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Employers often don't know what is causing their workers' compensation costs to rise. They assume that the injury-management program they have in place is a solid one. They think rising costs are a fact of life and attribute rate increases to the rising cost of living. If risk managers looked closer, they would be surprised to find that there are actually several pre- and post-loss areas that, singly or together, drive up their workers' comp costs.

Risk managers should be looking at all areas to determine the real cause for increased costs, including return-to-work, management commitment, medical cost containment, medical care coordination, fraud, employee communication, training, claims-handling, performance, and post-injury response including rapid reporting and thorough accident investigation.

The first step is to perform a thorough assessment. Previously, employers looked at one or two causal areas, such as fraud and insurance. A comprehensive assessment requires looking at practices in loss prevention, benchmarking, performance goals and communication. Assessments identify procedural gaps that exist between the employers' existing workers' comp management practices and best practices for their industry.

An assessment gives employers the opportunity to compare their workers' comp data to national figures to determine how well (or how poorly) they are doing. Risk managers can then discover that they might be doing really well in some areas, but need improvement in other areas. Based on this outcome of strengths and weaknesses, they can identify process gaps. It might be that a company has strong communications but weak modified-duty programs.

Armed with the knowledge of process gaps and opportunities for improvement, employers can take the recommendations generated from the assessment to build a cost-containment program that dovetails with their company's specific needs.

Such an assessment provides an education to risk managers about the broad spectrum of workers' comp management options open to them, such as medical cost-containment strategies, rules of engagement for treating physicians, and strategies to drive relationships with insurers or third-party administrators.

Often, an assessment will reveal a problem in a specific area that requires immediate concentrated attention. For example, if open workers' comp claims files have not been reviewed for more than six months, the employer should spearhead a file-review initiative where an interdisciplinary team reviews open files and develops action plans for claims resolution. Having experts review files provides a wealth of information about what improvements need to be made.

At the heart of all strong workers' comp management programs, though, are company procedures that are practiced and documented every day. Thorough accident investigations, for example, give risk managers the ability to defend against litigation, make third-party recoveries and have correct facts when negotiating settlements. It's crucial to get the information when it's fresh in everyone's mind. Don't forget to preserve evidence immediately after an incident. Making sure there is standardized documentation is key to getting the information needed.

Adherence to safety principles, a well-established post-injury response program and an active transitional-duty program also require standardized documentation to ensure consistent information is gathered for all incidents.

Companies should launch and maintain a strong communication program early on that brings employees into the safety/injury-management loop and provides the opportunity for all employees to incorporate healthy practices into their everyday routines so that safety/injury management becomes second nature. Heightened awareness of injury prevention begins when an employee walks into the workplace and continues throughout the day with a strong communication program that can include poster programs, incentive programs and lost workday- reduction goals.

REBECCA SHAFER, an attorney and risk consultant specializing in cost containment, is president of Amaxx Risk Solutions Inc.

April 15, 2007

Copyright 2007© LRP Publications