Self-insured employers can have a good safety program, an established return-to-work program and knowledgeable nurse case managers, and still pay way too much on their workers’ compensation claims.  Ineffective claims management can wipe out most or all of the cost savings achieved through your efforts to control cost.  Whether you have your own claims office, or have a third party administrator (TPA) handling your workers’ compensation claims, poor claims handling will always result in higher claims costs.

Need to Know If Following Best Practices

The challenge for the risk manager is to know whether or not the work comp claims are being handled properly.  The risk manager can personally be involved in each claim for compliance with the Best Practices for Workers’ Compensation claims guidelines, but that defeats the purpose of having company claims adjusters or a TPA if the risk manager has to direct all the work on the claims.

An alternative approach is to have the claims supervisor or claims manager review each claim file for proper claims handling, but that often results in minimal improvement.  The claims supervisor or claims manager has a vested interest in not pointing out what could be construed as their failure to properly manage the claim adjusters.

Determine If You Need An Independent Claims Audit

The best solution to determine the quality of the claims handling is to bring in an independent claims auditor.  The independent claims auditor has no conflict of interest when reviewing the claim files and can provide an unbiased evaluation of the quality of your claims handling.  Here is a checklist to determine if you need a claims quality audit.

[  ]     You have noticed deviations from your Best Practices guidelines

[  ]     You have noticed gaps in the investigation of claims

[  ]     Information that should have been known during the initial investigation of the claim turns up later in the life of the claim

[  ]     The adjusters are not staying current on their diary system

[  ]     You have received an inquiry from the Industrial Commission, Work Comp Board, or Insurance Commissioner’s office

[  ]     You have received complaint calls from employees or from the employees’ supervisors or managers

[  ]     Your claim cost is increasing faster than the rate of inflation

[  ]     The average age of your claims is increasing

[  ]     Your claims are open longer on average than your industry’ average

[  ]     Your loss run contains errors on loss location, injury description, type of claims

[  ]     Your claim reserves are being stair-stepped (many reserve changes on one file)

[  ]     Your actuary’s recommended reserves differ significantly from the reserve on the files

[  ]     You have noticed significant reserve increases right before claim settlement

[  ]     You have noticed missed subrogation opportunities

[  ]     You have noticed experienced adjusters being replaced with adjuster trainees or significant personnel turnover in the claims office

[  ]     The adjusters have high caseloads

A Claim Audit Is Recommended If You Checked One or More Above

If you checked one of the above categories you should consider an independent claim file audit.  A claim quality audit is recommended if you have checked two or more of the above categories.

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: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: https://blog.reduceyourworkerscomp.com/

©2018 Amaxx LLC. All rights reserved under International Copyright Law.

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

Self-insured employers, insurers, third party administrators, and government entities all use workers’ compensation claim quality audits to measure the performance of the claim adjusters, supervisors, and over-all claim staff. Common uses of claim file audits include measuring compliance with Best Practices, verifying the accuracy of reserves, identifying leakage, preventing fraud, and improving subrogation recoveries. As self-auditing often results in the inability to see the forest due to all the trees, claims management frequently turns to an outside independent claim file auditor to ensure unbiased and objective opinions in the claim audit.

Both Closed and Open Claims Files Should be Audited

Critics of claim file audits often complain that audits are retrospective, as the Best Practices have already been missed or the leakage has already occurred. The critics are correct if only closed files are being reviewed. However, when open claim files are audited, and the audit results are acted on promptly, substantial savings can be had.

When open workers’ compensation claims are reviewed, issues that have been missed can often can still be corrected. This is true because once the claim is paid and closed, it is too late to investigate compensability, arrange for an earlier return to work, provide proper medical management, adjust incorrect reserves or negotiate a better settlement.

A complete claim file audit not only provides a report on the correct or incorrectness of individual files, but also includes an aggregate report of the various claim handling procedures that have been reviewed. The most common way of tabulating or scoring an audit category is based on 100%. Usually, a score of 90% or higher is considered acceptable, and a score of 95% or higher is considered good. Hence, a score of 96% in the category of medical management would be good, but a score of 76% would indicate a lack of quality in medical management and the need for the adjuster to improve in this area.

When the claim file audit is limited to open files, the adjuster/supervisor/claims manager has the opportunity to correct files where an important part of proper claims handling has been missed. In the above theoretical example where the claims office scored 76% in the medical management category, the aspects of the medical management that have been missed could be completed. This would positively impact the overall medical cost of the claim and possibly also reducing the indemnity portion of the claim by getting the injured employee back to work faster.

Management Benefits By Identifying Weak Spots In Claims Handling

By identifying both individual files where claim handling errors occurred and by identifying claim handling categories where either an adjuster is weak or the entire claims office is weak, management benefits in several ways, including:

• Management can focus training resources on specific issues, whether with a single claims adjuster or the entire claims office
• Data provided can be used by claims management to support the need for procedural changes, additional personnel, or personnel restructuring
• Reserving data can be used to verify the accuracy of, or the need to adjust coverage underwriting

By having an independent claim file audit, the self-insured employer, insurer, third-party administrator or government entity can use the information gathered to improve the overall quality of the claims handling, and in doing so, significantly impact the cost of workers’ compensation claims. For more information on how an independent claim file audit can improve claim quality and reduce the cost of claims, please contact us.

