ZURICH: Help Point Perspective
What's the best way to fix the workers' compensation system?
By SETH HAUSMAN, head of operations and construction for Zurich North America.
To advocate privatization implies that not only is the state based system broken, it also implies that it is beyond repair. This is not the case. While the current models in many states leave room for improvement, it is possible for insurers and employers to successfully address these challenges without embarking down a path that could be wrought with other new perils.
Throughout all workers' compensation systems, medical costs have ballooned and now exceed wage replacement and related traditional indemnity benefits. Even within a privatized model, insurers and employers remain wary of these risks.
In the absence of reform or privatization, the results of the system can be improved. A focus on quicker reporting of claims can have a great impact on care and costs. Employers that aggressively manage rapid claim reporting along with direct medical care with a Preferred Provider network where available and creative return to work strategies can have a significant impact on their Workers' Compensation medical costs. Comprehensive bill review management and utilization review by the insurer can also reduce these costs. Further, claim frequency can be significantly lower with an enforceable and comprehensive drug and alcohol policy as well a thorough new employee orientation and training program. States that encourage these steps can facilitate these improvements.
In several states, there is an alternative that allows the employer to establish a "carve-out" -- provisions in an employer's collective bargaining agreement with its union that create an alternative benefit distribution and alternative dispute resolution (ADR) process that differs from the state system. To date, carve outs are used mostly in the construction industry, but are available to other industries as well.
Effective medical treatment, efficient and prudent claims management and dispute resolution, and a proactive loss prevention program should be the hallmarks of a workers' compensation program. The current system has the opportunity to meet these goals while continuing to provide adequate protection for workers, but states, employers and insurers need to work together to creative innovative initiatives.
November 1, 2012
Copyright 2012© LRP Publications