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How to Find Patterns in Workers’ Comp Claims

Workers’ compensation claims cost employers, their insurers and government agencies billions of dollars every year. While employee safety should be every employer’s first priority, the desire to reduce the costs of compensation claims can add to that emphasis.

So, how can you reduce the cost of workplace accidents?

One of the most effective and efficient ways is to look for patterns in workers’ comp claims. By identifying their patterns, employers can address the workplace issues that most frequently lead to the most expensive claims.

Using Patterns to Identify Workplace Risks

Spotting a pattern to workers’ compensation claims starts with identifying the factors that contribute to accidents in your business. The list may be longer than you think. Consider the following:

  • Company morale
  • Employee experience and training
  • Employee physical and mental health
  • Employee socioeconomic status
  • Facility architecture, age and repair
  • Geographic location
  • Quality, age and repair of equipment, machinery and tools
  • Weather patterns
  • Workplace conditions

While not all of these will be relevant to all employers, they are still all factors that can affect the likelihood of a workplace injury. More importantly, they are factors that employers can address  to mitigate both injury risk and the cost of valid claims.

Reducing Risk of Injury

Of course, the most effective way to reduce the cost of workers’ compensation claims is to avoid them in the first place. While going 100% claim-free may be unrealistic, there are certain measures that can be taken to reduce the likelihood and frequency of injuries on the job.

Reducing risk starts with the hiring process. Careful, targeted pre-employment screening and interviews can help employers identify high-risk individuals. Here, “high-risk” can mean a number of different things: inexperienced, lacking proper training, suffering from problems with drugs or alcohol or even a history of worker’s compensation claims. For existing employees, employers can re-assess records from the hiring process to identify patterns among injured workers. This information can then be fed in to the new-hire process.

Pattern evaluation can be used to identify other areas for improvement, as well. Are injuries more common at a specific location? At a specific time of day? Is a recurring mistake the cause of frequent injuries?

Once identified, these are all issues that can be addressed to reduce the risk of future injuries.

Reducing the Cost of Valid Claims

Pattern analysis can also aid employers and their insurers in avoiding overpayment on valid claims. Understanding what questions to ask and what to look for during the investigation allows companies to pinpoint the relevant issues and tailor the adjustment process accordingly. The more data you have at your disposal, the better able you will be to thoroughly and accurately assess workers’ compensation claims as they arise.

Using Patterns to Spot Fraudulent Claims

Finally, looking for patterns is an effective measure for combating the rising cost of fraudulent claims. Fraud can occur at both the employee and health-care provider levels and, by some measures, accounts for anywhere from 5% to 20% of all compensated claims. While clearly not conclusive, the following are examples of factors that may indicate a fraudulent claim:

  • Refusal to submit to diagnostic testing
  • Inability to provide details about the accident
  • Delayed submission of the injury report (all injuries should be reported immediately)
  • Lack of witnesses to corroborate the claimant’s story
  • Healthcare costs that far exceed what would be expected for the alleged workplace injury

Harness the Power of Data to Manage Your Workers’ Compensation Costs

Understanding the factors that contribute to workers’ compensation claims is the first step toward mitigating the costs of workplace injuries. By identifying patterns before, during and after the claim process, employers and their insurers can improve workplace safety while also benefiting the bottom line.

When to Use a Nurse-Triage Program?

How many claims justify using a nurse-triage program? This is a good question that seems simple but actually can be answered in many ways.

How Much You Spend on Claims Matters More Than How Many There Are

Here is a rule of thumb based on our experience over many years: most insureds who have 100 or more claims per year find triage to be justifiable by any measure, regardless of their industry or state. The savings from avoiding unnecessary claims and from improving in-network utilization far outweigh the cost of the triage call.

Many organizations with fewer than 100 claims also find triage to be financially justifiable. Here’s an example. If an insured has 24 claims a year averaging $2,000 each, it would spend $48,000. Even a mediocre triage service could help avoid 25% of claims, saving $12,000. (A top triage service could save almost twice as much!) The 24 triage calls would cost less than $2,400, yielding a net savings after triage fees of $9,600. In actuality, many claims cost much more than $2,000 each, meaning the triage service would save even more than $9,600, and additional savings in claims administration fees and productivity are also often realized.

