Slide 1

Arizona Workers Compensation At A Glance

Slide 2

Workers Compensation Premium Rankings

Slide 3

Arizonas Ranking 2012 Ranking: 36 (15 th lowest in country) Premium Rate Index per $100 of Payroll: $1.61 Percent of National Median ($1.88): 86% Source: Oregon Workers Compensation Premium Rate Ranking Summary Reports, Oregon Department of Consumer & Business

Slide 4

Workers Compensation Rates

Slide 5

Rate Changes in Arizona

Slide 6

WC Premiums

Slide 7

Taxable Premium In Millions

Slide 8

2012 Taxable Premium Allocation by Payer In Millions

Slide 9

Claims Frequency

Slide 10

Arizona WC Claims Frequency

Slide 11

Claim Frequency of Lost Time Claims Per 100,000 Workers Source: 2012 NCCI Arizona State Advisory Forum

Slide 12

Direct Losses & Costs

Slide 13

Total Direct Losses In Millions

Slide 14

1999 to 2011 Allocation of Losses by Payer In Millions

Slide 15

2012 Loss Allocation by Payer In Millions

Slide 16

CY Snapshot of Losses and Frequency

Slide 17

AZ Average Indemnity Cost Per Case Adjusted to Current Wage Level Actual Source: 2012 NCCI Arizona State Advisory Forum

Slide 18

Comparison to CW Average Indemnity Cost Per Case Actual Source: 2012 NCCI Arizona State Advisory Forum

Slide 19

Average Medical Cost Per Case Adjusted to Current Wage Level Actual Source: 2012 NCCI Arizona State Advisory Forum

Slide 20

Comparison to CW Average Medical Cost Per Case Actual Source: 2012 NCCI Arizona State Advisory Forum

Slide 21

Distribution of Benefit Costs Carrier Claims Ten Years Ago Today Source: 2012 NCCI Arizona State Advisory Forum

Slide 22

Distribution of Benefit Costs Self-Insured Claims Ten Years Ago Today

Slide 23

Newsworthy Notes!

Slide 24

Revenue Is On The Rise!

Slide 25

Calendar Year Admin Fund Rate Admin Fund Revenue in Millions % Change from Prior Year 2012 3.0%$27.7+14.7% 2011 3.0%$24.2+18% 2010 2.65%$20.5-21.% 2009 3.0%$26-14.8% 2008 3.0%$30.5-4.1% Admin Fund Revenue

Slide 26

Special Fund Revenue Calendar Year Special Fund Rate Total Special Fund Revenue in Millions % Change from Prior Year 2012 2.5%$23.1+14.9% 2011 2.5%$20.1+4.1% 2010 2.5%$19.3+48.5% 2009 1.5%$13-14.5% 2008 1.5%$15.2-42.6%

Slide 27

Actuarial deficit estimated as of 6-30-12: $46.9 million Special Fund Actuarial Picture

Slide 28

CalendarAdminSF GeneralSF Insolvents SF Apportionment Total 19853%1.5%004.5% 19863%1.5%004.5% 19873%1.5%004.5% 19883%1.5%004.5% 19893.%1.25%004.25% 19903%1%004.% 19913%1%004.% 19923%.75%003.75% 19933%0003.% 19941.25%000 19951.45%000 19961.25%000 19972.15%000 19983%0003.% 19993%0003.% 20003%0003.% 20013% 0 003.% 20022.75%000 20033%000 20043%1.5%004.5% 20053%1.5%.5% 5.5% 20063%1.5%.5% 5.5% 20073%1.5%.5% 5.5% 20083%1.5%004.5% 20093%1.5%004.5% 20102.65%1.5%.5% 5.15% 20113%1.5%.5% 5.5% 20123%1.5%.5% 5.5% 20132.75%1.25%.5% 5% Tax/Assessment History

Slide 29

SB 1310 Special Fund Report

Slide 30

1.The Commission shall publish a report showing the amount of cash and assets held by the Special Fund that are attributable or allocated to the payment of claims of insolvent insurers as of June 30, 2013. 2.The report shall include all insurance carriers that have had claims assigned to the Special Fund. Legislation

Slide 31

3.The report shall be accompanied by an actuarial opinion confirming the adequacy of the reserves reported and shall also include an opinion from an independent CPA that the methodology used fairly presents the attributable cash and assets. 4.The amount of attributed cash and assets shall include the total amount of monies that are held by the Special Fund from any assessments, recoveries, and released deposits. Legislation

Slide 32

5.The Commission must publish the report by the last Commission meeting in 2013. Legislation

