What does a rising trend in injury costs mean?

The costs of work-related injuries are felt by individuals, families and communities.  The personal and human costs are immense but difficult to quantify.  Injury costs associated with workers’ compensation claims, however, are financial and easily quantifiable. 

Changes in injury claim costs get the attention of employers and workers’ compensation administrators.  The obvious concern is that rising claims costs might be an indicator that claims managers are “giving away the farm”, not managing the claims very well.  I have rarely found this to be the root cause of such a trend.

Rising injury claim costs can be related to external factors.  Healthcare cost inflation is outstripping overall inflation, for example; even if all else remains the same, this factor alone may account for increased claims costs.  The external employment environment may also be a factor.  We know from research that claim duration increases as the employment moves from high demand to steady and from steady to declining demand (given relatively constant labour force supply). 

Occasionally injury claim costs rise because of closer adjudicative scrutiny.  I recall one claims director promoting very early intervention and a medical report every two weeks before a payment could be issued.  The result was increased medical tests and physician visits, which added significantly to costs and did not result in shorter duration. 

I was consulting with one large employer who was considering terminating his third party administrator (TPA) because indemnity and medical costs per claim were on the rise.  As we discussed the situation, it became clear that demographics not claim management practices were the main driver.  As this very large firm had automated and improved efficiency, it had hired fewer workers.  Mandatory retirement had also been eliminated so more workers were working longer (automation actually facilitated a longer work career).  Taken together, the result was an aging workforce and one with a greater level of co-morbidity (diabetes, high blood pressure, obesity).  While injury rates were lower, duration and medical costs were higher every year.  Clearly, these issues—not the TPA’s claims management practices—were driving claim costs upward. 

Recently, I was corresponding with a coordinator for a booming resource extraction firm where recruitment and retention were big issues.  The employer made a point of meeting with all the crews, raising awareness about workers’ comp and disability benefits as well as their extensive EFAP program and easy, on-line extended benefit program.  The result was increased utilization in WC, EFAP, LTD and extended health driving premiums higher.  This was both expected and welcomed because it contributed to a more important corporate objective:  increased employee retention and lower turnover.  The higher premium costs were much less than the cost of recruiting and training of new employees. 

Of course, a trend toward higher injury claim costs may also be related to internal factors.  Increasing caseloads, for example, may be caused by staffing reductions or increased claim volume with insufficient increases in staffing; either way, the result may be less attention per claim and rising injury claim costs.  Other internal changes to systems, policies and procedures may also contribute to higher costs.  One insurer back-filled a significant number of case manager positions with less experienced staff so the more senior staff could be assigned to a particular crisis situation.  At the best of times, the handover of a particular caseload from one case manager to another may contribute to longer claim duration and increased utilization as the new case manager becomes accustomed to the caseload.   When amplified by the simultaneous transfer of many caseloads, the impact on performance measures such as claim cost can be significant.

Whether you are looking at the performance of an overall system or a specific firm, rising injury claim costs cannot be viewed in isolation.  Its meaning must be interpreted within a broader context. 

What “best practices” would you recommend to Case Managers?

Interacting with case managers at conferences and workshops, I learn a lot about case management practices that work… and some that don’t.  I hesitate to call the ones that work “best practices”.  The term is over-used and implies an evaluative process that is usually absent.  More often than not, the identified “best practice” is nothing more than an opinion (perhaps informed, occasionally expert but usually otherwise).

The other problem with “best practices” is the implied universality of the term.  Rarely does a discussion of best practices in case management precisely define the domain to which the identified practices apply. Not all case managers have equivalent duties or work within similar organizational structures; not all legislative frameworks allow for information exchanges that might be considered valuable or desirable.   A particular set of best practices may well exist for a narrowly defined role and organization.  In the absence of that definition, any list of best practices devolves into a set of self-evident generalities like “communicate clearly and often”, “intervene early”, “set expectations”.

Rather than propose a list of best practices in case management, here are four practices I have run across often enough to recommend them for your consideration.  

1.       Three point contact. If there is one practice that is mentioned more than any other, it is this one.  It is often modified and expanded to mean, “Case managers should review the file and, within three days of receiving that file, establish contact (preferably personal) with the treating healthcare professional, employer and worker.”  In practical terms, the treating healthcare professional contact may have to be indirect.  Don’t let that stop you from making personal contact with the worker and employer. (Many jurisdictions put this practice in their required procedures for agents and adjudicative staff.  See South Australia WorkCover Claims Operational Guidelines Chapter 6 page 4 as an example applied to agents and New Your State Insurance Fund Global Case Management for one that applies at an insurer team level).

2.       Facilitate personal contact with decision-making employer and worker.  The vast majority of injured workers return to their “at injury” employer.  The timeliness of that return and its long-term success often rest with the case manager.  Often, the manager or supervisor will be the key person mediating the timing of a return to work. Keeping the worker connected to the employer and the employer actively engaged in thinking about RTW for this person may well lead to improved outcomes.  ( I really like the CCOHS document Best Practices for Return-to-Work/Stay-at-Work Interventions for Workers with Mental Health Conditions FINAL REPORT [May 2010] because it is authoritative and well referenced. I think the personal contact practices identified are widely generalizable to most Case Management situations).

3.       Think mid-week this week, not Monday next week.  Case managers can influence the timing of a graduated RTW, light-duty RTW or work trial.  For most Monday to Friday jobs, there is a tendency to set a Monday start date a week or two in hence.  Research tells us that more injuries occur on a Monday than any other day of the week.  This “Monday Effect” phenomenon alone is reason enough to consider a different approach.  Why not consider the Wednesday, Thursday or Friday before as the RTW date?  Not only will this allow a returning worker more time to adjust to a regular work week, it may shorten duration and reduce costs overall.  

4.       Identify barriers…and how to overcome them.  I recently reviewed a case management system where the insurer and staff had developed a new “tab” that required the case manager to identify barriers to RTW.  Case managers themselves had helped design this part of the systems with drop-down menus of the most common barriers raised or identified in case management.  If the barrier source was identified as “employer” and the reason “wants worker to be 100%,” the course of action might be “case conference with employer” generating an actionable item in the system. If the source was “worker” and the reason “fear of re-injury” then the action might be “arrange work conditioning” or “set up light duties with employer.” The point here is not that you need a new case management system but that identifying barriers and ways to overcome them can be an effective technique in case management. 

There are other practices I think are worth considering (subject to jurisdictional law or corporate policy).  One case manager involved in making entitlement decisions asks if the client wants a text message when the decision is made (yes, a full letter will follow or is immediately available on the electronic file but let’s face it, most of us now depend on our smart phones).  Another routinely uses conference calls to have the worker, employer and treating healthcare professional (often a physio or occupational therapist) together to discuss progress and set up RTW trials.

If you have a practice that you think should be considered by Case Managers, share it through a comment.