Automated Workers Comp Medical Only Claims Not A Solution Yet

August 20, 2020 By JL Risk Management Consultants

Automated Workers Comp Medical Only Claims vs. Human Intervention

Two different presenters this month spoke on automated workers comp medical only claims. In fairness to the presenters, I will not mention their names or companies. Their presentations were better than most that I have seen on this subject.

The ideas of claims automation claim analytics and other “no-touch” claims adjusting, and processing have been discussed since the mid-1980s. Unfortunately, worker’s compensation has not been able to advance as much as health or other lines of insurance since that time.

The Tick Tick Medical Only Claims

Automated Workers Comp medical only claims caught my attention in 2005 when a monopolistic state fund was using a fully automated system – even to set reserves and to send out forms, letters, and to accomplish other daily “mundane” adjuster tasks.

Two members of the Workers Comp press interviewed me on my article. One reporter agreed with me, the other one not so much.

The system was scrapped in 2008 as the monopolistic state fund ran into many problems including being severely under-reserved on certain claims and over-reserved on many minor claims. Overall, the fund totals seemed accurate, but the underlying financials made no sense.

The Tick Tick Medical only claims in the above subtitle came from an article I wrote many years ago as a dire warning to medical only claims adjusters, supervisors, managers, insureds, and especially self-insureds.

Any claims person will nod their head that some of the worst claims they have handled originate as minor medical claims. Without any intervention, these claims were paid and closed with problems still existing before and after closure.

Avoid Claims Festering

Medical Automated workers comp medical only Blue stethoscope

Wikimedia Commons – Tachypnoe

Medical only claim festering(c) was a concept and keyword that I coined 15+ years ago. In the late 1990s, I decided to start analyzing any injury, type of claim, or any variable that was most common amongst the worst claims. The claims that reached into my claims authority level (over $75,000) had many similar characteristics.

I covered those in the Six Keys to Workers Comp Cost Savings and even wrote two manuals on them. The one element that popped up repeatedly for the worst of the worst claims overwhelmingly started as untended medical only claims. These claims were inherited from another TPA – they did not occur on my watch.

Why did they not occur on my watch? Each claim had a supervisor, adjuster, and medical only adjuster, along with a claims assistant all look closely at every incoming claim. The claims processing system had a module for automated workers comp medical only claims that we never used on even one claim.

Automated Workers Comp Medical Only Claims – Solution Someday?

I have reviewed a claims processing system over the last week that may be able to at least reduce the amount of “eyes on the small claims.” We shall see how that works out.

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Medical Only Claims Adjusting – One Super Critical Task To Consider

February 1, 2019 By JL Risk Management Consultants

Medical Only Claims Adjusting – Where Small Claims Can Turn To Crises

Most Medical Only Claims Adjusting sections in a claims processing manual consist of a very few pages. Lost time adjusting takes up the majority of a TPA or insurance carrier claims manual.

medical only claims adjusting picture large wave breaking

Wikimedia Public Use License Broken Inaglory

The Medical Only claims adjusting section may or may not cover what is just as important as any Lost time adjusting task. The recognizing, converting, and immediately handling of a medical only claim that has become serious has wrecked more than a few employer’s loss histories.

If a small claim festers lacking any administration/adjusting, the claim will likely end up being a non-investigated, expensive, out of control mess. Some claim systems will catch a small % of these claims. Those systems are few and far between.

How are small claims that are turning into uncontrollable claims discovered? The usual ways involve:

Twilight Zone Phone Call
Employee is denied an unauthorized treatment by medical provider
Employee’s newly hired attorney sends in representation notice
Employee calls into claims department to complain about no TTD checks
Claims reserves peg at higher than normal level for a medical only claim
Claim stays open for months/years
Claim is reopened and then re-closed multiple times to pay bills over a long period

Most medical only claims adjusting staffs and lost time adjusters could add on many more items to this list.

Some claim departments required a recorded interview on even medical only claims. This sickening requirement caused these claim departments to become overloaded in pending recorded statements. Most claim departments which required recorded statements on all claims changed the task to a recorded statement on all lost time claims and serious medical only claims.

