Pub. 1 2019 Issue 3

Workers’ Compensation ClaimReserves A reserve on workers’ compensation claims is the money set aside to pay the ultimate cost of the claim. Insurance carriers, self-insured employers, and self-insured groups are required by law to “reserve” enough money to cover the costs of individual claims and claims that have not yet been reported. Individual claims are reserved by the adjuster and regularly reviewed by the Claims Man- ager to insure that the money set aside, as the reserve, is sufficient to cover the cost of the claim through to the total recovery of the injured employee. It takes actuarial analysis to reserve the cases that have not been reported. The actuary annually analyzes the WCT claims data to determine how much money should be set aside for those unreported claims, known as incurred but not reported, IBNR. The actuary looks back on three decades of NHADA WCT claims experience to determine the number and cost of claims that open after year end to establish a reserve for IBNR claims. Since these reserves are not specific to a claim, they are added on to the total reserve of all claims for a given year. When members review the loss runs provided by the NHADA WCT they will see open claims with total incurred costs, which represents reserves plus payments, as well as categories for payments and reserves. There are four categories of payments and reserves: indemnity or disability payments; medical; legal (the amount we pay the attorney to defend claims); and other, which cov- ers expenses to file such as the cost to obtain medical records, surveillance and independent medical exams. Generally, files remain open for 30-60 days after the last medical treatment to insure all related bills have been received and paid. Claims that have been denied remain open from at least 90 days post denial. The injured employee has 18 months from the date of denial to request a hearing. Generally, claims do not stay open for the 18 months, but if the injured employee requests a hearing, retains legal counsel or otherwise gives us the impression that they will request a hearing the file stays open. These cases may stay open for extended periods while hearings are scheduled, decisions are rendered by the NH Department of Labor, and appeals are filed and heard. The case is reserved based on the ultimate cost of the case in the event that the claimant prevails and benefits are ordered to be paid. The WCT has been challenging the cost of medical bills since the workers compensation statute was revised in 2015, shifting the burden of proof from the carriers to the medical providers to prove that the charges are reasonable. We pay what we deem to be reasonable based on a national guide adjusted for New Hampshire and we deny the balance. The medical providers have 18 months to negotiate a resolution or to request a hearing. We reserve the claim based on the amount of the denied medical charges. As a result of this change, members may see claims open with a medical reserve well after the injured employee has stopped treatment. Open claims effect members two times a year. The first time is in May when we use the total incurred costs to cal- culate members’ rebates. The immediately preceding year is not taken into consideration for rebates. The 2019 rebate will utilize money from 2014 through 2017. The second time open claims affect members is at the end of June. We use the total incurred cost to calculate the experience modifi- cation factor, and again the immediately preceding year is not taken into consideration. In 2018, total incurred costs PETER SHEFFER DIRECTOR OF WCT D R I V E 10