Loss Control Programs Need Tune-Up

Saturday, June 16, 2007 | 0

By Rebecca Shafer

The key for businesses and insurers seeking to clamp down on workers' compensation expense is an intensive, comprehensive look at cost drivers from the moment an injury occurs to the day the employee goes back on the job.

This involves studying a wide variety of points, including an evaluation of personnel, procedures, data and files, as well as field visits to see what your company or client does.

What it comes down to is this: If you don't understand what is driving the costs, you won't be able to design an effective program to reduce those costs.

Most companies should shoot for a workers' comp injury cost that is 50 percent lower than the national average cost per full-time equivalent employee, better known as FTE.

The "2004 RIMS Benchmarking Survey" indicates the average cost per FTE for all industries is $885. Measure the number of lost workdays in the prior three years, and then establish a goal of 15 percent reduction of the number of lost workdays over each of the next three years.

Trimming costs also involves seeing whether post-injury procedures during the 24 hours immediately following an injury are airtight.

When an employee is injured, check whether they return to work as soon as medically able. Supervisors must know exactly what to do when an injury occurs. The employer must be in control.

When injured employees go for medical treatment, make sure they bring a Work Ability Form with them, where the medical provider can enter an assessment of what work they are able to perform.

When an employer does not have a complete system in place, the claim can escalate quickly, with the employee staying out of work longer than necessary.

Businesses should ensure that injury documentation and procedures are both thorough and easy to read and use.

Conveying your company's concerns about injuries through brochures, wallet cards and thoughtful gestures ensures employees get your program--that they are wanted back at work--rather than a televised message from an attorney suggesting they engage in litigation.

Communications with senior management, general managers, supervisors and employees should be based on the intended use and the reading level of users.

Generally, documents should be at the sixth-grade reading level so they can be read by all. Some companies may need to use pictograms to supplement text.

Once an employee is injured, returning them to work as soon as medically possible should become a primary focus.

Make sure all injured employees are given the option of returning in a temporary transitional-duty position, perhaps less strenuous than the original job, while they recuperate.

Figure out how many employees are out of work right now and see if the local general manager knows how many employees are out of work and on transitional duty.

The employer must have a transitional-duty policy, and all employees must sign a written acknowledgement they understand the policy.

A company unit handling injuries should have a disability duration guide to quickly determine the average length of time an injury should take to heal.

Ascertain whether job offers are made to every employee who can work in some capacity. Studies have shown that employees heal faster when they return to work soon after their injury.

Management support is imperative. Find out how your company builds support to bring managers on board. Is there a dollar-for-dollar monthly chargeback system in place, or is it a vague system that fails to motivate supervisors and managers?

Make sure safety performance and improvement is seen as a key performance indicator for all levels of management.

Pinpoint what organizational resources are available. Know whether the company manages and monitors claims internally. Ask what role each department plays in the post-injury and return-to-work process.

Determine if the people responsible for claims management are knowledgeable about innovative risk management and workers' comp cost-containment techniques.

Look to see that procedural goals are set so that the insurance company's or third-party administrator's claim office handles your claims effectively and meets your return-to-work targets.

Find out what process is in place to hold medical, investigative and legal vendors accountable to your overall cost-reduction goals.

Make sure the goal of returning all injured employees to work as soon as they are medically able is spelled out in account-handling instructions.

See whether your TPA is held accountable to get work restrictions in writing immediately after each medical visit.

Many companies misidentify the problem as being caused by the insurance company or claims administrator. Hold a vendor day to find out in detail what your claims administrator provides.

Ask for sample investigation reports and sample nurse case-management reports. Set an agenda and invite everyone who is involved in the workers' comp process.

Medical care must be coordinated so injured employees receive prompt, quality care by a physician or clinic that supports your company's goal of rapid healing and return to productivity.

There should be a medical advisor on your team to review medical care and effectiveness of medical vendors proactively within the first few weeks of disability--not after the claim has reached a $25,000 threshold.

Often, adjusters are unaware of their medical knowledge gaps, so they occasionally accept claims that are related to a chronic condition instead of a work incident.

Your company should strive for overall cost reduction, which sometimes means paying more for a doctor who will spend more time with your injured employees.

Find out if your company's workers' comp team knows the red flags of fraud. Do they report their suspicions to the adjuster immediately? Does the workers' comp manager review surveillance reports, videotapes and photographs? There should be an antifraud program that includes a toll-free tip line.

Make sure there is check endorsement language on the back of all indemnity checks.

A consultant can evaluate your program by asking questions on the phone or during on-site visits. A consultant should also review documentation and data to determine what procedures are in place and how closely the procedures are followed.

For maximum effectiveness, physicians familiar with the workers' comp system should review a cross-section of files to determine how well the medical aspects have been handled.

Rebecca Shafer, an attorney and risk consultant specializing in cost containment, is president of Amaxx Risk Solutions Inc., in Mansfield Center, Conn. She can be reached at Info@WorkersCompKit.com. This column first appeared in National Underwriter magazine. To learn more, visit their Web site at:

http://www.propertyandcasualtyinsurancenews.com/cms/nupc/weekly%20issues/channels/Workers%20Compensation

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