| |
JLARC
Performance Audit Recommendations
Recommendation
I
The Department should consider the possibility of having
a board that would oversee its activities related to insurance
services.
| Legislation
Required: |
Yes |
| Fiscal
Impact: |
Would
depend on the board's duties, frequency of meeting
and size of staff |
| Completion
Date: |
|
| Agency
Response: |
Non-concur |
We
believe setting up a board to appoint the head of
workers' compensation and direct it's activities would
make this important function of state government less
accountable to the voters of the state. Currently,
an elected Governor appoints the director. The audit
proposal adds another layer between the voters and
the head of workers' compensation. It would also weaken
the Legislature's ability to hold the agency accountable.
A board composed of management and labor representatives
can provide valuable perspectives for the workers'
compensation system. We believe the existing statutory
Workers' Compensation Advisory Committee plays this
role. The agency will work with business and labor
to strengthen the effectiveness of this committee. |
Recommendation
2
The Department should adopt an alternative system for
the reporting of injuries. The worker would report to
the employer, and the employer would report to the Department.
An educational effort should be launched to promote this
method of reporting.
| Legislation
Required: |
Yes |
| Fiscal
Impact: |
Significant.
Depends on extent of changes |
| Completion
Date: |
January
2001 |
| Agency
Response: |
Concur |
| We
believe this recommendation represents a positive
improvement to the workers' compensation system by
involving employers earlier in the claims process.
However, significant policy questions regarding alternative
reporting methods and failure-to-report requirements
should be addressed by the Workers' Compensation Advisory
Committee in the design of the new reporting system. |
Recommendation
3
The claims functions should be organized into units that
include five to seven claims adjusters, clerical support
and a claims supervisor.
| Legislation
Required: |
No |
| Fiscal
Impact: |
Significant |
| Completion
Date: |
|
| Agency
Response: |
Non-concur |
The
agency has launched a major initiative to improve
timeliness, fairness of service and provide better
communication with employers and claimants. We have
created 67 new claim manager positions and added 16
other workers' compensation staff. New staff are either
in training or have completed training, and appointments
must be made to a number of vacant positions. Caseloads
are being reduced, and we established three new units
to reduce the span of control for supervisors, though
not to the level recommended in the report.
In addition, claims administration recently implemented
significant changes in the way work is organized and
in claim managers' duties. A coach-mentor unit has
been set up to provide technical advice to claim managers.
These changes are targeted toward the agency's commitment
to a significant reduction in long-term disability
and duration of time-loss - - by the year 2000. The
past year's work is part of a long-term strategy and
has set the groundwork for significant improvement.
We believe moving to even smaller units would disrupt
this ongoing effort.
The current effort should be implemented and the results
measured before a decision is made on whether to again
reorganize the claim units. We believe this approach
will achieve the same improvements to claims processing
without the need to create additional supervisory
positions for the smaller units. |
Recommendation
4
To the greatest extent possible, employers should be
assigned to an individual claims adjuster.
| Legislation
Required: |
No |
| Fiscal
Impact: |
Minimal |
| Completion
Date: |
July
2002 |
| Agency
Response: |
Partially
concur |
| The
agency has previously considered this option and decided
to wait until other changes were completed. Considerable
computer programming would be required, and the agency's
resources now are centered on complying with year
2000 requirements. Employer assignment of cases could
benefit large employers and their employees. Appropriate
assignment of claim managers to small employers, who
may have one claim every few years, may best be done
on an industry basis. Further analysis is needed to
determine the optimum size and how the accounts would
be distributed. |
Recommendation
5
Claims management duties should be changed as follows:
| A. |
There
should be a personal contact with the three key parties
involved in a claim as soon as possible and no later
than 48 hours after a report is received. |
|
| Legislation
Required: |
No |
| Fiscal
Impact: |
Minimal |
| Completion
Date: |
July
1999 |
| Agency
Response: |
Concur |
|
The agency will need to make other changes in
workers' compensation processes to allow the
additional time claim managers will need to
make these personal contacts. |
|
| B. |
All
new claims should be reviewed by a claim supervisor
within three days after the report is received. |
|
| Legislation
Required: |
No |
| Fiscal
Impact: |
No |
| Completion
Date: |
Pilot
will be completed by July 1999 |
| Agency
Response: |
Partially
concur |
| The
agency is will pilot a "triage" system to identify
potentially difficult compensable claims when
they are filed. Experienced claim managers will
immediately review these claims so that quick
action can be taken. The "triage" approach will
allow critical judgments to be made about potential
problems when a claim is filed. |
|
| C. |
The
people handling claims should set reserves on those
claims. |
|
| Legislation
Required: |
No |
| Fiscal
Impact: |
Moderate |
| Completion
Date: |
Pilot
will be completed by January 2001 |
| Agency
Response: |
Partially
concur |
| Claim
managers previously set reserves on claims.
