1 of 1

Adjuster: Jones

Claim No.: ABC123

Account No.: 577890


Reviewer: George




ICD9 Codes: 887.3

Date 02/28/07

Code 99213

Code Description Mod. Office Consultation

Totals Reason for reductions:


Figure 7–4 EOB (highlighted).

Charge

Bill Review Reduction

PPO Reduction

Other Reduction

Allowed

Reduction Code

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RECONSIDERATION/APPEAL reconsideration/appeal Request to review a payment for additional money.

down coded Paid at a lower level of service than billed.

A reconsideration/appeal is a request to the insurer to review a payment to determine if additional money is due. When a payment is received and the amount paid is less than the provider feels is due, the provider can contact the insurance company in writing to ask it to reconsider the payment of the bill. Some state fee schedules set a time limit on applications for reconsideration, so it is important for the provider to check the fee schedule guidelines for the appropriate state’s rules and regulations. Not filing in a timely manner can cause the provider not to be able to request a reconsideration of the medical payment made to them. Some of the most common reasons for an appeal are: • • • • •

Bill did not have necessary accompanying documentation. Incorrect CPT code was used for treatment performed. Service was not shown to be related to workers’ compensation injury. Services were down coded (paid at a lower level of service than billed). Not all of the treatment was properly reported in the medical report.

If the insurance company determines that the bill was not properly paid, it will issue the provider a check for the additional money along with an additional EOB/EOR explaining the additional payment. Figure 7–5 shows an EOB that denies payment altogether. The reason for the denial of payment, as stated on the EOB, is that the provider requested a reconsideration of the payment made to her but did not do it within the 60-days that the fee schedule mandated, so no reconsideration was done. The EOB in Figure 7–6 is also for a reconsideration of the original payment. The physician billed with a CPT code of 99214, which is a high level of service, but the supporting documentation did not support this level of service. Figure 7–7 shows how a payment is made when there has been a payment made to the provider and then an additional payment is made for the same charges. The physician originally billed with a 99215 code but was paid at a 99212 level because supporting documentation was not sent with the bill. At a later date the physician sent the necessary documentation, which showed the service done was at a 99215 level of service.

CASE STUDY 7–9 1. Dr. Jane Doe billed with a 99245 CPT code for $575.00. In the state where this bill was paid, the fee schedule value for this code is $525.00. This provider is not part of a PPO network. When the original bill was sent in there were no medical records attached and the bill was paid at a 99242 code, which had a fee schedule value of $350.00. The physician’s office resubmitted the bill with the appropriate medical reports showing that the 99245 code was correct. What additional payment will the physician receive?

2. Dr. Jane Doe billed with a 99204 CPT code for $275.00. In the state where this bill was paid, the fee schedule value for this code is $300.00. The provider is part of a PPO network and has agreed to a 10 percent discount off the fee schedule. When the original bill was sent in, there were no medical records attached and the bill was paid at a 99202 code, which had a fee schedule value of $100.00. The physician’s office resubmitted the bill with the appropriate medical reports showing that the 99204 code was correct. What additional payment will be physician receive?


155

Explanation of Review ABC Insurance Company 1 Main Street Anywhere, USA Provider: Joseph Mark, M. D. 998 North Street Anywhere, USA


Page: 1 of 1

Adjuster: Barber

Claim No.: XYZ111

Account No.: BOR266

Claimant Name: A. Showers

Reviewer: Doris




ICD9 Codes: 884.2

Date 02/16/07

Code 99215


Mod.

Totals Additional Amount Allowed

Charge $200.00


$200.00

$90.00

PPO Reduction

Other Reduction

Allowed $110.00

$110.00 0.00

Reduction Code

42

Reduction codes: 42—Request for reconsideration is past the allowed 60-day limit according to state fee schedule

Any questions should be directed to: ABC Insurance Company (800) 999-9999 Figure 7–5 Sample reconsideration EOB/EOR.

156 Chapter 7

Explanation of Review ABC Insurance Company 1 Main Street Anywhere, USA Provider: Dr. Mary Jones 5555 West Avenue Anywhere, USA


Page: 1 of 1

Adjuster: Moore

Claim No.: 1AB56

Account No.: XX444

Claimant Name: L. Cush

Reviewer: Tina




ICD9 Codes: 884.2

Date 02/16/07

Code 99214


Mod.


