Controlling Workers Compensation Costs Part 1
Workers' Compensation has fast become a leading cost factor in restoration insurance programs. Premiums are at an all-time high for many contractors and the indirect costs associated with employee injuries are often two to three times the premium. Many restoration contractors are left feeling helpless in controlling these costs and do not realize the level of control they can have. Here are 10 ways to control your workers compensation costs:
1) Safety Programs
This initiative implements regularly scheduled safety training which produces workers conditioned to sound safety practices; setting up safety committees; encouraging strong commitment from management to develop a corporate philosophy of safety and loss control; identifying and correcting unsafe working conditions; and instituting inspections of both equipment and the safety program on an on-going basis.
2) Pre-employment Screening
This approach includes written and/or physical examinations to help ensure that an employee is well suited to the requirements of the job; obtaining previous work experience information; and obtaining the frequency and nature of any compensation claims from past employment. Other benefits would include reducing the prospect of future injury or illness related to performance of duties; preventing the spread of communicable disease and screening for addictions to drugs or alcohol. A targeted pre-employment health evaluation may cost more per applicant but ultimately will reduce rates and costs of serious industrial disabilities.
3) Light Duty Programs
This initiative emphasizes getting employees back to work as quickly and safely as possible. Light duty programs are for those recovering from injuries working for the same employer in a different job - a job compatible with the employee's disability. A modified work program is considerably less expensive in that other programs (such as physical therapy outside the job place) have higher claims costs. Moreover, if an employee completes one year of employment in a modified job, a refund of a portion of the workers' compensation premium may be possible.
4) Vocational Rehabilitation
Qualified injured workers, unable physically to return to their pre-injury jobs, must, as mandated by the workers' compensation law, be offered vocational rehabilitation. Three sources of costs are involved:
Maintenance allowance to help replace lost wages while the worker receives rehabilitation services, (this accounts for the largest portion of the vocational rehabilitation dollar, typically half the total cost);
The cost of evaluation, testing, development and implementation of a specific return to work plan, job replacement assistance and other rehabilitation counseling;
Out-of-pocket expenses related to the vocational rehabilitation plan, e.g., tuition, books, transportation, tools, uniforms, food and lodging while the worker is away from home, even child care in some instances.
5) Medical Bill Audits
This initiative includes the review of physician practice patterns; applying fee scheduling to the "double-standard" type medical bill (for example, when an employee breaks an arm during non-working hours, it can be a $100 bill, but the on-the-job bill can be $300); identifying and reducing billings that are above acceptable workers' compensation rates, or contract rates if a bill is from a PPO member; and working with insurers and employers to identify employees who can receive the same care at a less costly facility.