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"

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

Predict Claim Risk with Diagnostic Severity Scores

by Karen Wolfe

Predicting and measuring claim risk is an important effort in managing Workers’ Compensation claim costs. Huge sums of money are allotted to sophisticated predictive modeling initiatives hoping to tag the claims that will be the most costly. Scores of analytic professionals are put to the task and when high risk claims are identified, additional resources are applied to mitigate impending damage. Yet, one very powerful measure of claim risk remains virtually untapped and ignored by the legions of analysts.

Diagnostic codes

Every medical bill submitted for payment contains diagnostic information in the form of standard codes. The codes, assigned by the treating physician, describe the injury or illness that triggered the claim.

The codes, ICD-9 codes, are intended to justify treatment rendered and the fees charged. ICD-9’s codes are the International Classification of Diseases published by the World Health Organization (WHO). On Workers’ Compensation bills, they can tell us what the medical problem is.

Codes ignored

ICD-9 codes are part of the collected information from the bill, however, they are not well understood or used in claim management. That ICD-9 codes are ignored by claims professionals is perfectly reasonable.

ICD-9 codes on the claim are just codes. They do not contain the description of the injury and there are thousands of them. Adjusters do not have the time or inclination to search for code descriptions. Instead, they rely on the NCCI classifications of type of injury, body part, and cause. Nevertheless, neither ICD-9 codes nor NCCI classifications by themselves can define the seriousness of the medical condition.

Coding the codes

To define injury severity, individual ICD-9 codes must be graded for medical severity using a simple scoring methodology. For instance, multiple codes are used by physicians to describe back injuries and they have very different severity scores. A low back strain will not be scored as high for seriousness as a spinal cord injury. Likewise, a fracture of the tibia in a healthy young adult will have a lower severity total score than a fracture of a tibia of a 60 year old who also has diabetes.

Multiple codes on a claim

Rarely is only one ICD-9 code assigned to a claim. In fact, when a claim is complex or when recovery is slow or compromised, multiple ICD-9 codes accrue to the claim. Older claims involving many treatments over time can literally contain pages of ICD-9 codes. Each time an injured worker is referred to a new specialist, new codes are added.

Comorbidities

Comorbidities such as diabetes, heart disease, or obesity that add complexity, delayed recovery, and cost to a claim can also be tracked through ICD-9 codes. When the treating physician notes such a condition, the code will be on the bill along with the injury codes. Treating physicians should be encouraged to include comorbidity diagnostic codes because they impact recovery.

Migrating claims

Claim diagnostic scores accumulate as the claim progresses. Total diagnostic scores are tallied and monitored by the computer system. As claim diagnostic scores accrue, automatic alerts are sent when the total reaches a pre-determined set point.

Importantly, migrating claims can never go unnoticed!

Moving indicators

Claim diagnostic scores are dynamic moving indicators of risk and exposure in a claim. Electronic monitoring claim ICD-9’s continuously offers critical information about current claim risk status. The claim diagnostic risk tally remains in the system background, interfering with nothing and no one. However, when the set-point is reached, an alert is sent to the appropriate person so that action can be mobilized.

As new medical bills arrive and new diagnoses are accrued, the diagnostic risk score for a claim mounts. While not the only indicator of claim risk, diagnostic severity scoring is powerful, current information. A high diagnostic severity score absolutely predicts high claim risk and cost.

Karen Wolfe is the founder and President of MedMetrics, LLC, a Workers’ Compensation analytics company. MedMetrics offers online apps that super-charge medical management by linking analytics to operations. MedMetrics apps include Diagnostic Severity Predictive Scoring with Alerts. karenwolfe@medmetrics.org

 

How to Measure Claim Risk With ICD-9's

by Karen Wolfe

Most agree the medical portion of Workers’ Compensation claims is now almost 60% of claim costs. That fact alone should easily convince payers to focus on the rich medical information in their data. Yet, very powerful information residing in claims data is virtually ignored—diagnostic codes in the form of ICD-9’s. The problem is few in the industry really understand ICD-9’s or in what ways they could inform and super-charge medical management.

