Understanding Your Experience Mod Factor

Have you been told by your agent to pay small medical only claims? If so, contact us immediately to find out why that is bad advice. Has your agent ever showed you what your minimum modification factor is? If not, you should contact us so we can show you how important it is to understand your experience modification factor.
Nebraska is one of many states that have adopted the experience rating adjustment (ERA), which reduces all medical only claims by 70 percent before the numbers are utilized in the experience modification calculation.
The reason behind this adjustment was to decrease the incentive for employers to pay the small medical only claims themselves and not report them to the insurance company. Insurance carriers and the NCCI feared that these claims could be handled incorrectly and unreported data could skew rates in future years. With this adjustment, indemnity claims have a greater impact than medical only claims and insured’s need to know how much a loss time claim can affect their experience modification factor. For example, a $3,000 medical only claim will be reported as a $900 primary loss, but a $2,900 medical and a $100 indemnity claim will be reported as a $3,000 primary loss because the indemnity payment prevented the medical only classification.
Most business owners understand the impact the experience modification factor has on the cost of workers compensation insurance. Some owners attempt to lower their experience mod by paying small claims themselves. They are often disappointed when this does not have the desired effect. It is crucial that these med only claims be reported correctly on the NCCI Mod Sheet. We often find errors are made with these claims and the experience modification is incorrect.
The first step in effectively controlling your mod is to understand how it is calculated. Using ModMaster we can assist you in understanding:

1. How much of the modification factor can be controlled.
2. The minimum mod for your company. This is something that should be shared with supervisors and management.
3. How much impact past claims are having.
4. Analysis by cause of injury, size of claim, and classification of employee.
5. Understand the true cost of a loss.
6. Show you why paying smaller claims didn’t help your modification.
7. Anticipated future mod factors based on current claim trends.
Once you understand what makes up your experience mod, we can help you develop a modification management program. This includes identifying and correcting errors, proactive efforts to close claims and reduce reserves, and focusing return to work efforts.
We are the only Certified WorkComp Advisors in Nebraska. UNICOMP provides you with the resources to support your modification management program. Some of the services we can provide are:
• We provide claim reviews that monitor claim activity and negotiate reserves with adjusters. We have a proven track record in lowering these reserves which has a direct impact on your experience modification factor. Review for proper claim reserving by the insurance carrier and negotiate the closing of inactive claims prior to being reported to the statstical rating bureau for calculation of your experience rating.
• These reviews provide a complete report on claims including return to work status, doctor and therapy appointment dates, progression of medical treatment, medical and surgical reports, conference setting dates and reserved and paid claim amounts.
• Annual review of your experience modification rating worksheet for correct payroll by classification.
• Third party or subrogation claims are monitored until recovery is obtained.
• Claim closings will be included in the claim report outlining the amount of the permanency settlement, if applicable, and indemnity and medical final payments.

Contact us if you’d like to learn more about your experience modification factor and how you can do more to control it. Carl Zeutzius czeutzius@unicogroup.com