Controlling workers comp costs: insights from five studies

Study: 2020 workplace safety index – Liberty Mutual Holding Co. Inc.

Findings: Each year this study researches the top 10 causes of the most serious workplace injuries, those that cause employees to miss work for more than five days, and ranks the causes by their direct cost to employers, based on medical and lost-wage expense. Further, it drills down this data for eight specific industries: construction, health care and social assistance, manufacturing, professional services, retail, transportation and warehousing, hospitality and leisure, and wholesale.

Overexertion from handling objects accounted for nearly a quarter of all workplace injuries and cost employers $13.98 billion, according to the index. Falls on the same level accounted for 18% of injuries at a cost of $10.84 billion, and struck-by injuries from objects or equipment made up 10% of injuries, costing $6.12 billion.

Takeaway: This helps employers understand the top risks in the workplace to better allocate safety resources.

 

Study: Top 10 Most Dangerous Jobs of 2020 – EHS Today

Findings: This list of the top ten most dangerous jobs is based on the fatal work injury rate, which is calculated per 100,000 full-time equivalent workers. Loggers were the number one most dangerous profession followed by fishers and related fishing workers.

Takeaway: Rather than looking at the total number of workplace deaths, this study offers a closer look at exactly how often a worker dies while employed in a specific industry. It enables employers to know when the chances of a fatality are high.

 

Study: Motor Vehicle Accidents in Workers Compensation – National Council on Compensation Insurance (NCCI)

Findings: From 2011 to 2016, the frequency of all workers compensation claims decreased by 20.1 percent while claims caused by motor vehicle accidents increased by 4.9 percent. Motor vehicle accident lost-time claims continue to cost over 80% more than the average lost-time claim because such claims tend to involve severe injuries to such body parts as head, neck, and spine. The study points to the rapid expansion of smartphone use as a possible cause.

Takeaway: An effective and consistently implemented distracted driving policy is critical for any business with employees who drive as part of their job.

 

Study: Comparing Physician Services in Workers Compensation and Group Health – NCCI

Findings: Injuries cost more, much more for some conditions, when they’re covered by workers’ compensation rather than group health insurance. Overall, comp costs are about 177% of group health costs. The costs for treatment are only slightly higher than group, but the utilization (number of treatments) is significantly higher.

Takeaway: The author suggests, “Some workers’ compensation claimants and claimant attorneys may find an incentive to seek additional medical care to support wage replacement benefits over a longer healing period or to negotiate a better settlement.” Partnering with an occupation medicine provider can help control the quantity and efficiency of medical services.

 

Study: Biopsychosocial Approach to Identify and Treat At-Risk Injured Workers – One Call Care Management Inc.

Findings: A small percentage of claims (five percent) account for a disproportionate percentage (25 percent) of the costs of physical therapy and rehabilitation. In fact, the average cost associated with that top five percent is more than five times the average cost. These cases are often not identified as problematic until after a treatment plan exceeded the initial guidelines. Predictive analytics can help identify at-risk workers early in the process and lead to an intervention plan that improves outcomes.

Takeaway: Share all you legally can about an injured worker’s type of work and medical history that can help flag at-risk cases.

For Cutting-Edge Strategies on Managing Risks and Slashing Insurance Costs visit www.StopBeingFrustrated.com

Studies: Getting a handle on two comp cost drivers: motor vehicle accidents and claim denials

Limiting motor vehicle accident costs

In its 2018 Driver Safety Risk Report, Motus, a Boston-based vehicle management and reimbursement platform, estimates that about 40 percent of vehicle accidents are work-related, while 53 percent of vehicle crash injuries cause employees to miss work, costing employers $56.7 billion in 2017. The costs include medical care, property damage, legal expenses, lost wages, increased insurance, and lost productivity. When an employee has an on-the-job crash that results in an injury, the average cost is $74,000 to the employer.

