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MYTH: The first step in cost containment must be to reduce the costs of
your medical providers.
REALITY: Reducing your medical providers’ fees is a noteworthy cause,
but it is not the first thing to be done. If
you have employees sitting home on workers
compensation, you should bring them back to
work before you focus on medical cost
containment issues.
If you can reduce the number of “lost days” and bring your
employees back to some sort of transitional
duty position, you will be taking a giant step
toward controlling your comp costs. Because
for each day your employees are out of work,
you pay more in indemnity payments.
Half the cost of workers comp is lost wages. Indemnity payments are
tax-free payments made to your employees to
replace the wages they lose while they are out
of work. The sooner employees go back to work,
the more money you will save.
While it is true that some will only be partially productive during the
transitional duty period, it is always better
to have partially productive employees at work
than entirely unproductive employees at home.
Also, the longer someone remains out of the
workplace, the less likely it is that they
will ever return to your workforce and the
more likely it is they will suffer some level
of clinical depression.
As your lost-day count goes down, so will all of the other costs
associated with workers compensation,
especially medical. Employees seeking to stay
out of work often use a doctor as a safety net
and seek treatment continuously in order to
accomplish their objective of staying out of
work longer.
Keep in mind that while the injured employee is out of work, the
company is paying a replacement employee as
well. And if the injured employee was employed
by another company in addition to yours, the
employee’s indemnity check may include lost
wage payments for both jobs if he or she is
unable to work at the other job as a result of
an injury suffered at your company.
In this scenario, you would be paying up to the equivalent of three
lost wage payments until you bring an injured
employee back to work (two for the out-of-work
employee plus a replacement worker).
Calculating the real cost to the company for those three jobs shows the
full impact of a workers comp claim to
management—and it is a great way to build upper-level commitment when requesting
resources.
MYTH: Employees stay out of work intentionally because they do not want
to go back to work.
REALITY: While it is certainly true in some situations, this is not
always the case. Employees often do not come
back to work because a company will not offer
them a transitional duty assignment while they
recuperate. In situations where an employer
has only a few, narrow job classifications in
its operation, there are not many transitional
duty options. It is important for these
employers to locate jobs that are not obvious
at first glance in order to give the employee
at least some options to return to work.
Employees are motivated to come back to work because they have friends
in the workforce, they need a steady routine
and they do not want to become deconditioned
while not working. In many cases, employees
become depressed with the loss of their
routine, especially when the only replacement
is hours of nothing at home. Everyone needs a
destination to go to each day.
MYTH: If you have unions, you will never lower your workers
compensation costs.
REALITY: While implementing a workers compensation program in a
unionized company can be more challenging, it
is usually not. Begin with a positive,
cooperative, win-win attitude. Sit down and
discuss the situation with the bargaining
committee; educate them about workers comp and
the need for transitional duty and they will
usually facilitate the program. They need to
be aware that staying out of work for extended
periods of time normally does not help an
injured employee heal, and, in fact, the
employee’s health often deteriorates because
mental health can be compromised by depression
once the employee loses his daily routine and
social network.
Focus on the economic consequences and interests of the membership and
determine how those costs impact union funds.
For instance, if members are older, emphasize
how money spent on workers compensation may be
draining their welfare fund and how the
savings will help their retirement accounts.
Sometimes they will have very creative ideas
about how a new transitional duty program can
be effectively integrated, and they will make
you aware of collateral source benefits that
need to be eliminated. In one recent case, the
union was angry because management had not
tried to do more to stop several fraudulent
claims.
MYTH: To get a slow claim moving, the best thing to do is request an
Independent Medical Evaluation.
REALITY: If a claim is stalled, it is quite common for the adjuster to
recommend getting an IME to ascertain the
status of the claimant. In some cases this may
be effective and warranted, but sometimes this
only makes a bad situation worse. It makes it
worse when the timing is not right, when
inadequate medical records are included with
the IME packet or when inadequate medical
questions are asked of the doctor who is
performing the IME. You might want to consider
a Functional Capacity Evaluation instead. Or,
you might want to conduct a brief surveillance
of the claimant to assess his or her level of
ability—or lack thereof.
Perhaps the biggest problem with IMEs is not obtaining medical records
from prior to the workplace injury. If the MRI
post workplace injury shows a herniated disk
but there is a history of back pain, a record
of that herniated disk might be found in
earlier medical records. If so, it is
important to distinguish a recurrence of the
workplace injury from the natural progression
of an underlying disease. A “recurrence”
may in fact just be the progression of a
pre-existing condition. This is often seen in
cases of spinal stenosis, for example—one of the more severe manifestations of degenerative arthritis. It is
very helpful, then, to have a medical doctor
in the role of medical advisor review who can
screen all IME requests.
Sometimes an IME can hurt more than help. This is particularly true
when there are insufficient medical records.
Without the latest MRI and/or a pre-injury
baseline, an IME physician has to rely on the
claimant’s version of events and is unable
to provide an objective opinion based on all
facts.
MYTH: Once cost containment initiatives are implemented, workers
compensation premiums will immediately go
down.
REALITY: With a proper cost containment program, loss costs will fall
immediately. But premiums may take several
years to fall because they are calculated on a
company’s experience modification, which is
a based upon a three-year rolling average. As
each good year “rolls” into your
experience, a bad year drops out so it could
take up to three years for the full benefit of
a cost containment program to be reflected in
your premiums.
Armed with this wisdom of reality and the willingness to dispel
traditional cost containment myths, you too
will be able to slay the formerly invincible
workers comp dragon.
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