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HomeMy WebLinkAboutStaff Report 8891 City of Palo Alto (ID # 8891) Policy and Services Committee Staff Report Report Type: Action Items Meeting Date: 2/13/2018 City of Palo Alto Page 1 Summary Title: Status Update of Audit for Disability and Workers Compensation Rates Title: Staff Recommendation That the Policy and Services Committee Recommend the City Council Accept the Status Update of the 2016 Disability and Workers Compensation Rates Audit From: City Manager Lead Department: Human Resources Recommendation Staff recommends the Policy and Services Committee recommend that the City Council accept the attached Status of Audit Recommendations for the 2016 Disability Rates and Workers’ Compensation Audit. Background The City Auditor’s Office previously issued an audit with objectives to assess the effectiveness of activities to manage and minimize disability retirements and workers’ compensation claims. Review of processes to ensure employee safety, tracking and reporting activities, contract administration, and efficiency of claim processing. Since the 2016 Audit, new procedures and processes to improve claim monitoring, timely claim reporting, and recordkeeping have been implemented and documented. Training for supervisors has also been provided. The Administrative Services Department (ASD) SAP Functional team assisted by configuring a payroll code for tracking medical appointments for injured employees, followed by testing by Payroll and HR staff. The Human Resources (HR) Department has completed 7 of the 15 recommendations. The recommendations and actions taken for completion are listed in the attached document (Attachment A). The attached report also provides an update of the status of the eight open recommendations. HR is in the process of implementing employee safety training to minimize strain injuries as well as working with third-party administrator (York Risk Services) to improve performance metrics. City of Palo Alto Page 2 In addition, HR team will be working with ASD SAP Functional and Payroll teams to test and implement updated CalPERS report which includes correcting temporary disability pay coding. Staff expects to have all completed by June 2018. Attachments:  Disability Work Comp Audit January 2018 STATUS OF AUDIT RECOMMENDATIONS DISABILITY RATES AND WORKERS’ COMPENSATION – ISSUED 10/17/16 PAGE 1 The City Manager has agreed to take the following actions in response to the audit recommendations in this report. The City Manager will report progress on implementation six months after the Council accepts the audit report, and every six months thereafter until all recommendations have been implemented. Recommendation Responsible Department Original Target Date and Response Current Status Implementation Update and Expected Completion Date Finding 1: The City’s Injury and Illness Prevention Program (IIPP) is comprehensive but has lost its effectiveness due to the loss of its City Safety Officer. 1.1. The City Manager allocate sufficient resources to implement and maintain the City’s IIPP and to monitor the City’s compliance with the program. Human Resources Concurrence: Agree Target Date: December 1, 2016 Action Plan: The Human Resources Department requested a new dedicated position (1 FTE) in FY17 Budget. As soon as the position is approved and can be filled this position will review and update the City’s IIPP to ensure effective program compliance. Completed July 2016 Management Update: Council approved additional position in HR for FY17. Senior HR Administrator assigned is currently focused on training, administering daily claim activities to maintain the Workers’ Compensation program while at same time focusing on updating policies and procedures and training on City’s IIPP. 1.2. HR update the safety manual, including supplemental tools and guidance posted on the intranet, to ensure: • The roles and responsibilities over the IIPP are redefined. • The City’s IIPP complies with all Cal/OSHA standards and other applicable safety laws. Human Resources Concurrence: Agree Target Date: March 2017 Action Plan: Once appropriate staff resources are in place, the roles and responsibilities can be reestablished to ensure the safety manual (IIPP) is reviewed and updated as necessary. While a few safe work practices have been updated, such as the Heat Stress Prevention Guidelines in July 2014, a thorough review will be conducted and any necessary updates will be completed. In Progress January 2018 Management Update: Updates have been posted to HR Risk Management and Safety website, specifically targeting Ergonomic awareness. Review of all other safe work practices will continue. Expected Completion Date: June 2018 STATUS OF AUDIT RECOMMENDATIONS DISABILITY RATES AND WORKERS’ COMPENSATION – ISSUED 10/17/16 PAGE 2 Recommendation Responsible Department Original Target Date and Response Current Status Implementation Update and Expected Completion Date 1.3. HR review departmental procedures and safety requirements to ensure they align with the revised IIPP and City policy and procedures. Human Resources Concurrence: Agree Target Date: December 15, 2016 Action Plan: HR is in process of securing a safety specialist to conduct periodic inspections of City facilities for hazard assessment. This comprehensive evaluation will include determining if any corrections need to be completed, including updating or implementing work procedures. In Progress January 2018 Management Update: Currently, the following components of an effective IIPP are ongoing: Accident Investigation: supervisors investigate all accidents, injuries and near-misses and make appropriate changes to minimize recurrence. Hazard Correction: Supervisors correct conditions that are discovered during their