The beginning 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:
- How quickly are claims reported?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.
- When a claim is first reported and while it is open, do you provide relevant information about the injured employee to the adjuster?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.
- What is the relationship with the claims adjuster(s)?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.
- How many claims involve lost time?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.
- How often are open claims and reserves reviewed?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.
- How are legacy claims managed?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?
- How many claims are litigated?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).
- Have you moved to an advocacy-based approach to claims?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:
- Change the script. Don’t focus on how the claim will be investigated or all the insurance jargon. Begin with empathy, concern, compassion, and how you will help them through the process.
- Designate someone to contact the worker on a regular basis. Don’t rely on the insurance company to be the prime contact; designate a supervisor, risk manager, or HR representative to maintain contact throughout the claim process. Monitor how often the contact occurs.
- Make medical care easy. Having the support of occupational doctors and therapists and a triage nurse, who share the same objective of improving the injured employee’s health for a recovery at work, eases the process.
- Don’t have a blanket approach. While one employee may respond well to several texts or phone calls in a week, another may find it disturbing and feel the employer does not trust them. Find a balance that works and set the right tone for maintaining communication.
- Engage in the recovery at work conversation early. Be sure the employee and the treating physician know the options available and that the supervisor is on board. Involve the employee in the process – find out what they are comfortable with and what they worry about.
- Are payments to injured workers sent on an accurate and timely basis?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.
- How effective are your medical cost controls?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.
- How many emergency room visits did you pay for?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.
- Do you investigate potentially fraudulent claims?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.
- Have subrogation opportunities been identified and pursued?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.
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