Effective cost management of workers’ compensation claims starts at the time of the injury. Otherwise, studies confirm that the longer it takes to report a claim, the higher the cost.
“What happens in the first 24 hours post-injury is critical,” said Michael Bell, executive vice president for U.S. business development with Gallagher Bassett. Industry experts agree that successful management of these expenses must be comprehensive from start to finish, from the time of the injury through recovery and eventual return to work.
Bell estimates that 30% of all injured workers require medical guidance instead of medical care. This means that 30% can be resolved with self-treatment and that a claim doesn't have to be filed. It eliminates a costly visit to the emergency room, where expenses can quickly climb to $1,000 or more.
The top priority — helping the employee recover and return to work — is best addressed by prompt treatment and proper guidance to direct the patient to the right source of care. For example, if someone is suffering from complex pain issues, a general practitioner may not be the best option for a claim that is not going to end with a simple outcome.
An injury is frequently a new experience for many employees who are looking for guidance. Where that guidance comes from, whether on the employer's side or the claims handling side, makes a difference. A recommended best practice, Bell said, is a nurse triage process. Nurses will record initial interviews at the site of the accident, a critical time when facts can be clarified and confirmed. A worker will be much more honest in sharing information with a nurse than with a claims professional. A triage nurse also determines whether treatment is even necessary and then guides the patient to the appropriate medical provider.
Employer involvement is critical
Early engagement by an employer with an employee following an injury also aids in setting the expectations of the process, which can ease certain frustrations and anxious moments that could prompt the employee to contact a plaintiff's attorney.
Initial recorded statements and the documentation of the facts should be reviewed regularly throughout the lifespan of a claim. In cases that extend 12-18 months, it is interesting to see how rarely the adjuster and employer actually listen to the original recorded statement. They need to continually refer to the original statement, paying particular attention to the direction of the claim from the beginning since it impacts the rest of the case. It is important to take into account demonstrated risks — things that arise in courts as the claimant continues treatment and that are not related to the original injury.
According to Tim Pokorney, senior vice president of sales for Paradigm Outcomes, setting a claim on the right trajectory can improve the chances of controlling costs and reaching a mutually desired outcome for both employee and employer. Focus should be on those claims that lead to the highest cost and highest risk. Pokorney said typically, 6% of all claims comprise up to 50% of the overall costs. These tend to be complex catastrophic claims such as brain injuries, spinal column injuries or amputations.
Ten years ago, pharmacy was about 6% of overall medical cost in Workers’ Compensation. Today, show it has soared to nearly 20%. (Photo: Shutterstock)
Felicia Snyder, defense attorney with Snyder Law Offices in Lexington, Ky., recommends monitoring activity closely during recovery. She said it is important to maintain a good file utilizing tools such as surveillance and activity checks in order to control costs. Physical monitoring can be expensive, she added, though targeted surveillance might show an injured worker going to another job.
Snyder finds social media accounts are useful in monitoring employees’ activity during recovery. “First thing I do when I receive a claim is to look up their Facebook account,” she said. “In a deposition, an employee can be asked about activities posted on their Facebook account such as four-wheeling, bowling or softball.” Other online tools employers should consider are hunting license applications. In Missouri, for example, applications for hunting licenses are public information and are free to access. Claims have been found to increase during hunting season.
Video cameras that can be installed on a light post on public property are also useful for monitoring a house for activity. Rural areas can be especially dangerous for surveillance workers, but video cameras will safely capture outdoor activities that can be used in a hearing.
Monitoring drug spends
Controlling drug costs is vital to managing spending. Having analytics in place to intervene early when prescription drug overuse is detected can prevent a case from heading into a costly spiral.
Pokorney said it is no exaggeration that there is a national epidemic regarding certain drugs in the U.S. He said 99% of the hydrocodone supply, the active ingredient in Vicodin, is consumed in the U.S. Almost 10 years ago, pharmacy was about 6% of overall medical cost in Workers’ Compensation. Today, statistics show it has soared to nearly 20%, of which narcotics comprise approximately 35%. If not managed appropriately, it can grow out of control.
Overutilization can occur when patients take drugs to combat other drugs. For example, a worker suffers a minor back injury while on the job. After taking an anti-inflammatory drug, most workers return to their jobs with no issues. Another worker, however, may start on a lower strength narcotic before moving on to OxyContin. The patient starts with one doctor and goes back for a stronger drug. If the doctor doesn't give workers what they want, they’ll seek a second doctor or go to the emergency room.
In these cases, it is important for the employer to adopt a holistic approach by looking at the psychological part as well as the social aspect of the claim. Sometimes, dependence on certain narcotics is exacerbated by a spouse who is sharing the drugs. Better case management upfront can determine how easily costs and clinical outcomes are handled.
Bell added there is significant value in an employee's successful reentry because it has a major impact on indemnity payments as well as on the medical part of a claim.
Employees also have a social purpose for returning to their job: They want to get back to their normal routine. Employers should consider whether the employee was engaged socially. Did he or she have a difficult relationship with a supervisor? How far does the employee live from work? These and other factors can be hurdles to bringing an employee back to work and must be managed because when the employee is back on the job, the medical spend decreases significantly.
Employers have historically taken an adversarial approach to Workers’ Compensation, but the law is on the employee's side; benefits tend to be skewed in their favor. Strategically, the better approach is to engage an employee, set expectations and avoid making it adversarial.