Over the years, I have met and supervised great medical only claims adjusters that had a gut feeling when a claim was souring and going to be more costly than just a small amount of medical bills paid in the first few weeks.

Employer Role In Medical Only Claims Adjusting

I then discovered one of the techniques of these great medical only claims adjusters. They had established great two-way communications between themselves and the insured. The adjusters had a great open door policy for the employer to call them if they noticed anything suspicious or extraordinary occurring on even the smallest workers compensation claim.

Even if your company does not have this type of communication and relationship with your medical only adjusters, go ahead and start on it today. If you see anything strange on a medical bill, or if a large medical bill is received on a medical only, let the medical only claims adjusting staff knows about it immediately.

If the employee has an unexplained absence after reporting a medical only claim, get in touch with the medical only adjuster as soon as possible.

Email your medical only claims adjuster instead of calling in most cases. The email will allow the adjuster time to pull up the file and then discuss it with the lost time adjuster or medical only claims adjusting supervisor.

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Report Medical Only Claims To Carrier – Saves Later Headaches

January 24, 2019 By JL Risk Management Consultants

Report Medical Only Claims – The Devil Is In The Delay

Should I report my medical only claims to the carrier?

Public Use License – Frank Vincentz

Our newsletter and blog readers ask us this question as often as any other workers comp question. The other related question – Will my premiums increase if I report medical only claims?

Our answer is – Not reporting medical only claims will increase your premiums in the long run. A side note – most states give a 70% discount to the effect on your E-Mod when you report your medical only claims.

Claims Festering Due to Not Reporting Medical Only Claims

Claims festering was coined by me approximately 10 years ago. When an employer decides to become the adjuster on small claims, the scenario proceeds along in this fashion:

An innocuous accident occurs resulting in a small injury
The employer does not report the claim to their insurance carrier
The injured employee keeps treating and the employer pays the bill or reports it to their health insurer
The claim slowly grows and becomes more serious with little or no oversight – festering like a boil
The injured employee now has incurred multi-thousands in non-fee scheduled bills
Now, after running up a large claim, the employee starts to miss time from work
The employer decides to report it to their carrier or TPA (self insureds)
The carrier cannot investigate a claim until the first report is filed
The claims staff becomes frustrated as they likely have received Twilight Zone phone calls
Your reputation has been eroded with your carrier – Oh, it is ABC Widgets, they always report claims late
The adjuster cranks up the reserves much higher than usual due to unseen bills and for the risk of a non-adjusted claim
Claims adjuster now has to play catch up
The claim is out of control – get out the checkbook

The same scenario occurs with a self insured except you do not wreck your E-Mod, you wreck your budget for claims payments.

Six Keys for Savings

Reporting claims timely remains one of our most highly recommended keys for cutting workers comp costs. My advice is to report any claim where the employee has to stop work due to an injury. If the injured employee receives medical treatment, then they had to stop work and seek out medical care.

With online reporting, filing the first report of injury is now easier and faster. I can still remember when the fax machine hummed from incoming claims.

The bottom line – report medical only claims to your carrier.

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Personal Sensitivity Claims Complicated Workers Compensation Matter

September 6, 2018 By JL Risk Management Consultants

Personal Sensitivity Claims – Frustrating For Employees and Adjusters

A large number of personal sensitivity claims have created a large chasm between workers compensation adjusters and employees who report this type of claim.

picture of personal sensitivity claims rash

Wikimedia Commons License – Skoch3

General sensitivity claims can be defined as where the employee reports a claim that may have been caused by exposures that the general public faces and are not specific to the job.

The maddest employees with the smallest workers comp claims come into play when adjusters assess a claim – usually medical only claims – as not being specific to the risks of the employee’s job.

The best example:

Part of an employee’s job involves washing down a workspace. The cleaner used is nothing more than Dawn soap and warm water.
The employee reports a claim that the Dawn soap irritated their hands and caused a rash on their arms.
The employee seeks medical treatment for the irritation and rash
The medical only adjuster receives the first report of injury.
The medical only or lost time adjuster denies the claim as personal sensitivity
The employee becomes very upset that the claim is not paid under Workers Compensation even though they may have health benefits.
These claims have been litigated in certain states.

