Workers' Compensation is more challenging than ever before. Payers are continually navigating a delicate balance between ensuring that injured workers receive appropriate treatment and cost containment. Many of the headlines we see related to cost controls are focused on medical costs. And, while this remains critical, it's also important to bring attention to the costs associated with managing indemnity payments.
As a payer, do you know what is actually driving up costs of administering indemnity payments to injured workers? Test yourself below by determining which statements are a myth or a reality.
Myth or Reality: An increase in remote workers has an insignificant impact on indemnity payment processing.
Myth: While most of today's workforce still heads to the office, factory or jobsite each day, the number of remote workers continues to rise. According to the U.S. Census, between 2005 and 2012 there was a 79% increase in the number of staffers working from a home office, on the road or at a remote worksite.
There is an added complexity to indemnity payment processing for numerous reasons when remote employees are hurt on the job. For example, they may not have access to a branch of a local bank. This is especially true for the nation's 3.5 million truck drivers (Source: American Trucking Associations) and migrant or seasonal workers who may be eligible for workers' compensation.
Myth or Reality: Claim severity does not impact indemnity payments.
Myth: The more severe the injury, the increased likelihood an injured worker will receive indemnity payments and for a longer duration. While claim frequency has declined during the past 10 years, indemnity claim severity (which includes expenses for medical, indemnity and defense) experienced a 2% increase (Source: NCCI).
This is important to note because the longer a claim is open, the greater the number of indemnity payments that must be pushed through the Workers' Compensation revenue cycle. Administrative costs can quickly add up when using traditional payment solutions such as checks or electronic funds transfer (EFT). In addition to extra fees, payers must go to greater lengths to reduce the opportunity for missed, duplicate or incorrect payments.
Myth or Reality: Corporate fraud impacts Workers' Compensation indemnity payment processing.
Reality: Occupational fraud costs U.S. businesses millions of dollars per year and continues to rise. That means companies need to put stringent controls on Workers' Compensation payments—particularly in traditional forms, such as checks. This, combined with corporate data breaches more frequently making headlines, makes it increasingly difficult to obtain bank information from an injured worker.
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