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Oregon Bulletin

September 1, 2012

Department of Consumer and Business Services, Insurance Division, Chapter 836

Rule Caption: Amendment of the workers’ compensation premium audit and classification notice rules

Adm. Order No.: ID 13-2012

Filed with Sec. of State: 7-16-2012

Certified to be Effective: 1-1-13

Notice Publication Date: 6-1-2012

Rules Amended: 836-043-0101, 836-043-0105, 836-043-0110, 836-043-0115, 836-043-0120, 836-043-0125, 836-043-0130, 836-043-0135, 836-043-0145, 836-043-0150, 836-043-0155, 836-043-0165, 836-043-0170, 836-043-0175, 836-043-0180, 836-043-0185

Rules Repealed: 836-043-0140, 836-043-0190

Subject: These rules: Define terms: “audit,” “desk audit,” “field audit,” “committee” (Oregon Workers’ Compensation Rating System Review and Advisory Committee), “insured,” “payroll report,” and “standard premium.”

 Update audit procedures involving records used to conduct audits, final audit billing disputes, and classification of exposure.

 Eliminate the requirement that the “bureau” (National Council on Compensation Insurance) conduct seminars on audit fundamentals for employers.

 Revise requirements of the test audit program to

 Clarify the time allowed for insurers to report audit findings to the bureau.

 Require insurers to report all compensable indemnity claims to the bureau.

 Require insurers to report compensable medical-only claims to the bureau if the reported loss amounts are $5,000 or more.

 Clarify policy selection process and constraints.

 Exclude “wrap-up” projects from the test audit selection.

 Eliminate the requirement for weekly production reporting of all test audits.

 Eliminate the requirement that summarized quarterly and six quarterly audit results be furnished to the Workers’ Compensation Rating System Review and Advisory Committee.

 Amend the minimum standard for test audit performance; the number of premium differences in excess of $500 or 2% of standard premium must not exceed the critical number shown in the Table of Minimum Standards.

 Update and clarify premium audit hearing procedures, including:

 Time frames for an insured to petition for hearing;

 Elements that must be included in a final premium audit billing (to render the bill collectible);

 Referrals of hearing requests and requests for stays of collection to the Office of Administrative

 Hearings (OAH);

 and Reasons the director will dismiss an insured’s request for a hearing.

 Clarify classification notice requirements.

Rules Coordinator: Sue Munson—(503) 947-7272

836-043-0101

Statutory Authority; Purpose; Applicability

(1) OAR 836-043-0101 to 836-043-0170 are adopted by the Director of the Department of Consumer and Business Services pursuant to the requirements of ORS 737.318.

(2) OAR 836-043-0101 to 836-043-0170 establish a premium audit program system for workers’ compensation insurance for the following purposes:

(a) Achieving equitable premium charges to insureds and collecting credible ratemaking data;

(b) Prescribing minimum standards for an efficient premium audit program that ensures an adequate proportion of an insurer’s earned premium is audited and focuses on operations where accurate reporting may be difficult or where misreportings are more likely;

(c) Educating insureds about the audit reporting function of the rating system;

(d) Establishing a continuing test audit program of all insurers;

(e) Providing an appeal process pursuant to ORS 737.318(3)(d) and 737.505(4) to (5) for insureds to request a hearing to dispute the results of an audit, as described in a final premium audit billing issued by an insurer to an insured.

(3) OAR 836-043-0101 to 836-043-0170 apply to all authorized workers’ compensation insurers, the State Accident Insurance Fund Corporation, Oregon insureds, and the National Council on Compensation Insurance.

Stat. Auth.: ORS 731.244, 737.310 & 737.318
Stats. Implemented: ORS 737.235, 737.318 & 737.505
Hist.: ID 1-1988, f. & cert. ef. 1-20-88; ID 13-2012, f. 7-16-12, cert. ef. 1-1-13

836-043-0105

Definitions

As used in OAR 836-043-0101 to 836-043-0170, unless the context requires otherwise:

(1) “Audit” means a process of verification of information used to determine the premium for a workers’ compensation insurance policy that is performed in one of the following formats:

(a) “Desk audit” means an audit performed by an insurer at a site, other than the insured’s principal place of business, mutually agreed to by the insurer and the insured. A desk audit does not consist of an examination of a payroll report submitted by the insured to the insurer in lieu of an audit.

(b) “Field audit” means an audit performed by an insurer at the insured’s principal place of business, work site, or other site mutually agreed to by the insurer and the insured.

(2) “Bureau” means the licensed rating organization of this state for workers’ compensation insurance.

(3) “Classification” means a grouping of insurance risks according to a classification system used by an insurer.

(4) “Classification System” means a schedule of classifications and a rule or set of rules used by an insurer for determining the classifications applicable to an insured.

(5) “Committee” means the Oregon Workers’ Compensation Rating System Review and Advisory Committee established by OAR 836-043-0200 to 836-043-0240.

(6) “Insured” means an employer who has been issued a workers’ compensation insurance policy by an insurer.

(7) “Insurer” means any insurer authorized to write workers’ compensation insurance in this state or the State Accident Insurance Fund Corporation.

(8) “Payroll” or “remuneration” means money or substitutes for money payable to workers for their services, which are specified or defined by the rating system used by the insurer subject to the limitations imposed in the definition of “payroll” in ORS 656.005.

(9) “Payroll report” means a report of an insured’s payroll by class code used by an insurer to determine the premium for an insurance policy.

(10) “Premium” means the contractual consideration charged to an insured for an insurance policy for a specified period of time, regardless of the timing of actual charges.

(11) “Rate” means a monetary amount applied to the exposure units for a classification to determine the premium for an insurance policy.

(12) “Rating Plan” means a rule or set of rules used by an insurer to calculate premium for an insurance policy, including all rating plan factors applied, after application of classification premium rates to exposure units.

(13) “Rating System” means a collection of rating plans to be used by an insurer, rules for determining which rating plans are applicable to an insured, a classification system and other rules used by an insurer for determining contractual consideration for an insurance policy.

(14) “Standard Premium” means the premium determined by application of approved rates, including experience rating modifications and other charges in accordance with the statistical plan as defined in OAR 836-042-0045.

(15) “Workers’ Compensation Insurance” means insurance providing coverage for the obligations of an employer arising from illness or insurance to workers whether such obligation is imposed by ORS Chapter 656, similar laws of the United States or agreement between states.

Stat. Auth.: ORS 731.244, 737.310 & 737.318
Stats. Implemented: ORS 737.235, 737.318 & 737.505
Hist.: ID 1-1988, f. & cert. ef. 1-20-88; ; ID 13-2012, f. 7-16-12, cert. ef. 1-1-13

836-043-0110

Insurer Premium Audit Program

(1) The rates, rating plans and rating systems filed with and approved by the Director of the Department of Consumer and Business Services shall govern the audited payroll and the adjustment of premiums, subject to the provisions of this rule.

