A Better Way to Measure Claim Risk

Insurance Thought Leadership has just published an article by Karen Wolfe of MedMetrics,
"A Better Way to Measure Claim Risk"

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MedMetrics provides this diagnostic claim risk scoring tool. It's quick, easy, and affordable.
Contact: KarenWolfe@MedMetrics.org

Validation for Making Data a Work-in-Progress Claim Management Tool

by Karen Wolfe

According to a recently published White Paper by LexisNexis®, Data makes all the difference. The article, “More Data, Earlier: The Value of Incorporating Data and Analytics in Claims Handling”, states that carriers can reduce severity payments by up to 25 percent.[1]

The article further states that “PC carriers have implemented real-time data and analytics to enhance risk management, streamline processes and reduce costs. Yet historically within the claims function, data and analytics have mostly been isolated in the special investigative unit (SIU).  

LexisNexis believes that carriers should use data and analytics as an operational tool first, and an investigatory tool second. We conducted a study to investigate the effect of having more data earlier in the claims process and found that claims with more data are resolved faster, with lower overall costs.”

 

The study is about bodily injury claims, not about Workers’ Compensation, but the findings can logically be extrapolated and applied to Workers’ Compensation. Applying data early and throughout the claims process will result in lower costs, efficiency, and improved outcomes.

 

Early data
 

In Worker’ Compensation, having early and comprehensive data is a fait accompli. The First Report of Injury (FROI) from the employer and in many states, the treating physician, launch the data collection process. The claim is set up in the payer’s claim system and continually fed by additional data. Bills from medical providers and others are streamed through bill review systems, then to claims systems. Events such as litigation, court dates, and bills paid are documented in the claims system. Pharmacy is managed by the PBM (Pharmacy Benefit Management), thereby setting up an additional database for the claim. Most also collect utilization review and medical case management data. The question is not the data, but what is done with the data. How can it be applied?

Sitting data

 

Unfortunately, in Workers’ Compensation, voluminous data sets often remain in separate silos. The focus in Workers’ Compensation for the last twenty-five years has been on collecting the data. Now the question is, how to make data an operational tool and achieve the kind of positive results reported in the LexisNexis study. Doing so requires a different approach to data management.

Integrated data

 

Making data a useful work-in-progress tool is a matter of first integrating the data. This is not as difficult as is often portrayed by many IT departments. Nevertheless, the request and funding must come from the business units where data integration is also not usually a priority. Until business managers understand the value of converting data to actionable knowledge, little will be done.

Actualized data
 

To actualize the data for useful application, it must be analyzed and re-presented to the business units in ways that can be easily accessed, understood, and applied. The data is transformed to knowledge, knowledge about conditions in claims, approaching benchmarks, and performance of vendors.

Knowledge is actionable, not the data.

 

Actionable knowledge
 

Actionable knowledge is derived from analysis of the data. To achieve measureable cost savings, continuously monitor the integrated data, analyze it, and re-present it to the business units in the form of understandable knowledge, thereby making it actionable. Individuals can be prompted by the system to take specific actions based on the knowledge, thereby creating a structured and powerful approach to claims management with measurably positive results.

Karen Wolfe is the founder and President of MedMetrics®, LLC, a Workers’ Compensation medical analytics and technology services company. MedMetrics offers online apps that super-charge medical management by linking analytics to operations, thereby making them actionable. karenwolfe@medmetrics.org

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[1] A.Hassib and T.Fannin. LexisNexis. June, 2014 insurance.sales@lexisnexis.com