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Susannah Levine

Susannah Levine writes about health care, education and technology. She can be reached at riskletters@lrp.com.

2014 Teddy Award Winner

Healing the Healers

Teddy Award winner Cold Spring Hills Center for Nursing and Rehabilitation proved that even small organizations can make a huge difference in their employees’ lives. 
By: | November 3, 2014 • 7 min read
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When Bob Baranello joined Cold Spring Hills Center for Nursing and Rehabilitation as chief executive officer in 2011, the facility “clearly had a lot of work to do” to reduce staff injuries and workers’ compensation costs, he said.

The average claim cost was $7,500, lost-time claims averaged 26 days and with an experience mod of 1.45, and premiums were “through the roof.” The facility had a weak safety culture and a pervasive fraud and abuse problem.

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Cold Spring Hills was not yet enforcing the strict safety standards its owner, National Healthcare Associates, had put in place at its 40 other nursing and rehabilitation facilities.

After Prism Consultants, a health care brokerage and risk management consultant, ran extensive analytics on a large quantity of claims data, National Healthcare discovered its employees were at even greater risk than they had realized, said Ephram Ostreicher, director of operations, National Healthcare Associates.

It brought in Prism to manage all aspects of the workers’ compensation program, and set about changing across-the-board safety, customer service, and quality of care practices.

“When you change a culture, you fix a lot of things,” Baranello said.

New Safety Culture

“We put a lot of work into a new safety awareness culture,” Ostreicher said. The existing culture wasn’t conducive to gaining traction on safety improvements. “There was cynicism and negativity. We had to prove we care.”

“When you change a culture, you fix a lot of things,” — Bob Baranello, CEO Cold Spring Hills Center for Nursing and Rehabilitation

Top of the list: Remediating conditions related to patient-handling injuries and slips, trips and falls, the biggest source of claims, both in number and severity. Targeting the back and shoulder injuries that plague nurses and nursing assistants from constant bending and lifting, Cold Spring Hills initiated its “Journey to Zero Lift” program.

It bought 14 new Hoyer lifts, mechanical devices that spare wear and tear on residents as well as nurses and assistants. It created Journey to Zero Lift “kit bags,” which contain non-friction sheets and gait belts for lifting and turning, depending on the residents’ medical records and care plan. The kits are stored outside resident rooms for easy access.

“By branding the kits and the program,” said Ettie Schoor, the founder and managing principal of Prism Consultants, “we helped employees understand the importance of the program.”

Cold Spring Hills also started to investigate every accident immediately to make sure it never happens again. In the past, investigation of an accident may have lagged three or four weeks, by which time the traceable conditions would have changed.

Now, supervisors immediately go to an accident scene and ask employees to re-enact it, if they’re able. They examine every environmental detail, including lighting, footwear and hardware, Schoor said. This practice identified a mechanical problem with dietary carts, which had injured a number of employees.

“We brought in the vendor to check every cart. They changed the wheels,” she said.

Bob Baranello, CEO, Cold Spring Hills Center for Nursing and Rehabilitation

Bob Baranello, CEO, Cold Spring Hills Center for Nursing and Rehabilitation

The surveillance cameras Cold Spring Hills installed also shed light on how the accidents happened and how they could be prevented.

These efforts, Baranello said, mark a sea change from the dark days just five years ago when injured employees filed 231 workers’ comp claims. That number dropped to 98 in 2013, and is still falling.

Strategic “micromanagement” extends all the way up the corporate food chain. Baranello is directly responsible for safety. He’s involved in every incident, not just the “big ones” that would merit the CEO’s attention at most facilities.

Baranello, department heads, supervisors and line staff participate in monthly meetings of the newly refashioned safety committee so they can spread the safety gospel.

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“Safety of residents and staff is a huge part of every employee’s job,” said Baranello.

Revised resident care plans factor into safety as well, with highly detailed profiles and instructions. One might note, for example, that Mr. Smith prefers a male aide or that he doesn’t want to be awakened before 10 a.m. Care plans conform as closely as possible to the resident’s tastes and pre-facility life, minimizing the behavioral problems that produce a distressing number of scratches and bites to the direct care staff.

“For everybody’s safety, we hold closely to the care plan,” said Ostreicher. “It’s part of the training.”

