Tag Archives: claimants

Analytics: Predictions Vs. Presumptions

Plaintiff lawyers can teach us something about the limits of predictive modeling when it comes to workers’ comp claims processing. Simply stated, it is better to presume than to predict.

Lawyer advertisements blatantly tap the mindset that employers, insurance companies and adjusters cannot be trusted to pay benefits. Notice that the advertisements do not have to prove this as factual because the advertisements correctly presume this notion is a societal norm. In fact, the mindset is so prevalent that the advertisements do not even have to depict a claimant’s current frustration, but only need to describe what might happen if claimants don’t hire a lawyer. Essentially, the ads address a void of employee confidence that causes concern even though there has not been any direct harm yet.

Consider an injured employee who hires counsel right out of the gate. No advertisement is required. The employee is already in a “fight back” frame of mind. What makes that employee different from others who, weeks or months later, might be swayed by advertisement to retain counsel? The difference is that the employer had a chance to act on the employee’s natural concerns in a positive way but lost it.

The lesson here is that lawyers do not need predictive analytics or predictive models to screen for complicated claims. Lawyers presume that every injured worker has doubts that can be transformed into feelings of pending injustice. Making the claim complicated is easy once they get the claimant roped in. Everybody knows that attorney representation often increases claim complexity and potential dollar value simply because the claimants often accept a dark notion of fairness and are willing to do more than what common sense and medical research supports to maximize their claim.

I contend that there is a stark vulnerability in today’s industry reliance on analytics and predictive modeling. Automated models seek to assess new cases and save resources by assigning low-level indicators to a fast-tracked category. The models assume a claimant is emotionally fine. Instead, we should realize that every fast-tracked claimant is subject to lawyer advertising and cautionary comments by relatives or co-workers that agitate the claimant’s natural fears and suspicions. We must also accept the poor societal image of insurance adjusters as a reality.

We all experience claims that start as medical-only, then turn bad. I contend that the aggregate cost of these missed opportunities obviates any argument that predictive modeling is good for WC claims.

Quick Tip: Presume and Act, Don’t Predict and Wait

Presume: Like plaintiff lawyers do, consider that each and every injured employee, even with the smallest injury, is a potential litigation candidate. They all have some degree of caution, low confidence, confusion and fear.

Be First: Strive to be first in exposing and defusing even the most minor employee concerns. At the outset of an injury, all employees should know they will have an open forum and a direct line of communication in the course of their claim should any concerns arise.

Take Responsibility: The employer, not the adjuster, should provide this open forum and line of communication. The employee must be confident because of some historical degree of trust established with the employer. The adjuster is simply not capable of creating that atmosphere.

Straightforward Methods: Creating a proper forum is not complicated. Immediate meetings with relevant parties such as the supervisor, WC coordinator, human resources, safety, etc. should investigate the claim as well as alleviate any employee concerns. Nurse triage, as a vendor process, can add a powerful layer of assistance and confidence. Bottom line: It might take all of 15-45 minutes to make sure an injured employee feels his WC claim is being handled fairly and is very important to the company. This added effort is peanuts considering the cost of claims that go rogue.

The Only Prediction That Counts: While claim vendors perpetuate the false notion of efficiencies in predictive modeling, you only need to make one prediction: that your injured employees need to be satisfied so they won’t be sucked in by presumptive lawyer advertisements.

Life Waiver of Premium Part 2: Optimizing Claim Management Operations

This is Part 2 of a two-part series on waiver of premium. Part 1 can be found here.

Recognizing the need to improve claim management processes in waiver of premium claims, life insurers are turning to technology to replace inefficient operations associated with manual claim processing.

“Insurers today have an opportunity to bring automation into the life waiver of premium adjudication process to improve existing business models,” says Eric Lester, vice president of administrative services at Legal & General America. “It’s about operational efficiency, providing a good consumer experience, and integrating forward-looking solutions that fit the profile [that] business models in the industry should emulate. This is why we’re thinking forward—strategizing as how to integrate these efficiencies into everyday processes.”

Insurers can streamline the claim adjudication process by standardizing procedures to substantially reduce manual claim handling and support lowered risk management outcomes.  This next level of technology not only yields greater improvements in life waiver claim management but also enables insurers to focus on the effectiveness of their claim decisions.

