Cutting Workers Comp Costs Has New Key Added For Clarity
The subject of cutting workers comp costs added an obvious 6th addition to the list. In 1989, I originally wrote and presented on what I thought were the Three Keys to Workers Compensation Savings. I wrote the three from a claims standpoint.
Those three were:
- ASAP First Reports of Injury
- Return to Work Program
- Physician Network
Subsequently, I added in Employee Treatment as a Key. The article from yesterday contains more info on why I subsequently added in this consideration.
Recently, I added in a fifth Key to Cutting WC- Understand your Premium Audit and E-Mod. If you are a self insured – Understand Your Loss Development Factor (LDF).
The Affordable Health Care Act has actually done more than move the subject of Workers Comp to the back burner. It has caused employers to take it off the stove for now. Workers Compensation is still a budget-buster that may be receiving less recognition as at least a partially controllable budget item.
The new addition to the list (Sixth) is Adoption of the First Five in the list by Management. With health insurance becoming more of a concern, Safety and Risk Management departments have been reduced or even eliminated in some cases.
The employer E-Mods and Self -Insured payouts will usually not show the full effect of the Risk/Safety department reduction or elimination for 3 -5 years.
If Senior Management or the Company Owners in smaller companies will not adopt any of the first five Keys in the list, the likelihood of not paying more WC premium or self-insured payouts is almost a certainty.
I have performed statistical tests that showed the first three in the list not being instituted will cause a claim to increase by 400% per item or 1,200% if none of the first three are accomplished.
A recent study by WCRI (see yesterday’s article) somewhat quantified #4 on the list – Employee Treatment. WCRI quantified Employee Treatment as being a major concern in WC costs..
Understanding Your E-Mod, LDF, Premium Audits, or Self-Insured Payouts has been discussed very often in this blog. I will not repeat the information again here.
However, if management does not adopt any of the listed cost savings procedures, identifying the areas of concerns and implementing changes “on paper” is just that – in a book that sets on someone’s shelf or as a computer file that is in the My Documents folder never to be seen again.
Now may be the time to get the book off the shelf and dust it off or dig out the computer file and see what could possibly be implemented without spending any extra cash as the plan may be sitting right in front of you.
That is why I wrote in #6 this week – to remind companies that dusting off the old WC procedures manual may be a great cost- saving move. At least putting WC “back on the stove” will likely cause the claims and/or premium payouts to decrease in a time when every $ counts.
The addition of #6 now makes the List of Cutting Workers Comp Costs Keys:
- ASAP First Reports
- Doctor Network
- Return to Work program
- Employee Treatment
- Understanding Your E-Mod, Premium Audit, and LDF
- Adoption of #1 – #5 by Management or Ownership
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