Showing the Love

When accidents do happen despite precautions, Cold Spring Hills and Prism show employees “a lot of love and care,” said Schoor. That means frequent and regular follow-up calls with the employee and all medical providers. It might also mean providing nursing care at home, household help, child care, delivered meals and even flowers — any way possible to lift injured workers’ spirits and accelerate their return to work. This kind of attention can also forestall the litigation characteristic of disgruntled workers.

When a dietary worker suffered third-degree burns, the insurance company anticipated initial exposure of $480,000 and potential exposure of over a million dollars in medical treatment and lost time. It predicted a long, grim life of disability for the worker and subsequent lifetime indemnity payments.

Prism assisted Cold Spring Hills in pulling out all the stops to aid the injured worker’s recovery and boost her morale. Employees from both organizations, including Baranello, visited her in the hospital.

They sent cards to her and food to her family. When she started to fret over the depleted minutes on her mobile phone plan, they funded her cell phone so she could concentrate on the important job of getting better.

Nine months, multiple surgeries and $80,000 in medical bills later, the worker declined a $150,000 insurance settlement, choosing instead to return to work — this time at a desk job instead of in the kitchen where she was burned and traumatized.

“She said, ‘Because of the way I was treated, I will never leave this facility,’ ” Schoor said.

Return to Work

That worker’s modified assignment is a key part of National Healthcare’s claims management strategy.

“We try to get all employees back to work no matter what their restrictions are,” said Ostreicher. “We find a meaningful job they can do within their restrictions,” while monitoring progress on the path to full duty.

Prism works with National Healthcare and doctors to identify temporary restricted duty (TRD).

Ettie Schoor, founder and managing principal, Prism Consultants

Ettie Schoor, founder and managing principal, Prism Consultants

A nursing assistant who underwent spinal fusion was still in a wheelchair when she was released to return to work. “We worked with her to identify tasks she felt were important to the operation: folding residents’ clothes, polishing handrails/walls and reading to and feeding residents,” Schoor said.

Cold Spring Hills paid her previous salary, so she experienced no loss in compensation, and she felt her contribution, although different, was still important.

When injured employees return to TRD, they report their progress regularly to supervisors, who are “hands-on involved” in returning workers to full duty as soon as medically appropriate. “They know we’re on top of it,” Schoor said.

The team also ensures that as workers’ restrictions ease, their jobs change also. This minimizes exposure while earning the worker’s loyalty.

Smoking Out Fraud

As much as Cold Spring Hills, its parent company and Prism show the love to genuinely injured workers, they turn an equal fury on fraudsters.

“If you mess with us, we’ll catch you and be all over you,” Schoor said.

“Tender and tough — that’s our policy,” — Ettie Schoor, founder and managing principal, Prism Consultants

“When an accident happens, we work with our staff to make sure the same one won’t happen again, and when we do have an accident, we help the employee return to work,” Schoor said. This keeps exposure down, and so does meticulous follow-up on claims.

“If we smell something — not necessarily fraud — we follow up. If the doctor says the employee is disabled but she’s able to lift her kids, we’ll use that information to get a release to work. That also keeps exposure down.

“Tender and tough — that’s our policy,” said Schoor.

In one spectacular case of gumshoe insurance investigation, a worker “disabled” by a shoulder injury called Prism about her workers’ comp check. The caller ID showed the name of a beauty supply store.

Prism sent an investigator equipped with a wrist-watch camera to the store and asked the worker to reach up for several items. The movement engaged the putatively injured shoulder, which he filmed surreptitiously.

When he paid for the items, he captured her name on the sales slip. Between the two pieces of documentation, the fraudulent injury claim collapsed.

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An overwhelmingly honest workforce isn’t spooked by these aggressive tactics, said Baranello, but rather welcomes them.

“Good people don’t want to see fraud, and most are hard-working and responsible,” he said. “They want us to prosecute the few bad apples who try to game the system.”

_______________________________________________________

Read more about all of the 2014 Teddy Award winners:

11012014_02_cs_honda_150x150Building Value with Trust: Honda of South Carolina boosted its involvement with injured worker cases, making a positive first impression on employees and health care providers.

