Tag Archives: RIMS 2016

How to Improve Claim Audits — and Profit

A session at RIMS 2016 illustrated how to methodically examine and review the right activities in claims audits to improve the bottom line.

Speakers in this session were:

  • Jenny Novoa, senior director of risk management, Gap
  • Joe Picone, claim consulting practice leader, Willis Towers Watson

They explained that, in a claims management context, an audit assesses compliance with the carrier and industry best practices and special handling instructions. A “typical” claim audit determines if the TPA/carrier’s performance is meeting its obligations in the service agreement. It also determines adequacy of reserves, benchmarks the TPA/carrier and adjuster performance, measures against best practices, provides constructive observations and recommends and identifies areas for improvement.

A group came together from some major companies including Gap, Foot Locker, Saks/Lord & Taylor, Corvel and Willis Towers Watson to study the claim auditing process. This study explored different areas of the process and was conducted over the course of about a year.

The mission of the study was to determine several things, including:

  • Does the claim audit fairly measure the outcome of the claim?
  • Is there’s a better way to audit the claim?
  • How is “outcome” defined?
  • What factors are important in defining claims outcome?
  • Does a best practice score really equate to a good outcome?

The study group came up with categories of what matters most in the claims process, including: quality of the adjuster, overall health of employee and quality of medical care. They looked at various audit criteria for retail business with the basis for “outcome” being days out of work. They also had a set of specific audit rules.

See Also: How to Manage Claims Across Silos

The group used a large sample of questions by category and compared the Best Practice Audit (BPA) with the Outcomes-Based Audit (OBA). Results were very different.

A few observations from the study:

  • BPA audit scores did not identify any of the 28 claims with poor outcomes.
  • OBA identified just 10 of the 28 claims with poor outcomes.
  • The average OBA audit score was 91, and the average BPA score was 97.
  • The OBA overall audit score is much more in line with the overall outcome of the universe of claims audited.

More takeaways:

  • The team proved that audits must be designed to really affect not just the performance of the adjuster but all elements of the claims process.
  • Review your questions. For example — each question should be individually reviewed with regression analysis to determine correlation levels. Questions that have no correlation should be eliminated and those that do show correlation added.
  • Know that BPA can score 100, but the claim can still have a bad outcome.
  • OBA is a better predictor of outcomes than BPA.

The group determined the correlation between a best-practice compliance audit score and outcome may be lost if the wrong activities are audited. Critical activities that are never audited may cause poor outcomes in a claim. Again, only when you methodically examine and review the right activities do you improve the bottom line.

Managing Behavioral Health at Work

At the RIMS 2016 Annual Conference, Kimberly George, senior vice president of Sedgwick, and Scott Daniels, director of disability for Comcast, discussed an approach to managing mental and behavioral health in the workplace. The discussion focused on how Comcast deals with these issues. Comcast has a very diverse workforce, owning a cable company, multiple television networks and even theme parks.

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Behavioral health claims not only affect your employees directly, but they also can have a significant impact on your business. According to a recent study by IBI, four of the top six employment-related concerns of employers related to the health of their workforce. The study also found that mental health was the second-highest duration of disability diagnosis for their short-term disability programs.

Comcast has had 1,300 to 1,600 behavioral health claims per year, paying millions of dollars in benefits. One area of concern for the company is that 60% of those being treated were not being seen by licensed behavioral health experts. Instead, they were being treated by general practitioners who lacked the expertise to adequately address the issues. Comcast is trying to focus on being an advocate for its workers on health issues, and part of that includes assisting them in being treated by the appropriate medical providers.

See Also: A New Focus for Health Insurance

Comcast’s program is currently focused on the group benefits side. The company hopes to someday expanded to workers’ compensation. If employees have a behavioral health diagnosis, they are required to treat with a practitioner specifically licensed in that area. Comcast does not direct to specific providers but instead work with the employee to help identify providers in the network. The Comcast employee assistance program (EAP) comes into play as the employee can receive a certain number of behavioral health visits under this at no cost to the worker. The program has been in place less than a year, but Comcast is already seeing  significant decreases in duration of disability for behavioral health claims.

There is hope that this program can have a positive impact on workers’ compensation claims, as well. Under the EAP program, Comcast can provide the behavioral health treatment outside the workers’ compensation claim to help address the psycho-social issues that could have an impact on the claim. This approach recognizes that you must treat the whole person to effectively manage workers’ compensation claims, and you cannot ignore psycho-social issues that may be affecting the case.

