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NEWSLETTERS
NEWSLETTERS
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In this issue
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The Case of the Disappearing Claims |
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Why Injury Management is Essential: What Claims Really Cost Employers |
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Study: Most Lost Time Claims Can
be Avoided |
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The Case of the Disappearing Claims
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Insured:
This case involves a Southern California fit and finish contractor with a $1.2 million Workers' Compensation annual premium. Because of financial issues, the company does not meet self-insurance requirements.
Situation:
In 2003, the company's Workers' Compensation claims amounted to $535,000. Much of the difficulty in managing the claims process resulted from the fact that the company operated crews in some 50 work sites at any given time.
Assessment:
WorkComp Advisors analyzed the situation and introduced improved claims management processes in 2004. In addition, the Advisors' Claim Cost Coordinator found mistakes on the company's Experience Modification worksheet and had them corrected plus reduced filed claims over the last two years by over $127,000 to lower their new Experience Modification Factor.
Solution:
In 2004 the Advisor introduced Post Hire/Pre-Placement processes; Medical Clinic Selection protocols and a Supervisor Claims Responsibility Management Program with the support of a trained management process. Supervisors and a new Workers' Comp Claim Manager were trained in how to control claims including two critical issues:
- The supervisors were shown the 2003 claims reports so they could see what the premium costs were doing to the company's bottom line. They understood the message and responded by saying that Workers' Compensation claims were costing "30 pick-up trucks a year".
- A process was set in place in which the supervisors became responsible for discipline, reporting all claims within 24 hours, and checking out job applicants before they were hired to determine the history of job-related injuries.
The company's new Work Comp Claim Manager effectively managed claims and monitored their Early Return-to-Work program.
Result:
In 2005, a year after the program was put into place, Workers' Comp claims had dropped to $13,000.
The management processes plus the Supervisor Claims Management Responsibility program was then further enhanced to make certain the dramatic gains would continue:
- Each supervisor without a claim during a 12-month period receives a bonus.
- Each year, individual supervisors are given a claims budget and they must stay within that budget to qualify for the annual bonus.
Even difficult Workers' Compensation situations such as this one can be turned around with the proper expertise and installing a process that changes the culture and delivers continuous results
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Why Injury Management is Essential: What Claims Really Cost Employers
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Employers pay both directly and indirectly for the cost of employee injuries. Directly, the employer faces increased Experience Modification factors for three years and lost dividends and return of premium. While it has been shown that employers pay $2 to $3 back to the insurance company for every $1 paid out for many employee injuries, indirect costs are even more significant. In fact, on average indirect costs exceed direct costs by 4:1. These include lost productivity, training costs, overtime, increased stress for supervisors and fellow employees, schedule delays, unhappy customers, morale problems from having temporary employees and legal fees.
Moreover, the longer employees are away from the job, the less likely they will return to work. Statistics show that at 12 weeks employees have only a 50% chance of ever getting back on the job.
The chart below indicates how much revenue is required to pay for an accident.
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Study: Most Lost Time Claims Can
be Avoided
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According to a ManagedComp survey, fewer than 10% of work-related injuries should require employees to take more than three days off work for medical reasons. Yet, nationally 24% of workplace injuries result in lost time greater than three days.
While many employers have made significant progress in reducing the number of job-related injuries, the cost of claims continues to rise. According to the National Council on Compensation Insurance (NCCI), from 1990 to 2004, the total cost of work related injuries more than doubled, outstripping the gains made by the reduced number of injuries.
It is estimated that 60% - 80% of lost claims can be avoided. The key is a clear and definitive process to manage injuries.
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Better Communication = Reduced Claims Costs
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A new study by Watson Wyatt proves what we intuitively know: organizations that communicate effectively with employees outperform those that don't. Companies with the most effective communication programs returned 57% more to shareholders than companies with the least effective communications.
This principle is easily applied to the issues in managing Workers' Compensation cases. When an injury occurs in the workplace and there is uncertainty how to handle it, delays occur and the management of the injury is often left to the medical provider and insurance company, while the employer focuses on the issues of getting the work done.
In turn, the medical provider may not offer a comprehensive work related exam, have little understanding of your business and consider Workers' Comp cases low priority, poorly paid work. Little communication occurs between the medical provider and the employer and there are no treatment guidelines in the care of the injured worker. Paperwork delays, inadequate information sharing and phone tag result in lost time and increased costs and a poorly served employee.
The result: A medically unnecessary disability and increased workers compensation costs.
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How Well Do You Know Your Medical Provider?
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Helping injured workers recover and get back to work should not be left to chance. It requires timely treatment and responsiveness from a highly skilled health care provider who will develop and support a plan of care aimed at Return to Work (RTW) and Maximum Medical Improvement (MMI). MMI refers to the date after which further recovery from, or lasting improvement to, an injury or disease can no longer be anticipated based upon reasonable medical probability.
As Level 5 WorkComp Advisors, we consider accomplishing these goals the foundation of injury management and key to improving medical outcomes (and cost) of Workers' Compensation. We work to develop solid working relationships with medical providers that result in aggressive medical management of Workers' Compensation claims, preventing claimants from going down the wrong road.
We recognize that there are significant differences between occupational health delivery systems and the general medical community that can greatly impact the successful management of work injury cases.
Here are some benchmarks to judge your medical provider by:
- How long does it take them to report to you and the insurance company? What is the quality of the information provided?
- Do they routinely send your employee home to "rest" instead of back to work
- Do they coordinate and manage treatment and rehabilitation with other providers to facilitate a speedy recovery and return to work or do they routinely send your injured employee to specialists for tests?
- Do they understand your business?
- Do they know what "light duties" exist in your return to work program?
- Do they have a relationship with management?
- Do they use treatment guidelines or protocols in the care of the injured worker?
- Do they monitor utilization and outcome to assist you in targeting the 20% of claims that are driving 80% of the costs?
- Do they have the ability to identify ergonomic job risks?
- Do they provide case management?
- Do they offer or are they planning to offer web-based technology?
- Do they base decisions on a release to work on medical outcomes, not social factors?
If you'd like to learn more about the services we offer in selecting medical providers, please contact us for more information.
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