Avoiding Closed Workers Comp Claim Mistakes
One of the major mistakes made during loss run reviews occurs with this set of “silent claims.” Closed Workers Comp claims should not be glossed over by an adjuster, insured employer, self-insured, or anyone who deals with workers comp claims.
In our workers comp loss run reviews, we have seen these “harmless(?)” mistakes result in future surprises. Let us look at three examples that occur often with closed workers comp claims.
Online access to claims helps avoid some of these mistakes.
Scenario #1 – Reopened – Closed
Very few insurance carriers and TPAs (self-insured) may have a sub-status that says Reopened – Closed. Usually, the claim status on the workers comp loss run says Reopened – which is very important. Check out this article on why these reopened claims should be monitored closely.
A claim is reopened to pay a $13,500 hospital bill that was not paid until after having the closed workers comp claim status. The file was only open for two days to pay the bill. The last time the claim was reviewed the status was closed. Now, $13,500 was added to the claim amount (ouch!) with an unchanged status.
The employer’s loss ratio spiked after the bill was paid by the adjuster. The employer’s broker called us in to see what happened with the loss ratio.
Claims can be reopened and closed multiple times. Almost all claims systems will not allow a bill payment without an open (reopen) claim status.
Scenario #2 – Longer Lookback Period
(Closed workers comp claims and predictive analytics). Due to AI and Predictive Analytics, claim values do not “fall off” a history like the Experience Mod factor as in the past. Yes, E-Mods (X-Mods) are still important.
If one thinks like a self-insured, the Loss Development Factor (LDF) traces claims back over 10 years or longer. Predictive analytics can now produce loss factors not seen pre-pandemic.
Almost all agents or anyone who asks us to do loss run reviews request that all claims going back 5+ years – even closed ones – be reviewed.
Scenario #3 – Trends and More Trends
More trends become apparent when looking over the last 20 years of claims. Twenty years seems like a long period for a claims or loss run review. Yes, a full claims review for 20-year-old claims requires too much time.
Examining the closed workers comp claim amounts from the distant past reveals trends that one may not see when looking at a five-year timespan.
Trends such as medical provider performance, long-term safety issues; and return to work program effectiveness are a few examples.
Closed workers comp claims can be a great source of information – even medical-only claims.
Bottom Line on Closed Workers Comp Claims
Reviewing only open active workers comp claims and their associated loss numbers does not present the whole picture of your workers comp program. Always save your loss runs to make sure that if you move to a new carrier or TPA for access to those numbers.
