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Posted on 09 Mar 05
This is the second of a two part series supplied by ProgramBusiness Storefront Owner NRS/CompAudit USA. You can reach their storefront at http://www.programbusiness.com/tracking/sftracker.asp?Sfid=239.
“Value-added” services can go far to help agents get, and keep, new business. In the second of a two-part article, Monte Gale focuses on techniques for keeping Workers Comp costs — and your clients’ premiums — under control.
The second part of this article will focus on curbing Workers Comp payout costs through
third-party claims administration, managing reserves, and employee education
CLAIMS MANAGEMENT
An insurer should maintain primary claims management functions internally while outsourcing claims administration to a Third Party Administrator (TPA) that can demonstrate “best practices” compliance.
At a minimum, the TPA’s functions should include:
• Identification and pursuit of fraud cases to completion;
• Maintenance of updated adjusters’ diaries available to the company in real time;
• Full documentation of case investigations for possible mitigation of claims payments;
• Check of claimant’s current work status for concurrent employment;
• Review of Second Injury Fund relief availability;
• Examination potential claim offsets, such as Social Security or state credits;
• Monitoring compensation payments for death claims;
• Study of possible subrogation options;
• Review claimants’ rejection of simple medical and surgical treatment
• Audit of medical bills and charges. An insurer can reduce overall claims costs significantly by requiring its TPA to aggressively investigate and deny fraudulent claims, fully utilize alternative funds, and pursue subrogation opportunities.
RESERVE MANAGEMENT
An insurer should manage its reserves aggressively by continually reviewing open claims to ensure that they represent its true exposure. An accurate reserve valuation is essential to maximizing the leverage of its surplus to premium ratio (and, conversely, guarding against writing premium off the back of loss reserves — the Workers Compensation industry currently has an estimated reserve deficit of $19 billion!).
As part of the initial claim reviews, the claims manager must verify: the claimant’s average weekly wage (AWW); the scheduled percentage applied to AWW, estimated medical treatment schedule; independent medical examiner results; date of maximum medical improvement; percentage rate for temporary partial disability; and percentage rate for permanent partial disability.
EMPLOYEE EDUCATION
Many carriers don’t take an aggressive approach to “petitions” (formal hearings by claimant to dispute or demand benefits). Carrier attorneys often aren’t briefed before hearings, don’t have an updated claim files,and/or arrive at the hearings without a case file. However, if a claimant is ready for the hearing, no continuances are granted – the carrier simply doesn’t present a case. What’s more, carriers seldom appeal adverse rulings, believing that the petition process in most states is biased toward claimants.
Despite carrier ineptitude and frustration with the petition process, the best defense against hearings is to avoid having them filed. By having employers educate their employees about Workers Compensation benefits. Although employees usually know that they can receive Comp benefits if they’re injured on the job, surprisingly few are aware of the types and amount of those benefits.
Some employers prefer to keep employees in the dark, fearing that making such information available will lead to such abuses as: staging accidents; filing claims for injuries sustained outside the scope of employment; extending the period
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