Charge $250.00


$250.00

$100.00

PPO Reduction

Other Reduction

Allowed $150.00

Reduction Code 18

$150.00 0.00

32

Reduction codes: 18—Documentation suggests this should be billed as a 99213 code 32—After review, additional documentation did not quality for a 99214 level of service


Figure 7–6 Sample reconsideration EOB/EOR.


157

Explanation of Review ABC Insurance Company 1 Main Street Anywhere, USA Provider: Dr. Mary Jones 5555 West Avenue Anywhere, USA


Page: 1 of 1

Adjuster: Moore

Claim No.: 1AB56

Account No.: XX444

Claimant Name: L. Cush

Reviewer: Tina




ICD9 Codes: 884.2

Date 02/16/07

Code 99215


Mod.


Charge $400.00


$400.00

$300.00

PPO Reduction

Other Reduction

Allowed $100.00

Reduction Code 18

$100.00 $300.00

44

Reduction codes: 18—Documentation suggests this should be billed as a 99212 code 44—After review, additional documentation suggests payment should be made at 99215 level of service


Figure 7–7 Sample reconsideration EOB/EOR.

158 Chapter 7

SUMMARY In this chapter we have learned what is necessary to pay medical bills. Medical bill payment is a very important part of the claims process because medical bill payout represents a large portion of the money that is paid out by the insurance company. Accurate and prompt bill payment is critical to an insurance company’s ability to provide good claims handling. In this chapter we learned about the following areas of bill payment: • • • • • • • • •

Responsibilities of a bill payer Bill payment software Importance of medical reports Understanding of evaluation and management (E/M) codes Preferred provider organization (PPO) networks How to properly pay a bill Negotiated discounts Explanation of benefits/explanation of review (EOB/EOR) Reconsiderations/appeals

A basic understanding of all of these areas is necessary to be a competent bill payer. Without understanding all of these areas, one cannot pay bills correctly or provide adequate customer service to the physician. Only with an understanding of these areas will you be able to answer questions about the payment of a bill by a physician or her office staff.

CHAPTER REVIEW True or False Identify the following statements as either true or false. 1. Bill payment software will pay medical bills without the bill payer having to have a working knowledge of how to pay a bill. True

False

2. Most medical bills need a medical report to be submitted with them in order for the insurer to properly pay the bill. True

False

3. A medical report needs to have the diagnosis listed on the report. True

False

4. An EOB/EOR details the payment made by the insurance company. True

False


159

5. A reconsideration occurs when the physician doesn’t know what treatment to use for the injury. True

False

6. A negotiated discount is generally sought only for providers that are not part of a PPO network. True

False

7. Certain specified criteria must be met in order to bill with a high level of service. True

False

8. PPO discounts are always 10 percent off the billed charges. True

False

9. The EOB/EOR does not need the CPT code listed on it. True

False

10. Consultations can be billed for any type of service provided by the physician. True

False

Coding Determine what level of E/M code should be used for the following treatments. 11. Service rendered for this new patient in the office is as follows: Detailed history Detailed examination Low complexity of medical decision making Correct code: 12. Service rendered for this established patient in the office is as follows: Problem-focused history Problem-focused examination Straightforward medical decision making Correct code:

160 Chapter 7 13. Service provided was an office consultation as follows: Comprehensive history Comprehensive examination Moderate-complexity medical decision making Correct code: 14. Service provided was for an inpatient hospital initial treatment as follows: Detailed or comprehensive history Detailed or comprehensive examination Straightforward or low-complexity medical decision making Correct code: 15. Service provided was for a subsequent hospital treatment as follows: Expanded problem-focused history Expanded problem-focused examination Moderate-complexity medical decision making Correct code:

Calculations Correctly calculate payment on the following bills. 16. Physician bills $175.00 for a 99213 code; fee schedule allows $165.00. Physician is part of a PPO network that allows 15 percent off fee schedule amount.

