Speaker: Carol Isen

Council Comment: None.

Public Comment: None.

A quorum was not present to adopt the June 6th minutes.

Action: June 6th minutes will be presented for adoption at the December 5th, 2022, meeting.

Dr. Peggy Sugarman, Deputy Director, Workers’ Compensation Division

Reported on Accomplishments, Challenges, and Initiatives

Dr. Peggy Sugarman thanked Director Carol Isen and greeted the council and those in attendance. She shared this will be her last presentation to the Workers’ Compensation Council as Workers’ Compensation Director. Dr. Sugarman shared the agenda covering accomplishments, initiatives, and challenges for the Workers’ Compensation Division. Dr. Fiona Wilson will present the COVID-19 report. Dr. Peggy Sugarman will return to discuss key performance indicators. Then, Finance and IT Manager Stan Ellicott will present key performance indicators and financial reports. Lastly, Julian Robinson, Claims Manager, will share and explain claim analytics. Dr. Sugarman will return for some final words of goodbye.

Dr. Sugarman began the presentation by sharing key accomplishments over the past ten years of her tenure.

• Organizational restructuring & staffing enhancements to keep up with growing claim volume, benefiting in increased oversight
• Implementation of Electronic Deposit for employee Workers’ Compensation payments, which helped avoid payment delays during the COVID-19 pandemic
• Implementation of two “Carve-Out”/Alternative Dispute Resolution Programs with SFPOA and SFFA Local 798, saving an estimated $5 million in Year one and $2 million in Year two
• CCSF Medical Provider Network oversight and administration
• Catastrophic Illness Program Management since 2015
• Implemented mandated state reporting that had been required since Y2K
• Overhauled Medicare Reporting to achieve compliance
• Implemented 24/7 Nurse Triage/Injury Reporting hotline
• Technology improvements/initiatives
• Integration of Disability Duration/Risk Assessment tool in claims system
• Improved claims oversight, internal & external audits
• Clinical staff now a regular part of WCD/DHR
• Implemented a Pharmacy Benefit Network program resulting in oversight, volume discounts, and easier access to prescribed medication
• Served the City for COVID-19 management, including CityTestSF, data distribution, Cal/OSHA compliance, medical outreach to ill employees of all departments
• Launched Citywide Safety/Loss Prevention Program
• 26,703 claims opened; 35,052 claims closed – 134% closing ratio!

Dr. Sugarman continued with the accomplishments achieved during Fiscal Year 2022.

• Managed through the largest-ever claim volume increase in our known history, 1,295 additional new claims or 50% increase, with limited additional temporary staffing
• Obtained $13.1M Supplemental Appropriation for departments hardest hit by rising claim volume and/or severity, including FIR, DPH, SHF and DEM
• Completed an independent, third-party assessment of the organization’s structure, scope and duties from G2 Insurance Consulting which compelled staffing and budgetary enhancements approved in the FY22-23 budget
• Launched CompTiger knowledge sharing system for CCSF and Intercare Teams to house our policies, procedures, trainings, resources and more
• Successfully transitioned Medical Bill and Utilization Review Programs to Allied Managed Care
• Issued updated Policy and Procedures for reserving, payment approval authorizations, Medicare Reporting, and more
• Retained staff during an exceptionally pressured labor market with very scarce workers’ compensation talent
• Medical Provider Reimbursement Enhancements
  • Completed system migration with check printing vendor, Change Healthcare, while maintaining continuity of business
  • Enhanced medical bill remittance documents to add additional layers of bill adjustment detail, updated regulatory language, and support contacts at Allied Managed Care for inquiries/reconsiderations
• Completed actuarial evaluations of the Alternative Dispute Resolution Programs for SF Firefighters Association (Local 798) and SF Police Officers Association
• Re-launched Quarterly Safety Newsletter
• Safety/Loss Prevention Consultations launched to review injury and safety programs within departments
• Achieved highest-ever departmental satisfaction scores on claims administration with 17 departments reporting, near perfect score of 4.94 on scale of 1-5 who "strongly agree" that claims administration is "excellent"

