Speaker: Carol Isen

Council Comment: Peter Goldstein, Deputy Director, Risk Management Division, representing City Administrator, announced his retirement from city service next month. He will be replaced by Kelly Hernandez, Risk Management Division, representing City Administrator.

Public Comment: None

Action: Minutes approved for the meeting on December 7, 2020.

Speaker: Dr. Peggy Sugarman, Deputy Director, Workers' Compensation Division

Reported on Accomplishments, Initiatives and Challenges, Covid-19, Performance Quick Facts, Claim Analytics and Financials.

Dr. Sugarman introduced the presentation topics and upcoming speakers for the Workers’ Compensation Division report. Dr. Sugarman will first discuss Accomplishments, Initiatives and Challenges for the Workers’ Compensation Division. Next, Dr. Fiona Wilson will share COVID-19 data from our ServiceNow reporting tool. Dr. Sugarman will return to discuss Performance Quick Facts. Julian Robinson, Claims Manager, will explain and share claim analytics, and Stan Ellicott, Finance and Systems Manager, will discuss the financial state of the Workers’ Compensation Division.

This quarter, the Workers’ Compensation Division completed annual OSHA injury logs and reports, which reflect new COVID-19 requirements. Our division also helped smaller departments citywide with their log and report summaries to ensure timely completion of this OSHA mandate.

The Governor signed Senate Bill 1159 in September, which requires reporting of all COVID positive cases to a workers’ compensation claims administrator, which is our role. Prior to this September requirement, we integrated new COVID-19 test result data from Color Testing Center. We have now accomplished integration of a new data stream coming from the Jail Health testing centers. This workflow accomplishes the reporting and notification of COVID positive employee information to the Sheriff’s department. Thank you Anthony Lo and Stan Ellicott for daily management of this data.

On November 30th, 2020, effective immediately, Cal/OSHA required employers to have basic safety training for all staff members. In collaboration with Ed Ochi, the Department of Public Health (DPH) and our workforce development team, we created and staged training to share with all departments, which complied with the core requirements of Cal/OSHA. We enrolled everyone, including DPH, who, even with their higher standards regarding aerosol transmissible diseases, benefited from this training. This training can be found in SF Learning.

We implemented claim system upgrades to comply with 1099-NEC information return reporting. We also issued 1,506 newly changed 1099-MISC and 235 1099-NEC returns for CCSF and SFMTA.

On the medical front, we added 60 new medical professionals to the CCSF Medical Provider Network. We brought psychologists in from Integrated Medical Case Solutions (IMCS) to provide short-term counseling and therapy. IMCS addresses mental health issues to prevent recovery delay and encourage return-to-work ability for our injured employees.

Continuing with accomplishments, our nurse triage reporting line, managed by Nonie Devens, is regularly monitored, tested, and updated with the most recent guidance for those seeking COVID-19 advice. Over 400 calls have been logged for those calling concerned about coronavirus exposure, testing, and quarantine guidelines. The nurse triage line provides advice consistent with the most recent information provided by the Department of Public Health.

Moving on to initiatives, our actuarial study by Towers Watson, regarding potential cost savings from our first year of the Carve-Out/Alternative Dispute Resolution Program, is nearing completion. This Carve-Out program serves the San Francisco Police Officers’ Association and the San Francisco Fire Fighters’ Association. March 25th, 2021 will be our first look to see what we may have saved during the inaugural year of the program. It appears we will have savings for the San Francisco Police Officers’ Association. Further results will be reported at the next Workers’ Compensation Council Meeting in June. We plan to present the results at the Joint Labor Management Committee meeting later this month.

We have several significant contracting activities underway including our Managed Care Services contract. This large contract serves Workers’ Compensation divisions of City and County of San Francisco and San Francisco Municipal Transportation Agency, providing bill review and medical treatment utilization review. This contract is nearing completion, and we expect the notice of intent to award the contract to arrive mid-March.

We have a request for qualifications (RFQ) for special investigation services which will be published in the third quarter of FY21.

Our banking services contract is under development with the Treasury and Tax Collector. We are currently in Phase III of our banking and modernization plan, which is an initiative focusing on paying recipients electronically instead of mailing checks. Phase III focuses on payment to medical providers, whereas phase II activated automated deposit for Workers’ Compensation injured employee benefits, and payments to non-medical vendors. We are some of the first government entities to do this. We are looking forward to finalizing our multi-year project to pay all parties through automatic deposit (ACH.)

We are upgrading our claims system (Claims Enterprise) on March 15th, 2021. Stan Ellicott will present the substantial benefit from this upgrade in his portion of the presentation.

