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Expert Practices Articles
- Ten Steps to Reducing Your Workers' Comp Costs
- An Ounce of Prevention Equals a Pound of Cure
- Managing Claims to Reduce Your Costs
- Setting Up a Workers' Comp Medical Network
- Selecting an Insurance Broker
- The Self-Insured Option
- Long-Term Cost-Cutting Strategies
Book List: Workers’ Compensation
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CEO Best Practice: Workers’ Compensation
Executive Summary
- Ten Steps to Reducing Your Workers' Comp Costs
- An Ounce of Prevention Equals a Pound of Cure
- Managing Claims to Reduce Your Costs
- Setting Up a Workers' Comp Medical Network
- Selecting an Insurance Broker
- The Self-Insured Option
- Long-Term Cost-Cutting Strategies
Ten Steps to Reducing Your Workers' Comp
Costs
Have you taken a look at the workers' compensation situation lately?
If you're a business owner or CEO, it's hard to ignore. In most
states, workers' compensation insurance premiums are escalating
at double-digit rates. Insurance companies are losing money and/or
going out of business with alarming frequency. Injured employees
often receive inadequate benefits, while attorneys, doctors and
other service providers scoop up the lion's share of the dollars.
What's causing workers' comp costs to go through the roof? Vistage
members Gary Uhlemeyer and Bill Litjen, along with former members
Marilyn Murata and Marcia De Witt, identify several causes:
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An Ounce of Prevention Equals a Pound of
Cure
Our experts believe that minimizing workers' comp costs starts with
a solid dose of prevention applied in four key areas:
- Management commitment. To demonstrate commitment from the top,
Uhlemeyer recommends that CEOs:
- Spearhead a program that focuses on reducing the number
of claims and the cost of those claims once they occur.
- Select an insurance broker and/or third-party administrator
who will help proactively address the true causes of loss
in the business.
- Focus the entire organization on safety and accident/injury
prevention.
- Make sure a competent person, either internal or third-party
administrator, aggressively manages any claims that occur.
- Conduct regular reviews of the company's safety processes
and loss analysis.
- Preventive hiring practices. According to Murata, preventive
hiring includes:
- A clear and accurate job description that lists the specific
tasks to be performed and the physical requirements needed
to get the job done
- A drug screen and a complete physical to determine the applicant's
health status and ability to physically perform the job (drug
screens must apply to all job applicants; they cannot be used
selectively)
- Using the employment interview to weed out potential abusers
of the system
- Strict reference checking and, when appropriate, background
checks
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Managing Claims to Reduce Your Costs
To reduce the costs of claims once they occur, our experts recommend
aggressive action in four key areas:
1. Treat the injury. To properly treat a legitimate work injury,
Litjen recommends the following:
- Use first aid when possible. If uncertain, call your workers'
comp physician before sending the employee to receive care.
- Avoid emergency room and urgent care visits. Use a pre-established
network of specially-trained workers' comp medical providers.
- Don't delay appropriate treatment or testing, but be expedient
with care. Don't allow excessive use of chiropractic treatment
or physical therapy.
- Require employees to keep all medical appointments; don't
allow them to reschedule.
- Strive to get injured employees back to work as soon as possible.
If necessary, provide a modified work program
In addition, says DeWitt, the company's response to the injury
plays a major role in how the employee experiences the workers'
comp system. She recommends a "care and concern" injury
management model which sends an important message to injured employees
-- we're sorry you got hurt, we care about you, we want you to get
the best possible treatment, and we want to bring you back to work
as quickly as possible.
2. Assess the claim. According to Litjen, many injuries/illnesses
are not covered by workers' comp, including injuries caused by intoxication
of alcohol or controlled substances, intentional injuries, injuries
suffered during commission of a felony or crime, voluntary wellness
programs, car accidents on the way to work and many more. In these
situations, employers can file an "affirmative defense"
which, if upheld, precludes them from paying the claim.
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Setting Up a Workers' Comp Medical Network
To limit the cost of workers' comp claims, only use medical practitioners
who specialize in workers' comp injuries and occupational medicine.
Specialists may cost a few dollars more up front, but in the long
run they will save you a lot of money.
"In many cases, the cost of getting the injured worker back
to work far outweighs the initial cost per doctor visit," explains
DeWitt. "That's where the specialists come in. Most primary
care doctors aren't trained to diagnose and treat occupational injuries.
Plus, they don't have the time or interest in working with you to
get injured employees back to work. To reduce your claims costs,
use medical specialists who understand the importance of getting
people back on the job."
In addition, look for physicians who agree that on the day they
see your employee they will fill out the proper forms, tell the
worker what follow-up treatment is necessary, identify any required
job modifications and communicate (in writing) all this information
to you. Your specialists should also agree to see every injured
worker within 24 to 48 hours. The quicker the employee gets back
to work, the less you have to pay in lost wages and replacement
wages for temporary workers.
To handle the broad spectrum of possible injuries, DeWitt recommends
establishing relationships with five types of specialists:
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Selecting an Insurance Broker
What makes for a good broker? Uhlemeyer lists four key criteria:
- Experience with your business/industry
- Partner mindset
- Ability to sell multiple lines of insurance
- Ability to deliver a full range of services
Before shopping for a broker, Murata suggests creating a wish list
to present to prospective brokers. What might you ask for? A certain
amount of free consultation each year. Regular reviews and status
reports, with recommendations on how to better handle claims. Quarterly
loss analysis reports. Regular meetings with claims examiners. It
all depends on the unique needs of your business and your workers'
comp environment.
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The Self-Insured Option
Some companies save money by self-insuring rather than purchasing
insurance from a carrier. According to Uhlemeyer, companies that
self-insure enjoy four main benefits:
- More flexibility over how claims are investigated and handled
- Better ability to minimize the cost drivers of workers comp
- Increased motivation to manage the process and reduce costs
- Financial and cash flow benefits
Who qualifies for self-insurance? Each state has its own set of
criteria. However, in general a company must:
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Long-Term Cost-Cutting Strategies
To further lower your workers' comp costs, our experts recommend
the following steps:
- Conduct regular claims reviews and fight all fraudulent claims.
- Hire a risk manager to analyze the causes of loss.
- Practice attorney avoidance by educating employees before injuries
occur.
- Work closely with your physicians and TPA to close all lingering
claims.
- Adopt a "we care" attitude.
"Too often, employers simply forget about injured employees
until they return to work," notes Uhlemeyer. "Treating
people with dignity, care and respect always leads to a more positive
outcome."
Finally, urge our experts, contact your state legislators and demand
reform. In particular Litjen recommends six specific actions to
request:
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