Correct payment:


161

17. Physician bills $325.00 for a 99222 code; fee schedule allows $350.00. Physician is not part of a PPO network.

Correct payment: 18. Physician bills $750.00 for a 99233 code; fee schedule allows $750.00. Physician is not part of a PPO network. Physician agrees to a 20 percent negotiated discount off billed charges.

Correct payment: 19. Physician bills $410.00 for a 99242 consultation code. Physician is not part of a PPO network. Documentation does not show a consultation was done.

Correct payment:

162 Chapter 7 20. Physician bills $275.00 for a 99214 code; fee schedule allows $275.00. Physician is part of a PPO network that allows 15 percent off inpatient charges.

Correct payment:

Coding List the three levels of service necessary to qualify for the following codes:

21. 99223

22. 99214

23. 99233


24. 99202

25. 99213

26. 99231

163


Glossary

assigned-risk pool policies Type of insurance policy high-risk companies have to obtain in order to have workers’ compensation insurance. asterisked procedures setting.

Minor surgical procedures that are usually done in an office

audit Examination of employer records and other business documents to see if the proper premium has been paid at the end of the policy year. audit premium adjustment on the results of an audit.

An adjustment to an insurance premium that is based

audit worksheet Worksheet prepared by a premium auditor showing how the auditor calculated the payroll numbers that are used to determine the audited premium. auditor Professional who verifies that a policy is appropriately priced. bilateral Two-sided. bill payer Individual that reviews and pays medical bills. bill payment software system payments. certificate of insurance

Computer software used to assist with proper bill

Document that provides evidence of insurance.

claimant Injured worker. claims adjuster

Individual that is responsible for managing a claim.

claims department workers’ claims. claims evaluation begin. claims file

Department of an insurance company that handles injured Process of determining what is owed and when payment should

Location where all pertinent claim information is stored.

claims investigation Process of gathering all information to determine if there is coverage for an accident. claims resolution

To bring a claim to a conclusion and close the file.

classification codes late premium.

Code associated with the risk of the workplace; used to calcu-

CMS-1500 (HCFA) form treatment.

Form used by providers (other than hospitals) to bill for

competitive state fund State fund that competes with other insurance companies in the state for business.

165

166 Glossary consultations Type of services provided by a physician whose opinion or advice regarding evaluation and/or management of a specific problem is requested by another physician or another appropriate source. current procedural terminology (CPT) codes surgical, and diagnostic procedures.

Code set that identifies medical,

death benefits Benefits paid to the surviving dependents of a worker that dies due to an on-the-job injury. down coded

Pay at a lower level of service than billed.

duplicate bill

Bill that has previously been sent and/or paid.

elective workers’ compensation Coverage provided in those states that do not require the employer to carry workers’ compensation insurance. electronic filing

Submitting first report of injury online.

endorsement Written agreement made to the original policy during the policy year that makes changes to the original policy. ergonomic Study of the interaction of a person with a machine, desk, workstation, etc. evaluation and management (E/M) CPT codes used to bill for visits and/or consultations performed by a physician. exclusive state fund a state.

State fund that is the only source of workers’ compensation in

explanation of benefits/explanation of review (EOB/EOR) details of the payment made by the insurance company.

Document that gives

expense constant Charge that covers the expense of issuing a policy. experience modification factor Factor calculated by NCCI that compares the experience of a specific company to the average losses of similar companies. federal tax ID number Identifying number of the provider for tax purposes. first report of injury Form used to notify insurance company of a workers’ compensation injury. fraud

Deception related to injury, payroll, etc.

indemnity benefits Benefits paid to injured worker to cover all or part of wages lost due to on-the-job injury. independent medical examination (IME) Medical evaluation performed by a physician that is not involved in the patient’s care. injured employee employment. insurance loss.

Individual that is injured on the job in the course and scope of his

A contract where one party guarantees to protect another party against

insurance policy

Promise of security if someone gets injured.

International Classification of Diseases, 9th Revision, Clinical Modification (ICD9 CM) codes Numeric codes used to describe symptoms, diseases, conditions, and other reasons for seeking medical care. loss prevention Preventing or reducing workplace accidents. lost wages Money the injured worker loses due to the on-the-job injury.

Glossary

mandatory workers’ compensation requires employers to have.

