Red Flag Workers’ Comp Cost Drivers and How to Avoid Them

Red flag – danger ahead! This is something members of the claim management team and other interested stakeholders should look out for and avoid. Sadly, these red flags are missed. The result is countless settlements are missed, or programs end up spending needless dollars on their programs. Now is the time to review program systems that ensure the identification and resolution of workers’ compensation red flags that serve as a barrier to settlement and only promote program inefficiencies.

Common Red Flags in Workers’ Compensation

There are many warning signs that claim handlers and stakeholders should look out for in their workers’ compensation programs. These signals mean the program will not be efficient and result in delayed or missed settlements.

Excessive use of “dangerous medications” as defined by the Food and Drug Administration: The opioid-epidemic has driven home the point that these powerful drugs needs to be used correctly. Protocols should include prescription drug contracts, regular screening to ensure they are being used correctly, and raising objections when they are continually be renewed. Use of these prescriptions in combination with others should be carefully monitored.
Claim that involve excessive, or frequent drug spends: Use of one prescription drug often leads to others to control the “waterfall effect” that occurs to pacify side-effects. When an employee is using prescription drugs, the claim team should be proactive by using tools such as utilization review, and independent medical reviews.
Catastrophic claims such as traumatic brain injuries (TBI), instances involving multiple dates of injury, and legacy claims: These injuries are big drivers on workers’ compensation claims as they are complex and require reserves to be set high. Proactive measures can be taken such as assigning these claims to special units where more attention can be given to these matters.
Claims driven by lost time from work: Interested stakeholders should seek to get employees back to work following a work injury. This helps reduce program costs and increases morale. It also demonstrates the empathy required. The claims team should seek out a point of contact at their insureds who has the ability to impact change and can directly communicate with other stakeholders with that organization. This can also include direct and ongoing contact with the employee and their treating medical providers.

Additional steps can also be taken when resolving claims that involve a Medicare Set-aside. This is because the voluntary Medicare review and approval process places and emphasis on the employee’s most receive prescription drug use and follows the treating physician’s recommendations. Never be afraid to contact the treating doctor when the above red flags are present.

Proactive claim handlers and other interested stakeholders can avoid these problems with their workers’ compensation claim programs by implementing a strategy designed to move claims toward settlement. These common sense changes are easy to make, but take buy-in and involvement from all.

The best offense in workers’ compensation is an effective defense. It is time to focus efforts on workplace safety and education. This requires input and buy-in from all levels of management and employees. Involve a labor union if the workplace has an organized labor component.
Provide effective and immediate medical care following a work injury. This goes beyond having a fully stocked first aid kit. Common sense solutions include the use of telephonic nurse triage services, development of a Preferred Provider Organization (PPO) network, and having employers direct medical care when possible.
Develop and concentrate efforts on an effective return to work strategy. This can include the use of a single point of contact within an insured’s office that has the ability to make change when needed and direct contact with all supervisors.
Treat all injured employees with respect and dignity. Think of the employee as the “MVP” of the workers’ compensation system. Showing empathy and concern also increases workplace morale. Want an employee to return after a work injury? It all start with treating them with respect.

Now is the time to examine your workers’ compensation program and see what proactive measures can be implemented to reduce costs, while ensuring employees receive all benefits they are entitled to receive.

Conclusions

There are countless read flags in the workers’ compensation system that drive claims and prevent settlement. Now is the time to identify common red flags that resolve around the area of complex claims and prescription drugs. Once these flags are identified, steps can be taken to provide an effective defense that seeks to get the employee back to work with empathy and compassion. When done correctly it will reduce workers’ compensation program costs.

Author Michael Stack, CEO Amaxx LLC. He is an expert in workers’ compensation cost containment systems and helps employers reduce their workers’ comp costs by 20% to 50%. He works as a consultant to large and mid-market clients, is a co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is the founder & lead trainer of Amaxx Workers’ Comp Training Center, which offers the Certified Master of Workers’ Compensation national designation.

Contact: [email protected].

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Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.