STATE TO STUDY COMP LOSSES, DRUG TEST DATA

A Tennessee initiative may help stem criticism of state laws that promote drug-free workplaces by allowing workers compensation insurers to give premium credits to employers that screen for drugs.

The drug-free workplace laws, which more states are considering, have drawn criticism that there is little credible data to demonstrate how much the mostly voluntary drug-screening programs help control losses or to justify the average 5% premium credit.

Tennessee, however, may be on to an approach that could help solve those problems, according to observers of the state's initiative.

The Tennessee program links an employer's reporting of basic drug-test program information with its workers comp loss data. That approach could yield more credible data about the impact of drug-free workplace programs that will help employers and state authorities.

Some insurance organizations, though, remain skeptical of the appropriateness of the premium credits.

"We simply don't know what works and what doesn't," said Keith Lessener, vp-safety and environment with the Alliance of American Insurers in Schaumburg, Ill.

"It's an open question whether the cost savings from drug-free workplaces will justify the premium credits granted," agreed a spokesman for the National Council on Compensation Insurance in Boca Raton, Fla.

Preliminary results from a Florida program indicated about a 5% reduction in average incurred losses as a result of a similar program.

However, determining statistically appropriate premium credits is another difficult issue for employers and state officials.

Unless data collection is improved and program performance more accurately assessed, employers with effective workers comp programs may be subsidizing those with ineffective drug-test programs. That could cause overall workers comp rates to go up unfairly or insurers to bear a disproportionate share of the cost.

Robert Kriebel, coordinator of the Tennessee Department of Labor's Drug-Free Workplace Program, agreed that acquiring good data is important, "just so we have a statistical basis to make decisions."

Tennessee's program was mandated by the state's 1996 workers comp reform act, though the need for technical amendments to the act and approval of operating guidelines have delayed implementation until later this year.

The topic of determining statistically valid premium credits is increasingly important nationally, because a growing number of states are adopting or considering similar legislation as well as larger premium credits.

Eight states in the past few years have enacted some type of drug-free workplace premium credit, and eight more states considered similar bills during their current legislative sessions, according to the Alliance.

Alabama, Florida, Georgia, Ohio, Mississippi, Tennessee, Virginia and Washington have adopted the programs. Similar premium credit bills are pending in Hawaii, Illinois, Louisiana, Massachusetts, New York, South Carolina, Texas and Vermont.

Proposed premium credit amounts also are expanding beyond the typical 5% level, which states often adopt as part of reform negotiations.

For example, Georgia's new law calls for a 7.5% credit. In addition, Ohio's recently enacted law calls for tiered credits ranging from 6% to 20%, with random drug testing required to earn the higher discounts, according to the Alliance.

Most drug-free workplace programs do not require random testing, though that is considered the most effective approach.

A typical drug-free workplace program, like that proposed in Tennessee, includes some pre-employment and post-accident testing, in addition to testing for "reasonable suspicion" when a worker is behaving erratically.

Most programs test a worker's urine for alcohol, amphetamines, cocaine, opiates and cannabis-type substances.

The data collection component of the Tennessee program still is being determined, but an Alliance-backed proposal asks each participating employer to complete a simple form that asks when its program began, who does its testing, who serves as its medical review officer and the number of tests done. An employer would update the form annually and if it decides to disband the program or when state authorities ask for it.

A key component of the Tennessee drug-free workplace program is the NCCI's pledge to analyze the employer's workers compensation claims data in the context of the drug-free workplace program start date and other data. That and other comparisons are expected to yield an accurate evaluation of the program's true effectiveness. Tennessee law then allows the percentage of premium credit in future years to be adjusted from the expected 5% to an "actuarially sound" number.

Tennessee's drug-free workplace program "is of high interest to a fairly good percentage" of the 1,800 employers that belong to the Tennessee Assn. of Business, said Bob Gaskill, vp of the Nashville, Tenn.-based group. The group represents employers of all sizes.

In states that allow premium credits for drug-free workplace programs, most employers attracted to such programs tend to be midsize-with premiums less than $10 million-or smaller companies, because many large employers are self-insured, said Anne Allen, state affairs director for the Risk & Insurance Management Society Inc. in New York.

Mr. Gaskill said two key attractions of Tennessee's proposed program are the likely initial 5% discount as well as a reversal of presumption in a discharge case. As a result of the presumption, adjudicators will presume that a job-related injury involving a worker who tests positive was caused primarily by the presence of the drug, and workers comp benefits may be denied.

However, this presumption may be countered by the testimony of a medical review officer, for example, in cases in which the accident was not caused by the substance-abusing worker.

No such presumption exists now; instead, the presumption is that the employer is liable for a workers comp claim in an accident.

At least two unions in Tennessee also support drug-free workplace programs to promote safety and jobs by enhancing employer competitiveness.

"We always promoted it, because it makes a safer work environment and helps us meet our schedules and hold costs down on jobs," said Jack Gatlin, business manager and financial secretary for the International Brotherhood of Electrical Workers Local 474 in Memphis. "It also keeps workers comp premiums low, which helps our contractors be more competitive."

"We don't want drugs or alcohol in the workplace, not only because it is dangerous for the individual person involved but it also can endanger co-workers," said James G. Neeley, president of the Tennessee's AFL-CIO Labor Council in Nashville.

Both union leaders serve on the state's 12-member Workers' Compensation Advisory Council, along with a representative of the Tennessee association.

Legislators' increased interest in drug testing tracks what the majority of major employers are already doing. According to a 1996 American Management Assn. survey of major companies, the number of companies testing for drugs nearly quadrupled to 81% since 1987 (BI, April 29, 1996).

Employers implementing drug-free workplace programs also should be wary of the new liabilities they create. Employers must keep workers' results confidential and ensure that testing companies perform appropriately, said David Holcombe, risk manager of the International Speedway Corp. in Daytona Beach, Fla. He chairs RIMS' Government Affairs Committee.