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: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: https://blog.reduceyourworkerscomp.com/

©2018 Amaxx LLC. All rights reserved under International Copyright Law.

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

A claims auditor was brought in because a self-insured employer was seeing an acceleration of the average workers’ compensation claim cost. The employer was dismayed to know that, in comparison with other employers in their industry, they were paying nearly double the cost on each workers comp claim. The safety consultant had already reviewed their safety program and had made some minor tweaks, but nothing that would have any significant impact on their claims or their claim cost.

By the end of the claims audit’s first day, the claims auditor knew what was driving the cost of the workers’ comp claims sky high. There was no investigation by the adjusters of any of the claims when they were reported to the third party administrator (TPA). In each claim, the first file note was, “Called employer; they do not question the claim.” That was it. There was no other investigation on the claim.

A proper claims investigation entails various aspects, far more than confirming with the employer that the claim was reported! The claims investigation has to be much more than asking the employer if the employer is suspicious of the claim.

Start Investigation Based on Facts & Circumstances Reported by Employer

Each claim is unique. Sure, there will be a lot of similarities with previous claim files, but the facts and circumstances surrounding the injury will vary. The investigation should be started based on the facts and circumstances reported by the employer. It is the claims adjuster’s responsibility to review all the information about the claim to both weed out the claims that should not be paid and to control and manage the claims that are owed.

It is a commonly accepted premise in the insurance industry that good claims handling leads to good results and poor claims handling leads to poor results. This applies to both the claim of questionable authenticity and the valid claim. If a valid claim has poor claims handling, the claim cost will be higher. The first step in the process of having a successful claims management program is a good investigation of each claim.

Start Investigation Immediately

Immediately upon assignment of the new workers’ comp claim the adjuster should begin the investigation. Immediately (meaning, in the first few minutes) is not always possible. But the longer the adjuster delays to start an investigation, the poorer the results. If the TPA’s published best practices state same-day contact – that is good. If best practices state 24-hour contact – that is acceptable. If best practices have no time limit for making contact with the employee, employer and medical provider, or if the time limit is longer than 24 hours, the TPA is putting their own interest and what is easy and best for themselves ahead of what is best for the employer.

The first investigation step is to contact the employer to review all known information about the claim. The mistake the adjusters made in the claims audit noted above was contacting the wrong person at the employer. They were discussing the claim with the workers’ comp coordinator for the employer. The person(s) the adjusters should have been contacting was the injured employee’s direct supervisor and co-workers who saw the accident. If no one saw the accident, then the adjuster should contact the first person the employee advised of the accident. The reason for this is to establish exactly what happened, the nature of the injury, and the extent of the injury.

It is better for the adjuster to discuss the accident with the employer first, but that is not always possible. If the adjuster is unable to reach the employer, the adjuster should still make immediate contact with the employee. The quality of the adjuster’s contact with the employee is key. The contact needs to be thorough with the adjuster learning as much as can be learned about the claimant and the accident. If there is any question about the validity of the accident, or there is the possibility of subrogation, or the injury is severe, the initial interview should be in the form of a recorded statement from the employee.

19 Points to Cover in a Proper Workers’ Comp Claim Investigation:

1. The details/facts of how the accident happened.
2. The names of aall co-workerswho witnessed the accident.
3. The nature of the employee’s disability.
4. The extent of the injury and all body parts that were injured.
5. Has the employee previously had an injury to the body part(s) involved in this accident?
6. A review of all prior injuries – work, vehicular, recreational, etc.
7. Verification of all information on the employer’s first report of injury.
8. Confirmation of all information to support subrogation.
9. A description of the employee’s job duties.
10. The employee’s job title.
11. The equipment or tools involved in the work at the time of the injury.
12. The experience level of the employee – how long on the job, and prior experience in the same type of work with other employers.
13. Confirmation of lost time.
14. The availability of modified duty work.
15. The identification of all medical providers for the injury.
16. The type of medical care being provided.
17. The nature of any pre-existing medical conditions – obesity, diabetes, etc.
18. Any concurrent treatment with pre-existing medical conditions.
19. The identification of pre-injury medical providers if pertinent to the claim.

At the conclusion of the interview with the employee, the adjuster should discuss the indemnity benefits that will be provided, the employer’s desire to get the employee back to work when the employee is medically capable of doing so, and the need for the adjuster and the employee to stay in contact. The adjuster should arrange for the employee to call the adjuster after each medical appointment to provide an update on the status of the medical treatment and the employee’s work status.

Assess Injured Workers’ Attitude

Contact with the employee should give the adjuster insight into the claimant’s attitude toward:

1. The employer.
2. The medical treatment.
3. The early return to work.
4. The benefits provided by workers comp.

The relationship between the adjuster and the employee should not be an adversarial one, but one of mutual cooperation where the adjuster does whatever can be done to facilitate the employee’s recovery and return to work.