Workers’ Compensation Division has developed following initiatives for FY22-23:

Leadership Transition and Staffing:

• Recruitment & Onboarding of new Workers’ Compensation Director and other new management and claims administration positions
• Finalized new organizational structure to support new positions

Policy Development:

• Citywide Temporary Transitional Work Policy to reduce temporary disability
• Catastrophic Illness Program changes under consideration

Reporting:

• Enhanced monthly charge back and loss summary reports
• Department claim dashboards with claim-specific drilldowns

Technology:

• US Bank System Upgrades necessary to maintain existing EFT Payment Program - critical technology being retired by US Bank
• Improve desktop technology skills among Workers’ Compensation staff

Operations:

• Converting office spaces for double occupancy and examining floor plan options to add additional workstations to sustain growth in staffing in the Division

Major Contracts:

• Third-Party Claims Administration – Contract negotiations underway with Intercare Holdings on successor contract
• Claim System – Amendment to extend by two-years and increase not-to-exceed amount
• RFP/RFQ for investigation services

Safety:

• Continue implementation of Citywide Safety/Loss Prevention Program

Performance:

• Continue to evaluate performance, satisfaction, and workload/staffing ratios based on increased volume, consistent with G2 Insurance Services Report & Analysis

There are a few challenges ahead in terms of legislation. Senate Bill 1127 will reduce the time for determination of compensability of a claim that falls under a presumption. The legislation, which is expected to pass, reduces time for determination of presumption to from 90 days to 75 days. Senate Bill 1127 will also increase costs by extending temporary disability caps to 240 weeks from 104 weeks for certain injuries. Unreasonable denials have potential penalties of up to $50K.

• Senate Bill 284 extends PTSD presumption to emergency dispatchers and similar classifications as of the first of the year. We have work to do to identify the classifications including workers who perform emergency management who may also be suffering from PTSD.
• Assembly Bill 1751 extends COVID-19 presumption from January 1st, 2023, to January 1st, 2024, which is a reduction from January 1st, 2025.

Peggy Sugarman introduced Dr. Fiona Wilson to report on COVID-19. Dr. Wilson will discuss trends, regulatory updates, updated definitions and requirements of close contacts, and current outbreak testing requirements.

Since meeting in June, the Omicron subvariant BA5 surged, and then slowly dropped. Since June, limiting activities, such as shelter-in-place and mask mandates, are over. Travel, meetings, and congregating have returned, and school is back in session. Isolation and quarantine restrictions remain at ten days. However, return to work with a negative test result, is now possible after day five. Dr. Wilson expressed the current COVID variant is mild, and easy to overlook.

Dr. Wilson presented regulatory updates. Cal/OSHA has recognized that COVID spreads by aerosol. The definition of close contact has changed. No longer six feet or closer, exposure is now considered any shared indoor airspace. This means there is a broader group of employees who can be considered exposed. Masking is required for ten days, and testing on days 3-5 after exposure is recommended, but not required.

Currently the highly transmissible variants are B.2 and B2.1.21. However, because our employees are highly vaccinated and boosted, we are seeing little serious illness and rare hospitalization. Also, there is a rapid resolution of symptoms for many city employees. Employees can test after day five and return to work. Additionally, oral therapy is now widely available and appropriate for some employees. Further, no quarantine is required.

In terms of outbreaks, the definition remains unchanged at three or more COVID cases in an exposed workplace within a 14-day period. Masking is required until the outbreak is over, which takes at least 14 days. Weekly testing is required, except for workers who have a documented COVID infection within the past 90 days.

