Technology-fueled audits drive improved RM decisions, results
To that end, according to Dawn Zoppa, executive director, Commercial Business at CS STARS, a business unit of Marsh, managing the total cost of risk as it relates to claims includes adopting automated strategies that more easily deliver periodic claim, safety, compliance and other types of audits to ensure all programs are performing as expected.
At CS STARS, that means serving two main client groups, one being the risk management departments of client organizations, and the other being carriers and third party administrators (TPAs) serving their own clients. In both cases, the advantage of having an auditing platform to manage claim costs in today's economic landscape, whereby everyone is trying to do more with less, is proving to be a winner.
"When you look at this from a claims perspective, the costs of claims for auto, general liability and/or workers compensation represent a huge amount of any casualty program," Zoppa said. "If you combine the recent rash of catastrophic losses with the faltering U.S. economy and its impact on Workers Compensation, it all factors in to how sensitive these loss programs can be.
"Organizations want an independent verification that claims are being handled properly and all the avenues available to a claims shop are being utilized," she added. "This is at the heart of the increased auditing demand."
For example, Zoppa explained, audits provide checks and balances to keep the claims process from straying off course. Clues - such as an increased number of calls and complaints from providers and claimants, or fluctuating or inadequate reserves - are dangers signs that can surface via auditing.
"It also could be a sudden change to the types of claims you are accustomed to seeing," Zoppa said. "In the case of a carrier, maybe you have never written before in a specific industry, so claims may be different and look and respond differently, and the result is that they aren't adjudicated effectively, subrogation opportunities are missed, and your potential for compliance fines and penalties is increasing.
"Auditing tools can help you see patterns that indicate that something is wrong, and they can help you get at those red flags," she said. "Audit results often give you reason to take pause and investigate further to understand what's happening."
Zoppa added that CS STARS' Audit helps facilitate a claim audit and also delivers the technology to streamline the audit. It also allows the user create action plans around things that are noted in audits, and allows them to track any corrective measures so they can later report on their effectiveness.
"Demand is up for auditing tools," she said. "This is something clients are trying to get their arms around because it is so critical to drive costs and keep risks as low as possible."
One CS STARS' client, Medical Mutual Insurance Company of North Carolina, in Raleigh, took advantage of the audit tool to create a risk assessment process featuring real-time, comparative analysis reporting for insured medical providers and medical offices. Medical Mutual uses its customized version to do an initial assessment, whereby insureds receive detailed information regarding any issues that qualify as risk exposures compared to their peers.
Six months after the initial evaluation, reports and actions plans, a Medical Mutual risk consultant conducts a follow-up visit that captures changes in performance. Those positive changes result in an updated report generated to identify remaining critical risk exposures.
"When I first arrived at Medical Mutual, the department was using a home grown application. It required constant attention to maintain and had little capacity for meeting our expanding needs," said Marsha Hughes, vice president, risk management, at Medical Mutual. "As we explored possible vendor options, there were none that offered a specific risk assessment to meet our need. However, once we saw the CS STARS audit tool, we immediately recognized its potential. We had the knowledge to develop the content. CS STARS had an easily customized tool with all the other features we wanted."
Today, Medical Mutual has transferred much of the remaining technological work to their internal IT department, a very smooth transition, she noted.
Hughes says one of the most exciting aspects of the risk assessment tool is the real-time reporting. As soon as the risk consultant completes the on-site assessment, the reports are immediately generated with the results presented the same day.
"Once the risk assessment results are presented to the providers, the reports are saved as PDF documents and placed on a thumb drive for the practice manager," she said. "Because the report classifies risk exposures into two levels, the practice manager now has a prioritized project plan to assist the group in focusing efforts toward making change."
For example, one of the largest exposures is the lack of a patient tracking system -- a critical risk factor in malpractice cases. Another exposure surrounds provider-to-provider communications. For physicians who attend the final presentation and learn about their risk exposures, continuing medical education (CME) credits are awarded by Medical Mutual.
Janet Dell, managing director, CS STARS Software Product Delivery, noted clients such as Medical Mutual are heavily involved in design aspects of the audit tool. With budgets smaller and companies doing more with less, this type of tool can make a big difference. It even can help clients who use the tool prior to exploring the insurance marketplace.
"With the audit tool helping them, they can take on a higher risk exposure, for example, to save on premium costs," Dell said.
Risk management departments are evolving, and they are immersed in all aspects of risk management, not just losses, she added. By using an audit tool, they can get ahead of any issues, even if they have hundreds of locations and time zones. An auditing tool delivered using SaaS can help them gather responses with minimal staff and costs and track the process.
Bottom line, the result is higher productivity because the more mundane tasks are automated, leaving more time for risk management analysis and strategic efforts.
"The audit tool resonates with clients who want to do root cause analysis or to measure compliance with standards they want enforced," Dell said. "For safety management, it can identify whether a client is compliant with a company's best practices. For example, do they have sprinklers within 10 feet of doors? More importantly, are there action plans in place to address exposures and risks and how to mitigate them?"
On the technology front, Dell said client demand is growing for a mobile app, and so CS STARS responded with an iPad solution that can be used anywhere at any time. Clients regularly provide feedback on pain points and CS STARS responds with changes to their existing tool to meet those needs. And even if the client does not use STARS software for RMIS or Claims Administration, the auditing tool can be purchased as an unbundled feature.
"They can feed any RMIS data into this solution," Dell said. "That is not a problem."
For Medical Mutual, the flexibility of the CS STARS audit tool was an excellent choice in building its successful, award-winning risk assessment process, said Hughes. As a result, the Medical Mutual risk assessment process identified 4,800 critical process risk exposures between 2007and 2010. Of those, the medical practices corrected 3,600 -- a 75 percent reduction in medical malpractice exposures.
"We believe the most innovative aspect of this process is in the real-time reports provided to physicians and practice managers," she said. The reports feature a dynamic color rating on each graph for an instant visual, which allows for immediate viewing of the level and types of risk identified during the assessment process. The reports also generate a comparative analysis to other practices that have undergone an assessment. This, along with Medical Mutual's recommendations, assists medical practices in decreasing risk exposure.
"Our goal is to measure the change in performance, which leads to an improvement in patient safety and a concurrent reduction in malpractice claims," Hughes concluded. "The CS STARS solution delivers the foundation in reaching that goal."
(The above piece is part of our continuing Perspectives series designed to highlight key products and services to our readers. This paid-for Perspective was written and edited by Risk & Insurance®
on behalf of our marketing partner. Additional Perspectives can be found on our Web site at www.riskandinsurance.com/.)
September 14, 2012
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