Strategy and timing are key for improving workers' compensation outcomes

Improving workers’ compensation claim outcomes in a statutory, no-fault system is challenging but achievable. A successful claims strategy should be informed by the loss data, focused on returning injured employees back to health and targeted to reduce cost drivers. It requires flexibility to accommodate every claim on its own merits, while providing the framework to guide adjusters toward a common goal.

Loss triangles teach us that time is the biggest impediment to improving workers’ compensation outcomes. Statistically, the longer claims are open, the more they cost. Experienced adjusters know that time often gives rise to unfortunate and spurious events (such as narcotic addiction, claimant comorbidities, motivations for secondary gain, lawyer involvement, and unrelated complaints, that can cause claims to worsen and costs to increase. Consequently, a claims strategy that shortens the life of workers’ compensation claims is the most effective way to improve results.

Related: 4 things to know about filing a workers’ comp claim

Six key elements

In my experience, there are six simple but key elements essential for a successful workers’ compensation claims strategy. Employers, carriers and third-party administrators can improve workers’ compensation outcomes by ensuring that their claim processes focus on the timely and professional delivery of the following critical elements:

• Quality investigation: A prompt investigation to determine jurisdiction, ensure compensability, assess third-party liability and document the nature and cause of an injury must be promptly completed on every workplace injury. The very first step in improving outcomes is to make sure your company is only paying for claims it should. Moreover, a quality investigation, contemporaneously documented, is the best way to mitigate and avoid future adverse development.
• Quality medical care: Ensure that injured employees receive quality medical care efficiently and effectively delivered. Employers and adjusters should engineer a path of least resistance to quality physicians with excellent communication skills and good bed-side manners. Again, time is the enemy. Adjusters should focus on the speed to quality care by monitoring treatment plans and managing delays in treatment. Evidence-based medicine, independent medical evaluations, utilization review and pharmacy reviews should be used strategically and judiciously to challenge unnecessary, prolonged or unrelated treatment. Quality medical care is essential to returning employees to health and their jobs, ultimately improving claim outcomes.
• Professionalism and compassionate care: A successful claims strategy should ensure that injured employees are treated professionally, respectfully and empathetically. Keeping claimants informed about the process, being responsive to inquiries and ensuring timely benefits payments are key to a claim’s success. Treating injured employees respectfully and empathetically is not only the right thing to do, but it also minimizes plaintiff attorney involvement and sets the right tone for positive results.
• Cost containment: An effective claims strategy must also include programs to manage a myriad of workers’ compensation cost drivers such as medical, pharmacy, physical therapy, diagnostic, legal and adjuster fees. Focusing on the cost of goods and services alone will not yield the desired results. Instead, quality cost containment programs should achieve three goals: (1) drive down unit costs; (2) manage utilization; and, (3) reduce the administrative burdens for adjusters so that they can concentrate on the meaningful adjusting work that improves outcomes.
• Litigation management: Loss statistics tell us that claims with attorney involvement take more time and cost more money. Therefore, a disciplined litigation management strategy is critical for program success. In a no-fault system, employers and carriers should typically avoid litigation whenever possible. In deciding which cases to litigate, employers should choose only those cases they can win or need to win. When the decision to litigate is made, employers and carriers should adopt a litigate-to-win approach. This means hiring the best attorneys and encouraging them to secure the experts and discovery necessary to win the case. Even if the dispute ultimately settles, a litigate-to-win approach will typically secure a better result. While legal budgets may be higher on the claims that are litigated, fewer cases will be tried and more will be won. The results are lower attorney fees and better outcomes overall.
• Prompt resolution: The longer claims are open, the more they typically will cost. Consequently, a prompt resolution must be an unwavering goal and drive the pace of claims activity from the outset to the conclusion. To improve claims outcomes, employers and carriers need to: (1) proactively manage claims by experienced adjusters from beginning to end; (2) relentlessly drive the pace and cadence of the claim file; (3) utilize automated diaries, workflows and controls to reinforce goals; (4) invest in quality assurance to drive compliance; and (5) incent adjusters to achieve positive results.

Related: Believe it or not: 10 of the craziest claims of 2018

One claim at a time

Successfully executing this strategy on any claim will help to improve its outcome, but only execution on every claim will achieve marked program-wide improvement. Better outcomes are achieved one claim at a time with a well-executed, replicable strategy.

Sustainable improvement requires a clear strategy, operational discipline and an unrelenting focus on moving claims toward a prompt resolution. Complacency, delay and reactive adjusting must be stripped from the work processes and culture.

If this is done, successful execution is quickly rewarded with green shoots of positive development. Leading indicators of success typically include:

• better closing ratios;
• fewer open claims;
• lower reserves; and
• usually a temporary increase in claim payments as older cases are resolved and newer claims are resolved sooner.

Long-term success, however, will ultimately manifest in reduced claim life spans, lower costs per claim and increased employee satisfaction. Benchmarking these metrics, tracking their progress, and striving for continuous improvement is the best way to ensure sustained and long-term program success.

Related: The connection between high health plan deductibles and workers’ comp claims

Christopher Schaffer (christopher.schaffer@ctplc.com) is CEO of Charles Taylor TPA, a business within Charles Taylor plc, and a licensed attorney in Maryland, the District of Columbia, and South Carolina. The views expressed here are the author’s own.