- This is a primary area that mistakes are discovered.(especially when policies have been canceled before normal expiration date.) The ERP is 36 consecutive months during which the policies that cover an employer are included in the mod calculation. Typically the ERP begins forty-eight months before the effective date and ends twelve months before a mod becomes effective, but there are exceptions.
Experience Modification Review and Audit
Experience Modification Worksheets Review
If your company uses a guaranteed cost program, it is vital to review your experience modification worksheet to ensure claims are coded correctly. While this doesn’t affect companies with loss-rating plans, it does affect those companies with “mod-rated” plans. This is distinguished as a “loss rated” vs. “mod-rated" program.
For example, If a medical-only claim is incorrectly coded as a lost time claim, you will pay more than necessary. In many states medical-only claims are discounted 70%. Any miscoded claims can artificially inflate your experience rating.
The modification rating effects more than just the rate you are paying and can be used by potential clients and government agencies for bidding purposes. Certain industries like construction may be precluded from even bidding on a project if their experience modification factor is too high.
How do I check my experience modifier for accuracy?
1. Experience Rating Period (ERP)
2. Payrolls
- Are the payrolls in the experience modifier correct (they are from past audits)?
3. Losses
- Do all the losses in the ex mod belong to your organization? Be sure to check loss runs against the experience modifier.
4. Preliminary or Contingent
- This is a sign of potential trouble. Is the experience modifer on the policy labeled as preliminary or contingent?
5. Claims
- When was the last claim review conducted? Were losses closes before the ex-mod’s unit date? Is that reflected in the mod worksheet?
6. Large Losses
- Are they capped at the state maximum? Do you know your state’s maximum loss?
7. Last mod calculated
- Typically rating bureaus and the NCCI update ex mods as they receive new data. Your policy should contain the last experience modification that was calculated. Sometimes the paperwork slips through unchecked and the policy reflects an out-of-date experience modification.