Errors in the Worker’s Comp system cause overcharges in 1 out of 2 businesses

Which side of this overcharge line are you?

In the realm of business operations, a critical but often overlooked aspect is the experience modification factor, or MOD, akin to monitoring vital health stats like blood pressure and cholesterol.

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This figure is not just a number—it's a pivotal element in controlling your workers' compensation expenses and, by extension, enhancing your profit margins. Have you ever stopped to consider the significance of your MOD? Picture it as a financial report card: a 1.00 is akin to a "C" grade, indicating average performance, while any score above signals room for improvement.

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Surprisingly, a significant portion of MOD calculations may not accurately reflect a business's overall claims situation. My observations suggest at least 50% off MODs are inaccurately calculated, with over 75% of the data submitted to the rating bureaus being mishandled due to various reasons, including:

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• Incorrect or incomplete payroll or premium amounts reported by insurers.
• Repeated entries for the same employee injury on loss reports.
• Failure to report recovered funds from claims.
• Misapplication of credits, such as those for deductibles.
• Misclassification by adjusters, such as reporting a temporary worker in warehousing under the wrong class code, leading to discrepancies in expected loss rates.

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These inaccuracies can lead to businesses being unfairly penalized for minor claims, effectively causing a company to pay the insurer $3 for every $1 of claims paid out. The challenge lies in ensuring that the costs of replacing an injured worker's wages don't end up disproportionately inflating your premiums.

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Here's a strategic blueprint to safeguard your bottom line:

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• Prioritize Injury Prevention: Emphasize safe practices over mere safe conditions to mitigate workplace accidents.
• Implement Modified Duties: Swiftly reintegrating injured employees into the workforce through alternative roles can curtail the financial impact on your insurance premiums.
• Maintain Open Communication: Keeping in touch with injured employees can deter them from being swayed by persuasive legal advertisements.
• Forge Partnerships with Healthcare Providers: Collaborating with medical professionals who are well-versed in the nuances of workers' compensation can streamline the recovery process.

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By diligently managing your experience modification factor and adhering to these guidelines, you position your business to control workers’ compensation costs more effectively.

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This proactive approach not only aids in achieving a healthier MOD but also underscores the importance of operational vigilance in fostering a safer, more cost-effective work environment.

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Don't let an inaccurate Experience Modification Factor drive up your workers' compensation costs unnecessarily. Begin by assessing your current MOD, identifying areas for improvement, and implementing the strategies outlined above.

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Need assistance or have questions about optimizing your MOD?

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Andy can be reached at 678-215-2711 or [email protected]