Trends since the last meeting on June 6th, 2022, include:

• San Francisco new cases are declining to 89 per day, having peaked at 524 per day
• Test positivity rate: from 10% in June, now 6.2% today
• True case numbers are much higher because data only captures PCR lab run tests, and does not measure abundantly used home tests
• Underestimates of all COVID cases for data totals: local, statewide, national, and international

San Francisco has added 35,000 more cases of COVID and 150 more deaths since early June. The average number of new cases confirmed daily is down. Also, the average number of tests collected is down because most people are now testing at home. In People and Pay there are currently 5,254 total employee cases. The peak of 567 cases per week was in June, and the peak now is 73 COVID cases per week in city employees. During the pandemic, we have had 3,909 Workers’ Compensation claims, of which 3,512 were accepted and 397 denied, usually because the employee did not have COVID. As of last Friday, there were 10 current outbreaks and only one outbreak considered major, that is, 20 or more cases in a 30-day period. There have been 155 resolved outbreaks total.

First responders and health care workers have a higher chance of contracting COVID. Due to SB1159, first responders and health care workers are presumed to have contracted COVID-19 at work, when exposed. We are seeing about 12,000 cases within these presumption departments: Public Health, Fire, Police and Sheriff. In the departments with no presumptions, there are 19,278 cases. The total paid out under presumption pay is $7,430,294, and all department COVID claims have cost $10,909,153.

Over time, claim counts has gone up. We already have had more claims by September 2022 than we did in all of calendar year 2021. The cost of time missed from work, however, has come down since last year. Medical costs are much smaller this year than last year as well, due to vaccination requirements.

Dr. Wilson shared that long COVID, now called Post-Acute Sequalae COVID, or PASC, has dropped from an estimate of 25% of patients in 2020-2021 to 4% of patients in 2022. This lower number is due to vaccinations and the milder Omicron variant.

Dr. Wilson next addressed employee anxiety regarding MPOX, formerly known as monkeypox. The declared public health emergency contributed to misunderstanding of transmission and risks. Education and vaccine drives put on by DHR were successful, and there have been no known workplace-originating infections to date.

Next, Dr. Peggy Sugarman returned to discuss key performance indicators for Fiscal Year 2022. Our benchmark is usually 95% of the overall workers’ compensation budget. As of this report, we are at 95.2% of this year’s supplementally appropriated budget. Our claim volume of 3,128 indemnity claims surged against our benchmark of 1,634 claims. The duration benchmark of claims is 216 days, and we achieved a decrease to 167 days average days open of claims closed in the fiscal year period. Additionally, closure average continues to drop. Indemnity average costs are down from a benchmark of about $14,000, to $9,500. Medical claim costs were about the same as our benchmark of $721 average claim cost.

Stanley Ellicott shared costs by expenditure category for end of Fiscal Year 2021-2022. We have seen a significant increase in Temporary Disability (TD) benefits, impacted by a temporary disability rate increase of over 13%. Coupled with an increase in claimants receiving these benefits, we ended the year with about $17.3 million dollars in TD expense. An increase in medical spending of $6.2 million also led to the need for supplemental appropriation this past year. Overall, the total year over year cost growth was 16.4%.

While we had six months of declining Temporary disability expenses, August saw an all-time high of 1.75 million dollars. While there was a previous decline in claimants receiving TD benefits, this reversed in August. We are starting to see the impact of the 13% rate increase set by the State of California’s Workers’ Compensation Division. We are actively working to reduce and manage these numbers to the extent possible, specifically by use of citywide return to work policies.

Stan Ellicott next presented overhead expenses which are required to self-administer the Workers’ Compensation program. In Fiscal Year 2022 we had $21.95 million dollars of operating expenses that were not benefit related. The biggest driver to our year-over-year cost increase was an increase to our state assessment for Self-Insurers. This is derived from a complex formula the state uses. One of the biggest factors is the amount of total paid indemnity, which includes salary continuation for sworn personnel, (4850 pay) total temporary and permanent disability benefit payments.