(2) For the purpose of determining the premium for an insurance policy producing an annual standard premium of $10,000 or more, the insurer must perform a field audit of the insured at least once annually, except as provided in this section. For as long as the insurer continues to provide coverage to an insured, when the insurer finds that the audit premium difference is less than five percent for each of two consecutive policy years for which the insurer provided coverage, the insurer need audit only every third renewal policy subsequent to the policy most recently audited. If the insurer finds at any audit that the audit premium difference is five percent or greater, the insurer must again audit the insured’s policy at least annually until the insurer finds an audit premium difference of less than five percent for each of two consecutive policy years. For each policy year for which a policy is not audited, the insurer shall obtain a payroll report from the insured. For purposes of this section, the basis for the audit premium difference for an insured will be the audited standard premium as defined in each insurer’s approved rating system.

(3) An insurer shall perform a field audit of at least five percent of all policies that are issued by the insurer and produce an annual standard premium of less than $10,000 but more than $1,000. In each year when a field audit of such a policy is not performed, the insurer shall perform a desk audit or obtain a payroll report from the insured. If neither a field or desk audit is performed nor a payroll report is obtained, the insurer shall give satisfactory reason to the director.

(4) When an insurer performs an initial or revised audit, the insurer shall send to the insured a written final premium audit billing, as described in this rule and in OAR 836-043-0170.

(5) A final premium audit billing must include the following wording, or substantially equivalent wording approved by the director, that is prominently displayed and in not less than 12-point type:

Notice: You, the insured, may request a hearing to dispute the results of the audit described in this final premium audit billing. If you want to request a hearing, you must send a written request for a hearing to the Insurance Division of the Department of Consumer and Business Services, State of Oregon. The Insurance Division must receive the request not later than the 60th day after you received this billing.

Who may request a hearing?

1. If the insured is a sole proprietor, then the insured or an attorney for the insured may request a hearing.

2. If the insured is a partnership, then an attorney for the partnership or any member of the partnership may request a hearing.

3. If the insured is a corporation, association or organized group, then an attorney for the corporation, association or organized group or an authorized officer or authorized employee of the corporation, association or organized group may request a hearing.

4. If the insured is a governmental authority other than a state agency, then an attorney for the governmental agency or an authorized officer or authorized employee of the governmental authority may request a hearing. Please state in your request the date you received this final premium audit billing. You must send the request for a hearing using at least one of the following methods:

By delivery:

Insurance Division

Department of Consumer and Business Services

350 Winter St. NE

Salem, OR 97301-3883

By mail:

Insurance Division

Department of Consumer and Business Services

PO Box 14480

Salem, OR 97309-0405

By e-mail:

DCBS.INSMAIL@state.or.us

By fax: 503-378-4351 Assistance is available on the Insurance Division’s web page, at http://www.cbs.state.or.us/external/ins/ and by e-mail, at DCBS.INSMAIL@state.or.us If the Insurance Division timely receives your request for a hearing, the Insurance Division will send or make available to you a petition form. In the petition, you must explain why you believe the billing is incorrect and describe the actions you want the director to take to correct the matter. The completed petition, along with a complete copy of the final premium audit billing, must be received by the Insurance Division not later than the 60th day after the date the Insurance Division received your request for a hearing. You are entitled to a hearing only if the Insurance Division timely receives your request for a hearing and completed petition and determines that the director has jurisdiction over the matter. You may send a copy of your request for hearing to your insurer so that you may attempt to resolve the dispute with your insurer prior to a hearing. However, please remember:

1. The 60-day period for initiating your request continues to run even though you may be negotiating with your insurer.

2. Your request must be received by the Insurance Division not later than the 60th day after you received this billing. You may wish to consult with an attorney about your case.

Stat. Auth.: ORS 731.244, 737.310 & 737.318
Stats. Implemented: ORS 737.318 & 737.505
Hist.: ID 1-1988, f. & cert. ef. 1-20-88; ID 13-1988(Temp), f. & cert. ef. 7-27-88; ID 15-1988(Temp), f. & cert. ef. 9-2-88; ID 4-1989, f. & cert. ef. 2-28-89; ID 9-1990, f. 5-10-90, cert. ef. 6-1-90; ID 6-1997(Temp), f. & cert. ef. 5-30-97; ID 17-1997, f. 11-25-97, cert. ef. 11-26-97; ID 1-2000, f. & cert. ef. 2-10-00; ID 1-2007, f. & cert. ef. 1-17-07; ID 13-2012, f. 7-16-12, cert. ef. 1-1-13

836-043-0115

Insurer Audit Procedure Guide

Each insurer shall develop audit procedures that include all of the features described in this rule or, in place thereof, more comprehensive alternative procedures that will consistently achieve minimum standards as measured by the Oregon Test Audit Program under OAR 836-043-0125. The features are as follows:

(1) The auditor shall perform a pre-audit review to ensure that the insurer provided or made available to the auditor all relevant information and materials, as listed in this section.

(a) The bureau Basic Manual;

(b) Bureau bulletins, “Scopes Manual” on classifications or similar classifications and committee minutes pertinent to classifications and auditing procedures;

(c) Policy information that provides a description of operations and a summary of payrolls by classification;

(d) Bureau Inspection & Classification Reports that provide a description of operations and summary of employees by classification;

(e) Bureau Experience Rating Modification Worksheets that provide payroll classifications and claims allocation history;

(f) Claims data in sufficient detail to verify classification assignments;

(g) Pertinent correspondence;

(h) Prior year’s audit file if renewed, or copies of interim payroll reports, if on an interim reporting basis.

(2) The auditor must contact a principal or designated representative of the insured who is familiar with the insured’s operation, in order to ensure that the insured is properly classified under Basic Manual rules.

(3) Audit practices require the following:

(a) Examining payrolls from the most complete and accurate records;

(b) Determining proper payroll classifications, substantiated by a written description of the insured’s operations;

(c) Making sufficient test checks to establish the audit’s accuracy and compliance with Basic Manual rules when using summary type records as the payroll source;

(d) Reconciling the total payroll with records not used in the original tabulation; and

(e) Providing guidance on recordkeeping practices to aid in future audits, including, but not limited to, maintenance of verifiable payroll records.

(4) An insurer shall give particular attention to the following factors and circumstances:

(a) Type of entity. With respect to the type of entity being insured, the insurer shall include factors and circumstances as follows:

(A) If the entity is a corporation, limited liability company, limited liability partnership, partnership, or other entity described in ORS 656.027, the name, title, classification assignment and total remuneration for each executive officer, member, or partner must be shown separately. All other officers of the corporation, members of the limited liability company, or partners must also be listed. The insurer shall designate whether each officer, member, or partner is a subject employee under ORS Chapter 656;

(B) Listings of covered corporate officers, limited liability company members, partners, and proprietors must include a brief description of each person’s duties. The auditor must verify the stipulated maximum and minimum remuneration with respect to non-subject corporate officers who have elected coverage or are covered as provided under ORS 656.027, and assumed wage for non-subject sole proprietors, partners, and limited liability company members who have elected coverage or are covered as provided under ORS 656.027.

(b) Sources and reconciliation. The insurer shall indicate the source record used to conduct the audit and the record used for reconciliation purposes. The most commonly used records include, but are not limited to, time records, payroll journal, individual earnings records, prepared summary, check book, cash book, petty cash book, general ledger, confidential ledger, bank statements, job cost records and tax returns (Federal, Social Security/State Unemployment). The auditor must be able to reconcile the audit product with the source record and be certain that appropriate records have been examined to verify the inclusion of all payroll. When summary type records are used as the audit source, sufficient sampling of the original payroll records must be made to ensure the inclusion of all payroll. The insurer must be sure that the auditor is able to check and list the dates (and amounts if readily available) of the opening and closing payroll period or periods (e.g., weekly and semi-monthly) in order to establish proper continuity from prior audits and for subsequent audits. This is also necessary for the purpose of proper audit review.

