By Paul Glover, Chairman and CEO, ISG Services, LLC
Now, more than ever, our industry needs proven predictive analytics to manage our businesses out of the current crisis in workers’ compensation. NCCI® reports the combined ratio for private carriers in 2011 was 115. This difficult reality, coupled with an uncertain national political environment, means further instability for employers and insurers. So, what can we do to positively impact change?
I firmly believe many of the claims challenges faced by the workers’ compensation arena can be altered through the utilization of superior data mining technology to capture more relevant data earlier in the lifecycle of a claim and distribute the results to change agents as soon as possible. Using predictive analytics to establish and monitor workflows that properly allocate resources at the appropriate time is one such method. However, I’m not talking about simple predictions based on vague historical information (because anyone can do that), but rather a model that utilizes empirical artifacts to assess the performance of a specific claim to drive clinical decisions and operational processes. This model offers tangible value in two ways: monitoring forward progress on an individual claim level as well as the overall injury severity/ loss potential at the program level.
Think about it, if you knew with a very high degree of probability the projected impact of a claim at the onset, you could more accurately apply the appropriate resources. I am not referencing an underwriting predictive model for reserve practices, but rather a projected score that is calibrated to an entity’s risk tolerance to allow proper adjusting, claims management, medical case management and physician involvement. Such an approach to predictive analytics must leverage the latest technology if we are to accurately, consistently and repeatedly predict an outcome. Monitoring all open claims not only indentifies the potential for adverse development, but also impacts daily claim resource allocation, yielding best-in-class production to positively impact the loss development curve of employers. Additionally, a nightly re-scoring relative to the current claim status that is utilized to reinforce targeted clinical interventions is the ultimate goal. Combining this methodology with the utilization of high-performing networks and actionable analytics elevates programmatic change.
As pertinent billing information is processed, recurring claim scoring improves the confidence of the score and the probability the score may mitigate adverse development. Our application generates an aggregate score of all open claims to serve as an index of ultimate loss costs in real time and is made available to executives as an early indicator to truly impact business practices.
A commitment to investing in the latest data mining technology is essential, but highly-skilled personnel in analytics, who are able to incorporate the metrics and fine tune the weights to emerging values commonly gleaned from complete bill and claim financial data sources specific to an employer’s experience, are critical. The end result must be embedded in a risk information management process to alert the adjusters of a required action. Since most claims personnel have higher demands with less time to execute, the score should be embedded in the workflow process.
Even better news: Once the scoring of claims at the onset generate very high probabilities to the total costs at claim closure, the model can be applied to pharmacy, surgery, and other ancillary services to positively effect change.
About Paul Glover
Paul Glover founded ISG Services LLC in 2008 and is Chairman and Chief Executive Officer. Prior to ISG, Mr. Glover has been a leader in the workers’ compensation managed care industry with roles in managed care, third party administration and insurance companies. Mr. Glover holds an A.B. degree in Economics from Dartmouth College and an M.B.A. in Finance and Accounting from Cornell University.
About ISG Services LLC
ISG Services LLC is the nation’s leading healthcare technology company with a suite of software and services that enable highly targeted data-driven interventions to achieve meaningful impact on outcomes and financial performance. ISG utilizes extensive data analytics to identify gaps in care, quality or integrity and applies the appropriate resources to ensure rapid resolution. ISG’s affiliates include the following well-known entities: StrataCare – the nation’s premier workers’ compensation bill review software and service provider; Bunch & Associates – offers award-winning managed care solutions, including CONNECT™, its successful outcomes-based provider management tool.