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March 20, 2019

It’s Groundhog Day for WC Claims Handling

Summary:

Why have attempted fixes via legislation and technology failed to fulfill promises for decades, for almost a generation of workers?

Photo Courtesy of Pexels

The popularity of the 1993 Bill Murray movie rendered the phrase “Groundhog Day” with a common reference to a continually occurring unpleasant situation, according to Wikipedia.

Workers’ compensation claims handling seems to be stuck in a time warp with the same unpleasantries year after year no matter how many attempts have been made to address these issues through various avenues, including legislation and technology.

2019 began with the same challenges reverberating: provider fraud; medical disputes arising from applying evidence-based medicine together with a pharmacy formulary; inefficient and ineffective reactive claims management practices; through to the methods used for outgoing payments.

In California, the opportunity for providing high-quality, coordinated care as well as controlling medical costs and fraud has existed since the passing of SB1005 some 26 years ago, yet there are still complaints from dragged out-medical care and poor recovery through to unacceptably high medical costs and fraud levels never witnessed before in the history of workers’ compensation.

See also: The State of Workers’ Compensation  

Technology has always been touted as a means to improve claims handling. Programming languages available 50 years ago, like COBOL and PL/1, enabled computer programmers to code logic to address all the needs of claims handling processes, including disbursements over any number of payment methods. Coding languages allowing predictive analytics, such as SAS, also known as Statistical Analysis System, have been available for over 40 years, and data management through a relational database using the Structured Query Language is also almost 40 years old. At the same time as these technologies became available, technology entrepreneurs planted seeds to raise awareness for the next evolution of analytics: artificial intelligence. Little (if any) of this technology, however, has been harvested in claims handling over the past four decades.

Why then have the legislation and technology paths been littered with failed promises for over the past three decades or so, or indeed almost a generation of workers? The answers are simple: mindset and execution.

In any business enterprise, including P&C insurance, money is the bottom line in every decision made. The objective of the P&C claims administrator is to close claims quickly with minimum payouts, which can incite adversarial claims handling.

Workers’ compensation, which in 2017 accounted for 16% of P&C’s written premiums in California, is governed by statute requiring employees injured at work to receive all the necessary care, including medical treatment, to enable their prompt return to safe, sustainable and gainful employment. However, to fully undertake the management of an injured worker’s recovery process as well as develop a successful reintegration strategy is not in the P&C DNA. Hence, the insurers are required to operate through profit-making middlemen, enterprises that prosper by manufacturing crisis and creating chaos. Their excessive costs for services have resulted in the rationing of medical care by restricting access to both resources and therapies.

For instance, California allows P&C companies to establish their own treater networks, combined with their utilization review program, with oversight through an independent medical review process. Unfortunately, this approach has fallen into disrepute because of countless allegations of delays and restricted access to treatments, as illustrated in IMR Case# CM18-0238095. In this case, an off-work, 54-year-old woman with a shoulder pain rating of nine out of 10 waited for 69 days just to be informed her medication costing 92 cents was medically unnecessary and inappropriate as per the California Medical Treatment Utilization Schedule (MTUS).

In 2017, 2.8 million employees in private industries experienced a nonfatal injury or illness, according to the U.S. Bureau of Labor Statistics, of which 882,000 (or 31%) required time off work. Over three decades, this equates to 26,5 million families (assuming the same annual figure) whose lives most likely experienced upheaval and disruption caused by the failed promises.

See also: 25 Axioms Of Medical Care In The Workers Compensation System  

Workers’ compensation claims handling for injured employees has been a major and inexcusable fiasco and in urgent need of a new breed of claims administrator, one who is forward-thinking, using outside-the-box approaches to effect change and break through the Groundhog Day time warp.

A longer version of this article is available here.

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About the Author

John Bobik has actively participated in establishing disability insurance operations during an insurance career spanning 35 years, with emphasis on workers’ compensation in the U.S., Argentina, Hong Kong, Australia and New Zealand.

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