N.Y. DFS Disapproves NYCIRB’s +6.8% Loss Cost Level Change Filing

July 17, 2014

The New York Compensation Insurance Rating Board (NYCIRB) announced in a bulletin yesterday that the New York Department of Financial Services (DFS) issued an opinion and decision letter disapproving the +6.8 percent workers’ compensation loss cost level change filed with the DFS on May 15, 2014 for an effective date of Oct. 1.

Consequently, the NYCIRB noted, the current loss costs and rating values will remain in effect. Carriers, however, have the option to file revised loss cost multipliers with the DFS.

The NYCIRB is a non-profit, unincorporated association of insurance carriers that serves as the state’s official workers’ comp rate service organization to collect the loss, premium and payroll data from each carrier, summarize this information and develop an adequate rate structure.

In its opinion and decision letter issued on July 11, the DFS said it disagreed with the NYCIRB’s permanent partial disability (PPD) duration cap loss assumptions and the Reopened Case Fund (RCF) closure assumptions. Additionally, the NYCIRB this year selected private carrier premium development factors, excluding large deductible experience, based on an average of latest three years of available experience, instead of the latest two year average used in the last two filings. But the DFS said it disagrees with the change in the NYCIRB’s methodology.

The DFS also stated that the state’s Workers’ Compensation Board (WCB) guideline reforms would allow carriers to realize “meaningful savings.”

The DFS noted that the WCB is reforming a number of guidelines governing how benefits are administered to injured workers. The WCB recently announced reforms to the Mid and Low Back; Shoulder; Knee; and Carpal Tunnel Syndrome Medical Treatment Guidelines and introduced new Non-Acute Pain Guidelines, which are expected to be implemented before Oct. 1, 2014.

The DFS noted that the proposed Non-Acute Pain Guidelines, for example, are designed to change the way that medical care is administered to injured workers — particularly as it relates to drug testing, psychological evaluations and treatment, active physical therapy, and chiropractic care — to reduce their use of and dependence of opioids. Moreover, the new guidelines will require the use of generic drugs and limit the number of injections that may be administered to “trigger points,” the DFS stated.

Based on the experience of other states that have implemented similar guidelines, particularly Washington in 2011, the reforms to existing guidelines and the new Non-Acute Pain Guidelines are expected to substantially reduce the related medication costs incurred by workers’ comp insurers, the DFS stated.

And when these developments are coupled with other possible reforms that may be implemented over the next policy period by the WCB, the DFS said it would expect carriers to realize meaningful savings in both claims payments and necessary reserves.

 

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