Managing The Cost Of Workers’ Compensation Claims Begins With The Approach.
We have a problem in the workers’ compensation industry. It’s an expensive, inefficient, and time consuming problem. This problem involves an archaic process that nobody likes, but to which everyone continues to subscribe. In working toward the resolution of workers compensation claims, Insurance carriers and TPA’s majorly overspend through a process they have been utilizing for decades. This outrageously expensive process is somehow prioritized before a simple examination of the overall spend for the Total Cost of Risk (TCOR) incurred. The strategic management on new or long term existing claims of dispute have a direct impact on the administrative costs incurred per claim, as all claims are unique. But the current process utilized in the industry does not allow for this strategy.
Insurers and TPA’s take the same course of action and rarely change their position once litigation on a disputed claim has begun. This inefficient approach – from the over-utilization of Independent Medical Exams and physician evaluation services, to the endless legal fees contributes to a vast array of unnecessary administrative costs. When aiming to settle a case for a specific reserve mark, all carriers lose sight of the big picture with regards to cost containment incurred for the claim. The majority of these claims could have been settled prior, at a fraction of the expense.
Unfortunately, the claimants are the ones who suffer the most hardships from the current process in place. Carriers, Employers, and TPA’s focused on cost containment significantly contributes to the industry wide problem. To my knowledge, no adjuster, advocate, or counsel can relate to what a claimant is going through unless they have had the direct experience navigating their own workers’ compensation claim or been trained by such person.
Thirsting for a more efficient process, the industry itself has created a shift demanding a less adversarial model for the future of claim resolution. Creating a Claims Advocacy model must be custom tailored to each Employer, Carrier, and Third Party Administrator’s specific needs. The solution for achieving high sufficient success rates with a less adversarial model is completed within a two stage process.
First, every claims advocacy model must be custom designed serving the employer’s needs.
By gearing the focus toward the injured party and taking an advocacy approach to your company’s workers’ compensation claims, creates an environment that allows for the claimant to feel heard. Addressing the needs and concerns of the injured worker builds and nurtures trust from the very beginning of a claim. This level of customer service lowers the rising costs of litigation, prevents the common breakdown in communication between the claimant and carrier, and ultimately leads to a faster and cost effective resolution.
Let’s look at one employer and third party administrator example.
Starbucks has created a less adversarial model specifically for their company while working in conjunction with their TPA for years, providing their full trust and support explicitly. Starbucks Claims Advocacy model as reported by risk and insurance, achieved 50% less litigated claims, savings of almost $50 million in reserves and most important better outcomes for their claimants. This is truly an amazing accomplishment for the system overall and applaud Starbucks for instead of standing on the sidelines reviewing the process but stepping up and implementing a solution which works for them.
The data obtained from the Starbucks claims advocacy model providing a 50% reduction for litigated claims continues creating support for an advocacy based model. Missing from this example is the second stage to this process.
The utilization of unique private mediation with an outsourced past claimant to new claimant model. Once the claimant returns to work all risk can be mitigated for the employer. Shall the claimant not return to work and want to proceed to litigation, the second stage of this model will help find an amicable resolution for all parties while providing effective cost containment relief for the employer, carrier and third party administrator. Creating a unique bond with the claimant creates a trust factor that can’t be emulated and allows the claimant to move forward with their life. To my knowledge, with our patent pending process, no other claims advocates or models can provide your company with comparable services.
When both of these models are strategically implemented together, the benefits provided will help all claimants return to work faster with providing a final resolution of their claim when required. Carriers, TPA’s and Employers will move to the forefront of the industry with the utilization of these tools at their disposable that can’t be matched by any other service.
Founder & CEO
PG Resolutions Group