Can You Identify the Large Problem?

The following is happening with alarming regularity and our industry needs to address these situations. Contained in this REAL example is a problem. Can you identify it?

• Driver reports an 'accident' that is clearly his fault; rear-ended the vehicle in front. Police respond; information is exchanged and it is noted that there are no injuries. All is well, eh?

• About a week later a letter from Plaintiff Counsel appears and they are contending that their Client, the driver of the vehicle that was struck from behind, is injured.

• Note: when the accident was reported it fell well below the radar of those who are charged with managing this type of accident. In other words, nothing was done from an investigative standpoint. I mean, why would you, there was no injury at the scene and if later the claimant DOES allege an injury it couldn't possibly be much, right?

• Fast forward two years! The case is in litigation, costs are mounting and medical for the injured driver stands at over $125,000. Demand is at $850,000.

So, where is the Large Problem? Well, no one ever inspected the claimant vehicle. No photographs, no nothing. What we DO know is that the Police Report says there was NO DAMAGE to the rear of the claimant vehicle. Further, no claim for damage was made by the owner of the vehicle or their insurance company. Hmmm.

Piling On

"Piling On" is a term used to describe, in a football game for example, the defensive players that recklessly jump on to a "pile" or gang of players after the play has been decided or the offensive player's forward progress has been stopped.

There is a correlation to the Claims Industry.

Recently I was speaking with a senior claims adjuster who confided that she has 200 claim files. This might be low in some claim offices but I suspect it is on the high side.

A Risk Manager must ask how an adjuster can perform with this number of files. The same adjuster who has 200 claim files also added that one case in litigation took up her entire afternoon with reviews and discussions with defense counsel. With a caseload of 200 files (no exposures or "features") the adjuster must apportion 9 files per day on their diary. Well, taking an entire afternoon for one case now pushes the per day diary to 9.3. Sounds manageable enough you may think. Consider holidays, sick days, vacations and the myriad of interruptions and the number of files to review escalates.

The pressure to keep adjuster head count is real. Efficiencies play an important role then in maximizing the time of every adjuster and for this reason the claim management process must be viewed the same way one would view a production line.

We believe part of the solution is to bifurcate the responsibility for investigations away from the adjuster. Adjusters are paid to think and organize information for defense or settlement.

Enough Rhetoric

Bipartisan! If we hear that word once we hear it 500 times a day. Enough already! Let's just get something done.

Well, the claims process, from the chair of the customer (and the injured worker) , is often viewed much like our bipartisan politicians; a lot of explanation about what has gone on and how we got to this point but very little in the way of demonstrable solutions.

So it is with the Claims Process for many claims organizations. A lot of opinions on what should be done but little in the way of demonstrable progress. Things that will affect the bottom line. The fundamental challenge remains, as it has for some time, to respond to a loss and begin meaningful management as soon as possible.

Many tout a 24-hour contact rule. So what is "contact"? Does making a call and leaving a voice mail message constitute contact? When contact IS made is the discussion meaningful for the injured worker and the employer?

I made the following suggestion to a group claim managers many years ago; "Do away with the 24-hour contact rule and implement an IMMEDIATE contact rule. Then, follow this up with an immediate, cost-effective investigation". Heresy!

Sadly, many investigations today consist of a conversation with an injured worker. This process is tantamount to believing everything a used car salesman tells you about the 1977 Pinto you have your eye on.

The medical case management element, when coupled with an immediate and thorough investigation, will pay dividends. It is not enough to assign a Nurse who PHONES the injured worker and the attending physician. Their impact is minuscule with this process.

Like politics, claims management can get bogged down in meetings, relationships (vendors), data management, on-line access and monthly reports. Progress is achieved when we get back to a focus on the injured worker, a swift and thorough investigation coupled with immeidate medical case management intervetion that is not afraid to call out a doctor when their treatment is not substantiated by findings.

Carom has developed both the investigation and medical case management methods and services that bring to light, quickly, all the elements of the disability (physical, emotional, financial, vocational and motivational) to ensure better (lower) outcomes.