 

11012014_03_cs_harley_150x150The TLC Behind the Roar: A proactive and holistic approach to employees’ well-being has resulted in huge reductions in work-related injury claims for Harley-Davidson.

 

11012014_04_cs_compass150x150Quick to Act: Compass Group is lauded for its safety initiatives and for a return-to-work program that incorporates all of its business lines.

 

 

11012014_05_cs_coldspring_150x150Healing the Healers: Teddy Award winner Cold Spring Hills Center for Nursing and Rehabilitation proved that even small organizations can make a huge difference in their employees’ lives.

 

Susannah Levine writes about health care, education and technology. She can be reached at riskletters@lrp.com.
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Claims Management

Measuring the Unmeasurable

Often it’s the intangibles that can make or break the payer-TPA relationship.
By: | October 1, 2014 • 8 min read
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Risk managers and third-party administrators (TPAs) use massive amounts of claims data to reduce, predict and manage risk, but the quality of the TPA-client and TPA-claimant relationships are the single most important measure of an insurance program’s success, risk managers and TPAs agree.

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“The qualitative factors make the relationship,” said Marty Frappolli, senior director of knowledge resources, The Institutes, a risk management and insurance education organization.

“They’re harder to measure than the quantitative factors” such as claim resolution costs, timeframes, loss expense and legal costs, “but they’re at least as important.”

Qualitative vs. Quantitative Measurements

Every company has its own spin on what metrics are important to them, said David Smith, vice president of risk management for Family Dollar, whose TPA delivers a monthly scorecard with top-line metrics. They include “simple things” like closing ratios and stick rates — are claims staying closed? — average claim costs and reserve development on its book of business, which it compares from month to month and year to year.

Grace Crickette, senior vice president and chief risk officer, American Automobile Association for Northern California, Nevada and Utah

Grace Crickette, senior vice president and chief risk officer, American Automobile Association for Northern California, Nevada and Utah

To coax the best outcome from an undesired event, as all claims represent, Grace Crickette, senior vice president and chief risk officer, American Automobile Association for Northern California, Nevada and Utah, recommends employers define upfront the data fields they want the TPA to collect and resist the impulse to collect numerous but useless data just because they can.

“Excess fields create unnecessary work and distract TPAs from making sound decisions on the claimant’s behalf,” she said. Ambiguous fields such as “other” and “miscellaneous” create poor data integrity.

Smith said he looks for the story behind the metrics. “If the average claim payment spikes by 5 or 10 percent, that doesn’t necessarily mean the TPA is at fault.”
Instead, the spike could be driven by the company’s strategic decision to pay more to settle claims quickly, betting against the chance of longer-term reserve developments if they remain open.

Metrics raise the flags that prompt the questions, Smith said.

“If the average claim payment spikes by 5 or 10 percent, that doesn’t necessarily mean the TPA is at fault.”  — David Smith, Vice President of Risk Management, Family Dollar

“If the average claim payment rose last year, we’d ask, ‘Is there a problem? How should we deal with it?’ ” The monthly scorecard reflects the total book of business, down to the TPA’s regional office, and down even further to the individual adjuster.

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“Maybe an adjuster’s asleep on the job,” said Smith. “Then we’d sit down with our TPA to figure out what to do about it.”

Susan LaBar, risk manager for Coach USA, a transportation company, looks through weekly reports at reserve changes and new claims.

“I send the reports to my people in our locations and say, ‘This week you had two slips and falls on your bus. What’s going on?’ ”

“The qualitative factors make the relationship.”  — Marty Frappolli, senior director of knowledge resources, The Institutes

At yearly TPA meetings, Coach compares its insurance program over the past three years with industry numbers.

“Are we paying more for claims? Are they closing faster?” said LaBar.
When shoulder injuries upticked last year, for example, Coach traced the problem to more stops where the driver lifted luggage.

“We ask our TPA what do we do about it. If they don’t come up with solutions, they’re not a good TPA.”

The big-picture post-loss metrics, said Joel Raedeke, vice president of consultative analytics, Broadspire, are average cost and closure rate. He cautions against the “skewed perspective” that an overconcentration on one metric can produce, especially in the presence of new safety or return-to-work (RTW) initiatives.

