Mark Kraemer's Articles

‘Aggravated’ is Only Half the Story

Posted on 5/21/2018 7:15 AM . By Mark Kraemer

What Went Wrong?

According to Minnesota’s work comp laws, you can get your experience mod corrected, but only if you can figure out what went wrong in the first place. The so-called “Aggravated Inequity” rule allows you to get an updated mod, but only if 3 things happen first:

  1. An open claim on the experience mod closes between valuation and your renewal date
  2. The claim results in 5 point or greater improvement to your experience mod
  3. The carrier issues new stat cards to the rating bureau

The rating bureau then uses the updated information to issue a new mod.

How You Can Get Your Mod Corrected

  1. Determine your valuation date(s); you may have more than one if you’ve changed renewal dates
  2. Review open claims and identify potential candidates for aggravated inequity – anything that might close after valuation
  3. Continue to monitor and follow up with the adjuster on open claims, at least once per month, following valuation
  4. Submit proof to the insurance carrier that the claim has closed between valuation and renewal and will impact your mod by at least 5 points

The carrier will then issue new stat cards to the rating bureau, and the rating bureau will send you a new mod.

It’s not the responsibility of the insurance company to know when your experience mod is being calculated. If you want a new mod, it’s up to you to go get it. This is why it’s so critical to have someone reviewing open claims, working to get claims closed, and calculating the impact on your experience mod.

See Rule 4 of the Minnesota Experience Rating Plan Manual for more details about the statute.



Prevent and Manage Traumatic Brain Injuries in the Workplace

Posted on 4/26/2018 5:04 AM . By Mark Kraemer

Like carpel tunnel a decade ago, traumatic brain injury (TBI) is an emerging work comp trend causing concern for many employers. At a Traumatic Brain Injury seminar we hosted on April 3, work comp and brain injury specialists made it clear that these injuries can be subjective and depending on the doctor, treatment and recovery can vary widely in cost and scope. From concussions to severe trauma, when an employee suffers a traumatic brain injury at work, make sure they see a medical provider experienced in treating these types of injuries. Best Practices to Get Employees Back to Work Without a return to work process in place, employees seek treatment at the ER or with a family doctor which can draw out the recovery process and drive up the cost of the claim. The best way to get injured employees back to productive work and reduce the cost of claims is to partner with a medical provider who understands work comp. Choosing the Right Provider to Treat Workplace Injuries In Minnesota, you cannot force your ...

Could You Be Paying for Someone Else’s Mistakes?

Posted on 3/6/2018 5:07 AM . By Mark Kraemer

For over 20 years, the Minnesota Workers Compensation Insurance Association (MWCIA) has conducted an annual test audit review, pulling from a sample of employers across the state. Designed to verify the accuracy of the statistics reported to the MWCIA, the test audit program reviews the work of auditors working for or on behalf of insurance carriers.

The result has been an increasing trend in the number of errors or, audits that are flat-out wrong. The latest test audit, released January 25 of this year, reported 67.2% of audits conducted in 2017 had errors. Most errors work in favor of the industry, often resulting in an inflated experience mod and higher cost of work comp insurance for the employer.

After a few uneventful years, incorrect audits in 2015 to an astounding 77.8%. Roughly 4 out of 5 audits were wrong. Incorrect audits held near 70% for 2017.

Audit errors occur for many reasons, but the main reason with a lot of employers is the right questions are not being asked, or the employer does not know the rules.

Why Isn’t More Being Done to Ensure Accuracy?

The MWCIA conducts the test audit, but think of it more as a clearing house: whatever the carrier submits, right or wrong, is what the MWCIA uses to calculate your mod, and consequently, what you pay for insurance.

The insurance carrier is not responsible for checking for these errors, and most brokers simply do not have the time, training, or resources to dedicate to reviewing audits. There is also little incentive for brokers to spend time on audit errors.

Employers are not helpless, however. You can get your mod corrected you just have to know where to look. Review your experience mod and audit worksheet for these common errors:

Look for 000s
When have you ever had a year where your payroll was a flat amount? If you notice 000s for payroll in your summary sheet, then it’s wrong.

