Dover, DE – The DCRB recently announced that it has submitted a filing of revisions to Delaware’s Residual Market Plan, voluntary market loss costs and related rating values with a proposed effective date of December 1, 2015.
The DCRB’s analysis produces a proposed overall increase in collectible rate level of 14.92 percent for the Residual Market Plan and a proposed overall increase in collectible loss costs of 15.03 percent for the voluntary market.
A key factor in the development of the proposed changes in residual market rates and voluntary market loss costs is the enactment of House Bill 373 of 2014 (HB373). §2322B of HB373 sets forth procedures and requirements applicable to the health care payment system for workers compensation claims.
Among those requirements is the mandate that the fee schedule shall result in a reduction of 20% in aggregate workers compensation medical expenses by the year beginning January 31, 2015, an additional reduction of 5% of 2014 expenses by the year beginning January 31, 2016 and an additional reduction of 8% of 2014 expenses by the year beginning January 31, 2017.
In preparing this filing, the DCRB noted that it believes that the first, and largest, reductions in medical fee schedules required under HB373 will produce savings in medical expenditures of less than 20 percent. However, the DCRB cannot yet ascertain the extent to which savings in medical expenditures accomplished by way of the January 31, 2015 medical fee schedules will fall short of that threshold. We are also aware that opportunities exist for changes to the health care payment system in 2016 and 2017 to compensate for a shortfall in the intended effects of the January 31, 2015 changes. Accordingly, the DCRB has elected to again recognize the full extent of savings specified in HB373 in preparing its December 1, 2015 residual market rate and voluntary market loss cost filing.
The DCRB continues to collect Medical Data Call information, detailed medical bill line-item records reflecting services provided, charges rendered and payments made for injured Delaware workers. To date, we have received very limited amounts of data pertaining to services provided after January 31, 2015, the effective date for the first fee schedule reduction required under HB373. However, information available from that source will expand over the course of the next two or three calendar quarters, and will become a very probative source for evaluation of experience after the January 31, 2015 fee schedule changes. As this information becomes available, the DCRB noted it will rely very heavily on it in making subsequent evaluations of the impacts of law changes on system costs.
In addition to residual market rates and voluntary market loss costs, DCRB Filing No. 1502 proposes revisions to the following programs and/or rating values:
- Residual market minimum premiums
- Excess loss factors
- Excess loss premium factors (residual market)
- Small deductible program
- Workplace Safety Program
- Experience Rating Plan
- Merit Rating Plan
- Continuation of existing DIP Surcharge Program
- DCCPAP qualifying wage table (proposed effective June 1, 2016)
- Retrospective rating
- State & Hazard Group Relativities
- Minimum and Maximum Corporate Officer Payrolls
- Mergers of certain Classification Codes
- Appeals Procedure revisions
- Miscellaneous Manual revisions
Once DCRB Filing No.1502 has been adjudicated by the Department of Insurance, each licensed Delaware carrier will be required to make a filing for a loss cost multiplier, rates and/or other related rating values with the Department of Insurance. This requirement will apply even if a carrier intends to retain its current pricing values and programs intact. Accordingly, in order to preserve the desired and possibly necessary flexibility in pricing Delaware workers compensation policies, it is strongly recommended that all policies issued with effective dates on and after December 1, 2015 be qualified as carrying tentative rates, using the Pending Rate Change Endorsement for this purpose. Any policies issued at current rates or on a “to-be-determined” basis for which approved rating values are changed as a result of DCRB Filing No. 1502 and/or any subsequent carrier filing(s) must be endorsed subsequently with the new carrier rates.
Source: DCRB