(c) Remuneration. The insurer shall investigate all possible sources of earnings, including those for uninsured contract employment.

(d) Overtime. The insurer shall indicate whether overtime was paid and, if so, whether the records are maintained in such manner as to permit the exclusion of overtime remuneration from total payroll, as allowed by Basic Manual rules. If overtime was paid but not properly recorded in the insured’s records, the auditor shall provide the insured with guidance for maintaining overtime remuneration records to allow for credit on subsequent audits. This action shall be documented on the auditor’s worksheet.

(e) Out of state operation. The insurer shall determine if the insured uses Oregon subject workers to perform work outside Oregon. Payroll for Oregon subject workers performing work outside Oregon must be included in the premium, based on protection provided through the extra-territorial provisions of Oregon law.

(f) Clerical employees, salesmen and drivers. The insurer shall:

(A) Verify the proper use of Classifications 8810 — Clerical Office Employees NOC, 8742 — Salespersons or Collectors — Outside, and 7380 — Drivers, Chauffeurs, Messengers, and Their Helpers NOC — Commercial;

(B) Show clerical, outside sales and drivers payroll analysis on work sheets, either for the entire audit period or for a sample period.

(g) Classifications. The insurer shall determine the proper classifications. The insurer shall explain if the classifications assigned to the insured at audit differ from those shown on the insured’s policy information page or bureau Inspection Report. Final premium charges are subject to ORS 737.310. The insurer shall obtain a detailed description of the insured’s operations from the person or persons in the insured’s organization best able to answer inquiries regarding the following:

(A) The service or product;

(B) The raw materials used;

(C) The process involved; and

(D) How the product is marketed.

(h) Additional classification information. The insurer shall examine the insured’s first reports of occupational injury or illness as an additional source of classification information when classification issues require additional inquiry. The insurer’s review may include electronic or paper documentation.

(i) Location. The insurer shall document any changes in the insured’s locations. The insurer shall review payroll to assure that all locations have been included in the audit.

(j) Rate splits. The insurer shall determine if rate changes or normal anniversary rating dates require payrolls to be split;

(k) New construction or alteration. The insurer shall determine if structural alterations or new construction work on the insured’s premises has been conducted by employees of the insured during the audit period. Payroll for these activities must be separately rated.

(l) New operations. The insurer shall identify any new operations, acquisitions or changes in operations.

(m) Longshore and Harbor Workers’ Compensation Act operations. The insurer shall determine if the insured is engaged in operations subject to the Longshore and Harbor Workers’ Compensation Act and if such operations are covered under the policy as evidenced by endorsement.

(n) Division of payroll. The insurer shall determine if the insured’s records support a division of payroll between different classifications due to an interchange of labor, as provided for by OAR 836-042-0050 to 836-042-0060.

(5) If the director meets with the insurer under OAR 836-043-0155 to obtain a detailed explanation of remedial measures undertaken by the insurer, the director may request a copy of the insurer’s audit review program. If the director determines that the insurer’s program is inadequate, the director may prescribe an audit review program for use by the insurer during the period in which the insurer must take remedial measures.

[Publications: Publications referenced are available from the agency.]

Stat. Auth.: ORS 731.244, 737.310 & 737.318
Stats. Implemented: ORS 737.318 & 656.027
Hist.: ID 1-1988, f. & cert. ef. 1-20-88; ID 12-1998, f. & cert. ef. 9-14-98; ID 13-2012, f. 7-16-12, cert. ef. 1-1-13

836-043-0120

Minimum Standards of Insured Education Program

(1) At or before policy issuance, an insurer shall make available to the insured information covering the matters identified in this section. This information may be delivered via electronic means, as provided for under ORS Chapter 84.

(a) Which workers are subject to the Workers’ Compensation Law for whom premiums must be paid;

(b) What remuneration is subject to premium charges;

(c) How to divide payroll between assigned classifications, as established in OAR 836-042-0060;

(d) The requirements for verifiable records, as established in OAR 836-042-0060;

(e) The existence and nature of premium audits and the appeal process afforded insureds by ORS 737.505;

(f) The insured’s responsibility to notify the insurer of changes in the business structure and operations; and

(g) The classification notice requirements prescribed by OAR 836-043-0175 to 836-043-0185.

(2) When the insurer becomes aware of changes in the insured’s business that affect the reporting of payroll or other exposure basis, the insurer shall provide additional appropriate instruction to the insured.

(3) When changes in statute, rules or rating system occur that affect reporting of payroll or other exposure basis, the insurer shall provide notification of such changes to insureds as soon as reasonably possible.

Stat. Auth.: ORS 731.244, 737.310 & 737.318
Stats. Implemented: ORS 737.318
Hist.: ID 1-1988, f. & cert. ef. 1-20-88; ID 1-1999, f. & cert. ef. 2-19-99; ID 13-2012, f. 7-16-12, cert. ef. 1-1-13

836-043-0125

Purpose

A Test Audit Program shall be conducted by the bureau to carry out ORS 737.318. To perform this function, the bureau shall maintain the test audit staff for examining pertinent records of a number of Oregon insureds and insurers established according to the schedule in Exhibit 1 of OAR 836-043-0130, or other appropriately credible audit levels as determined by the director. The purposes of the test audit program are as follows:

(1) To check the accuracy and reliability of each insurer’s audits, verify the classifications assigned, and assure that the premiums charged are based upon filed rates, rating plans and rating systems on file with and approved by the director;

(2) To establish minimum auditing standards and to develop a program for monitoring insurer performance toward the achievement of established standards; and

(3) To improve audit proficiency through the evaluation of insurer auditing practices.

[ED. NOTE: Exhibits referenced are available from the agency.]

Stat. Auth.: ORS 731.244 & 737.318
Stats. Implemented: ORS 737.318
Hist.: ID 1-1988, f. & cert. ef. 1-20-88; ID 7-1997(Temp), f. & cert. ef. 5-30-97; ID 18-1997, f. 11-25-97, cert. ef. 11-26-97; ID 13-2012, f. 7-16-12, cert. ef. 1-1-13

836-043-0130

Selection of Risks for Test Audit

(1) All insurers or insurer groups shall be test audited on a continuous basis. Each quarter, the bureau shall send a list of policies selected for test audit to each insurer’s Oregon policy issuing office or other office designated by the insurer.

(2) The number of policies to be selected for each insurer shall be determined based on Exhibit 1, using the insurer’s current policy premium distribution and the error ratio from the insurer’s previous test audits. The policy premium distribution shall be based on estimated annual standard premium reported by the insurer for policies subject to selection. For each insurer, the error ratio shall be the number of policies found to have audit errors divided by the total number of policies test audited during the latest six quarters. The error ratio shall be assigned a credibility weight, as described in Exhibit 1, and the complement weight shall be assigned to the statewide error ratio of all insurers for the latest six quarters. The credibility weighted error ratio for the insurer shall be used to determine the policy sample rates in Exhibit 1.

