How To Save on Workers’ Compensation Cost – Get Back to Basics.

Workers’ Compensation can be a source of frustration to a business owner because of its confusing language and many requirements. However, workers’ compensation can also be a tremendous savings opportunity for a construction company if you take the time to understand what a good program can provide. This article will outline some tips for general contractors and subcontractors on what to look for and how to take advantage of cost savings from a good workers’ compensation program.

 

Look For Financially Sound Providers

 

The insurance industry has suffered difficult investment conditions, declining stock values, and financial losses. Because of this, it is very important to ensure that your insurance provider is financially strong and able to pay claims. Review a provider’s financial statements. Ask about any regulatory actions impacting their financial stability. Ask for their insurance company rating from the various rating agencies that monitor the insurance industry. An “A” rating or better is usually considered very good. If an insurance provider has had a downgrade of its rating, inquire as to why and how it is impacting the provider.

 

Ensure the Provider Understands the Construction Industry

 

Partner with a provider that has industry expertise, understands the market, and has a track record of consistent success. A company that specializes in workers’ compensation in the construction industry has a better understanding of economic drivers and competitive factors, and the ability to develop comprehensive, cost-effective programs tailored to contractors’ unique needs. Also, a company that understands construction exposures can help a contractor achieve better claims outcomes.

 

Is the Provider Committed to Customer Service?

 

Review the workers’ compensation provider’s service standards. Ask for references for other clients within the construction industry to verify these service standards. Make sure the workers’ compensation provider is solution-driven and committed to prompt and personalized responses.

 

Will the Provider Help You Establish Cost Savings Programs?

 

Look for a carrier that will work with your organization to develop loss control programs to empower employees to prevent injuries before they occur. Ask for examples of programs that the provider has established with other contractors and ask for the cost savings results generated from these programs. This will give you the necessary data and information needed to review how these programs will impact your bottom line.

 

Understand How the Claims Management Process is Managed by the Provider

 

Understanding how managed care solutions are determined will help to ensure that the best claim outcome is reached while containing medical costs. A strategic medical bill review process is important because of the potential savings to an organization when a workplace accident occurs. The process should include reviewing pre-operative and post operative care, as well as ongoing therapy. A provider’s attention to appropriate procedures, as well as billing detail, contributes to a contractor’s savings, timely bill payment and overall satisfaction.

 

Understand Medical Network Dynamics

 

Focus on local network dynamics when evaluating the effectiveness of a medical provider network. Workers’ compensation claim costs are impacted by network quality, accountability, and penetration. A workers’ compensation provider that utilizes a multi-layered medical provider network, with knowledge of local area physicians and pharmacies, can address the specialized needs of injured workers more effectively. It also ensures injured workers can access the best quality health care and most responsible medical providers in their region. In addition, a focus on network optimization and penetration allows an organization to reduce medical and pharmaceutical costs.

 

Reviewing these tips before selecting a workers’ compensation provider will ensure better service from your provider while focusing on cost savings. For more information on this article, please feel free to contact David B. Blain at dblain@macpas.com.

Comments

[Dphelan]

Another service worth looking into when considering an insurance broker is whether they provide an annual experience MOD verification prior to your valuation date (6 months prior to your insurance renewal). More than 1/2 of all experience mods are wrong. That number goes up to 80% if you work in more than one state, and close to 90% if you perform OCIP/CCIP work. These errors typically will favor the insurer, not the insured contractor.