10 Ways Employers Increase Their Comp Costs

Michael Davis - IWIRC Corp.

In the past, we have discussed ways employers can reduce their workers’ compensation costs. However, we have never directly discussed the ways in which employers spend unnecessary dollars in the comp world. Consider this to be sort of like ESPN’s “Not-So-Top 10” list.

10. Focus on the cost of services rather than the quality of the service offered. Since 2002, the State of Illinois has continued to squeeze the costs of medical services on the comp side. Insurance companies are continually trying to sign up anyone for their networks who will charge a little less than state rates. The problem is there are no quality controls on the providers in these networks. Stick to the quality providers and the occupational medicine specialists—you’ll save money.

9. Don’t have modified duty programs available. Yes, it’s true. Some of you are requiring full duty or no duty. If that’s you, go ahead and write your check for next year’s premium and add 10 to 25 percent to this year’s bill.

8. Fight every claim that comes across your desk. Look for the crack in the law. I’m not saying employers should not be careful and fully investigate every claim. However, when you find yourself parsing words in the hopes of having a claim denied, chances are you’ll lose—so pull out the pen and write a check for legal fees, too.

7. Continue to believe that all physicians are the same. Allow your employees to see their family-practice physicians (many very qualified family practitioners), and watch those lost work days climb. 

6. Don’t drug-screen your employees after an injury or accident. Did you know that you should drug-screen after an accident, even if there is no injury? Why? More than half of all workplace injuries and accidents have a drug- or alcohol-related component to the event.

5. Continue to believe that it is too expensive to do pre-placement physicals for new hires. The cost of a pre-placement physical and drug screen: less than $100. The cost of a back injury or carpal tunnel claim: more than $30,000. Yes, the insurance company pays the claim, but you’ll pay the increased premium next year, and the year after that, and the year after that.

4. Continue to believe that all physical therapy is the same. Still paying for ultrasound and massage treatments? Did you know there is little or no research proving their effectiveness? They do, however, have costs associated with them, and will grow your workers’ compensation costs very quickly.

3. Continue to employ the “chronically” injured person. Don’t get your medical provider involved to evaluate if he or she is truly cut out for the work. Continue to believe that it is less costly to keep him or her as an employee than to sever the working relationship and cut your losses.

2. Ignore workplace safety procedures. Companies that do not insist on safe work practices can have the best medical providers and the best employees, but the incidence of work-related injuries is sure to climb… and cause premiums to climb with them.

1. Allow morale to slide backwards in your business. The number-one reason people claim injuries is not an injury; rather, it is an antagonistic work environment. iBi

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