167

Workers’ compensation insurance that a state

manual premium Workers’ compensation premium calculated by multiplying payroll by appropriate rates, before application of experience modifier, schedule credit, or premium discount. manual rate Rate per hundred dollars of payroll times the classification code. maximum medical improvement Condition that exists when an injured worker has reached the point that no more medical improvement is expected. medical benefits Benefits that an injured worker receives to cover any medical expense resulting from the on-the-job injury. medical case manager monitor medical care. medical reports being billed for.

Person that works with injured worker and physician to

Reports sent by physicians or hospitals that describe the treatment

mileage payments Benefit that reimburses an injured worker for miles driven to and from medical treatment. modifier Suffix to add to CPT code as an indicator that a service or procedure has been altered. National Council on Compensation Insurance (NCCI) Organization responsible in many states for determining proper workers’ compensation classifications, experience modification factors, and collecting. negotiated discounts Agreed-upon discounts. no fault

Provision of benefits regardless of who is responsible for a workplace injury.

occupational injury/illness

Injury or illness arising out of employment.

outsourced Describes a corporate function that is performed by people hired outside the company. overpayments Incorrect payments on a claim. payer One that pays benefits, such as an insurance company, self-insured group, or state fund. payroll Wages a company pays out as salary to employees. permanent disability

Permanent disability due to on-the-job injury.

policy Written contract between an insurance company and the company or individual that is insured; specifies risks covered and dates of coverage. policy effective date

The date that coverage begins under an insurance policy.

policy term Duration of an insurance policy. policyholder

Individual or company that purchases an insurance policy.

precerted Authorized medical treatment. premium The cost paid to an insurance company for insurance protection. prognosis Prediction of outcome. provider Individual, group, or facility that provides medical treatment.

168 Glossary preferred provider organization (PPO) network Group of health care providers organized by an insurance company to provide medical care. reconsideration/appeal

Request to review a payment for additional money.

recorded statement Statement taken from an injured worker and/or witnesses that is written down or electronically recorded. recovery department Department of an insurance company that focuses on recovering money paid out on a claim. rehabilitation benefits Benefits received by the injured worker to help him or her return to the job or find a new job that he or she can perform. reinsurance Insurance policy purchased by an insurance company to protect itself from large, unforeseen losses. remuneration

Payroll wages.

reserves Estimate of what a claim will cost. second injury fund Fund set up in some states to help pay the cost of a claim if the injured worker has a previous injury. self-insured Describes an employer that has set aside enough assets to cover workers’ compensation benefits for employees and so does not purchase a workers’ compensation policy. self-insured trust Group of self-insured employers that contribute premiums to the trust to cover the claims of an injured worker. second medical opinion (SMO) Examination by a second physician to determine medical condition of injured worker. settlement An agreed-on amount of money paid to an injured worker in order to close his or her claim. social insurance

Insurance program funded by the government.

spendable earnings

Workers’ earnings less withholdings.

state fee schedule Schedule determined by a state that lists the amount to be paid for each type of medical treatment. state fund Workers’ compensation insurance that is provided and administered by the individual states. subpoena Legal document requiring someone or something to appear in court and/ or provide evidence; the process of using a subpoena to compel these actions. suffixes

Groups of letters at the end of a word.

surveillance Observation. temporary disability

Condition of being unable to work for a set period of time.

third party Another person/company that could be financially responsible for all or part of the workers’ compensation accident. third-party recovery Another party that may be totally or partially responsible for the injury/accident and may be liable for some of the cost of the claim. UB-04 form Form used by hospitals to bill for treatment. underwriter Individual that prices an insurance policy and determines if the insurance company will accept the risk.

Glossary

169

underwriting The process performed by an underwriter in which all relevant information is looked at to determine if a policy should or should not be written by an insurance company and, if it is written, what the premium should be. usual and customary Amount that is commonly paid for a particular treatment. vocational rehabilitation worker gain employment.

Providing training in a specific trade to help injured

waiting period Time injured worker must be off of work before workers’ compensation indemnity benefits begin. workers’ compensation board/commission Entity responsible for administering the workers’ compensation laws within a state; also handles appeals and disputes. workers’ compensation insurance Insurance coverage, required by state and federal law, that provides benefits for workers who are injured on the job in the course and scope of their employment.