Look at What Counts as Payroll
Employers may not know what should be included as payroll and auditors typically do not ask. In the state of Minnesota, there are exceptions, also known as “excluded remuneration.” If you include these exceptions in your payroll count, you’re inflating you own mod and paying more for it.

Look for Incorrect Class Codes
The state rates each class of employee based on their level of risk. A clerical worker who sits at a desk all day is at lower risk for a workplace injury than a factory worker on the plant floor. If your employees are coded incorrectly, it could mean you are paying more for exposures that do not exist.

Purdue Pharma to Stop Selling Opioids Direct to Doctors, Cuts Sales Reps by Half

Posted on 2/15/2018 6:57 AM . By Mark Kraemer

Photo Credit: PureRadiancePhoto/

Opioids, including heroin, but also prescription opioids like oxycodone, hydrocodone and the synthetic painkiller fentanyl, killed more than 42,0000 people in 2016 – and according to the CDC, 40% of those overdose deaths involved a prescription opioid.

Opioids do not discriminate; anyone who takes them can become addicted, regardless of their background or income level. Once hooked on opioid painkillers, addicts often turn to heroin, which is both cheaper and easier to get. In fact, 4 out of 5 new heroin users started with prescription opioid painkillers.

Widely criticized for its marketing practices, Purdue Pharma LP, maker of the opioid painkiller OxyContin, announced Saturday that it will stop promoting opioids to doctors and has cut its sales department by half. This comes as the state of Alabama announced last week that it was suing Purdue Pharma, joining a number of states, counties, and cities accusing the company of using misleading marketing that downplayed the dangers of addiction, and overstated the benefits of using opioids to treat long-term, chronic pain, rather than short-term pain.

The result has been rampant overprescribing of addictive painkillers – in 2013 alone, doctors wrote nearly a quarter of a billion prescriptions for opioids, enough for every adult in America to have their own bottle of pills. The most common drugs involved in opioid deaths include prescription oxycodone (like OxyContin), hydrocodone (including Vicodin), and methadone, an opioid commonly used to treat opioid withdrawal symptoms.

Purdue is no stranger to the legal system; in 2007, the pharmaceutical company and three of its executives pleaded guilty to federal charges related to misbranding OxyContin and agreed to pay $634.5 million to resolve a Justice Department Probe. Purdue also reached a nearly $20 million settlement with 26 states and Washington D.C. that same year, and in 2015, agreed to pay $24 million in to resolve a lawsuit by the state of Kentucky.

“We now know that overdoses from prescription opioids are a driving factor in the 16-year increase in opioid overdose deaths,” states the CDC website on the opioid epidemic. Citing DEA data and a CDC report, the website goes on to state that the amount of opioids sold to doctor’s offices, hospitals, and pharmacies “nearly quadrupled between 1999 and 2010,” though pain levels in America had not increased, and that deaths from prescription opioids have more than quadrupled since 1999.

In a recent Reuters article, Purdue said it would inform doctors on Monday, February 12, 2018 that it was stopping the practice of sending sales reps direct to physician offices to discuss its opioid products, and will direct doctors with opioid-related questions to its medical affairs department.

The restructuring announced Saturday is another step toward mitigating the catastrophic levels of opioid abuse and overdose deaths in this country that many argue was fueled by pharmaceutical companies like Purdue Pharma.

How is Your Worker Comp Insurance Premium Calculated Part Two

Posted on 1/10/2018 1:14 AM . By Mark Kraemer

Average losses result in a modifier of 1.00.
(Premium remains the same.)

Those with less losses than average earn a modifier of less than 1.00.
$500,000 ÷ 100 = $5,000
$5,000 × 0.15 = $750
$750 × 0.90 X-mod = a final premium of $675

Those with more extensive losses suffer a modifier greater than 1.00.
$500,000 ÷ 100 = $5,000
$5,000 × 0.15 = $750
$750 × 1.1 X-mod = A final premium of $825

As you can see, the X-mod is a multiplier of your premium, affecting the way work comp consultants calculate your rates based on your business’ previous claims history to the advantage/disadvantage of premium costs.

Making the Math Work to Your Advantage
Although you have minimal control over your industry’s loss rating, or those assigned to your classification, you have significant control over your X-mod, with work in the safety arena offering the potential to reduce premiums and lower your modifier.

