Speaker: Kate Howard

Council Comment: None

Public Comment: None

Action: Minutes approved for the meeting on March 1, 2021.

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 information from our ServiceNow reporting tool and how COVID-19 has affected our city workforce. 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 launched a major upgrade to the Claims Enterprise 5X system. Thank you to Stan Ellicott and his team for pre-testing the program which resulted in a flawless launch on March 15, 2021. With this upgrade there are enhancements available including dashboard capability and disability duration models. These disability duration models will allow us to easily identify potentially high-risk claims.

This quarter also begins our preparation for mandatory state reapproval of the Medical Provider Network (MPN), which occurs every four years. Thank you to Julian Robinson, Lupe Perez, and Kathy Hermanson for preparing and filing this large regulatory package for reapproval of our MPN.

An advantage to having our own small medical provider network is that we can personally manage the list of treaters as necessary. We recently removed five providers from our MPN due to poor performance. These providers failed to adhere to state treatment standards and they failed to respond to return to work concerns.

We have some major updates regarding our Alternative Dispute Resolution program, also referred to as a “Carve-Out.” We had launched this program with the San Francisco Police Officers’ Association and San Francisco Fire Fighters Local 798 in July 2019. Our program goals included reduction in litigation, faster case resolution, and potential cost savings absent a significant increase in serious claims.

We finalized our actuarial study for SF Police and compared average loss costs and overhead of the ADR program’s first year to years 2014 through 2019. The actuaries found a 17.1% reduction of losses per $100 of payroll. Litigation rates are down significantly from 26% to 7%. This is mainly due to the addition of an ombudsperson/member advocate who works with the injured employee from day one and responds to concerns before the member reaches out to an attorney.

While cost savings was never a driver for our ADR program, we were astonished to see an estimated savings of $5.1 million in our first-year results. We amortize the savings under the given agreement, which splits savings with the labor organizations. The amortized first-year savings of $1,029,004 allows for $514,502 to be distributed to the San Francisco Police Officers’ Association for health and safety initiatives. We are in process of working with the San Francisco Police Officers’ Association on a spending plan for these savings. We will begin studying the second-year results shortly to see how well we have held to these savings.

The actuarial study for San Francisco Firefighters Association has been accepted in draft form. No savings were identified due to adverse claim development. However, reduction of litigation was found as a positive outcome of the study.

Initiatives in the next year include undertaking some major contracts. Our request for proposal for the large managed care services contract has been completed. This includes bill review and medical utilization review. Additionally, a contract with new provider Allied Managed Care is underway with planned service implementation in late fall, 2021.

Phase three of our banking services project, which allows electronic payment to employees for disability and expenses, will now allow for automatic deposits to our medical providers. This requires a contract with the Treasurer and Tax Collector which is now underway.

Lastly, Dr. Sugarman and Dr. Fiona Wilson have been meeting with health and safety professionals on a weekly basis throughout the pandemic to collaborate on safety concerns, gather information and help determine how we can best respond to our employees’ needs. Our focus is to keep COVID-19 from spreading in the workplace and stay in compliance with Cal/OSHA requirements.

We are excited to finalize our contract with the Official Disability Guidelines (ODG). These are national guidelines for disability management. The upgraded Claims Enterprise 5X system has a feature which allows us to review and manage reserves and determine how long employees should beout of work given the diagnosis(es), type of work, and any co-morbidities that may affect an employee’s recovery. Slide 9 shows how Official Disability Guidelines and analytics are integrated into claims decisions within the Claims Enterprise application. We hope to reduce costs and improve efficiency by identifying potentially high-cost claims early. With evidence-based treatment, we can improve performance for return to work, medical management, reserving, and risk assessment. Duration visualizations for each claim are provided where we can utilize ODG to analyze claim intake information and compare with a return to work (RTW) comorbidity calculator. One benefit to having access to all available diagnosis codes, demographics, and confounding factors is to identify injured workers who are out longer than anticipated. Then we can reach out to the medical provider to find out what obstacles to overcome, or what more we can do to bring the employee back to work.

Dr. Sugarman then introduced Stan Ellicott, Workers’ Compensation Finance and Systems Manager, to present what is ahead regarding the development of CompTiger, a shared, knowledge-based online resource. This tool will allow ease of accessibility between CCSF and Intercare for new and existing employees. Our aim is to create an accessible, searchable, secure, and fun online environment to collectively manage business administration information. The platform is under development and will be launched this summer alongside our new managed care services program implementation. We have identified uses to include hosting policies and procedures, contact management and sharing office schedules. We will also offer a place to share team profiles and highlight team expertise, as well as host onboarding information, and provide a location for collaborative project management.

We completed our annual survey of client departments and received feedback that departments want more information. Therefore, with Ventiv technology, we are developing a pilot dashboard reporting toolkit which will provide on-demand data. This will allow users a look into the claim system and see an overview, see tailored claim volumes, and see expenditure trends. We are developing the ability for a user to see into individual claim details including an intended plan of action to resolve the claim and return the employee to work.

Peggy Sugarman then presented the challenges of a new state medical legal fee schedule. This has been adopted for all exams occurring on or after April 1, 2021. The Workers’ Compensation Insurance Rating Bureau of California is predicting substantial cost increases of at least 22%. For example, we recently had two medical reports for one person with fees totaling around $42,000.00. While there is not much that can be done to curtail these fees, we have trained staff and created a focus group to develop workflow recommendations. Additionally, we continue to collaborate with WC City Attorneys on strategies to manage costs by avoid medical legal disputes, and by working directly with medical treaters.

Next, Peggy Sugarman introduced Dr. Fiona Wilson to provide the COVID-19 report. 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 1532 positive employee reports, of which Workers’ Compensation received 615 claims for COVID-19. About 191 claims were denied due to negative test results, or because these employees contracted COVID-19 away from work, usually at home from a family member.

