Technology’s Role in Managing Employee Absences
The 24th annual National Workers’ Compensation and Disability Conference® and Expo takes place Nov. 11-13 at the Mandalay Bay Resort and Casino in Las Vegas. The conference is produced by LRP Publications, which publishes Risk & Insurance®. For more information, visit www.wcconference.com.
You might not think that an employee’s absence for just a few days could raise concern for an employer. But all absences are not created equally.
There is workers’ comp, short- and long-term disability, Family and Medical Leave Act, and other types of absences. Some are planned, others are not. Some are paid, some unpaid. Some are associated with job protection benefits, others are not. There are state and federal regulations that may apply.
Employers need to understand when each should be employed and make sure they have fair and consistent practices in administering their leave programs.
“There is a misconception that absence management is easy. It is not,” said Keith Nelson, vice president and head of group insurance program delivery for Aetna Life Insurance Co. “Absence management is very complex.”
As Nelson explains, even a single day of absence may involve multiple types of leave and can impact different components of an organization in many different ways.
“We’ve got state mandated leaves such as those under workers’ comp, and state family and medical leave laws, that run concurrently with FMLA leaves,” he says. “There are now even a growing number of municipal leaves being added into the equation for employers to administer.”
His session, Technology Tools for Managing Disabilities and Absences, takes place Thursday, Nov. 12 from 10:45 a.m. to noon.
Effects on Personnel
“An employee might be out for one day, but that day of absence could apply to 15 or 16 different benefits,” Nelson said.
“Some have different start dates or end dates. The employee may have been approved for one benefit but denied for another on the same day. In my experience, many key stakeholders don’t fully understand those nuisances. There’s a concurrency component of absence management.”
An employee’s absence may affect people within an organization differently, depending on the role of the person. Each may have a different awareness of which type of leave benefit applies to the employee’s absence request.
“An employee might be out for one day, but that day of absence could apply to 15 or 16 different benefits.” — Keith Nelson, vice president and head of group insurance program delivery, Aetna Life Insurance Co.
“From the employee’s perspective, they don’t know all the benefits available to them or the differences,” Nelson said. “The only thing some of them can say is ‘I’m injured or ill,’ whether it happened at work or not, and ‘I need to be off of work.’”
Absence, he explains, is very personal to each individual. The concerns change from one person to another throughout the company.
“As you go up the organization, the interests are very different,” he said. “For the supervisor, it is ‘do I have a full staff at work?’”
Plant managers, human resources personnel, and the company’s CEO all have other concerns about an employee’s absence. Where one department is concerned about the effects on productivity, another may be more interested in finding out how and why the injury/illness occurred.
“Employers want to protect their employees from injuries or safety incidents. They are really all about mitigating safety risks and putting prevention in place,” Nelson said. “From the economic side of a workers’ comp accident, not only is the employer funding the lost wages for an employee who is away from work, but also likely funding the legal expenses, the medical expenses, and all kinds of claim-related expenses such as temporary labor expenses.”
“Different rules of compensability apply in different states. Moreover, employers may offer different types of disability plans for different groups of employees,” Nelson said. “The same can be said for leave of absence policies that are offered to different groups of employees. The overarching impact is the same: ‘Do I have a full workforce or not?’”
The one common link among each department is the need for information about the absence.
With technology, each department within an organization has access to information about an employee’s leave in the form best applicable to the needs. Personnel can better understand the overall picture of absences with a good technology platform.
“It enables effective information exchange,” Nelson said. “There is a whole new level of sophistication in the workforce, and employers/providers have a new appetite for information. That’s the big picture of what the session is all about — learning how technology can assist employers to administer effective absence management programs.”
Employers are required to use fair and consistent practices when applying the various types of leaves. Through technology, various facets within an organization can have a clear understanding of the rules and regulations.
“The industry is changing,” Nelson said. “There are new regulations all the time, new types of benefits, emerging paid sick and paid family leave. From a workers’ comp perspective, there is medical only and true lost time claims, but it’s still the same individual. How does it work? How do all constituents stay informed?”
The privacy aspect of an employee’s absence is another concern that can be addressed through technology. For example, workers’ comp has different protocols for sharing claim information than is routinely used for disability and state or federal leaves. The circumstances dictate what can be shared with an employer.
