The end of the year is a good time to take a step back and look at your Workers' Compensation program to assess strengths and weaknesses. A key aspect of a successful program is proactive management of claims. Every $1 in claim costs represents $2 or $3 in premium costs. Here are 13 points to evaluate:
Reporting sets everything in motion - medical treatment, incident investigation, recovery at work, and so on. If claims are not reported quickly - within 24 hours or less - return to work is delayed and the cost of the claim and potential for litigation increase.
The more information an adjuster has, the more efficiently a claim can be managed. Information on job description, co-morbidities, recovery at work options, prior workers' comp claims, workplace disputes, and so on will expedite the process. In addition, any changes that occur need to be immediately reported to the adjuster. For example, if you are contacted by an attorney, when the employee returns to work, the employee is not cooperative about recovery at work, or there is a change in medical information or providers.
Regardless of company size, employers who take a hands-off approach and do not properly monitor claim adjusters will likely experience higher claim costs. Workloads are heavy and mistakes do happen. Having a designated adjuster who can work collaboratively with your staff will increase the efficiency of claims management and expedite closure.
Lost time claims are the most expensive workers' compensation claims and have the greatest impact on an employer's premium. Countrywide, roughly 25% of all claims are lost time cases. You want to do better. Taking the time to analyze the claims and assess trends will help you focus your loss control efforts on the underlying issues.
It's common sense that the longer a claim is open, the more it is going to cost. Excessive time lags in care or claim duration is a red flag that a case is spiraling out of control. Today, claims are more complex, often involving co-morbidities, narcotic drugs, an aging workforce, and expensive medications. Do claims ultimately close within 10 - 15% of the reserved amount? At a minimum, open claims and reserves should be reviewed quarterly.
Lost time claims can be active for years and if not aggressively managed, the cumulative costs will continue to grow. Are they forgotten? Has any effort been made to contact the employee and explain why it is in their best interest to settle?
There is no question that litigation leads to increased claims costs and often times leads to a worse medical outcome for the injured worker. A 5% litigation rate is very good, 10-15% is good, and anything over 20% should be considered a red flag warranting further analysis. Litigation can start because the injured worker is afraid. Fear of the unknown. Fear for the job. Fear about their injury. Take the time to explain things to injured workers. An advocacy-based model can help (see next question).
An employee's perception that an employer doesn't take the employee's concerns seriously will escalate a claim and increase the length of a disability. Advocacy-based claims models emerged as "buzz" in the industry in 2016. At its core is a focus on people. It's treating your injured employee like a customer - helping them every step of the way and advocating for them when bumps occur. Here's how:
Injured workers who aren't paid in a timely fashion are fodder for eager attorneys. Designate someone to advocate for them and get it resolved.
While state statutes differ with respect to the extent to which employers can direct injured workers to certain medical providers, the medical management of a workers' comp claim is essential to reducing costs. Evaluate your relationships with medical providers and medical bill review processes to be sure they are working for you and your injured employee. Monitor the medical progress reports to be sure the treatment is appropriate and be wary of physician dispensing.
Treatment at an emergency room is not only one of the most expensive places to get medical care, but also likely to derail a rapid return to work. While often used for convenience, it should be a last resort and used for critical, emergency situations only.
While only a small percentage of claims are fraudulent, they do occur. It doesn't have to be costly surveillance; often times social media activity will tip off employers that something is amiss.
Subrogation is the right to recover Workers' Compensation benefits paid to the employee because of the negligence of another person or entity. While subrogation laws vary by state, there are common occurrences that should be on the radar screen for potential third-party liability. These include: automobile accidents, slips and falls due to defective premises, defects in machinery or other products, or involvement of dangerous chemicals or other substances. While the process can be complicated and expensive and often the decision to subrogate is in the hands of the insurance company, it behooves employers to immediately notify agents and insurance carriers of the involvement of a negligent third party.