Workmen's comp. costs

Companies that manage claims aggressively can get employees back to work faster--and at lower cost.

By Jane Pearl

While manufacturers across the country are losing money because of yearly increases in worker's compensation claims, a Massachusetts-based maker of men's suits named Grieco Brothers is saving a bundle. The average number of compensation claims filed by Grieco's workers has declined from 73 in 1987 to only 15 in 1989. During that period, the number of days lost due to workers' accidents dropped from 1,769 to 452. The company now spends far less than it used to on insurance premiums.

Grieco hasn't discovered some sort of miracle drug, nor has the company's 600-person workforce suddenly become immune from medical problems. The stitchers and pressmen still suffer from repetitive motion syndrome and loading-dock workers still lock up with back pain.

The company's savings are the result of a new policy regarding employee injuries. By taking an active approach to managing compensation claims--that is, carefully monitoring an employee's medical treatment and then assigning light.tasks to those still recuperating-- Grieco has kept health costs down.

Nationwide, workers' compensation insurance premiums grow by more than 10 percent each year. Anthony Sapienza, Grieco's vice-president of manufacturing and the nephew of the firm's founder, says his company's insurance premiums have decreased by 50 percent since instituting a so-called "managed claims" program 18 months ago.

In mid-1989 Grieco hired Lynch Jones & Associates, a consulting firm, to train its supervisors to manage workers' compensation cases. Before adopting the program, Grieco's managers (like many of their counterparts at other companies) had a laissez-faire attitude toward injured employees, who were out of sight and out of mind until they returned to work.

A key element of Grieco's aggressive approach to health care was hiring Carol Nolan, an occupational health nurse, who plays several roles. She is first of all an advocate for injured workers. When a serious accident occurs, she accompanies an injured worker to a hospital, makes sure he receives prompt medical attention, and helps him get answers to questions about diagnoses and treatments.

When an injury requires an employee to miss work, Nolan acts as a liaison between worker and employer. She makes weekly telephone calls to injured employees and their physicians, reassuring employees that the company is interested in their condition and eagerly awaits their return. Nolan mentions the company van that takes injured workers to a doctor or physical therapist. And the company pays a full-time salanr even if a worker can return only for light duty.

Nolan also plays the role of mediator between workers and their insurance companies. If Nolan receives an independent medical report stating that a worker is able to return to light duty or a less strenuous version of his job, she sends the employee's doctor the report along with the worker'sjob description. Even if the physician agrees that light work is acceptable for his patient, the worker doesn't have to return to work. However, an insurance company will then file a court petition to decrease the worker's insurance payments by the amount he would have earned from light or modified duty, or even to discontinue all benefits except medical costs. When an employee refuses to comply with a doctor's approval to resume working, courts often side with the employer and its insurer.

Getting a court date, though, can take as long as six months, a period dunng which the employee continues to collect benefits. Nolan points out that some employees may get comfortable at home collecting pay- checks and lose their incentive to return to work. Since Grieco began to manage its compensation claims, how- ever, injured workers generally have agreed to perform light tasks, their cases are settled much faster, and some employees with minor injuries haven't had to miss any work at all.

"A lot has to do with the motivation of the person," says Nolan. "Some people know how to beat the system and will try to do so. But our program has improved morale and made workers more cooperative and more willing to stav in the workplace."

The Department of Labor estimates that five out of every 100 American workers are injured on the job each year.About80percentofthe injuries cause moderate back problems, and one quarter of those result in more than six months of missed work. Almost 100 percent of these compensation claims end up in court, says Peter Rousmaniere, chief financial officer of Lynch Jones & Asso- ciates. The situation has become a crisis in some states such as Maine, where the country's largest workers' compensation carrier, Liberty Mutual, refuses to issue new compensation insurance policies.

Preventing accidents is the best way to keep workers' compensation costs under control. But when accidents do happen, the idea is to get people back to work as soon as possible. One out of every four moderate back injuries usually results in more than six months of lost time, according to Rousmaniere. Then em- ployers such as Grieco Brothers actively manage worker compensation cases, only one in 50 back injuries causes an employee to be out of work that long.

States regulate the workers' compensation system, but companies are far from powerless when it comes to controlling their own costs. Here are some key areas that can help businesses rein in their costs:

Accelerate diagnosis and treatment. Weeks may elapse between visits to a doctor. Claimants sometimes consult with several physicians, who may repeat tests and not be aware of diagnoses or treatments offered by other providers. A better alternative is to encourage employees to get treatment from a preferred provider network that treats compensation cases on a priority basis, coordinates treatment, and forwards test results to different specialists. Personnel managers should keep in touch with all doctors involved in a case, making sure everyone knows about tests, treatments, and diagnosesotherspecialists have made.

A supervisor should contact injured employees and their doctors once a week. By showing genuine concern for injured workers, the supervisor demonstrates that workers are valued employees--an important incentive to get a worker back on the job. Talking candidly with doctors is equally important. When a doctor signs papers stating a worker cannot return to the job for several weeks or months, an employer can discuss the option of a worker returning earlier to less demanding work.

Get quality medical care. It is in the best interest of an injured worker, the employer, and the insurer to treat medical problems effectively, thereby allowing the employee to return quickly to work.

Audit every hospital and providers' bill for accuracy. Workers' compensation fees are restricted in half of the states. Companies that are based in those states should make sure that every medical and chiropractic procedure is within the scheduled fee. Intracorp, a Pennsylvania-based disabil ity management and healthcare cost-control company, claims that it found $200 million in errors and overcharges to its clientslastyear.

Find a vocational rehabilitation program. Workers who are so severely injured that they can never return to their old job don't have to accept retraining for a new job, although refusal to do so could affect long-term benefits if the employer challenges them in court. One workers' compensation carrier, Liberty Mutual, has its own vocational rehab program in Boston. Its rehabilitation team--orthopedic surgeons, internists, therapists, nurses, vocational counselors, and a psychologist--provide physical therapy and career counseling.

Insurance carriers can recommend some top-notch programs. For those workers who are self-insured, a third- party administrator can suggest good local programs.

Try to prevent accidents. Insurance companies such as Liberty Mutual inspect work sites and recommend ways to improve safety. Finally, consider financial incentives for employees with perfect safety records.

Jayne Pearl is a senior editor of Family Business.

Rising Compensation Costs

Average medical cost per claim$2,310$3,420+48%
Average cost of lost time per claim$4,202$5,805+38%
Average lost workdays per claim6375+19%
Sources: National Council on Compensation Insurance Occupational Health and Safety Agency

Managing the claim

Jones & Associates recommends that supervisors of injured workers take the following steps:

Personally escort injured employees to the hospital or doctor. Insist that they be seen promptly. Ask questions about a doctor's diagnosis and recommended treatment.

Investigate immediately the cause of an accident and subtmit A written report recommending corrections in work procedures, equipment, or physical layout of the plant to prevent accidents in the future.

Contact injured workers at least weekly and ask how they are feeling to let them know their colleagues miss them.

Encourage injured workers to return to the plant for light duty as soon as possible. Like getting back on a horse after falling off, part of the cure of a workplace accident is returning for modified work. Injured workers will therefore not feel forgotten or neglected and can concentrate on being producl tive, not disabled.