How to Control Workers’ Compensation Costs

Controlling Costs Controlling CostsEmployers in Colorado searching for options to reduce workers’ compensation insurance premiums need look no further than the Colorado Premium Cost Containment Program. This program, can provide significant cost savings by both reducing the premiums employers pay and by reducing claims through better safety and health rules, policies, procedures, and training.Controlling Costs

Employers apply for cost containment once they have completed six required steps and documented them for a year. If approved, the employer’s workers’ compensation insurer applies a discount (typically five percent) to the employer’s workers’ compensation policy at the next renewal period after certification.

The six steps below are those employers must undertake to be premium cost-contained, and are also valuable steps anyone can take to reduce the risk of injury in their workplace.

Step 1: Formal declaration of an organization-wide safety policy
Employers must have a written declaration of the organization’s commitment to safety, signed by top management and communicated to all employees. This declaration should be crafted to reflect the philosophy and commitment of top management to safety. It should also be tailored to fit the individual culture of the organization. A safety policy should define the fundamentals of an organization’s safety program and communicate that the safety and health of all employees is a top priority for the organization. The policy should be dated at the time of distribution to all employees and should reflect any future revision dates.

Step 2: Formal creation of a safety committee and/or coordinator
Employers must name a safety coordinator and/or create a safety committee and identify objectives and tasks for each. Top management should distribute a dated memo to all employees identifying the safety coordinator and/or safety committee members outlining their responsibilities. The appointed safety coordinator and/or safety committee members should also sign and date the description of duties and responsibilities. These records should be updated as assignments change and objectives are revised, to be treated as “living” documents. Documents should also reflect revision dates.

The safety coordinator and/or committee should show documentation of participation in the safety program by documenting and signing safety audits, participating in safety meetings, participating in accident investigations, recommending safety policies, establishing and updating safety rules, and promoting safety awareness.

The safety committee should meet on a regular basis (at least quarterly), depending on the employer’s industry. Documentation should consist of dated meeting minutes with the safety committee members’ signatures.

Step 3: Clearly defined and conspicuously posted safety rules
Employers must develop site-specific safety rules for the particular hazards of their industry and the specific jobs within their organization. A signed and dated copy of the safety rules must be submitted with the application for premium cost containment.

Once employers have drafted and distributed safety rules, they must obtain employees’ acknowledgements that they have received and read the safety rules.

Step 4: Safety awareness and loss prevention training
Employers must conduct relevant safety training for all employees at least once a quarter and document this training appropriately. Appropriate documentation includes the safety information and training provided (attach power points, handouts, etc.) plus a signed and dated employee attendance roster and acknowledgement of training. Training can be
a mix of in-person training and electronic training. Employers should also have a documented safety orientation and training program in place when new employees are hired.

Step 5: Written designation of two designated medical providers
Employers must designate two medical providers to treat employees who suffer work-related injuries and illnesses. Once designated, employers must communicate the medical providers’ specific contact information to all employees in writing and obtain signed and dated employee acknowledgements that they have received this designation. Employers should make a similar written designation to employees after each work-related injury.

Step 6: Written policies and procedures on claims management and return to work
To be cost-contained, employers must have written claims management procedures detailing their unique processes of handling a claims from the moment of injury or illness through return to work and, ultimately, to the final resolution of claims. Claims management procedures are essentially “how-to” guides for employees tasked with administering
workers’ compensation claims. Claims management procedures should cover: employee claim reporting procedures (when, how, and to whom employees should report incidents or injuries); employer claim reporting procedures to the workers’ compensation insurer (when, how, and to whom employers should report claims); accident investigation procedures (who should investigate accidents and how investigations should be conducted); and return-to-work procedures (steps the employer should take in returning injured employees to work). Employers must coordinate with their workers’ compensation insurers at least annually on issues such as loss-run review, outstanding reserves, and employee classification.