Scope of the Problem

For benefit specialists to effectively manage claims and provide highly personalized results requires access to relevant medical data from multiple sources.  Life waiver claim management requires collecting, collating, and communicating the claimant’s medical notes and pre-disability occupation data to evaluate their current capabilities, restrictions and limitations. The information derived during the initial assessment stage builds a critical foundation for ensuring consistency not only in the initial claim interpretation but in the recertification process, as well.

The handling of restrictions  and limitation (R&L) data, occupational identification information, and policy definitions  continue to follow more traditional manual processing procedures, resulting in claims frequently adjudicated without the required data, or against underwritten policy definitions. Here is what’s happening with manual processing:

manual processing

Insurers rely heavily on the Attending Physician Statement (APS) forms to collect medical status data. However, considering the high volume of claims per specialist and the time involved to manually process them, information contained in the APS isn’t always fully translated. Because of this, forms are often lacking the complete information required to fully understand the claim, based on a fair and accurate assessment of the claimant’s physical capabilities, restrictions and limitations. Moreover, this manual process makes it hard to ensure consistency throughout the duration of the claim.

For example, if the physician states that the claimant is unable to work and fails to provide a written medical basis in the APS forms regarding the decision, benefit specialists are unable to accurately assess and match the claim to the appropriate contractual definition of disability as defined in the claimant’s policy. This process makes it difficult to determine if the liability should be accepted or denied.

Managing the risk throughout the duration of the claim can influence claim outcomes by providing the opportunity for better claim management for both the insurer and the claimant.

The Long-Term Disability & Life Waiver Chokehold

It is not uncommon for consumers to have both their long-term disability (LTD) and life insurance with the same insurance carrier. So, when a person goes on disability, there are essentially two claims open and running simultaneously. The problem is the life waiver claims aren’t being treated as disability claims—which is, in reality, what they are.

What typically happens is the LTD claim becomes the driving force while the life waiver claim takes a backseat, often translating into processing delays. Even though these plans usually reflect two very distinct definitions (LTD claims begin as a two-year “own occupation” plan, while life waiver is usually “any occupation” provision from day one), the life waiver claim sits—waiting to see what the LTD claim is going to do first.  The life waiver claim essentially becomes more of a contractual definition of secondary importance, and consequently is managed as such.

Insurance carriers must be diligent in applying adjudication decisions consistent with what is underwritten in the life waiver provisions of an insured’s policy, and not based on what’s happening with the LTD claim. This has become increasingly problematic as caseloads continue to grow and life waiver claims follow the LTD claim by default, increasing the insurer’s reserve liabilities (i.e., disability life reserves, morality life reserves and premium reimbursement liabilities), and risk exposure.

Unfortunately, once a disability has been accepted on a life waiver claim, there tends to be minimal risk management. Improved risk management in life waiver claims should include best practices that focus on understanding the severity, restrictions and limitations of the claimant, then matching claimant capabilities to the occupational policy terms.

Better Claim Monitoring, Better Results

What’s missing within life waiver processes is the ability to manage the claim block holistically with information derived from all necessary sources, and integrating it into a unified data platform. By doing this, insurers can quickly identify claimants that have occupational opportunities based on their specific physical capabilities, restrictions and limitations, education, experience, and training. But it doesn’t stop there.

Once an occupational opportunity has been determined, insurers can compare these findings to occupations identified by the department of labor and match the capabilities of the claimant to a specific occupation. In addition, medical details surrounding the claim should be updated continually and combined with historical data, as physical capabilities can change over the duration of the claim. This type of automated vocational support allows adjusters to fully evaluate the claimant’s condition for available occupation opportunities.

Considering the thousands of claims that are processed manually by examiners, it can be difficult to ensure that new claims and the recertification of claims are being completed on time, consistently, and in line with risk management best practices. This becomes an almost unmanageable task for examiners as they struggle to maintain the continuity required to reopen, examine, and research individual claims from day one. It is a continual problem because a claim that is approved today may look completely different a year from now.

“With technology, there is a great opportunity for insurers to make operational changes that will systematically improve their current adjudication processes and minimize the insurer’s reserve liabilities,” explains Thomas Capato, CEO of FastTrack RTW Services & Solutions, whose Life Waiver Tool is the first commercially available technology to automate the waiver of premium process. “This next-generation best practice will not only help improve internal productivity for life insurers but allow waiver reserves to be managed properly and improve future actuarial assumptions.”

An automated claim process allows for continual claim management and tracking that’s set to the claimant’s policy terms, ensuring that all follow-ups are done in a timely and consistent manner — without the need for manual intervention.

