Often you see references to “Best Practices” in the handling of workers’ compensation claims without an explanation as to what they are or what the insurance industry standards are for handling work comp claims. While “Best Practices” vary slightly from insurance company to insurance company, here is a synopsis of the basic standards of how the insurance adjuster handles work comp claims.
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Coverage:
The very first thing a work comp adjuster does is verify the coverage by checking the policy number, policy dates, and insured name.
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3 Point Contacts:
The adjuster makes voice contact (in person contact on severe claims) with the employer, the employee and the treating physician within 24 hours of the claim being reported to the claims office.
Proper contact involves an exchange of information with the employee, the employer and the doctor’s office, not just leaving a voice mail or sending a form letter. On claims of questionable compensability or with subrogation potential, a recorded statement from the employee needs to be obtained.
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Investigation:
The adjuster addresses all issues affecting coverage, compensability, subrogation, extent of injuries and benefits within 14 days of the receipt of the claim.
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On-going Contacts:
Consistent and on-going contact with the employee (or attorney), the employer and the medical providers are essential to getting the employee back to work as quickly as possible.
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Data records:
All data input is completed within 72 hours of receipt of the claim. These sample data items must be correct on every claim: loss location codes, body part codes, and description of injury codes.
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Reserves:
The initial file reserves are usually set at the completion of the 3-point contacts and within 72 hours of the claim being reported. Once the adjuster obtains the initial medical records, the reserves are reviewed for accuracy. Any subsequent medical records or other information impacting the value of the claim usually results in a reevaluation and changes in the file reserves.
On severe claims where the file remains open for an extended period of time, the reserves must be checked for accuracy ever 6 months.
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Average Weekly Wages:
The adjuster obtains information documenting the employee’s wages within 14 days of receipt of the claim.
Compensability:
The basis for the acceptance or the denial of a claim is documented in the file within 14 days of receipt of the claim.
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Payment of Benefits:
The file clearly outlines how the indemnity benefits were calculated and confirm the benefits were paid on time (varies per jurisdiction).
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ISO Filing:
The index filing is completed within 14 days of receipt of the claim. (Most companies have gone to index filings on only the lost time claims). If the index filing reflects a prior claim, the work comp adjuster follows-up with the prior insurer for information on the prior claim.
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First Reports (Claims Handled by TPAs):
When claims are handled by a third-party administrator (TPA) rather than the insurer, it is standard for the TPA to provide a report to the insurer within 14 days outlining the coverage, jurisdiction, compensability, medical management, benefits, subrogation (if applicable), subsequent injury fund (if applicable), reserves, payments and action plan.
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Status Reports (Claims Handled by TPAs):
Regularly scheduled status reports updating the insurer on file developments are completed by the TPA’s work comp adjuster. Depending on the status of the claim, the status reports may be every 30 days, 60 days or 90 days, however important developments on the claim is immediately reported to the insurer.
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Action Plans:
The file contains an outline of the steps the adjuster plans to take to bring the file to a conclusion. The outline contains a date for each issue, problem or concern to be resolved.
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Medical Management:
The work comp adjuster knows the nature of the injury, the cause of the injury, the treating physician’s diagnosis, the prognosis, the treatment plan and the return-to-work status. On severe claims, the adjuster coordinates/supervises the nurse case manager’s involvement in the claim.
Where applicable, the adjuster (or the nurse case manager) provides the treating physician with the necessary information for utilization review and pre-certification.
If the adjuster’s office utilizes a medical bill review company to verify proper billing, the adjuster must be sure the medical bills are provided to the vendor for processing.
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Return to Work:
The adjuster coordinates with the employer and the medical provider the employee’s to return to work as soon as possible on modified duty or full duty, as appropriate.
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Subrogation:
As part of the investigation, the adjuster determines if any third party can be held responsible for the employee’s injury. If so, the adjuster places the third party and their insurer on notice of the intent to subrogate. Once the claim is concluded, the adjuster or the designated subrogation adjuster pursues recovery of the amount paid on the claims.
Subsequent Injury Fund/Other Offsets:
- In the jurisdictions with a subsequent injury fund, the fund is placed on notice of the claim as soon as medical information reflects the potential for recovery from the fund.
- The file reflects how social security disability benefits, short-term or long-term disability benefits, unemployment benefits or any other benefits the employee is receiving will impact the amount paid on the claim.
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State Filing:
Properly completes and files on time, all state required forms.
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Litigation Management:
All files requiring defense counsel are assigned to counsel on time. The initial assignment of the file to defense counsel provides instructions to counsel on how the adjuster wants to proceed with the claim. Any issues or disputes are brought to defense counsel attention with a request for counsel’s recommendations.
A litigation budget is submitted by the defense attorney outlining the projected cost of defending the work comp claim.
The adjuster provides defense counsel with on-going instructions on how the adjuster wants to proceed with the claim. All reports from the defense counsel are reviewed and answered as appropriate. All billing from defense counsel are reviewed and approved, if appropriate or questioned, if needed.
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Diary:
When the adjuster completes the initial 3-point contact, all further activity on the file is planned and placed on the adjuster’s calendar for completion. All issues noted in the Action Plans are given a diary date for completion. The diary is kept current until the file is completed.
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Progress Notes:
Every activity completed by the adjuster is noted in the file notes. The file notes are clear, comprehensive, concise and understandable.
If the adjuster completes each of these “Best Practices,” the quality of the work comp claim file reaches a high standard, and claim resolution is appropriate.
Author Michael Stack, CEO Amaxx LLC. He is an expert in workers’ compensation cost containment systems and helps employers reduce their workers’ comp costs by 20% to 50%. He works as a consultant to large and mid-market clients, is a co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center .
Contact: [email protected].
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Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.