Timely Investigation Allows Adjuster to Better Manage Claim

A timely initial investigation allows the adjuster to better manage the claim. By establishing contact with the employee and discussing thoroughly the aspects of the claim, the adjuster significantly reduces the likelihood of attorney involvement, the treatment of unrelated medical conditions, the inclination of the employee to take extra time off work, and the likelihood of co-workers thinking it is easy to “take a vacation on comp.”

A proper investigation allows the adjuster to manage the many facets of the claim as it develops. It allows the adjuster to make an early and proper determination of compensability and to pay benefits quickly and correctly. It facilitates the timely involvement of medical management. And, the proper investigation leads to much lower claims cost.

Author Rebecca Shafer, JD, President of Amaxx Risk Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality, and manufacturing. She is the co-author of the #1 selling book on cost containment, Workers Compensation Management Program: Reduce Costs 20% to 50%. Contact:.

Contact: RShafer@ReduceYourWorkersComp.com.

Workers’ Comp Roundup Blog: https://blog.reduceyourworkerscomp.com/

©2018 Amaxx LLC. All rights reserved under International Copyright Law.

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

While every workers’ compensation claim is unique, every claim contains certain key events and documents. The best practices established either by the insurer or the third party administrator creates a certain amount of uniformity in the claims.

When you review the workers’ comp claims of your employees, you will see established criteria in the handling of the claims. Each claim will contain information on:

• Coverage
• Contacts
• Investigation
• File Documents
• Evaluation and Settlement

Coverage: 

The very first step the adjuster takes when handling a claim is the verification that there is coverage. This includes checking the policy number to be sure it is accurate; the policy dates to be sure the injury occurred during the time frame covered by the policy; the state(s) covered by the policy; and, any endorsements to the policy or any exclusions of coverage. If any aspect of the coverage verification is missing, the wise adjuster stops any further activity on the file until there is proof insurance covers the claim.

Contacts: 

Once the workers’ comp adjuster verifies there is insurance coverage in effect for the named insured, on the date of the injury, and in a location covered by the policy, the adjuster contacts all involved parties. Whether the adjuster contacts the injured employee first or the employer first depends on the nature and extent of the injury and the time frame of known events. The adjuster also contacts the medical provider’s office to obtain the initial medical treatment information, to provide information to the medical provider on billing for their services, and to provide the medical provider with information on the return to work policy of the employer. Any other parties who may impact the claim are also contacted; for example — witnesses on questionable or severe claims.

Investigation: 

Contact with all parties involved is the start of the claim investigation, but a proper investigation contains many other actions impacting the future outcome of the claim. Some of the investigation steps include:

• A comparison of the details of the accident as provided by the employer, the employee, the medical provider, and any witnesses. Any deviation in the information obtained from the various parties needs to be analyzed by the adjuster.

• The filing of the Insurance Service Office inquiry to determine if the employee has made prior insurance claims, and if so, do they impact the present workers comp claim. For instance, the employee, who suffered a lower back strained in your claim, also had a lower back injury workers comp claim with a previous employer.

• A determination if there is a third party responsible for the employee’s injury, and if so, the documentation needed to pursue a subrogation claim.

• An analysis of the nature and extent of the employee’s injury, the medical treatment plan, and the prognosis for the employee’s recovery.

• An analysis of the employee’s job duties, equipment used, the return to work restrictions from the medical provider and the modified duty information obtained from the employer to determine if a modified duty job is an option.

• A determination as to the future course of action needed on the file, also known as an Action Plan.

File Documents: 

Every claim file has basic claim documents to support the claim and the activity taken on the claim. Depending on the extent of the injury, the file may have additional documentation that might not be found in a simple injury claim. The documents you may see in the claim file include:

• The Employer’s First Report of Injury (FROI).

• The recorded statement summary of the employee and possibly the recorded statement summary of the employee’s supervisor and/or witnesses.

• The required state forms filed with the governmental office enforcing the workers’ compensation statutes of the state.

• The wage statement is showing the employee’s earnings during the required calculation period.

• The Insurance Service Office report.

• The medical records.

• Vocational and/or rehabilitation reports.

• Subrogation documentation.

• Correspondence to and from defense counsel, correspondence to and from the employee’s attorney, and correspondence between defense counsel and the employee’s attorney.

• Reserve worksheets used to calculate the cost of the claim.

• File notes (a log of activities undertaken) making a record of every telephone call, piece of mail, e-mail, fax or other communication on the claim.

Evaluation and Settlement:

When the claim file has progressed to the point where the adjuster can start the evaluation process (usually when the employee has reached maximum medical improvement); there will either be a reserve worksheet or an evaluation worksheet establishing the financial exposure of the claim. The evaluation of the claim includes the compensability, the disability rating, the jurisdictional law, and any legal questions that need to be resolved. The file notes should describe the adjuster’s settlement discussions when they have taken place.

An essential part of risk management is to know as much as possible about the exposures your company faces. We recommend obtaining electronic access (on a read-only basis) to the insurer’s or third party administrator’s claim file. By knowing what is in your claim file, you can contribute any additional information benefiting the adjuster in bringing your employee’s workers’ comp claim to a satisfactory conclusion.