The Workers’ Compensation Division has done well managing overall program expenses. There were minimal increases in salaries and benefits, even while enhancing our clinical resources, such as hiring Dr. Fiona Wilson. As Dr. Sugarman previously shared, we have had a 50% increase in claims this year. Overall, our overhead rates for the year were a favorable 29.6%. The Workers’ Compensation Insurance Rating Bureau (WCIRB) recently reported an average cost of $0.50 to the dollar to the average California insurer to deliver Workers’ Compensation benefits. Self-insurance proves beneficial to the city as we can deliver our benefits at a lower cost with more efficiency. Ending the year under thirty percent is a good year end overall performance.

Stan Ellicott wished Peggy Sugarman a hearty congratulations and thanked her for her division leadership.

Next, Claims Manager Julian Robinson was introduced to discuss claim analytics in more detail. He discussed injury rates for the top ten city departments. There was a spike in 2022 for citywide claims incurred per 100 full time equivalent. The Fire Department shows 60 per 100 FTE, and Police and Sheriff show 36 claims incurred per 100 FTE. The rate for all departments citywide held steady at under ten claims incurred per 100 FTE. However, due to increased claim volume, our average has recently increased to 14 claims incurred per 100 FTE. If we remove COVID claims, our average drops back to more normal statistics, such as 23/100 for Fire, and Police and Sheriff at about 18/100 FTE each. The citywide number of claims incurred per 100 full time equivalent, without COVID claims, returns to 9/100.

Overall citywide we are up 50% in new claim filing frequency. Indemnity is up about 91% citywide. This has led to a need for increased staffing. The most heavily impacted departments are Fire with 196% increase in new claim filing frequency, Sheriff with 84%, and Police with 121%, all due to their service to the city, 24/7.

Open claim inventory continues to gradually decline but remains elevated. In March 2022, open claims inventory peaked due to Omicron variant claims, but has since decreased. As of September 6th, 2022, there are still 240 open COVID-19 claims, or 5.5% of total volume. This is a decrease from 8.1% in quarter three, but still elevated from traditional numbers.

Julian Robinson then presented litigation statistics. We are currently trending in the right direction. We have about 35% of open claims represented by counsel, down from 40% last year. There are 18% of open claims litigated, compared to 24% from the prior year. This is 25% decrease in claims litigation. Thank you to the hard work of our staff and to the Alternative Dispute Resolution (ADR) Program, which solves disputes more quickly and without the need for attorney involvement.

Julian Robinson explained the breakdown cost of a litigated claim vs. a non-litigated claim. The cost of a non-litigated claim is only about 9% of a litigated claim. A vast majority of COVID claims helped keep this number low because COVID claims have shown to cost little, close quickly, and are not represented by council.

Julian Robinson then reported the litigation statistics for the ADR Program. The ADR program strives to reduce litigation and consequently save on claim costs while expediting the delivery of benefits to employees and reducing unnecessary friction.

In FY 2022 we saw a low representation rate of 17% for Fire and 25% for Police. The litigation rate is only 4% for Fire and 5% for Police, respectively, compared to the last three fiscal years when 43% of firefighters and 57% of police officers were represented by counsel. Our litigation and representation rates would be even lower without opt-in claims, many of which come into the program already represented. Even applicant attorneys have commented they like the speed, ease of resolution, and efficiency of the Alternative Dispute Resolution program. Special thanks to Ed Stone and Arnold Pacpaco who are the claim supervisors for Fire and Police respectively, and their teams, for their hard work in making this program a success.

Julian Robinson then extended congratulations to Dr. Sugarman on her retirement and thanked her for all her hard work.

Dr. Sugarman thanked Julian Robinson for his presentation and oversight of the program. She thanked Stan Ellicott, Dr. Fiona Wilson, and the management team, and concluded that it has been an honor to serve.