In the mid-1980s, however, the Department established
a claims reserve unit for greater consistency
and accuracy. The Department will test this
recommendation with a claims unit. |
|
| D. |
The
people handling claims should be required occasionally
to visit the workplaces involved. |
|
| Legislation
Required: |
No |
| Fiscal
Impact: |
Moderate |
| Completion
Date: |
Ongoing |
| Agency
Response: |
Concur |
|
| E. |
Claims
adjusters should have sufficient support for clerical
and investigative tasks. |
|
| Legislation
Required: |
No |
| Fiscal
Impact: |
12
FTEs |
| Completion
Date: |
July
1999 |
| Agency
Response: |
Concur |
| The
Department agrees that this would be helpful
to claim managers. To investigate 3 percent
to 5 percent of claims as recommended, the agency
will need 12 additional staff. |
|
Recommendation
6
The measurement of claim management performance should
be changed to emphasize prompt payment, three-party contact
and successful return to work.
| A. |
Prompt
payment. |
|
| Legislation
Required: |
No |
| Fiscal
Impact: |
Programming
costs |
| Completion
Date: |
July
2000 |
| Agency
Response: |
Concur |
| We
agree with the goal of prompt payment. According
to statute, the agency currently measures and
is accountable for timeliness of payment within
14 days of when we receive the claim. We pay
approximately 94 percent of the claims in a
timely manner. Many states do not measure timeliness
based on injury date as the audit recommends.
Clearly, we need to improve the prompt payment
standard and will work with the Workers' Compensation
Advisory Committee to develop a better measure. |
|
| B. |
Three-party
contact. |
|
| Legislation
Required: |
No |
| Fiscal
Impact: |
Minimal |
| Completion
Date: |
July
2000 |
| Agency
Response: |
Concur |
|
| C. |
Successful
return to work. |
|
| Legislation
Required: |
Yes |
| Fiscal
Impact: |
Significant |
| Completion
Date: |
July
2000 |
| Agency
Response: |
Partially
concur |
| The
Department agrees that one performance measure
should be the percent of injured workers who
successfully return to work. Calculations of
return to work would require extensive use of
the Employment Security database, rather than
creating a new database at Labor and Industries.
Any measurement of return to work would be affected
by factors such as a workees level of education,
local economic conditions, a workers motivation
to return to work, the success of the attending
physician and vocational rehabilitation. The
Department will work with the Workers' Compensation
Advisory Committee to develop the appropriate
measure. |
|
Recommendation
7
There should be less reliance on the formal claim closure
process.
| Legislation
Required: |
Yes |
| Fiscal
Impact: |
Yes |
| Completion
Date: |
January
2000 |
| Agency
Response: |
Partially
concur |
| The
agency will undertake a review of many aspects of
its claim closure process, including the use of independent
medical exams, to streamline the closing process.
