Businesses in California who previously made arrangements with their medical clinic to directly pay for medical treatment bills for “first aid” claims will no longer receive the benefit of their workers’ compensation experience modification rating being unaffected.
Starting January 1, 2019, the California Workers’ Compensation Insurance Rating Bureau (WCIRB) will be changing the calculation methodology for workers’ compensation experience modification (x-mod) rating. The new methodology eliminates the impact of the first $250 of every workers’ compensation claim on the x-mod calculation. This change is a result of concerns surrounding the WCIRB reporting updates that went into effect in 2017.
What does that mean for YOU?
If you, as an employer, historically had a program where you paid first aid medical bills directly to a clinic, you should stop this practice. While it used to have a beneficial impact, any potential savings previously realized has been negated by the new calculation methodology.
The WCIRB’s goal with moving toward complete injury reporting is to be able to more accurately measure and track injury rates within the state. In the past, many insurance carriers allowed employers to make direct payments to medical providers for treatment specifically related to first aid claims. Insurers rarely, if ever, tracked the actual costs paid by employers for first aid claims, even on those claims properly reported and coded as first aid files. The benefit of an employer’s direct payment of first aid claims was a decreased impact on the x-mod (calculated through a formula comparing the actual losses to the expected losses) associated with the first aid claims. This is no longer the case.
WCIRB determined that the majority of first aid claims that had been paid out of pocket by employers fell below the $250 threshold. By eliminating the effect on the x-mod, employers would be less inclined to pay those costs directly and should be more inclined to properly report all claims to their workers’ compensation insurer.
Western Growers Insurance Services can assist members with training their managers, supervisors and employees on the process for handling workers’ compensation claims and assist businesses in finding the best workers’ compensation provider for its business.
For questions, please contact Ken Cooper, WGIS Director of Risk Strategy, at kcooper@wgis.com or (949) 379-3858.