Claim File Reviews – Use This Simple Diary System
Every year we receive requests to perform claim file reviews to close out an employer’s calendar year. Basing a claims review on the calendar year can be a waste of time.
As part of their customer service, carriers or TPAs (self-insureds) sometimes contact employers to close out the year with a claim file audit or review. Large deductible workers comp policies should have the same review timeline.
When I worked for carriers or TPAs, we often did this type of calendar year review. At the time, I did not realize I was wasting the insured’s, agent’s, and employer’s time. I have written and spoken very often on this subject. Claim file reviews can be a powerful tool to have the worker’s comp file reserves set properly and for the life of the file.
Setting up a recommended diary system will help greatly in keeping the reserves in line and moving files to closure while providing the proper benefits to the injured employees.
A Quick Example
The first question I usually receive is – “Why Start So Early?”. Let us look at a quick example – (not state-specific)
- A lower back strain claim resulted in a surgery recommendation
- The reserves were properly set (usually at 60 days after the injury) for $265,000
- The surgery did not occur due to conservative medical treatment
- The injured employee returned to work part-time and eventually to full-time work
- The $265,000 reserves would now be considered excessive or over-reserved
A $265,000 file up for a file reserve reduction would require many approvals. File reserve reductions would first have to be
- Reviewed and recommended by the adjuster – check here to see where that ranks in their daily job duties
- Reviewed and approved by their supervisor;
- Forwarded to the Claims Manager for approval
- Final approval by the Claims VP
The whole claims file review process would take at least 90 days if not longer.
Claims File Review Timeline
The all-important Unit Statistical Date occurs 180 days after a policy ends. The UNISTAT date is when the carriers report the claims data for the prior policy to the rating bureaus such as the WCIRB, NCCI, NCRB, PCRB, and other independent bureaus.
One complicating factor comes from carriers and agents using predictive analytics. The old way of thinking that your Experience Mods generated by the rating bureaus are the only measure of an employer’s safety programs has been slowly changing over the last decade.
Ninety days after a policy ends is the deadline for when an employer should let their adjusters know that a file looks over-reserved for reduction purposes. Do not wait until two weeks before your UNISTAT date to contact your adjuster on any file that you feel may need a reserve reduction. You will be disappointed with the result.
Using the 90-day claim review date gives the carrier time to proceed across the screens of the insurance carrier’s claims file review process. I will cover the self-insured timeline next week.