Is it a better risk management technique to accept this claim and pay it rather than have a disgruntled claimant on their hands?

Man Hand Writing personal sensitivity claims Risk Management Word

by StockUnlimited

If the company that processes the claim is a Third Party Administrator (TPA), then the employer should have a large say as to whether they claim is paid instead of creating a disgruntled employee situation. Remember, an adjuster that works in a TPA environment is spending the money out of a self insured’s account.

I remember having an agreement with certain self insureds that personal sensitivity claims are to be paid and not denied. Some of those very small claims have turned into much worse claims that could not be denied later in the claim.

This type of claim has been ruled on in many jurisdictions. I cannot make a blanket statement as to which states allow or do not allow the claim.

This situation is one that should be run by the defense attorneys that the adjuster usually works with on their claims. Personal sensitivity claims may seem too insignificant to speak with a defense counsel. It will be well worth your time to know the answer even if you have not handled personal sensitivity claims.

I wanted to bring this issue to the attention of claims departments, safety managers, risk managers, and our other 7,000 weekly newsletter readers.

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California WCIRB First Aid Claim Requirements – Good and Bad

May 4, 2017 By JL Risk Management Consultants

California WCIRB Issues Mandate on Filing First Aid Claims

The California WCIRB is the workers compensation insurance rating bureau for specifically the Golden State. The WCIRB produces notices of rule changes that will affect California employers.

British Red Cross First Aid kit California WCIRB green bag

Wikimedia Commons – Owain Davies

One that I wanted to call attention to (even though it was published in November 2016) concerns the handling of First Aid and Small Medical Only claims. I have written many articles on WCIRB’s conferences, webinars, rulings, etc. over the last fifteen years. As with most rating bureaus, California WCIRB has provided me with great assistance and almost always a very positive attitude. See my conclusions on the new rule at the bottom of this article.

Reporting of Small Medical Only or First Aid Claims – California WCIRB

Bulletin 216-25

The Insurance Commissioner recently approved amendments to the California Workers’ Compensation Uniform Statistical Reporting Plan—1995 (USRP) effective January 1, 2017, to clarify the reporting requirements for small medical only or “first aid” claims. The Insurance Commissioner’s Decision (CDI File No. REG-2016-00018), dated October 14, 2016, approved amendments that specifically reference first aid as defined in California Labor Code Section 5401(a), to clarify that insurers must report the cost of all claims for which any medical care is provided and medical costs are incurred, including those involving first aid treatment, even if the insurer did not make the payment.

Man Injured California WCIRB With First Aid Briefcase

StockUnlimited

These changes can be found at Section II, Definitions, Rule 24, Medical Only or Medical Claims Only, and Section V, Loss Information, Subsection A, General Loss Reporting Instructions, Rule 1, Reporting Losses, of the USRP and are provided below for your reference. As indicated in the Insurance Commissioner’s Decision, the reporting of first aid claims has been an enduring concern. It has been the long-standing position of the CDI and the WCIRB, as communicated in several prior WCIRB Bulletins, that insurers are required to report the medical costs incurred on first aid claims, even if paid by the employer, as any other medical loss.

By explicitly citing first aid in the definition of medical claims and the reporting of losses, the amendments clarify the intent of the regulations and what has been communicated in prior WCIRB Bulletins.

There are no special or unique coding requirements related to the reporting of claims meeting the Labor Code Section 5401(a) definition of first aid. The reporting requirements in Part 4 of the USRP applicable to the reporting of medical costs incurred on any other medical only claim also apply to the medical costs incurred on claims meeting the first aid definition.

Part 4, Unit Statistical Report Filing Requirements, Section II, Definitions: 24.