monthly inspections or after an injury or accident to prevent reoccurrence. Training: Supervisors are responsible for ensuring their employees are trained to perform work safely. Documentation: Safety training sign-in sheets and investigation reports are maintained. Communication: Employees know how to inform management about health and safety matters. Expected Completion Date: June 2018 1.4. HR work with York and departments to identify useful safety statistics, appropriate HR and departmental recipients of this information, and reporting frequency, and establish an automated process for those statistics to be provided. Human Resources Concurrence: Agree Target Date: December 16 , 2016 Action Plan: HR will work with York to identify useful reports that identify injury and illness trends and implement an automated process for those reports to be emailed to department representatives. Completed January 2018 Management Update: HR is working with York to finalize two reports for distribution to departments, one graph showing claim frequency to be distributed quarterly and a comprehensive report to be distributed on a monthly basis showing trend information: injury description, job classification, body part, and cost detail. STATUS OF AUDIT RECOMMENDATIONS DISABILITY RATES AND WORKERS’ COMPENSATION – ISSUED 10/17/16 PAGE 3 Recommendation Responsible Department Original Target Date and Response Current Status Implementation Update and Expected Completion Date 1.5. HR identify industry-specific ergonomics and general wellness training opportunities to minimize common injuries, and coordinate with departments to ensure regular training is provided to employees. Human Resources Concurrence: Agree Target Date: September 16, 2016 Action Plan: HR will coordinate industry- specific ergonomic training, similar to training provided to Parks maintenance employees in 2010 and Library employees in 2014. We agree industry-specific ergonomic training serves as a reminder for example, that the best way to prevent back injuries is to develop habits that reduce the strain placed on the back. In Progress January 2018 Management Update: Have identified trainer and in process of establishing contract and training dates. Using claim data for previous 5 years, have identified top 5 body parts injured with objective to train employees with highest exposure and focus on injury prevention. Expected Completion Date: May 2018 Finding 2: Injured employees’ benefit eligibility is not accurately and completely tracked and monitored, resulting in both overpayments and underpayments of workers’ compensation benefits. 2.1. HR continue working with ASD and CalPERS to address the disability leave benefits that were incorrectly reported as compensation to CalPERS. Human Resources Concurrence: Agree Target Date: February 2017 Action Plan: HR worked with Payroll to identify wage codes and required corrections needed to fix CalPERS payroll report. In Progress January 2018 Management Update: SAP Functional has configured new disability coding to make correction to CalPERS report. Next steps include testing by Payroll and HR to move forward with correction which have been delayed due to other priority projects. Expected Completion Date: June 2018 2.2. HR review the 22 claims that accounted for 87 percent of the total additional city benefits difference in Exhibit 11, and take necessary action to address any errors identified. Human Resources Concurrence: Agree Target Date: July 2016 Action Plan: HR working on timecard amendments to address errors with 2 Public Safety officers whose claims were initially delayed when claims first submitted and final determination resulted in denial and non-acceptance. In Progress January 2018 Management Update: HR reviewed 22 claims and action on errors where possible still under review. Expected Completion Date: May 2018 STATUS OF AUDIT RECOMMENDATIONS DISABILITY RATES AND WORKERS’ COMPENSATION – ISSUED 10/17/16 PAGE 4 Recommendation Responsible Department Original Target Date and Response Current Status Implementation Update and Expected Completion Date 2.3. HR review the existing disability leave management process in Exhibit 12 and determine the optimal monitoring structure, update the tools and procedures, and allocate sufficient and skilled resources to ensure: a. Benefit eligibility and work status of injured employees is accurately, completely, and timely tracked including: • Start date of disability • Date released back to work by the treating physician • Date returned to modified duty, including the assignment and payroll code used • Date returned to full duty b. Any changes in work status are communicated to York c. Disability leave time buckets are updated as soon as HR is notified of the status change. d. Benefit notices and vouchers issued by York are consistent with the timecards and actual benefits paid through payroll. e. Employees comply with the City policy requiring timely submission of work status notes. Human Resources Concurrence: Agree Target Date: December 16, 2016 Action Plan: a. HR is exploring better methods to track temporary disability and return-to-work status accurately, completely and timely. b. HR will also improve process of maintaining timely communication with York. c. HR staff will explore how to improve management of disability leave buckets in SAP. d. HR will explore how to audit benefit notices and vouchers issued by York to ensure they are consistent with timecards. This would be a manual process that may not be able to be supported. e. HR will work with supervisors to ensure employees comply with City policy requiring timely submission of work status notes. f. HR will explore options for improved disability leave management and tracking as part of the SAP replacement RFP process. In