Slide 33

SB 1148 Workers Compensation Reciprocity

Slide 34

The old A.R.S. 23-904 is repealed and replaced with a new A.R.S. 23-904. Subsection (A) is the same as it was and preserves the entitlement to AZ benefits for the worker who is hired or regularly employed in AZ but injured in another state Everything else is new effective September 13, 2013! A.R.S. 23-904. Effect of injury without the state; right to compensation of out-of- state employee injured within state

Slide 35

Insurance coverage from State A follows ERs workers performing temporary work in State B. Benefits are provided as if the worker were injured in State A. Extraterritorial Provisions

Slide 36

A state will honor the extraterritorial provisions of another state as long as the other state honors its extraterritorial provisions. Reciprocity

Slide 37

What Claims are Subject to Reciprocity? Any claim made after September 13, 2013, regardless of the date of injury. Any claim that has not been accepted as compensable or adjudicated as compensable as of September 13, 2013.

Slide 38

If Reciprocity Criteria Apply, Then: An employer and worker from another reciprocity state are exempt from the Arizona Workers Compensation Act while the worker is temporarily in Arizona doing work for the employer. An Arizona employer and worker are exempt from the application of the workers' compensation insurance laws of another reciprocity state while the Arizona worker is temporarily working in the other state doing work for the employer.

Slide 39

An Arizona worker who is injured in another reciprocity state while temporarily working in that state is entitled to receive Arizona benefits as their exclusive remedy. A worker from another reciprocity state who is injured while temporarily working in Arizona may not file a claim in Arizona. Their exclusive remedy is under the WC laws of the other reciprocity state. If Reciprocity Criteria Apply, Then:

Slide 40

An employer is exempt from requirement to obtain WC insurance in reciprocity state where worker is temporarily working because employers insurance policy in home state covers out-of-state temporary employment (extraterritorial coverage). If Reciprocity Criteria Apply, Then:

Slide 41

Employer has WC coverage in home state that covers a worker's temporary employment while in Arizona (e.g. policy with extraterritorial coverage) Employers home state recognizes extraterritorial provisions of Arizona and exempts employers and workers from application of the home states workers compensation laws. The workers compensation benefits of the home state are the exclusive remedy against the employer for injuries sustained by a worker who is injured while temporarily working in Arizona Employee has worked less than 90 continuous days in Arizona during the 365 days immediately before the date of injury Reciprocity Criteria

Slide 42

Talk to your Legal Counsel!! But Wait, There is More

Slide 43

If the Claims Division receives a claim for a worker injured while temporarily in this state, and no Arizona coverage is found, the Special Fund No Insurance Section will be notified. If it appears extraterritorial reciprocity coverage exists, the Special Fund will deny the claim and check box 11 with this explanation. The injured worker can then file in his/her state of usual employment or can protest the denial. Commission Process

Slide 44

Evidence Based Medical Treatment Guidelines

Slide 45

Legislation A.R.S. 23-1062.03, requires the Industrial Commission of Arizona to develop and implement a process for the use of evidence-based treatment guidelines, where appropriate, to treat injured workers no later than December 31, 2014.

Slide 46

Advisory Committee Established to Represent Stakeholders Dir. Laura McGrory, Chair Donald Dearth, D.C. Marjorie Eskay-Auerbach, M.D., J.D. Dennis Kurth, Attorney Chris Labban, D.O. Bill Lewis, M.D Todd Lundmark, Attorney Melinda Poppe, ICA Staff Sydney Standifird, State of Arizona Risk Management Patricia Treharne, M.D. Cathy Vines, SCF Arizona Steve Weiss, Attorney Joe Tracey, York Risk Services Group

Slide 47

Recommendations for the Development and Implementation of Treatment Guidelines Advisory Committee has agreed to the following: It is appropriate to use treatment guidelines in the management of chronic pain. Existing guidelines will be considered for adoption (as opposed to drafting Arizona specific guidelines). A multidisciplinary panel of respected specialists will be established to evaluate case scenarios under the following guidelines: ACOEM, Colorado State, ODG, and Washington State.

Slide 48

2014 Statutory Maximum AMW Beginning January 1, 2014, for injuries that occur during calendar year 2014, the maximum average monthly wage is $4,256.94.

Slide 49

Change of Physician Requests Under A.R.S. 23-1062.02 Off-Label prescription of controlled substances; Prescription of schedule II controlled substances; Reports; Treatment Plans; Definition

Slide 50

Change of Physician Requests Under A.R.S. 23-1062.02 An employer, carrier, or the Commission may request a change of physicians if the treating physician does not comply with the provisions of the statute File Request to Change Physician with the Claims Division specifically stating that it is made pursuant to A.R.S. 23-1062.02(C)(2) The Claims Division will refer the request to the Administrative Law Judge Division for investigation and resolution. If necessary, the matter will be set for hearing on an expedited basis

Slide 51

Deductible Policies Is it time to level the paying field? You decide.

Slide 52