While the figures are daunting, the company offers these solutions for reducing collision rates by as much as 35%:

  1. Expand driver risk management approach beyond basic Motor Vehicle Record (MVR) checksMVRs aren’t always a good indicator that a person is a safe and competent driver. If a person lives in a city and doesn’t drive much, the chances are they have a stellar driving record. Yet, their road experience is very limited. Employers need to drill down to evaluate the record.
  2. Mandate driver safety programs for all drivers, including those in mileage reimbursement programsOnly 42.6 percent of companies currently mandate driver safety programs for employees in company-owned vehicle programs. That number drops to just 19.5 percent for employees in mileage reimbursement programs. With mobility increasing, driver distraction at an all-time high, and new technology emerging in vehicles every day, training takes on increased importance and should be a top priority for your business.
  3. Consider a fixed and variable rate (FAVR) reimbursement programUnlike the one-size-fits-all car allowance or cents-per-mile reimbursement programs, fixed and variable rate (FAVR) programs reimburse employees for their individualized fixed and variable costs. Fixed costs are constant, but vary from employee to employee and include insurance premiums, license and registration fees, and taxes and depreciation. The variable costs are based on the number of business miles driven and include gas, oil, maintenance and tire wear.Such an approach ensures that the employer can verify that the driver is complying with the insurance coverage requirements and that they are limiting mileage to work-related trips only, “thereby mitigating exposure to costs associated with off-hour accidents.”

Managing claim denials for cost control

While a study by Lockton Cos. L.L.C. found that the number of claim denials for injured workers is increasing, rising from 5.8% in 2013 to 6.9% in 2017, 67% of those initial denials were paid within 12 months. What’s even more disconcerting is the increased cost of the denied claims that were eventually accepted. Based on an examination of 273,000 claims from 150 Lockton clients between 2013 and 2017, denied claims cost 55% more on average at the 60-month mark: $15,694 instead of $10,154 for an accepted claim.

This increased cost is understandable because a worker with a denied claim usually will seek medical care from the primary care physician and the costs will not be subject to a negotiated workers’ comp fee schedule. The authors are not suggesting that companies deny fewer claims but are urging companies to look closely at what is being denied and the process.

“Take a closer look at your company’s converted denial rate, and whether savings from indemnity and medical costs are enough to offset increased expense on denied claims that end up paying out,” note the authors. Look at the claims that were denied and overturned and see if there are common threads. Is it an internal decision or a decision on the part of the carrier? Are they concentrated in one division? Has there been an increase in denial rates and, if so, why? Pressure to reduce costs or increased focus on fraud?

The study revealed the top 10 reasons for claims denials: no medical evidence; no injury per statutory definition; reservation of rights; pre-existing condition; idiopathic condition; intoxication or drug-related violation; non-work-related stress; failure to report accident timely; doesn’t meet statutory definition of employee; and misrepresentation. The rate at which denial was converted to paid varied with the reason. For example, when “willful intent to injure oneself” was the reason for denial, 89% of the claims were converted to paid. For “pre-existing condition,” the conversion rate was 69%.

In every industry, converted denials cost more than non-denied claims, but some industries vary significantly from the overall averages. Healthcare experiences lower average differences, but Administrative and Support and Waste Management and Remediation Services, and Manufacturing incur higher claim costs than the national average.

There were variations by state also. California has a very high conversion rate compared to the national average, whereas Florida and Texas have lower rates. Litigation is also a major factor. According to the study, 70.6 percent of denied lost-time claims will be litigated, which is more than twice the 27.5 percent litigation rate for non-denied lost time claims.

For Cutting-Edge Strategies on Managing Risks and Slashing Insurance Costs visit www.StopBeingFrustrated.com

Things you should know

Cell phone users twice as likely to be involved in a crash – study

The AAA Foundation for Traffic Safety compared drivers’ odds of crash involvement when using a cell phone relative to driving without performing any observable secondary tasks. The study found that “visual-manual interaction with cell phones while driving, particularly but not exclusively relative to text messaging, was associated with approximately double the incidence of crash involvement relative to driving without performing any observable secondary tasks.”
Health care environment named top concern in comp – survey

The National Council on Compensation Insurance (NCCI) surveys senior carrier executives in its annual Carrier Executive Pulse. The top challenges that executives identified for 2018 are:

