The question was recently asked: “Will cost containment work if my business is located in a monopolistic state?” The answer is an absolute YES! [If you are wondering, a monopolistic state is a state where the employer is required to purchase Workers compensation insurance from the state government]. All four of the monopolistic states (Ohio, North Dakota, Washington, and Wyoming) have state sponsored programs encouraging employers to reduce the number of work related injuries.
The largest monopolistic state, Ohio, uses the employer’s claim experience to determine the rate the employer will be charged for work comp coverage. The Ohio Bureau of Workers Compensation operates along the same principles as a standard workers compensation insurance company. It uses an experience modifier factor to determine the workers comp insurance rate for each employer. Employers with higher than average claim history pay higher than average workers comp insurance rates, while employers with lower than average claim history pay lower rates.
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North Dakota’s Department of Workforce Safety & Insurance places a very strong emphasis on the cost containment approach of having a transitional work plan – also known as a return-to-work program or a modified duty program. The state government of North Dakota encourages employers to put injured workers back to work on light duty and for employees to return-to-work on light duty as soon as the treating physician agrees the employee is capable of working light duty.
North Dakota uses a retrospective rating plan to lower the cost of workers comp coverage for the employers with a better than average loss experience. With a retrospective rating plan, if the cost of claims is better than expected, the employer receives a partial refund of the workers comp premium. The lower the cost of claims, the greater the refund.
Washington State Department of Labor & Industries emphasizes the need for each employer to have a safety program and a return-to-work program. Washington’s L&I has a slogan — “Prevent Injuries & Save Money.” Washington State also uses a retrospective rating plan refunding a portion of the workers comp premium to the employers who have a better than average loss history.
Wyoming’s Department of Employment Workers Safety and Compensation Division promotes their safety discount program. Wyoming uses a cost benefit analysis to show the employer the cost of providing a safe work place is less than the cost of higher work comp rates. Wyoming also has a Risk Management Services department to assist the employer in quantifying the benefits, methods and cost of various cost containment measures.
All four of the monopolistic states want employers to take active steps to mitigate and contain costs. Each of the monopolistic states rewards the employers with lower workers comp cost when they reduce the number of workers comp injury claims.
The following are recommendations for employers in the monopolistic states (and employers everywhere) on workers comp cost containment measures:
- Have an established return-to-work program providing modified duty or light duty work for your employees before the injury occurs. This will allow you to get an injured employee back to work as soon as the treating doctor will allow. Request the work restrictions from the medical provider at the time of the initial treatment.
- Have an established protocol of on-going communications with every injured worker until the worker is back on the job.
- Have a strong safety program to eliminate injuries before they occur. Constantly promote job safety and preventive measures. Be sure employees are properly trained to operate equipment or machinery, and know proper lifting techniques.
- Be a drug-free workplace with an active drug-testing program.
- When the medical provider will not permit the employee to return to work on modified duty, assign a nurse case manager (NCM) to the claim to provide medical management. NCM has a positive impact on the medical cost.
- If your business operation is large enough, employ a staff nurse or doctor to treat workers comp injuries on-site. (WCxKitz)
- Have a pre-employment screening program.
- Have an active fraud prevention program.
Summary
Cost containment, whether you are in a monopolistic state or one of the other 46 states, is an absolute for any employer who wants to have a positive impact on the cost of workers compensation insurance. Your company will be rewarded with lower workers comp insurance costs with the added benefit of your employees knowing you care about their safety and their return to work when they are injured.
Author Rebecca Shafer, P PPPresident, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers’ Compensation costs, including airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. Contact: [email protected] or 860-553-6604.
WC Roundtable LinkedIn: http://www.linkedin.com/groups?homeNewMember=&gid=1922050/
Work Comp Calculator: http://www.LowerWC.com/calculator.php
Light Duty Calculator: http://www.LowerWC.com/transitional-duty-cost-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.
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