Woman On Desk California WCIRB With Papers And Computer On Desk

StockUnlimited

Medical Only or Medical Claims Only A claim or injury for which no indemnity is incurred, but for which medical treatment costs are incurred is a “medical only” claim or injury, regardless of whether the cost of medical treatment, including first aid, is paid by an employer or insurer, or regardless of whether a Workers’ Compensation Claim Form (DWC 1) is filed.

“Medical Only” claims or injuries include but are not limited to all compensable injuries in which the disability does not extend beyond the waiting period specified in the workers’ compensation laws of California, or injuries for which immediate medical treatment has been provided prior to a determination of compensability pursuant to Labor Code Section 5402(c).

Part 4, Unit Statistical Report Filing Requirements, Section V, Loss Information, Subsection A, General Loss Reporting Instructions

1. Reporting Losses Any and all claims, including those involving first aid as defined in California Labor Code Section 5401(a), in which Indemnity Losses or Medical Losses are incurred or Allocated Loss Adjustment Expenses are paid must be reported individually. All loss amounts are on a direct basis (excluding reinsurance assumed and adjustment for reinsurance ceded) and must be reported on a gross basis prior to the application of any deductibles.

Good

Hand Showing California WCIRB Solution Icon

StockUnlimited

Requiring employers to report all claims no matter the seriousness results in two great developments:

Twilight Zone phone calls from medical providers wanting medical authorization
Claims festering (c) avoidance – some of the worst claims start as ignored minor claims
The WCIRB also included small medical only claims in the rule which should always be reported

Bad

The other side of the coin indicates that for a reported First Aid claim

Almost all carriers assign $500 to $1,000 to any first report of injury received – possibly skewing an Experience Modification Factor for a claim or group of claims that never really existed
The paperwork involves a large increase in recordkeeping – more regulations?

Solution

The rule stands. Report all your claims. The California WCIRB enforces the legislated rules. They do not create the rules. Do not try to work around the rule.
Contact your agent/carrier when your renewal date approaches to see if they have a Reportable Only category. Most do, make sure you get out the most important tool for policy renewals – the proverbial highlighter – and see how your carrier charges and reports Reportable Only claims.

Yes, I do realize the Rating Bureaus supply credits for reporting Medical Only claims.

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Medical Only Claims – Ignore Them At Your Own Risk

April 13, 2017 By JL Risk Management Consultants

Medical Only Claims – A Short List of Concerns

Medical only claims turn out to be the worst Lost Time claims if not monitored properly. How can a few $250 claims cause such havoc?

Sign Medical Only Claims At Your Own Risk

Wikimedia – MOTOI Kenkichi

The old saying concerning “Big things come in small packages” applies very well to this situation. The least monitored claims can blow up very quickly. Why?

I coined the the term claims festering approximately 10 years ago. Yes, the term came from what happens to an ignored sore. The ignored claims sometimes:

Stays reserved with the automatic amount ($250 or $500) too long
Increased just to pay a bill
Not reviewed due to small dollar amount – one cannot expect an adjuster to examine a $450 claim.
Keeps being handled and reserved for a low dollar amount for months
No supervision = no control of the medical
Festered medical only claims usually turn into large claims headed down the wrong path – think snowball from hell

How does a claims department and/or employer avoid this mess? The question begs to be answered in this manner. Technology – not claims analytics may be the best answer.

Nurse Medical Only Claims With Patient In Corridor

StockUnlimited

A very talented medical only adjuster knocks the claims monitoring out of the park. I have experienced this often with medical only claims adjusters who worked with or for me in my claims career.

Getting the file transferred to a lost time status is a critical step. A good experienced medical only claims adjuster generates this transfer most of the time. Asking an overloaded claims supervisor spells trouble for a festering claim.

The main concern coming from a festered claim is the lack of supervision over a very acute claim. A laughable situation occurs when a lost time investigation commences six months too late. Technology sounds great as the solution. It does not suffice in this instance.

Picking out a festering claim from a list of what can be thousands of medical only claims will be a monumental if not impossible task.

Why did I write this article? I just reviewed a loss run with 125 medical only claims. Five of those were deemed festering claims. Five of `125 claims may not seem that large of a percentage. These claims were tracked by a spiffy claims analytics software package.