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: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: https://blog.reduceyourworkerscomp.com/

©2018 Amaxx LLC. All rights reserved under International Copyright Law.

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

Looking to reduce your workers’ compensation costs, improve outcomes, lower your ex-mod? Plan and prep for your next claims audit/review. This is a tremendous opportunity to ramp up your workers’ compensation program and make it best-in-class.

Even though the vast majority of employers engage in these sessions the results are fairly dismal; instead of being a synergistic way to improve an injury management program, they often end up as a finger pointing session and lead to the production of a report that sits on a dusty shelf and is forgotten. But with proper planning, execution, and follow-up, you could potentially see your ex-mod cut in half in just a couple of years.

Building Relationships

A claims audit/review brings together the parties involved in the claims handling process; the employer, carrier/TPA, broker, medical experts and any others who might lend some insight. These sessions can benefit an employer in two ways:

• To get a big picture view of how claims are being handled and areas that could be improved
• To look at specific claims and figure out how to move them forward to closure

Planning

The goal of a claims audit/review is to develop a team mentality, where each party understands what the others are doing in working toward a common goal. This requires everyone involved to be open to listening to one another and begin to forge bonds. Follow several specific strategies:

1. Stop the blame game. Too often employers and others see the claims audit/review as a chance to point out what they perceive as failures by the other parties.

• The carrier or TPA is not doing its job
• The adjuster isn’t doing a proper investigation
• The medical providers are not getting people back to work
• The employer doesn’t take responsibility for its role in the process

A session based on finger pointing is a negative waste of time for everyone involved.

2. Set expectations. Each party in the claims audit/review should understand what he is expected to do to help claims progress. The activities of each are dependent on the actions of the others.

For example, the adjuster cannot make 3-point contact within 24 hours of the injury if the employer doesn’t report the claim for several days or longer. The employer must understand his responsibility for timely claims reporting, while the adjuster needs to be committed to making early contact.

3. Keep communication channels open. The audit/review should be seen as the beginning of a relationship, not a one and done event. Employers and adjusters should maintain contact with one another after the session.

4. Select the right claims. For small organizations with just a few claims, it’s appropriate to review every claim. Companies with hundreds of claims must be selective. Ideally, there should be a number of ‘typical’ claims, as well as some that may raise red flags. There are several ways to identify claims to be reviewed, examples include:

• Claims with large reserves, especially if they have been open for more than a year, and medical-only claims that have been open for at least six months.
• Large medical-only claims. An injury that does not render the worker unable to work but includes significant expenses may have something unusual about it that needs to be examined.

The claims selected should not include any personal information about the injured worker.

Execution

5. Review specific aspects. There are a multitude of aspects to every claim that could be discussed and analyzed. But instead of nitpicking, select the areas that are most telling about the claim. For example

• Was the claim reported promptly?
• 3-point contact. Were the employee, employer, and physician contacted within 24 hours of the injury?
• Was a recorded statement taken of the injured worker and witnesses?
• Treating physician. Was medical control established?
• Post-appointment contact. Was there follow-up with the injured worker after the first appointment with a medical provider?
• Were checks issued to the injured worker promptly?
• Did someone contact the injured worker and explain timelines and other aspects of the workers’ compensation process?
• Were state forms filed timely?
• Were they put up properly and timely? And were reserves reviewed for reduction or closure timely?

6. Follow-up. To make the claims audit/review truly meaningful requires the parties to agree on ways to proceed. A designated person should issue a report following the meeting. But rather than it going up on a shelf collecting dust, it should include action steps for each participant which should be agreed upon during the meeting.

Conclusion

Claims audits/reviews allow all the parties to claims handling to come together, determine best practices and identify areas that can be improved. Companies that prepare and are actively engaged in this process reap significant benefits.

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: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: https://blog.reduceyourworkerscomp.com/

©2018 Amaxx LLC. All rights reserved under International Copyright Law.

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

When you go on-line to review the adjuster’s file notes on your company’s lost time work comp claims, do you know what you should see in the adjuster’s Action Plan? If you have not been a work comp claims adjuster, it would be easy for you to miss items overlooked or missed by the adjuster. The adjuster’s file notes should state what was accomplished and what needs to be accomplished to move the file forward.

Each of the items that need to be accomplished should be given a due date and placed on the adjuster’s diary (calendar) for completion. You should see at minimum the date due and the date completed for each of the items in the adjuster’s Action Plan.

Initial Claim Handling Completed Day Claim Received

If your adjuster is following the Best Practices set by most insurers and third party administrators, the initial claim handling was completed the day the claim was received in the claims office. You should see file notes reflecting coverage was verified for the claim, that the employer contact, employee contact and physician contact was completed and the initial reserves were placed on the file.

All of these items should have been completed before the adjuster does the initial Action Plan. If for any reason coverage has not been verified, contacts not completed or the reserving cannot be done, the adjuster’s Action Plan should reflect the item(s) that are outstanding from the initial handling and provide the due date for the follow up on those items to be completed.