For many months now, Dr. Peggy Sugarman and Dr. Fiona Wilson have met with Health & Safety professionals across the city. Safety managers, industrial hygienists, and safety analysts meet to discuss common challenges, review different safety guidance, collaborate on safety recommendations for HR policy, and discuss Cal/OSHA requirements.

Our main cost driver for this year will be the April 1st rate increase to the state Medical Legal Fee Schedule. This is the first cost increase our medical legal providers have received in fourteen years. There was public controversy regarding the state’s failure to address this sooner. This overdue price adjustment resulted in the state auditor’s report suggestion that fees increase by 30%. Slide 7 shows calculations of what a 30% fee increase could look like. The low estimate of $302,000 and the high estimate of $454,000 are for both the Workers’ Compensation Division and SFMTA.

The fee schedule has a flat fee for all reports, which can reduce costs. However, the state added a record review fee of $3 per page over 200 pages. So, while we can limit what is sent and avoid any duplication regarding legal records, we cannot control what an employee’s representative submits to a medical-legal evaluator. Therefore, the new Medical Legal Fee Schedule is likely to be a significant cost driver. There are also several bills pending in the legislature that would increase costs and increase friction. One bill would most notably allow for a public option Medical Provider Network, which allows employees to opt out of our MPN, and into a public network. This is of great concern in the industry.

Dr. Sugarman then introduced Stan Ellicott, Workers’ Compensation Finance and Systems Manager, to share what is ahead regarding the Claims Enterprise upgrade. Mr. Ellicott greeted the council and expressed his excitement as we move this project from an initiative to an accomplishment this coming quarter, as the upgrade is scheduled for March 15th, 2021. This upgrade is to the 5th generation of Ventiv technologies Claims Enterprise system. It is our primary tool used for the electronic management of Workers’ Compensation claims. The purpose of this upgrade is to comply with changing regulations which will no longer be supported on earlier versions.

Increased security management is a key feature in this 5x version. We will benefit from password management upgrades, user access security, and the provisioning process. Our former version provided all access, and then we created restrictions based on the user authority level. Instead, this Claims Enterprise 5x upgrade provides information to employees only on an as-needed basis, ensuring further security. To safeguard against any identified issues found by other users, we waited a year after release to adopt this 5x version and ensure stability. Further, the finance and systems team extensively verified the technology by performing “day in the life” testing such as adding claims, importing data from third party sources, processing payments, and transmitting check files to our printer. Hundreds of hours have been spent actively finding and correcting problems so the upgrade experience for users will be as simple and pain free as possible.

Inside the application, new enhancements include a modern user interface, dashboard integration, reserve guidelines, and an official disability module for management of return-to-work. Additionally, a new content module provides improved user interaction by allowing us to see and export data more simply than ever before.

Stan Ellicott then presented the Claims Enterprise upgrade schedule. A week prior to the upgrade, the Finance and Systems team plan to complete advance payment processing for all payments due by Sunday, March 21st, 2021. This will ensure no missed payments, and therefore no penalties, during the system shutdown. The production environment will be taken down, upgraded, and restarted on Saturday, March 13th, and tested pre-launch on Sunday, March 14th. Our launch day is Monday, March 15th and on Wednesday, March 17th we have a mandatory Q&A for all WCD staff to discuss and resolve any concerns.

The 5x launch is the pathway to many exciting future initiatives and long-term projects. This Spring, we plan to launch an enhanced content management module. This will help us with our file-and-serve responsibilities and support the timely receipt of medical reports to applicants’ attorneys. We will develop and deploy dashboards to enhance the use of ongoing system reporting to help adjusters manage claims. Departments will now be able to see and work with data at their convenience instead of view only correspondence sent from the Workers’ Compensation Finance team each quarter.

We have a large project planned to reclassify our indemnity reserves to comply with Public Self Insurer annual reporting regulations from the Department of Workers’ Compensation. We plan to report results of these changes to the council in the future.

For injured workers, the Enterprise Claims 5x application provides a secure portal where claimants may now see payments, view adjuster contact information, and includes the ability to communicate via text message. Lastly, the application introduces new functionality which serves as an alternative to the batch payment process. Instead, 5x will primarily rely on sharing data between the claim system and third-party providers.

Stan Ellicott then thanked his staff who put a lot of work into testing and preparing for the launch of the Enterprise Claims 5x upgrade.

Next, Peggy Sugarman introduced Dr. Fiona Wilson to provide the COVID-19 report. While most slides for this council meeting are updated on a quarterly basis, the slides supporting Dr. Wilson’s COVID-19 presentation have been updated very recently and are current.

