In claim management conversations from the water cooler to theexecutive suite, one question arises again and again: "How will therecession affect workers' compensation claims?" With so manyemployers struggling to keep their companies afloat, this criticalissue must be scrutinized from every possible angle.

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The jury is still out on whether the recession -- andaccompanying workforce layoffs, in particular -- will result in anincrease in workers' compensation claims. Historically, the numbersand costs have spiked during economic downturns. But as theAmerican workforce has shifted from blue- to white-collar jobs withless exposure to physical trauma, an increase in layoffs may notsignal an increase in claims. On the other hand, the currentrecession is the longest in almost two decades, and unemploymentreached a 25-year high in March 2009, so the full impact remains tobe seen.

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Regardless of whether or not workers' comp claim numbers go up,cost-cutting measures are the order of the day in all areas ofoperation. Claim management is no exception, and in tough times,the challenges become even greater. Why? Controlling costs hasalways been at the very top of claim management's "must-do" list.Many would go so far as to say that wringing any more cost savingsout of claim management is like squeezing blood from the proverbialturnip. There's nothing left to squeeze out.

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Most likely, squeezing isn't the right answer, anyways. Theimperative today is to execute every phase of claim management withthe greatest precision possible and at every step of the way, whichincludes before a claim occurs, during the claim managementprocess, and after it has been resolved. This is, of course ashared responsibility involving the employer, the claim manager,and even the employee at a certain level. Within each of thesethree phases -- pre-claim, processing, and post-claim -- and foreach of the groups involved, there are specific areas whereexamining current processes and procedures, identifying andcorrecting inefficiencies or bad habits, and adhering to bestpractices will help deliver optimal outcomes. Here are nine areasthat offer practical potential for improving claim managementefficiency and cost savings. Realizing the potential will requirecollaboration and cooperation throughout the claim managementcycle.

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1. Set realistic employee expectations.

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Employers should not hesitate to discuss workers' compensationwith their employees. The more informed employees are about how thesystem really works, the more efficiently and appropriately theycan participate if the time comes. It's all about setting realisticexpectations.

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This means not only informing employees about how to report aclaim, but also what they can and cannot expect from the workers'compensation system in their jurisdiction. Employees need to knowthat if they sustain an injury or illness related to their workthat they are entitled to certain specified medical and disabilitybenefits. They should also understand that workers' compensation isnot a system of unlimited largess, and that the ideal outcome istheir return to health and to work as early as possible.

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A time-tested technique for communicating about workers'compensation is a brief "payday meeting." Held periodically, even afive-minute session can provide relevant, actionable informationnot only about how to deal with an illness or injury, but also howto prevent and avoid them in the first place. Resources for suchinformation abound, and the return on the negligible investment ineducation can be significant.

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2. Provide explicit guidance for those seekingcare.

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A key element in setting expectations is making sure thatemployees seek appropriate care in both emergency and non-emergencysituations. If employees have specific guidelines on what kind ofcare to seek and from whom, they are much more likely to make gooddecisions. Without adequate training or information up front,especially in an emergency, employees may panic and do all thewrong things from seeking inappropriate care to consulting alawyer.

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The employer's ability to provide highly specific guidance maybe determined by the jurisdiction in which it operates.Nonetheless, the more guidance provided the better, includinghaving a pre-defined medical group to treat injured workers,advising injured employees to seek treatment there, and assuringthem that the provider will bill the employer, not the worker. Bysetting expectations before injuries occur, all involved will knowwhat to do and the fear of the unknown will be removed.

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3. Leverage technology for maximumefficiency.

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It goes without saying that maximizing the efficiency andeffectiveness of claim management processes requires up-to-date,well integrated information systems and technology. Make sure thatefficiency drivers -- data capture, flagging systems, and automaticadjudication rules, for example -- are cooked into claim managementsystems at every step. In a bad economy when price competition islikely to increase and margins are razor thin, the less-efficientclaim management companies may not survive.

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4. Focus on timely reporting.

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Immediate reporting of an incident is the cardinal rule ofefficient claim management, and its importance has never beengreater. The faster a claim is reported, the sooner aninvestigation can be launched and a decision made regardingacceptance of the case.