Index

A AASCIF, 10 Abbreviations, 113–116 Ability testing, 61 Academic testing, 61 Accidents, 98 Adjusters. See Claims adjusters Alabama, 94, 107 Alaska, 106 Alcohol abuse, 6, 80 American Association of State Compensation Insurance Funds (AASCIF), 10 American Medical Association, 108 Anesthesiology CPT codes, 108, 109 Appeals, 154–157 Arizona, 107 Arkansas, 46, 106 Assigned risk, 27 Asterisked procedures, 110 Attorneys, 76, 83, 100 Audits, 30, 34–35, 38

B Babylonians, 3 Beneficiaries (in Oklahoma), 66 Benefits. See Death benefits; Indemnity benefits; Medical benefits; Rehabilitation benefits Bill payment, 136–138 Black lung disease, 6 Boards/commissions, 6 Body System abbreviations, 115t Burial allowances, 45, 62, 65–67t Businesses. See Employers

C California, 93, 106 Carpal tunnel syndrome, 6 Certificates of Insurance, 30, 31f, 38 Children of deceased workers, 5, 45, 63–65t, 90 China, 3 Chiropractic, 83, 106 Civilian employees, 6 Claimants, defined, 88

Claims claims file creation, 82–84 closing, 100 determining coverage for, 80–81 evaluation, 87 filing new, 73–76 fraudulent, 99–100 investigation, 83, 87, 88–89 notification methods, 74 recovery, 97–98, 139 reserves on, 89–92 resolution, 87 steps in handling, 82, 84 Claims adjusters claims handling, 80–81, 82, 83, 87 fraud investigation, 99–100 indemnity payments and, 93–94 medical management by, 92–93 overpayments and, 97 reports from, 83, 88 reserves and, 89 responsibilities summary, 87, 100 Claims department, 80, 81–82, 88, 100 Classification codes auditing, 30, 34–35, 38 fraud and, 99–100 general discussion, 16–20, 37 Clerical personnel, 136 CMS-1500 (HCFA) form, 116–121 Coal miners, 6 Collection agencies, 46 Common law, 1, 3, 12 Competitive state funds, 8–10 Compulsory plan, 3 Connecticut, 107 Consultations, 142, 144–147 Co-payments, 46, 106 Counseling, 60–61 Court battles, 1, 3, 4, 46, 83, 100 CPT codes. See also E/M bill payment and, 137, 139, 148 general discussion, 107, 108–112 Criminal act injuries, 6

171

172 Index Current Procedural Terminology codes. See CPT codes Cuts, 80

D Dairy farmers, 17 Data entry personnel, 136 Death benefits burial allowances, 45, 62, 65–67t general discussion, 2, 5, 45, 63–65t, 67 reserves and, 90 Death contracts, 4 Deductibles, 46 Delaware, 106 Dental care, 47 Department of Energy workers, 6 Dependents of deceased workers, 5, 45, 63–65t, 90 Diagnostic Testing abbreviations, 114t Direction and Location abbreviations, 115t Disabilities, 46, 49, 50–54, 93–94 Discounts, 147, 148. See also PPO District of Columbia, 3, 106 Divers, 6 Domestic servants, 5 Down coded services, 154 Drug abuse, 6, 80 Drugs prescribed, 5 Duplicate bills, 137

E Education for retraining, 61, 62 Elective workers’ compensation coverage, 5, 9 Electronic filing, 74 E/M categories and levels of service, 142–146 CPT code breakdown, 109 CPT code range, 108 sample payments for CPT code 99213, 107 Emergency room visits, 5, 47, 106 Employers. See also Classification codes benefits for, 1, 4–5, 12, 73 filing claims by, 73–74 fraud and, 99–100 information gathered from, 83, 93 physician choice by, 106 requirement to have insurance, 5, 6, 16 safety and, 98 second injury funds and, 97 self-insured, 7, 16 vocational rehabilitation and, 61–62, 93 in Workers’ compensation history, 1, 3–4 Employers’ liability, 3, 5, 16, 20, 30, 36 Endorsements, 27, 28f Energy Employees Occupational Illness Compensation Program, 6