Some types of software track the festering better than others. An IT person would input the level where a warning would be given if a claim festers too long, not an adjuster.

Oh, my, human intervention wins again even with the small medical only claims.

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Scariest Claims of All – IBNR Can Be Frightening – Happy Halloween

October 31, 2013 By JL Risk Management Consultants

IBNR Can Be Frightening To All Parties

IBNR (Incurred But Not Reported) can be one of the most frightening aspects of the Workers Compensation system as a whole. I often hear the term bandied about in WC “techie talk” conversations. All parties in the WC system need to be aware of these claims.

StockUnlimited

I used to ignore the term as just being another term that confuses people. I had thought it was not important enough to mention very often when this blog was started in 2007.

The definition of IBNR claims is basically claims that have occurred which have never been reported to an employer or carrier. How does this affect each entity in the WC process?

Employers

Injuries such as carpal tunnel; a worker’s back that has been strained several times; a trucker that has to haul loads on a very dangerous route, can all be thought of as a claim “that is waiting to happen.” The even scarier ones are where the employee decides to “work through” the injury. The accident has occurred but the employee just does not report it to their employer. Employers usually find out about these claims when there is a layoff or the person no longer works for that employer.

Carriers/TPA’s

Many formulas (regression, triangulation, etc.) have tried to assist in assessing how many claims a carrier or TPA does not have that are “not on the books” such as the prior example where an employee has not reported the claim to their employer. The other conundrum for carriers/TPA’s is when the employer decides to pay small claims and not report them to their carrier. This violates one of the Five Keys To Saving on Workers Comp Claims that I wrote many years ago. I coined the term “claims festering.” This is a claim that has occurred and was reported to the employer, but not reported to the carrier.

Rating Bureaus, State Regulators

House On Top Of Roll Money IBNR And Man Sitting On Chair

StockUnlimited

These two groups have been left to rectify and quantify the IBNR claims. There is a very large amount of reference data in existence. However, trying to assess something that does not yet actually “show in the numbers” is a tough task at best.

IBENR

This is a term that leaves actuaries, insurance carriers, rating bureaus, and regulators scratching their heads. Incurred But Not Enough Reported (IBENR) will add adjusters to the mix. A claim may have been reported, but not yet reserved properly. IBENR really can be affected at all levels of the WC insurance process. I actually accidentally found this term when I googled IBNR.

The bottom line is to watch out for IBNR – better known as the claims goblins.

Workers Comp Medical Only Claims – Your Money Down Toilet

April 27, 2011 By JL Risk Management Consultants

Workers Comp Medical Only Claims And Claims Festering(c)

Certain Workers Comp Medical Only Claims snowball into uncontrolled Lost Time Claims for employers and carriers. My last post on Medical Only claims pointed out the pitfalls and concerns of medical only claims. I promised that I would get back to how employers should monitor medical only claims.

Picture Of Doctor And Patient Workers Comp Medical Only Claims Shaking Hands

123RF

One of the huge mistakes by employers and carriers is the medical only claims are allowed to fester for many weeks and months and not receive the proper attention. I have seen many medical only claims turn out to be an employer’s worst nightmare.

A medical only claim has really had no investigation performed and is usually more of a medical only claim processor’s job. A lost time adjuster may never see a medical only claim until it turns serious, such as a physician’s office calling for authorization for a major back surgery. By that time, it is almost too late to do anything that would resemble a good investigation of the claim.

Medical only claims are not that hard to monitor. Avoiding a delayed investigation by the Workers Comp adjuster is the goal.

Excel Spreadsheet Workers Comp Medical Only Claims Screenshot

Wikimedia

An Excel spreadsheet can be used as a diary system. An Outlook or some type of calendar program will work even better. After filing the First Report of Injury for a medical only claim, calendar a follow up with the employee at 30 days, 90 days, 6 months, and one year. If they have an email address, that is the easiest method to contact them.

The others side of the coin, so to speak, is what info is flowing to your insurance carrier or TPA without your knowledge. Medical providers often send the bills and reports directly to the claims office. You should ask that a copy of the medical bills and reports are also sent to your office. If the report points out the employee’s condition is worsening or surgery is anticipated, you will be able to point this out to your Workers Comp claims department.