Dr. Wilson began by presenting data which has been accumulated through the ServiceNow Reporting Tool. This tool allows us to study and reduce both exposures and close contacts in the workplace. The ServiceNow Reporting Tool shows 1513 employee positive reports, of which Workers’ Compensation received 532 claims for COVID-19. About 161 claims were denied due to negative test results, or because the exposure was found not to be occupational in nature. These employees contracted COVID-19 away from work, usually at home from a family member.

Of the 1513 employee positive reports, the most common employee job classifications with reported COVID-19 were registered nurses, patient care assistants, transit operators, police officers, and firefighters. Dr. Wilson said it is not surprising that health care roles have the most COVID-19 occupational exposure.

The Department of Human Resources is beginning to explore cases by race and ethnicity to understand the effects on communities by job class. The chart shows, for example, that Filipino case distribution is higher than the percentage of Filipino city employees. There is a difference in the percentage of COVID-19 cases in the City and County of San Francisco, versus the percentage of many race/ethnicity groups of city workers. The data compiles positive cases of city employees whether the exposure was from work, or from the outside community, or from a family member. We are trying to keep a lens on this race and ethnicity graphic to understand and explore if there is a workplace or home-generated issue presented here.

Slide 17 graphs dates which represent when employees tested positive for COVID-19. This graph mirrors timeline reports from the media and health care organizations since the beginning of the pandemic. The first surge was last summer, the second surge during the end-of-year holidays, and we are just now coming off our third surge.

Next, Dr. Wilson shared the process in which we investigate close contacts once we learn an employee has tested positive for COVID-19. As a reminder, close contact means being near someone positive for COVID-19, closer than six feet, for more than fifteen minutes, over a 24-hour period. In the investigations, the task is to try to determine where the employee was during the 48 hours prior to first feeling symptomatic, or, if there were no symptoms, the date when the employee first tested positive. The goal is to identify any close contacts employees who need to quarantine.

Slide 18 shows that only about 28% of our employees reported close contact exposure to others during the 48 hours prior to first feeling symptoms of COVID-19. This number has remained significantly low, likely because many employees work remotely or are diligent in practicing safety guidelines. Less than ten of our employees who had to quarantine due to a close contact at work have turned into positive cases themselves.

As of February 22nd, of the 1513 positive COVID-19 cases in our Service Now Reporting Tool, 532 Workers’ Compensation claims have been filed. The average COVID-19 Workers’ Compensation accepted claim cost is $2,729 through the duration of the claims to its closure. These figures include 4850 disability payment vouchers which are expenses incurred by departmental payroll. The average per claim medical expense was $1,527. This number reflects far more workers are recovering at home than at a hospital. Unfortunately, there has been one death citywide.

Dr. Sugarman thanked Dr. Wilson for her COVID-19 presentation and continued with a discussion of our fiscal health performance quick facts for quarter two. Slide 22 presents a snapshot of performance metrics based on a benchmark of the last four years compared to the second quarter of this year. The ratio of actual spending to the budget was 98.7% Normally this time of year we are at about 95% so we are slightly higher, spending an amount a little closer to our budget. Our claim volume, which is the number of new claims in each period, was 509 indemnity claims versus our benchmark of 401 claims per quarter. The number of indemnity claims reflect higher level, more complex claims, because they include paid time lost from work and time used to determine compensability. Those who received treatment, but did not miss out on time from work, are classified as medical claims. Our current count for medical claims is 157, which is down from a benchmark of 265. In summary, simpler medical claims are down, and more time-consuming indemnity claims are up.

We are proud that the average number days open of claims closed in the period was 165, down from the benchmark average of 234. This may be related to the number of COVID-19 claims which were not found to be positive and could therefore be closed more quickly.

Claims manager Julian Robinson was introduced to discuss claim analytics in more detail. He presented slide 24 to show our claim filing frequency measured as a citywide rolling average, comparing the past four years against the current quarter. While we are flat in terms of volume comparison to previous quarters, the content of the claims is different. This quarter, total citywide indemnity claims are up by 27%, slightly down from 32% last quarter. These are the higher-cost indemnity claims, and they include paid lost time and time used to determine compensability. This indemnity claims increase was supplemented by a decrease in medical only claims by 41% overall.

The rate of all claims incurred citywide has decreased to a long-term goal of 10 per 100 full time employees (FTE) for any recent given fiscal year. This decrease is likely due to more employees working from home. Our non-telecommuting divisions, such as Fire, Sheriff, and Police, had claim surges in November and December which led to an increase of claims incurred per 100 full time employees. Lastly, some departments, such as Recreation and Parks, show an increased rate of claims incurred per 100 FTEs due to fewer workers employed overall due to the pandemic.

