In a recent interview, compensation experts offered advice on how to manage workers’ comp costs.

What do the experts say? Partner Daniel P. O’Brien is Fisher & Phillips’ in-house workers’ comp guru, but the same firm’s James Holland, also a partner, gave us additional good information. O’Brien is in the firm’s Cleveland office, while Holland works in Kansas City.

Before workers’ comp, O’Brien explained, workers’ couldn’t find help for work-related injuries, and the insurance program was devised as a no-fault system to meet that need. No-fault theoretically meant that employers couldn’t be sued, but all that has changed. The program has turned into a monster, because it’s slowly but surely become much broader than the initial plan.

Today’s workers’ comp doesn’t necessarily protect employers from lawsuits; worse, it’s become administratively paper-intensive, burdensome, and expensive for employers. Part of the reason, of course, is the rising costs of health care, but litigation has also boosted the bills. Some industries experience higher injury rates than the norm, and higher costs as a result. O’Brien points to construction; patient-care environments; manufacturing with its repetitive stress injuries; food-processing; farming; mining; and, for some reason, temps, leased employees, and those from professional employer organizations.

Take steps to reduce costs. Holland suggests the following as initial steps:

• Conduct legal but thorough background checks on all new hires.
• Administer agility tests to job applicants.
• Conduct post-offer medical exams and inquiries.
• Focus on job safety during orientation.
• Ensure your job descriptions are accurate and up to date.
• Strictly enforce your substance abuse policy.
• Consistently adhere to a temporary light duty policy.
• Train managers and supervisors on workers’ comp cost containment.

It’s also key to know your workers’ comp insurance policy inside out. Understand the correlation between your current experience of claims/payments and future premiums. Most states (all but 14), says O’Brien, belong to NCCI, or the National Council on Compensation Insurance, which tracks, state by state, ratings of classifications and “exposures”–insurance talk for risks. That is, it has compiled 600-odd profiles of various jobs in various industries, and how they stack up in terms of injuries and workers’ comp claims.

NCCI offers subscribers in each state the typical rates of injuries and claims in similar and related industries. As a workers’ comp manager, you should check your “mod ratio” against the record of comparable companies in your state: If it’s above 1.0, then your costs are running higher than your peers’. Small and mid-sized employers should ask their insurers to share quarterly losses and track claims costs and the level of reserves. Identify your mod ratio, and be prepared to challenge your insurer if reserves seem too high. If your costs consistently look too high based on your claims, consider hiring a workers’ comp consultant to look over your insurer’s shoulder.

What else can you do to control costs? Advises O’Brien, “He who controls primary care controls the claim costs.” So establish a good working relationship with a primary care doctor who will serve the company for workers’ comp claims. Find someone who’s an occupational care expert and who understands your business. Than provide him or her with all your job descriptions.

Have a rigorous safety program that puts safety on a par with productivity and customer service. The safety committee should keep HR informed off any hazards it notices. Make employees aware of safety initiatives and concerns.

Finally, get injured workers back to work as soon as possible. Make sure your light-duty or transitional work program operates as it should: Think of it as a work-hardening therapy that rehabilitates employees. O’Brien notes that among workers who return within 6 weeks after an injury, 90 percent later go to the job they held before they got hurt. But those who don’t come back for a year are highly likely never to return.