Reduce Workers’
Compensation Costs With CompScore Metrics
How do we keep score in Workers’ Compensation? Typically
insurance companies provide “top of the line measurements,”
such as total number of claim dollars spent in a given year, average claims
costs for medical only claims and average claims costs for lost time claims
to employers. They may even break down some injury costs by department.
Not surprisingly, these metrics drive decisions. They become goals and measures
of success. In fact, metrics on claims costs have become so predominant
that companies often reward their employees based on them. If injury costs
go down in a department, it’s a good thing and supervisors and employees
are rewarded. If they go up, it’s a bad thing and corrective actions
are needed.
Unfortunately, this focus on total claims cost from one year to the next
is incomplete and shortsighted. It fails to recognize or measure what’s
driving the claim costs. If the average medical cost per claim increased,
was it simply a matter of medical inflation or did it have anything to do
with something the employer could control? If it went down, was it luck
or a result of the employer’s actions?
What is needed are tangible and measurable metrics of factors driving claims
costs. This focus has several advantages. First, it inherently takes a long-term
view enabling employers to understand the underlying circumstances and conditions
that are driving up work-related injury costs. Secondly, it isolates measures
of the value of the employer’s actions. This approach is much more
than a difference in semantics; it not only will drive decisions in a different
direction but it may also entail significant changes in an organization’s
management of Workers’ Compensation.
CompScore Metrics, the four most important measurements for driving down
Workers’ Compensation costs, are:
1. Time lag
A well-known study by The Hartford has demonstrated that “time is
money” for workers’ compensation claims. A week’s delay
in reporting an injury can increase claim cost by 10%; claims filed a month
or more after an injury cost 48% more to settle than those reported in the
first week. Yet it is not only the lag time in reporting that is important
to measure; along the continuum of care there are many points at which a
claim can become snagged, slowed down or stopped dead in its tracks. Lag
time to first doctor’s visit; lag time to get report from doctor;
lag time to see a specialist; and so on., all have negative effects on claims
costs.
An employer can set their own baseline for improvement by examining injury
records, writing down dates, and identifying excessive time lag. Reducing
delays in care, and accelerating continuity in care and communication with
the employer will drive down claims costs and improve productivity.
2. Disability duration and treatment
Excellent sources of disability duration guidelines and benchmarking data
on time away from work are available. The Medical Disability Advisor,
by Presley Reed, MD, helps companies more efficiently manage and measure
the time employees are away from work by providing evidence-based disability
duration guidelines for over 6,700 of the most common injuries and illnesses
of working age people.
The gold standard for effective occupational medical practice from the American
College of Occupational and Environmental Medicine (ACOEM), Occupational
Medicine Practice Guidelines: Evaluation and Management of Common Health
Problems and Functional Recovery in Workers, 2nd Edition, provides
evidenced-based treatment guidelines for all types of injuries. These guidelines
are the foundation for the State of California’s Medical Treatment
Utilization Schedule that requires doctors to use these treatment protocols
for injured workers.
The evidenced-based guidelines offer the best standards of medical diagnosis,
evaluation, and medical management in the workplace. With these benchmarks
employers can measure the actual versus the expected disability duration
for an employee based on their injury and determine whether or not the treatment
matched the treatment protocols. The approach has met with success in California
and warrants consideration as a national model.
Drilling down even further, there are predictive modeling programs that
can identify claims that are likely to spiral out of control. Flagging these
claims and monitoring vigilantly is another way that evidenced-based guidelines
can reduce costs.
3. Modified Duty Days
A smooth, safe and expedited return-to-work is the mark of a well-run loss
control program. The longer an employee stays at home, the more difficult
it is to bring him or her back to the work environment. Return-to-work programs
with modified work assignments are a crucial component in reducing Workers’
Comp costs. Yet, modified duty work assignments are transitional, designed
to reach the primary goal of returning workers to full duty at their original
job. Injured workers should not be mired in modified duty for extended periods
of time. Benchmarks are available to evaluate the employee’s progress
and reductions in modified duty days will improve productivity.
4. Physicians
The best way to measure a physician is by the evidence-based treatment guidelines.
Yet, not all doctors follow them. Reviewing the cases treated by the same
physician can reveal disconcerting trends – i.e. every one is referred
for physical therapy. 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. Holding physicians accountable to established standards is key.
Using CompScore metrics will lead to different insights and strategic decisions
than the current claims-cost approach. They act as a mirror into the current
processes. If it takes on average seven to ten days to report an injury,
there is a training and communication issue. The employer can put a training
initiative in place and measure the results over a three or six month period.
If there are delays in the continuity of care, there is a problem with the
physician and it must be communicated that it is unacceptable. Often times,
delays can be resolved by using alternative specialists, improving communication,
or simply being more aggressive on the telephone.
In the same way that measuring results is key to productivity improvement,
measuring the factors that affect Workers’ Compensation costs becomes
the basis by which employers can reduce these expenses and, at the same
time, better serve injured employees.
Since insurance companies are not providing this critical data, it falls
to employers, along with their insurance agents, to take action on their
own since it’s their bottom line and employees that are at risk. |