(3) The quarterly list of policies selected for test audit shall be randomly drawn from an insurer’s entire book of workers’ compensation business, subject to the requirements of section (2) of this rule. Additional policies may be added at the request of the director. The list shall indicate, for each insurer or insurer group, the insured, the policy number, the issuing office (if available) and the policy dates. This list shall only include policies with expiration dates not less than 90 days prior to the date of selection. Unless otherwise requested by the director, this list shall exclude:

(a) Wrap-up policies approved under ORS 737.602 or Sections 1 and 2, Chapter 336, Oregon Laws 1995;

(b) Policies for risks that have been test audited within the four-year period prior to the date of selection; and

(c) Policies canceled by either the insured or the insurer prior to the expiration date of the policy.

(4) Within 45 days after receipt of the selection list, each issuing office shall provide the bureau the following audit material on those risks for which it is responsible:

(a) If an audit is performed, a non-returnable copy of the auditor’s work sheets and the premium invoice;

(b) Correspondence pertinent to proper completion of the audit;

(c) If the insured’s payroll report has been utilized, a copy of the insured’s payroll report and the premium invoice; and

(d) A list of all compensable indemnity claims. The claim listing should also reflect each compensable medical-only claim with reported loss amounts of $5,000 or more. The bureau must receive at least the name of the injured employee and the date of accident, although the following information must also be submitted if available; job title, nature of injury, Basic Manual classification to which claim is assigned, claim file number and a brief description of what the employee was doing when the accident occurred. (See Exhibit 1.)

(5) At least 10 days before the test auditor’s planned date of call, the auditor must inform the insured in writing of the planned date of call.

(6) The written notice required by section (5) of this rule must include certain information. An example of acceptable written notice is located on the Department of Consumer and Business Services, Insurance Division website at www.insurance.oregon.gov. The notice must include the following information:

(a) Identification of the insurer, the insured, the policy number, and the policy period being audited;

(b) The scheduled date and time of the test audit;

(c) Explanation of the test audit program and the statutory authority to conduct test audits;

(d) Identification of the bureau responsible for conducting the test audit;

(e) Explanation of the bureau’s authority under the policy to examine the insured’s records;

(f) Explanation of the types or specific records the insured must make available to the auditor; and

(g) Contact information for the auditor.

(7) The bureau shall complete the test audits within six months of the date of selection. Test audits not completed within the six-month period may not be included in the insurer’s result. Nevertheless, the insurer shall submit a revised unit statistical report for any late test audits that would have otherwise constituted an error. The director may request the bureau to provide a quarterly report of test audits that are not completed in a timely manner.

(8) The following must be obtained from bureau files:

(a) A policy data sheet providing all necessary information shown on the insurer’s policy; and

(b) A copy of the latest bureau inspection.

[ED. NOTE: Exhibits referenced are available from the agency.]

Stat. Auth.: ORS 731.244 & 737.318
Stats. Implemented: ORS 737.318
Hist.: ID 1-1988, f. & cert. ef. 1-20-88; ID 11-1994, f. 12-19-94, cert. ef. 1-1-95; ID 7-1997(Temp), f. & cert. ef. 5-30-97; ID 18-1997, f. 11-25-97, cert. ef. 11-26-97; ID 12-1998, f. & cert. ef. 9-14-98; ID 13-2012, f. 7-16-12, cert. ef. 1-1-13

836-043-0135

Test Audits

(1) A Analysis of Test Audit Results shall be completed on each test audit.

(2) The test auditor shall interview the insured or an authorized representative of the insured in order to solicit the insured’s cooperation and also to obtain all factual data necessary for proper completion of the test audit.

(3) If a current inspection is in the file, the test auditor shall verify data contained in that report.

(4) Each test audit, using the audit detail form, shall contain the following:

(a) A reconciliation of payroll subject to premium charge, which must be made with the independent control records of the State Unemployment Insurance quarterly reports and FICA quarterly report;

(b) A review of the cash disbursements journal to develop the remuneration paid to contract labor and casual labor;

(c) A detailed review of at least one pay period to verify proper classification;

(d) A review of time cards to verify proper treatment of overtime remuneration;

(e) A review of original entry records to verify proper application of the “division of single employee’s payroll” rules (OAR 836-042-0050 to 836-042-0060);

(f) A listing by name, duties and earnings of all persons assigned to the “standard exceptions” classifications. When size of the risk makes the listing impractical, spot checks must be made;

(g) A listing by name, title, duties and earnings of all covered executive officers, partners or individuals;

(h) A summary, by classification, of all chargeable payrolls;

(i) A summary of differences between the test audit and the insurer audit.

(5) Examples of the templates and forms described in this rule are located on the Department of Consumer and Business Services, Insurance Division website at www.insurance.oregon.gov.

[ED. NOTE: Exhibits referenced are available from the agency.]

Stat. Auth.: ORS 731.244 & 737.318
Stats. Implemented: ORS 737.318
Hist.: ID 1-1988, f. & cert. ef. 1-20-88; ID 13-2012, f. 7-16-12, cert. ef. 1-1-13

836-043-0145

Disposition of Test Audits

(1) The bureau shall submit individual results of each test audit to the office or offices designated by the insurer as soon as the bureau audit is completed.

(2) For those audits that do not result in a significant difference, defined as in excess of $500 in premium or in excess of two percent of the total standard premium, whichever is greater, the bureau must notify the insurer by letter of the name of the insured, the policy number and the fact that the test audit was closed without change from the original audit.

(3) For those audits that do develop a significant premium difference, the bureau must provide the insurer with a report explaining the difference and the effect of such difference upon the total premium. An example of this report template is located on the Department of Consumer and Business Services, Insurance Division website at www.insurance.oregon.gov.

(4) Results of test audits of individual insurers shall be confidential data under ORS 731.264.

(5) Immediately upon receipt of the bureau’s report, the insurer shall determine whether it agrees with the bureau’s findings, auditing the insured if necessary. If the insurer agrees with the bureau’s findings, the insurer shall file the corrected information on the original or, if necessary, on a revised unit statistical report. When the net premium difference is not sufficient to qualify as an “error” but a single difference is sufficiently large to qualify as an error prior to any offsetting premium amounts, the insurer shall be advised of such differences by an “advisory” notice. Also, when individual claims have been assigned to an incorrect classification an “advisory” notice shall also be submitted to the insurer. Upon receipt of the “advisory” notice, the insurer shall report such payrolls or losses on the initial or, if necessary, a “C” (corrected) Unit Statistical Report. All test audit differences must be closed within sixty days of notification unless the insurer requests an extension and the request is approved by the bureau.

(6) When classifications utilized by the insurer are found to be in error, the bureau shall take the normal appropriate action to secure compliance.

(7) Findings resulting from test audits shall not be utilized in any action by an insurer to enforce premium collections.

(8) If there is disagreement with the bureau’s findings, the insurer shall communicate with the designated contact at the National Council on Compensation Insurance office to resolve areas of contention.

(9) When an insurer is unable to resolve test audit differences with the bureau staff, the insurer may present an appeal to the committee.

(10) When an insurer is unable to resolve test audit differences with the committee, the insurer may present an appeal to the director for final determination.

[ED. NOTE: Exhibits referenced are available from the agency.]

