Linked In Next level claim strategies - Sedgwick

Next level claim strategies

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On Tuesday, August 25, 2015, from 9:50 – 11:00 am Sedgwick will present one important aspect of next level claim strategies in “New Thinking in Risk Management: Leveraging Program Integration and Cross-functional Collaboration for Better Results.” This session will draw on some of the strategies outlined in an IRMI article by the same name and published last month at www.irmi.com, in the “claim management” online column. I hope you’ll read the entire column, but in the meantime, if you’ll be at the Workers' Compensation Institute annual conference in Orlando (8/22/15-8/26/15) I hope you’ll find time to come by and join the conversation I’ll be leading along with Mark Denesevich, Verizon, Director, Risk Management and Cathy Gannon, Sr. Manager WC at Eaton Corporation, both of whom are leading voices in the movement to align and integrate occupational and non-occupational exposure management. Here’s a peek at the content we’ll be presenting and discussing.

One important next level opportunity is from a long-minimized and largely untapped synergy between casualty claims (risk management) and the benefits world. Some argue that these worlds are just too different and distinct to bring together, whether through simple alignment or partial to full integration. Managers are often more comfortable in their own functional areas and sometimes crossing over can stretch expertise and focus. Fundamentally, however, claims are claims though subject to the unique rules of processing and resolution, many of which are dictated by third parties as well as statutes and regulations. This may be one reason that workers’ compensation “option” programs exist today in only two states – Texas (for more than 100 years) and Oklahoma (since February 2014). For the record, Tennessee and South Carolina have also introduced their version of “option” legislation, which could become law as early as 2016.

Risk and benefit managers debate the use and value of integrated vs. "siloed" services and strategies. Integrating claims administration, medical bill review, preferred provider networks and case management can benefit claims management via maximum customization and savings. However, there’s been a shift in thinking and growing interest in a more collaborative, aligned and even fully integrated services approach, one which takes many forms, but at its core incorporates a more integrated and collaborative strategy from date of incident through claim closure. The targeted goals for this approach are:

  1. Ensuring an appropriate employee experience throughout the life of the claim
  2. Targeting and delivering outcome optimization
  3. Minimizing the Cost of Risk associated with the reasons employees are under medical care and/or unable to contribute productively to their employer’s mission

This session will spell out readily obtainable, practical and real-world benefits of an integrated “one system” services program which, if properly executed and leveraged, can achieve the goals noted above. An integrated services program strategy and approach can lead to sharper outcome focus and faster resolutions, while better meeting employee- and employer-specific needs. To help you see the possibilities in your own organization, you’ll hear from risk, claim and benefit leaders from two prominent national employers whose programs are already delivering the goods. They demonstrate how collaborating more closely confers greater benefits both tangible and intangible, along with the tools, processes, methods and tactics that have led to demonstrable results. Here’s more on our session content.

Shared goals

On its face, the value of collaboration seems obvious. From both an employee benefits and risk management perspective, providing care for the individual is of the utmost importance. One of the main objectives is ensuring the right outcome. Essentially, this opportunity can be defined as leveraging the basic skill sets of investigation, verification, documentation and equitable resolution that are common between these two realms. The nuances and distinctions that exist between them are not insignificant, but the key goals are the same: caring for people under medically-related distress (regardless of source), minimizing disruptions to workforce productivity and closing claims efficiently and effectively with fairness to all parties and their respective goals and objectives. The key components of process effectiveness in both worlds include rapid, accurate reporting; timely, complete investigations; compassionate and equitable treatment of employees; verification of facts; compliance with laws and statutes; efficient and effective resolutions and robust cost control tactics.

Although these components have varying levels of impact in each field, they are fundamental to process effectiveness in both. This is not to say that there aren’t peculiar and unique aspects of each that require certain expertise and skills to achieve more specific end goals. However, while blending skill requirements among a common group of claims professionals can be challenging, it is not rocket science. Defining and filling positions to enable successful claims handling in both worlds is imminently doable. The biggest hurdle may in fact be the necessary extent of collaboration among and between these typically distinct functional areas and their leaders in order to secure the best outcomes for injured employees.