  1. Rising costs, advances, and uncertainty in healthcare
  2. Political, regulatory, legislative, and legal environment
  3. Maintaining profitability both today and tomorrow
  4. The changing workplace and workforce
  5. The future of the workers’ compensation industry
  6. Opioid abuse and medical marijuana

Impact of worker obesity can be managed with prevention, treatment programs: ACOEM

Wellness programs and insurance coverage that includes bariatric surgery can help manage worker obesity and alleviate its economic costs to employers, according to a released guidance statement from the American College of Occupational and Environmental Medicine (ACOEM).
First Edition of NCCI’s court case update

The first edition of NCCI’s Court Case Update provides a look at some of the cases and decisions being monitored by NCCI’s Legal Division, that may impact and shape the future of workers’ compensation.
New guidelines intended to reduce fatigue among EMS workers

The University of Pittsburgh Medical Center and the National Association of State EMS Officials have partnered on a set of guidelines aimed at reducing work-related fatigue among emergency medical services workers.
State News

California

  • Cal/OSHA adopted a new rule to help reduce injuries for hotel housekeepers. The rule will require employers to establish, implement, and maintain an effective written musculoskeletal injury prevention program that addresses hazards specific to housekeeping.
  • The Division of Occupational Safety and Health is moving to create a new safety standard to prevent and handle workplace violence for general industries.
  • The state is drafting workplace safety rules for the burgeoning marijuana industry.

New York

  • State Workers’ Compensation Board is inviting public comment on a proposed Pharmacy Formulary. The comment period expires on February 26, 2018.

North Carolina

  • Industrial Commission recently announced an update in the rules for the workers’ compensation system addressing the opioid crisis. Published January 16, 2018, in Volume 32 Issue 14 of the North Carolina Register, the rules are for the utilization of opioids, related prescriptions, and pain management treatment. A public hearing is scheduled for March 2, 2018 at 2:30 p.m., and the Commission will accept written comments until March 19, 2018.

Pennsylvania

  • The Governor signed a statewide disaster declaration related to the opioid crisis to enhance state response, increase access to treatment, and save lives. It will utilize a command center at the Pennsylvania Emergency Management Agency to track progress and enhance coordination of health and public safety agencies.

For Cutting-Edge Strategies on Managing Risks and Slashing Insurance Costs visit www.StopBeingFrustrated.com

When employers are vicariously liable for employee automobile accidents

Employees are often expected to use their personal vehicles for business related trips. It could be on a regular basis, such as sales, or an occasional drop off to a customer or trip to the bank. While the employee is serving the employer in such a capacity, the principle of vicarious liability applies. Should employees get into an accident and seriously injure someone, damage another car, or injure themselves, the employer can be liable. While the employer does not actually commit the wrong, the company can be held responsible for the actions of the employee.

The employee’s auto insurance will be primary, but the problem arises when the coverage is insufficient. The employer can then be sued by the third party or be required to pay workers’ comp for the injured employee.

To control this exposure, best practices should begin with a written policy, according to two experts at Travelers who were interviewed by EHS Today. “The policy should include expectations regarding the driver’s behavior while driving on company business and require that their motor vehicle record be monitored periodically against an established standard. The policy may also state an expectation that the employee purchase personal auto insurance with certain minimum limits and not allow a business-use exclusion to be attached to the policy.”

The experts emphasize that knowing who is driving on behalf of the company, hiring safe drivers, and focusing on proper employee behavior behind the wheel is critical. The company must walk the talk. If employees read and sign “no cellphone” policies, but continually receive calls from the manager while on the road, the policy is meaningless. According to the National Safety Council, employers have been liable up to $25 million for motor vehicle crashes involving employees using a cell phone while driving.

Additionally, employers should work with employees to ensure they operate vehicles safely, which could include:

  • policies regulating cell phone use and other distractions while employees are driving during work time
  • policies and training regarding safe operation of vehicles
  • information on the limitations of smart technologies and the issues when features are disabled
  • ensuring employees are properly licensed
  • minimum insurance limits
  • monitoring driving records for employees who operate motor vehicles as part of their regular work duties

For Cutting-Edge Strategies on Managing Risks and slashing Insurance Costs visit www.StopBeingFrustrated.com