Management & Operations

Controlling Injury Insurance Costs the Right Way

Posted on August 1, 2004 by Jack Burket

Big dollars are exchanged in the health and compensation insurance arena these days. Has anyone not noticed the crisis in health insurance costs and availability? From health insurance premiums to doctors closing their practices to the continuing saga of Medicare costs and funding, everyone is surrounded by health care cost problems.

For employers, the options are few. Health care coverage may lead to transferring costs by establishing higher employee contributions or deductibles. The employee relations problems these moves create are well known and documented. But in the world of workers' compensation, solutions available to employers are even more limited. They include an acceptance of higher costs and attempts to manage those costs back downward with safety and injury management programs.

And as hard as these options are to accept, for employees the options are even worse. When illness or injury strikes, discomfort is followed by disablement and dysfunction, accompanied by new and unexpected financial burdens. All in all, it's a most unpleasant experience for everyone.

Real-world examples
An example may help illustrate some of the elements of the workers' comp problem. A coach driver was injured while attempting to make repairs to his vehicle. A post-incident investigation revealed he was untrained, unskilled and unprepared. Yet that did not stop him from crawling under the coach to try to stem an air leak. He was injured and unable to escape.

The trip to the hospital, his surgery and a long recuperation were all paid for by his employer's workers' compensation insurance. The employee was out of work, in pain, a loss to his family and unavailable to his employer. All of this was made worse with the high costs that the employer had to eventually pay in the form of higher loss experience, leading to higher workers' compensation insurance premiums.

Workers' compensation coverage premiums are driven by a number of factors, only some of which are within the control of the employer. This type of insurance is ultimately a form of "no-fault" coverage, with the costs and lost time for employee injuries paid by the employer's insurance coverage program. The costs and availability of medical care have an obvious effect on premiums, but so does the employer's own ability to reduce the number of incidents that occur. To cut costs, employers must take every opportunity to control their loss rate. Controllable experience is a major factor in reducing coverage costs.

Control is an important issue in workers' compensation. But control is difficult to command in an environment where the law seemingly gives the employee every benefit of the doubt. Experience has shown that employers with high workers' compensation costs and high fraud incidence almost always have a history of poor employee relations. The seeds that are sown by poor management bear the fruit of employees seeking every advantage left open to them, and there are many. No-fault insurance means just that: payments are made no matter how foolish or improper the employee's actions. Thus, it is clear that relationships matter.

Does no-fault mean no-win?
What else can an employer do? There are those in the motorcoach industry who see only hopelessness and helplessness. They are wrong. While the spiral of health care costs continues to climb, there are very real ways to assure that your company's costs are the last to rise, and rise the least. Such a strategy can put you and your company in a position of having a commanding competitive advantage. Consider a few of these steps.

Practicing "safety first" begins with understanding that employees do not want to be injured on the job (or anywhere else). A sustained program of safety guidance is essential, as is establishing rules of safe conduct. Enforcement of these rules is the vital follow-up measure that assures everyone that safety is a serious business. But even companies with these safety initiatives often find it difficult to keep "safety first" in the minds and actions of their employees.

Employees will openly seek practical advice that can help them stay healthy and safe, but they will reject advice perceived as pointless, impractical or failing to address their particular situation and needs. Thus, on-the-job safety guidance, for any and all employees, must first deal with the problem of acceptance and motivation. Employees see situations differently. Some see risk, while others see none. They also have experience, and change will come slowly and only after proof of a benefit is offered. The company problem of costs is not the employee's problem, so any and all safety advice must be personalized for the employee.

Good follow-up protocol
A critical element of injury cost containment is the creation of a system to manage incidents after they have occurred. There are many actions that can and should be taken. Here are a few suggestions.

Establish quality medical care for the employee. The point of first treatment of an injury should be with a medical team that offers quality care in a setting where competence is apparent and employee confidence is gained. The first treatment center should be carefully screened by the employer. When the employee has confidence in the care received, there is a much greater expectation that all subsequent care will be provided by this same medical source, assuring that the treatment will be both appropriate and ethical.

Provide assistance. Injured employees should not be abandoned to the circumstances of learning to live with an injury. Immediate employee assistance such as transportation and assisting with short-term needs once the employee arrives at home can build rapport. Maintaining contact over time with get-well cards and periodic contact can also help maintain a positive relationship.

Establish return-to-work terms. An employer can and should be kept informed of the progress in recovery of the employee. Once the immediate crisis passes, return-to-work dates should be established and, if necessary, revised. A return-to-work date is a critical target element for getting employees healthy and back on the job. To enhance the chances of getting the employee back to work, light-duty work should also be established if possible. Light duty is usually planned in conjunction with the employee and the medical caregiver. It should be real work — fair, safe and appropriate — but it need not be work that offers great appeal to the employee.

Curbing fraudulent behavior
Limiting the potential for injury and abuse in the workplace begins with employee education. Though even in the most hostile workplace few will deceive or fake an injury, it is true that a large number of employees will extend their time off the job or take advantage of a comfortable situation after an injury.

Giving this tendency a name, the name it deserves — insurance fraud — should be a part of every employee's education. Individuals who commit fraud can and do go to jail, and states periodically create campaigns to reduce this problem. Providing employees with information on the results of such campaigns can do much to reduce fraudulent situations.

An alert employer can also have a strong impact. While laws vary and employers' options differ, a good rule of thumb is that where employees are forgotten and ignored, the likelihood of fraud greatly increases. Employers should follow the law, but they should also not wait for anyone else to be attentive to an injured employee's status.

Controlling injury exposure
The long-term benefits of safety and loss control are seldom in dispute. As workers' compensation coverage premiums are in part based upon loss experience, the first and best approach to cost control is to eliminate injury to the maximum extent possible. Such an approach calls for an intensive loss control effort.

Loss control in fleet and maintenance shop operations potentially includes a number of elements, one of which is risk evaluation. Every task should be reviewed for safety, including the necessity of actually performing the task, or the need to do the task in-house. All of the tools and facilities involved in performing various operations should be periodically inspected and evaluated for adequacy.

It's also critical to manage the leading sources of injury. Fleet injury experience does fall into predictable patterns, and every fleet should analyze its own loss experience. However, the following tasks should be subject to special oversight.

Lifting. All lifting for drivers or shop personnel should be handled by two people or with assistance from equipment.

Trips and falls. These are especially common on and around bus steps. Poor housekeeping also contributes to this toll.

Failure to use protective equipment. Supplying personal protective equipment to employees can usually save more money than it costs, and sometimes it is simply a company-supplied necessity.

Victory in workers' compensation cost control may only be maintaining the cost levels already in place. This sort of victory is much like a tie in football, neither satisfying nor reassuring. But given the complexity of the problem and its relationship to the big picture of medical cost increases, a tie may be all a fleet manager can realistically expect. The cost of coverage for workers' compensation has the control points detailed here, all of which bus fleets should aggressively pursue. When sound management merges with common sense and technical skill, the results can reduce costs from the company and add profits to the bottom line.

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