As published in the November 1, 2012 Toledo Business Journal
Steve Buehrer
Ohio Bureau of Workers’ Compensation (BWC)
BWC reducing workers’ comp costs
Toledo Business Journal recently interviewed the Ohio Bureau of Workers’ Compensation (BWC) administrator / CEO Steve Buehrer. He shared the following thoughts.
Toledo Business Journal: Can you discuss the Ohio BWC’s financial performance during the past year and what Ohio employers might expect in terms of rates during the next two years?
Steve Buehrer: When I think about our financial performance, I think about two things. One is the administrative costs, what it costs to run the agency and operate it, the other is the rate side.
One thing Governor Kasich and I talked about early on is low rates are ideal for employers. It lets them keep more money in their pockets to invest in new workers and new equipment. Equally as valuable is stability in rates. Can we have rates that are predictable so employers know what their costs are going to be in upcoming years? We’ve worked hard on both of those things.
Because of good investment returns and lower than expected medical spending, a year ago we were able to give a 4% base cut for private-sector employers. This July, when we renewed our rate, which we do on an annual basis, we were able to maintain that 4% cut. In total, it’s about $130 million less that private sector employers are paying at the base level.
On the public side, which is primarily local governments and schools, a year ago we were able to do a 5% base cut, which is about $22 million in savings. Just recently, we recommended an additional 5% cut for this year, which will add an additional $13 million in savings.
In terms of our investment return out of the State Insurance Fund, we assume about a 4% return. We call it our discount rate. That’s what we assume we’re going to make on the dollars we’re holding. In the fiscal year that just closed, we had a 9.8% return and if you look at a 3 year average, we’re at 11.4% annualized.
The administrative costs are going down as well. When we did our biannual budget that we’re currently in, we asked the General Assembly to give us a 12% cut. They later added an additional 1.5% cut. In summary, it’s approximately $80 million less than we were operating the agency with just two years ago.
TBJ: BWC has initiated a Workplace Wellness Grant program. Can you explain this?
SB: I think the idea has been out there, especially on the health plan side, that healthier employees help keep healthcare costs down. That same principle also operates in the workers’ comp system. People who have diabetes or suffer from obesity and other health conditions are more likely to file a claim and their recovery is likely to be longer because of these other conditions.
Seeing this trend, what I did a year ago was take $4 million we’d set aside for our safety and hygiene funding. What this does is assist employers who want to set up some health assessment with their employees and then hopefully set up coaching to remediate health conditions. Employers can apply to us for a grant and we’ll give them a grant to operate this over a couple of years and it will hopefully keep accidents and injuries down, but also educate employees.
TBJ: Can you discuss BWC efforts during the past year to address fraudulent worker claims?
SB: The Bureau has had fraud protection and detection for numerous years. What we’ve tried to do during my tenure is elevate the exposure of that. I want to talk about our fraud prevention efforts because I believe if people know we’re out there trying to detect fraud, it may have a deterrent effect on people contemplating cheating the system.
It’s also a good financial investment for the employers of Ohio. We return about $6 for every dollar we invest for fraud detection. Last year, we had 191 convictions for fraud in the system and close to $60 million recovered for our system. We have doubled our efforts on all areas of fraud, not just injured workers. We’re perusing providers who defraud, employers who defraud, and I’ve added one extra provider fraud detection team.
We have been very aggressive about this.
TBJ: This past summer, BWC announced positive results from a pharmacy management initiative. Can you discuss this?
SB: One of the areas at the Bureau that has not been managed in the classical sense is our pharmacy area. By way of background, BWC is a big buyer of healthcare in the state. Last year we spent over $800 million in healthcare for the injured workers who enter our system. Approximately $170 million of that is for pharmaceuticals. There has never even been a formulary.
A year ago, in February, we put in place a formulary. Now that we have that piece in place, we’ve started to tighten the corral to be smart about the type of drugs we’re giving our injured workers. Our system is plagued, much like the majority of the state is plagued, with the overuse of narcotics and opiates and some of those things. We’ve honed in on making sure our providers are not over-prescribing these things and causing addictions in many of our injured workers.
We’ve got some preliminary data comparing year-to-year, beginning last year February to April and then looking at this year February to April, that just by tightening this system we’ve gone down 1.1 million doses in the narcotics area alone. We’ve seen a savings year-to-year of about $15 million. It’s good to save money for the employers of Ohio, but we also believe we’re having better health outcomes for our injured workers.
TBJ: Can you explain BWC’s Destination: Excellence program and objectives?
SB: Destination: Excellence is an attempt to take all of the various discount programs that the Bureau has out there for employers on their rates and make it simpler. We wanted to consolidate them into a single, cafeteria-style list of choices for discounts that employers can choose.
We want to provide meaningful discounts to help the entire system by eliminating injuries, having better health and safety practices, and better return-to-work outcomes for injured workers. The type of things that Destination: Excellence will pay a premium discount for are employers who invest in a drug-free workplace, safety and hygiene work, people who file electronically, and so on.
It’s a summary of all of our premium-type discounts.
TBJ: Can you discuss the Drug-Free Safety Program and benefits for employers?
SB: When people come into the workplace impaired, they’re going to have more accidents. We want employers to take the time and invest in good, drug-free safety programming. There are some industries in Ohio, most notably construction, which require programming to be implemented, but we want all employers to think about these issues and put in place programs to avoid the accidents that come with impaired workers. If we can give the employers a few discounts to help them set up those programs, it’s a win-win for everyone.
TBJ: Can you discuss a BWC grant program designed to assist employers in developing transitional work programs to return injured employees to work?
SB: Transitional work is the employers thinking ahead. If a person has been injured, but we can find ways to keep them connected to their workplace, they’re going to have a better outcome in the system. The Bureau has a matching grant program (three to one with smaller employers) where the employer would go out and hire a BWC-accredited transitional work developer and those people, using the grant dollars, would come in and help the employers get the plans in place so when they do have these scenarios, they’re all ready to go.
TBJ: Are there any other issues that you would like to address?
SB: We have spent a lot of time this last year to try and look at our return-to-work initiatives. When people do get hurt, how do you bring them back into the workforce quicker? That has been the focus of a lot of our time.
At the end of the day, we’re concerned about prevention and care. We want to work all the time on preventing injuries and illness. The best injury we have in our system is the one that never comes in because it’s prevented.
One of the good news stories that doesn’t get told is the number of workplace injuries both in Ohio and nationally has fallen dramatically. That’s a credit to the employers and the employees who have begun to get the message that safety is important in the workplace.
When an injury does occur, we want to make sure the worker gets the optimal care they can get, which is why we have spent so much time talking with health systems, looking at our internal processes, and talking with injured workers trying to make sure this system works as well as it can.
Right now we’re on good financial footing at the Bureau so that allows us to turn our focus on prevention and care and try to improve the system for the employers for Ohio.