Stat. Auth.: ORS 731.244 & 737.318
Stats. Implemented: ORS 737.318
Hist.: ID 1-1988, f. & cert. ef. 1-20-88; ID 11-1994, f. 12-19-94, cert. ef. 1-1-95; ID 13-2012, f. 7-16-12, cert. ef. 1-1-13

836-043-0150

Summary of Test Audit Results

(1) Test audit results shall be summarized quarterly for the individual insurer or insurer group, as well as for the industry as a whole. The summary must include all prior quarters up to but not exceeding a total of six quarters. The summary must reflect separately the results of field audits, desk audits, and reviews of payroll reports. An example of this report template is located on the Department of Consumer and Business Services, Insurance Division website at www.insurance.oregon.gov.

(2) The summary of test audit results must be reported quarterly to the insurer’s home office to the attention of the designated contact. If the insurer’s home office is located outside Oregon, a copy of the summary results must also be forwarded to the Oregon branch or division office that reports directly to the home office. It shall be the insurer’s responsibility to keep the bureau advised of the responsible contact to whom the summary results should be directed.

(3) The bureau shall meet with each insurer to review its results and when requested, may offer remedial suggestions when such action is indicated.

(4) The bureau shall maintain sufficient records to permit accurate reporting to the insurer and the director.

(5) Copies of all individual insurer and summary reports shall be submitted to the director upon completion.

[ED. NOTE: Exhibits referenced are available from the agency.]

Stat. Auth.: ORS 731.244 & 737.318
Stats. Implemented: ORS 737.318
Hist.: ID 1-1988, f. & cert. ef. 1-20-88; ID 11-1994, f. 12-19-94, cert. ef. 1-1-95; ID 13-2012, f. 7-16-12, cert. ef. 1-1-13

836-043-0155

Test Audit Standards

(1) An insurer that fails to achieve the Minimum Standard of the Test Audit Performance for six consecutive quarters shall meet with the director, or the director’s designated representative, to provide a detailed explanation of the remedial measures the insurer is taking to restore overall audit proficiency to an acceptable level. An insurer meets the Minimum Standard when the insurer satisfies the requirement that the number of premium differences in excess of $500 or two percent of the insured’s standard premium, whichever is greater, must not exceed the critical number shown in the Table of Minimum Standards Exhibit 2.

(2) If an insurer still fails to achieve the Minimum Standard following presentation of remedial measures to the director, as required in section (1) of this rule, the director may impose a penalty, including possible suspension of the insurer’s certificate of authority.

(3) For the purposes of this rule, only policies that exceed $5,000 in annual standard premium after test audit will be used to determine whether an insurer achieves the Minimum Standard.

[ED. NOTE: Exhibits referenced are available from the agency.]

Stat. Auth.: ORS 731.244 & 737.318
Stats. Implemented: ORS 737.318
Hist.: ID 1-1988, f. & cert. ef. 1-20-88; ID 11-1994, f. 12-19-94, cert. ef. 1-1-95; ID 7-1997(Temp), f. & cert. ef. 5-30-97; ID 18-1997, f. 11-25-97, cert. ef. 11-26-97; ID 13-2012, f. 7-16-12, cert. ef. 1-1-13

836-043-0165

Monitoring Audit Program System

(1) The director shall examine every insurer at least once each three years for the purpose of determining its compliance with:

(a) The statistical reporting requirements of OAR 836-042-0045;

(b) The premium audit program requirements of OAR 836-043-0110 and 836-043-0115; and

(c) The minimum standards of insured education programs of OAR 836-043-0120.

(2) The director shall continuously monitor the bureau for the purpose of assuring its compliance with the test audit program requirements of OAR 836-043-0125 to 836-043-0155.

Stat. Auth.: ORS 731.244 & 737.318
Stats. Implemented: ORS 737.235 & 737.318(3)(b)
Hist.: ID 1-1988, f. & cert. ef. 1-20-88; ID 13-2012, f. 7-16-12, cert. ef. 1-1-13

836-043-0170

Premium Audit Hearings

(1) This rule establishes the procedure for an insured to request a hearing to dispute the results of an audit, as described in a final premium audit billing issued by an insurer to the insured, pursuant to ORS 737.318(3)(d) and 737.505(4) to (5). If an insured wants to request a hearing, then the insured must send a written request for a hearing to the Insurance Division. The Insurance Division must receive the request not later than the 60th day after the insured received the final premium audit billing. For the purpose of determining the date of receipt of a final premium audit billing sent to the insured by mail when the receipt date is unknown to the insured, the date of receipt shall be presumed to be three days after the postmark date, or three days after the date of mailing, if the postmark is illegible or unavailable.

(2) If the Insurance Division timely receives the insured’s request for a hearing, the Insurance Division will send or make available to the insured a petition form. In the petition, the insured must explain why it believes the billing is incorrect and describe the actions the insured wants the director to take to correct the matter. The petition, along with a complete copy of the final premium audit billing, must be received by the Insurance Division not later than the 60th day after the date the Insurance Division received the insured’s request for a hearing.

(3) For the purposes of computing time periods specified in sections (1) and (2) of this rule, ORS 174.120 and 174.125 shall govern.

(4) If the Insurance Division determines that the insured is entitled to a hearing, the Insurance Division shall notify the insured and the insurer, and also the bureau if the statements in the petition of the insured address the use of the bureau rating system, that the insured is entitled to a hearing and the Insurance Division has requested the Office of Administrative Hearings to schedule and, if necessary, conduct a hearing. The Insurance Division shall forward the insured’s request for a hearing and petition to the insurer, and, if helpful to decide the matter, the bureau.

(5) An insured may request the director to stay the collection effort of an insurer on a final premium audit billing during the pendency of an insured’s request for a hearing, pursuant to ORS 737.505(5). The application must allege and show good cause as required in ORS 737.505 by providing an explanation of the alleged errors for which the insured is requesting relief. The stay must apply only to the disputed amount. The director shall not decide whether to grant or deny the insured’s request for a stay until after the Insurance Division has timely received the insured’s request for a hearing and completed petition and determined that the insured is entitled to a hearing. The director may delegate to the Office of Administrative Hearings the authority to grant or deny the insured’s request for a stay.

(6) Subject to the exception provided in section (7) of this rule, for purposes of ORS 737.318(3)(d) and 737.505(4) to (5), OAR 836-043-0110 and this rule, the final premium audit billing of an insured is the first document issued by the insurer to the insured after the insurer’s initial or revised audit of the insured that contains all of the elements specified in this section. Failure by the insurer to include any of the elements renders the billing incomplete as a final premium audit billing for purposes of ORS 737.318 and 737.505 and renders the debt uncollectible until all elements are included. An invoice issued by an insurer based on a payroll report without having performed an audit is not considered a final premium audit billing. The elements are as follows:

(a) The results of the audit;

(b) If the final premium audit billing is based on an initial audit, the amount of the difference between the estimated standard premium reported by the insured for the entire policy period and the final standard premium calculated after the policy period is over, pursuant to the audit;

(c) If the final premium audit billing is based on a revised audit, the amount of the difference between the final standard premium calculated after the policy period is over, pursuant to the initial audit, and the final standard premium, calculated pursuant to the revised audit;

(d) If the final premium audit billing is based in whole or in part on a determination by the insurer that one or more persons are employees rather than independent contractors, then the name of each person, a description of the positions or tasks of each named person, and the basis for the determination;

(e) The notice required by ORS 737.318(3)(d) and OAR 836-043-0110; and

(f) The front page of the billing bears the title “Final Premium Audit Billing.”