Initial Action Plan Checklist

Assuming the first day’s claim handling was completed, the initial Action Plan for the work comp claim should contain:

1.  A follow up date for further contact with the employee (ability to return to work).
2.  A follow up date for further contact with the employer (availability of a modified duty position if the employee is unable to return to full duty).
3.  A follow up date to verify the receipt of the initial medical report.
4.  A follow up date to verify the receipt of the documentation of the average weekly wage (should be within 14 days or less depending on the jurisdiction—in order for the adjuster to issue the first TTD payment or issue a denial of claim).
5.  A follow up date to complete any further investigation of the claim (should be within 14 days of the date the claim was received).
6.  If subrogation is appropriate based on the investigation, a date to put the responsible party on notice of the subrogation claim.
7.  A date to verify the claim is accepted for compensability or the date the claim will be denied.
8.  A date for the TTD benefit payments to be calculated and the first TTD check issued, if applicable.
9.  A date for the completion of the ISO filing (within 14 days of the receipt of the claim).
10.  A follow up date to verify all state required forms have been filed with the state work comp board.
11.  If the file is reportable to an insurer, excess carrier or any other party, the date the reporting will be completed.
12. A date for the next Action Plan to be completed (usually 30 days after the first Action Plan but the time frame can be shorter or longer depending on the severity of the claim).

Second Action Plan Checklist

By the time the second Action Plan is due, most or all of the items outlined in the first Action Plan were completed. Any items not completed are carried over to the second Action Plan with a new due date for each carried over item. Activities you can expect to see on the second Action Plan include:

1. A date for reevaluation of the file reserves (usually 60 days from the date the claim was received in the claims office).
2. A date for evaluation of the need for a Nurse Case Manager on the claim, if the employee has not returned to work, and assignment of the Nurse Case Manager, if needed.
3. A date for coordination of the return to work full duty or modified duty, if needed.
4. A date for the obtainment and evaluation of the disability rating.
5. If the file is reportable to an insurer, excess carrier or any other party, the date the second report will be completed.
6. A date for the next Action Plan to be completed (usually 30 days after the second Action Plan but the time frame can be shorter or longer depending on the severity of the claim).

Third & Subsequent Action Plan(s) Checklist

The third and subsequent adjuster’s Action Plans will vary more in the items that will be included in the Action Plan. Some things to look for in the subsequent Action Plans including their due dates, are:

1. Medical records being obtained and evaluated for all on-going treatment.
2. Regular scheduled follow-ups with the employee, the employer and the medical providers.
3. Regular scheduled contact with the Nurse Case Manager when there is one.
4. The completion and filing of all state forms.
5. The scheduling and obtaining of independent medical evaluation or a peer review.
6. Offsets and deductions being calculated and applied.
7. Second Injury Fund (in the jurisdictions that still have one) being placed on notice
8. A settlement evaluation that is explained and properly justified, including both the strengths and weaknesses of the claim.
9. A Litigation Plan and a Litigation Budget, if the claim is in suit or in a contested board review.
10. All required waivers and/or releases obtaines.
11. CMS notification if a MSA is considered or needed.
12. A re-evaluation of the reserving accuracy.
13. Subsequent filing of the claim with the ISO/Index Bureau.
14. If the file is reportable to an insurer, excess carrier or any other party, the date the next report will be completed.
15. A date for the next Action Plan to be completed (usually 60 or 90 days after the third Action Plan but the time frame can be shorter or longer depending on the severity of the claim).

As long as the work comp claim remains open, the adjuster continues to have an Action Plan outlining the steps to take to bring the claim to a conclusion. The final entry on the adjuster’s last Action Plan for the claim is actually the activity the adjuster looks forward to doing. The final Action Plan activity should read: “Close file.’’

Author Michael Stack, CEO Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is 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: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: https://blog.reduceyourworkerscomp.com/

©2017 Amaxx LLC. All rights reserved under International Copyright Law.

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

One thing seldom heard from the either the insurance company or from the third party claims administrator (TPA) is “we / I made a mistake”. Mistakes happen. The difference between the excellent adjuster and the so-so adjuster is the number of mistakes made. Claims management , supervisors ,and managers also make errors in judgment, or unwittingly commit an oversight. There will not be a list of common claims handling mistakes on the insurance company’s website or TPA’s website. Therefore, we present what are common claims handling errors seen when the claims are audited by an independent claims auditor.

20 Common Adjuster Mistakes

1. The failure to thoroughly investigate the claims including the establishment of the nature and extent of the injuries.

2. The failureto properly document the average weekly wage and to properly establish the TTD rate.

3. The failure to maintain the files on a diary (a regular scheduled file review by the adjuster to ensure all needed activity has been completed).

