Workers’ Compensation for Medical Groups

By Nick Zingaro

Workers’ compensation is a significant cost for many medical groups. With the development in the cost of claims as well as the recent experience modification rating update, workers’ compensation continues to be an increasing cost in New York State. 

Often, we hear clients tell us, “the rate is the rate for our class of business”. Workers’ compensation is often considered a fixed cost that cannot be controlled by most medical practices. Although this can be true, there are a few factors that can help reduce your overall cost:

1. The Experience Modification Rating (EMR or “MOD”): Each practice or entity is given a MOD calculated by New York State (NYS), based on their workers’ compensation claims over a rolling three-year period. A MOD of 1.0 is what NYS expects your losses to be, based on your industry and payroll size. If you have a rating over a 1.0, your losses are above what would be expected, and a corresponding debit will be applied. Conversely, if you have a rating below 1.0, you are outperforming expectations and a credit on your total premium will be applied, lowering your overall costs.

Example based on a $50,000 premium: 

A MOD of 1.20, will result in a 20% debit, for a premium of $60,000. 

A MOD of .80, will result in a 20% credit, for a premium of $40,000. 

The MOD is currently a hot topic, because the calculation that NYS uses to determine the MOD has recently changed – many practices with a “good” MOD (1.0 or lower) are seeing even larger credits applied, however, those with a “poor” MOD (above 1.0) may see more significant debits applied to their premium. You can read more about recent changes to the MOD here. 

2. Base Rates: Workers’ compensation base rates, determined by NYS, are decreasing across the industry. This is great news for medical groups. However, this comes with a catch… with the frequency of claims and severity of settlements continuing to increase, carriers and NYS are using alternative methods to increase overall premiums, including using higher LCMs and the adjusted MOD calculation.

3. Loss Cost Multiplier (LCM): Each insurance company or carrier will have its own designated LCM, which is added to the NYS base rate. The higher your workers’ compensation carrier’s LCM, the more premium you will ultimately pay. A higher LCM results in higher premiums from that specific carrier. All carriers have their own LCMs filed with NYS, so it is important to compare. 

Now more than ever, it is critical to work with an insurance professional who can help navigate and address these topics. OneGroup has a team of experts that understand the unique challenges faced by medical practices and the healthcare industry.

We recommend you give us a call or reach out to your current broker to talk through your unique workers’ compensation program and ways to control your cost.