E-Mod (Ex-Mod) Review Of Outstanding Reserves
An E-Mod (Ex-Mod) review is something to leave to the experts. Usually, approximately one third of the Total Incurred value should be Outstanding Reserves. That is a very, very rough approximation.
I received a few question on this figure.This is an overall estimation on the thousands of premium audits or file reviews that I have done over the years.Your outstanding reserves can change overnight with the payment of one large medical bill.
This is one area where claims adjusting experience is golden.There is no exact formula or method for knowing which files to question the level of outstanding reserves.
Many years ago as a Workers Comp adjuster, I used to actually increase files when a certain file was brought to my attention that was deficient is reserves-often as a result of a claims review with the insured. Most adjusters decide to do a reserve increase review while the file sits in front of them. The
For clarification Total Incurred = Previously Paid $ + Outstanding Reserves. The previously paid figures can be reviewed with leakage audits. Those reviews are totally different task best left to a highly experienced expert. Leakage audits are complex and are not E-Mod (Ex-Mod) reviews.
Most Workers Comp adjusters are drowning in work. Knowing which files to discuss is only 50% of the answer. Knowing which files to leave alone is the other 50%.I often advise client to not ask for a full file review of every open file. I am not advocating any type of deception.
Targeting certain files for an Outstanding Reserve inquiry will make your Workers Comp claims staff appreciate not taking the time to review a claim with an outstanding reserve of $98.67.That is a waste of time and resources for all parties.
One consideration is to not look at just files where the employee lost time from work.The Medical Only claims usually cause more needless funds to be paid out than any other type of claim.
I will cover Medical Only claims in the next article.