Julian Robinson then continued with Litigation Statistics. Currently, about 38% of open claims are represented by counsel, and 28% of open claims are litigated. This is a downward trend for both. Represented claims are those who are managed by an attorney but may or may not have filed an application with the Workers’ Compensation Appeals Board (WCAB) or mediation through our Alternate Dispute Resolution Program. Litigated claims have a filed application with the court, or mediation through our Alternate Dispute Resolution Program, and are proceeding towards hearing or trial. Our litigated claim percentage is down this quarter over the same period in prior fiscal years.

Slide 27 shows the average cost of closed litigated claims to those claims that were closed but non-litigated. The average cost of a non-litigated claim is 8% the cost of a claim that is litigated, which is about $7,200 in quarter two of this year. One reason for increased cost on litigated claims involves the settlement of more claims in 2021 than there were in 2020 due to pandemic related delays. Additional reasons for increase cost on litigated claims include claims which tend to be open longer, may have multiple body parts included, utilize more discovery time, may contain hearings, and may consist of possible permanent disability with need for future treatments and/or medication.

Julian Robinson continued with Alternative Dispute Resolution (ADR) litigation statistics. The ADR program strives to reduce the litigation rate and consequently, save on claim costs. The San Francisco San Francisco Fire Fighters’ Association has had about 39% in represented claims and 25% volume of litigated claims. For the ADR program, representation decreased to 28% with a noticeable drop to 9% for litigated claims. This includes those with prior represented claims who opted into the ADR program, citing faster resolution, better access to care, and fewer delays.

Julian Robinson next reintroduced Stan Ellicott, the Finance and Technology Manager, to present information on the division’s financial status for the second quarter of Fiscal Year 2021.

Stan Ellicott began by talking about our financial position for fiscal year 2021. Slide 30 reflects projected actuals through the end of the fiscal year. These numbers are based on six-month actuals as well as our forecast for the remainder of the fiscal year. From a projection standpoint, the end of 2020 and beginning of 2021 have been challenging for Workers’ Compensation.

For the six-month mark, we have very favorable police department projections for this current fiscal year. Despite experiencing year over year cost increases, we anticipate a moderate surplus for this department, as we are seeing favorable preliminary savings results from our ADR program. However, due to increasing COVID-19 claims within Public Health, Fire and Sheriff departments, we also see significant year over year cost increases. While Fire is projecting moderate deficits, Public Health and Sheriff were able to carry forward a small amount of money from fiscal year 2020. So, while the deficit numbers may seem severe, the application of carry forward will soften the overall deficit for these departments.

Projections for the Human Services Agency are very favorable. There is preliminary evidence that departments able to transition to a more comprehensive telecommuting program are seeing savings from a reduction in claim filings as well the cost of those claims.

Overall, in the entire program, at this point in the year we have about a 1% deficit for our top ten client departments. These are also the departments who have been the most impacted by COVID-19. They are also the departments whose workforces and work patterns were not lessened by shelter in place or telecommuting programs. For the entire program, we see a moderate surplus comparing our Annual Appropriation Ordinance budget to the projected actuals for the year.

The next slide depicts costs by category. Included are Fiscal Year 2019 and Fiscal Year 2020 actuals. This year, we are projecting a 23% increase in temporary disability benefits in fiscal year 2021. Our studies conclude that the incidents of temporary disability on a claim have increased, which means that on average, the likelihood that some form of temporary disability being paid is greater than in previous years, and the duration of temporary disability benefits have also been longer.

One of the tools we are hoping will have an impact on these figures and bring down our projected actuals is the deployment of the Official Disability Guidelines module in our Claims Enterprise system. This tool uses proprietary claim statistics and provides disability duration estimates for all injury types. We plan to use this information to identify outliers and allow work with our primary treating physicians to return injured employees to work in a timeframe that is medically feasible.

Medical expenses, another cost driver, are flat for the year. Early on, and in fiscal year 2020, the pandemic disrupted access to medical care for many injured workers. As access improves, injured employees are seeking more care in 2021 than in last year. Nonetheless, we are anticipating a slight decline in medical expenses based on the information that we have at this time. Overall, benefit expenditures are up by 3.3% for the entire program for all benefit costs. We are addressing the increased costs by eliminating some investigation services and by controlling contract costs to deliver the lowest expenses possible to the program.

Dr. Sugarman thanked Stan Ellicott, Julian Robinson, and Dr. Fiona Wilson for their presentations. She congratulated Peter Goldstein on his retirement and turned the meeting back to Director Isen.