Visit http://www.caromdata.com/ for more information.

Efficiency

The economy (we can't get away from it) is forcing us to consider all areas for efficiencies. So, allow me to pinpoint what I feel is an obvious area for improvement.

Commercial policyholder (customer/policyholder) has an accident or on the job injury. Event is reported by the employee on, say, Wednesday at Noon. Event is reported to insurance carrier or TPA possibly the next day and from there we typically see that the response from the assigned adjuster is another day or two.

Recently a review of a claim for a customer showed that there were ten (10) Note entries in the claim system within a five day period once the claim was received; however, only one (1) of the entries was not system generated and it was a brief note by the supervisor.

Point here is that we must gain efficiencies in reporting and responding. The company, the policholder is in a position to respond immediately to any event, regardless of the first impression of severity, as opposed to waiting for the insurance carrier or TPA to respond.

Psychological Warfare?

Ever wonder why change is not more of a constant? Consider the auto industry. Easy now to ask why they haven't developed fuel alternatives in light of our current prices for gas but I truly wonder; especially our big 3, could they not have anticipated the spike in fuel? Could they shrink the development time or getting new models to market?

The insurance industry may have no rival when it comes to staid processes. In particular, the way claims are adjudicated. A good friend likes to say that claims process has not changed since the advent of the pc! I can't argue with that logic.

Part of what drives us (no pun intended) is the passive manner in which commercial auto cases are handled. Minor impact (see photo) results in claim for injuries some weeks or months after the accident. Adjuster receives letter from plaintiff attorney and acknowledges then...we wait. Adjuster calls the attorney's office for a medical update and when we are given no new information we diary the file for 30 days! And this continues for months while the claimant, with the preexisting condition-has found an orthopedic surgeon who "slaps" a diagnosis of bulging disc on the claimant and associates the condition to this accident since the claimant described it as a hard impact.

Consider the psychological aspect. The claimant nor the doctor or attorney are challenged in any way while we sit back and wait for, essentially, a demand. They all know they game and they calculate how to take advantage (read TIME). Medical is submitted months later along with the bills.

Consider the reaction of the claimant, the treating physician and attorney when they are notified that we have empirical evidence that the impact in NO WAY could have caused an injury and we are prepared to use this information at trial and, further, we are willing to share our information! Back to the psychological aspect, the treating doctor, when they read this along with confirming documents, will run, run, run away from the patient/plaintiff after quickly pronouncing them as 100% cured. The attorney, if they do not drop the case, will get very reasonable with their demand and a case that could have settled for $50,000 now has true nuisance value.

For the benefit of the policyholder and their bottom line we must change our process. The insured-policyholder must become actively involved (people) and ensure that aggressive steps are taken, quickly, to pose psychological obstacles that most claimants, attorneys and doctors will back away from.

Why Wikinomics?

The following was posted at the Wikinomics Blog (http://www.wikinomics.com/blog/index.php/2007/11/26/all-bugs-are-shallow/#comment-64060)

"There are two groups; those that ‘get it’ and those that do not. Efficiency is the name of the game in business and those who cling to structure-the tangible- have ‘insecurity’ written all over their faces. I have begun to give the book “Wikinomics” to those who yearn to work smarter and quicker."

Would You Pay $330 for a $1 Pill?

If you are involved in the management of Workers' Compensation or 3rd Party BI claims it is important to understand what drives the cost of these claims. The medical portion (charges) is something that Carom finds is not regarded with enough scrutiny. So, we offer you the following information that we hope will cause you to question every line of every bill from every hospital.

A midwest health insurance provider recently sent me a letter explaining why certain charges from our local hospital were not covered for blood work done for my Wife. The letter went on to say that the insurance company analyzes charges from all hospitals and sees the markups that are billed. They wanted to let me know that "Based on the most recent public data, ______ Hospital marks up their prices, on average, by 330% times cost."

Enough said.