By Kevin Ring, Lead Workers' Compensation Analyst, IWCP &
Teresa Long, Director of Injury Management Strategies, IWCP
Rising medical expenses are the culprits driving up Workers' Compensation costs. While it's true that Workers' Comp rates are mostly flat or going down, any savings is being more than eaten up by higher medical bills.
With the possible exception of safety issues, many employers feel that Workers' Comp costs are beyond their control. As it turns out, they can play a key role in controlling medical costs.
Here are six actions employers can take to make certain medical costs are appropriate:
1. Medical costs are the leading driver of Workers' Compensation costs. As a percentage of total comp claims, medical costs rose from 46% in 1988 to 58% in 2009, the last year for which fully adjusted data is available.
A workforce plagued by obesity, diabetes, and poor health habits coupled with demographic trends of an aging workforce that takes longer to heal, offer little relief to combat this disconcerting trend.
Action: All bills should be carefully checked as mistakes, inaccurate coding, duplication and fraud happen. Beyond checking the bills, it's vital to ensure that employees receive the most appropriate-and most cost-effective-care, aimed at returning the employee to work. Established relationships with physicians and clinics trained in occupational medicine will help ensure early, effective treatment and positive outcomes.
2. Workers' Comp hospital costs inflation high. A recent article in Risk and Insurance by Peter Rousmaniere, an expert on the Workers' Compensation industry, notes that the rate of inflation for hospital costs appears to be among the highest for Workers' Comp claims payers. Bill-review professionals say that hospitals take advantage of flawed fee schedules, employing experts to maximize billing.
This is consistent with an NCCI Holdings, Inc. 2010 report that found the proportion of Workers' Compensation medical costs subject to physician fee schedules is declining as medical providers shift from charging private practice fees to billing for procedures through hospitals or other facilities that employ them. Billing by hospitals and the other facilities may not fall under a Workers' Comp fee schedule.
Action: Partnering with the right medical providers is key. Employees who are injured at work are entitled to the highest quality medical care, aimed at returning employees safely back to productive work. There are significant differences between occupational health delivery systems and the general medical community. Establishing relationships with physicians or clinics that use proper diagnostic evaluation and evidenced-based treatment guidelines will improve outcomes, reduce costs and help workers return to their jobs quickly and safely. Understanding red flags of inappropriate treatment (see side bar) and addressing the issues quickly will help stop costs from spiraling.
3. Emergency room wait times put safety at risk. In addition to having costs four or five times higher than clinic or office visits, emergency rooms are jeopardizing patient safety due to high wait times, the American College of Emergency Physicians (ACEP) warns.
The increasing number of patients relying on ER for medical care because they lack health care coverage caused the average wait time to rise to 4 hours, 7 minutes.
Almost 40% of hospital ERs exceed or are at capacity. ACEP said health care reform legislation won't improve the situation, pointing out that Massachusetts, which passed health care reform in 2006, has seen an increase in ER visits.
Action: Only life threatening emergencies should be treated at an Emergency Room. Having a clearly defined process for medical evaluations, treatment and care when an injury occurs is critical to controlling costs.