Progress January 2018 Management Update: 80% complete a. In progress- York is able to track return- to-work in claim file in “notes,” which does not provide ability to run report. HR still exploring improved tracking methodology. b. Completed- The workers’ compensation desktop procedures have been reviewed and revised to include the most effective monitoring process based on the tools, systems and resources currently available. c. Completed- Central email box was created to receive work status notes. Monitoring now in place morning and afternoon as well as establishing timely responses. Work procedures have been established to ensure the monitoring and management of the box, including process in place with support staff to track and monitor start and end dates of disability leave buckets. d. In progress- HR explored how to audit benefit notices and vouchers issued by York and determined that comparison is not possible due to difference in TD payments. HR will review with York to determine if they can track the salary continuation TD code 7200 as well as the difference between what the City pays highly compensated injured employees STATUS OF AUDIT RECOMMENDATIONS DISABILITY RATES AND WORKERS’ COMPENSATION – ISSUED 10/17/16 PAGE 5 Recommendation Responsible Department Original Target Date and Response Current Status Implementation Update and Expected Completion Date and state requirements. e. Completed- 1. Procedure document was updated and posted on City website in 2016. Roles of WC staff members, third party administrator, injured employee’s and their supervisors has been streamlined and documented in detail. 2. Training was completed in June 2016; 74% of supervisors/managers attended. Created training video which is posted on the HR Workers’ Compensation intranet site and PowerPoint slides for future reference for supervisors. Expected Completion Date: March 2018 2.4. HR work with ASD to ensure that the data necessary for disability leave management is captured through time reporting in SAP to support the process, including: a. Revising the City’s payroll procedures, Policies and Procedures 2-06/ASD, to provide clear instruction for reporting disability leave on Human Resources / Administrative Services Concurrence: Agree Target Date: February 2017 Action Plan: a. HR following up with ASD Payroll on feasibility to revise City payroll procedures; otherwise, will include steps in City’s Workers Compensation policy. b. ASD and HR have determined how to In Progress January 2018 Management Update: 50% complete a. Completed- HR has drafted Timecard Disability and Modified Duty Coding guideline which will be attached to City’s Workers Compensation policy b. 1. In Progress- SAP Functional has configured new disability coding to make STATUS OF AUDIT RECOMMENDATIONS DISABILITY RATES AND WORKERS’ COMPENSATION – ISSUED 10/17/16 PAGE 6 Recommendation Responsible Department Original Target Date and Response Current Status Implementation Update and Expected Completion Date SAP timecards. b. Configuring the SAP system to: • Track compensation reportable to CalPERS separately. • Track medical appointments that qualify as disability leave by creating a separate payroll code. • If feasible and cost- effective, limit the number of days each employee can code disability leave or modified duty on their timecard based on their position. code public safety temporary disability as “PERSable” and non-public safety temporary disability as “non-PERSable” by using different SAP codes. - A separate timecard code (7600) is being developed to track medical appointments. - Limiting the number of hours each employee can code disability leave can be accomplished when disability leave bucket is established; may not be feasible for modified duty and requires further review. correction to CalPERS report.Next steps include testing by Payroll and HR to move forward with correction which has been delayed due to other priority projects. 2. Completed- New SAP payroll code has been created by ASD and tested by HR to track medical appointments separately from disability leave. An email communication was distributed to city staff on use of new code. 3. Not started- HR discussed new process with SAP Functional to develop new SAP coding system for workers compensation tracking. At this time, determined not feasible in SAP. Instead, HR will review new HR ERP solution to look for improved coding process Expected Completion Date: June 2018 2.5. HR work with York to identify and train responsible HR staff, and maintain online access to York data for analyzing claims, payment transactions, and trends. Establish and maintain written procedures for granting, monitoring, and removing access to the York data and appropriate handling and safeguarding of the data. Human Resources Concurrence: Agree Target Date: December 2016 Action Plan: Training will be provided to HR staff newly assigned to oversee workers compensation. Completed October 2017 Management Update: On September 14, 2017 HR Sr Administrator and Asst HR Director received online “FOCUS” training on how to run claim data and trend reports. HR has established desktop written procedure for granting, monitoring and removing access to York data; HR will forward an annual memo to York identifying employees with approval to maintain access and those who should be removed in order to safeguard data. STATUS OF AUDIT RECOMMENDATIONS DISABILITY RATES AND WORKERS’ COMPENSATION – ISSUED 10/17/16 PAGE 7 Recommendation Responsible Department Original Target Date and Response Current Status Implementation Update and Expected Completion Date Finding 3: The City has not met the state requirement for timely reporting of its workers’ compensation claims to York, potentially causing the cost of claims to increase. 