For example, he said, an employer’s concerted RTW program could reduce or eliminate lost time days and indemnity exposure on a small claim, which would reduce average costs in total. “But if you have your eye only on average cost per indemnity claim, you might see the average cost per indemnity claim rise because you’re pulling the lower-cost claims out of the mix. You think it’s getting worse when actually getting better.”

Metrics for Satisfaction

“There’s no need to measure customer satisfaction,” said David Zaback, executive vice president, National Health Plan.

 “Excess fields create unnecessary work and distract TPAs from making sound decisions on the claimant’s behalf.” — Grace Crickette, senior vice president and chief risk officer, American Automobile Association for Northern California, Nevada and Utah

“If there’s a problem, your client tells you about it — quickly — but if you’re still together after five years, something’s going right.”

If a client’s not satisfied, “you start getting calls from the boss. People start asking, ‘Why is it costing me so much? Why did it take 65 days to pay that claim? A lot of other vendors will make it easy for your client to jump ship, so if they’re still with you, they’re obviously satisfied.”

A TPA that depends on negative feedback from its client isn’t using metrics well, said Smith. “You want your TPA to be proactive, not reactive,” he said.

Analytics are proof for CFOs, LaBar said, but not for people who handle claims every day. She gets instant feedback from the 19 safety managers at far-flung locations who report to her.

“They’ll call me in two seconds with a complaint,” she said, but she notes those complaints come from colleagues, not claimants.

“Before I go into yearly meetings with my TPA, I know exactly what will happen.”
LaBar values a TPA’s sense of urgency.

“Every injured person wants to think you’re as concerned about their injury as they are.”

This attribute is foremost on her radar screen when she interviews adjusters.

“I can tell if they care by the way they answer questions. When they respond immediately and with passion, that’s good. Waffling and making excuses are signs they won’t be aggressive in their claims handling.”

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Barbara Ritz, manager of workers’ compensation, Temple University Health System, looks for a fully engaged partner. The measurable qualities she seeks are keeping her program in legal compliance and reducing costs, but “managing an insurance program takes more than just knowing the law.”

A TPA could be hitting the marks at 100 percent — timely communications with claimants and providers, timely processing claims, holding the line on reserves, issuing notifications in accordance with ACA filings with the state — but that’s not enough. Ritz said the TPA must also be actively listening to the client and adapting to each client’s unique challenges.

“If they propose programs that won’t work in my union shop, fail to represent our organization appropriately or can’t bring creative solutions, the relationship isn’t working.”

Crickette looks at caseloads. Overloading adjusters might suppress administrative costs, she said, but outcomes suffer when they lack time to think through decisions or refine their data. Good adjusters can be innovative, far exceeding the mere competence of meeting deadlines, heading off runaway claims and understanding regulations.

“Extraordinary adjusters navigate relationships,” she said.

They know the client’s business, such as what light duty is available for an injured worker. They know the assigned clinicians and the medical landscape where the injured worker will be treated. They have good communication with the clinicians and know what calls can open the doors to the worker’s return to work.

When the relationship appears to be failing, employers should do a little soul searching, said Michael Stack, principal, Amaxx Workers Comp Solutions Inc.

“We want them to look in the mirror and ask, ‘What am I not doing? Do I have a return to work program? A fraud prevention program?’ ”

Switching TPAs should be the last resort, he said, if only because of the insuperable costs and the headaches of switching, such as issuing new location codes, breaking in new adjusters and marrying up new systems.

additional photo for webStack also recommends site visits, such as “vendor day” and chairside visits, where the employer goes to the TPA’s office and sits next to the adjuster.

“It’s eye-opening for a risk manager who never adjusted a claim to see where the problems come up. For example, they may see the value a nurse case manager is adding to their claim file. The TPA might be doing an excellent job.”

Managing the Data

Anticipating the time when client and TPA part ways, who manages the data? Both are best, said Smith.

“If you’re big enough to have the resources, keep your own analytics data while TPA keeps it also. If you’re not, trust your TPA to keep the data points that are important to you.”

Absent a system to store data independent of its TPA, said LaBar, a company becomes captive in a bad situation.

“You absolutely need your own data. If you ever leave your TPA, the data piece is a nightmare when all your data’s in their format.”