Slide 14 displays dates 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. Only about 28% of our employees reported close contact exposure to others in the workplace 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.

Of the 1532 employee positive reports, the most common employee job classifications with reported COVID-19 were those of 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.

Of the 1532 positive COVID-19 cases in our Service Now Reporting Tool, 615 Workers’ Compensation claims have been filed. Only six cases have cost over $10,000.00. The average COVID-19 Workers’ Compensation accepted claim cost is $4,005 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 $568.00, down from $1,527.00 last quarter. This number reflects far more workers are recovering at home than at a hospital. Unfortunately, there has been one death citywide. Our hearts go out to the family of that individual.

Dr. Sugarman thanked Dr. Wilson for her COVID-19 presentation and continued with a discussion of our fiscal health performance quick facts for quarter three. Slide 21 presents a snapshot of performance metrics based on a benchmark of the last four years compared to the third quarter of this year. The ratio of actual spending to budget was 99.1% We are getting close to our benchmark of 95%.

Our claim volume, which is the number of new claims in each period, was 523 indemnity claims versus our benchmark of 395 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 183, which is down from a benchmark of 264. In summary, simpler medical claims are down, and more time-consuming indemnity claims are up.

The average number days open of claims closed in the period was 176, 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. Also, cases are settled more rapidly in our Alternative Dispute Resolution program.

Next, Claims Manager Julian Robinson was introduced to discuss claim analytics in more detail. He presented slide 23 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 in comparison to previous quarters, the content of the claims is different. This quarter, total citywide indemnity claims are up by 32%, slightly up from 27% last quarter. These include lost time claims and claims where we evaluate compensability. This indemnity claims increase was supplemented by a decrease in medical only claims by 31% 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 which led to an increase of claims incurred per 100 full time employees. Lastly, other departments, 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 39% of open claims are represented by counsel, and 24% of open claims are litigated which is a slight drop from our prior quarter, which was 28%. We are seeing that the Alternative Dispute Resolution program has a profound affect on these decreased percentages. 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 include 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 26 shows the average cost of closed litigated claims to those claims that were closed but not litigated. The average cost of a non-litigated claim is about 10% the cost of a claim that is litigated, which is $8,127 in quarter three 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, such as exam postponements. 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, and a few larger police and fire settlements.

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. Fiscal years 2017-2020 saw about 45% litigation within claims for the San Francisco Fire Fighters’ Association, and 50% litigation for the San Francisco Police Officers’ Association. Last year was our first full ADR program year, those claims are now becoming aged, and may become more complex, and/or represented by council over time. Overall, Fire had 30% represented claims, but in the ADR program we had only 2% claims litigated. Further, for police, the numbers dropped from 39% litigated outside the ADR program, to 6% litigated within the ADR program. The ADR program helps significantly reduce litigation.

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

Stan Ellicott began by talking about our department expenditure trends. Our ten largest departments comprise roughly 90% of total spending for Workers’ Compensation. Presented here are eleven months of actuals against the revised budget. The bottom line is we are up about 5% fiscal year in total cost including benefit expenditures and claims administrative expenses.

Police has a projected surplus of 3.4 million dollars. There is a year-over-year reduction in expenditures of $580,000.00, which we attribute to the success of the ADR program. Due to increased COVID-19 claims, the Department of Public Health has a moderate deficit this year of $550,000.00. This is primarily due to more costs in the Zuckerberg SF General Hospital. The Fire Department has the most pressure on its budget this year. This is attributed to factors such as medical expenditures, increased temporary disability benefits, and lastly, settlement of a large serious and willful claim, which amounted to roughly half of the deficit. Human Services Agency has favorable expenditure results of $436,000 and will have a year-end surplus of about $1.6 million.

The next slide depicts costs by category. Included are fiscal year 2019 and fiscal year 2020 actuals. This year, we are projecting a 26.2% increase in temporary disability benefits. 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 up 1.8% 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 5.4% 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 returned the meeting back to Director Howard.

Council Comment:

Public Comment: None

Speaker: Dan Roach, San Francisco Municipal Transportation Agency

Mr. Dan Roach greeted the council. He thanked Peggy Sugarman and the Workers’ Compensation team for their innovation, participation and collaboration working in partnership with the SFMTA Workers’ Compensation programs.

Mr. Roach began his presentation by reporting on claim volumes based on rolling 12-month reports. Slide 33 represents claim volumes by frequency, broken down by indemnity, medical only, and other. Viewing the 12-month trend, we captured the pandemic period. For claim volumes, we had a spike in 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 34 breaks out the overall expenditures of the program. In terms of indemnity, we have seen an increase of 9.3% in temporary disability and a slight dip in permanent disability of 1.7%. The grand total reflects an increase of less than 1% which is a great result despite the increase in total temporary disability.

As we have been experiencing more cases of disability and longer duration of disability during the pandemic period, claims management has taken a few steps to mitigate cost drivers and achieve better claims outcomes. Along with Intercare, we have 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 onetime 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 beginning 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.

As we continue to remain below claim cost and claim average, we will continue to use mitigation tools to support the efforts of the Workers’ Compensation program.

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 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. While pre-pandemic numbers were 10 injuries per 100 employees, the injury rate per 100 employees is currently down to 7.37%. 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. There are less injuries reported as employees work remotely.

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 37.5%.

Dan Roach concluded his presentation and invited the council to ask any questions or provide comments.

Council Comment:

Public Comment: None

Council Comment: Director Howard commented on behalf of Todd Rydstrom, who would like to hear reporting towards gender and racial equity impact in the Workers’ Compensation claim environment as it becomes available.

Council Comment: None