We recently have improved communication related to
claim closure as a result of adding claim staff and
revising the letters and notices we send to employers
and claimants. The Department will continue to use
formal claims closures to preserve claimants' rights
to be notified of this important decision to close
a claim and retain the worker's right of protest. |
Recommendation
8
There should be a compliance unit within the Department
that monitors the operation of the Insurance Services
Division and self-insured employers.
| Legislation
Required: |
No |
| Fiscal
Impact: |
No |
| Completion
Date: |
July
1999 |
| Agency
Response: |
Partially
concur |
| The
Department will strengthen its Quality Assurance (QA)
unit as part of the current improvements to claim
management. The QA unit will monitor the State Fund
claim management activities for consistency, fairness
and accuracy. We believe this will most appropriately
meet the goals set in this recommendation. The agency
believes the existing oversight of self-insured employers
should continue. (See response to Recommendation 10.) |
Recommendation 9
The Department should offer some form of ongoing refresher
training for all individuals who manage claims.
| Legislation
Required: |
No |
| Fiscal
Impact: |
Minimal |
| Completion
Date: |
Ongoing |
| Agency
Response: |
Concur |
Recommendation
10
Once the Department has in place a compliance unit and
a system of ombudsmen or mediators, the current oversight
of the claims processes of self-insured employers should
end.
| Legislation
Required: |
Yes |
| Fiscal
Impact: |
Yes |
| Completion
Date: |
|
| Agency
Response: |
Non-concur |
| The
agency believes this proposal would remove an important
protection for the employees covered under self-insurance.
We believe the agency's self-insurance regulatory
effort has performed well and should be continued. |
Recommendation
11
When the Department begins sending monthly checks through
an attorney or when it sends any lump-sum payment through
an aftomey, it should notify the claimant of the rate
or the amount of the payment or payments sent to the aftomey
and the statutory limit on attorney fees.
| Legislation
Required: |
No |
| Fiscal
Impact: |
Minimal |
| Completion
Date: |
1999 |
| Agency
Response: |
Concur |
Recommendation
12
When the Department sends dividends to a retro group,
it should notify the member employers of the amount of
the dividend and the basis for its calculation.
| Legislation
Required: |
No |
| Fiscal
Impact: |
Minimal |
| Completion
Date: |
1999 |
| Agency
Response: |
Concur |
Recommendation
13
The Department should collect and publish information
about the performance of third-party administrators to
the extent it becomes available through audits and otherwise.
| Legislation
Required: |
Yes |
| Fiscal
Impact: |
Yes |
| Completion
Date: |
|
| Agency
Response: |
Non-concur |
| The
recommendation does not include any regulatory authority
for the agency to oversee the performance of third-party
administrators. We believe it would be inappropriate
to audit performance of third-party administrators
without legislative authority. Nor does the recommendation
clarify what information concerning thirdparty administrators
should be collected and published. The current system
holds employers responsible for the actions of their
third-party administrators. |
Recommendation
14
The Department should develop a system of allocating
indirect costs among its funding sources and publish financial
statements that clearly indicate where its funds come
from and how they are spent.
| Legislation
Required: |
No |
| Fiscal
Impact: |
Small
ongoing costs |
| Completion
Date: |
July
1999 |
| Agency
Response: |
Concur |
Recommendation
15
The Department should create a system of mediators or
ombudsmen to provide assistance to workers and employers.
| Legislation
Required: |
Yes |
| Fiscal
Impact: |
Significant |
| Completion
Date: |
|
| Agency
Response: |
Non-concur |
The
agency has launched a major initiative to improve
timeliness, fairness of service and provide better
communication with employers and claimants. We believe
this is the preferred use of claim management resources
and can help achieve the same goal. We have created
67 new claim manager positions and added 16 other
workers' compensation-related staff. New staff are
either in training or have completed training. Caseloads
are being reduced and the agency's claims administration
program recently implemented significant changes in
the way work is organized and in claim managers' duties.
We believe these changes will be sufficient to meet
the underlying concept of improving response to claimants'
and employers' concerns. The past year's work has
set the groundwork for significant improvement.