Summary

Every claim has unique situations, and insurers need to apply the right risk management principles to that particular claim. This can mean the addition of a single automated application, or perhaps a combination of many, internalizing processes to determine the best solution for enhancing risk management outcomes.

“Technology enhances the ability to fully capture specific information surrounding the nature of a claimant’s disability for better risk management within the life waiver block, providing insurers with an accurate profile of the person, the job, and occupational capabilities,” says Lester, at Legal & General America.

It’s time for life waiver processes to utilize technology to manage claims in a more efficient, effective, and standardized manner. By replacing manual claim tasks with the rigor of automated monitoring, insurers have the opportunity to optimize existing processes and improve overall operational efficiencies within their life waiver claim block. Moreover, it is this technology that can make consistent, supportable and repeatable real-time decisions, bringing value to both the insurer and the claimant.

Waiver Of Premium: The Unmanaged Liability

This is Part 1 of a two-part series on waiver of premium. Part 2 can be found here.

Insurance actuaries consider waiver of premium (WOP) a neglected liability — a supplemental benefit rider that has yet to be fully evaluated for risk exposure or cost containment, unknowingly costing individual and group life insurance carriers billions in liability every year.

The problem is that many companies don't have accurate claim management systems capable of reporting what's really happening with the life waiver reserves that are sitting on their books. But with a 44 percent increase in disability claims by people formerly in the workplace1, it's time this largely ignored liability is held up to the light.

Why Companies Need To Pay Attention
Most life insurers aren't fully aware of how much of a liability they're carrying when it comes to their waiver of premium reserves. Moreover, they're even less likely to know critical information such as the number of open life waiver claims, the percentage of approvals and denials, or claims still holding reserves that perhaps maxed out years ago.

Tom Penn-David, Principal of the actuarial consulting firm Ant Re, LLC explains: “There are generally two components to life waiver reserves. The first is active life reserves (for individual insurers only) and the second is disabled life reserves, which is by far the larger of the two. A company that has as few as 1,000 open waiver claims with a face value of $100,000 per policy, may be reserving $25+ million on their balance sheet, depending on the age and terms of the benefits. This is a significant figure when coupled with the fact that many life insurers do not appear to be enforcing their contract provisions and have a higher than necessary claim load. Reserve reductions are both likely and substantial if the proper management systems are in place.”

Unfortunately, by not knowing what's broken the situation can't be fixed. Companies need to examine their numbers in order to recognize the level of reserve liability they're carrying, and to see for themselves the significant financial and operational consequences of not paying attention. Furthermore, a company's senior financial management team may be underestimating the actual number of their block of waiver claims, thus downplaying the potential for savings in this area. Typically, the block of existing claims is much larger than new claims added in any given year, and often represents the largest portion of overall liability.

“Life companies are primarily focused on life insurance reserves and not carefully looking at waiver of premium,” Oscar Scofield of Factor Re Services U.S. and former CEO of Scottish Re., says. “There could be a significant reserve redundancy or deficiency in disabled life reserves and companies need to pay attention to recognize the impact this has on their bottom line.”

To illustrate this point, let's take a quick look at the financial possibilities for a company with even a small block of life waiver claims:

Example – Individual Life Carrier Current Reserve Snapshot With Proactive Management
Number of Open WOP Claims 1,000 1,000
(*) Average Disability Life Reserves (DLR) $19,989,255 $19,989,255
(*) Average Mortality Reserves $3,046,722 $3,046,722
Average Premiums Paid by Carrier on Approved WOP Claims $754,427 $754,427
Average Total Reserve Liabilities $23,790,404 $23,790,404
Claim Approval Percentage 90% 60%
Reserves Based on Approval Percentage $21,411,364 $14,274,242
Potential Reserve Savings $7,137,121

* The above reserve data is based on Statutory Annual Statements.

As you can see, even under the most conservative scenarios, the reserve savings are substantial when a proactive waiver of premium claim management process is put into action.

Industry Challenges
The National Association of Insurance Commissioners (NAIC) requires life companies to report financials that include both the number of policyholders who aren't disabled with life waiver, as well as reserves for those who are currently disabled and utilizing their life waiver benefits. But many items, like the number of new claims or the amount of benefit cost are not reported. Moreover, companies rarely move beyond these life waiver reporting touch-points to effectively monitor their life waiver claim management processes or to identify the impact of contract definitions on their claim costs.

