Embed Size (px)
Citation preview
Session 2: “Measuring The Effective Claim Process”
Oklahoma Self Insurers Association – 2016 Fall Conference
Location: Hard Rock Hotel & Casino Catoosa, Oklahoma September 22, 2016 9:30 a.m. to 10:30 a.m. Presenter: Alan Turnipseed, SVP Claims Consulting Practice Marsh Risk Consulting Houston, TX
Understanding your road . . .
There are many variables within the workers’
compensation lifecycle capable of being measured.
Isolating the most impactful variables is the ultimate
challenge.
“Measuring the Effective Claim Process”
2016 OSIA Fall Conference 2
Investigation
Disability
Management
Medical
Management
Resolution
Workers’ Compensation Claim Lifecycle
Start By Building A Solid Foundation
“Measuring the Effective Claim Process”
2016 OSIA Fall Conference 3
Data is used everyday
to make critical
decisions which can
have significant
Financial, Productivity,
Compliance, &
Operational impacts on business.
The organization must transition its culture away from gut-level decision making; ultimately, the data should drive decisions.
*Harvard Business Review
Common Data Limitations
“Measuring the Effective Claim Process”
2016 OSIA Fall Conference 4
50%
44%
44%
42%
37%
Does the following impede the effectiveness of your
organization's use of risk analytics?
Unavailability of, or poor quality of, internal or external data
Lack of systems integration
Outdated legacy systems
Difficulty in embedding the risk analytics in management process
Lack of skilled staff to develop the analytical models
Accenture 2013 Global Risk Management Study
Systems
Integrity
Analytics
Strive For Balance
• Analytics should reflect a balance of:
― Activity-based measures:
Quantitative (common focus)
Qualitative (uncommonly observed)
― Outcome-based measures
5 “Measuring the Effective Claim Process”
2016 OSIA Fall Conference
Strategies For Measuring The Effectiveness of the Claim Process
• Benchmarking
• Leakage Study
• Variable Cost of Risk Analysis
• Claim Closure Assessment
6 “Measuring the Effective Claim Process”
2016 OSIA Fall Conference
• An evaluation of various aspects of an employer’s
workers’ compensation program in relation to peer
group companies based upon past performance
7 “Measuring the Effective Claim Process”
2016 OSIA Fall Conference
Benchmarking Overview
• Benchmarking studies should be inclusive of both:
― Internal Trends: Trending results of an employer’s own
experience over time in several key areas. The
analysis is correlative in nature providing a clear view
of how program components relate to each other
― External Benchmarks: Performance trends compared
to a custom peer group allowing an employer to
measure success relative to other organizations
8 “Measuring the Effective Claim Process”
2016 OSIA Fall Conference
Benchmarking Scope
9 “Measuring the Effective Claim Process”
2016 OSIA Fall Conference
Benchmarking Process
• Validation of
employer data
• Custom industry
peer group
identification
• Key performance
indicator (“KPI”)
selection
• Delivery of a benchmarking report including:
− A summary of high-level program findings and
associated recommendations
− Supporting program documentation addressing:
oCausal factors driving claim frequency
oPost-loss claim management factors driving
claim severity
oAn assessment regarding the integrity,
accuracy and validity of internal claims data
10 “Measuring the Effective Claim Process”
2016 OSIA Fall Conference
Benchmarking Objective
Leakage Study Overview
• An approach to detect the degree of lost
economic opportunity or “leakage” occurring
within a workers’ compensation program
• Evaluation of both the employer and claim services
provider processes responsible for driving leakage
11 “Measuring the Effective Claim Process”
2016 OSIA Fall Conference
Company ABC
• A focus on the following areas of the workers’
compensation claim lifecycle:
― Compensability
― Return-to-Work
― Medical Management
― Claims Management/Cost Recovery
• Methodology includes both:
― An operational assessment of key processes
― Closed claim file against existing industry benchmarks
and standards
12 “Measuring the Effective Claim Process”
2016 OSIA Fall Conference
Leakage Study Scope
13 “Measuring the Effective Claim Process”
2016 OSIA Fall Conference
Comparison of outcomes with benchmarks and industry standards
Collection of objective claims data and evaluation of claims outcomes
Review of a statistically-valid sample of closed claims
Determination of claims leakage or “lost economic opportunities
Financial impact segmented by employer and claim services provider
Calculation of trended leakage linked to employer and claim services provider claim practices.
