Back to my review of the audit of Broward County School Board’s workers comp program. My last post focused on some of the specific problems identified in the Broward School Board work comp audit. This post will concentrate on more global problems, and highlight some “indicators” that you may be able to use to identify potentially problematic issues with your own program.
From 2001 to 2004, the percentage of the total program costs that were paid to “outside” entities (e.g. CorVel and Gallagher Bassett) went from 14% to 22%. However, according to the audit report,
“our tangible results, lost time, litigation expenses, permanent impairment ratings have not improved.”
Note – if your program management costs have increased but results have not improved, you have a problem.
CorVel (the managed care firm contracted with Broward’s TPA, Gallagher-Bassett), was paid over $2.7 million for the 2004-2005 school year, an amount which is greater than 10% of the actual claims paid. By any measure, that is wildly excessive. And the program is getting even more expensive – from FY 02/03 to FY 03/04, CorVel’s total expenses increased by 27.4%.
Note – if your costs go up 27% and results do not improve, you have a problem.
The average case load for CorVel’s field case managers went from 36 in 2003 to 31 in 2004. However, the number of case managers working Broward claims went from 8.6 to 12.5, an increase of almost 50%. During this period, the number of telephonic case managers did not vary, while their case load increased by 10%. Tellingly, the number of claims increased one percent during this time frame.
So, we have more case managers billing more hours for the same number of claims.
Note – if your FCM costs and staffing increases while the number of claims is static you have a problem
The audit report also noted “the District has a relatively large number of open claims which are quite old”; 146 cases are more than 10 years old, have incurred costs of almost $50 million, and comprise almost 19% of ALL claims.
Note – if one-fifth of your claims are over 10 years old, you have a problem.
The risk management department under-reported WC claims expense by about $1.7 million for the most recent school year. Leaving aside the question of “how is that possible”, this suggests a need for an annual audit to verify expenditures.
Note – if your books don’t balance, you have a problem
What does this mean for you?
This situation is gaining national attention, which should serve as a warning to vendors, risk managers, and regulators alike. Clearly there have been signs for some time of problems at Broward County – if you haven’t audited your program or services recently, best do it now.
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