The new and ongoing volume of claim information, manual processing, and the fact that life waiver claims involve months if not years of consistent, close monitoring, is humanly challenging — if not impossible. For example, it's not out of the ordinary to have only a few people assigned to process literally thousands of life waiver claims.

It's unfortunate, but this type of manual claim reporting continues to remain unchanged as claim personnel (working primarily off of three main documents: the attending physician's statement, the employee statement, and the claim form), quickly push claims through the system. The process is such that once these documents are reviewed (and unless there are any questionable red flags), the claim continues to be viewed as eligible, is paid, and then set-up for review another 12-months down the road. As long as the requests continue to come in and the attending physician still classifies the claimant as disabled and incapable of working, there isn't much done to proactively manage and advance the claim investigation.

An equally challenging part of the life waiver claim process is working off the attending physician statement — both when claims are initially processed, as well as when they are recertified. Typically very generic in nature, the statement often only indicates whether or not the claimant is or continues to be unable to work. This problematic approach essentially permits the physician to drive the course of the claim decision away from the management of the insurance company. The insurer, who is now having to rely on the physician's report to fully understand and evaluate the scope of the claimant's medical condition, has little information in which to manage the risk.

For example, did the evaluation accurately assess the claimant's ability to work infrequently or not at all? Are they able to sit, stand, walk, lift, or drive? If so, then what are the specific measurable limitations? Is there potential to transition them back into their previous occupation or into an occupation that requires sedentary or light duty — either now or in the near future? In order for companies to move beyond the face value of what has initially been reported, and to monitor where the claimant is in the process, they need to build better business models.

Closing The Technology Gap
The insurance industry as a whole has always been a slow responder when it comes to technology. But for companies to optimize profitability, closing the gaps in life waiver claim management and operational inefficiencies will require a combination of technology and human intervention. Investing in the right blend of people, processes, and technology with real-time capabilities, can substantially reduce block loads and improve overall risk results.

Constructing a well-defined business model to apply standardized best practices that can support and monitor life waiver claims is critical. The adjudication process must move beyond obvious “low hanging fruit” to consistently evaluate the life of the claim holistically. It means not only examining open claim blocks, but also those that are closed, to better identify learning and coaching opportunities to improve future claim outcomes.

Additionally, segmentation can provide great insight into specific areas within the block, by applying predictive modeling techniques. It can evaluate how claims were originally assessed, the estimated duration, and why a claim has been extended. For example, was there something regarding the claim that occurred to warrant the extension of benefits such as change in diagnosis?

Predictive modeling also looks at how certain diagnoses are trending within the life waiver block, so if anything stands out regarding potential occupational training opportunities, benefit specialists can effectively introduce the appropriate vocational resources at the right time for the insured.

Capabilities to improve outcomes in waiver of premium operations through technology and automation should include these three primary assessments:

  • Financial: Companies need to start looking at waiver of premium differently. They need to continually evaluate the declining profit margins on in-force reserves in order to identify the impact on profits. Even if a waiver of premium reserve block is somewhere between 10 and 200 million dollars, potential savings are likely to be 10 to 20%. Better risk management tools can substantially control internal costs and improve reserve balances.
  • Operational: Current business models have to move beyond the manual process to steer the claim down the right path from start until liability determination. Standardized automation brings together fragmented, disparate information systematically across multiple platforms, essentially unifying communications between the attending physician and the insurance company. This well-managed infrastructure gathers, updates, and integrates relevant data throughout the life of the claim.
  • Availability: A critical way to improve the life waiver claim process is through accurate reporting. By breaking down the silos between the attending physician, case manager, and the insurance company, claim related information can immediately be uploaded and reported in real-time. Proactively enhancing the risk management process to enable companies to consistently receive updated claimant health evaluation and physical limitation reports, is critical for best determining return-to-work employment opportunities.

Three Technology Touch-Points in Waiver of Premium Operations

Front end: Assessment of the initial claim and determining the best possible duration time.

Mid-point: An open claim should be reassessed to determine continued eligibility and to evaluate the direction of the claim if lasting longer than projected-and why.

End-point: The evaluation process continues to ensure claims are being re-evaluated at regular intervals, examining the possibility of getting the claimant back to work.