Motivations and hurdles

So what should motivate the pursuit of such an opportunity? Well, make no mistake that the cost of claims, especially when you combine casualty and benefit claim expenses, can be the biggest portion of the budget in both risk management and benefit departments. Clearly, companies can’t afford to ignore the size of these direct expenses, which often represent more than 2% of gross revenues.1 Arguably, depending on your industry and the size of your company, employee injury and medical costs are the largest component of employee-related expenses, with the obvious exception of compensation. Since most corporate leaders consider claims expenses material and controllable, it seems logical to look more closely at how they can be specifically controlled. An initial question would be: How do we get key functional leaders to care more about the truly significant leverage possible in managing employee injury and health exposures more collaboratively? A core answer is: By working toward enterprise priorities, not just personal or departmental priorities.

In addition to the medical expenses related to claims, there is the cost of lost productivity from employees not available to perform their jobs, in whole or in part. It’s been noted that this “indirect” cost component of injuries and disease represents, by some estimates, 4 times2 the “direct” costs that often get the most attention. Translating that into more meaningful dollars, you get 8 cents per revenue dollar on each claim dollar expensed. When you look closely at the possible costs involved, a total absence management (TAM) view seems as though it should be a natural priority.

Many employers are already effectively managing employee injury and disease exposures. There are discernable trends emerging toward fewer silos, and more performance-oriented measurement focused on short- and long-term strategies. Those companies taking a more collaborative approach can benefit from key elements such as:

  • Integrated reporting across departments
  • Integrated measurement across departments
  • Robust analytics that result in prescriptive actions with impact
  • Innovative tools targeted to specific process opportunity areas
  • A more holistic focus on the care of affected employees
  • The over-arching goal of a healthy, productive workforce

More opportunities

Looking more broadly at the evolving strategies around new and best practices in claims handling, other opportunities are emerging that are worthy of further investigation and understanding including:

  • Compassionate care – While the traditional casualty claims handling process has been focused on timely reporting, cost control and closure time, an important part of the next-level paradigm emphasizes compassionate care at the forefront for people who are injured and ill, without losing sight of other goals. This new focus makes sense when you consider the potential benefits of improved communication and understanding of the individual’s needs, which can reduce the possibility of litigation.
  • Enhanced communications – This includes changing the way that claimant communication is delivered and ensuring this happens in a consistent, meaningful way. This begins with the insurer/employer and the claims service provider/mechanism used at the center of the resolution process. Critical to this paradigm shift is the adoption of a clear and unambiguous understanding of and communication around the strategies and priorities that would underpin a claimant-focused approach. Once the strategies and priorities are set, however, success is entirely in the execution; in other words, the players doing what they say they will with a dedicated focus on established goals.
  • Proactive approach – With the emergence of enterprise and strategic risk management strategies, we are seeing significant benefits from an integrated claims management approach. As documented in the 2014 RIMS Executive Report: Claims Reporting and Management Practices, “well-run claims programs contribute to decisions which influence whether: 1) the entity is in compliance with regulatory and insurance program coverage mandates; 2) injured parties are treated respectfully and responded to in a timely fashion; 3) property will be restored as quickly as possible and 4) the entity's reputation can be damaged or improved through its loss responses.”3 I think this list captures the key outcomes to which many aspire.

So join Mark, Cathy and I as we dive deep on this new thinking and opportunity for getting to the next level in claim management. See you in Orlando!

Chris Mandel, SVP, Strategic Solutions Sedgwick

1 Advisen/RIMS Benchmark Surveys (conducted annually)
2 Unrecognized Costs of Risk, RiskInfo.com
3 RIMS Executive Report: Claims Reporting and Management Practices, 2014

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