Five Tips to Jump-Start Your Cost Control Efforts in 2005

Tuesday, January 18, 2005 | 0

Instituting "best practice" workers' compensation processes is no easy task. The system is convoluted and complicated, and few businesses are able to perform strongly in every area of the claims process. However, those companies that do manage to tighten and control their practices save thousands of dollars each year.

How they do it? Here are 5 tips, practiced in highly successful organizations, that you can put into practice immediately:

1. Get active and get educated. In order to achieve cost-cutting solutions, you need to create sense of urgency throughout your organization about trimming costs and changing inefficient workers' compensation practices.

This effort needs to start at the top-with you. It's up to you to work with your management team to get all the elements of your workers' compensation system in alignment and working smoothly. Since the system is complex and involves multiple parties with sometimes-conflicting interests, it's critical to get to know who the players are and how they relate to each other.

For example, do you have a handle on the role of each of the following parties and fully understand what part each plays in the workers' compensation claims process?

* Employer
* Employee
* Workers' compensation appeals board
* Treating doctor
* Nurse case managers
* Return-to-work coordinators
* Defense and applicant attorneys
* Rehabilitation professionals
* Private investigators (when fraud is suspected)
* Insurance broker
* Risk manager
* Loss prevention specialists
* Underwriting professionals
* Claims department adjusters, management, and supervisors

When claims costs go up as a result of the actions of any of the parties listed above, the cost is passed on to you, the employer. If you don't stay on top of the complex claims process, your claims may be handled poorly or slowly. Or they may simply "fall through the cracks." These are the claims that get out of hand and cost you thousands of dollars each year.

If you don't have the in-house resources to ensure the proper handling of your claims, make it your business to find the help you need. You could be paying thousands of dollars more than you need to for your workers' compensation premiums.

2. Prevent injuries before they happen. According to Liberty Mutual's annual Workplace Safety Index, the top three causes of injury are overexertion, falls on same level, and bodily reaction (injuries resulting from bending, standing, reaching, and slipping or tripping without a fall). These top three injury categories &

* Are the fastest growing of all injury causes, with the cost of each rising 10.7%, 17.2% and 13.7%, respectively, faster than inflation
* Represent just over half of the total costs of serious workplace injuries, costing about $23 billion a year or $450 million a week.

When you begin to closely examine the root causes of your workers' compensation claims, you'll see that many of them can be addressed and resolved before they become workers' compensation claims.

If you create a culture in which safety comes first, you'll see a drop in the number of accidents. Employees need to be well schooled on the proper procedures to follow in the execution of their jobs, and they should know precisely what to do in the event of an accident. In addition to keeping your workforce safe and healthy, establishing a safe environment will secure a more favorable rating from your insurer.

3. Know exactly what to do during the first 24 hours after an accident occurs. There are very few cost saving measures more advantagious than the efforts taken within the first 24 hours after a workplace injury.

That is when you must conduct an investigation to determine how to proceed with a claim. During this period, the injured employee should be given reassurance, directed to your choice of proper medical care, and encouraged to immediately return to work in an alternative function.

Here is what you need to do in the first 24 hours after an injury.

1. Provide immediate medical attention
2. Immediately obtain an employee statement
3. Alert the physician to suspicious claims
4. Receive precise information about work restrictions
5. Decide whether to contest the claim.
6. Get the employee back to work
7. Explain the workers' compensation system to the employee
8. Submit an injury report.
9. Most important, during the claims process, do a good job of managing the employee relationship. An employee who is positive and confident will recover sooner, and remain on "your side." Make sure your process facilitates a positive relationship.

While these steps are a tall order for a 24-hour period, they are essential to controlling costs. Think of this time as an investment, and consider a smooth claims process as your return on investment. Anything that saves you money and helps your employees should be embraced. Ask yourself these questions about your current practices:

* Are your claims handled with a sense of urgency?
* Are claims reported within 24 hours?
* Are hazards removed immediately upon reporting?
* Do you have well-established protocols and procedures for immediate, sustained after-injury support for your employees?
* Where can you add urgency and action-orientation in your system of reporting claims?

4. Be aware of the problems with your claims process and know how to address them. Here are some potential pitfalls to be aware of:

* Questionable claims are not acted on quickly.
* Medical bills and provider payments are late or delayed.
* WC forms to governing bodies are processed slowly and filed late.
* Files are over-reserved.
* There is a low number of file closings.
* There are few or no reserve reductions.
* Benefits that are due to the employee are delayed.
* The employee feels that his or her needs are not being met.
* The employee turns to an attorney.
* The employee is reluctant-or refuses-to return to work.
* The relationship sours and costs go much higher.

On the other hand, highly effective workers' compensation systems address these pitfalls and put safeguards in place. Effective systems &

* Coordinate the development and implementation of relevant policies and procedures
* Educate and train employees, supervisors, and managers about the WC system and processes
* Have a central contact person for all work-related injuries
* Screen claims for evidence of fraud and questionable claims
* Coordinate and review accident investigations
* Have a system for corrective measures
* Set up a rigorous claims submission process
* Ensure return to work documentation
* Coordinate return-to-work strategies
* Maintain effective communication with the injured employee, physicians and other medical providers, the insurance carrier's claims representatives, and company management
* Regularly evaluate procedures for all aspects of the company workers' compensation management system

5. Understand that you pay the tab. The final tip toward jump-starting your cost control effort is to become aware of who really pays the tab for the workers' compensation system.

For years, the prevailing myth has been that the insurance company pays for everything. That couldn't be more false! The fact is, you, the employer pays for every claim, eventually, in the form of higher premiums. The insurer might initially pay for a claim, but the employer will ultimately reimburse the insurer dollar for dollar-with interest.

Unfortunately, there are workers' compensation "players" who take advantage of the system-ill-intentioned employees, doctors, and attorneys. Ultimately, everybody pays for this abuse. The employer pays, through higher premiums. And employees pay as well-because there is less money available for other employees who need it.

Start paying attention to how you are being billed, and take notice of your experience modification, or ex-mod. Mistakes are often made when carriers file their unit stat filing reports. And those mistakes can be very costly. Errors in your ex-mod can have an adverse effect on your premium rates for three years. Make sure that you're not paying any more than you are legally required to.

These are just a few ways that you can start monitoring your costs in the New Year. In the following months, we will cover other areas that offer opportunities for savings. If you take these ideas and implement them this year, you will start to see the results of your labors as your costs get under control. Good luck with your cost control efforts!

Brent Heurter is founder and chief solutions officer of ClearComp (www.clearcomp.com). For more information, call 1-888-CLEAR-89.

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The views and opinions expressed by the author are not necessarily those of workcompcentral.com, its editors or management.