How to Make Data a Robust Medical Tool

In workers' comp, medical costs are more than 60% of claim cost and continue to climb, but rethinking how to use data can make inroads.

“Data makes all the difference.” This is according to a white paper published by LexisNexis, titled, “More Data, Earlier: The Value of Incorporating Data and Analytics in Claims Handling,” which states that carriers can reduce severity payments by as much as 25%. This is true for P&C carriers but especially true for workers’ compensation payers, where medical costs have steadily increased for decades. In workers’ compensation, medical services are not limited by plan design. The costs for medical now amount to more than 60% of claim cost, and they continue to climb. Nevertheless, data managed correctly can make all the difference and save real dollars. Everyone is talking about big data as a panacea. The notion is that organizing and analyzing copious amounts of data will produce new and improved insights. But it needs to be complete, consistent and accurate, and purity is rare, regardless of the size of the data set. Duplicate records must be cleansed and merged, for starters. More importantly, bad input processes must be altered upstream, where data is created. Standards for quality must be set and enforced. Automated imaging systems must be regularly calibrated to ensure accuracy while individuals who input data along with their managers must be held responsible for the quality of the data. In workers’ compensation, as with all insurance lines, comprehensive data is a fete accompli. Data has been collected digitally for decades, driven by claims payment requirements. In workers’ compensation, the claim is set up in the payer’s system and continually fed by incoming data. Mandatory reports of injury are submitted by employers and treating physicians. Bills from medical providers and others are streamed through bill review systems, then to claims systems throughout the course of the claim. Events such as litigation, court dates and bills paid are documented in the claims system. The PBM (pharmacy benefit manager) sets up an additional database related to the claim. Most payers also collect medical utilization review and medical case management data. The question is not the amount of data, but its quality and what can done with it. How is it applied? Unfortunately, in workers’ compensation much of the data remains in separate silos. The focus has been on collecting the data. Now the question is how to make data an operational tool that achieves the kind of savings results reported in the LexisNexis study. A different approach is needed. Making data a useful work-in-progress tool is a matter of first integrating the data across multiple data sets relating to claims. This is sometimes a tedious process but is invaluable. The request and funding must come from the business units, where anything related to data is not usually a priority. Business managers must begin to value the process of collecting good data and converting it to action. Once the data is collected and integrated, analyzing it to gain the business knowledge is the task. Business managers can learn to articulate for IT what they want and need for decision support and other initiatives. IT has a role in assisting business managers in understanding how to ask more effectively for what they need. Cost drivers and trends can be uncovered in the analyzed data. The power of data is best exploited when it is analyzed and made available to the business units as concurrently as possible. Intervention is far more effective when it is mobilized early. The data must be analyzed and presented to the business units in ways that can be easily accessed, understood and applied. Through analytics, the data is transformed to knowledge: knowledge about conditions in claims, events, costs and performance of vendors. Individuals can be prompted by the system to take specific initiatives based on the knowledge, thereby creating a structured and powerfully enhanced approach to medical management with measurably positive results.

Karen Wolfe

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Karen Wolfe

Karen Wolfe is founder, president and CEO of MedMetrics. She has been working in software design, development, data management and analysis specifically for the workers' compensation industry for nearly 25 years. Wolfe's background in healthcare, combined with her business and technology acumen, has resulted in unique expertise.


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