There is no such thing as a quick fix for an out of control EMR, XMOD or Experience Modification Rate!! Sorry, I just had to get this out of the way…AGAIN!
We are contacted almost daily by an employer, usually a contractor, who has had their EMR go through the roof. They need a quick fix to reduce their EMR. The call usually comes because their mod has gone over 1.0 and they are about to lose job contracts or they are soon to be banned from bidding on new job contracts.
The truth, and for most employers a rude awakening, is that there is no such thing as a quick fix! Think of workers compensation experience rating is a timed event. An EMR rating formula looks back at an employers claim and payroll history over what’s known as the experience period. Did I say it uses historical data? Typically the EMR looks back four years, throws out the most recent year and uses that data to generate the current EMR.
The development of an EMR is complicate in it’s details but really simple in some ways. From a big picture point of view these three items make the greatest impact:
And out of these three, claims make the most obvious impact.
When it comes to developing a solution to regain control of an EMR then concentrating on workers comp claims is a good first place to start. Get a handle on claims, both frequency and severity, and you’ll begin to see a positive result in the experience modification rate. But this has to be kept in the realm of reality. A high EMR didn’t just occur overnight. No it took time and like wise it will take time to correct.
Remember the experience period? You know, it’s that three year window where claim data is gathered. It works as a sliding scale where older claims, those that occurred during the oldest policy period, will fall off and be replaced by newer claims, those that occurred during the most recently included policy period, with those in the middle sliding back one year. The very nature of the system used in gathering and processing data for the development of an EMR is the reason there can be no quick fix!
Here’s a few things an employer with high EMR problems should do:
- Contact an independent workers compensation consultant and make arrangements to have their EMR, XMOD or EMOD reviewed.
- Learn about the system and the independent factors used in the development of an EMR.
- Become involved in the claim process and have all workers compensation claims reviewed by an independent workers comp consultant.
Hope this helps you out! Thanks!