What Specific Steps Can You Take to Lower Your Modifier?

- Put Safety First
Building a culture of safety both in and out of the workplace, including outside safety evaluations and training, can net a reduction in workplace injuries that can greatly reduce your modifier/premiums.

- Revamp Your Return-to-Work Program
Developing effective return-to-work can greatly reduce the direct and indirect costs of workcomp claims.

- Look to State-Offered Opportunities
Ask your insurer about available state-sponsored safety programs that can help your business reduce injuries/premiums.

- Join a Group
If your business has better-than-average safety, consider joining a group to earn ‘group rated’ discounts.

Flabbergasted by premium inflation? Change the equation with the help of our expert work comp consultants today.

How is Your Worker Comp Insurance Premium Calculated Part One

Posted on 1/8/2018 1:04 AM . By Mark Kraemer

Find your worker’s comp premium staggering? The work comp consultants at Minnesota Comp Advisor want you to understand how your rate is calculated. Not only to put an end to your confusion, but because doing so can shed light on opportunities for future premium savings.

Calculating Your Work Comp Premium
Your annual premium is based on the following formula:

RATE X (PAYROLL/100) X Experience Modifier = PREMIUM

Here, the two most important variables affecting premium are the rate and the experience modifier, also known as the EMR or X-mod.

Equation Translation
To better understand how work comp consultants calculate your rate, it pays to fully understand the knowledge behind the numbers. Classification rates reflect occupational risk: The likelihood a worker will be injured on the job. (Think: Clerical personnel versus welders and roofers.) Each industry’s classification is rated by the National Council on Compensation Insurance (NCCI) or state rating agency, with employers in similar industries sharing the same classification.

The Payroll Effect
Payroll is also a major element of your workcomp premium calculation, with your total payroll divided by 100 and multiplied by your EMR as described above. For example, if your total payroll is $500,000, and you have an EMR of $0.15; you would calculate your premium as:

$500,000 ÷ 100 = $5,000
$5,000 × 0.15 = $750

The X-Mod Example
Your X-Mod or EMR is another element essential to your rate. This number is a numeric representation of your business’ actual loss history compared to the average of others in your industry. Like your classification rate, the average industry rate is calculated by the NCCI or your state rating bureau.

How to Handle a Worker's Comp Insurance Claim Part Two

Posted on 1/3/2018 3:08 AM . By Mark Kraemer

Quality of Life, Protected
Efficiently and factually completing the initial phase of the worker's comp insurance claim investigation and treatment results in a shorter recovery and return-to-work timeline by directing medical care. Surgery is performed same-day and the machinist begins recovery.

The specialist understands the emotional/psychological effects of the injury, and is cooperative with a modified-duty, return-to-work program, reducing lost time and wages on the part of the employer and employee. The machinist is discharged from care and returned to full-duty in 8-12 weeks. The injured employee is thrilled with his attentive, empathetic treatment, the competency of his doctor, and his ability to remain at work with full pay (rather than partial disability).

In the interim, the adjuster performs necessary interviews, investigating the injured’s prior medical issues and background which may have impacted the claim, including possible changes to safety procedures with the HSE team.

What Could Have Been
The inclusion of a professional, outside field adjuster mitigated a host of hazards. It avoided a 4-5 hour ER visit and the wait to see a specialist following the required doctor referral. Surgery was not delayed, thwarting the potential for permanent damage, continued pain and therapy. The machinist was not converted to a lawsuit plaintiff, instead continuing a productive lifestyle to the benefit of his family.

Given the pre-established relationship, information was easily shared between the adjuster and treating physician, helping return the employee to work sooner. Cost inflation was controlled, and the company retained a key employee, bringing the process to a fast, felicitous solution.

Wish your worker's comp insurance claims had happier endings? Discover new pathways to success with the help of Minnesota Comp Advisor.

How to Handle a Worker's Comp Insurance Claim Part One

Posted on 1/1/2018 3:18 AM . By Mark Kraemer

Worker's comp insurance claims are inevitable. Negative outcomes are not. When the proper steps are taken from the onset of the claim through resolution, your team can ensure positive results that support everyone’s best interests.