In addition, two staff members presently review claim
disputes on a full-time basis for inquiries or complaints
submitted to the Director's office. |
Recommendation
16
The Department should adopt a policy that all protests
and reassumptions are resolved within 30 days.
| Legislation
Required: |
No |
| Fiscal
Impact: |
Yes |
| Completion
Date: |
Ongoing |
| Agency
Response: |
Partially
concur |
| The
Department agrees that timely resolution of protests
and reassumptions is needed. We also agree that too
much time is spent on the process of re-doing a claim.
However, a 30-day response time would not be realistic
for resolution of the majority of protests and reassumptions.
We believe the time needed to adequately resolve these
reassumplions is within 90 days of the protest or
reassumption. Under rare circumstances, an additional
90 days might be warranted to fully resolve complex
issues. |
Recommendation
17
Superior Court review of decisions by the Board of Industrial
Insurance Appeals should be eliminated.
| Legislation
Required: |
Amend
RCW 51.52.102; 51.52.110, 51.52.115; 51.52.130; 51.52.132;
51.52.140 (as they pertain to industrial insurance
appeals) |
| Fiscal
Impact: |
No |
| Completion
Date: |
|
| Agency
Response: |
Non-concur |
| We
believe workers and employers should have the right
to trial by jury in the Superior Court to review decisions
of the Board of Industrial Insurance Appeals. The
agency will concentrate on providing better service
and communications, and streamlining its claims processing.
We feel this will result in fewer appeals of cases
to Superior Court. |
Recommendation
18
The primary goal of vocational rehabilitation as formally
stated and as observed in practice should be successful
return to work of the injured worker.
| Legislation
Required: |
Yes |
| Fiscal
Impact: |
Increase |
| Completion
Date: |
One
year after legislation is enacted |
| Agency
Response: |
Non-concur |
| We
agree that return to work is the optimum outcome for
both workers and employers. This is a complex issue,
and the goal for vocational rehabilitation must be
clearly defined in statute. Otherwise, there could
be unintended consequences that may be extremely costly.
This could significantly change the delicate balance
of our current workers' compensation system's high
benefits and low costs. Negotiations on this issue,
as well as an appropriate performance measure, should
continue within the Workers' Compensation Advisory
Committee. |
Recommendation
19
The standard for employability should be wages at the
time of injury, not the federal minimum wage.
| Legislation
Required: |
Yes |
| Fiscal
Impact: |
Substantial |
| Completion
Date: |
One
year after legislation is enacted |
| Agency
Response: |
Non-concur |
| Returning
a worker to employment at the wage rate at time of
injury is the preferred outcome. We agree that the
current standard of employability at the federal minimum
wage is inadequate. The agency believes, however,
that the recommended standard of employability would
be costly if eligibility for vocational rehabilitation
is not properly defined. Negotiations should continue
on this topic, as well as Recommendation 18, within
the Workers' Compensation Advisory Committee. |
Recommendation
20
Increase the current monetary and time limitations on
retraining.
| Legislation
Required: |
Yes |
| Fiscal
Impact: |
Moderate |
| Completion
Date: |
Within
one year after legislation is enacted |
| Agency
Response: |
Concur |
| Negotiations
on this topic should be continued within the Workers'
Compensation Advisory Committee in conjunction with
discussions concerning Recommendations 18 and 19. |
Recommendation
21
There should be an increased professionalism with regard
to vocational rehabilitation within the Department, specifically.