3.1. HR streamline the workers’ compensation reporting process and improve the accuracy and completeness of the claim forms by: • Revising the procedures to clarify the roles and responsibilities. This should include determining whether departments should be responsible for completing only the Employee Claim Forms (DWC-1) and Supervisor’s Report of Injury and Exposure (City form), with HR staff being responsible for completing the Form 5020. • Revising the City form for supervisors to complete with necessary information that can be easily copied and pasted to the Form 5020. • Ensuring the use of York’s online claims reporting to submit the Form 5020, and having appropriate and trained staff enter any sensitive personnel or payroll information. • Making the required forms and Human Resources Concurrence: Partially Agree Target Date: February 2017 Action Plan: HR agrees the reporting process needs to be improved and streamlined. HR will determine if using York’s online claim reporting to submit the Form 5020 is most efficient process. As an alternative, HR will evaluate ability to create DocuSign Form 5020 which Department would initiate, completing facts related to employee filing claim and details regarding injury or illness. DocuSign Form 5020 could then be submitted by departments to HR staff who would complete salary data. HR staff could then submit DocuSign form to York. Completed October 2017 Management Update: Procedure document has been updated to clarify roles and responsibilities on how to file claim and follow up steps. HR held training session for managers, supervisors and department liaisons responsible for completing claim forms to be familiarized with online claims reporting website and given overview for workers compensation benefits. 74% of all managers and supervisor have completed Workers Comp 101 training as well as learning how to access York website and 5020 entry. Sr HR Administrator will periodically review York Scorecard data, “new claims > 5 days from date of injury” to ensure timely reporting of workers’ compensation claims. Forms and instructions on how to file a claim are all available on HR Workers’ Compensation intranet site. STATUS OF AUDIT RECOMMENDATIONS DISABILITY RATES AND WORKERS’ COMPENSATION – ISSUED 10/17/16 PAGE 8 Recommendation Responsible Department Original Target Date and Response Current Status Implementation Update and Expected Completion Date procedures available online in one place with clear instructions and adding electronic signature capability, if feasible and cost-effective. • Regularly reviewing the forms, procedures, and performance to ensure their compliance with state law. Finding 4: The City has not ensured that York met all contract terms. 4.1 HR create a list of key contract terms and assign staff to monitor and follow up on York performance against each term, including recovery of $5,000 from York for not meeting the indemnity claim closure ratio for FY 2013. Human Resources Concurrence: Agree Target Date: July 29, 2016 Action Plan: HR will create a list of key contract terms that require follow-up. New HR staff assigned to administer workers compensation program will monitor and follow up with York regularly on contract terms. Completed January 2018 Management Update: $5000. Recovered. Key contract term sheet based on new contract with York created, to be reviewed at end of each term. 4.2. HR work with York to streamline the monthly, quarterly, and annual reporting process by leveraging online access to York data (see recommendations 1.3 and 2.5). Human Resources Concurrence: Partially Agree Target Date: August 30, 2016 Action Plan: The York data is readily available, currently 8 reports are provided to HR monthly. However the contract calls out for reports that are no longer in use. This can be cleaned up in next contract RFP and in any future contracts. HR will review reporting capabilities to determine how to improve use of data. Completed October 2017 Management Update: During claim system training in September 2017, HR reviewed reporting capabilities to determine how to improve use of data. Worked with York to complete report automation and readily accessible on Claim system dashboard. STATUS OF AUDIT RECOMMENDATIONS DISABILITY RATES AND WORKERS’ COMPENSATION – ISSUED 10/17/16 PAGE 9 Recommendation Responsible Department Original Target Date and Response Current Status Implementation Update and Expected Completion Date Finding 5: Workers’ compensation revenues, costs, and performance data are not clearly reported for informed decision making. 5.1. HR work with ASD’s Office of Management and Budget to clarify the presentation of the workers’ compensation costs in the City’s budget documents. Human Resources/ Administrative Services Concurrence: Agree Target Date: December 16, 2016 Action Plan: HR staff will meet with Budget Manager to clarify presentation for workers compensation costs for FY18 Budget and determine changes or improvements. Completed April 2017 Management Update: Completed- HR worked with OMB Director and Analyst to create inlay document in FY 18 Proposed Budget, page 298, showing workers comp costs not previously identified clearly. 5.2. HR work with York to identify useful performance measures and establish procedures to ensure reliable reporting of performance data using a consistent methodology. Human Resources Concurrence: Partially Agree Target Date: January 2017 Action Plan: HR will explore best practice performance measures and establish procedure to ensure reliable reporting. In Progress January 2018 Management Update: HR has worked with York to identify useful performance measures available on York Scorecard. HR participating in webinar to explore workers compensation best practice metrics. Expected Completion Date: March 2018