England, 10 EOB/EOR bill payment software system and, 137 general discussion, 148–153 for reconsideration/appeals, 154–157 Ergonomics assessment, 60, 98 Established patient E/M codes, 143, 144, 145 Estate of deceased workers, 65 Europe, 3 Evaluation and Management. See E/M Exclusive state funds, 8–9 Expense constant, 36 Experience modification factor, 26 Explanation of Benefits/Explanation of Review. See EOB/EOR

F Falling, 80 Farmworkers, 5 FCE, 60 Federal Black Lung Program, 6 Federal Employees Compensation Act Program, 6 Federal Employment Liability Act, 6 Federal government fee schedules, 6, 7 indemnity benefits and, 2, 5–6 job injuries and, 19, 45 programs, 6, 7, 62 Federal Tax ID number, 20, 119, 124, 148 Federal Workers’ Compensation Act, 7 Fee schedules. See Federal government: fee schedules; State fee schedules First report of injury, 73–76, 84, 88, 137 Florida, 46, 106 Follow-up inpatient consultation E/M codes, 145, 146t Fraud investigations, 99–100 Functional Capacity Evaluation (FCE), 60 Funeral expenses, 2, 5, 65, 66, 90. See also Death benefits

G Germany, 3, 4f, 10 Government. See Federal government; State governments Great Britain, 3, 4f

H Harbor Workers’ Act, 7 Hawaii, 46 Health Assessment abbreviations, 114t Health care providers, 6, 46. See also Physicians Hospital visits E/M codes, 144, 145 general discussion, 5, 47, 89, 142

Index

Hospitals billing process and, 116, 122–126, 137 reports from, 83, 137

I ICD9 CM codes, 107–108, 137, 139–140, 148 Illnesses. See Injuries IME, 93 Indemnity benefits first report of injury and, 74, 75 general discussion, 2, 5–6, 6–7, 45, 67 methods of payment, 94 overpayments, 97 for permanent disabilities, 46, 49, 52–54t, 93–94 reserves and, 89–90 settlements and, 100 for temporary disabilities, 46, 49, 50–52t, 93–94 time limits, 93 types, 49 wage statements and, 83, 93, 94f waiting periods, 49, 54, 57–58t, 59, 94 Independent Medical Examination (IME), 93 Indiana, 106 Industrial Revolution, 3 Industry Compensation Act (1884), 10 Initial inpatient consulation E/M codes, 145, 146t Injured employees/workers, defined, 1 Injuries covered and non-covered, 6, 46, 80 faking seriousness of, 99–100 reserves and severity of, 89 Inpatient E/M codes, 144, 145, 146 Inspections, 98 Insurance, defined, 2 Insurance commissioner (in West Virginia), 67 Insurance companies balancing act by, 15, 20, 37 departments, 80, 81, 97, 98, 99, 136 finances, 81 as payers, 7 physician choice by, 106 reputation, 82, 140 Insurance policies, defined, 2. See also Workers’ compensation policies Interest testing, 61 International Classification of Diseases, 9th Revision, Clinical Modification (ICD9 CM) codes, 107–108, 137, 139–140, 148 Interview coaching, 60, 61 Iowa, 106

J Job analyses, 60, 61 Job-search assistance, 60, 61 Jones Act, 6

L Labor market surveys, 60, 61 Legal actions, 1, 3, 4, 46, 83, 100 Levels of service, 143–146 Lifting, 80 Longshore and Harbor Workers’ Compensation Program, 6 Longshoremen’s Act, 7 Loss prevention, 98 Lost wages, defined, 2. See also Indemnity benefits Louisiana, 106, 107 Lung disease, 6