| A. |
The
Department should move toward requiring higher standards
of private vocational rehabilitation providers. |
|
| Legislation
Required: |
No |
| Fiscal
Impact: |
No |
| Completion
Date: |
December
1999 |
| Agency
Response: |
Concur |
|
| B. |
There
should be better availability of qualified, professional
vocational rehabilitation counselors to assist and
advise claim managers within the Department. |
|
| Legislation
Required: |
No |
| Fiscal
Impact: |
8
FTEs |
| Completion
Date: |
Ongoing |
| Agency
Response: |
Concur |
| L&I
recently converted positions for professional
vocational rehabilitation counselors to claim
manager positions. This change was made to meet
demands from employers, workers and the Legislature
to increase the speed, accuracy and fairness
of claims processing. Implementing this recommendation
will require the addition of eight vocational
rehabilitation counselors. |
|
| C. |
There
should be more effective training of claim managers
and vocational rehabilitation providers concerning
best practice methods for achieving the Department's
hierarchy of return-to-work objectives, including
the appropriate goals for and effective use of vocational
rehabilitation services. |
|
| Legislation
Required: |
No |
| Fiscal
Impact: |
Moderate |
| Completion
Date: |
July
2000 |
| Agency
Response: |
Concur |
|
| D. |
The
sections within the Department charged with evaluating,
contracting, managing and setting policy for vocational
rehabilitation should include managerial leadership
by individuals who are qualified and experienced vocational
rehabilitation professionals. |
|
| Legislation
Required: |
No |
| Fiscal
Impact: |
No |
| Completion
Date: |
Ongoing |
| Agency
Response: |
Concur |
| The
Department agrees that vocational rehabilitation
professional expertise is important in the management
of the agency's vocational rehabilitation program.
To this end, the Department will make every
effort to include such professionals in management
policies and decision-making related to vocational
rehabilitation services for injured workers,
and to recruit such professionals to appropriate
management positions in the program as they
become available. |
|
Recommendation
22
With regard to a performance-based referral system:
| A. |
Performance
standards of quality and effectiveness in vocational
rehabilitation practice should be adequately defined
to determine the appropriate indicators to be used
and -how best to measure them. |
|
| Legislation
Required: |
No |
| Fiscal
Impact: |
No |
| Completion
Date: |
December
1999 |
| Agency
Response: |
Concur |
| The
terms 'quality" and "effectiveness" have not
been defined by the vocational rehabilitation
profession or in this audit report. We will
develop improved performance standards to better
manage Washington's vocational services through
negotiations within the Workers' Compensation
Advisory Committee. Recommendation 18, 19 and
20 will be discussed in conjunction with this
recommendation. |
|
| B. |
Measures
of satisfaction should include and focus primarily
on injured workers and employers. |
|
| Legislation
Required: |
No |
| Fiscal
Impact: |
No |
| Completion
Date: |
December
1999 |
| Agency
Response: |
Concur |
|
| C. |
The
evaluation mechanism should include a minimally acceptable
threshold for referral. |
|
| Legislation
Required: |
No |
| Fiscal
Impact: |
No |
| Completion
Date: |
December
2001 |
| Agency
Response: |
Concur |
|
| D. |
The
full range of the providers activity in serving State
Fund cases should be considered in evaluating performance. |
|
| Legislation
Required: |
No |
| Fiscal
Impact: |
No |
| Completion
Date: |
Ongoing |
| Agency
Response: |
Concur |
| The
Department agrees that the performance measures
should incorporate additional outcomes. |
|
| E. |
All
of the parties involved should be assured that once
the evaluation is established, ft would be used in
making referrals. This assurance should be accomplished
by formalizing and announcing the procedures that
will be used to accomplish ft. |
|
| Legislation
Required: |
No |
| Fiscal
Impact: |
No |
| Completion
Date: |
Ongoing |
| Agency
Response: |
Concur |
|
Recommendation
23
We recommend a series of changes in the Department's
safety-related activities. These changes are designed
to:
- Expand emphasis
on the prevention and control of musculoskeletal disorders.
(Appendix 23-1)
- Develop
methods for more closely integrating service involving
hazard identification and control, with service aimed
at controlling workers' compensation losses. (Appendix
23-2)
- Improve
the customer-focused orientation of service content
and delivery. (Appendix 23-3)
- Improve
service communications and recordkeeping. (Appendix
23-4)
- Provide
more detailed information to employers about the availability
of specific services. (Appendix 23-5)
- Improve
responsiveness and timeliness of service delivery. (Appendix
23-6)
- Better coordinate
services among various consulting entities and eliminate
redundancy. (Appendix 23-7)
| Legislation
Required: |
No |
| Fiscal
Impact: |
Yes |
| Completion
Date: |
June
2000 |
| Agency
Response: |
Concur |
| We
agree that prevention of musculoskeletal disorders
needs to be emphasized, and we have begun to address
prevention in a comprehensive manner. We support increased
cross training and information sharing among staff.
