Effective cost management of workers' compensation claims startsat the time of the injury. Otherwise, studies confirm that thelonger 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. businessdevelopment with Gallagher Bassett. Industry experts agree thatsuccessful management of these expenses must be comprehensive fromstart to finish, from the time of the injury through recovery andeventual return to work.

Bell estimates that 30% of all injured workers require medicalguidance instead of medical care. This means that 30% can beresolved with self-treatment and that a claim doesn't have to befiled. It eliminates a costly visit to the emergency room, whereexpenses can quickly climb to $1,000 or more.

The top priority — helping the employee recover and return towork — is best addressed by prompt treatment and proper guidance todirect the patient to the right source of care. For example, ifsomeone is suffering from complex pain issues, a generalpractitioner may not be the best option for a claim that is notgoing to end with a simple outcome.

Related: Talking to nurses is the right prescription forinjured employees

An injury is frequently a new experience for many employees whoare looking for guidance. Where that guidance comes from, whetheron the employer's side or the claims handling side, makes adifference. A recommended best practice, Bell said, is a nursetriage process. Nurses will record initial interviews at the siteof the accident, a critical time when facts can be clarified andconfirmed. A worker will be much more honest in sharing informationwith a nurse than with a claims professional. A triage nurse alsodetermines whether treatment is even necessary and then guides thepatient to the appropriate medical provider.

Employer involvement is critical

Early engagement by an employer with an employee following aninjury also aids in setting the expectations of the process, whichcan ease certain frustrations and anxious moments that could promptthe employee to contact a plaintiff's attorney.

Initial recorded statements and the documentation of the factsshould be reviewed regularly throughout the lifespan of a claim. Incases that extend 12-18 months, it is interesting to see how rarelythe adjuster and employer actually listen to the original recordedstatement. They need to continually refer to the originalstatement, paying particular attention to the direction of theclaim from the beginning since it impacts the rest of the case. Itis important to take into account demonstrated risks — things thatarise in courts as the claimant continues treatment and that arenot related to the original injury.

According to Tim Pokorney, senior vice president of sales forParadigm Outcomes, setting a claim on the right trajectory canimprove the chances of controlling costs and reaching a mutuallydesired outcome for both employee and employer. Focus should be onthose claims that lead to the highest cost and highest risk.Pokorney said typically, 6% of all claims comprise up to 50% of theoverall costs. These tend to be complex catastrophic claims such asbrain injuries, spinal column injuries or amputations.

Ten years ago, pharmacy was about 6% of overall medical costin Workers' Compensation. Today, show it has soared to nearly 20%.(Photo: Shutterstock)

Felicia Snyder, defense attorney with Snyder Law Offices inLexington, Ky., recommends monitoring activity closely duringrecovery. She said it is important to maintain a good fileutilizing tools such as surveillance and activity checks in orderto control costs. Physical monitoring can be expensive, she added,though targeted surveillance might show an injured worker going toanother job.

Snyder finds social media accounts are useful in monitoringemployees' activity during recovery. “First thing I do when Ireceive a claim is to look up their Facebook account,” she said.“In a deposition, an employee can be asked about activities postedon their Facebook account such as four-wheeling, bowling orsoftball.” Other online tools employers should consider are huntinglicense applications. In Missouri, for example, applications forhunting 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 publicproperty are also useful for monitoring a house for activity. Ruralareas can be especially dangerous for surveillance workers, butvideo cameras will safely capture outdoor activities that can beused in a hearing.

Monitoring drug spends

Controlling drug costs is vital to managing spending. Havinganalytics in place to intervene early when prescription drugoveruse is detected can prevent a case from heading into a costlyspiral.

Pokorney said it is no exaggeration that there is a nationalepidemic regarding certain drugs in the U.S. He said 99% of thehydrocodone supply, the active ingredient in Vicodin, is consumedin the U.S. Almost 10 years ago, pharmacy was about 6% of overallmedical cost in Workers' Compensation. Today, statistics show ithas soared to nearly 20%, of which narcotics comprise approximately35%. If not managed appropriately, it can grow out of control.

Overutilization can occur when patients take drugs to combatother drugs. For example, a worker suffers a minor back injurywhile on the job. After taking an anti-inflammatory drug, mostworkers return to their jobs with no issues. Another worker,however, may start on a lower strength narcotic before moving on toOxyContin. The patient starts with one doctor and goes back for astronger 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 aholistic approach by looking at the psychological part as well asthe social aspect of the claim. Sometimes, dependence on certainnarcotics is exacerbated by a spouse who is sharing the drugs.Better case management upfront can determine how easily costs andclinical outcomes are handled.

Bell added there is significant value in an employee'ssuccessful reentry because it has a major impact on indemnitypayments 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 shouldconsider whether the employee was engaged socially. Did he or shehave a difficult relationship with a supervisor? How far does theemployee live from work? These and other factors can be hurdles tobringing an employee back to work and must be managed because whenthe employee is back on the job, the medical spend decreasessignificantly.

Employers have historically taken an adversarial approach toWorkers' Compensation, but the law is on the employee's side;benefits tend to be skewed in their favor. Strategically, thebetter approach is to engage an employee, set expectations andavoid making it adversarial.

Related: Certified physician assistants help detect what's'real' in Workers' Comp claims