Council Comment:

Speaker: Dan Roach, San Francisco Municipal Transportation Agency

Mr. Dan Roach greeted the council. He congratulated Peter Goldstein on his retirement and thanked him for his past collaborations. Next, Dan Roach thanked Peggy Sugarman, Julian Robinson, and Stan Ellicott on the great job regularly working in partnership on the Workers’ Compensation programs.

Mr. Roach began his presentation by reporting on claim volumes based on rolling 12-month reports. Slide 34 represents claim volumes by frequency. Viewing the 12-month trend, we saw a significant increase in claims in January and February of last year. For claim volumes, we also had a significant spike this current January. Most of these claims are report only claims. In terms of indemnity claims or medical only claims, we stayed relatively flat. The overall claims experience has been lower for the pandemic period. Claim volume has not returned to pre-pandemic levels.

Dan Roach continued by reporting on Financials. Slide 35 breaks out the overall expenditures of the program. In terms of indemnity, we have seen an increase of 13% in temporary disability and a slight dip in permanent disability of 4%. In terms of overall medical, we have seen a significant decrease in expenditures of 15%. We also see a total expense decrease of about 30%. Comparing 7-month expenditures current fiscal year to prior fiscal year, overall, we see an expense decrease of approximately $400,000.00 or 2.32%.

The Cause Analysis slide graphically demonstrates where our injuries are occurring in the agency. The top causes are repeated motion, assaults, vehicle accidents, and continuous traumas. We added a column for pandemic which describes the frequency of COVID-19 claims, of which most are report only. You can see that this last quarter spiked with 43 claims while the previous two quarters reported only 18 claims each.

Next, Dan Roach presented the data of Agency Injury Rate per 100 Employees. This has trended down over the past year or so. The pre-pandemic numbers were 10-11 injuries per 100 employees. Now the injury rate per 100 employees is down to 7.731%. As we have a significant number of front-line employees, namely transit operators, station agents, and parking control officers, whose numbers are growing as we increase services, this is a good rate for the agency.

We have calculated that our litigated ratio, that is, the rate of injured workers who are represented by attorneys compared to unrepresented injured workers, is flat at 38%. This is the number for cases where the employee is represented and not necessarily litigating.

Next, Dan Roach spoke on what the SFMTA is doing in terms of pandemic claims management. The pandemic has led to less access to medical treatment modalities including remote physical therapy and less surgeries for most claims. Many doctors are not supplying the level of service for Workers’ Compensation cases as they used to. As a result, the agency is seeing longer periods of total temporary disability compared to non-pandemic cases. We are also seeing less access to medical-legal evaluations, and less modified return-to-work options. These are all cost drivers impacting claims and making it difficult to close claims and reduce costs.

Claims management has taken a few steps to mitigate these cost drivers and achieve better claims outcomes. Some of what we have done to offset these impacts, is incorporate claims practices consistent with SB1159. SB1159 presumes cause for COVID-19 claims and includes a shortened investigative period. SB1159 also includes a temporary disability offset of using COVID-19 sick leave for the first two weeks of injury.

The SFMTA has also focused on early return-to-work opportunities, looking for ways to bring injured workers back within their temporary work restrictions. This includes faster return to service programs, as well as an increased ambassador presence within the city for MTA.

Another effort revolves around nurse case managers and targeted intervention. We have identified and focused on cases where temporary disability had extended for a longer period than expected. To mitigate costs and return the employee to work, we designed targeted intervention where we assign a specially trained nurse case manager to make a one time visit with the primary treating physician along with the employee. The three parties discuss the benefits of returning to work and downside of staying off work for prolonged periods. We highlight that returning to work is a form of physical therapy. This meeting also gives employees an opportunity to discuss with the physician and nurse case manager any concerns prior to returning to work. We have seen positive outcomes in the two months since this program started.

Another correlated effort to offset cost drivers is to resolve claims without medical legal evaluation. Peggy Sugarman spoke to the pending increases in the medical legal fee schedule slated for April 1st, 2021. When combined with the challenge of getting a medical legal evaluation, the claim can be opened longer, driving up medical costs and indemnity costs. Settling the claim from the primary physician’s report is one way to mitigate the cost of the claim. SFMTA Workers’ Compensation has developed documentation focusing on getting permanent and stationary (P&S) reports from the treater to close the claim and avoid long delays. This is sure to have a positive effect on our claim costs.

We continue to remain below claim cost and claim average and will continue to use these mitigation tools to support the efforts of the Workers’ Compensation program. Dan Roach concluded his presentation and invited the council to ask any questions or provide comments.

Council Comment: None

Public Comment: None

Council Comment: None

Council Comment: None