How to Manage & Track Workers' Compensation (6 Simple Steps & Tips)
Published September 6, 2022.
Workers' compensation will pay employees' medical costs and wages lost due to a workplace injury. Mismanagement of workers' comp claims can result in a great deal of financial and legal trouble for your organization. Effective management and tracking of workers' compensation claims can save your company considerable amounts of time and money.
That being said, read on to learn exactly how to manage and track your workers' compensation claims with these easy steps and some expert tips.
6-Step Workers' Compensation Guideline for Your HR Department
Your HR manager should take the following steps for every workers' compensation claim:
1. Employee Reports Work-Related Injury
Should an employee injury occur, the employee must report the incident to the employer as soon as possible. Immediate reports facilitate faster claim resolution and limit legal risk and potential fraud.
2. HR Manager Files First Report of Injury (FROI)
The employer should complete and file the First Report of Injury (FROI) to the workers' compensation insurance carrier. OSHA regulations mandate that certain injuries are reported within a specific period, and many states charge fines and penalties for reporting delays.
3. Insurance Claim Is Filed & Incident Investigated
Once the insurance carrier has received the report, the insurance company will perform its own investigation of the incident. The company will look at medical records and collect statements from the employee, witnesses, and the person who received the incident's initial report, looking for any indication of fraud.
4. Claim Is Accepted or Denied
With the evidence gathered during the insurance carrier's investigation, the insurer will decide to accept or deny the workers' compensation claim.
5. Development of Return to Work Plan
The insurance claims adjuster and the employer's HR department work together to develop a plan for the employee to return to work based on the report provided by the employee's physician regarding their capabilities. If possible, the employer may make accommodations for the employee to return to work.
6. Settlement of Claim With Employee Return
The claim is closed when the employee has healed from their injury, has been released from their physician's care, and has fully returned to work.
Tracking the Workers' Compensation Claim Once Filed
Your HR department can efficiently track workers' compensation claims after filing with the help of automation. Workers' comp software can assist with filing injury reports, document management, compliance, and claims workflow management. Some even offer injury and claims cost analytics to help you identify areas that may require safety or process improvements.
When comparing workers' compensation tracking software, consider the following features:
- Payroll integration Workers' comp tracking software that integrates with your automated payroll software means less data entry and fewer errors.
- Organization and reporting tools The software should be able to be filtered by various factors such as department or claim status to create detailed reports.
- Ability to accommodate complex scenarios It may be necessary to manage workers' comp claims across different states or worksites. The software you choose should be able to handle this complexity.
- Ability to produce high return on investment The investment in the software should not be more than the amount of money saved through reduced claims or time spent managing workers' comp.
Understanding Experience Modification Factor
Your workers' compensation premiums are based on your organization's MOD, or experience modification factor.
MOD is a formula used by your insurance carrier to determine the amount of premiums they'll charge your organization. The formula takes into account the amount of actual workers' comp losses your company has incurred, based on your company size and industry, and expected future losses.
The MOD formula outputs a factor around 1.0. If your MOD is less than 1.0, your losses are better than expected, and you'll get a discount on your workers' comp premiums. A MOD above 1.0 indicates losses are worse than expected, and you'll pay more for insurance.
Extra Tips for Effective Workers' Compensation Management
Promote Workplace Safety
You can promote workplace safety by providing your employees with the proper training, keeping a clean workspace, posting signs, and regularly reviewing safety procedures with your team. Reminding your employees to work safely will reduce the risk and number of injuries.
Act Immediately After Injury
If an injury occurs, acting immediately can save money on fines and penalties for delayed reporting and eliminate the possibility of fraudulent claims.
Conduct a Thorough Investigation
A thorough investigation of the accident as soon as it occurs will identify any immediate dangers to others. Documenting the situation can help with filing workers' comp claims and protect you from false claims.
Control Drug Costs (If Possible)
One of the most effective ways to reduce drug costs is to replace brand-name drugs with generic drugs. A pharmacy benefits management program can help negotiate better prescription drug costs.
Evaluate Post-claim Expenses
Continually assess for ongoing medical expenses for injuries, such as costs of physical therapy or specialty physician visits. Remember that certain injuries may have latent effects on the body, which may not appear until months or years after the original injury.
Beware of Claims Fraud
You can combat the likelihood of claims fraud by implementing a zero-tolerance policy for false claims, establishing ways for employees to report fraud anonymously, and installing video surveillance in work areas.
Bottom Line: Take Control of Your MOD Factor
Even though you cannot determine your own MOD score, you should take the necessary steps to influence it. Since MOD is basically a safety score for your company, improving your safety programs to lower the number and severity of workers' comp claims will, in turn, lower your MOD factor, thus reducing workers' comp losses and insurance premiums.