|14-Apr-24 BWC Board Gives Formal Approval to ‘Two Billion Back’|
The Ohio Bureau of Workers’ Compensation’s (BWC) “Billion Back” program grew to $2.2 billion Wednesday as its Board of Directors approved the award of employer credits proposed for the switch from retrospective to prospective billing. That’s $1.2 billion of surplus funds in addition to $1 billion in premium rebates announced by the governor in 2013.
Premium credits will help public and private employers make the jump to pay-as-you-go workers’ insurance in January 2015 without the double billing normally required for a real-time switch from retrospective payments for a previous coverage period to prospective payments for a subsequent coverage period.
After forward billing received permissive authority in budget bill 130-HB59 (Amstutz), BWC Administrator/CEO Stephen Buehrer projected an additional billion dollars over and above the billion-dollar rebate announced by Gov. John Kasich last summer.
Workers’ comp mid-biennium review (MBR) HB493 (Sears-Henne) provides further statutory and rulemaking authority for billing changes and other BWC reforms, recently passing the House 87-4. It still needs full hearings and passage in the Senate.
In the final Audit Committee presentation of her career, outgoing BWC Fiscal Planning Chief Tracy Valentino reiterated Wednesday why the move to more industry-friendly billing practices has been so difficult, and is now so ripe.
“Historically, BWC has not been in the position to shift from a retrospective billing to a prospective billing without double-billing Ohio employers. This is because private employers would have to pay premiums for the prior six months of coverage where they were retrospectively billed and simultaneously pay for a future period of coverage once the transition was completed. In addition, public taxing district employers would have to pay premiums for the prior calendar year’s coverage where they were retrospectively billed and simultaneously pay for the next calendar year’s coverage once the transition was completed,” she said. “However, our net position is at an all-time high, which allows BWC to provide a transition credit to these state fund employer groups.”
Valentino said forward billing will not only allow for another projected rate cut of 2 percent for private employers and 4 percent for public employers.
“Additionally, Ohio would see the benefit of a higher level of employer satisfaction by cutting through the bureaucratic red tape that currently exists in the system and operating BWC in a manner consistent with private insurance practices. The decision to move to prospective payment, particularly with BWC's reducing the financial impact on private and public taxing district employers will help modernize Ohio’s workers’ compensation system and simplify the system greatly for the employers who rely on it for coverage.”
The Audit Committee had given the go-ahead to the second “Billion Back” Tuesday, followed by full board approval on Wednesday. The $1.2 billion award will grant private employers eight months' credit starting January 2015 and public employers a full year’s credit split between January 2015 and January 2016, instead of the six-month credit originally projected for both classes of policyholders. That will leave $500 million in actual premium payments during the transition, constituting primarily the remaining four months of private employer coverage.
“We’re pleased our strong financial position is enabling this move to the industry standard of prospective billing as part of ongoing efforts to modernize our operations and provide better service to Ohio employers,” Buehrer said Wednesday. “The credit will facilitate a smooth transition for employers to a more user-friendly system that will provide them more flexibility while reducing their overall costs.”
After prospective credits are in place, he said ongoing savings from the switch will total $28 million for private employers and $16 million for public employers in 2015 alone. Policyholders will also have the option of making 12 installment payments per year and earlier opportunities to participate in various incentives, including group experience rating and group retrospective rating programs.
“Today was a formal step of the board to reserve that money as a liability of the fund,” Buehrer said outside the board meeting. “It shows that we’re trying to modernize the system, and we're trying to do it in a way that is not harmful to our customers.”
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