Every risk manager and employer in the country depends on a workers compensation claims team to proficiently respond to their employees’ workplace injuries. Even with impressive improvements in workplace safety, job site injuries remain a major loss exposure for many employers. Yet access to reliable information about claims team performance, generally or comparatively, has been scarce.
Cumulative data from a five-year, 1,700 participant survey project may provide some answers. The annual Workers Compensation Benchmarking Study, founded in 2013 and published by Rising Medical Solutions, pinpoints the top three traits that make the top quarter of claims teams better than the rest. These summary findings reveal steps claims executives can take to improve claims outcomes. Risk managers and self-insured executives will find the results useful in drafting RFPs for claims management, and in reviewing their workers compensation programs, in-house claims operations, or third-party administrators.
- Best performers focus more on what is most important
Since the study’s onset, claims executives—the majority of whom work for employers, insurers and third-party administrators—have been asked to rank in order of importance the 10 core competencies most vital to successful claims outcomes. Survey participants have consistently ranked medical management, disability/return-to-work (RTW) management, and compensability investigations as the top three capabilities most critical to claim outcomes
Survey participants also define an “employee’s return to the same or better pre-injury functional capabilities” as the number-one criterion for a good claims outcome. This definition reflects a shift away from a more legal compliance, reactive culture and towards a more proactive, service-oriented approach. The 1,700-plus survey respondents clearly say that this is the business they are in.
However, there are striking stratifications in this “business” with higher performing claims teams outpacing lower performers by factors of five, six, and 10 respectively when it comes to measuring their performance within core competencies, measuring claim outcomes based on evidence-based treatment guidelines, and measuring claim outcomes based on evidence-based disability duration guidelines.
The study was able to separate high performers from lower performers by ranking respondents by their claims closure ratio. A closure ratio of 75% means that for every three claims closed, four are opened. Organizations with a closure ratio of 100% run a tight ship, closing claims at the same pace they are opening new ones. Claims experts involved in the study agree that a claims ratio of 101% or higher is a reliable sign that the organization is managing claims outcomes effectively and superiorly.
High performers send a strong message that measuring medical care and return to work directly influence claims outcomes. Specific examples include gauging provider performance by average medical spend, average narcotic use and average number of temporary total disability (TTD) days, which higher performers do five, six, and three times more than lower performers.
Another step is to strategically apply medical resources by assessing claim risk factors and prescribing the best interventions, particularly through the use of both predictive and prescriptive analytics—something higher performers use eight and three times more. We have seen such targeted and early interventions decrease overall managed care costs by 20% or more (e.g., fewer bills per claim, less utilization review, less field case management). With nurse case management consistently ranked as the most valued of 10 medical management tools, and half of all study respondents outsourcing this function, carefully streamlining and directing such programs is imperative.
For claims executives and system designers, the message is clear: Focus on and measure key core competencies more in order to succeed.
- Best performers invest more in people
Superior claims teams better equip and better capitalize on their most important asset, their claims talent. First, when it comes to arming adjusters with decision support tools known to improve claims outcomes, they do so four to five times more than lower performers.
They also consistently cultivate talent in ways other organizations do not. Higher performers are notably more engaged in developing their claims staff. In response to the industry’s talent crisis, higher performers are more likely to raise staff performance expectations, spend money on training, and nurture mastery throughout their adjusters’ careers.
When asked about early staff development, most respondents say it takes up to three months of training before new claims adjusters are ready for a full case load. But 51% of training programs provide adjusters with no more than 40 hours of formal training.
Training that is provided tends to focus on basic process tasks to meet regulatory requirements. But higher performers also cultivate their adjusters’ soft skills. Take communication and critical thinking. The adjuster must listen, describe, assign, visualize, predict, explain, adapt, and negotiate. Currently, 42% of claims teams conduct communication skills training for adjuster staff and 32% provide critical thinking training. Top performers are four times more likely to do so for each of these skill sets.
They also view training as a continuum, investing in career-long learning opportunities seven times more throughout their adjusters’ employment.
Another way top performers stand out is they use advocacy-based claims models four times more than lower performers. This employee-centric approach is in stark contrast with the industry’s adversarial and compliance-focused methods of employee interaction. The study’s multi-year results indicate that consumer-driven models around injury recovery have emerged as a competitive advantage, both from a claims outcome and a claims staff recruitment/retention perspective.
- Best performers invest more in advanced tools and techniques
The most successful claims organizations are far more likely to have higher IT budgets and engage in numerous technology initiatives. Here are a few differentiators:
- Results indicate 41% of organizations leverage various outcome-based systems/data; and top performers do so six to 10 times more.
- Only a third of claims operations use predictive analytics yet, again, high performers use it eight times more.
- About half of all organizations use a data warehouse today, and usage among high performers is five times the rate of lower performers.
Data warehouses accelerate claims resolution by focusing claims staff on high priority threats and opportunities and removing clutter. These central data repositories can produce meaningful intelligence by integrating claims, medical bills, legal documents, case management files and numerous other data sources into a full visual display of a claim.
Closing the Performance Gap
With only 24% of claims teams achieving top performer status, what steps can the remaining 76% take to advance their operations?
The data is clear. The best claims teams use an outcome strategy, versus a process improvement strategy for success. They 1) measure outcomes, 2) equip their claims talent to better influence outcomes, and 3) allocate more financial resources to outcome management tools.
For instance, take the goal of reducing litigation. First, an organization’s focus on measuring outcomes that facilitate an employee’s “return to the same or better than pre-injury functional capabilities” will prompt claims staff to remove barriers to recovery. Second, building claims talent will lead to developing the skills staff need to overcome these barriers—often skills in the critical thinking and soft skill categories. Third, investing in information technology can lead to predictive and prescriptive models that guide claims professionals to proactively anticipate and address barriers that have been specifically identified as leading to litigated claims.
As the industry moves forward, we can count on employers being predominantly interested in outcomes. Injured workers are only interested in outcomes—theirs. For those claims teams that choose to close their performance gap, the path to success is well-marked.