Medical-only claims, also known as injury or IJ code type 6 losses in many states, are an important factor in the experience modification rating process. These claims are reduced by 70% for the mod calculation, a reduction known as the experience rating adjustment (ERA). 

Key Factors to Keep in Mind 

Before examining the scenarios to determine whether self-payment saves or costs the employer, keep the following in mind: 

• Self-payment of small claims is not legal in all states, and may be subject to fines or penalties. Specific rules are determined by state workers’ compensation statutes. 

• Self-payment of claims also has implications at the federal level if injured employees are eligible for Medicare. 

• Employer access to state or “reasonable and customary” fee schedules is an important consideration in the cost of self-paid claims. 

• Employers paying small claims out of pocket may risk liability if those claims develop into something costlier. 

Analyze Your Choices 

There are myriad reasons that ultimate costs could vary. However, in most scenarios, paying small claims out of pocket demands a detailed analysis that accounts for all associated costs, such as any fines and applicable medical fee schedules. In all cases, knowing your state rules is imperative. Refer to your state’s Department of Insurance or to the NCCI’s Unit Statistical Reporting Guidebook for more information. 

Claiming all losses results in better data—not just for the bureaus or insurance carriers, but also for you as an employer—and better data leads to more meaningful analysis opportunities. 

Getting the complete picture reveals all trends and will help you drive the most appropriate operational initiatives towards improvement.