One of the most heavily posted recommendations by me is having online access to your claims. You can easily see what is occurring in the claim and to see how the carrier is handling the medical only claims. You may also be able to see scans of the medical reports or medical charges paid.

Using these two simple techniques will avoid you surprising your claims adjuster. Do not rely solely on your Workers Comp claims department to catch everything on medical only claims. A surprised claims adjuster may set your Workers Comp reserves very high, which means your E-Mod will be higher, which is money down the toilet.

Medical Only Claims – Worst Type May Go Unnoticed Festering

April 13, 2011 By JL Risk Management Consultants

The Very Worst Workers Comp Medical Only Claims

Recently, I posted on the pitfalls of Workers Comp medical only claims. That article is here. The worst medical only claims nightmare results from claims festering – or an unknown claim that sits with undiscovered liability.

Picture Of Doctor Medical Only Claims Explaining In Patient

Wikimedia Commons – Jorgejesus4

There is a very small window of time where a claim can be investigated – regardless of whether it is a medical only or a lost time Workers Comp claim. The three point contact (Employer, Employee, and Medical Provider) must be made within 24 hours. This allows for a timely and proper accept/deny decision.

If an employee has not drawn Workers Comp benefits, these claims are usually lumped into the Medical Only category. There are a few exceptions.

Medical benefits are paid timely, but the claim is becoming more serious without any monitoring. The medical bill expense may not necessarily signal any problems if the injured employee keeps working and only has medical office visit and prescription expenses. The claims staff usually does not contact the injured employee in these cases.

Doctor Talking To Patient Medical Only Claims In Hospital Bed

StockUnlimited

Who monitors these claims? The answer is usually no one. The medical bills are processed and the claims just keeps growing and growing with no intervention.

Yes, there is a med-only adjuster than may alert their supervisors on a few of this type of claim. They are usually too overloaded with volume to read every medical report.

Medical Only Claims Adjuster Is Key

A talented Medical Only claims adjuster spots this type of claim early in the process. Do not ever think these adjusters are not that important. Heading off a very serious case of claims festering(c) saves massive claim payouts in the future.

The ability to spot these claims is an art unto itself. How does an employer monitor these claims? I will cover that next time.

Medical Only Claims Festering – Fuse May Be Lit For Huge Loss

April 6, 2011 By JL Risk Management Consultants

Medical Only Claims Festering (c)

The term medical only claims festering was coined by me in the late 1980’s.

Most medical only claims are just that – claims with low dollar values that close within 90 days. They usually do not affect your E-Mod (Ex-Mod) in most situations. There is one area where a simple medical only claim can become your company’s worst nightmare. It is a term that I coined know as claims festering.

picture Of Hand Typing On Laptop Medical Only Claims With Stethoscope

Wikimedia Commons – Daniel Sone

This is not necessarily a set of claims that can be caught with doing an E-Mod reduction review. Medical Only claims must be constantly monitored for adverse development. I have a claim that was sent by a self- insured on the desk in front of me right now. The Total Incurred (Paid + Outstanding Reserves) is over $400,000.

The claim festered in a medical only status for months. From most of our file reviews, med-only claims are not monitored that well. It is the nature of the business. The Risk Management technique for these claims is easy to monitor.

Picture Doctors Medical Only Claims Personnel Posing to Camera

StockUnlimited

If a medical only clam is open for six months, then the claim needs to be monitored heavily. Insert the clams on a diary and inquire about their status on a monthly basis. One cannot let the claim turn into a large claim due to lack of follow up or control. Communication with the medical only claims adjuster is critical for this type of claim. Long-standing medical claims often turn into complex claims with litigation as the eventual outcome.

This task will be much more difficult if you do not have online access to your claims. If your insurance carrier or TPA offers this, sign up for it today. Monitoring medical only claims off paper loss runs will usually not result in any savings.

There is actually a much worse type of medical only claim. I will cover that next time.