One of the first resources that Comcast tapped into in developing its program was its EAP provider. The  provider offers a variety of resources to the workforce, not just in the area of behavioral health but also with a variety of lifestyle issues. The EAP was being underutilized before this program started, but the change in focus helped employees to fully understand the benefits under their EAP.

Resilience is a also very important issue that can affect both disabilty and workers’ compensation claims. Comcast is working with a vendor partner to assist employees in developing coping skills and being more resilient. Comcast feels that by strengthening the resilience of its workforce it can significantly reduce all disability in the workplace.

Comcast is also using more telehealth, which is yielding positive results. It makes it easier for the employees to receive medical care in a timely manner. This has been especially useful with behavioral therapy.

The company is also hoping that the focus on getting the employee the proper care will decrease relapse in disability. Oftentimes, relapse is driven by the employee’s not receiving the appropriate treatment.

The overall focus at Comcast is establishing a culture of health for the workforce. The company wants employees to engage in the healthcare experience and become educated consumers. The hope is this culture will ultimately lead to healthier employees, which will result in fewer disability and workers’ compensation claims.

Politics of Guns and Workplace Safety

The politics of guns in America are volatile, divisive and passionate, yet the risks that firearms present to organizations every day do not depend on the politics of the moment. Employers must deal with the reality of gun violence in America. A RIMS 2016 session discussed the legal aspects of what organizations can do and the practical implications of creating a firearms risk management program.

Speakers were:

  • Michael Lowry, attorney, Thorndal Armstrong Delk Balkenbush & Eisinger
  • Danielle Goodgion, director of human resources, Texas de Brazil

What Risks Do Firearms Pose?

OSHA states that an employer must provide “employment and a place of employment which are free from recognized hazards that are causing or are likely to cause death or serious physical harm to his employees.”

See Also: Active Shooter Scenarios

There are several risks to your organization, including:

  • Operations can halt in the case of a shooting. You have issues like police investigations and possibly injured employees.
  • Workers’ compensation will kick in if employees become injured.
  • General liability will be activated to cover injuries of non-employees.
  • Reputational risks are possibly the largest risks. You do not want your business associated with a violent act.

Most think that the Second Amendment bars private businesses from banning guns, but this is incorrect. The amendment applies to governments, not private homes and businesses.

Some employers react by posting signs banning all guns. This simple sign can be a recipe for disaster for several reasons:

  • Have you created a duty? If you post a sign, you have officially created a duty.
  • Why did you create this policy?
  • What are you doing to enforce this policy? Did you have a manual? Did you put up X-ray detectors? Probably not. You have to be able to prove you are enforcing the policy if you post a sign.
  • Did you train your employees to enforce this policy? If this policy is not enforced, a person might be injured by a firearm on your property.

“Bring Your Gun to Work” Laws

This is not a good idea. According to the law, business may not bar a person who is legally entitled to possess a firearm from possessing a firearm, part of a firearm, ammunition or ammunition component in a vehicle on the property.

In Kentucky, an employee may retrieve the firearm in the case of self-defense, defense of another, defense of property or as authorized by the owner, lessee or occupant of the property. In Florida, the employer has been held liable for civil damages if it takes action against an employee exercising this right.

Reputational risks also can apply. You could either get special interest groups protesting against your business or people who refuse to do business with you.

The Middle Ground

It is best to create a policy. Even if you support the right to bear arms, you can do it subtly. There are several provisions on what type of carry you allow and what signs are required. Business owners also do have the ability to allow no guns on the premises.

See Also: Broader Approach to Workplace Violence

Your policy should describe exactly how to approach a customer if an employee sees a weapon, including who should approach the customer, what to say and the steps to take to address the issue. Training is important.

Why Train?

  • Researchers from the Harvard School of Public Health and Northeastern University found the rate of mass shootings has tripled since 2011.
  • In 2014, an FBI study considered 160 events between 2000 and 2013. 70% occurred in business or educational setting.
  • In 2000-2006, the annual average rate was 6.4 shootings. That jumped to 16.4 in 2007-2014.

This is clearly a problem that is getting worse, so why is training rarely provided? Places of business are a target – especially retail, restaurants and businesses in the hospitality industry. The active shooter wants soft, easy targets in large, open, public and crowded areas, and the goal is to kill indiscriminately. If your business is doing well with large crowds, you are a soft target.

Active Shooter Resources

To learn how to manage this risk, you can find resources from:

  • Law enforcement
  • Insurance partners
  • Government
  • Outside experts
  • Legal
  • Human Resources

Online resources include: