FINANCIAL MANAGEMENT/Cutting workers’ comp costs
City and county governments are particularly challenged when attempting to reduce workers’ compensation costs. Special problems are presented in local governments because of the inherent diversity of their employee bases. The difficulties associated with formulating modified-duty programs for the vast number of governmental positions (and the high level of labor-intensive positions such as highway workers) also create problems.
In fact, industry experts predict a rise in workers’ compensation costs, resulting in higher insurance rates. That rise is reversing the gradual decline in workers’ comp costs that employers have enjoyed during the past few years.
To make matters worse, the costs associated with wages and benefits paid to off-the-job workers – and related productivity losses – also are rising. In 1997, businesses paid $127 billion in total workers’ comp costs, $63 billion of it representing the direct and indirect costs associated with lost work days.
As with all employers, investing in the best loss control/injury prevention program possible is local governments’ first line of defense against high workers’ comp costs. In Atlanta, that involves “smart management” strategies. “We’ve found treating each department like a separate employer to be an effective cost-reducing measure,” says the city’s workers’ comp manager, Linton Harris. “That allows us to concentrate on the individual needs of each employee base.” (Atlanta is self-insured, and its workers’ comp program is self-administered.)
Additionally, to properly manage those on-the-job injuries that inevitably occur, governments can form partnerships with specialized workers’ comp vendors – third party administrators, insurers and managed care organizations – that are adept at dealing with the complexities of governmental employee bases.
The majority of vendors remain somewhat traditional in their approach to workers’ comp, plugging the employer into an existing provider network, using non-medical adjusters as front-line managers and involving medical personnel late in the claim when certain cost levels are reached or when problems arise. In recent years, however, workers’ comp vendors have begun using non-traditional, smart management approaches to bring costs under control.
Specialized third-party administrators, insurers and managed care organizations can help local governments reduce their workers’ comp costs in a number of ways, including: * assisting in the development of sophisticated modified-duty programs for all departments; * customizing a provider network that addresses the particular needs and culture of each facility or department, then carefully training each physician and ancillary facility to operate within tightly controlled systems of managed care; * placing highly credentialed medical personnel on the front lines. Nurses and physicians act as the first point of contact after every injury and begin immediate patient tracking and medical management on every claim. Medical personnel remain the primary managers of the claim, working closely with adjusters; * requiring providers to pre-certify or receive authorization for treatment choices and care plans while the injured worker is still at the medical facility. That allows front line medical managers to control each medical event and each stage of medical progression; and * conveying treatment or medical event information via phone and fax (or online) to the employer immediately following the real-time interaction with providers, keeping the employer constantly abreast of progress in each claim.
