By Kevin Kilroy, Chairman and CEO, Acrometis
For decades, the workers’ comp industry has been challenged with ways to become more efficient, attempting to leverage technology to assist humans in managing the ever increasing mountains of requisite information required to process claims. While these technical solutions have improved operating performance, the unintended consequence often results in inflexibility within the claims operations. The net impact being constraints which both limit the capability of claims professionals, and lead to an adversarial relationship with the injured worker.
In some instances, the potential for these unintended collateral consequences potentially reduce interest in a career opportunity within the field of claims management by future generations of problem solvers. Technology should be utilized to enhance the knowledge and the importance of the claims professionals, not marginalize them. Enabling claims professionals to solve problems and supporting them with the tools needed to help solve these problems will lead to injured workers returning to work faster and better overall outcomes, reduced claims duration/costs and a more rewarding claims professional career path. Simply put, technology deployed which impairs or impedes the capability of skilled professionals and solves no known problem is not of value to anyone in the workers’ compensation industry.
System “Improvements” May Be Costing You Elsewhere – The California Example
Workers’ compensation attorney and industry blogger, David DePaolo, explored this cost-shifting issue last year with the consolidation of California’s State Compensation Insurance Fund (SCIF). As a result of systems improvements and subsequent headcount reductions, Workers’ Comp Executive magazine reported in its article “State Fund’s Restructuring Leaves It Behind In Payments” that SCIF’s penalties and fines skyrocketed- with 300,000 penalties totaling over $21 million dollars. As David remarks “That’s a lot of claims adjuster positions…”
These payments were mostly for late payments to providers. While the monetary impact of the penalties is surely staggering, you can only imagine the impact on the claims professionals when 300,000 providers are calling about the status of their payments. But SCIF’s situation is unfortunately not unique in our industry. We have had firsthand experience with many payers who, prior to implementing our claims processing system, were incurring tens of millions of dollars in inappropriate medical loss, regulatory fines or penalties because their existing system was unable to identify, resolve and avoid these challenges.
The usage of any claims system which relies upon automation that is unable to identify the current status of a claim, automate the processing, determine the routing and management of all claim related documentation, eliminate inappropriate medical submissions or is incapable of avoiding penalties associated with regulatory compliance, is a point of vulnerability that exposes payers to excessive operating expenses, exorbitant penalties and incalculable risk.
All too frequently advanced workers’ compensation claims systems promising “improvement” efforts tend to consider the claims professional as an afterthought, since it is often through the planned reduction in these professionals that new technology investments are justified. Skilled adjusters and claims professionals are an invaluable resource that, when given the tools, support and knowledge to do so, can assure that payers such as SCIF can avoid these unnecessary regulatory penalties. To overlook, minimize or otherwise fail to fully understand the impacts on claims professionals by technology driven claims systems, both those that are beneficial and those that miss the mark entirely, can result in a serious bottom line result for any payer that should be carefully evaluated.
Cost Isn’t the Sole Criteria to Consider When Evaluating Technology Solutions
Claims systems and their resultant upgrades are all too often prohibitive in cost and mandate an implementation that demands extensive resources from an organization whose resources are already spread thin. More often than not the decision to employ automated claims systems is driven by the bottom line. The key criteria employed in the selection process are either reducing the costs associated with supporting the current system, or improving the efficiencies of the current business process to reduce both variability and the number of employees needed in the process. Such improvement in efficiency is often handled through what is called “process optimization”. “Process optimization” proposes that there is one best way to operate. As every claims professional within workers’ compensation knows there is no “One Size Fits All” scenario to be employed when managing a claim. Unfortunately for the workers’ comp claims professional, the “best way” can, and often does, change for every claim. Claims professionals need technology to help them make better decisions, not eliminate or constrain their ability to make decisions
So, in an age where we can multi-task, where critical information needed to make an informed decision is only a keystroke away for virtually every other industry- why are claims professionals asked to do more with less technology assistance? The answer, perhaps, lies in a deficiency found in current workers’ claims processing solutions and the inability of technology vendors to comprehend the unique needs and requirements of the workers’ compensation industry.
Essential to the capabilities of any technology solution for our industry is deep domain expertise, situational fluency and tenure within the workers’ compensation industry for all involved, including but not limited to, senior management, developers, engineers and support personnel. Beautiful graphical user interfaces, alluring colorful landing pages, and impressive workflow charting, while nice, do not address the substantial processing and information needs required in our industry. In 2014 any claims professional employed in workers’ compensation should have the ability to determine claim status at the touch of a keystroke, at a moment’s notice and be able to access the information and history needed to make an informed decision with clarity and accuracy. They should have the right tools for their job, be empowered and free from burdensome, non-productive and dysfunctional technology solutions that impair their ability to improve outcomes while reducing the overall costs associated with a claim.
Workers’ compensation claims are vastly different than other lines of insurance, and for that matter any other type of claims. There are different requirements and response times involving multiple jurisdictions that must be carefully managed, multiple parties involved on all sides, an undefined exposure amount at the time of the event, and the possibility for a claim to dramatically change in impact later in the life of the claim. Despite these differences, companies frequently pursue a “One Size Fits All” approach to claims systems, while overlooking the benefit or deficits of their current or proposed workers compensation claims systems.
