What is a MOD Rate? How Does it Affect Your Bottom Line?

A MOD rate contributes to how much companies pay each month in workers’ compensation premiums.  It is partly determined based on the industry classification a company operates in 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% less than the industry rate and, conversely, if the MOD rate is 1.2 they are paying 20% 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 and employees to reduce the number of OSHA recordables that accrue over time.

Recent studies have shown occupational health clinics to save employers more than 50% in overall workers’ compensation costs1, including a reduction of more than 40% in their MOD rates.  In today’s economy, employers cannot ignore opportunities to save more than 50% 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 only concerned 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 or remodel their house or anything else they want…they just cannot work!  How is that restricting?

In 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 extra tens of thousands of dollars every year?  It’s your decision.

[1] Source: National Report (April 2003).  Occupational clinics reduce workers’ compensation costs, Claims.