The below procedure will provide instructions on running a Change of Incurred Report. Please see the Change of Incurred.pdf file at the bottom of this article.
The Change of Incurred report lists the claims that have had a change in total incurred value of the entered minimum change or more during the entered activity period. When the adjuster believes the estimated cost the claim needs to be adjusted, he or she will enter reserve adjustment transactions. The reserve adjustments can be positive or negative to increase or decrease the total incurred value.
The total incurred value less the amount already paid equals the outstanding reserve (the estimate of future payments on the claim). Reserves are put on a claim by category. For workers compensation, the categories are medical, indemnity (lost time benefits, usually two-thirds of the worker’s normal wage), case management, legal, and other expenses. Payments greater than the outstanding reserve for its category are not allowed. For instance, if there were an outstanding medical reserve on a claim of $22,000 and a hospital bill came in for $30,000, the adjuster would have to enter a medical reserve adjustment of at least $8,000 before being allowed to make the payment.
Another good thing to know is where the description of the Reason comes from. Every reserve change in the report has a description of the reason for the change. The reason description is the text of a Notepad of type Reserve Rational entered on the claim during the report’s activity period. (If there were more than one Reserve Rational notes entered on the claim during the period, the note entered most recently would be used.) If there is no Reserve Rational note, the entry in the Comment field entered when the reserve transaction was entered is used. (The Comment is often very short, a word or two.)
As an example, let us say the Change of Incurred report was run with a Minimum Change value of $10,000, an Activity From entry of 8/1/2015, and an Activity Through entry of 8/31/2015. For a claim to be included in the report, all of the reserve transactions made on the claim during August for all of the different categories would have to sum to either $10,000 or more or else to negative $10,000 or less. In other words, the incurred value of the claim would have to change by at least $10,000.