Why Waiver Of Premium Matters
What's typically happening is that most company's life claim blocks are managed on the same platform and in the same manner as their life claims, so ultimately the life waiver block is improperly managed. Life companies need to recognize that a waiver of premium block is not a life block but a disability block, and needs to be managed differently. For example, older actuarial tables do not reflect the fact that people with disabilities are living longer, potentially leaving companies with under-stated reserve liabilities.

Ultimately, having a good handle on the life waiver block will prove beneficial for both the carrier and the insured.

Part 2 of this series will discuss specifically how the introduction of process and technology into this manual and asynchronous area can deliver substantial benefits to life carriers.

1 Social Security Administration, April 2013.

Game-Changing Strategies to Transform Workers' Compensation

The workers' compensation system continues to face three major challenges: reducing the spiral of rising costs for claims, improving outcomes for medical care, and streamlining efficiencies which impacts both care and costs.

Each year, workers' compensation medical costs continue to escalate — they now constitute 60% of total claims costs according to the National Council on Compensation Insurance. The average medical cost of lost-time claims has more than tripled during the last 20 years. The Workers Compensation Research Institute recently reported that outpatient hospital average payments per claim were up 31% from 2006 to 2010, while inpatient hospital payments per episode jumped 36% during the same time.

Unfortunately, the inter-related nature of components in workers' compensation makes it difficult to achieve long-term, consistent progress in cost containment. While medical expenses are recognized as an increasingly powerful cost driver, the total cost picture is impacted by more than just charges for and volume of medical services. Quality medical care is behind the speed and ability of the injured worker's ability to return to work, which influences indemnity and lost time costs. Litigation by dissatisfied claimants adds to the expense picture. However, the fact is that medical costs and care are the 800-pound gorillas that are the real challenge to better management and superior outcomes. A new approach that can break through this log jam will be a truly game-changing solution.

Such a solution must be able to remedy the primary drivers of increasing costs and sub-par medical outcomes in workers compensation, which include:

  • The growing epidemic of opioids for the treatment of pain, which can — when used inappropriately — lead to long-term disability, negative health outcomes, and fraud and abuse. A study by Accident Fund Holdings and Johns Hopkins University found that the presence of long-acting opioids resulted in claims almost 3.9 times more likely to cost more than $100,000 than a claim without any prescriptions; claims with short-acting opioids were 1.76 times more likely to have an ultimate claims costs of more than $100,000.
  • Co-morbidities and obesity that raise the cost and complexity of care. The October 2012 National Council on Compensation Insurance Research Brief, “Co-morbidities in Workers' Compensation” found that claims with a co-morbidity diagnosis have about twice the medical costs of other comparable claims.
  • An older workforce is another cost driver. According to the National Council on Compensation Insurance's Research Brief, “Workers' Compensation and the Aging Workforce,” claim severity and costs for older workers (45 – 64) is more than 50% higher than for younger employees for both indemnity and medical.
  • Significant variations in care by provider and by state negatively impact outcomes. For example, the Workers Compensation Research Institute's “Prescription Benchmarks, 2nd Edition: Trends and Interstate Comparisons,” July 2011, reports that the average prescription payment in Louisiana was $1,182 for claims that had more than seven days of lost time and at least one prescription, as compared to $330 – $350 in states with the lowest prescription costs.
  • The fragmentation of care management creates waste and poor outcomes. It takes a multitude of different types of medical and service providers to successfully treat an injured worker. Within this maze, the traffic cop is the busy claims adjuster who today may manage an average of 150 claims. This heavy workload makes it hard for the beleaguered adjuster to find the right providers, manage all the connections, and to give claims — especially complex ones — the constant, in-depth oversight needed.
  • The impact of providers can vary widely. Many providers are not experienced in workers' compensation cases — they do not understand the assertive “sports medicine” type of approach that deploys and manages treatment from the inception of the case in order to help achieve a rapid recovery and return to work.

Within this scenario, it's easy for a case to become unnecessarily complicated, dragging on for months and years, ratcheting up not only medical but also indemnity costs.

The Solution
Leaders in workers' compensation recognize that finding and using superior practitioners is the key to getting the best care for injured workers and reducing overall costs. Results in outcomes-based networks have indicated that superior providers can reduce total claims costs by 20%-40%.

If an injured worker sees an experienced and high-performing physician from the beginning, and their treatment plan moves rapidly through an integrated network of outstanding providers who understand workers' compensation objectives, there is a much better chance of an efficient and fast resolution of the injury, return to work, and closure of the claim.