(7) If, after performing an audit of an insured, the insurer issues both a statement of the insured’s account and a letter to the insured that explains the audit and states the amount of the difference, the statement of account and the letter together are considered to be the final premium audit billing and:

(a) The insurer may provide the notification required in ORS 737.318 and OAR 836-043-0110 either in the statement of account or in the letter; and

(b) If the statement of account and the letter are received separately, the 60-day period within which the director must receive the request for a hearing begins upon receipt by the insured of the later-received document.

(8) Unless otherwise provided by statute or rule, the director shall dismiss an insured’s request for a hearing if:

(a) The director does not receive the insured’s written request for a hearing within the required timeframe.

(b) The director does not receive the insured’s completed petition within the required timeframe.

(c) The audit results in changes that affect a future policy period, but does not result in changes to the policy period audited.

(d) The director does not have jurisdiction in the matter, including, but not limited to, the following circumstances:

(A) The billing only addresses changes to the workers’ compensation insurance coverage for an insured’s employees who are not Oregon subject workers.

(B) The billing is based on an estimate of compensation paid by the insured to its employees who are Oregon subject workers and not on actual audit results.

(C) The billing is based on the assignment of an experience rating modification by the bureau, in accordance with the experience rating plan adopted under OAR 836-042-0015.

Stat. Auth.: ORS 731.244 & 737.318
Stats. Implemented: ORS 737.318 & 737.505
Hist.: ID 1-1988, f. & cert. ef. 1-20-88; ID 13-1988(Temp), f. & cert. ef. 7-27-88; ID 15-1988(Temp), f. & cert. ef. 9-2-88; ID 4-1989, f. & cert. ef. 2-28-89; ID 9-1990, f. 5-10-90, cert. ef. 6-1-90; ID 13-1998, f. & cert. ef. 9-23-98; ID 1-2000, f. & cert. ef. 2-10-00; ID 13-2012, f. 7-16-12, cert. ef. 1-1-13

836-043-0175

Statutory Authority; Purpose; Applicability

(1) OAR 836-043-0175 to 836-043-0185 are adopted by the Director of the Department of Consumer and Business Services pursuant to the provisions of ORS 737.310.

(2) The purpose of these rules is to prescribe minimum standards for notice by insurers to insureds regarding approved rate classifications.

(3) These rules apply to all authorized workers’ compensation insurers and the State Accident Insurance Fund Corporation.

Stat. Auth.: ORS 731.244 & 737.310
Stats. Implemented: ORS 737.310
Hist.: ID 2-1988, f. & cert. ef. 1-20-88; ID 2-1992, f. 2-6-92, cert. ef. 2-15-92; ID 13-2012, f. 7-16-12, cert. ef. 1-1-13

836-043-0180

Definitions

As used in OAR 836-043-0175 to 836-043-0185 unless the context requires otherwise:

(1) “Bureau” means the licensed rating organization of this state for workers’ compensation insurance.

(2) “Classification” means a grouping of insurance risks according to a classification system used by an insurer.

(3) “Classification System” means a schedule of classifications and a rule or set of rules used by an insurer for determining the classifications applicable to an insured.

(4) “Insurer” means any insurer authorized to transact workers’ compensation insurance or the State Accident Insurance Fund Corporation.

(5) “Reclassification” means an addition or removal of a classification by an insurer to a policy for an insured when the previous classification is improper or inadequate.

(6) “Workers’ Compensation Insurance” means insurance providing coverage for the obligations of an employer arising from illness or injury to workers whether such obligation is imposed by ORS Chapter 656, similar laws of the United States or agreement between states.

Stat. Auth.: ORS 731.244 & 737.310
Stats. Implemented: ORS 737.310
Hist.: ID 2-1988, f. & cert. ef. 1-20-88; ID 2-1992, f. 2-6-92, cert. ef. 2-15-92; ID 13-2012, f. 7-16-12, cert. ef. 1-1-13

836-043-0185

Insurer Classification Notice

(1) When an insurer issues a workers’ compensation insurance policy to an insured for the first time, an insurer shall provide each insured a written rate classification notice describing the work activities of each classification assigned. This information may be delivered via electronic means, as provided for under ORS Chapter 84.

(2) The rate classification notice shall include the following information:

(a) The complete description for each classification assigned as contained in the insurers’ classification system filed with and approved by the director;

(b) An adequate description of work activities for such classification as reviewed by the director;

(c) One or more publications that include basic ratemaking and classification information and necessary records and reporting procedures for the division of payroll of an individual employee among classifications assigned as provided for under OAR 836-042-0060;

(d) An amendatory endorsement to the policy for reclassification assignments during the policy year as provided for under ORS 737.310(13).

(3) When an insurer provides the written rate classification notice required under ORS 737.310 (12) and (13), the notice must be given in the manner prescribed by section (2) of this rule.

[ED. NOTE: Exhibits referenced are available from the agency.]

Stat. Auth.: ORS 731.244, 737.310(12) & 737.310(13)
Stats. Implemented: ORS 737.310(12)
Hist.: ID 2-1988, f. & cert. ef. 1-20-88; ID 2-1992, f. 2-6-92, cert. ef. 2-15-92; ID 13-2012, f. 7-16-12, cert. ef. 1-1-13


 

Rule Caption: Adopting consumer disclosure requirement for individual and small employer health benefit plan rate filings.

Adm. Order No.: ID 14-2012

Filed with Sec. of State: 8-1-2012

Certified to be Effective: 8-1-12

Notice Publication Date: 7-1-2012

Rules Amended: 836-053-0471

Subject: This rule requires health insurers to include, as a component of a small employer or individual health benefit plan rate filing, a document containing, among other important disclosures, summary information breaking down the expenditure of premium contributions, and further breaking down expenditures on medical claims. The form is similar to a federal form that contains these and other disclosures and that are required for any requested rate increase above 10 percent. This rule requires insurers to submit the state form as part of all rate filings for increases under 10 percent. If the increase is over 10 percent, the insurer may submit a copy of the federal form to meet the requirement.

Rules Coordinator: Sue Munson—(503) 947-7272

836-053-0471

Required Materials for Rate Filing for Individual or Small Employer Health Benefit Plans

(1) Every insurer that offers a health benefit plan for small employers or an individual health benefit plan covering an Oregon resident shall file the information specified in subsections (2) and (3) of this rule when the insurer files with the director a schedule or table of premium rates for approval.

(2) A schedule or table of base premium rates filed under subsection (1) of this section shall include sufficient information and data to allow the director to consider the factors set forth in ORS 743.018(4) and (5). The filing shall include all of the following separately set forth and labeled as indicated:

(a) A filing description.

(A) Label: FILING DESCRIPTION.

(B) The filing description shall be submitted in the form of a cover letter. The filing description must provide a summary of the reasons an insurer is requesting a rate change and the minimum and maximum rate impact to all groups or members affected by the rate change, including the anticipated change in number of enrollees if the proposed premium rate is approved. The description also must include the name and contact information of the filer and a description of any significant changes the insurer is making to the following:

(i) Rating factor changes;

(ii) Plan modification or discontinuance; and

(iii) Benefit or administration changes.