Not a Hassle
When a worker's comp insurance claim begins, it’s critical not to treat the injured employee as an obstacle. If your head machinist clocks-in, but then suffers injury from a small metal shaving that slices into the fingers of his right hand, how will you respond?

A Human Being
Let’s say you, the supervisor, treat him as a valued colleague and report the accident. Your machinist thinks it’s a scratch, but you consider the potential of serious injury. While he removes his gloves and washes his hand, you call your workplace health and safety (HSE) executive, who dispatches an adjuster to the job site while you bandage the worker.

A Deeper Understanding
The adjuster arrives, discussing the incident with the machinist. The adjuster’s experience compels him to ask the machinist to straighten the fingers affected by the thin, deep cut. When he cannot, the adjuster calls a hand specialist, describing the range-of-motion limitations, and the machinist is transported to the clinic.

A Helping Hand
Along the way, the two have a Q&A on what will commence and why the specialist was called. The drug screening company is called to meet them. The injured employee and adjuster fill out the necessary paperwork, including the medical authorization form from the injured employee.

What does all this personal attention net the employer? Find out in ‘How to Handle a Worker's Comp Insurance Claim Part 2’ from Minnesota Comp Advisor.

Could a Workers Comp Insurance Rate Drop for Your State Be In the Future?

Posted on 12/27/2017 3:56 AM . By Mark Kraemer

David Altmaier, Florida State Insurance Commissioner, has ordered workers comp insurance rates to be lowered 9.8% for next year.

Not So Fast
Rejecting the National Council on Compensation Insurance’s (NCCI) 2018 rate filing for a 9.6% decrease back in August, the Florida Office of Insurance Regulation (FOIR) ordered a statewide 9.8% decrease, citing a previous Florida Supreme Court Ruling: Marvin Castellanos v. Next Door Co. et al. Noting its responsibility “…to ensure workers comp insurance rates are not excessive, inadequate, or unfairly discriminatory…” And pointing to the need for quantitative analysis to better determine the effect the case is having on the Florida workers comp market, utilizing it supports future rate filings.

Try Again
NCCI had previously cited a 2% allowance for profit and contingencies in its rate filing. However Commissioner Altmaier ordered the NCCI’s rate request be amended and refiled, releasing an order that stated the refiling include a profit and contingencies provision or no more than 1.85%. If approved by the FOIR, the decrease would become effective January 1st of the new year.

Could Your State Be Next?
A welcome surprise for businesses statewide, Florida had been suffering rates that rose double digits in 2016 following the Castellanos v. Next Door Company and Westphal v. City of St. Petersburg case decisions, and were expecting rates to soar even higher. However, improvements in workplace safety and efficiency alongside use of automation and other technologies are resulting in a decline in claims frequencies, and subsequently rates, not just in Florida, but countrywide.

Workers comp insurance rates flying sky-high? Bring them back down to earth with the help of Minnesota Comp Advisor today.


Why Are My Workers Comp Premium Rates Always Going Up?

Posted on 12/25/2017 1:17 AM . By Mark Kraemer

In the business world, companies continually deal with the rising costs of goods and services that must be addressed to keep their businesses functioning successfully. Another area companies must deal with is rising workers comp premium rates.

What is Causing Rising Workers Comp Premium Rates?

This is a valid question that may be a concern to you as an employer. The following list includes a few of the reasons workers comp premiums are on the rise in your business.

- As insurance companies make changes to their rates, often it is like a juggling act where one classification code is lowered while another, more popular classification, is increased.

- Businesses that change from one type of service to something different may encounter a higher rate due to the classification codes used for that particular business.

- A change in the number of persons on the payroll triggers an increase in workers comp premiums.

- When a reassignment of an employee's payroll to a classification code with a higher rate, this will increase the premium.

- The cost of medical care and services directly affect increases in workers comp premium rates. The cost for the treatments and procedures administered by a medical facility along with wages paid to the injured employee are factors in increased rates.

Whether your company is experiencing a current or continual rise in rates can be a combination of one or more factors at any given time. These include businesses changing to a different type of business, payroll changes, and classification codes, along with profit margins for the insurance company, lost wages paid, and medical costs.

For help with workers comp issues, contact Minnesota Comp Advisor, today.

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