Flexibility Eliminates Challenges and Improves Outcomes
When a claims professional is overloaded with a high caseload (as they almost always are) and is forced to move from “working the claim” to “working the files”, outcomes suffer and claims related costs rise. Systems that tie the hands of claims professionals, those offering only one method for dealing with a case, frequently lead to frustration from everyone in the process, the claims professional, the injured worker, the employer and even the providers.
Claims professionals need the flexibility and authority to make decisions based upon the unique circumstances of the claim. The best solutions in workers’ compensation claims processing employ auto-adjudication, relieving claims professionals from routine and ordinary claims processing requirements while providing the flexibility to meet with injured workers, work remotely in the field and even join them during their provider visits. This capability reduces the chances of an adversarial relationship from forming and results in goal congruence in rehabilitating the injured worker so they can return to work as quickly as possible.
Rapidly Approaching the Cliff
Derrick Amato, Administrative Director, Occupational Health for Saint Francis Care, and President and CEO, COMP, LLC noted in a comment on industry blog Managed Care Matters that “The industry is facing a cliff event, where seasoned adjusters are exiting the workforce and the industry has invested little in keeping the true art of adjusting alive and well.” And Property & Casualty 360 reported in April that global management consulting firm McKinsey & Co. determined that one-fourth of the insurance industry’s workforce will retire by 2018. The industry is in dire need for a younger workforce, but will the younger generation of Millennials have an interest in the workers’ comp industry?
Millennials increasingly desire to be part of what best-selling author, economist and social scientist Richard Florida calls “The Creative Class” in his book The Rise of the Creative Class. This creative class “draws on complex bodies of knowledge to solve specific problems”. Systems that treat claims professionals as note takers won’t attract problem solvers. The best claims professionals look at a workers’ comp claim as a problem to solve. Companies looking to attract and retain those problem solvers need to ensure that the systems and business processes support accountable problem solving rather than simply completing forms.
Hand in hand with problem solving is problem identification and problem elimination- long before suspect claims were ever adjudicated. This capability is a critical component of any advanced claim system to be employed, and one that will ultimately enable new entrants into our industry to make meaningful and long lasting contributions in the span of their professional careers.
The ability to identify real time trends, alert claims professionals when something requires further evaluation, conduct analysis and identify and eliminate the cause of such issues immediately, and with urgency, is something that today’s claims professionals seek. As an example, some of the users of ClaimExpert have harnessed this capability to identify not only inappropriate submissions, but the frequency, source and impact of the same.
Using the advanced analytics capabilities presented by our solution, claims professionals have identified numerous instances in which claims, or claim related documents, should have never entered their operations and has created processes to eliminate them completely. The result? Their employers saved millions of dollars, the claims professional made a meaningful contribution to their employer and both employer and employee shared jointly in the success of solving a significant problem that, to that point, had been going undetected.
Improve claims operations by increasing the attractiveness of claims careers
RIMS recognizes the need to attract the new generations to the industry through their Student Membership program. Gamma Iota Sigma, the national scholastic insurance fraternity with over 2,100 student members, has a specific mission of preparing the next generation of insurance professionals. The workers’ comp industry needs to improve the contributions possible to claims professionals to get the best of these new generations to join the industry.
The general consensus among industry professionals is that there are plenty of challenges to be addressed in the worker’s compensation industry, and while significant advancements have been realized there is still plenty of opportunity to improve the capabilities of our claims operations. . By confronting these challenges, while taking significant efforts to enable accountable innovation, our industry will essentially become a leader in innovation and efficiency and in the process become a strategic component of the overall insurance landscape. Giving claims professionals the flexibility and support of information, analysis, tools and the freedom to solve these problems will attract the best problem solvers of the current and future generations.
Critical to the success of any business are the invaluable contributions made by skilled professionals. After all, when everything is said and done it’s the people, not the programs, not the processes and not the enabling technology that result in a sustainable worker’s compensation industry. Providing our current and future peers with the best support available ensures the long term success and viability of our industry and we should invest our time, effort and energy in workers’ compensation claims professionals supported by world class solutions at a bare minimum.
About Kevin Kilroy
Acrometis’ Chairman and CEO P. Kevin Kilroy has over 35 years of experience as a senior executive in the technology industry. As Chairman and CEO of Bluestone Software, Inc., (NASDAQ:BLSW) he led Bluestone from a small, venture funded enterprise middleware organization through multiple stages including a successful IPO and a subsequent merger with Hewlett Packard Corporation, and subsequently was Vice President and General Manager of HP’s Middleware Division. He has held roles in notable technology companies such as iMany, Inc., Seer Technologies, CONTEL, Xerox and Avon Cosmetics. Kevin is regarded as an industry expert on business and technology developments, is a graduate of North Carolina Wesleyan College and was awarded their Distinguished Alumnus Award.
About Acrometis
Acrometis offers the most complete and automated claims processing platform designed specifically for the workers’ compensation industry. Acrometis’ expert, rules-based family of claims processing platforms allows for meaningful changes to the claims processing environment that in turn lead to maximized cost savings, efficiency, and productivity gains over the lifecycle of a claim. For more information about Acrometis, please visit www.acrometis.com, its blog (http://wcinsights.com/) or call 855.282.1476.