Published in July of 2011 by the Indiana Compensation Rating Bureau, the attached white paper "EMR as Qualifier to Bid on Construction Projects" has new relevance for the construction industry today. As discussed in this white paper, EMR (experience rating modification) is designed solely as a premium calculation factor. It is not intended to be an indicator of contractor safety. As the costs for medical care and the costs of purchasing health insurance have increased due to the implementation of the ACA, several factors utilized in the calculation to determine a company's EMR have been affected.
The EMR is a ratio of Actual Losses divided by Expected Losses. Insurance companies include a reserve amount for open claims in the Actual Losses. This reserve amount has drastically increased over the last few years. Additionally the multiplier, or ballast number, in the calculation has also increased along with the higher medical costs. The net effect on the EMR is that companies with no claims or minor claims may find their EMR exceeding the 1.0 threshold which could result in an automatic but erroneous disqualification from consideration for worksite eligibility. It has been shown that the EMR can increase regardless of a contractor's Safe Work History.