by Mike Bechtol, Redirect Health

For most subcontractors, workers’ compensation is an ongoing source of worry, not to mention a drain on the bottom line. Beyond the cost of insurance and claims, workers’ comp can dramatically impact a company’s profitability, growth opportunities, and long-term financial solvency. That’s because workers’ comp claims are directly tied to a business’ Experience Modification Factor—or e-Mod—score.

The e-Mod is a numerical expression of a company’s accident and injury record compared to other employers of a similar size and in the same industry. Not only does it have the single largest impact on workers’ comp premiums, but it’s a reference point for general contractors hiring subcontractors for work. The higher the e-Mod, the higher the workers’ comp rate—and the lower the odds of winning bids on new jobs.

That said, few subcontractors have tangible strategies for improving their workers’ comp claims or e-Mod score. For most, this seems an impossible task, but subcontractors can make a big impact on their rates and scores by taking a few simple actions.

While the e-Mod is made up of variables that can’t be changed—like the size of the company and the average industry score—employers with a strategic healthcare plan can take charge of other factors:

• First aid or workers’ comp? Far too frequently, employees claim workers’ comp for accidents or injuries that do not happen at work, driving up costs. Workers who have a healthcare plan designed to provide first dollar benefit on primary care and chiropractic visits will use the health plan instead of workers’ comp for treatment. Accidents that do happen at work can be guided to a primary care or chiropractic visit when appropriate, and the claims for those visits are covered and will not go to the workers’ comp carrier.

Instead, employees who incur minor injuries in the workplace may be treated by a primary care doctor. The out-of-pocket cost for a primary care visit is significantly less than the cost of urgent care. Moreover, the employer can avoid unnecessary workers’ comp claims and the subsequent e-Mod ding. Simply delineating between first aid and injuries that truly require a claim can save significant money.

• The other 30 percent: For the 30 percent of injuries that require treatment beyond first aid, it’s critical for employers to monitor claims and ensure the proper course of treatment.

Most businesses send an injured employee to an urgent care clinic specializing in workers’ comp. In makes sense on the surface—these clinics promise to treat the employee and handle the administrative headache of filing the claim. However, just like every other company, providers that work with workers’ comp claims are in the business of making money—and some of them exploit it. They know that workers’ comp will cover 100 percent of all services provided—at a rate that’s five to 20 times higher than services rendered at a primary care office.

For example, providers will often prescribe a course of treatment far exceeding the patients’ needs because they’re guaranteed payment. An employee who hurt his back at work may see a chiropractor who recommends 10 visits, even if one or two visits would do the trick. It seems crass, but it’s a regular occurrence.

A strategic healthcare plan should include healthcare case management to ensure the employee receives the right treatment at the right place—and for a fair price. In most cases, the employer should still file a claim for moderate or major injuries to protect the business in the future, but companies may opt to pay cash for the service (at the real cost) rather than billing it through workers’ comp.

• Full-time hours and wages: Whenever possible, employers should continue paying full-time wages to an employee accessing workers’ comp. This might seem counterintuitive—a worker with a broken arm can hardly hammer a nail or hang a door—but claims that include non-medical costs (like wages) have a dramatic impact on a company’s e-Mod score.

Companies can continue to pay wages and employees can keep their regular hours by performing light duties in the workplace, watching safety videos at home or even studying another language. The cost to the business is the employee’s 40-hour-per-week salary; this is peanuts compared to the jump in workers’ comp for non-medical claims.

• Access to healthcare: It’s common for employees to claim workers’ comp for injuries sustained outside the workplace. In most cases, the employee simply doesn’t have other healthcare options. He uses workers’ comp because he doesn’t have health insurance, or can’t afford the deductible for a doctor’s appointment.

A workers’ comp visit is free for the employee, which makes it an attractive option, but the ripple effects are costly for the business. One solution is to offer routine health services free of charge. In addition to safeguarding the e-Mod, this ensures employees get the care they need through appropriate channels. Companies that offer free basic healthcare will improve productivity, boost morale among their staff and prevent workers’ comp fraud. Moreover, free primary care combined with healthcare case management is considerably cheaper than workers’ comp.

Of course, implementing a healthcare strategy that improves a business’ workers’ comp and e-Mod score can be a daunting task. In this case, a partner organization like Redirect Health can help companies create a smart healthcare plan through a self-insurance model and built-in case management. The plan can be customized to meet the needs of the workforce and will make a significant impact on workers’ comp.

What Is Self-Insurance?

Companies that self-insure assume the claims risk of their staff. They create their own plan and pay claims directly or through a third-party administrator. Benefits can be customized and may include medical, dental, vision, prescription medications and workers’ comp.

Just like traditional insurance, employers determine how the claims bucket will be funded and how costs will be split between the business and employees. For employees, the plan may look and operate exactly the same.

A smart self-insurance strategy includes the following components:

• Free routine care: To bring down workers’ comp, companies should consider covering the cost of treatment of common health issues like coughs and colds, flu, sinusitis and minor injuries. Doing so removes barriers to care and ensures employees receive the services they need.
• Stop-loss insurance: Most companies purchase stop-loss insurance to cover the high cost of catastrophic diagnoses, major injuries and specialist care. This insurance limits liability and protects companies from unexpected financial loss.
• Medical case management: Companies will benefit by partnering with an organization to manage the care delivery process, direct employees to the right level of care, and ensure fair pricing on all services—like paying $37 instead of $350 for an X-ray. In fact, working with a case management partner is key to realizing the full benefits of self-insurance and ensures subcontractors and their staff can stay focused on their work.

Mike Bechtol is director of membership of Redirect Health, a Scottsdale-based company that makes healthcare easy and affordable for individuals, employers and brokers. For more information, visit redirecthealth.com.

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