For example, she said, her former TPA’s system referred to the date of an incident as the “date of occurrence,” and her new one calls it the “date of loss.” LaBar worked with the new TPA for a year to reconfigure the code differences before Coach’s existing data matched up with the new system.

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But Crickette recommends the TPA’s system as the “single source of truth.”
“I don’t know of a company that can afford redundant systems, so go with the TPA’s,” she said.

However, the client company should take pains to provide accurate data feeds and proper mapping from other systems into the TPA’s system. This harkens back to the client’s responsibility for high-quality data.

“Make sure the data quality is good enough that you can analyze it and put it to good use,” Crickette said.

Unbundled risk management information systems (RMIS) are an option, where technology companies manage a company’s data but don’t manage claims. Broadspire offers a hybrid: a native RMIS that can be contractually unbundled from its claims management service.

“If a client left Broadspire, it wouldn’t have to recode or rethink its data,” said Raedeke.

_______________________________________________________

Read our three-part claims management series, which focuses on third-party administrators:

09012014_04_inDepth150x150Part I: A Marriage of Compatibility

Employers must select the TPA best equipped to manage employees’ health and well-being.

 

09152014_04_indepth 150x150Part II: Best Practices a Moving Target

The best claims-handling practices depend on hiring good people.

 

10012014_04_indepth 150x150Part III: Measuring the Unmeasurable

Often it’s the intangibles that can make or break the payer-TPA relationship.

 

 

Susannah Levine writes about health care, education and technology. She can be reached at riskletters@lrp.com.
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Claims Management

Best Practices a Moving Target

The best claims-handling practices depend on hiring good people.
By: | September 15, 2014 • 10 min read
09152014_04_indepth PB

Although modern claims management technology can capture all manner of information to identify where employers and carriers spend — and misspend — their insurance money, a third-party administrator’s (TPA) success in managing an insurance program depends on the underlying human intelligence and a disciplined application of its own best practices.

However, universally applicable “best practices” resist codification because too many variables contribute to how a claim should be handled, including local laws, industry, line of insurance, and the size of the client company, said Randy Jouben, risk manager, Five Guys Enterprises, LLC in Virginia and a member of the Risk Management & Insurance Society (RIMS) Standards & Practices Committee.

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Instead, companies develop internal best practices based on their own closely observed and analyzed experience, and some share their findings with each other, said Janet Warren, managing director, Beecher Carlson.

These best practices are customized to the client’s sophistication, needs, industry and internal staffing.

The principles underlying all modern best practices emerged from the financial stewardship and speedy communications principles codified in the Unfair Claims Settlement Practices Act of 1997, Jouben said. Created by the National Association of Insurance Commissioners, the act provides guidance to states wishing to protect consumers and regulate insurance carriers. These best practices include timely communications, responsible stewardship of the client’s money, and fair and speedy settlement.

Philosophies Must Align

Jouben regards openness and honesty as qualitative best practices. “Things go wrong in claims. Don’t cover up those mistakes.” Instead, he said, “work together to seek resolution instead of crucifying the person who made the error.”

The relationship breaks down when the TPA and client don’t have equal expectations. “You need specific, realistic expectations on both sides for it to work,” he said.

Consistent engagement in and monitoring of a TPA is a client’s chief best practice, said Frank Ramsay, Towers Watson senior consultant and head of its claims management practice.

He recalled a client with a bafflingly high legal spend. “We visited the TPA, and within a few minutes of walking in the door, we learned that this TPA’s claims philosophy was to litigate everything.”

His client hadn’t been aware of this approach, which differed sharply from its own.

“First, there was a basic breakdown in communication,” Ramsay said, “and second, nobody at the client’s organization monitored and oversaw the TPA.”

Critical Judgment is Vital

Settlement authority requires complete accord between TPA and client. The threshold depends on the level of trust in the relationship, Warren said. “After the TPA establishes credibility, the client raises settlement authority as the relationship matures.”

Even then, appropriate authority is nuanced, subject to the types of claim and other factors. A TPA administering product liability claims might have lower settlement authority than, say, workers’ compensation, because the client’s brand is at stake, Warren said. In workers’ compensation claims, where the jurisdiction defines rules and regulations more clearly, the TPA might have higher settlement authority.

