Three Ways What You Do Not Know CAN Hurt Work Comp Costs

When it comes to implementing a workers’ compensation management program, it seems as if everyone — managers, employees, adjusters — lack the ability to understand how lack of knowledge can hurt workers’ comp cost and, the employer’s bottom line.

1- Management’s Lack of Knowledge

Management doesn’t understand the true costs of workers’ compensation far outweigh the face value of the claim.

For example, if an employee has a claim costing $15,000 – do you know how much do you really pay? Let’s say your profit margin is 8%. It’s going to take a whopping $187,500 to replace the cost of the $15,000 claim. In other words, a $15,000 claim isn’t just a $15,000 claim.

2- Adjusters’ Lack of Knowledge

Adjusters overlooking missing medical information, not understanding complex medicalese terminology, and settling large claims without all the facts and the costs associated with the claim has a huge impact on the cost of claims.

You owe it to yourself to visit the adjuster facility, determine whether or not they use good work practices. See: https://blog.reduceyourworkerscomp.com/2008/12/5-things-you-can-review-to-determine-whether-your-claims-administrator-is-doing-a-good-job/

If you see files laying on the floor, if the adjusters are being interrupted by phone calls, these are red flags. Ask to see the claims to ensure adjusters are completing vital information about the claimants and not moving forward to settlement without a complete picture of the claim.

Adjusters must understand medical terminology associated with workers’ comp claims. For example, if an adjuster thinks a positive axial compression test means the injury is genuine, then you’ve got a problem. Axial compression tests are used to see if injured employees are exaggerating their symptoms. A positive outcome means that, “yes” the employee is exaggerating symptoms.

Have your adjusters visited your facility lately? They should have a physical, three-dimensional understanding of your transitional /modified duty program and how it works. Therefore, they need to see the work sites, see the layout, and how modified duty jobs are implemented so they can make more informed recommendations.

3-Employees’ Lack of Knowledge

Employees may assume the insurance company is paying their claim. Employees may not realize the costs associated with workers’ compensation claims may come back to bite them in terms of budgetary cuts, lack of pay increases, and potential layoffs as company resources dwindle because the employer is paying out huge deductibles and related costs on workers’ compensation claims. (workersxzcompxzkit)

This is particularly true if the company has a large deductible. Thus, for each claim, the out-of-pocket expenses eat away at the finite resource pot. There is only so much money and it can be spent to benefit all employees or to pay out large claims for the few who know how to navigate the loopholes.

COMMUNICATE — It’s the key to reducing workers’ compensation costs.

Author Robert Elliott, executive vice president, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers' Compensation costs, including airlines, health care, manufacturing, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. He can be contacted at: Robert_Elliott@ReduceYourWorkersComp.com or 860-553-6604.

Podcast/Webcast: How To Prevent Fraudulent Workers' Compensation Claims Click Here http://www.workerscompkit.com/gallagher/podcast/Fraudulent_Workers_Compensation_Claims/index.php

WC Books: http://www.reduceyourworkerscomp.com/workers-comp-books-manuals.php
TD Calculator: www.reduceyourworkerscomp.com/transitional-duty-cost-calculator.php
WC Calculator: http://www.reduceyourworkerscomp.com/calculator.php

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers' comp issues.