MOD Rates: Impact on Workers' Comp Costs

by Adam Haight , IWIRC Corp.

A MOD rate contributes to how much companies pay each month in workers’ compensation premiums. It is partly determined by the industry classification in which a company operates and how many OSHA recordables it accumulates.

If a company’s MOD rate is 1.0, they pay the industry’s average rate. However, if the MOD rate is .80, they pay 20 percent less than the industry rate, and conversely, if the MOD rate is 1.2, they pay 20 percent more than the industry rate. Ultimately, employers control their workers’ compensation costs by choosing a medical provider that understands these concepts and works with employers to reduce the number of OSHA recordables that accrue over time.

Recent studies have shown occupational health clinics to save employers more than 50 percent in overall workers’ compensation costs, including a reduction of more than 40 percent in their MOD rates. In today’s economy, employers cannot ignore opportunities to save more than 50 percent in anything!

Basically, the more OSHA recordables, the higher a company’s MOD rate increases. The OSHA recordables that most greatly affect a company’s MOD rate are prescription drugs and lost workdays. When a provider prescribes certain medications (such as Vicodin, Norflex, or even prescription-strength Ibuprofen), they are adding more recordables onto the employer’s logs, although sometimes these medications are not necessary. In many cases, an over-the-counter prescription will do the trick, but many general practitioners or emergency room physicians do not understand the effects of recordables on employers. They are concerned only with treating the patient and not the other parties involved in occupational medicine, such as employers, insurance carriers, case managers or third-party administrators.

Restrictions such as weight or movement limitations are meant to protect patients while recovering from injuries. When providers take patients off work, they are not writing restrictions; all they are saying is that the patient cannot work. The patient is still allowed to mow their yard, remodel their house or anything else they want—they just cannot work! How is that restricting?

In these tough economic times, when everyone is looking to save money and cut costs at every chance, many overlook something as simple as where to send their employees when a workers’ compensation case arises. What could you do with tens of thousands of extra dollars every year? It’s your decision. iBi


Two years ago a termporary worker form a local agency. He worked about one month and hurt the tip of his second finger. He went to the hospital and of course we paid or the first few visits and his payroll as well. About the 6th week he said he had stillcould not work and had to go back to the Doctor for futher work on his finger tip. In the men time we offered him a position driving a fork lift. He was driving withone hand and stated he could not use the hand to steer. We did not have a lesser job for him eto perform. He is still collecting today and the finger tip is still a problem. We had found out later that same time frame he had collected on another injury a few months before going to work forour company. We contacted our insurance carrier and asked them why this injury was not investigated and maybe have someone watch for his daily activity. They replied that the agency did not see this as a beneifir. That was about $160,000.00 dollars ago. Are there any agencies that actually investigate these claims. Our MOD went fro 1.0 to 1.4,. We think he is using his finger tip; but have not investigated.


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