Historically, workers' compensation claim professionals and their performance primarily have been measured by audits that determine their compliance with company policies, procedures and state regulations. Audit emphasis is placed on 24-hour contact, file documentation, action planning, reserving and completion of company and regulatory reports and forms.
While all of these elements are important in the claim management process, measuring performance solely on this basis tends to drive behavior toward passing audits. Unfortunately, a successful audit does not mean an individual or claim operation is effective at reducing claim costs and improving the employer's bottom line. The goal should be to create a performance measuring system and employee incentive program for claim professionals that focuses on effectiveness and results.
Establishing Benchmarks
By taking a common sense approach to claim management, experienced claim professionals can provide excellent service to injured employees. Demonstrating they are responsive – by making immediate contact – is an essential first step. Additionally, it is important to employers that claim professionals comply with policies and procedures and governmental regulations, while balancing positive outcomes for the injured employee.
To find the balance between excellent claim outcomes and customer service, claims professionals should focus on several benchmarks:
Claim Ratios
A high percentage of medical only to indemnity claims is a strong indicator of the effectiveness of early intervention by claim professionals and nurse case managers. For example, returning an injured worker to employment within seven days prevents the payment of indemnity benefits. This can only occur when a claim is reported immediately, quality medical treatment is expedited and a job within restrictions is coordinated between the physician, employer and injured worker. Education and a partnership with the employer are crucial.
Average Length of Disability
Once a claim becomes an indemnity claim, coordinating proper medical care and prompt return to work from the outset can save additional days of indemnity payments. Often, additional days of payments are made because of a lack of communication between employers, employees and physicians. Twenty-four hour contact is imperative; what is communicated during that process establishes the path and outcome of each claim. Claim professionals who focus on this benchmark develop habits that timely follow-up on the medical status of an injured worker and facilitate communication to ensure prompt return to work.
Litigation Rate
Considering that the average cost per claim can increase by as much as $31,160 per claim when attorneys become involved, early contact with an injured worker is critical. More importantly, explaining how claimants will receive the benefits due and relieving their concerns that they will be given proper medical treatment and have a job to return to is extremely important to avoid attorney representation. Most attorney involvement is the result of a breakdown in communication. The litigation benchmark is a strong indicator whether claim professionals and nurse case managers are timely and effectively communicating with injured workers.
Closure Rate
The best claim is a closed claim. Every additional day a claim remains open costs additional money and only increases the potential for a runaway claim. This benchmark is a strong indicator that claim staff consistently plan and execute a strategy to coordinate appropriate medical treatment and return to work at the earliest opportunity. By utilizing benchmarks and percentages of claims closed within each accident year, and by monitoring closure rates on an individual, carrier and department basis, determines if the claim professional is on target.
Average Cost Per Claim
This is the most widely used benchmark in the industry and reflects the overall effectiveness of the execution of all the fundamentals of claim handling mentioned above. National and state-specific statistics are readily available to provide claim operations the benchmarks needed to gauge their own effectiveness.
Outcomes
Benchmarking and reviewing claim trends and results provides the ability to balance successful claim outcomes while still scoring high on crucial audits. Considered together, these tools will determine which claim operations can simply pass an audit and which ones soar to the next level and truly impact the employer's bottom line.
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