4. The failureto recognize and document subrogation.

5. The failureto have Action Plans.

6. The failureto read medical reports.

7. The failureto monitor and control medical treatment.

8. The failureto conclude claims in a timely fashion when the opportunities were presented.

9. The failureto know the workers compensation laws in their jurisdiction.

10. The failureto file the appropriate state forms with the Industrial Commissions and Workers Compensation Boards.

11. The failureto maintain contact and rapport with the claimants.

12. The failureto record in the file notes the documentation received on the file.

13. The failure to utilize Independent Medical Examinations when appropriate.

14. The failureto utilize nurse case managers when appropriate.

15. The failureto deny unrelated medical treatment or unrelated body parts when introduced into the claim.

16. The failureto attempt to return injured employees to light duty work when the medical providers approved same.

17. The failureto respond to important developments on the claims.

18. The failure to provide proper litigation management on the litigated claims.

19. The failureof management to provide supervision or guidance to the adjusters handling the claims.

20. The failureof management to maintain continuity on the claims by changing the assigned adjuster on the claim during the course of the claim. (Occasionally it is necessary on a few files but not on a majority of the claim files).

What To Do About It

When mistakes occur in claims handling, the cost of the claim goes up. The insurance premium paid by employers is impacted by both the frequency and the severity of claims. While frequency of claims carries greater weight in calculating the insurance premium, the severity of the claims – what the claims cost – also impacts the insurance premium.

There are several things employers can do to limit the mistakes made on workers compensation claims, including:

• Having a published set of Best Practices and insisting the claims office abide by them.’
• Having a designated adjuster or dedicated adjuster(s) to handle all your claims.
• Verifying the adjuster has reviewed the Employer’s First Report of Injury and has filed all appropriate forms on every claim.
• Verifying the adjuster has obtained the proper wage/salary information for the calculation of indemnity benefits (calculate the indemnity benefit yourself and compare with what the adjuster is paying weekly or biweekly).
• Providing to the adjuster any information you have or receive about the claim, whether it is medical documentation, the employee’s personnel file or even scuttlebutt heard around the office.
• Establish a regular file review. (What get’s reviewed gets done).  If you do not have the time to review the adjuster(s) work yourself, hire an independent claim file auditor to review the files and identify the strong and weak points of the claims handling on your claims.

For additional information on workers’ compensation cost containment best practices, register as a guest for our next live stream training.

Author Michael Stack, Principal, Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is 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: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: https://blog.reduceyourworkerscomp.com/

Live Stream WC Training: http://workerscompclub.com/livestreamtraining

©2017 Amaxx LLC. All rights reserved under International Copyright Law.

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

Claim offices frequently employ a technique known as individual file conferences where the adjuster and the supervisor set aside a specific time to discuss one or more large, serious and/or catastrophic claims. Frequently the workers’ compensation adjuster and supervisor will expand their claim file discussion to include the claims manager, other supervisors, other adjusters and the employer.

Employer Should Stay Involved On Claims

The employer should designate a representative, whether the workers’ compensation coordinator, or another person, to participate in the individual file conferences. This accomplishes two things. First, it allows the employer to be up to date on the status of their claims; particularly large, serious or catastrophic claims. Second, in the states where employer input is allowed, the employer can offer insights or recommendations on bringing the employee back to work.

The discussion coordinator, whether the adjuster or supervisor, designates or selects the particular workers’ compensation claim(s) to be reviewed. While the expected cost of a claim can be a reason for a claim to be selected for review, claim cost is not normally the basis for an individual file conference. The claim(s) chosen for discussion are selected based on the obstacles the adjuster has encountered in moving the claim forward. This can include issues of medical necessity, delayed return to work, narcotic addiction, hearing issues, etc. If more than one claim is included in the discussion, each file is discussed separately and independently of other claim(s).

The organizer of the individual file conference will set a date and time for the discussion. Prior to the electronic age, the group would sit around a conference room table to discuss the claim. Now days, the “group” may be in several separate locations and attend the conference by telephone, Skype, webinars or other electronic means.

Provides Additional Perspective On How To Handle Claim

The purpose of individual file conferences is to provide the claims handler with additional perspectives and thoughts on how to deal with an issue. Adjusters, like all other people, develop ways of doing things. Falling into a claim handling rut, where ever claim is handled similarly, can limit the adjuster’s field of vision on what to do on a particular claim.

The individual file conferences by providing other points of view improve the potential outcomes of the claim. The individual file conferences can be an extremely beneficial learning experience for the newer adjusters, but also provides “why didn’t I think of that” moments for even the seasoned old pros.

At each individual file conference, the adjuster keeps a list of the suggestions and recommendations made to move the workers’ compensation claim forward. The list of suggestions and recommendations can be incorporated into the adjuster’s diary of issues and activities that need to be addressed or completed on each file.

For individual file conferences to be productive and not a waste of time for the participants besides the adjuster, the adjuster on the claim file should be prepared to discuss each individual claim. This includes having an outline of the issues to be discussed that are preventing the claim from moving forward at the normal pace.

File Conferences Are About Moving The Claim Forward

Employer participation in individual file conferences is not an opportunity for the employer to learn about the history of a claim from day one. As an employer if you are going to participate in the individual file conferences, you need to have kept abreast of the claim throughout the history of the claim. The individual file conference is about moving the claim forward to the conclusion. It is not about educating the employer.

While the employer should not waste the other participants time getting up to date on the file, the employer should also insist the discussion remain focused on the particular claim issues at hand and not allow the discussion to drift off on to unrelated issues or other claims.