M Mandatory workers’ compensation insurance, 5 Manual rate, 26, 37 Martin v. The Wabash Railroad, 3–4 Massachusetts, 107 Maximum medical improvement, 100, 106 Medical abbreviations, 113–116 Medical benefits covered services/treatments, 5, 47, 48f determination of, 6–7 general discussion, 2, 45, 46, 67 management of, 92–93 overpayments, 97 reserves and, 89 settlements and, 99 Medical bills, 83, 93, 97, 100, 139. See also Bill payment; CMS-1500 (HCFA) form; CPT codes; ICD9 CM codes; UB-04 form Medical case managers, 61, 92 Medical providers, 6, 46. See also Physicians Medical rehabilitation, 60, 61, 67 Medical reports, 83, 88, 99, 137, 138 Medical supplies, 47 Medical terminology, 112–113 Medicare, 106 Medicine CPT codes, 108, 111 Medicines, 5, 47 Michigan, 106 Mileage payments, 5, 47–48 Minnesota, 107 Mississippi, 7 Missouri, 106 Modifiers for CPT codes, 108, 110 Montana, 46, 106

N National Council on Compensation Insurance (NCCI), 16–17, 26 Negotiated discounts, 147, 148 New Hampshire, 106

173

174 Index New Jersey, 5, 46, 106 New Mexico, 107 New patient E/M codes, 143, 145 New York, 107 New York Workers’ Compensation Board, 66 No-fault rule, 6 North Carolina, 106 North Dakota, 7 Nuclear weapons workers, 6

O Occupational injury/illnesses, defined, 5 Occupational therapies, 5, 60, 92, 106 Off-duty injuries, 6 Office consultations, 142, 144–147 Office visits, 142–144 Ohio, 46 Oklahoma, beneficiaries in, 66 On-the-job training, 60, 62 Orthopedic appliances, 47 Outsourcing, 82, 97, 98, 147 Overpayments, 97, 140

P Partial disabilities, 46, 49, 94 Pathology and Laboratory CPT codes, 108, 110–111 Payers, defined, 7. See also Insurance companies Payroll, 16, 30, 34–35, 37, 38 Pennsylvania, 107 Permanent disabilities, 46, 49, 52–54t, 93–94 Photographs of injury site, 83, 88 Physical evidence, 88 Physical therapies claims adjusters and, 93 limitation in California, 106 as part of rehabilitation, 5, 60 as precerted medical treatment, 46, 92 reports on, 83 reserves and, 89 tools used in, 60 Physician visits, 5, 47 Physicians choice of, 45, 46, 92, 106 reports from, 83, 88, 99, 137, 138 second opinions and, 93 Plumbers, 17 Policies. See Workers’ compensation policies Policy term, 80 PPO bill payers and, 140–141 in bill payment software system, 137 defined, 93, 140 negotiated discounts and, 147 reduction on EOB/EOR, 148–151

Precerted treatments, 46, 92, 137 Preexisting disabilities/injuries, 97 Preferred provider organization. See PPO Premiums audit adjustments, 30, 34–35, 38 calculations, 17, 26 factors affecting, 15–17, 19–20, 26–27, 36, 37 increased liability limits and, 36 payment of, 20 rate regulation by states, 15, 26 Prescription drugs, 5 Pricing. See Premiums Private insurance, 7, 8–9t, 46, 99 Prognosis, 138 Proof of insurance, 30, 38 Providers, 6, 46. See also Physicians Puerto Rico, 3

R Radiology CPT codes, 108, 110 Railroad employees, 3, 6 Railroad passengers, 3 Ratemaking, 19–20. See also Premiums Reckless behavior, 6 Reconsideration/appeals, 154–157 Recorded statements, 83, 88 Recovery, 97, 139 Reductions, 147, 148. See also PPO Rehabilitation Act of 1973, 61 Rehabilitation benefits, 2. See also Medical rehabilitation; Vocational rehabilitation Reinsurance, 37 Remarriage, 62 Remuneration, 16 Reserves, 89–92 Résumé and job-application services, 60–61 Retraining for new job type, 2, 5, 60, 62, 90 Revenue codes, 122 Rib fracture, treating (CPT code 21800), 107 Risk assessment, 20, 26, 37 Romans, 3 Routine evaluation and management-office visit (CPT code 99213), 107

S Safety, 26, 74, 98 Seamen, 6 Second injury funds, 96 Second Medical Opinion (SMO), 93 Self-inflicted injuries, 6 Self-insurance, 7, 16 Self-insured trusts, 7 Senior bill payer personnel, 136 Settlements, 100

