What Does ADR Mean for Workers’ Compensation Programs On Construction Sites?
Workers’ compensation insurance is one of the costliest aspects of a construction project that carriers, construction managers, and businesses face. According to Insureon, construction carries the highest workers’ compensation costs of any industry, and as a result, the agents and brokers who work with construction employers are constantly looking for new tools to not only improve the return-to-work rates of the projects they insure but also reduce overall claims costs. Alternative dispute resolution (ADR) programs may hold the answer.
In New York, we see the costs continue to rise, and fewer workers returning to work after a construction accident as greater emphasis is placed on prolonged and drawn-out medical treatment rather than on actual healing that will benefit a worker, and employers, in the long run.
ADR programs offer a new route for clients who are looking to realize cost savings. At their foundation, ADR programs focus on directing injured workers to quality healthcare with an emphasis on return to work, partnering with unions to meet their needs, and delivering more timely responses and results to a worker’s injury.
Directed Care under ADR
Under the current traditional workers’ compensation model, an injured worker would receive care from their provider and the carrier or self-insured employer would have an opportunity to obtain an independent evaluation of that worker’s injuries. This process then often leads to a debate about which care provider is more credible. Under an ADR program, this litigation driver does not exist as the healthcare providers are vetted and selected well in advance of a potential injury.
At least in the state of New York, ADR programs are one of the only opportunities for employers and carriers to direct claims to specific healthcare providers who have a proven track record of providing care that focuses on healing the injured and returning them to a level of health where they can work again.
With traditional construction claims in particular, many workers are placed on prolonged care plans that are not designed to help them heal, but rather to maintain the status quo. Body creep, whereby the scope of injuries is expanded, is an ever-present issue and a worker who may be capable of returning to work is deemed by their provider as unable to, in the hopes of a big, but statistically unlikely, payout.
Through ADR, the care process is determined in advance and the employer or insured choses the injured worker’s physician. This is currently the only way an employer can direct care in the state of New York. ADR utilizes a predefined healthcare network to cut out many of the administrative and procedural roadblocks that can delay an injured worker’s care. Through these networks, an emphasis is placed on delivering the best possible care to the injured worker and ensuring that they not only get care quickly, but that care is focused on healing and returning to work.
As a result, workers in an ADR plan have a higher-than-average chance of returning to work, all while saving construction employers the costs associated with a prolonged workers’ comp claim.
This is not to say that ADR is for everyone. Since ADR programs need to be negotiated and agreed on well in advance, they are only available for union worksites and union labor. Brokers should consider this when determining if an ADR program is a fit for their clients.
A Bridge Between Unions, Construction Employers
When an ADR program is established, the employer and the unions work collaboratively with a third party as a program administrator to develop the healthcare network and build an agreement that works for all parties. As a result, ADR programs are only available to union workers in New York. This means that they do not replace traditional workers’ compensation coverage, but rather supplement it and provide a lower-cost avenue that focuses on return to work.
Because of this, ADR programs have been a great way to build relationships with unions and put a greater emphasis and focus on worker health and recovery. As a result, there are no surprises when it comes to directing care in an ADR Program. This is balanced by the intermediary administrator, whose job is to ensure that those caregivers meet the standards and maintain return-to-work focus that is required for the ADR plan to function.
Faster and Better Results
An example of this in action would be in the ordering of a common diagnostic tool, an MRI. Under traditional workers’ comp models, a healthcare provider’s order for an MRI will often have to go through two or even three parties before an approval can be granted. This delay only hampers a caregiver’s ability to provide care and increases the costs associated with processing that care request. With an ADR program, the process for care and the care providers are selected in advance, so tests are performed quickly, and proper treatment begins in a matter of days, rather than months.
As building costs continue to increase, those who insure workers on job sites are facing pressure to drive costs down while simultaneously increasing return-to-work rates. Unfortunately, the traditional workers’ comp model is not built to meet that demand. Only through new measures, like ADR programs, will the industry be able to keep up and actively improve return-to-work rates on job sites.