From the March 12, 2012 issue of National Underwriter Property & Casualty • Subscribe!

3 Tips for Controlling Workers’ Comp Medical Costs

The National Council on Compensation Insurance Inc. (NCCI) reports that medical services now represent 60 percent of Workers’ Comp claim costs. In the past, indemnity costs made up the biggest part of the Workers’ Comp claim.

From provider networks to prescription plans to medical audits, there are a number of measures available to help companies contain medical costs.

But the economy will drive many employers to turn to additional measures, brokers and insurers say. Here are three strategies that work.

1. Workplace Safety

One elemental but critical step in any plan to keep medical costs down is concentrating efforts on workplace safety.

With large employers retaining big chunks of their Workers’ Comp obligations under large deductible plans, they have to redouble their efforts on preventing losses in the first place, observes Mike Stankard, a Detroit-based managing director and the industrial-materials practice leader at Aon Risk Solutions.

2. Bogus Claims

While establishing a culture of safety is essential to prevent workplace injuries, employers also should be guarding against bogus claims, Stankard says.

In recent years as the economy soured, employers have faced spikes in Workers’ Comp claims—not all of them legitimate—when some workers who feared layoffs or knew they were pending filed claims to secure income after their jobs were lost.

Establishing ongoing testing of various job-related physical functions, such as hearing, gives employers a baseline measure they can track and respond to quickly at the first sign of a problem—rather than after a worker has filed a claim, according to Stankard.

3. The Right Hires

Some manufacturers are seeing an uptick in orders and are rehiring, which brings up a third important element in controlling Workers’ Comp costs: avoiding hiring workers who pose high claim risks.

“Data analysis tells a story of hot spots around an organization,” says Stankard. In many cases, the analysis takes employers back to the point of hire and their ability, or lack thereof, to match hires to a job. One step that can help: making sure the job description adequately characterizes the demands of the job.

Filling jobs with the workers who are best suited psychologically for those positions will help prevent injuries; it will also help prevent myriad indirect costs associated with a Workers’ Comp claim, according to Scott Higgins, president of commercial accounts at Travelers, which offers clients psychological profiles of job candidates.

Comments

Resource Center

View All »

Contractors General Liability Coverage 102

What is a prior work exclusion? Which option is right for my client? Why do...

Sign up today to get a 50% matching credit -...

Insurance marketing sometimes seems like it's a game of swings and misses, but we're here...

Guide: 5 Steps to Selling Cyber

Cyber risk and data security is on the agenda of every business owner and executive....

Citation Correlation

Do rigger and signalperson qualifications correlate with the cause of crane and rigging accidents? ...

Complete Guide to Electronic Signatures in Property & Casualty Insurance...

In property and casualty insurance, closing new business quickly is key. Learn how to leverage...

INSTANT ACCESS: Complimentary Sales Closer Questionnaires

Help property owners or managers compare your commercial residential property insurance coverage vs. the competition....

Determining Vacant Property Perils and Valuations

Are your clients fully covered for Vacant Properties? In this economic climate, your insureds may...

Risk Management for Law Firms

This package of 3 concise risk management articles offers straightforward content and practical suggestions law...

Guide: Top 15 E&O Risks-And How To Avoid Them

Accidents happen. But when it's an errors and omissions oversight, that accident can open your...

We'll Show You How to Reach Your Sales Goals

Whether you work alone or have a team of agents working for you, we can...

Workers' Comp Watch eNewsletter

Receive critical business insights into issues related to worker's comp insurance. Sign Up Now!

Advertisement. Closing in 15 seconds.