August 8, 2018
The Best Workers’ Comp Claims Teams
by Peter Rousmaniere and Rachel Fikes
A major study identifies the “top three” practices that organizations should adopt to join their successful peers.
Workers’ comp claims teams vary in their performance. Yet there has been no way to clearly identify what superior performance means and what superior performers do. Now we have the summary results of a five-year, 1,700-participant survey project to provide answers.
The annual Workers’ Compensation Benchmarking Study, founded in 2013 and published by Rising Medical Solutions, pinpoints what separates the top quarter of claims organizations from the rest.
To date, five Study reports have racked up more than 500 pages of text, tables and graphs. In a new white paper – How to Close the Claims Performance Gap – this multi-year data is whittled into the “top three” practices claims that organizations should adopt to join their more successful peers. Here we discuss one of them:
Best performers focus more on what’s most important
Workers’ compensation claims entail managing a wide array of competencies encompassing legal, medical, workplace, regulatory and psychosocial factors that affect recovery and claims closure rates. Therefore, a first step in comparing performance is to find out what and how claims teams focus on “core competencies.”
See also: The State of Workers’ Compensation
Since the Study’s onset, claims executives have been asked to rank in order of importance the 10 core competencies most vital to successful claims outcomes. Survey participants – the majority of whom work for insurers, third-party administrators and self-administered employers – have consistently ranked medical management, disability/return-to-work (RTW) management and compensability investigations as the top three capabilities most critical to claim outcomes.
Not that other items on the list, including litigation management and claims reserving, are not important competencies. But survey participants ranked them as having a less significant impact on achieving the best claims outcome – with survey participants defining an employee’s return to the same or better pre-injury functional capabilities as the #1 classification of a “good claims outcome.”
This definition of an optimal outcome reflects a shift away from a reactive culture more focused on legal compliance, toward a more proactive, service-oriented approach. The 1,700-plus survey respondents clearly say that this is the business they are in, with upward of one million compensable, new lost-time claims occuring each year.
However, there are striking stratifications in this “business” with higher-performing claims organizations outpacing lower performers by factors of five six, and 10 respectively when it comes to measuring their performance within core competencies, measuring claim outcomes based on evidence-based treatment guidelines and measuring claim outcomes based on evidence-based disability duration guidelines. The primary reasons that lower performers cite for not measuring performance within core competencies are: data/system limitations, unsure how to operationalize and, startlingly, it’s not a business priority.
The study was able to separate high performers from lower performers by ranking respondents by their claims closure ratio. A closure ratio of 75% means that for every three claims closed, four are opened. Organizations with a closure ratio of 100% run a tight ship, closing claims at the same pace they are opening new ones. Claims experts agree that a claims ratio of 101% or higher is a reliable sign that the organization is managing claims outcomes effectively.
For claims executives and system designers, the message is clear: Focus on and measure key core competencies more to succeed.
In addition to core competencies, we have identified two more critical practices that claims organizations should implement to join the elite ranks. With only 24% of industry payers achieving top-performer status, this means the remaining 76% need to take action or risk falling further behind.
To learn about these two critical practices, as well as viable implementation strategies, read our entire white paper, freely available here.