Failing to ensure fair and consistent practices can lead to regulatory scrutiny, legal action, and other financial liability. Technology can help reduce the complexities of absence management, minimize inconsistencies, and ultimately, mitigate risks.
Integrated Programs Pay Off When Employees Come First
Employers that place equal importance on managing all disability claims — regardless of whether their cause is occupational or non-occupational — experience better return-to-work outcomes, said a senior workers’ compensation manager who evaluated practices at nine companies.
Yet she has often heard employers that fully insure their long term disability claims say they don’t pay equal attention to those claims as they do when disabilities are work-related, said Catherine Duhigg Gannon, senior manager of workers’ comp at Eaton, a company with about 100,000 employees including 37,000 across North America.
Such thinking hurts employee relations and diminishes all return to work efforts.
“Focus on disability and return to work should not cease when the perceived cost to the employer decreases,” Duhigg Gannon said. “By that I mean long-term disability plans that were insured and had no [employer] oversight oftentimes resulted in the employee not returning to work. It was amazing how many people basically said, ‘We are not paying for it, so we stopped caring.’ ”
Duhigg Gannon presented her comments as part of a panel that addressed program integration during the recently concluded Worker’s Compensation Institute’s annual conference. She evaluated the practices at nine companies as part of a strategic assessment conducted every five years to help set the future path for her own company’s workers’ comp and disability management efforts.
Care of employees should be the first priority of integrated programs, said Chris Mandel, senior VP strategic solutions at Sedgwick Claims Management Services.
Integrated programs focus on combining the oversight of claims that are often separately managed by corporate risk management or benefits management domains. The claims can include those generated under the Family Medical Leave Act administration, short-term disability, long-term disability or workers’ comp.
“It was amazing how many people basically said, ‘We are not paying for it, so we stopped caring.’ ” — Catherine Duhigg Gannon, senior manager of workers’ comp, Eaton
“Employee care needs to be the first priority,” Mandel said. “We are after outcomes that benefit the employee most.”
The benefits of integration include aligned communications, a single contact for the intake of claims, better handling of data, and improved coordination of specialty case management that supports all causes of work absences, he said.
Other advantages include unified return-to-work planning, unified case management, and the improved communication of benefits, Mandel continued.
“But again, all of that for the benefit of helping employees navigate what could be rather bureaucratic and complex processes that often don’t touch each other, let alone talk and communicate effectively together,” he added.
Eaton has an “integrated disability platform” with the third party administrator handling workers’ comp, STD and LTD claims among others, Duhigg Gannon said. That helps provide continuity in the way the company views all disability claims.
Internally, however, Eaton’s insurance and risk management department oversees workers’ comp while the benefits department manages STD and LTD claims.
A recommendation has been made to Eaton’s senior management that a single, internal department managing all disabilities would be more effective.
“The best return to work outcomes were demonstrated when programs treated all disability claims the same, occupational versus non occupational and efforts to return an employee to gainful employment was equally invested in all disability claims,” Duhigg Gannon’s assessment found.
6 Truths about Predictive Analytics
Predictive data analytics is coming out of the shadows to change the course of claims management.
But along with the real benefits of this new technology comes a lot of hype and misinformation.
A new approach, ACE 4D, provides the tools and expertise to capture, analyze and leverage both structured and unstructured claims data. The former is what the industry is used to – the traditional line-item views of claims as they progress. The latter, comprises the vital information that does not fit neatly into the rows and columns of a traditional spreadsheet or database, such as claim adjuster notes.
ACE’s recently published whitepaper, “ACE 4D: Power of Predictive Analytics” provides an in-depth perspective on how to leverage predictive analytics to improve claims outcomes.
Below are 6 key insights that are highlighted in the paper:
1) Why is predictive analytics important to claims management?
Because it finds relationships in data that achieve a more complete picture of a claim, guiding better decisions around its management.
The typical workers’ compensation claim involves an enormous volume of disparate data that accumulates as the claim progresses. Making sense of it all for decision-making purposes can be extremely challenging, given the sheer complexity of the data that includes incident descriptions, doctor visits, medications, personal information, medical records, etc.