(b) A rate filing summary.

(A) Label: RATE FILING SUMMARY.

(B) This summary must explain the filing in a manner that allows consumers to understand the rate change. The summary shall be in accordance with the form established in Exhibit 1 or Exhibit 2 to this rule. The information contained in this summary must match the information provided elsewhere in the filing.

(c) A consumer disclosure summarizing the rate filing.

(A) Label: CONSUMER DISCLOSURE ABOUT RATE FILING.

(B) This information shall be provided in a document corresponding in form and content to the form labeled “Consumer Disclosure about Health Insurance Rate Filing” provided by the director and set forth on the website for the Insurance Division of the Department of Consumer and Business Services at www.insurance.oregon.gov.

(d) An actuarial memorandum.

(A) Label: ACTUARIAL MEMORANDUM.

(B) This memorandum must include all of the following:

(i) A description of the benefit plan and a quantification of any changes to the benefit plan as set forth in paragraph (2)(j) of this rule.

(ii) A discussion of assumptions, factors, calculations, rate tables and any other information pertinent to the proposed rate.

(iii) A description of any changes in rating methodology supported by sufficient detail to permit the department to evaluate the effect on rates and the rationale for the change.

(iv) The range of rate impact to groups or members including the distribution of the impact on members.

(v) Signature of and date that a qualified actuary reviewed the rate filing.

(e) Rate tables and factors.

(A) Label: RATE TABLES AND FACTORS.

(B) The insurer must include base and geographic average rate tables, identify factors used by the insurer in developing the rates and explain how the information is used in the development of rates. The rate tables and factors must include a table of rating factors reflecting ages of employees and dependents and geographic area. If base rates are not provided by rating tier, the rate tier tables also must be provided.

(C) The document must indicate whether the rate increases are the same for all policies. The document must clearly explain how the rate increases apply to different policies including the entire distribution of rate changes and the average of the highest and lowest rates resulting from the application of other rating factors.

(D) The geographic average rate table must include family type, geographic area and the average of the highest and lowest rates resulting from the application of other rating factors.

(E) The rate tables must contain at a minimum the base rates for each available plan. This document must include information that would permit the determination of rates for each benefit plan, each age bracket, each geographic area, each rate tier and any other variable used to determine rates. If the rates vary more frequently than annually, separate rates must either be provided for each effective date of change or information provided to permit their determination and the justification for such variation in rates.

(F) If the filing is for a health benefit plan issued to a small employer, the insurer also shall include the following factors if applied by the insurer as allowed under ORS 743.737:

(i) Contribution;

(ii) Level of participation;

(iii) Tobacco usage;

(iv) Participation in wellness programs;

(v) Duration of coverage in force; and

(vi) Any adjustment to reflect expected claims experience, which may not exceed the limits established in ORS 743.737.

(f) Plan relativities.

(A) Label: PLAN RELATIVITIES.

(B) This document must explain the presentation of rates for each benefit plan, explain the methodology of how the benefit plan relativities were developed and demonstrate the comparison and reasonableness of benefits and costs between plans.

(g) A description of the development of the proposed rate change or base rate.

(A) Label: DEVELOPMENT OF RATE CHANGE OR BASE RATE.

(B) This document is the core of the rate filing and must explain how the proposed rate or rate change was calculated. The calculation must be based on generally accepted actuarial rating principles for rating blocks of business and should provide sufficient detail to allow reasonable review. The development of rate change or base rate also should include actual or expected membership information and identify a proposed loss ratio for the rating period. A rate renewal calculation must begin with an assumed experience period of at least one year ending within the immediately preceding year, or, if more recent data is available for one-year period that concludes with the most recent period for which data is available. The total premium earned during the experience period should be adjusted to yield premium adjusted to current rates. A projection is made of premiums and claims for the period during which the proposed rates are to be effective. Claims for a renewal projection should reflect an assumed medical trend rate as well as other expected changes in claims cost, including but not limited to the impact of benefit changes or provider reimbursement.

(h) Trend information and projection.

(A) Label: TREND INFORMATION AND PROJECTION.

(B) This document must describe how the assumed future growth of medical claims (the medical trends rate) was developed based on generally accepted actuarial principles. The trend document also must include historical monthly average claim costs for at least the immediately preceding two years when applicable. If the carrier’s structure does not include claims cost, the carrier shall submit this information based on allocated costs.

(i) Premium retention.

(A) Label: PREMIUM RETENTION.

(B) This document must include a description of retention. As used in this paragraph, “retention” means the amount to be retained by the insurer to cover all of the insurer’s non-claim costs including expected profit or contribution to surplus for a nonprofit entity. Retention must be reported on a percentage of premium basis.

(j) Worksheet for Individual Health Benefit Plan Rates (if applicable).

(A) Label: WORKSHEET FOR INDIVIDUAL HEALTH BENEFIT PLAN RATES.

(B) This standardized schedule for individual health benefit plan rates must include earned premiums, incurred claims and membership totals for the past five years on an annual basis as well as accumulated to the current date. The same elements must be projected and reported for each of the next three years. If an active life reserve has been established, that reserve also should be included.

(k) Changes to covered benefits or health benefit plan design.

(A) Label: COVERED BENEFIT OR PLAN DESIGN CHANGES.

(B) This document must explain benefit and administrative changes with rating impact, including covered benefit level changes, member cost-sharing changes, elimination of plans, implementation of new plan designs, provider network changes, new utilization or prior authorization programs, changes to eligibility requirements, changes to exclusions, or any other change in the plan offerings that impacts costs or coverage provided.

(l) Changes in the insurer’s health care cost containment and quality improvement efforts.

(A) Label: COST CONTAINMENT AND QUALITY IMPROVEMENT EFFORTS.

(B) This document must explain any changes the insurer has made in its health care cost containment efforts and quality improvement efforts since the insurer’s last rate filing for the same category of health benefit plan. Significant new health care cost containment initiatives and quality improvement efforts should be described and an estimate made of potential savings together with an estimated cost or savings for the projection period. The insurer shall provide information about whether the cost containment initiatives reduce costs by eliminating waste, improving efficiency, by improving health outcomes through incentives, or by elimination or reduction of covered services or reduction in the fees paid to providers for services.

(m) Information about the insurer’s financial position.

(A) Label: INSURER’S FINANCIAL POSITION.

(B) This document must include information about the insurer’s financial position, including but not limited to profitability, surplus, reserves and investment earnings. This document also must include a discussion of whether the proposed change in the premium rate is necessary to maintain the insurer’s solvency or to maintain rate stability and prevent excessive rate increases for the line of business in the future. In providing this information, the insurer may reference documents filed with the department as part of the annual statement or other requisite filings. The referenced material must be available to the public.

(n) Certification of compliance.

(A) Label: CERTIFICATION OF COMPLIANCE.

(B) The certificate must comply with OAR 836-010-0011 and must certify that the filing complies with Oregon statutes, rules, product standards and filing requirements.

(o) Third party filer’s letter of authorization (if applicable).

(A) Label: THIRD PARTY AUTHORIZATION.

(B) If the filing is submitted by a person other than the insurer, the filing must include a letter from the insurer that authorizes the third party to submit and correspond with the department on matters pertaining to the rate filing.