Individual file conferences should be scheduled as needed as only a truly bad claim would entail having an on-going schedule of dates to discuss it. This does not mean that individual file conferences cannot be set on a schedule (example: second Tuesday of the month, 2 p.m.).   If a preset schedule is used, the claims to be discussed each date should be changed, and the individual file conference cancelled if there is not a claim that needs the extra attention that the individual file conference provides.

Different Perspectives Can Be Invaluable to Resolving a Claim

Individual file conferences can result in the claim taking a turn the workers’ compensation adjuster did not foresee prior to the file conference. The perspectives provided by other participants can be invaluable to resolving the claim. However, if the same participants are in all the file conferences, the value of the input will decline over time as the adjusters learn what the other participants will suggest. For this reason, in large claim offices the participants beyond the adjuster, the supervisor and the employer should be changed constantly. In the small claim offices, the adjuster can invite a nurse case manager, defense counsel, work comp judges, plaintiff attorneys (not related to the claim) and others to participate in the discussion.

Author Michael Stack, Principal, COMPClub, Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is 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 of COMPClub, an exclusive member training program on workers compensation cost containment best practices. Through these platforms he is in the trenches on a working together with clients to implement and define best practices, which allows him to continuously be at the forefront of innovation and thought leadership in workers’ compensation cost containment. Contact: mstack@reduceyourworkerscomp.com.

©2016 Amaxx LLC. All rights reserved under International Copyright Law.

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

There is an understandable need for workers compensation internal audits for the self-insured employer or the high retention employer.  However, insured or low retention employers also need to consider internal auditing for policies, procedures, and monitoring of the claim management department or third party administrator.

Further, internal audits can serve as a verification, or factual documentation for challenges, to external audits that are conducted by insurance carriers, state bank examiners or other auditing organizations.

Policies and Procedures for Injury Management

The policy and procedure program requires constant monitoring to be sure it stays in compliance with the workers compensation statute, current medical practice, implementation and proper oversight.  A claim coordinator or injury team should be designated to develop, implement and perform duties at the time of injury. The coordinator needs to be workers compensation claim knowledgeable.

An injury team needs to be versatile with workers compensation claims. It should be made up from both labor and management.

Personnel directly involved in employer reporting investigating and documenting the injury, need training and proper instruction as to how they must perform their duties.  There needs to be complete reporting to management as often as dictated by the facts of losses or program developments.

Claim coordinators or injury teams need access to all necessary areas of the employers business to gather and disseminate their findings. They need to be compassionate yet in control of the loss.  They need to be able to deal with claim adjusters, medical providers, private investigators, attorneys as well as all other entities that are found in the claim process.

Internal investigation results, payroll data, authorities, medical needs and other findings must be gotten to the handling claim adjuster as fast as possible. It is necessary to monitor the claim adjuster to ascertain that the coordinator or company team information is properly used.  Conversely, when an adjuster requests information from the employer, the response must be as prompt as possible.

The coordinator or team must monitor claim adjusters, .Following adjuster activity for control of investigation payments, controlling expenses and keeping proper reserves on the claim file until final disposition.

The entire above item needs to be audited by a senior management officer who has knowledge and ability to see flaws in the program.  At the same time when flaws occur, this person must be able to promptly make corrective change.

Utilization for Future Loss Containment and Job Modification

The claim coordinator or injury team needs to audit and review all workers compensation losses for frequency, severity, causation, as well as equipment and employee failure. These studies will be a guide for management to institute measures for future limitation or prevention of such injuries.

Claim coordinators or injury teams can also use these causes to develop alternate, temporary, or transitional jobs within the functional capacities such studies will show. A close interface with independent medical providers will help ascertain that the projected job performance meets the function limitations. (This might also be dovetailed with adjusters, and or medical management personnel)

All claims need to be reviewed with an eye to recovery from subrogation, second injury funds, re-insurers, restitution on fraud situations.

Auditing Error Prevention

The claim coordinator or the most knowledgeable injury team member should be the main contact person for external auditors to work. When external audits are scheduled, this person needs to be available at all times during the actual audit.  Discussions during the audit as to findings or questions by the auditor need to be conducted at least once or twice a day. A wrap-up meeting is required as soon as the external adjuster completes their physical review. This can help in avoiding improper or erroneous conclusions by an auditor before a formal concluding report is presented. It is best to reach mutual agreement at the wrap-up.

Annual Claim Purging

Claim coordinators or injury teams should obtain workers compensation claim loss run from the insurance carrier or claim handling organization three months before renewal.  Every claim listed should be reviewed for closing, proper reserves, payment errors or duplicates, expected disposition, alternate duty potential, subrogation recovery potentials, and proper recovery from re-insurers.  Files that should have been closed need to be closed.  Settlements or final dispositions should be pushed for closing before renewal. Excess reserves are to be lowered and under reserved files should be increased.  A final loss run with all changes should be reviewed two weeks before the filings to ascertain that all agreed changes are complied with.