The determining factor in cost justification is usually what an insured spends on claims, rather than its number of claims. High claims costs justify triage faster.

Other Considerations:

– Those that are self-insured realize the savings from triage immediately. Even on referrals that become claims, good triage providers improve in-network utilization, generating savings on medical fees. Top-tier triage providers also direct referrals to the right level of care (e.g. an occupational health clinic vs. an emergency room), generating additional savings.

– Employers in fully insured programs may think that they cannot benefit from triage because they incur the cost but the savings accrue to their carrier. In fact, employers save in several ways, though it takes time. Here is one example: Employers improve their experience modifier, which significantly lowers their premium cost in the future.

– Some insureds in time-sensitive industries with specialty jobs calculate that triage’s ability to help keep workers on the job is worth more than the claims savings.

– One of the most important considerations is the medical outcome – call it the “human factor.” The best triage service is focused on getting the right care for the injured employee. Sometimes, that means early identification of a serious condition or an unrecognized risk, and making a referral that creates a claim because it’s the right thing to do for the injured employee.

Bottom line: Insureds can justify triage in a variety of ways, not just by cost or claims count. The quality and consistency of the triage provider is a key factor, too – poor triage risks poor clinical outcomes, disgruntled employees and extra costs.

How Leadership Will Look in 20 Years

Let’s face it, most of us are addicted technology futurists. Who doesn’t enjoy speculating about what technology marvels will be commonplace in the coming decades? Will it be 3D printing? Artificial intelligence? The “singularity”? All are buzzwords of the emerging technology future.

But what about leadership? If we don’t get leadership right, all the bright shiny objects in the future will dangle beyond our reach. Will the tenets of great leadership change over time, and, if so, what will leadership look like 20 years from now?

Here are six major shifts I believe will mark how the most effective leaders will behave in 20 years:

1. Questions, Not Answers. Today’s leaders are addicted to answers. Corporations reward being right at the expense of just about everything else. We promote those who choose correctly, and those who don’t mysteriously disappear from the org chart. But with technology advances, answers are quickly becoming a commodity. Today you can Google just about anything – just imagine how efficient “search” will be in 20 years. Internal systems will capture corporate learning like never before, allowing you to tap deep into the set of corporate experiences. Of much greater value will be the ability to ask the right questions. In a chaotic situation, winning requires focus, and knowing where to focus will be determined by the questions you are asking. In the future, your effectiveness as a leader will be defined by your ability to ask the right questions.

2. Employee Pull. For nearly 100 years, leadership has been a top-down game. The Industrial Revolution brought about scale, and the only way leaders knew to manage this scale was through hierarchy. It was assumed that individuals could only effectively manage between 8 and 15 people, so as companies added more people they added more layers. But today’s marketplace moves and changes at great speed, and the inherent slowness of larger hierarchy is rapidly being trumped by the need for speedy, market-based decisions. Rather than having the “leaders on high” determining strategy and operational decisions and pushing them down through the organization, tomorrow’s winning organizations will delegate decision making authority to the “edge.” Decisions will not be pushed from the central command – they will be pulled from the edges of the organization, where the employees are closest to customers, and increasingly working directly in partnership with them. The most effective leaders will be those who embrace this extreme empowerment, while still effectively managing quality and risk.

3. Customer Pull. Like employee pull, the entire traditional “push” system of marketing will be turned on its head. Instead of executives in a wood-paneled conference room deciding on products and services to offer and then pushing those offerings out to the market, customers will make more and more of these decisions. Technology will make customization much more prevalent. Our experience when visiting websites will be unique to each of us. 3D printing will allow us to “materialize” what we consume in quantities of one. The Four P’s of marketing – price, product, place, promotion – will be controlled by a fifth and overriding factor – personalization. Leaders in this new marketplace will be those able to set up and manage systems of tools with which customers can interact and create. Great marketers will be replaced by great marketplace managers.

