Best Practices to Address the Growing Complexity of Workers’ Compensation ClaimsPosted on 09/15/16 by Ray DiCello, Senior Vice President
PMA Executive Briefings explore strategies necessary to effectively manage workers’ compensation costs.
In this Briefing, Ray DiCello, presents the claims perspective, focusing on best practices for a carrier/TPA's Claims organization, including jurisdictional expertise, the structure of claims teams and data analytics.
Managing workers’ compensation claims is more complex than ever. Several forces are driving this environment, including a vast array of legal, legislative and compliance demands as well as state-specific regulations and benefits, thus requiring insurance carriers and third-party claim administrators (TPAs) to have a high degree of jurisdictional expertise.In addition, emerging issues such as an aging workforce, narcotic use and the growing incidence of chronic health conditions among injured workers have made recoveries longer and more complicated—and can make claims more expensive.
Although workers’ compensation claims are becoming increasingly complex, a combination of new solutions, expertise, and technologies provides the opportunity for optimum outcomes for even complex, challenging claims.
Given the current environment, it is imperative that carriers/TPAs utilize specific workers’ compensation claims best practices, including:
- Matching the expertise and skills of claims specialists with specific claim types and complexities, including integration with managed care
- Establishing claims teams with in-depth jurisdictional expertise
- Using data analytics to identify key claims trends, initiate early intervention and build quality assurance
- Adjusting workloads based on complexity and jurisdictional requirements
Matching Specialists with Each Claim
It goes without saying that a claims team should include experienced specialists who understand the complexities of workers’ compensation claims and know how to achieve optimum outcomes. Here’s where the best claims systems come in—working seamlessly so the right professionals are involved at the right time. There are several components to this process:
- Proactively matching claims complexity with the right skills set and expertise of claims professionals. A carrier/TPA needs to have a system to ensure the most experienced claims professionals handle complex, high-exposure losses and claims with unique characteristics.
- Matching claims teams with jurisdictions and accounts. It’s important that specific jurisdictional expertise is applied to each claim, enabling the claims team to more accurately determine the compensability of the claim, execute the best loss mitigation strategy, and improve overall savings.
- Continuously monitoring the caseloads of claims adjusters and modifying them accordingly. This step ensures adjusters have manageable workloads, which results in higher quality claims handling and responsiveness.
- Engaging clinical experts early and often in the claims process as part of a fully integrated managed care program. The managed care team is critical to successfully manage medical costs, including high-exposure claims.
One of the biggest challenges in managing workers’ compensation claims is the significant difference among states. These jurisdictional differences involve unique regulations in each state related to state reporting, physician panels and network utilization, with states imposing costly fines when there are reporting errors. For example, utilization review is a tool that can be used by carriers/TPAs to assess the necessity of medical treatment in Pennsylvania and Illinois but not Minnesota.
Each state also has different fee schedules (rates that workers’ compensation payers are obligated to pay for each medical procedure) and medical billing codes and rules.
States require extensive data on every claim, and continually make changes to the hundreds of thousands of injury-specific codes, state-specific codes and procedure codes. Failure by a carrier/ TPA to keep up to date on these changes and accurately apply fee schedules and rules can diminish savings. Also, carriers/TPAs without the jurisdictional expertise to maximize savings tend to rely more heavily on defense counsel to settle claims, adding unnecessary legal costs.
Data analytics play an increasingly important role in managing workers’ compensation claims today and driving optimal outcomes. Data is captured at nearly every stage of a claim, from the first report of injury to settlement or return to work. This data can be analyzed and then used proactively in several ways.
For example, it enables you to act quickly and proactively to assign the claim to the right adjuster, direct it to a nurse case manager when necessary and identify when to intervene with the injured worker, pharmacy or physician. It can also inform decisions involving legal counsel and settlements.
Data also is used to identify longer term workers’ compensation and injury trends within industries, organizations and worker demographics. This valuable information makes it easier to benchmark results, identify potential high-dollar claims, adjust claims and manage strategies continuously.
Analytics are also the foundation of a quality assurance process, through which claims can be evaluated continuously to address behaviors of injured workers and drive better recovery and return-to-work results.
PMA industry experts tackle critical and timely issues. Coming up next - we’ll examine the role of analytics in workers’ compensation, with a focus on using analytics to lower your claims frequency and prevent losses.
Ray is the Senior Vice President and Chief Claims Officer of PMA Companies. He is responsible for all aspects of PMA’s multi-line claims services operations.