Thomas Jefferson University Change Creates Workers' Compensation Success
At that point, the University's workers' compensation program was self-insured and self-administered. Self-insuring was still the best option from a risk financing perspective, but it was very apparent that self-administering the complexities of workers' compensation was no longer an effective strategy, according to Lorraine Sacchetti, Senior Director, Risk Management and Insurance, at Thomas Jefferson University. After all, the school had a book of long-tail open claims (legacy claims), including one dating back more than two decades. The ongoing costs associated with those open claims made for an economic drain; it was time to find an alternative.
"We knew right away we needed to find a strong TPA partner to help with claims administration," Sacchetti explains. "So we went out into the marketplace with a very clear objective--to find the best possible partner to help us revamp our workers compensation claims process. We needed to reduce costs, and close and prevent claims, without sacrificing employee morale or good will."
Four years later, the Thomas Jefferson University plan to partner with a TPA appears not only to be working, but, Sacchetti says, it's been a complete success. Jefferson's search resulted in the school teaming up with Risk Enterprise Management Limited (REM), a national TPA based in Cranbury, N.J. Within the first year of the Jefferson-REM partnership, 56 percent of open legacy claims were closed, and within three years, 92 percent had been closed. Currently, only one claim remains open.
The impressive results don't end there. Since partnering with REM, claim severity is down 16 percent, claim frequency is down 12 percent, and total loss cost per $1,000 of payroll also has been reduced by 16 percent, Sacchetti reports.
On the dollar savings side, the actuarial projection from the period of 2002-2009 is that overall workers compensation costs have been reduced by an impressive $5.2 million.
"That means that if things had remained the same, in terms of administration of the program, our costs would have been $5.2 million higher for claims incurred over that time span," Sacchetti says. "Obviously, that savings is a huge number."
How exactly did Thomas Jefferson University achieve such impressive results within four years?
"We totally revamped our process, and the partnership with REM has been the key," Sacchetti explains. "For one, we boosted our service and care to the employees, but we also managed to experience that significant cost reduction."
She says REM came highly recommended from a number of sources, including Aon Risk Services (which consulted with Jefferson). Sacchetti says the company's motto of "At REM, we take claims personally" is no empty marketing slogan: it is reality.
"REM came in like our business was their business," she says. "They boxed files, organized our claims, and worked with us and Aon Risk Services to write a script so we could resolve those open claims and effectively manage new claims as well."
Sacchetti says the legacy claim situation was one of two major issues resolved smoothly and relatively quickly with REM's help, producing $1.5 million in ultimate liability savings. REM also helped Jefferson meet its second critical challenge, data management.
"Our data management situation was antiquated," she says. "REM brought their team in and using their system and expertise, did an excellent job, with no transitional problems."
The new data management solutions, she adds, allow Jefferson to execute excellent reporting processes and data internally, as well as with state agencies and brokers alike.
Of course, REM also brought its qualified adjusters into the mix, giving a much-needed boost to the program. For example, REM helped the school revamp its defense counsel panel, resulting in expense savings compared to the self-administered program.
"We took a hard look at where they were spending money," says REM's Lisa Iamonaco, the claims manager working with Jefferson. "We dig deep into a client's claims and exposures as if it's our money. We look for claim resolutions that are fair, efficient and fast. Most of all in their case, we avoided unnecessary third and fourth rounds of litigation, which can get very expensive."
Jefferson also hired an in-house workers' compensation claims manager, Joe Casciato, who was instrumental regarding the implementation of an effective, and aggressive, return-to-work component.
"Jefferson University has been able to accommodate getting employees back to work by instituting a very progressive strategy," Iamonaco says.
Sacchetti explains that apart from the main components of the new workers' compensation claims process, REM also is in the forefront of legislative changes.
For example, REM was "one of the few TPAs" ahead of the curve on Section 111 of Medicare and Medicaid Extension Act of 2007, which added new mandatory reporting requirements for group health plan (GHP) arrangements and for liability insurance (including self-insurance), no-fault insurance, and workers' compensation.
"They made it seamless for us," Sacchetti says. "Ultimately, we are responsible for the Section 111 data reporting, but they gave us direction and coordinated the process." Best of all, REM delivered that help at no fee to Thomas Jefferson.
A few other key accomplishments realized within the past four years include a point of first care program at an occupational medical center, a transitional job program, and an increased focus on loss prevention.
"With REM's help, we know what we have and we are doing a very good job at managing our workers' compensation situation," she says. "The day-to-day worry and stress has been greatly relieved through partnership with REM. Not only do they treat our program like it's their own, everyone we've worked with at REM has shown a clear a commitment to excellence."
Of course, dollar savings won't mean much if employees believe they are treated unfairly, but that's not part of the REM equation, Sacchetti says.
"Today, we are spending our dollars the right way, for the right medical care," she says. "In fact, we are right on target meeting NCCI's recommended benchmark--spending 60 percent of claims dollars on medical costs and 40 percent on lost work time."
"After our experience, I am convinced they are the best," Sacchetti concludes. "I don't believe you are going to get any better results from a workers' compensation TPA. We will continue to be hands-on with our approach to claims management and we have tremendous trust in our TPA partner to work with us to continually improve our program. That says a lot about REM."
(The above piece is part of our continuing Insights series designed to highlight key products and services to our readers. This paid-for Insights was written and edited by Risk & Insurance®
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February 10, 2010
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