(3)(a) For each schedule or table of premium rates filed, the insurer shall separately include a statement of administrative expenses for the line of business and complete the chart displaying the five-year trend of administrative costs included as Exhibit 3 to this rule. The chart must break down the insurer’s administrative expenses relating to:

(A) Salaries, wages, employment taxes and other benefits;

(B) Commissions;

(C) Cost depreciations including but not limited to depreciation for equipment, software or furniture;

(D) Rent or occupancy expenses;

(E) Marketing and advertising;

(F) General offices expenses, including but not limited to sundries, supplies, telephone, printing and postage;

(G) Third party administration expenses or fees or other group service expense or fees;

(H) Legal fees and expenses and other professional or consulting fees;

(I) Other taxes, licenses and fees; and

(J) Travel expenses.

(b) The statement of administrative expenses required under this subsection must include:

(A) As set forth in Exhibit 3, a statement of administrative expenses on a per member per month basis set forth separately for claim-related and non-claim expenses;

(B) As set forth in Exhibit 3, an explanation of the basis for any proposed premium rate increase or decrease related to changes in the administrative expenses of the insurer; and

(C) An explanation of how the insurer allocates administrative expenses for the filed line of business.

(4)(a) Within 10 days after receiving a proposed table or schedule of premium rate filing, the director shall:

(A) Determine whether the proposed table or schedule of premium rate filing is complete. If the director determines that a filing is complete, the director shall review the proposed schedule or table of premium rate in accordance with ORS 742.003, 742.005, 742.007 and 743.018. If the director determines that the filing is not complete, the director shall notify the insurer in writing that the filing is deficient and give the insurer an opportunity to provide the missing information.

(B) If the filing is complete, the director shall open the 30-day public comment period. For purposes of determining the beginning of the public comment period, the date the carrier files a proposed schedule or table of premium rates shall be the date the director determines that the filing is complete.

(b) The director shall issue a decision approving, disapproving or modifying the proposed table or schedule of premium rate filing within 10 days after the close of the public comment period.

(5) The director shall post on the Insurance Division website all materials submitted under subsections (2) and (3) of this rule at the beginning of the public comment period.

Stat. Auth.: ORS 731.244, 743.018, 743.019 & 743.020
Stats. Implemented: ORS 742.003, 742.005, 742.007, 743.018, 743.019, 743.020,743.730 & 743.767
Hist.: ID 5-2010, f. & cert. ef. 2-16-10; ID 14-2012, f. & cert. ef. 8-1-12


 

Rule Caption: Adoption of Revisions to Workers’ Compensation Statistical Plan.

Adm. Order No.: ID 15-2012

Filed with Sec. of State: 8-9-2012

Certified to be Effective: 1-1-13

Notice Publication Date: 7-1-2012

Rules Amended: 836-042-0040, 836-042-0043, 836-042-0045

Subject: The agency proposes to amend these rules to adopt the revised 2008 edition of the Statistical Plan for Workers’ Compensation and Employers Liability Insurance (Statistical Plan), as filed by the National Council on Compensation Insurance (NCCI). ORS 737.225(4) requires the director to prescribe the statistical plan to be used by workers’ compensation insurers to report statistics. The revised Statistical Plan:

 Changes the methods for reporting non-compensable and fraudulent claims;

 Changes the definition of permanent partial injuries to exclude references to temporary injury for accidents occurring on or after January 1, 2013;

 Eliminates the hard copy reporting option for reports received on or after January 1, 2013;

 Eliminates the option to group medical-only claims for reporting purposes for policies effective on or after January 1, 2013;

 Adds a new Cause of Injury Code (Gunshot – Code 93); and

 Clarifies existing rules.

Rules Coordinator: Sue Munson—(503) 947-7272

836-042-0040

Statutory Authority; Purpose and Effective Date

Statutory Authority; Purpose and Effective Date

(1) OAR 836-042-0040 through 836-042-0045 are adopted by the director pursuant to the requirements of ORS 737.225(4).

(2) The purpose and applicability of these rules is to prescribe a uniform statistical plan for workers’ compensation insurance statistics as required by ORS 737.225(4).

(3) OAR 836-042-0040 through 836-042-0045 apply to all reporting of workers’ compensation insurance statistics, as therein defined and prescribed provided that nothing contained herein shall restrict the reporting of statistical, financial, or accounting data necessary to fulfill the requirements of ORS Chapter 737.

Stat. Auth.: ORS 731.244 & 737.225
Stats. Implemented: ORS 737.225
Hist.: IC 3-1982, f. 1-27-82, ef. 7-1-82; ID 15-2012, f. 8-9-12, cert. ef. 1-1-13

836-042-0043

Definition

As used in OAR 836-042-0040 through 836-042-0045, unless the context requires otherwise: “Workers’ compensation insurance” means insurance providing coverage for the obligations of an employer arising from illness or injury to workers whether such obligation is imposed by ORS Chapter 656, similar laws of the United States, or agreements between states.

Stat. Auth.: ORS 731.244 & 737.225
Stats. Implemented: ORS 737.225
Hist.: IC 3-1982, f. 1-27-82, ef. 7-1-82; ID 15-2012, f. 8-9-12, cert. ef. 1-1-13

836-042-0045

Workers’ Compensation Statistical Plan

(1) The Statistical Plan for Workers Compensation and Employers Liability Insurance, 2008 Edition, filed by the National Council on Compensation Insurance and approved by the director to become effective January 1, 2009, and revisions approved by the director to become effective January 1, 2013, is prescribed as the statistical plan for workers’ compensation and employers liability insurance.

(2) Manuals or guides referenced within the statistical plan designated in section (1) of this rule are not prescribed by this rule.

[Publications: Publications referenced are available from the agency.]

Stat. Auth.: ORS 731.244 & 737.225
Stats. Implemented: ORS 737.225
Hist.: IC 3-1982, f. 1-27-82, ef. 7-1-82; IC 10-1982, f. 6-23-82, ef. 7-1-82; IC 2-1983, f. 3-16-83, ef. 4-1-83; IC 5-1983, f. 6-30-83, ef. 7-1-83; IC 4-1984, f. 9-28-84, ef. 10-1-84; ID 2-1998, f. & cert. ef. 2-6-98; ID 15-2001, f, 12-19-01, cert. ef. 1-1-02; ID 7-2003, f. 12-3-03 cert. ef. 1-1-04; ID 5-2005, f. & cert. ef. 4-7-05; ID 10-2006, f. & cert. ef. 6-9-06; ID 3-2008, f. & cert. ef. 4-7-08; ID 13-2008(Temp), f. 8-14-08, cert. ef. 9-1-08 thru 1-1-09; ID 20-2008, f. 12-30-08, cert. ef. 1-1-09; ID 15-2012, f. 8-9-12, cert. ef. 1-1-13

Notes
1.) This online version of the OREGON BULLETIN is provided for convenience of reference and enhanced access. The official, record copy of this publication is contained in the original Administrative Orders and Rulemaking Notices filed with the Secretary of State, Archives Division. Discrepancies, if any, are satisfied in favor of the original versions. Use the OAR Revision Cumulative Index found in the Oregon Bulletin to access a numerical list of rulemaking actions after November 15, 2011.

2.) Copyright 2012 Oregon Secretary of State: Terms and Conditions of Use

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