Summary

Internal audits and claim handling programs are not just for the larger employers.  All employers need to explore their need for a claim coordinator or injury team to keep a close control of claim cost.  If you do need assistance in implanting such a program, please contact us for a recommendation.

Author Michael B. Stack, CPA, Principal, Amaxx Risk Solutions, Inc. He is an expert in employer communication systems and helps employers reduce their workers comp costs by 20% to 50%. He resides in the Boston area and works as a Qualified Loss Management Program provider working with high experience modification factor companies in the Massachusetts State Risk Pool.  He is co-author of the #1 selling book on cost containment, Your Ultimate Guide To Mastering Workers Comp Costs www.reduceyourworkerscomp.com. Contact: mstack@reduceyourworkerscomp.com.

©2015 Amaxx LLC. All rights reserved under International Copyright Law.

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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.

As we start to approach the end of the year, it is a common time for adjusters to be bombarded with claim reviews from their various insured accounts.  Agents/Brokers crave the need to know what is going on with certain high exposure or potentially high exposure claims and their associated reserves.  Insured accounts want to know what lies ahead of them for the following calendar years.  Insurers are looking to see what will hit the radar in the months to come and want to be certain they are prepared and reserves are set.

It is also a time for renewals, and insurers want to shine.  They want to show said broker/agent how great they are, how prepared and dedicated their adjusters teams are, and they hope to gain a renewal in the process.  The insurer is also hungry for new business from this agency/broker and it is a good time to show off how well they have performed since the last claim review.

The reality is the adjusters are usually ready at any given time.  The reason why adjusters groan around this time of year is because the overall task of the claim review is daunting.  If you look at it from the adjuster point of view, they have to write up numerous reports on the claim, review reserves for the millionth time, and explain to those in the audience why they did what they did, and the rationale to support their plan of action.

So what can everyone do to make this process run like a well-oiled machine?

The adjuster has to remember to look at things from the perspective of someone that has no idea what is going on

Claim professionals know claims.  Chances are on high exposure claims they know a lot about the claim, especially if they have handled the claim from the start.  However, at times adjusters will cloud over the details and skip to the meat of the claim.  For example they will focus on where they want the claim to go within the next 4-6 months.  Can they set the claim up to be closed?  Is there a potential surgery out there that could have to be covered?  Do they have arguments to dispute ongoing treatment, and if so, why?  If a claim is denied or in litigation, what are the chances of a successful fight?  Should we mitigate this claim towards settlement and be done with it?  What are the pros and cons for each decision, and so on.

Instead of looking in the future and talking about just the prospective probable, the adjuster has to remember to put all of the pieces together for the claim review.  How it started off, why certain things were completed or denied, the supportive case law for each decision etc.  This way the audience gets the full picture of the claim.  The last thing the broker or claim manager wants to hear on the call is an unprepared adjuster.  A lot of questions will be thrown their way, and proper time has to be spent on the supporting details so everyone understands why the claim is where it is, and where it has to go, and why you need to support that stance going forward.

The claim or team manager has to review each file and be prepared to assist the adjuster when questions are asked

One irritating issue I hear on claim reviews will be questions brought up to the manager or team leader and they do not know the answer.  This shows that they are not paying attention to the claim, and overall that they are unprepared.  In this day of higher claim counts and less staff, everyone has to be ready to talk about every aspect of the claim.  Especially if the adjuster brings up any issues where the adjuster had one set of ideas about the future, and the manager had a different path, and the current path is not one the adjuster fully supports.  Showing conflict between the manager and the adjuster never bodes well in the end, so any issues need to be ironed out prior to the claim review.  Everyone has to be on the same page.

The employer has to be prepared, ready, and knowledgeable

If the employer on the claim review is one of those employers who only gets their info from the claim review itself, then this review will last for days.  Especially if you have to go over many files.  The adjuster wants to gloss over the minimal details, and spend their time projecting where it is going.  They do not want to spend an hour talking about the particulars of the claim that have no impact on the future. It is a waste of time for everyone.

If everyone does their homework, and everyone is prepared and ready, then a claim review is a great summary of what is going on.  But if any of these aspects break down and nobody is really truly ready, then the claim review will turn in to a claim review marathon.

Author Michael Stack, Principal of Amaxx Risk Solutions, Inc. He is an expert in employer communication systems and helps employers reduce their workers comp costs by 20% to 50%. He resides in the Boston area and works as a Qualified Loss Management Program provider working with high experience modification factor companies in the Massachusetts State Risk Pool.  As the senior editor of Amaxx’s publishing division, Michael is on the cutting edge of innovation and thought leadership in workers compensation cost containment. http://reduceyourworkerscomp.com/about/.  Contact: mstack@reduceyourworkerscomp.com.

©2014 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

SALES TO PAY FOR ACCIDENTS CALCULATOR:  http://reduceyourworkerscomp.com/sales-to-pay-for-accidents-calculator/

MODIFIED DUTY CALCULATOR:   http://reduceyourworkerscomp.com/transitional-duty-cost-calculators/

WC GROUP:  http://www.linkedin.com/groups?homeNewMember=&gid=1922050/

SUBSCRIBE: Workers Comp Resource Center Newsletter

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.