Workers' Compensation Cost Containment
Many things can be done to reduce the cost of workers' compensation. While many business owners and managers initially think "workers' compensation is the cost of doing business," this is not really true and there are many controls that can be put in place inside a company to make sure an employer pays only for legitimate injuries, from the time an employee is medically unable to return to any productive task at the workplace.
This field of risk management is a specialized niche called "post loss cost containment," "injury management cost reduction," and several other names. The specialty centers around actions an employer can do to "manage" the processes in the workplace immediately after an injury occurs. There are four stages to the workers' comp cost containment process including: assessment & recommendations, design & development, implementation and rollout.
Cost Drivers
The areas generally considered to be key cost drivers are:
- building management commitment,
- working with the insurance company & insurance adjusters,
- implementing an effective return to work & transitional duty program,
- coordinating medical care,
- medical cost management,
- recognizing fraud and abuse,
- improving communication with employees, and
- training supervisors.
Employers should use a "holistic" approach to workers' compensation cost containment by looking at the total problem, rather than focusing only on one area such as reducing medical bills. By taking a "can do" approach, employers focus on controlling procedures within their control rather than the many things they cannot control. For example, employers cannot quickly or easily change the workers' comp laws or eliminate plaintiff's lawyers or the legal system, items that are frequently mentioned as "causes" of high workers' comp costs; however, an employer can implement a "post-injury response procedure" in their own workplace specifying what an employee must do if injured. Employers must "take charge" of those things within their control.
Policies
Having consistent policies and forms helps the employer remain in control of the process. Even very small companies should have a tight post-injury procedure to help management control the post-injury process. The overall goal is for 95% of injured employees to return to work within 1-4 days after the injury unless they are medically unable to perform any productive role for the employer. The time out of work should be proportionate to the length of the disability. The Average Cost Per Employee in 2006, according to the 2006 RIMS Benchmarking Survey is $618 for all employers combined.
Some documents and policies to use are:
- Transitional Duty Policy
- Work Ability Form
- Transitional Assignment Form
- Post Injury Procedure
- Worst-to-Best Benchmark Performance List
- Employee Brochure
- Introduction Letter to Employees
- Employee Acknowledgement Form
- Physician Telephone Contact Questionnaire
- Supervisors Guide to Workers' Compensation
- General Manager Best Practices