4. Chaos Learning. In global business, the last 20 years have been marked by leaders in pursuit of the elimination of variance. We ask our consultants to simplify the world into a 2×2 matrix, identify “best practices,” write detailed policies and procedures that limit behavior choice and hope that the current version of market reality lasts long enough for these changes to be effective. But stable reality is being replaced by constant change, and at an accelerating pace. Tomorrow’s most effective leaders will embrace this new, chaotic world. Planning will be replaced by intelligent reaction. Leaders will anticipate where the next disruption may come from and prepare for multiple scenarios (windshield, not the bug!). Instead of relying on proven static methods and processes, leaders will focus on building a learning capability, being comfortable with ambiguity, continually working within a changing landscape and anticipating and reacting to it with agility.

5. Focus on Growth. To put it bluntly, efficiency will become ubiquitous. It is going to be a price of entry in nearly every industry. Most activities that are currently labeled “operations” will be shifted to computers and robots (read: unemployment). And we will all have access to the same tools. As a result, the battle for competitive advantage will be fought and won based on growth – rewarding those companies that can consistently invent and commercialize new products and businesses. Leaders who excel will understand and reward the skills and behaviors that create growth and innovation. Examples include “fail fast” experimentation, rapid prototyping and continuous iteration.

6. Purpose. Purpose is important for leaders today. It will become increasingly vital in the future. We are entering a great age of empowerment for both employees and customers. Employees will demand the right to choose who they work for, which tribes they join and which products they associate with. Purpose will be the basis of much of this choice, and the greatest leaders will rally around missions that offer the chance to have dramatic positive impact.

So there you have my futurist vision: 20 years from now, great leaders will ask the right questions, let employees pull information and customers pull their desired products and services, organize for chaos, foster the behaviors of growth and guide the entire system toward a positive purpose.

I can hardly wait.

4 Things a Leader Must Do in a Crisis

Ray Rice hit his fiancé in an elevator. The video is shocking, and the response by the NFL and Commissioner Roger Goodell has been infuriating to many. How this will all play out, no one knows at this point. It feels as if we are only in Act One.

As a leader, you will almost certainly face at least one crisis during your career. In business, “stuff rolls uphill.” Knowing how to effectively handle a crisis may mean the difference between survival and devastation. The keys are:

  • be truthful
  • be pessimistic
  • be definitive

In one of my previous companies, we created and ran a program for future Fortune 500 CEOs. Our faculty consisted of the most respected chief executives of a generation: Anne Mulcahy, A.G. Lafley, Jim Kilts, Carlos Gutiérrez, Jack Welch and more than two dozen others. One topic that would consistently come up in discussion was what should a senior leader do when confronted with a crisis. While their individual approaches were as personal as their leadership styles, here are four things that top CEOs stressed any leader should do in a crisis.

1. Get the facts. Quick. Ask your direct reports to get every detail of the facts out on the table. Then ask again. During a crisis, those who work for you at all levels of the organization will be reticent to bring you more bad news. But finding out later will often lead to a far worse outcome. Be relentless in your pursuit of what really happened. The good, the bad and the ugly.

2. Come clean with the truth, the whole truth and nothing but the truth. You must act as though all of the facts you have now discovered will eventually be public — and they almost always will be. Isolated crises turn into full-blown organizational meltdowns not typically from the initial act, but from the response to those acts. Heed the lessons of Nixon and Clinton. It’s the cover-up that leads to impeachment.

3. Estimate the broadest possible fallout from the crisis. Then triple it. I remember a specific discussion with Welch and a small group of CEOs about this topic. Jack said that, in nearly every single public crisis he was confronted with in a five-decade career, the final damage was far worse than anyone had estimated at the onset. By being aggressively pessimistic about the outcome from the beginning, he found his leadership teams were much better prepared to deal with the ultimate reality of the situation.

4. Realize that someone big is going to fall. “I wasn’t aware of it!” “It was the act of a rogue employee.” As a leader, it is impossible to keep your eye on everything. You can’t control the actions of everyone you lead. So, when a crisis occurs, it is tempting to rationalize that it wasn’t your fault. How can you or senior people on your team reasonably be blamed? But, in the end, the organization and the public will demand definitive action, and someone senior will ultimately take the hit, including potentially you. The more you resist, the angrier the villagers will get, and the more heads they will go after. Make the difficult decisions earlier than later, or your options will quickly turn from bad to worse.

Here’s hoping you navigate your entire career without ever having to face a crisis. But the odds are against you. Be prepared to act truthfully and decisively, and you may just make your way through the storm.