Rapid interventions with the right therapies from the beginning of the case means the injured worker is more likely to recover faster and have a better overall outcome. For example, a recent study published in the medical journal “Spine” found that early physical therapy treatment for low back pain was associated with reduced likelihood of subsequent surgery injections, physician visits, opioid use, and advanced imaging along with a corresponding reduction in related medical costs.

Yet, until now, there has been no solution that enables claims professionals to know which providers deliver the best care, and to consistently connect these providers to injured workers for timely, efficient delivery of superior care for best outcomes.

Now, due to three developments in the industry, that solution is becoming a reality. When this model is deployed throughout a claims management enterprise, payers can experience unparalleled improvements in medical outcomes, reduced overall costs, and increased efficiency.

The three capabilities present in today's marketplace that enable this change are:

  • The ability to develop strong networks of specialty “best-in-class” providers who contribute to all elements of care in workers' compensation, and who receive scrupulous credentialing and consistent quality oversight to ensure an aggressive focus on evidenced-based medicine and fast return-to-work.
  • Advanced analytics of claims data that can now determine which providers generate the best outcomes.
  • Easy-to-use technology that connects this broad range of providers with claims professionals, expediting fast referrals and treatment, overall care coordination and prompt reporting of test and care results. This technology connects these once fragmented players into a virtually integrated care team focused on the injured worker and a common set of objectives.

When these three capabilities are integrated, for the first time in workers' compensation there is a system that brings together the best providers in both primary treatment and ancillary services who are delivering care with aligned goals and shared information to bring about better outcomes with streamlined efficiencies and reduced frictional cost in the system.

The value of this integrated approach to care delivery has been recognized in healthcare for 10 years. At The Cleveland Clinic and the Mayo Clinic, care for Medicare patients cost less than the national median, indicating that this approach is successful in not only delivering better outcomes but lower overall costs.

The 2011 Health International McKinsey report, “What It Takes to Make Integrated Care Work,” found that an integrated care model can be implemented in virtually any health system, provided the three elements of multidisciplinary care, a focus on patient segments most likely to have high health care spending, and the ability to create strong virtual partnerships, are present.

How The Integrated Model Works In Workers' Compensation
The following examples illustrate how the integrated model workers within workers' compensation:

  1. A worker with a complex injury to his right leg is immediately referred to an occupational health physician who is experienced in workers' compensation and connected to networks of specialty providers. Based on the nature of the injury, the physician's office is instantly connected to a resource for crutches, transportation for getting back and forth to appointments, and a best-in-class diagnostics provider to provide fast, accurate diagnostic tests. Instead of having to figure out what is needed and arrange for each piece individually, all the components are in place from the beginning of the treatment plan.
  2. As the injured worker receives treatment from an integrated network of specialty providers, not only is the care provided by best-in-class providers but cost savings are maximized by consistently taking advantage of network discounts and preventing leakage.
  3. A patient who has an injury that may be associated with chronic pain is managed aggressively from the beginning of the case, to alleviate pain and optimize recovery with physical therapy and other pain-reducing modalities. Pharmacy management is also aggressive — if an opioid is prescribed it is for a finite period of time and constantly reviewed to ensure that it is still required and that addiction or misuse is not developing. Consequently, the slippery slope to long-term addiction and disability is avoided.
  4. When cases are complex and the injury is serious, all the treatment components that the patient may need are linked together and available when needed. The adjuster no longer wastes time trying to find specialists who are not in the network and who understand workers' compensation objectives, waiting for equipment that doesn't show up or work, or finding experienced clinicians who can coordinate care for challenges, ranging from infusion medical management to home modifications. The injured worker is managed for the duration of the injury, ensuring that their health is protected and that costs do not creep up through benign neglect or lack of oversight.

The best-in-class clinical team does far more than just deliver services — it takes on the role of care coordinator for the entire case: working with the hospital team before the injured workers is discharged to put in place a continuous care plan, ensuring that the right equipment is actually ordered and working and that it's there when needed and removed when it's no longer useful, and keeping continuous oversight of complex and long-term claims years after the injury so that these long-tail claims stay on track.

Interconnectivity between the physician, the specialty providers, and ancillary services like equipment, transportation, and translation keeps the team informed and linked so that reporting, communication and referrals are seamless, smooth and timely. For example, if a patient needs a knee brace to return to work that can only be fitted in the doctor's office, the transportation to the physician's office is arranged through the home care provider and the correct brace is waiting in the doctor's office when he arrives.

Enterprise-Wide Deployment Delivers Highest Value
The greatest value of the integrated medical model will be in its applications throughout a claims management enterprise when:

  • High performing physicians drive each case.
  • Best-in-class specialists are immediately available at the onset of each case, and with every development in the injured worker's condition.
  • Aggressive and appropriate care moves the injured worker toward recovery, avoiding pitfalls such as prescription drug dependence, long-term disability, and unnecessary treatments and costs that result in no improvement.
  • Providers are linked and connected with technology to know exactly what the injured worker needs and to make sure that all connections are met and made.

When this scenario is multiplied for every claimant that a payer has, the results in improved outcomes, reduced overall costs, and improved efficiencies are truly transformational. The integrated care management model in workers' compensation will be a game-changing phenomenon that will exponentially improve results throughout the entire system.

North American Property & Casualty Vendors: Partners In Claims Excellence

This article was excerpted exclusively for Insurance Thought Leadership from a 43-page research report by the author and published by Aite Group on December 12, 2012 as further described here. This new report from Aite Group reviews the many different vendors, products, and services that help Property & Casualty insurance carriers achieve claims excellence. Based on a May through August 2012 Aite Group survey of North American Property & Casualty insurance company claims executives, the report assesses the executives’ views of and reliance on various vendors, products, and services.

Introduction
The insurance industry has recently been transformed from operating in a product-centric model to operating in a customer-centric model across the entire enterprise, from sales and marketing to underwriting and from claims to billing. Today’s new consumers are better informed than ever, have a heightened sense of service entitlement, and are quick to exchange information, experiences, and opinions with one another using smartphones and social media, where their influence exceeds that of insurance company marketing. And over the past several years, in a fiercely competitive marketplace, North American insurance carriers have spent billions of advertising dollars on promoting their companies based almost entirely on the responsiveness and quality of their claims services.

It has long been understood that the claim is the “moment of truth” for property & casualty insurers with their policyholders, and it is truer today than it has ever been. When a claim is filed — by an average 10% of all personal lines insurance policyholders every year or, put differently, by the average policyholder once every 10 years — the claim is more often than not triggered by a traumatic or at least unpleasant event. Consider as well that the typical claimant has been dutifully paying his or her insurance premiums for years with nothing tangible to show for it and now, at this time of high anxiety, needs and expects prompt and attentive assistance.

Vendors play a crucial role in enabling carriers to achieve the elusive goal of claims excellence. Supporting the entire insurance claims process (though mostly transparent to claimants) is a large, well-coordinated, mostly virtual team of claims professionals with diverse skills and responsibilities. These professionals are supported by tens of thousands of claims software, services, and solutions vendors. Further, these third-party service providers frequently interact in-person with claimants earlier in the process and more frequently than do insurance claims representatives and as such become the face of the insurance company.

The extent to which all of these many different resources work together on behalf of the claimant and provide excellent customer service can dictate the claimants’ level of satisfaction and, in many cases, their intent to renew their insurance with that carrier as well as the opinions they will share and post about their claims experience. Because the challenges facing today’s property & casualty claims executives, including ongoing resource constraints and the many other factors described above, are unprecedented in terms of their number and complexity, claims vendors that best help them solve these challenges are the most highly valued and rewarded.

Claims Software
Carriers rely heavily upon a large and diverse variety of proprietary and third-party claims software systems and databases to manage every aspect of claims operations, from first notice of loss (FNOL) through claims payment. There are several hundred discrete operational processes across property & casualty claims, including auto, property, and workers' compensation lines of business. These processes include the claims management system (CMS) — the “core” or main operating system supporting the entire claims operation — and many other vendor software solutions — of which our report looked at vendor management software, automobile repair and property loss estimating software, and casualty management software.

Example: Claims Management System Software
Underpinning and supporting the entire claims operation is the carrier's claims management system, defined as the “core system” and the system of record for all activities and interactions for all claims. The extent to which internal and external applications, including vendor products and services, are integrated with the claims management system determines the overall efficiency and effectiveness of the claims process and, in turn, the policyholder satisfaction with the process.

Claims Services
Property & casualty insurance claims departments rely more heavily upon third-party claim service providers than one might imagine. Using the services, software, and solutions of about 250,000 claim service providers, U.S. property & casualty insurers spend approximately US$300 billion in the course of resolving 100 million claims. As discussed in this report's introduction, third-party service providers frequently interact in-person with claimants and are often the face of an insurance company. Moreover, the extent to which all of these many different resources successfully work together on behalf of claimants can dictate claimants' satisfaction with their insurance company.