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Technology comes into play here, too. Reporting claims by phoneor fax is certainly acceptable, but the preferred method -- fromthe claim perspective -- is to have the completed First Report ofInjury (FROI) or ACORD form submitted electronically through theInternet. Making the entire process easy to accomplish online helpsensure that complete, relevant information can be reportedimmediately, routed to the appropriate claim office and adjuster,and teed up on the claim management system for the next steps inthe process.

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5. Investigate early and thoroughly.

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The timing of claim reporting is extremely important, but so isthe quality of the information provided. The quantity and accuracyof information has a significant impact on expediting and enhancingthe quality of the subsequent investigation and follow up. Even asthey are allowing the submission of the first report of injury viathe Internet, forward-thinking companies are also conductingelemental investigations in the incident. Is the injury consistentwith the job function of the claimant? Are there witnesses? Isthere anything unusual about how the injury occurred?

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The more and better detailed the information from the outset,the more efficient adjusters can be in moving the claim forward.They can ask more specific and relevant questions when interviewingclaimants and be more thorough in verifying it with the employerand witnesses. The sooner all the criteria -- injury,circumstances, witnesses -- have been satisfied, the sooner theadjuster can contact the provider to determine diagnosis,treatment, and estimated loss of time and set up the reserve.

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6. Maximize the use of evidence-basedmedicine.

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Medical expenses now account for about 55 percent of the totalcost of workers' compensation costs. In many respects, the workers'compensation system is based on the quantity of services provided,which can lead to overtreatment. Making sure the claimant isreceiving the appropriate level and type of care in the appropriateenvironment is critical to optimizing efficiency and costeffectiveness.

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Doing this can be challenging, but it will be more effectivewith evidence-based medicine, which uses scientific data to helpproviders determine how to best treat a patient for a particularcondition. For claim managers, evidence-based medicine providesclear, step-by-step therapeutic guidelines to help determinewhether or not a particular treatment plan is both appropriate andcost effective to the employee's condition. It can be a very usefultool in ensuring that quality, not quantity, is the chiefdeterminant of care.

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7. Be aware of opportunities and challenges with careproviders.

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As unemployment rises -- it's now double-digit in many areas --the demand for health-care services will most likely decline, andmedical providers will be competing for fewer dollars. That maytranslate into opportunities for more favorable cost or serviceconcessions from professionals and institutional providers.

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At the same time, the shrinking pool of dollars may prompt careproviders to become more aggressive in billing and treatmentpatterns to make up for diminishing revenue. Effective utilizationreview could become the defining factor in cost-effective medicalmanagement.

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With more attention paid to reimbursement, claim managers mustcontinue to adhere to the highest standards and best practices inadjudicating claims. Anything that might contribute to decreasedoperational efficiency, such as an increase in challenges to claimdecisions, should be avoided whenever possible.

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8. Emphasize return to work and follow up.

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Prompt return to work is one of the most effective ways toreduce the costs of workers' compensation claims and to avoid"open-ended" disability. When possible, employers should haveoptions for modified duty or transitional employment alreadyidentified and readily available if needed. Any type of activitythat will get the employee back into gainful employment is apositive step. The longer employees remain away from work, the morelikely that "disability syndrome" will set in.

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In addition, as unemployment rates climb, expect regulators tomanifest more vocational-oriented programs, which focus onre-training or developing new job skills. Claim organizationsshould ensure that they have the right trade partners and internalprograms to provide compliance and success.

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9. Close claims as quickly as possible.

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Statistics consistently prove that companies that close claimsfaster generally achieve better outcomes and enjoy greater costsavings. The ideal goal of claim closure is an appropriate,satisfactory conclusion for all parties. This may include fullreturn to work, modified duty with ongoing medical costs, or asettlement. Ideally, claims are managed to avoid legal involvement,but that doesn't mean avoiding it at all costs. Sometimes it's theonly reasonable avenue of resolution. But given that a compensableinjury has happened, the aim is to restore the individual, make anylegally required settlement, and close the case. As a rule ofthumb, play fair and others will do the same.

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The pressures for managing claims with great efficiency and costeffectiveness will remain extremely high for the foreseeablefuture. The most reliable tools in times of uncertainty areconstant vigilance, continuous improvement, and adherence to bestpractices at every critical juncture of claim management. None ofthe measures outlined in the article can guarantee success on itsown. If they are applied in a concerted, coordinated effort,however, they can help ensure greater stability for the present andlower claim management costs for the future.

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