Four Steps to Reduce Workers’ Compensation Costs

Construction work is among the most hazardous occupations, with thousands of workers suffering injuries every year.

Approximately 13% of injured workers are off the job for more than 90 days. These long-term absences not only disrupt projects but also drive up workers’ compensation claims disproportionately, burdening businesses with significant financial costs. Compounding the issue, less than 3% of WC claims are flagged for behavioral health conditions, chronic pain and chronic pain with medication use. Yet these cases account for 35% of all WC costs.

The impact of an injury extends beyond physical harm; individuals who experience an injury while working are twice as likely to suffer from serious psychological distress, including anxiety, depression and fear of reinjury or job loss, compared to their uninjured peers. According to historical data from Sentry Insurance, workers struggling with these psychological challenges can take twice as long to return to work and their claims are five times more likely to exceed $250,000 in WC expenses.

But it doesn’t have to be this way. Both businesses and their injured employees can get back on track faster, reducing costs for employers and enhancing personal satisfaction for workers. The key lies in identifying and addressing the factors that keep injured workers off the job for extended periods.

An insurer’s data can match the right care at the right time for injured workers that helps them return to work quickly and safely, while controlling costs.

HOW EMPLOYERS CAN IMPROVE RECOVERY AND RETURN-TO-WORK OUTCOMES

When WC claims involve behavioral health issues, they can quickly escalate, often surpassing the costs associated with early, comprehensive intervention that addresses both physical and psychological needs.

Complex claims with behavioral health elements are also nearly twice as likely to result in litigation. Injuries complicated by psychological distress are also more likely to involve reliance on opioids, which—while sometimes necessary—carry substantial risks of dependence, misuse and increased costs. The potential for multiple surgeries also goes up with these claims, further prolonging recovery. Identifying behavioral health risks early allows for preventative care, reducing the risk of excessive, invasive treatments.

Employers who support injured workers through empathy and communication can help them return to work faster, cutting WC costs and stabilizing the workforce.

Here are four best practices employers can adopt to improve the odds of a successful, faster recovery:

1. Maintain Communication With Injured Workers

Ongoing, personal communication is key to maintaining the emotional and psychological wellbeing of injured workers. Regular check-ins, supportive messages or visits from supervisors help injured employees feel connected and valued during their recovery. This personal touch helps alleviate anxiety, clarifies the often complex workers’ compensation process and provides reassurance that the company cares about the worker’s wellbeing. These human connections are essential for creating a sense of security and belonging, and help facilitate a smoother and more positive transition back to work.

2. Recognize the Employer’s Impact on Recovery

Employers can have a strategic impact on the recovery process by actively shaping the path back to work for injured employees. Implementing structured return-to-work programs that offer modified duties or light work can help employees re-engage, even if just for a few hours a day. This approach not only reduces financial stress but also reinforces a sense of purpose, making workers less likely to seek legal repercussions. By setting clear expectations and providing a defined roadmap for recovery, employers demonstrate their commitment to employee wellbeing and create a supportive environment that motivates injured workers to return as soon as they are able. Some insurers administer modified duty programs for employers that are unable to.

3. Collaborate With Insurer to Use Data Effectively

Employers should leverage the wealth of data available from insurers and benefits providers to identify and address psychosocial issues that impact worker recovery. Asking the right questions of a carrier—for example, what are they doing to support workers facing psychological barriers, such as fear of reinjury—can lead to meaningful improvements. A carrier can partner with employers to actively analyze claims data and use advanced analytics to identify risk and develop targeted treatment options for injured workers who may benefit from early interventions. The goal is to turn data insights into actionable strategies that improve and hasten recoveries.

4. Tailor Treatment Plans

Employers should require their insurance providers to go beyond traditional approaches like telephonic-nurse case management, which, while helpful, may not be sufficient for workers facing prolonged recovery. By creating predictive models from claims data, insurers can help employers identify high-risk cases early and implement proactive measures that enhance recovery. Early intervention can be transformative, especially for workers stuck in long-term claims.

Tailored managed care plans, including virtual-reality therapy, professional counseling without an official diagnosis, and pharmacy clinical management tools, provide comprehensive support. These plans, overseen by a nurse case manager, help guide workers through recovery, reduce claim lengths and speed up the return-to-work process.

CHOOSING THE RIGHT CARRIER

To improve recovery outcomes, employers should collaborate with carriers who understand the construction industry’s unique challenges and can leverage data to reduce claims. Early identification of workers who need extra support—at about 90 days off work—is key to helping them achieve their best post-injury recovery and return-to-work.

By rethinking their approach, employers and insurers can improve outcomes for all by investing in behavioral-health resources and retraining staff to address these risks proactively.