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When we visit employers, they sometimes share with us news of an upcoming claim review. Most times it’s the obligatory six month claim review with the employer. The claim review is usually initiated by the third party administrator or insurance carrier and the goals and objectives are vague. Meanwhile, back at the TPA office, the file clerk has pulled the majority of the employer’s indemnity files and piled them in a conference room. The claims examiner will spend the week in the conference room top sheeting and sprucing up the claim file in order to make a good impression and provide the employer with basic first aid remedies for their growing inventory. Many times there are no goals or objectives for these reviews and employers use them solely to get an update as they have entrusted the TPA with “handling ” their millions of dollars of reserve monies. I write about this to illustrate the reactive approach usually employed by insurance carriers and TPA firms.
Let’s try this scenario on for size: You, the employer, make clear that the employer (you), will be reviewing your claims on a quarterly basis. Knowing you have every right to, you make clear the goals and objectives of your workers compensation claims program and your expectations. In other words, you emphasize the fiduciary responsibility of the TPA in handling the workers compensation claims of your injured employees. Fast forward six months. You have documented the progress and challenges of the claims being handled by the TPA. In that time you have devised a collaborative team; nurse case manager, workers comp attorney, broker, risk manager and of course the TPA. You go over reserve adequacy, litigated claims, non-litigated indemnity cases, medical-only files and of course, legacy claims. The team will sometimes include key front line managers or safety personnel, because you’re not just discussing existing claims, you’re strategizing, in order to avoid a pattern of claims or to optimize the Return to Work program.
The biggest failure with employers in their workers comp program is accountability. Failing to hold the TPA accountable can lead to a serious breach of trust or of the Fiduciary Responsibility of the TPA or carrier. Accountability is established at the onset of the contract and maintaining an active role in the administration of claims or prevention of injuries is of utmost importance.
Every day I sit with adjusters and attorneys who are looking for effective ways to explain the concept of Medicare Set Aside Arrangements to their clients. Adjusters try to explain to insureds why their settlements are taking so long and what Medicare has to do with their claims. Attorneys try to explain to their clients why, after years of litigation, they now have to put aside money for their future treatment. At times I am recruited to speak directly to clients in Spanish about these subjects.
I don’t really mind, however, as a consultant it’s part of my job. But what do you say to a claimant/plaintiff that has questions? Here are some questions that frequently pop up:
- What is a MSA?
- Why do I have to get a MSA?
- What happens when the money runs out?
- Where do I keep the money?
- How do I spend the money?
- Who’s going to handle the money?
- What if I promise not to use Medicare for my injury treatment?
- Can I opt out of an MSA?
Many attorneys, defense attorneys included, have not yet mastered the Medicare Secondary payer issue and at times proceed to walk settlements through the WCAB for approval without taking Medicare into consideration. This can lead to greater difficulties for employers in the form of Medicare conditional payments and associated penalties. For those who have received a recovery letter from the Centers for Medicare/ Medicaid Services seeking reimbursement on a claim you thought was finally closed, having to explain to the injured worker why his Medicare benefits have been declined and the insured that you have to re-open the file and deal with Medicare can be very disillusioning. It can also cause you to lose customers.
Make sure that Medicare is taken into consideration anytime you are settling out future medical benefits and when questions pop up, feel free to contact us.
Hartford’s loss control department studied the effects of new hires on work comp incidents. Overall, they speak to the importance of the selection process in hiring employees and the importance of proper on-boarding and new hire training. I thought the following was of great importance so I took it directly from their loss control findings.
WITHOUT PRECAUTIONS, NEW HIRES CAN POSE SERIOUS RISKS
The statistics below bear this out. But selective hiring, careful on-boarding and training can help curb potential losses. Injury rates are 4–6x higher in their first month on the job.
30% = Percentage of business failure due to employee crime.
40% = Percentage of industrial fatalities linked to alcohol abuse.
With effective candidate selection, hiring and training, you can help offset the impact of inexperience. Putting these new-hire controls into practice can help.
• Background checks (criminal, motor vehicle registration, financial)
• Verification of employment, education, licensing, credentials (See sidebar)
• Behavioral assessments (culture fit, risk potential, job skills, cognitive abilities,
critical thinking, abstract reasoning)
• Drug testing
• Physician (medical)
• Physical exam
• Random drug testing
• Drug testing
1 Breslin FC, Smith P. Trial by fire: a multivariate examination of the relation between job tenure and work injuries. Occup Environ Med. 2006; 13:27–32. 2 Kuratko, Donald F.; Hornsby, Jeffrey S.; Naffziger, Douglas W.; Hodgetts, Richard M. Crime and Small Business: An Exploratory Study of Cost and Prevention Issues in U.S. Firms. Journal of Small Business Management, July 2000; Vol. 38, No. 3. 3 http://www.ndwa.org/aboutus.php
4 Employers’ hiring practices are regulated by state and federal law, including but not limited to, the regulations of the ADAAA and EEOC. Employers should always consult
with legal counsel before establishing any practice that involves hiring. 5 Sources: CareerBuilder.com Survey (2008); Gurtin vs. Nurse Connection, et. al. (2002); Human Resources Management (2008); Recruiting Times, Society of Human Resources Management (2003); Two Wrongs May Mean No Rights, by Barbara Kat Repa, Nolo.com, (2001); U.S. Department of Labor, Wall Street Journal (2003); U.S. Department of Justice
7 http://www.samhsa.gov/data/occupation.htm 8 U.S. Department of Justice Office of The Attorney General: The Attorney General’s Report on Criminal History Background Checks; June 2006.
Conferences are fine for entertainment, but they’re designed to put you in front of sales representatives, who sponsor the event. Do you really want to transform your workers comp program? Do you really want to get control of your claims? Do you want to save hundreds of thousands of dollars by cutting costs and getting your employees back to work? The WC Employer School is for you!
We’ve just sent invitations to our mailing list for weekly sessions through the end of the year! Seating is limited! Reserve your seat today!
At the CLM & Business Insurance Workers Compensation Conference in Chicago recently, a panel illustrated the financially positive effects of the implementation of a Return to Work program with a large employer, Sodexo, Inc.. Sodexo has facilities in all 50 states and employs 150,000 people at 3100 sites. They average about 6,000 workers comp claims every year! Focusing on Return to Work has allowed Sodexo to shave between $8 million to $12 million in temporary total disability costs! This type of program is a perfect example of how hard work, collaboration and advocacy can create a program that centers around the goal of transitioning the injured worker back to work! You can read the article here: http://www.businessinsurance.com/article/20180525/NEWS08/912321528/Return-on-investment-helps-justify-return-to-work-programs