The Department is already evaluating this issue. We
also believe that an objective internal review can
effectively address overlaps and inefficiencies in
program services. We will work with the WISHA Advisory
Committee to accomplish this task. |
Recommendation
24
We recommend that the Department produce (either through
its own actuaries or through an outside independent consulting
company) a well-documented, exhaustive actuarial rate-filing
report detailing all assumptions and methods used. It
sho!,Jld be similar to. reports that are submitted to
regulatory authorities by a licensed insurance company
in states that use a "prior approval" rate-filing procedure.
| Legislation
Required: |
No |
| Fiscal
Impact: |
Moderate |
| Completion
Date: |
|
| Agency
Response: |
Non-concur |
| Well
documented information on the development of rates
is currently available. In addition, we provide customized
information on request. |
Recommendation
25
Adopt a plan by which excess premiums are returned as
dividends to prior contributors - both employers and employees
- that generated the excess premiums, rather than to future
policy holders/contributors as reduced rates.
| Legislation
Required: |
Yes |
| Fiscal
Impact: |
Major
programming costs |
| Completion
Date: |
First
quarter, 1999 |
| Agency
Response: |
Partially
concur |
| We
currently are providing a dividend to employers from
the Accident Fund. We believe it would be practically
impossible to provide dividends to the more than 1
million employees who contribute to the Medical Aid
Fund. The Department receives no information concerning
individual employees' contributions to the Medical
Aid Fund. The contributions are collected by employers
and submitted to the Department for deposit in the
Medical Aid Fund. We believe lowering rates is. the
only practical way to distribute excess Medical Aid
Fund premiums. |
Recommendation
26
Adopt changes in the rate-sefting process that are discussed
in detail in Appendices P and Q and which are designed
to minimize cross-subsidies.
| 26
a. |
(No.
1 Appendix P) Adjust Accident and Medical Aid funds
premium rates the same percentage as for Retro refunds. |
|
| Legislation
Required: |
No |
| Fiscal
Impact: |
No |
| Completion
Date: |
|
| Agency
Response: |
Non-concur |
| Retrospective
rating adjustments are not considered in setting
Medical Aid Fund premium rates because Medical
Aid Funds are not being used to pay for these
refunds. |
|
| 26
b. |
(No.
2 Appendix P), Eliminate the adjustment for Retro
refunds in the determination of classification rates. |
|
| Legislation
Required: |
No |
| Fiscal
Impact: |
No |
| Completion
Date: |
|
| Agency
Response: |
Non-concur |
| Retrospective
rating adjustments must be considered in setting
Accident Fund premium rates because Accident
Fund dollars are being used to pay for these
refunds. |
|
| 26c. |
(No.
2 Appendix Q) Evaluate loss development for serious
and non-sedous claims. |
|
| Legislation
Required: |
No |
| Fiscal
Impact: |
Programming
required to develop actuarial database |
| Completion
Date: |
2001 |
| Agency
Response: |
Concur |
|
| 26d. |
(No.
3 Appendix Q) Implement a dividend program to release
excess reserves. |
|
| Legislation
Required: |
No |
| Fiscal
Impact: |
No |
| Completion
Date: |
First
quarter, 1999 |
| Agency
Response: |
Concur |
|
| 26e. |
(No.
4 Appendix Q) Incorporate an adjustment for the impact
of experience rating by classification into a classification
rate-making system. |
|
| Legislation
Required: |
No |
| Fiscal
Impact: |
Minimal
(some programming, perhaps) |
| Completion
Date: |
|
| Agency
Response: |
Non-concur |
| The
agency believes it would be actuarially incorrect
to make su ch adj | | | | |