Predictive analytics alters this paradigm, offering the means to distill and assess all the aforementioned claims information. Such analytical tools can, for instance, identify previously unrecognized potential claims severity and the relevant contributing factors. Having this information in hand early in the claims process, a claims professional can take deliberate actions to more effectively manage the claim and potentially reduce or mitigate the claim exposures.
2) Unstructured data is vital
The industry has long relied on structured data to make business decisions. But, unstructured data like claim adjuster notes can be an equally important source of claims intelligence. The difficulty in the past has been the preparation and analysis of this fast-growing source of information.
Often buried within a claim adjuster’s notes are nuggets of information that can guide better treatment of the claimant or suggest actions that might lower associated claim costs. Adjusters routinely compile these notes from the initial investigation of the claim through subsequent medical reports, legal notifications, and conversations with the employer and claimant. This unstructured data, for example, may indicate that a claimant continually comments about a high level of pain.
With ACE 4D, the model determines the relationship between the number of times the word appears and the likely severity of the claim. Similarly, the notes may disclose a claimant’s diabetic condition (or other health-related issue), unknown at the time of the claim filing but voluntarily disclosed by the claimant in conversation with the adjuster. These insights are vital to evolving management strategies and improving a claim’s outcome.
3) Insights come from careful analysis
Predictive analytics will help identify claim characteristics that drive exposure. These characteristics coupled with claims handling experience create the opportunity to change the course of a claim.
To test the efficacy of the actions implemented, a before-after impact assessment serves as a measurement tool. Otherwise, how else can program stakeholders be sure that the actions that were taken actually achieved the desired effects?
Say certain claim management interventions are proposed to reduce the duration of a particular claim. One way to test this hypothesis is to go back in time and evaluate the interventions against previous claim experience. In other words, how does the intervention group of claims compare to the claims that would have been intervened on in the past had the model been in place?
An analogy to this past-present analysis is the insight that a pharmaceutical trial captures through the use of a placebo and an actual drug, but instead of the two approaches running at the same time, the placebo group is based on historical experience.
4) Making data actionable
Information is everything in business. But, unless it is given to applicable decision-makers on a timely basis for purposeful actions, information becomes stale and of little utility. Even worse, it may direct bad decisions.
For claims data to have value as actionable information, it must be accessible to prompt dialogue among those involved in the claims process. Although a model may capture reams of structured and unstructured data, these intricate data sets must be distilled into a comprehensible collection of usable information.
To simplify client understanding, ACE 4D produces a model score illustrating the relative severity of a claim, a percentage chance of a claim breaching a certain financial threshold or retention level depending on the model and program. The tool then documents the top factors feeding into these scores.
5) Balancing action with metrics
The capacity to mine, process, and analyze both structured and unstructured data together enhances the predictability of a model. But, there is risk in not carefully weighing the value and import of each type of data. Overdependence on text, for instance, or undervaluing such structured information as the type of injury or the claimant’s age, can result in inferior deductions.
A major modeling pitfall is measurement as an afterthought. Frequently this is caused by a rush to implement the model, which results in a failure to record relevant data concerning the actions that were taken over time to affect outcomes.
For modeling to be effective, actions must be translated into metrics and then monitored to ensure their consistent application. Prior to implementing the model, insurers need to establish clear processes and metrics as part of planning. Otherwise, they are flying blind, hoping their deliberate actions achieve the desired outcomes.
6) The bottom line
While the science of data analytics continues to improve, predictive modeling is not a replacement for experience. Seasoned claims professionals and risk managers will always be relied upon to evaluate the mathematical conclusions produced by the models, and base their actions on this guidance and their seasoned knowledge.
The reason is – like people – predictive models cannot know everything. There will always be nuances, subtle shifts in direction, or data that has not been captured in the model requiring careful consideration and judgment. People must take the science of predictive data analytics and apply their intellect and imagination to make more informed decisions.
Please download the whitepaper, “ACE 4D: Power of Predictive Analytics” to learn more about how predictive analytics can help you reduce costs and increase efficiencies.
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with ACE Group. The editorial staff of Risk & Insurance had no role in its preparation.