Workers' Compensation Cost Reduction Starts with Better Medical Care

By Allen Smith, J.D. Jun 20, 2017
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​Seek the best possible care for employees with workers' compensation injuries, because better care will result in fewer treatments and ultimately lower costs. So said Margaret Spence, president and CEO of C. Douglas & Associates in West Palm Beach, Fla., during a June 20 concurrent session at the SHRM 2017 Annual Conference & Exposition in New Orleans.

Spence recalled one employer in the panhandle of Oklahoma whose workers were told they had to use doctors in the rural area. When Spence got involved with the handling of the firms' workers' compensation claims, the company concluded that the doctors in that area were less qualified and every employee was sent to Oklahoma City for treatment. The employer paid for transportation to the city so the treatment would be handled correctly. As a result, instead of paying $70,000 for three surgeries, the employer paid $14,000 for one surgery, she said, giving one example.

Too often employers don't select the best doctors to treat the worst injuries, Spence said, adding that HR professionals should ask themselves whether, if they had an injury, they would really want to visit the doctors that workers must use under their workers' compensation programs.

Money also shouldn't be wasted on a CAT scan that provides no diagnosis, she cautioned. Shoulder, back and knee injuries are particularly susceptible to unneeded tests, such as CAT scans. Demand an MRI first and without delay, she said. Shoulder injuries tend to be among the most expensive, according to Spence, so don't let employees wait a month to get an MRI.

Sometimes insurers balk at employers that want to select better doctors to care for their employees. Insurers can be made to get in line with employers' instructions if there are so-called client instruction rules when the insurance is being purchased each year. That means HR needs a seat at the insurance bargaining table to make sure rules are incorporated that allow employer discretion in the selection of doctors.

Cost Cutting

Better care isn't the only way to cut costs. Spence noted that employers should track every part of their workers' compensation programs to get buy-in from the employer when there is a problem with costs.

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Map out who is off work and when, as well as temporary total and partial benefits, and track them month by month. Spence noted that she used to be the workers' compensation adjustor for the Palm Beach County, Fla., School District. When the district tracked workers' compensation costs, it noticed that the number of injured bus drivers peaked in April, just before summer. Some drivers were conveniently getting a workers' compensation check all summer, when they otherwise would not have been paid.

[SHRM members-only toolkit: Managing Workers' Compensation Costs and Caseload]

Spence told conference attendees that, if they didn't look at their data, they were missing an opportunity to cut costs.

Job Descriptions

Another way employers can reduce workers' compensation expenses is by sending current job descriptions with employees to their doctors. The job descriptions need to include the minimum requirements for lifting, standing or walking, for example.

So if a doctor says a worker can't lift more than 25 pounds but the job only requires lifting 18 pounds, the employee should not be referred by the doctor to light duty but to full duty.

Have an injured follow-up plan, Spence also recommended, concluding that "passion, perseverance and patience are needed to navigate the workers' compensation system." 


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