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NEWSLETTERS
NEWSLETTERS
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561-683-8383
September 2006 |
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In this issue
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When it comes to workplace injuries ...
90% of employees injured in 2006 have no previous job injury record |
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Costs spiral out of controlTrue Story: Patient dictates lost time during ER visit |
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Taking control in a soft market: drive down your Workers' Compensation premiums even further |
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When it comes to workplace injuries ...
90% of employees injured in 2006 have no previous job injury record
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This statistic is important. 90% of injured workers have never dealt with Workers' Compensation and/or disability benefits systems and rules. Even a minor injury may seem like a major occurrence because the process is unknown. Simple issues can lead to stress because of uncertainty. Common questions include, "How will I get paid?" "What is covered and what's not covered?" "Why did I get a doctor's bill?"
Employers often neglect to inform healthy employees how Workers' Compensation works. Yet, employee meetings are an excellent first opportunity to begin to control the process. By outlining a process that tells employees where they can go immediately for care, rather than waiting hours in an emergency room, and encouraging an early return to work with modified duties, employers give employees peace of mind and establish a level playing field of expectations. This is what drives down long-term costs.
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Costs spiral out of controlTrue Story: Patient dictates lost time during ER visit
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A Certified WorkComp Advisor (CWCA) recently visited a local emergency room following a household accident. There he witnessed first hand how the costs for an injury claim can quickly spiral out of control.
While the Advisor was repairing a shower in his home, a carelessly placed crowbar fell on his head from an open ceiling. A neighbor took him to the emergency room where he needed four stitches to close the gash. As the nurse practitioner in the emergency room put in the stitches, she made a visual assessment of the Advisor, who - clad in jeans, a tee shirt and work boots at the time - happened to look the part of a construction worker.
When she was done with the stitches, she told him he was free to go and that he had "the whole day ahead of him." To this, the CWCA replied, "My work day was kinda messed up by this hospital visit." The nurse practitioner then concluded that this had been a work-related accident and asked the CWCA how much time off from work he felt he would need.
In an effort to test the waters, the Advisor did not correct the nurse practitioner and instead, asked, "How much can I have?"
"Well, the stitches will be in 10 to 14 days," said the nurse practitioner.
"Can I have 14 days then?" asked the CWCA. And with that, she scribbled a note on hospital stationary that said in bold letters, "NO WORK, 14 DAYS." This came not five minutes after she had told him he could leave without so much as a prescription for pain medicine.
The fact that the patient in this case could dictate his own treatment underscores the need for an established Return-to-Work plan. Had this been a real workplace injury, a Return-to-Work plan would have resulted in the patient seeing a physician who understood workplace injuries and both the physician and the employee would know that there would be "light duty" work available for the employee. |
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Taking control in a soft market: drive down your Workers' Compensation premiums even further
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A common myth is that Workers' Compensation rates are set by the state and employers can do very little to control their premiums. With rates declining, there is a tendency for employers to become passive. Yet, in reality, Workers' Compensation is one of the most controllable of all insurance types and it is important to be proactive in a soft market because you can further drive down Workers' Compensation costs for the present and the long-term.
The Experience Modifier (Mod) is the factor that adjusts for the employer's actual experience compared to industry average. The details of the formula are quite complex; but the experience rating plan gives employers the opportunity to manage their own expenses through measurable and meaningful cost-savings programs. During a declining rate cycle, it is more difficult to lower Experience Mods because the plan expects that if rates go down, so should injury costs. If injury costs don't go down, the Experience Mod can go up and wipe out any savings from the rate reduction.
Ultimately, injury costs have a far greater impact on a company's net costs than rate decreases. Moreover, history shows that Workers' Compensation is cyclical and over time the soft market is replaced by a hard market. The proactive employer can drive down costs now and in the long-term by being vigilant and aggressive in reducing injury expenses.
The fundamental reason for most lost time is not medical necessity but the non-medical decision-making and lack of a process that occurs when an employee is an injured. Being guided by a plan that focuses on risk management is far more cost-effective than paying the lowest rates.
Consider the following example: A recent review of a prospect's Experience Mod found two small claims that involved only $516 in lost wages, but actually cost the employer $15,100 in premium resulting from an increased Mod. Had an effective Return-to-Work program been in place, these claims would not have occurred.
Often times, the benefits of value added services are not realized until something happens. Yet the current practice of focusing disability management efforts on those who are out of work is less successful than focusing on early intervention. Research confirms that people who never lose time from work have better outcomes than people who lose some time from work.
Maintaining control is key. The following story illustrates how easy it is for costs to unnecessarily spiral out of control when there is no plan in place.
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Case Study:Smelting Plant Saves $126K, Sees Mod Drop 30%
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Insured:
The aluminum recycling/smelting plant employs 36.
Situation:
The employer was witnessing an increasing number of claims each year and had been saddled with a surcharge as a result of those claims.
Assessment:
Certified WorkComp Advisors (CWCAs) began working with the employer two years ago, just two months after its latest renewal. The CWCAs found that the increasing claims were largely due to a lack of a defined employee-injury plan and hiring procedures that failed to identify employees who either were not well suited for the jobs for which they were hired or came with histories of prior Workers' Comp claims.
Solution:
The CWCAs worked with the employer to organize a formal program that specifically addressed the problems they were having. First, a comprehensive hiring plan was put in place to ensure that those who were hired did not have previous histories of injuries or other issues that may affect their ability to do their jobs. Second, an organizational plan was implemented in order to improve workplace safety and decrease injury frequency. Third, a return to work plan was established and introduced to both supervisors and the rank-and-file. The plan identified both the steps to take when an injury occurs and specific "light duty" opportunities and let all employees know exactly how they were to act before, during and after an injury occurred.
Result:
Because the plan showed the promise of significantly decreased claim frequency, the CWCAs were able to free the employer from the State Work Comp Fund and move them to a standard insurance company. This move saved the plant owners more than $57,000 in the first policy renewal and more than $69,000 in the second renewal. In addition, over the two years since the CWCAs began working with the employer, the number of claims has dropped significantly - enough to warrant a 30% drop in its Experience Modification Factor.
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