Call it the victory of the think tanks, plus a much needed dose of self-discipline.
I sense a hockey-stick pattern of improvement. Incremental work on cost drivers recently flexed upward into rapid gains in how we think about the design, delivery and cost of helping workers recover from injury.
To get where we are today meant freeing ourselves from an actuarial mindset--really accounting for final costs--and asking clever questions about how costs accumulate. It required better data. We no longer tolerate an injury noted as "bad foot."
Ten years ago, if you wanted to influence state policy, say on medical fees, you weren't expected to bring decent data to the table to argue your case. Managed-care innovations in the '90s were largely introduced without serious data analysis. I remember because I was there.
What a shift in expectations we've seen. A few years ago, California passed workers' comp reforms. There was some analysis introduced before reforms, but there's since been a cornucopia of very good quality from several independent think tanks.
The Workers' Compensation Research Institute is the national leader in analysis of state-mandated workers' comp benefits. Rick Victor, founder and chief executive, says he is not in the apparition business, but in credible analysis of benefits based on years of scrubbing data.
He gets most of his claims data from insurers and third-party administrators. "I think the quality of the data is driven by the usefulness of the data in the business processes of the claims-payers," he said. "I think that they have increasingly seen the value of data as a competitive edge."
The employer community has nurtured two think tanks to look at work injuries in the context of other personnel benefits and costs.
They are the EMPAQ program, sponsored by the National Business Group on Health, and the Health and Productivity Intelligence Suite, offered by the Integrated Benefits Institute. They are sufficiently different and insight-rich that employers can benefit from both.
Helen Darling, president of the NBGH, wants EMPAQ to help employers improve outcomes. The EMPAQ reports give senior managers the "Oh my!" moment when they see the return on investment of their programs. EMPAQ has just partnered with the University of Michigan's Health Management Research Center.
Tom Parry, president of IBI, told me about two new affiliations. One is with the Midwest Business Group on Health. Another is with Ronald Kessler, a Harvard Medical School expert on health and productivity.
Both think tanks have figured out how to import employer data from intermediaries and compile credible industry-specific benchmarks.
On another front, workers' comp insurers are now forced to be more diligent in projections of future benefits costs. I've suspected that loss reserve swings are due to weak information systems plus executive temptation to game financial reports.
Better claims data and Sarbanes-Oxley--which demands more self-discipline--have induced insurers to be more careful about projecting costs. Will insurance cycles moderate? I think so.
We will look back on this decade as being full of transitions toward a more thoughtful way of managing work injuries, better medical care and more stable costs. Underlying these transitions is the IT phenomenon.
PETER ROUSMANIERE, a Vermont-based consultant and writer, is the workers' comp columnist for Risk & Insurance®.
READ MORE: Features | Special Reports | Industry Risk Reports | Columnists | In-Depth Series
September 15, 2007
Copyright 2007© LRP Publications