As 2017 draws to a close, workers’ compensation pure premium advisory rate changes for 2018 have been announced. For the coming year, Michigan’s work comp premiums will be reduced by 9.3 percent according to the Insurance Alliance of Michigan’s (IAM) November 10, 2017, update. This update illustrates that between 2011 through 2018, employers paying for work comp insurance in Michigan will have seen a total decrease of approximately 45 percent. This represents a claims cost savings of about $446 million over those seven years. In contrast, an average increase of 4.9 percent has been observed nationally and IAM reports that Michigan’s workers’ compensation premiums are among the lowest five in the United States.
With the newly announced premium rate changes, it would be advantageous for insurance companies to take inventory of their current claims administration processes for workers’ compensation claims. A few key questions listed below will assist examiners in reviewing whether they are leveraging maximum cost savings techniques on workers’ compensation claims.
The first question to ask in this cost review is whether the insurance company is partnering with a third-party administrator (TPA) of workers’ compensation claims since partnering with a trusted TPA will result in claims cost savings in a variety of ways. Experienced TPAs will provide valuable resources such as a call center with highly trained personnel that examiners may draw upon throughout the entire claims process. Furthermore, the administrative burden on examiners will be minimized since a TPA will handle multiple aspects of claims administration, allowing examiners to take on additional claims in their workload.
Secondly, the offering of home health care products and services should be taken into consideration. Claimants experiencing injuries due to a workplace incident may recover more quickly if they are able to convalesce at home rather than in a hospital or a short-term rehabilitation facility. Insurance companies providing home health care products and services also tend to experience an increase in claimant satisfaction which further result in claims cost savings.
The next question involves the use of a durable medical equipment benefits manager (DBM). As the nation’s leading DBM, Northwood has built an extensive network of medical providers throughout the nation. Each provider is subject to a thorough credentialing process before being accepted into the network and must agree to offer contracted durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) fees to insurance companies and their claimants. These discounted rates translate into claims cost savings for both the insurance company and its claimants.
Since 1992, Northwood’s clients have saved over $200 million with a nearly three-to-one return on investment ratio. For customized, additional information about partnering with Northwood as a DBM to maximize workers’ compensation claims cost reductions please contact Rosanne Brugnoni at 586-755-3830 ext. 3771 to schedule a call.
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