By Ken Cooper, WGIS Director of Risk Strategy
As of January 2017, insurers are now required to report all claims to the California Workers’ Compensation Insurance Rating Bureau (WCIRB). These include claims for which any medical care is provided and medical costs are incurred, including those involving first aid treatment, even if the insurer did not make the payment.
What does that mean for employers?
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.
California Labor Code section 5401 defines “first aid” as “any one-time treatment, and any follow-up visit for the purpose of observation of minor scratches, cuts, burns, splinters, or other minor industrial injury, which do not ordinarily require medical care. This one-time treatment, and follow-up visit for the purpose of observation, is considered first aid even though provided by a physician or registered professional personnel.”
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 experience modification (calculated through a formula comparing the actual losses to the expected losses) associated with the first aid claims.
Now, since all claim financial data must be reported, even first aid workers’ compensation claims that are paid directly to medical clinics will affect an employer’s experience modification. Employers are highly encouraged to report all claims to their insurance provider.
What are the effects of the more stringent requirement?
The requirement to report first aid claims to insurers is not new. However, now the WCIRB is looking to put additional pressure on the reporting requirements of all claims and claim financial data, including those meeting the definition of first aid claims. The WCIRB formally announced clarification of the data tracking and reporting requirements through bulletin issued on November 10, 2016.
Because of the formalized scrutiny on insurers to track first aid claim financial data, insurers may begin disallowing policyholders from making direct payments to medical providers. Another possibility is that a continued process of direct payment of first aid costs to medical clinics may expose employers to more detailed audits by the WCIRB. Businesses who maintain an agreement with a medical facility for direct payment of bills related to first aid claims may wish to reconsider their current process.
Western Growers Insurance Services can assist members with training their managers, supervisors and employees on the process for handling workers’ compensation claims and assist the business in finding the best workers’ compensation provider for its business.
For more questions, please feel free to contact me at firstname.lastname@example.org or (949) 379-3858.