Managing your workers’ compensation program effectively has a big impact not only on insurance costs, but also on employee morale and productivity.
When an employee is out on workers’ compensation leave due to a job injury or illness, the results can be difficult for everybody.
- The employee must cope with the pain and suffering, as well as reduced income.
- The employer faces high costs and work disruption.
- The employee’s co-workers are also likely to feel the impact the absence of a co-worker for weeks or months, possibly contributing to a drop in morale and productivity.
It’s imperative, therefore, to manage your workers’ comp program effectively in order to minimize the negative impact of work-related injuries and illness on all concerned.
Employers who manage workers’ compensation programs effectively are "really good at the fundamentals," says Martin McGavin, manager of safety and claims for a Fortune 150 company and author of the book, Blueprint for Workers’ Comp Cost Control.
For McGavin, the fundamentals include investigating claims and determining which are legitimate, pursuing return-to-work programs, following up with medical providers, and, when a claim is not legitimate, working on a defense of the denial.
Martin McGavin has been managing safety and claims for more than 20 years. During those years he has worked as a plant human resources and safety manager, a claims adjuster, and as a corporate workers’ compensation manger.
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The Safety/Comp Connection
Safety folks have a great deal to contribute to workers’ compensation, suggests McGavin. "In many companies they work hand-in-hand. The [OSH] nurse is probably doing a lot of medical management, and in a lot of companies safety people take a lead in handling workers’ comp claims and return-to-work."
McGavin believes that from an organizational standpoint it makes sense for safety personnel to take responsibility for costs and to play a role in claims management. When it comes to investigating a claim, "nobody is in a better position than the safety person."
The same holds true for getting the injured worker back on the job as quickly as possible and even communicating with medical professionals.
McGavin believes improvements in workers’ comp can also be realized when companies bring injury-related costs down as far as possible, such as to the plant or departmental level.
"If you have 10 plants and each has its own workforce and claims and costs, they’re going to be far more attentive if they’re paying the bill for those injuries than if they get an annual allocation and risk management pays for any variance. If I’m a plant manager and these costs are going to affect my bottom line and bonus, I’m going to pay attention."
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Additional strategies that have succeeded for McGavin include:
- Make sure the person handling your comp claims uses medical-bill repricing. This is a combination of techniques that takes advantage of fee schedules and negotiated provider discounts to reduce the amount paid to medical providers. The greatest savings opportunity is on hospital visits, McGavin says. "If you can persuade someone to go to a hospital in the network, the bill can be a third of what it would be if they go to the hospital down the road."
- Use some form of utilization review. Some comp carriers provide an expert, such as a nurse, who can objectively review a medical recommendation to determine if it is necessary or appropriate. It’s a second-opinion process that’s similar to what group plans offer. A reviewer should have more than sound medical judgment; he or she should have access to a database about similar cases and treatments.
- Get and stay involved in the process. To achieve best results, employers need to get engaged in their comp programs. It’s not enough to turn things over to an insurance provider. And, McGavin adds, "if you have an insurance carrier that doesn’t want you to be part of the process, you probably need to change carriers.