The Full NCPRIMA Presentation With Slides Included
Last week, I presented at the NCPRIMA Annual Conference. The slides for the full NCPRIMA presentation can be found here. We received a few requests for a transcript of the presentation. The rest of this post follows the slides. The NCPRIMA presentation was aimed at public Risk Managers. There are quite a few points that also apply to private industry.
Analyze Trends Not Paperclips – basically paying attention to one big claim, or variable may not be the best way to analyze Workers Comp risk.
Counting paperclips is an old adage that means to not “sweat the small stuff”. The easiest method to examine WC risk is by sticking with trends.
– Identifying trends that impact cost – Hundreds of analyzable trends exist in WC. The key is to identifying the trends that are affecting your WC program the most. The most popular trends in our claims data are:
• Insurance carrier/Third Party Administrator (TPA)
• Adjuster
• Type of claim
• Accident type
• Body part
Two charts of the same data are included in slide 3 and 5. They are basically the same data. We had a Virginia public employer ask us to assist with what they thought was over-reserving by an adjuster.
We examined the data and found the adjuster on their files actually had performed well. If one enlarges the charts, there is an obvious trend.
The department 991 had more larger claims. The conclusion we drew that if the $$$ is ignored and the trend is analyzed, the public entity needed to focus on the safety of Department 991, not the adjuster.
Develop a Mechanism for Tracking and Analyzing Trends
– Turn the chart sideways – as in our prior example, something as simple as rotating a chart is a simple yet very effective way to look at the numbers.
We have had more than one statistical intern – that knew nothing about WC claims – refer to claims as anomalies or outliers. They considered claims as aberrations or a system failure. Interns are great for unbiased opinions.
– Excel® is a great choice – The 2013 version has many statistical packages (and it is free to most public employers).
– Most software is free – There are many other free statistical packages that analyze data. The internet is full of them.
– SourceForge.net (caveat) – a great place to find free statistical packages. The caveat is some of the software may not work. Most of it has been checked for malware or viruses.
LDFs and E-MODS
– LDFs and E-MODS Defined – click on the links for the definitions
• Individualizes claims experience – one of the basic underpinnings of E-Mods – click here for more info.
• Should know last three years – a public risk manager should be able to quote the last three years’ E-Mod or LDF. These are similar to your personal credit score. Not knowing them is going to make your job much more difficult
• LDF’s – basis for budgeting – if you have not had an LDF calculated for the self insured part of your program, you should obtain one soon. LDF’s can make basic budgeting much more easy for the public risk manager.
• Large deductibles still reported – much to the surprise of many Risk Managers and company owners, large deductible policies do not remove your organization from the E-Mod system. Your E-Mod is still reported and calculated in almost all instances.
– Impact of LDFs and E-Mods on Cost – there is a direct relationship between these two numbers and your budgeting. These are basically the scores of your safety and risk programs.
Access = $$$ The Value in Monitoring
–Online claims access – Full – this is one of the best ways to control and monitor your WC program with your TPA or carrier. Having immediate access to your WC claims will save your program $.
– 20% added value – In my humble opinion, having full claims access is worth 20% the value of what your entity pays a TPA or carrier. When your TPA or carrier quotes your organization for WC, make sure you have reviewed their online claims system.
– Status reports – these are golden for Risk Managers. They are basically the Executive Summaries for each one of your claims. These are great time savers if they are provided online.
– Emailing adjuster – calling the adjuster will usually result in he/she saying that they will have to pull the file and get back with you. This is one the major concerns that adjusters bring up in conversations about their insureds. Emailing an adjuster allows time for a response and provides written documentation on both ends
Subrogation – defined follow the link.
– Identifying and Assisting in Recovery – This is where we see the most money being wasted in public or private funds. Often, recoverable $$ is left on the table. A simple letter or identification of a third party can recover funds spent in WC.
Opportunities
• First Report of Injury- give the adjuster as much information upfront on everyone involved in a WC accident may flag the system for subrogation from the start.
• Accident investigation forms -these are priceless for informing the adjuster of an accident scenario. The more info that can be shared the better.
• Communication to adjuster – as the first two bullets in this section have pointed out, communication with the adjuster very important is cases of possible subrogation.
– Maintaining a Subrogation Diary – this link will describe a subrogation diary. As a Risk Manager, it is up to you to keep monitoring any recoverables.
• Outlook® Calendar – easiest one to use
• 60, 180, 365, adjuster change – communicating with the adjuster at these times in the claims can assist in recovering your subrogation funds.
Adjusters have been trained very well in Workers Compensation, However, as a former all lines adjuster, recovering subrogation funds switches the file from WC to liability. Liability adjusting is a different world than WC.
WC claims have many changes such as the adjuster or TPA assigned if assuming tail claims. The diary enhances the tracking of subrogation $ as the claim progresses through changes.
The blog with much more information is at blogs.cutcompcosts.com – presentation with
links to articles that I referenced
One area that I could not cover at the NCPRIMA presentation was the Six Keys To WC Savings. Go to the blog and type in Six Keys to find that discussion.
• Six Keys To Cutting WC Costs
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