As we come to the end of Q1, many of us are already dealing with workers’ compensation claims, as expected. But frankly, it’s never too late to re-evaluate some of your practices and the overall approach to claims handling and risk.
So let’s look at 10 ways you can clean up your workers’ comp. program starting now to positively impact the costs and risks associated with it.
1. Start the Renewal Process Early
It’s smart to stay ahead of the insurance market conditions for your industry and location ahead of your renewal date.
As I outlined in a recent post on the California workers’ comp. landscape, certain industries are experiencing some negative trends when it comes to indemnity (lost time) claims frequency: construction, agriculture and entertainment.
Despite this, the market conditions for California’s workers’ comp. insurance makes for a highly competitive marketplace, and that’s good for buyers.
But it’s also important to be aware of how legislative changes could impact cost and increase risk, like the recent enactment Assembly Bill 1897, which creates shared liability between a business and its labor contractor (for example, a temp agency).
2. Evaluate Your Company’s Risk Tolerance
Consider evaluating loss-sensitive workers’ compensation programs that offer an acceptable offset of premium for the increase of risk taken. Loss sensitive programs offer a higher degree of control and flexibility for organizations that have effective safety programs and actively manage claims and their outcomes.
My colleague Andy Barrengos wrote about the different types of workers’ comp. programs to consider here. While some of the information in that post is geared towards the life sciences and tech industry, the basic concepts still apply.
As Andy pointed out, “Loss-sensitive programs vary in structure, but are generally selected by larger companies that have the appetite for leveraging their workers’ comp. claims experience to offset varying degrees of their premiums.”
3. Understand How Experience Modification Affects Pricing
Experience modification, or ExMod, is a ratio – expressed in a percentage – that shows how a company compares to its peers with regards to its safety and loss program.
The calculation of the ExMod is pretty complicated, and there is a specific date in which a snapshot is taken of all your losses for a three-year period, and then sent to the Workers’ Compensation Insurance Rating Bureau (WCIRB).
You should coordinate the timing of claims reviews before that snapshot is taken to ensure anything that is sent into the Rating Bureau is as accurate as possible, and your reserves are as low as possible, so that the impact of loss reserves on your premium is minimized.
4. Implement a Safety and Loss Control Program
A safety and loss control program addresses the inherent risks posed by working for your company. Senior management support is critical to its success and will set the tone to make safety a part of your culture.
Depending on the nature of your work or industry, addressing common issues such as slipping and falling in the workplace, ergonomics issues or how to properly handle equipment and machinery are key to raising awareness and reducing risk for your staff.
Your insurance carrier will likely have resources available to you to implement a program such as this, or you may be able to turn to your insurance broker for guidance as well.
5. Report all Claims in a Detailed and Timely Manner – Even Questionable Claims
Prompt reporting of claims allows the insurance carrier to conduct a comprehensive investigation of the facts and ensure timely payment of benefits and medical care.
States have their own rules about timely reporting, too. So it’s important to understand what your state agency says, and the consequences of not abiding by them.
Failure to report in a timely manner can actually increase the cost of the claims overall. One study by The Hartford Financial Services Group showed that claims filed a month or more after an injury end up costing an average of 48 percent more to settle versus those that were reported within the first week.
6. Make Use of Your Insurance Carrier’s Medical Cost Containment Programs
Known as Medical Provider Networks (MPNs), these are groups of health care providers (similar to an HMO) that are set up by an insurer or self-insured employer and approved by the Division of Workers’ Compensation’s (DWC) administrative director to treat workers injured on the job.
Doctors who participate in MPNs are subject to higher standards and strict fee arrangements, which saves money on medical treatment and helps ensure quality medical care.
With MPNs, the focus is to heal the employee to get him or her back to work as soon as possible.
7. Review the Success of Your Designated Occupational Clinics
You want to ensure effective coordination of medical treatment, so it’s important to oversee this. If there is a problem, schedule a meeting with the clinic to address the issues or consider changing clinics.
In addition, make sure your clinic has the current job descriptions that outline the essential functions and physical requirements of your most common job roles so the doctor can look them up and understand restrictions based on injury.
Then, the doctor can suggest and you can offer modified or alternate work in order to save disability costs. The job need not be full-time or the normal occupation the employee worked before the injury.
When dealing with a permanent restriction, make sure that you engage in and thoroughly document your efforts in the interactive return to work process.
8. Maintain Contact with Employees While They Are Off Work
Communication with employees keeps them motivated and expedites the return to work process, which also greatly reduces the potential for litigation.
The U.S. Department of Labor outlined some best practices derived from its research published in this document, which states that communication with the employee can also help accomplish the following:
- Initial and follow-up calls with injured employees after their first medical appointment help identify restrictions for a modified work position
- Quick identification of short-term modified work positions can be relayed to the injured employee who may have some work capacity
- Early intervention services help ensure that the employee receives all information they need and are able to ask any questions
- An open dialogue allows the return-to-work process to move quickly and efficiently
- Early intervention and contact with employees demonstrates that they are cared for and are still an important part of the agency
- By offering short-term work and having early and frequent communication, employees are either constantly reminded that they are needed at work or that they still have to come in on a daily basis
9. Request Regular Claim Reviews with Your Insurance Carrier
Speaking of communication, keeping the lines of communication open with your insurance carrier lets them know how important claims are to your organization, builds accountability and facilitates claim resolution and closure.
Your insurance broker can be present during those claim review meetings to ensure that you’re well represented and that you have an expert on your side to interpret and discuss important details if need be.
10. Document Important Issues Thoroughly
In order to avoid unnecessary delays and costs, you want to be sure you document everything related to the claim or injury. Verbal reports of injury and modified work often become convoluted, lost in interpretation or forgotten if not supported in writing.
There you have it. I hope these tips help you jump-start your workers’ comp. “spring cleaning” so you can begin to reduce costs and get your employees back to work as soon as possible.