Speaker: Ify Omokaro, San Francisco Municipal Transportation Agency Leaves Services Manager

Mr. Ify Omokaro greeted the council. Introduced himself as the SFMTA Leaves Services and Accommodations Manager who will be presenting on behalf of the Workers’ Compensation Manager possibly for the last time. Andy Mathews and Danielle Buri from Intercare will be additional presenters. Mr. Omokaro expressed his gratitude and appreciation to Dr. Peggy Sugarman and offered congratulations on her retirement.

Today’s agenda will describe Accomplishments and Initiatives, Challenges, a COVID-19 Report, and Performance Quick Facts, followed by Claim Analytics, and Financials.

Ify Omokaro announced SFMTA has hired their Workers’ Compensation Claims Manager. Please welcome Jim Radding to the SFMTA team.

Other highlights include:

• The Request for Proposal and interviews were conducted for Third Party Administration services and Intercare is currently in contract negotiations with SFMTA and CCSF.
• The program had a 3% decrease in new indemnity claims reported in FY 2022 and 9% reduction in all reportable claims.
• The team achieved 92% closing ratio in FY 2022, with a five-year average of 101%.
• Quarterly claim reviews with SFMTA and the team.
• Collaborating with CCSF to enhance the Medical Provider Network (MPN).
• The WC claims staff now have access to videos from the coach operations.
• We continue to work through electronic workflow for all claim reporting.

Mr. Omokaro shared the challenges faced by the SFMTA, including:

• Rise in Temporary Disability Benefit Maximum is effective 1/1/22 and expected to impact the overall indemnity costs for CY 2022.
• Increase in Temporary Disability Benefits due to wage increases with the union agreements in July 2022.
• Ongoing Review of Assault Claims.
• Returning injured employees to modified duty.

Mr. Omokaro continued with the COVID-19 report:

• 183 COVID-19 Workers’ Compensation Claims filed in FY 2022.
• - 160 Reported claims only.
• - 23 Indemnity claims
  • 2 Litigated Claims
  • 9 Denied Claims
• 310 COVID-19 Workers’ Compensation Claims filed as of 6/30/22.
• - 255 Reported claims only.
• - 55 Indemnity claims reported
• 3 Litigated claims
• 6 Denied claims: Negative test or not occupational in nature.
• - Average paid per indemnity claim = $8,405.
• - Average Incurred per indemnity claim = $14,273.
• - As of 6/30/22, only 11 claims remained open

Continuing with Performance Quick Facts, Mr. Omokaro communicated that fiscal health ratio of actuals to budget is right at 99% of benchmark. There were 532 indemnity claims and 25 medical claims below a benchmark of 546 and 67 respectively, determined over the last five years. Our claim costs reflect a few big settlements closed out in the last quarter. We are just over our cost benchmark for the fiscal year. The average amount of days open for a claim, almost 472 days, is close to the benchmark of 443 days.

Next, our claim filing frequency is a more in-depth breakdown of claim filings. We show a stable decrease in claim filing frequency this quarter compared to the previous five years.

Claims frequency is trending at ten claims per 100 full time employees. This has been steady over the past five to six years.

Our claim cause distribution is mostly caused by repetitive motion, accidents, and physical assault. Most of these claims derive from our transit division and enforcement divisions, our front-line employees who deal with public daily.

In looking at our claims that are over $100,000, two-thirds of claims are from operators and parking control workers. Not many claims are over $300.000, few are a million, and few are over one-million-dollar claims.

The next slide shows litigated vs. non-litigated claims of the last five fiscal years as compared to this fiscal year. The rate of litigated claims has been going down, which typically equates to a reduction in claim costs. Non litigated claims can be closed faster and cost less.

This fiscal year we were consistent with our costs. Looking at costs per category, most of our costs are for disability payments, followed by medical costs. Our year over year budget increased by 1%.

Director Carol Isen Howard next requested comments from members of the council and public regarding the report from the Workers’ Compensation Division.

The council raised no items to be addressed in future meetings. Director Isen asked that, due to several absences, we send out a message to the council to ask if there are items of interest to place on the agenda for the next meeting in December.

Council Comment: None.