And still the claims adjuster makes judgment calls. “Administering the claims properly requires critical thinking skills and all the knowledge and experience the adjuster brings to the relationship,” Warren said. “One little piece of fact can change the complexion of the case and the adjuster’s decision about its disposition.”

Rob Blasio, president and chief executive officer of Western Litigation Inc., a professional liability claims and risk management company, agreed that appropriate settlement authority practices depend on the TPA’s relationship with the client and especially their line of business.

In workers’ compensation cases, he said, a TPA’s settlement authority is “prudent” for the sake of expedience, but his company generally has no settlement authority at all, which is appropriate for the health care professional liability claims he handles. Instead, he recommends settlement amounts to his sophisticated, high-end clients, who give settlement authority accordingly. In the final reckoning, he said, “collaboration and communication are the best practices.”

Tom Doney, president, Cypress Benefit Administrators, said his role as TPA shifted from the traditional claims payment to medical risk management as health care costs soared.

“When it’s our job to pay a claim, we ask, ‘Does this claim make sense? Is the billing appropriate?’ There’s a lot of fraud out there.” — Tom Doney, president, Cypress Benefit Administrators

His assignment is clear: Save money for the self-funded benefit plans his company administers. “As the cost of doing nothing continues to rise,” he said, he focuses on cost savings such as employee wellness programs that reduce total health care expenses, and identifying claims that shouldn’t be paid.

“If the inevitable happens and employees need care, we give them tools to make decisions about who they see, what type of procedures they may undergo and why,” Doney said. “When it’s our job to pay a claim, we ask, ‘Does this claim make sense? Is the billing appropriate?’ There’s a lot of fraud out there.”

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Doney credits the industry’s attention to cost controls with the success of the TPA business and the reason self-funding is now the dominant method of administering employee benefits. The Henry J. Kaiser Family Foundation study, “2013 Employer Health Benefits Survey,” reported 16 percent of covered workers at small firms and 83 percent at larger firms are enrolled in plans that are either partially or completely self-funded.

Cost savings is not always her clients’ primary goal, said Michele Tucker, vice president, claims, for CorVel, a national risk management provider for workers’ comp, health care liability and auto claims. One client’s goal could be service-related results, while another may focus on something completely different.

For example, best practices for a transportation company’s claims-management program would look very different from that of a retailer.

The transportation company has staff in the field, not in shopping malls, and it needs immediate access to a claims -eporting mechanism in its unpredictable, fluid work environments.

“That means a mobile application from which they can call in a claim and get access to immediate care,” Tucker said.

After an accident, the TPA would arrange immediate medical care to address the injury component and the liability insurance claims team to take care of property damage and any subrogation or recovery.

In the retail environment, on the other hand, injuries are fewer and less severe, but customer-related claims — which back into product and general liability cases, which themselves may by derived from chain-of-production issues — are more frequent.

Both involve multi-line claims management, which blurs both insurance and responsibility lines. These blurred lines demand informed, experienced humans.

“At implementation, the client and TPA need to decide how they’ll partner when workers’ compensation and liability lines run into each other,” Tucker said. “You need subject experts in these completely different subjects to get the best results.”

Analyze That!

Analytics are not just a powerful reporting tool, said Tucker, but a powerful diagnostic and prescriptive tool as well. Her company has a simple best practice regarding analytics: Use them.

09152014_04_indepth_jouben_headshot“Things go wrong in claims. Don’t cover up those mistakes. … Work together to seek resolution instead of crucifying the person who made the error.”
— Randy Jouben, risk manager, Five Guys Enterprises LLC

When CorVel saw a spike in claims for one of its retail clients, Tucker said, it analyzed data and found that the claims originated with employees who had been injured while handling a new clothing rack. The client phased out the rack. CorVel also uses analytics as a predictor of “creeping catastrophic” claims — the kinds that can go nuclear unless managed swiftly — with its pharma clients.

“TPAs and their clients can gain insights from data and predictive modeling to drive better decisions and actions,” said Kirsten Hernan, director, Deloitte Consulting LLP. “For example, when you see a potentially troublesome claim, you can escalate it to a more experienced adjuster,” who may be able to snuff out the fire before it starts.