Quantification of the financial impact of existing claims-related activities
Leakage Study Process
• Development of a quantifiable estimate of cost
savings potential within a WC program
• Identification of major WC program cost drivers
• Prioritization of solutions based on expected return
on investment
• Potential drill down to specific variables including:
― Operational structure
― Jurisdiction
― Claim services provider:
o Office
o Claim Examiner
14 “Measuring the Effective Claim Process”
2016 OSIA Fall Conference
Leakage Study Objectives
• An approach to compare claim services providers
(TPAs/carriers) based upon the expected net
variable costs (outcomes) achievable on an
employer’s workers’ compensation program
15 “Measuring the Effective Claim Process”
2016 OSIA Fall Conference
Variable Cost of Risk Analysis Overview
• Evaluation of:
― Medical payments
― Medical bill re-pricing charges
― Claims administration costs
16 “Measuring the Effective Claim Process”
2016 OSIA Fall Conference
Variable Cost of Risk Analysis Scope
Medical Cost
Outcomes
17 “Measuring the Effective Claim Process”
2016 OSIA Fall Conference
Variable Cost of Risk Analysis Process (Evaluation of Medical Cost Outcomes)
Vendor “A”
Vendor “B”
Vendor “C”
Vendor “D”
Vendor “E”
Employer’s Actual Medical Payments
Comparison of vendors
based upon projected net
medical cost outcome by
jurisdiction
Vendor “A”
Outcome
Vendor “B”
Outcome
Vendor “C”
Outcome
Vendor “D”
Outcome
Vendor “E”
Outcome
Vendor data based upon
internal MBR operational
outcomes/performance
by jurisdiction
Analysis is unique to
each Employer based on:
• Actual loss history
• Jurisdiction
• Exposure
• Equalization of vendor contract definitions of
“medical” and “indemnity” claims.
• Variances based upon:
− Number of days a claim is open
− Medical billed (pre/post re-pricing)
− # of “lost time” days
− Total cost
− Presence of allocated expenses
− Other variables:
o Subrogation
o Litigation
o Compensability investigation
18
“Measuring the Effective Claim Process”
2016 OSIA Fall Conference
Variable Cost of Risk Analysis Process (Evaluation of Claims Administration Costs)
• Quantification of an employer’s projected net
variable cost of risk per year across multiple claim
services providers
• Shift focus to projected program outcomes versus
vendor charges and unit pricing that make up a
small percentage of overall variable costs
19 “Measuring the Effective Claim Process”
2016 OSIA Fall Conference
Variable Cost of Risk Analysis Objectives
Estimated Ultimate WC Retained Loss - Workers Compensation
Claim Services Provider (CSP) Name CSP A CSP A CSP B CSP C
Data Source Actual Book Book Book
Medical Bill Review Fee Option Per Bill Per Bill Per Bill Per Line
Total WC Loss $ 7,194,102 $ 7,091,122 $ 6,591,695 $ 7,206,264
Total WC Claims Handling Charges $ 359,328 $ 359,328 $ 429,150 $ 307,305
Total WC Losses + Claims Handling Fee $ 7,553,430 $ 7,450,450 $ 7,020,845 $ 7,513,569
• An approach to evaluate the potential for
workers’ compensation program cost reductions
associated with an accelerated claim closure
initiative
20 “Measuring the Effective Claim Process”
2016 OSIA Fall Conference
Claim Closure Assessment Overview
• Applicable for claims arising from both self-insured
and high-deductible/insured programs
• Limited to claims in excess of 12 months of age
including:
− Indemnity claims
− Large exposure medical only claims > $10,000
• Applicable to nearly all jurisdictions
• Losses limited to self-insured retentions/deductibles
for all applicable policy years
21 “Measuring the Effective Claim Process”
2016 OSIA Fall Conference
Claim Closure Assessment Scope
22 “Measuring the Effective Claim Process”
2016 OSIA Fall Conference
Claim Closure Assessment Process
Modeling of projected savings associated with a
claim closure initiative
Receipt of loss run (open/closed losses) plus SIR/deductible information for all applicable policy years
Data request provided to employer
• Comparison of employer claim closure
patterns against historical closure initiative
outcomes based upon: − Jurisdiction
− Age of loss
− Total incurred value
− Industry
− Claim Services Provider
• Quantification of expected workers’ compensation
program cost reductions driven by:
− Decreases in total incurred claim values
− Avoidance of future loss development (“IBNR”)
23 “Measuring the Effective Claim Process”
2016 OSIA Fall Conference
Claim Closure Assessment Objective
• Independent
validation of case
reserving and
resolution
practices of the
Claim Services
Provider
• Gauge claim services provider performance
• Ensure compliance with organizational special
handling requirements
• Quantify performance/results of specific program
components
• Identify process improvements
• Utilize results to calculate performance guarantee
incentives/penalties
24 “Measuring the Effective Claim Process”
2016 OSIA Fall Conference
A Few Words About Claim Auditing Historical Purpose
• Ongoing shift from a “compliance” to a “strategic”
orientation:
− Compliance: The act or process of doing what
you have been requested or ordered to do
(focus on process)
− Strategic: Focus on the identification of long
term or overall aims and interests and the means
of achieving them (focus on quality impact)
• Goals > improvement in:
− Program outcomes
− Injured Employee experience
25 “Measuring the Effective Claim Process”
2016 OSIA Fall Conference
A Few Words About Claim Auditing Emerging Trends
Session 2: “Measuring The Effective Claim Process”
Oklahoma Self Insurers Association – 2016 Fall Conference
Location: Hard Rock Hotel & Casino Catoosa, Oklahoma September 22, 2016 9:30 a.m. to 10:30 a.m. Presenter: Alan Turnipseed, SVP Claims Consulting Practice Marsh Risk Consulting Houston, TX