For all of these reasons, successful carriers value these relationships and spend a great deal of time and effort selecting, managing, and working closely with vendors to ensure claims are handled quickly, courteously, and professionally, no matter how complex the process may be “behind the curtain.” While there are many others, the services and solutions included in our report include First Notice of Loss, claims analytics, insurance replacement rental cars, total loss vehicle valuation, salvage management, collision repair networks, national independent appraisal and adjusting services and litigation management solutions.

Example: Insurance Replacement Rental Cars
Insurance replacement rental cars are used extensively by insurance companies to provide temporary transportation to claimants whose automobiles are being repaired after an accident (most auto insurance companies include or offer temporary rental car coverage for a small additional premium). Of all the claims vendor services used by carriers, this category may be the most critical in terms of ability to influence the customer claims experience, policyholder satisfaction, and retention. In addition, it represents a significant overall claims cost for insurance companies and a major challenge for claims adjusters in terms of logistics, the many associated claims process touchpoints, and overall time consumed in managing the process.

Enterprise has come to dominate the insurance replacement rental car segment for a few simple but not-so-obvious reasons. Primarily, it focused on and perfected solving the unique needs of this very different segment of the rental car market. Its competitors treated insurance replacement rentals as just another small portion of their second-largest segment (the local market), choosing instead to focus on their larger and still-growing airport markets.

Enterprise quickly identified the many major pain points of insurance claims adjusters who were tasked with managing temporary rentals as part of the auto accident and repair claim process, and it ultimately simply assumed all of those responsibilities in exchange for the carriers' rental car business at competitive prices. Enterprise also understood the critical value of developing working relationships with local insurance agents and body shops, and it tasked their branch managers with doing both aggressively. Finally, Enterprise's family-owned and -run business philosophies have informed its business operations, including its college graduate-focused recruiting practices, its internal career-promotion policy, and its fierce focus on customer service.

Enterprise's impressive success may well be the insurance industry's best example of the rewards available to vendors who learn how to execute and manage insurance claims process outsourcing to the highest possible level of customer satisfaction.

The graph below illustrates respondent perception of the listed insurance replacement rental car vendor solutions' performance, regardless of whether respondents currently use them. As might be expected given the explanation above, perception of Enterprise performance is almost completely positive.

Perception of Insurance Rental Car Replacement Services

About This Report
This article is excerpted from a 43-page research report by the author and published by Aite Group on December 13, 2012 as further described here.

Companies with products and services named in the complete report are ABRA, Accenture, Acuity Management Systems, Aderant, Allegiant Systems, Allstate Insurance, Aon eSolutions, AQS Inc., Arbitration Forums Inc., Athenium, Audatex (a Solera company), Auto Claims Direct, Auto Injury Solutions, AutoNation, Avis Budget Group, BlueWave/Cover-All, Bottomline Technologies, Brightclaims, Caliber Collision, CARSTAR, CCC Information Services, CGI, ClaimForce, ClaimHub, Claim Toolkit, CodeBlue, Collision Revision, Copart, Corvel, Cox Enterprises, Craig/is, Crawford & Co., CSC, Cunningham Lindsey, CynCast, Detica NetReveal, Eagle Adjusting, Enterprise Rent-A-Car, Exigen, EXL Services, FairHealth, FairPay, FINEOS, Fiserv, FixAuto, Gerber/Boyd, Group 1, Guidewire, The Hartford, Hertz, HSG, HyperQuest, IA Net, IBM, Ingenix, Innovation Group, Insurance Auto Auctions, ISCS, ISO, Legal Services Group (LSG), LexisNexis, Lynx Services, Maaco, Manheim, Mitchell, Mitratech, MSB, NuGen IT, PDA Appraisal, Pega Claims, Penske, Performance Gateway, PowerClaim, Premier Prizm, Procura, QCSA, Quest, Ravello, Safelite Solutions, SAP, SAS, SCA Appraisal, Service King, Simsol, Sonic, Sterling, StoneRiver, SunGard, Symbility, Systema, Total Resource Auctions, Trillium, Tropics, Trover Solutions, Trumbull Services, Tymetrix, Van Tuyl, Verisk Analytics, Vista Equity Partners, Wipro, Wolters Kleuwer, and Zywave.