How do we keep score in workers’ compensation? Typically
insurance carriers provide “top of the line measurements,” such as total number
of claim dollars spent in a given year, average claims costs for medical only
claims, and average claims costs for lost time claims to employers. They may
even break down some injury costs by department.
Not surprisingly, these metrics drive decisions. They become
goals and measures of success. In fact, metrics on claims costs have become so
predominant that companies often reward their employees based on them. If
injury costs go down in a department, it’s a good thing and supervisors and
employees are rewarded. If they go up, it’s a bad thing and corrective actions
Unfortunately, this focus on total claims cost from one year to
the next is incomplete and shortsighted. It fails to recognize or measure
what’s driving the claim costs. If the average medical cost per claim
increased, was it simply a matter of medical inflation or did it have anything
to do with something the employer could control? If it went down was it luck or
a result of the employer’s actions?
What is needed are tangible and measurable metrics of factors
driving claims costs. This focus has several advantages. First, it inherently
takes a long-term view enabling employers to understand the underlying
circumstances and conditions that are driving up work-related injury costs.
Secondly, it isolates measures of the value of the employer’s actions. This
approach is much more than a difference in semantics; it not only will drive
decisions in a different direction but it may also entail significant changes
in an organization’s management of workers’ compensation.
CompScore Metrics, the four most important measurements for
driving down workers’ compensation costs, are:
A well-known study by The Hartford has demonstrated that “time is
money” for workers’ compensation claims. A week’s delay in reporting an injury
can increase claim cost by 10 percent; claims filed a month or more after an
injury cost 48 percent more to settle than those reported in the first week.
Yet it is not only the lag time in reporting that is important to measure;
along the continuum of care there are many points at which a claim can become
snagged, slowed down, or stopped dead in its tracks. Lag time to first doctor’s
visit, lag time to get report from doctor, lag time to see a specialist, and so
on., all have negative effects on claims costs.
An employer can set their own baseline for improvement by
examining injury records, writing down dates, and identifying excessive time
lag. Reducing delays in care, and accelerating continuity in care and
communication with the employer will drive down claims costs and improve
duration and treatment
Excellent sources of disability duration guidelines and
benchmarking data on time away from work are available. The Medical Disability Advisor
, by Presley Reed, M.D., helps
companies more efficiently manage and measure the time employees are away from
work by providing evidence-based disability duration guidelines for over 6,700
of the most common injuries and illnesses of working age people.
The gold standard for effective occupational medical practice
from the American College of Occupational and Environmental Medicine (ACOEM),
Occupational Medicine Practice Guidelines: Evaluation
and Management of Common Health Problems and Functional Recovery in
, 2nd Edition, provides evidenced-based
treatment guidelines for all types of injuries. These guidelines are the
foundation for the state of California’s Medical Treatment Utilization Schedule
that requires doctors to use these treatment protocols for injured workers.
The evidenced-based guidelines offer the best standards of
medical diagnosis, evaluation, and medical management in the workplace. With
these benchmarks employers can measure the actual versus the expected
disability duration for an employee based on their injury and determine whether
or not the treatment matched the treatment protocols. The approach has met with
success in California and warrants consideration as a national model.
Drilling down even further, there are predictive modeling
programs that can identify claims that are likely to spiral out of control.
Flagging these claims and monitoring vigilantly is another way that
evidenced-based guidelines can reduce costs.
3. Modified duty
A smooth, safe, and expedited return-to-work is the mark of a
well-run loss control program. The longer an employee stays at home, the more
difficult it is to bring him or her back to the work environment.
Return-to-work programs with modified work assignments are a crucial component
in reducing workers’ comp costs. Yet, modified duty work assignments are
transitional, designed to reach the primary goal of returning workers to full
duty at their original job. Injured workers should not be mired in modified
duty for extended periods of time. Benchmarks are available to evaluate the employee’s
progress and reductions in modified duty days will improve productivity.
The best way to measure a physician is by the evidence-based
treatment guidelines. Yet, not all doctors follow them. Reviewing the cases treated
by the same physician can reveal disconcerting trends - i.e., everyone is
referred for physical therapy. While state statutes differ with respect to the
extent to which employers can direct injured workers to certain medical
providers, the medical management of a workers’ comp claim is essential to
reducing costs. Holding physicians accountable to established standards is key.
Using CompScore Metrics will lead to different insights and
strategic decisions than the current claims-cost approach. They act as a mirror
into the current processes. If it takes on average seven to 10 days to report
an injury, there is a training and communication issue. The employer can put a
training initiative in place and measure the results over a three or six month
period. If there are delays in the continuity of care, there is a problem with
the physician and it must be communicated that it is unacceptable. Oftentimes,
delays can be resolved by using alternative specialists, improving
communication, or simply being more aggressive on the telephone.
In the same way that measuring results is key to productivity
improvement, measuring the factors that affect workers’ compensation costs
becomes the basis by which employers can reduce these expenses and, at the
same, better serve injured employees.
Since insurance companies are not providing this critical data,
it falls to employers, along with their insurance agents, to take action on
their own since it’s their bottom line and employees that are at risk.