By Dave Stair, Director of Insurance Payment Solutions, DataPath
Just as workers’ compensation claims have increased in complexity, so has the world in which carriers and self-insured companies do business. A leaner workforce means fewer claims adjusters. And yet, claims professionals are handling a heavier and more complex workload than ever before.
The business landscape hasn’t gotten easier either. The cost of doing business is on the rise. Mobile and remote workers pose new challenges to processing payments, especially those who are underbanked. Moreover, social media allows for instantaneous communication, making companies vulnerable to reputation-marring public criticism at any given moment, especially in response to late or incorrect indemnity payments.
These changes make processing and managing indemnity payments—which comprises 40 to a whopping 60 percent of claim costs—through common methods more costly and burdensome than ever before.
It’s time for payers to step back and re-evaluate the way they are currently managing indemnity payments.
Claims are more severe and more complex
While claim frequency has declined over the last decade, indemnity claim severity has experienced a 2 percent increase. Indemnity claims include expenses for medical, indemnity and defense. Additionally, the more severe the injury, the longer a claim is open, leading to an increasing number of indemnity payments that must be pushed through the workers’ compensation revenue cycle.
What does this mean for indemnity payers? An increase in the number of payments to administer per claim and, as a result, a greater threat of missed, duplicate or incorrect payments.
Employees on the move
As workplace environments evolve and technology advances, the U.S. workforce is becoming increasingly mobile. Tablets, web apps and cloud-based applications make remote communication easier and more accessible than ever. In fact, between 2005 and 2012, there was a 79 percent increase in the number of employees working from a home office, on the road or on a remote worksite (U.S. Census).
This upward trend adds complexity to indemnity payment management and processing. If remote workers get injured on the road or at a temporary jobsite, they may not have access to a branch of their local bank to process their indemnity checks. Additionally, nearly 25 million Americans are unbanked or underbanked (FDIC). With little or no access to a stable bank or checking account, or a lack of a permanent address, payments can be lost, late, stolen or undelivered.
Social media can threaten company reputation in an instant
Social media is causing one of the most pervasive and significant shifts in the business landscape because it allows anyone, anywhere to make his or her opinions known. According to a study conducted by the Pew Research Center, 74 percent of online adults in the U.S. use social networking, making instantaneous information sharing a business reality.
While this trend can positively affect an injured worker’s recovery, such as reducing depression through close social ties to family and friends, social media can be detrimental to a company’s reputation. Complaints from an injured worker who receives an inaccurate or untimely indemnity payment can quickly spiral into unwanted public criticism for insurance carriers and self-insured companies.
In December 2014, for example, a major national insurance provider found itself in a sticky situation when a customer lashed out in response to a tweet posted on Christmas Day. Meant to be a sincere holiday wish to its customers, the tweet triggered a negative response from a customer whose claims had not been paid on time, leaving her unable to purchase Christmas gifts:
While this was only a single negative response, it was made public and is still visible months later. In an instant, a company’s reputation can be marred by a single tweet or Facebook post, especially if the complaint goes unaddressed.
It’s time to take a step back
These changes and shifts in the business landscape, coupled with a myriad of challenges posed by common payment methods, are making processing and managing indemnity payments more difficult than ever before.
So what are payers to do?
Take a step back and re-evaluate your current indemnity payment systems and processes. Here are a few questions to consider:
- Would it be more cost effective to use a card-based solution versus check-writing and EFT? Be certain to consider postage, processing fees and other costs.
- Where are your employees based? Do those with a high propensity for injury work on-location or in remote offices?
- Is the best use of your adjusters’ time to hunt down missed payments?
- Do your employees actively maintain a consistent bank account, or do they move frequently? Are workers located far away from their home bank?
- When injuries occur, are they typically severe, making it difficult for the injured worker to get to the bank to cash a check or withdraw funds?
- Has injury severity increased for your organization?
- Would your organization benefit from turning over indemnity payment processing to a bank-neutral party?
- Are employees hesitant to provide bank account numbers to a third-party payer?
- Have you had difficulty ensuring that injured workers receive timely and accurate indemnity payments?
- Are you concerned that injured workers may voice any negative experiences associated with their claim over social media and impact your reputation?
It’s vital to become aware of how our vast and rapidly shifting business landscape affects your organization. Having this knowledge will equip companies to address areas of concern and explore alternative solutions and methods.
About Dave Stair
With more than 20 years of experience in the insurance market space, Dave Stair has a long history of successfully providing service and business development in workers’ compensation. Throughout his career, he’s worked in sales management and business development, specializing in providing managed care, claims adjustment and fraud prevention. He has played a vital role in providing payment solutions for insurance carriers, workers’ compensation and group health TPAs, and self-insured/self-administered employers nationwide. Today, he serves as the Director of Insurance Payment Solutions at DataPath, overseeing the development of the RenewCard and Provider Payment solutions.
Little Rock-based DataPath has created flexible financial and administrative solutions since 1984. DataPath’s workers’ compensation solutions include secure, card-based indemnity payment processing and a provider payment offering that makes it easier to distribute and track payments for workers’ compensation medical services. Learn more at www.dpath.com.