TPAs can capture and report all kinds of data, said Kevin Grady, managing director of Beecher Carlson’s “ZOOM,” a data disaggregation process that allows a company to focus on strategies to reduce costs.

But data alone doesn’t solve problems, he said. “How you use it creates value.”

Grady described the process of turning a practical problem into a statistical problem, then turning a statistical solution — a goal — into a practical solution.

For example, he said, say the TPA traces a cost increase to injured workers bringing suit, which are expensive because of attorney and court costs. “That’s the practical problem,” he said.

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Next, he’d convert the data to a rate. If 30 percent of claims were litigated last year, say, the company would target only 20 percent this year. “That’s the statistical solution.”

To achieve that, he’d ask, Where were the lawsuits coming from? The Northeast? Southeast? Midwest? “The location becomes the statistical problem.”

Then Grady sets the goal — the statistical solution. “If suits were clustered in the Southeast, we’d ask, ‘How effective is our response to claims in the Southeast? Are we reporting late?’ ”

When claims are reported late, injured workers get nervous, he said. “They worry about how they’ll feed their kids, so they get attorneys,” whereas they tend not to if the company approaches them promptly with a robust injury response process that responds in a timely manner, informs workers of their rights, establishes a path to recovery and maintains communications.

Thus armed with information, the TPA can help the client reduce injuries, claims and litigation. But not every problem is equally worth solving, Grady said. By analyzing claims data, employers and TPAs can prioritize the problems. “You know which to go after first.” The same applies to claims. “You go after the 20 percent of conditions that drive 80 percent of claims.”

Aim for Avoidance

Avoiding litigation is the best practice to manage litigation, said Beecher Carlson’s Warren. “Better yet, avoid the claim in the first place and you avoid the litigation too.”

In fact, said CorVel’s Tucker, workplaces are becoming safer, thanks in part to analytics that inform employers where to apply fixes.

When accidents occur anyway, Warren said, the decision whether or not to litigate depends on the facts of case, and every case must adhere to the Fair Claims Practice Act.

Closing cases proactively is the best policy for cost control, said Blasio of Western Litigation.

“Evaluate cases quickly, make decisions about whether they need to be resolved and close them expeditiously to reduce allocated losses and adjustment expenses on your files.”

Short of that, have vetted litigation guidelines that outline and control relationships with outside attorneys and experts called in to defend cases.

“It’s about managing expectations at the outset,” said Blasio. This could mean demanding a budget from attorneys and “holding their feet to the fire” about sticking to it.

Cyber security breaches among retailers, health care companies and governments have become the stuff of tabloids and courtrooms. To a large extent, they’re also avoidable.

“The organizations that succeed are those that take cyber security seriously.” — Marty Frappolli, senior director of knowledge resources, The Institutes

“Companies can hire experts to make their data securely available to those who need it and inaccessible to everyone else,” said Marty Frappolli, senior director of knowledge resources for The Institutes, a nonprofit provider of insurance education.

“The organizations that succeed are those that take cyber security seriously. The value of the data far exceeds the cost of protecting it, so take preventive steps first and buy cyber security insurance as a backup plan.”

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Clients and TPAs also should be willing to bring in outside help, especially on complex, high-exposure cases, Blasio said. These could include jury consultants and structured settlement specialists. “If there are other experts in the industry who can help strategize how to get the case in the best position for resolution, an existing relationship with a TPA or counsel shouldn’t preclude another.”

This best practice applies most to self-administered plans. “They spend hundreds of thousands of dollars retaining medical experts, but they rarely think about calling an expert who might have resolved 20 cases with the plaintiff’s attorney and can cut through the noise.”

______________________________________________________

Read our three-part claims management series, which focuses on third-party administrators:

09012014_04_inDepth150x150Part I: A Marriage of Compatibility

Employers must select the TPA best equipped to manage employees’ health and well-being.

 

09152014_04_indepth 150x150Part II: Best Practices a Moving Target

The best claims-handling practices depend on hiring good people.

 

10012014_04_indepth 150x150Part III: Measuring the Unmeasurable

Often it’s the intangibles that can make or break the payer-TPA relationship.

 

 

 

Susannah Levine writes about health care, education and technology. She can be reached at riskletters@lrp.com.
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