Index

Sickness funds, 3 Sicknesses. See Injuries Slipping, 80 Small employers, 5 SMO, 93 Social insurance, 3 Software for bill payment, 137 Specialists, 92 Spendable earnings, 50–52t, 52–54t Spouse of deceased workers, 5, 45, 63–65t, 90 Starred procedures, 110 State fee schedules bill payers and, 136–137 in bill payment software system, 137 general discussion, 6–7, 45, 46, 93, 106–107, 138 mileage payments, 5, 47 physician choice, 45, 46, 92, 106 PPO and, 140, 141 precerted treatments, 46, 92 reconsideration applications time limit, 154–155 reduction on EOB/EOR, 148–151 timelines for bill payment, 93, 137 State funds, 7–10, 99 State governments. See also State fee schedules altering policies to comply with state laws, 27 classification codes and, 16 death benefits and, 5, 62–67 expense constant and, 36 indemnity benefits and, 2, 5–6, 6–7, 45, 49, 50–54 premiums and, 15, 26 second injury funds and, 96 self-insurance and, 7, 16 settlements and, 100 states covered under policy, 20, 30, 81, 88 vocational rehabilitation and, 60–61 waiting periods for indemnity benefits and, 49, 54, 57–58t, 59, 94 workers’ compensation boards/commissions and, 6 in workers’ compensation history, 3, 7, 10–12t workers’ compensation variations, 5, 7–10 Statements, 83, 88 Strained back, 6 Subpoena of claim files, 83 Substance abuse, 6, 80 Suffixes in medical terminology, 113 Supervisors of claims adjusters, 83 Supervisors of injured employees, 75, 82, 88, 94f

Surgeries, 47, 89, 92 Surgical CPT codes, 108, 109–110 Surveillance, 99 Survivors of deceased workers, 5, 45, 63–65t, 90

T Temporary disabilities, 46, 49, 50–52t, 93–94 Tennessee, 46, 106 Terminology, 112–113 Testing (academic, ability, and interest), 61 Texas, 5, 16 The Wabash Railroad, Martin v., 3–4 Therapies. See Occupational Therapies; Physical therapies Third-party recovery, 76, 97 Total disabilities, 46, 49, 50–54, 93–94 Transferable skills analysis and testing, 60, 61 Transportation, 47 Treating rib fracture (CPT code 21800), 107 Tuition payments for retraining, 60, 62

U UB-04 form, 116, 122–126 Underpayments, 140 Underwater personnel, 6 Underwriting, 16, 18, 20, 37 United States, 3–4. See also Federal government; State governments U.S. Department of Labor, 6, 50, 52, 62, 65 Usual and customary rates, 106

V Virgin Islands, 3 Virginia, 106 Vocational rehabilitation general discussion, 5, 60–61, 67, 93 reports on, 83 reserves and, 90 Voluntary insurance act, 3

W Wage assessment evaluations, 61–62 Wage statements, 83, 93, 94f Waiting periods for indemnity benefits, 49, 54, 57–58t, 59, 94 West Virginia, insurance commissioner in, 67 Wisconsin, 3, 7, 106 Witnesses, 74, 81, 82, 83, 88, 99 Work conditioning, 60 Work hardening, 60 Workers’ compensation benefits. See Death benefits; Indemnity benefits; Medical benefits; Rehabilitation benefits Workers’ compensation boards/ commissions, 6

175

176 Index Workers’ compensation insurance history, 1, 3–4, 7, 10–12 primary objectives, 1, 12, 81 variations, 5, 7–10 Workers’ compensation policies applying for, 20–21 auditing, 30, 34–35, 38 changes/endorsements, 27, 28f claims investigation and, 88

employers’ liability, 36 pricing. See Premiums states covered under, 20, 30, 81, 88 storage of, 81 term of, 80 underwriting, 16, 18, 20, 37 Worker’s right to die, 4 Working Man’s Compensation Act (1897), 10 Wyoming, 7

Understanding Workers' Compensation Insurance

Cliffsnotes Understanding Health Insurance

Workers Compensation: A Reference and Guide

Causes of Litigation in Workers' Compensation Programs

Compensation

Two Centuries of Compensation for U.S. Production Workers in Manufacturing

Two Centuries of Compensation for U.S. Production Workers in Manufacturing

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