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How to stop higher Workers' Comp pricing pressures

As premiums rise, employers look for ways to improve their risk profiles and control their costs. Insurance companies report that their clients have seen mid-year Workers' Comp rate hikes ranging from 2.5% to 5% for large accounts and 5% to 10% for mid-market employers. Pricing pressures come from many angles - medical inflation, claim severity, Medicare set asides, state regulatory changes and lagging investment income from low interest rates. In addition to fairly aggressive price increases, insurance companies are increasingly selective about which accounts and risks they will underwrite.

This is not good news for employers who are not actively engaged in claims and risk management practices and can even be challenging for those who are. Employers looking to better position themselves focus on the fundamentals of reducing Workers' Compensation costs:

Yet, even employers with a strong commitment can struggle to achieve long-term, consistent progress in cost containment. The complexity of Workers' Compensation, the interrelated nature of the components of Workers' Compensation that can result in delays and superfluous services, and the number of stakeholders who sometimes have different and conflicting objectives, can lead to frustration and sub-par results.

To be successful requires rigorous oversight, coordination and constant vigilance. While employers need to lead by setting the vision and strategy, at other times they need to be the traffic cop, assuring that all aspects are moving properly and smoothly. Employers who carefully select partners, establish a coordinated framework, set expectations for each stakeholder and monitor results are in the best position for success.

Here are some expectations and red flags that can help guide the process:

Claims adjuster/Insurance carrier

Red flags: failing to investigate thoroughly; sloppy documentation; billing errors; failure to read medical reports; failure to monitor and control medical treatment; failure to close claims in a timely fashion; not using medical case management when appropriate; failure to understand employers' return to work program; not pursuing subrogation; inadequate communication with employee, employer and health care provider; frequent changes of adjusters; many litigated cases; inadequate support for defense attorney

Health care provider

Red flags: Treatment inconsistent with evidence-based guidelines; dispenses drugs, including opiates, from office; allows employee to direct care; co-morbidity conditions such as obesity, diabetes ignored; broadens scope of treatment beyond the injury; excessive testing; billing errors; does not understand or ignores return to work options; does not provide timely reports or appointments; injured employees do not reach MMI within forecasted time

Injured employee

Red flags: provides conflicting versions of injury; injuries are inconsistent with nature of accident; refuses medical tests or exams; difficult to reach; injury is not reported in timely fashion; refuses contact with supervisor and colleagues; depression; poor performer, disgruntled, and/or serious financial issues


Red flags: slow reporting of claims; many litigated cases (over 20%); a high percentage (over 20%) of lost-time claims; a high number of injuries among new employees; rash of injuries in particular areas; spikes in average costs of claims; retaliation/bullying relating to claims reporting