ICD defined

ICD-9 codes are not unique to Workers’ Compensation. ICD-9’s are the World Health Organization's International Classification of Diseases, Ninth Revision, Clinical Modification (ICD-9-CM). They are a standardized method of describing injuries, illnesses, and related issues worldwide.

ICD's are the codes that classify mortality data worldwide. The ICD-CM is used to code and classify morbidity data from inpatient and outpatient records and doctor’s offices.

The purpose of the ICD and of WHO (World Health Organization) sponsorship is to promote international comparability in the collection, classification, processing, and presentation of mortality statistics. New revisions of the ICD are implemented periodically so that the classification also reflects advances in medical science.

ICD-9’s in standard billing forms

Those who bill for medical services in the U.S. are required to use one of two CMS (Center for Medicare and Medicaid) standard forms, the HCFA-1500 (Health Insurance Claim Form) for outpatient services and UB-04 (Unified Billing) for hospitals and other facilities. Both standardized forms require the medical provider list ICD-9’s appropriate to the medical procedures for which they are billing. The verdant data derived from these forms should be analyzed and incorporated into medical management processes.

Unwieldy and ignored

Bill review organizations and payers capture data from the standardized billing forms in their systems. Nevertheless, while the ICD information is documented in systems, its use ends there. ICD-9’s are difficult to interpret in the form seen on bills.

ICD-9’s on bills are displayed in the form of codes, not descriptions of injuries and illnesses, and they number in the thousands. Individuals cannot remember the codes, nor do they have the time to look up codes for interpretation. Instead, they simply ignore them.

Secret power of ICD-9's

Requisite knowledge resides in ICD-9 codes that can be translated to powerful medical management tools. When the ICD-9’s in a claim are monitored electronically and concurrently, they reveal and inform.

ICD-9’s reveal migrating claims

Migrating claims are those where the injured worker is moving away from recovery, rather than toward it. Such claims always accrue ICD-9’s. However, few notice what is happening before them. Standard processes and systems in Workers’ Compensation only record the ICD-9’s. They do not monitor, interpret, or even count them.

Migrating claims are those becoming more complex and costly, often an insidious process that is missed by claims adjusters and medical case managers until considerable damage is done. What happens in migrating claims is the injured worker is not recovering and is referred to multiple specialists. Each specialist adds new ICD-9’s to the claim, thereby increasing claim risk.

As a claims migrates, the number of ICD-9’s associated with it mounts.

Knowledge solution

Using a computerized system especially designed to monitor ICD-9’s is a powerful knowledge solution. Alerts can be sent to appropriate persons when the number and severity of ICD-9’s in a claim increases beyond a certain point. Migrating claims cannot be missed and intervention is implemented early, thereby significantly improving effectiveness.

ICD-9 scores as predictors of risk

A way to optimize the power of ICD-9’s is to score them individually for medical severity. Each claim then contains a total ICD-9 score in the system which translates to the claim risk score.

A system designed to monitor ICD-9 scores in claims keeps a running total of ICD-9 scores for the claims, the claim risk score. As ICD-9’s are added during the course of the claim, the claim ICD-9 score increases. As a claim migrates and accumulates ICD-9’s, an alert is transmitted to an appropriate person. Migrating claims cannot go unnoticed.

Claim ICD-9 scores are predictors of risk and cost. Claim ICD-9 scores can be monitored from the outset and throughout the course of the claim.

ICD-9’s scores level the playing field

The claim ICD-9 score reveals the seriousness and complexity of a claim. Medical doctors managing difficult claims can be differentiated from those handling less arduous claims, thereby creating fairness in measuring provider performance.

Moving on—ICD-10

The ICD-9 contains thousands of codes. Moreover, the ICD-10 revision will triple the number of codes, making its information value exponential. ICD-10 is slated to be activated in October of 2014. However, it now may be postponed to 2015.

Regardless of the government’s decision about when the ICD-10 is required, wise medical managers are using the ICD factor as an important and revealing evidence of claim progress—or regression.

Karen Wolfe is President and CEO of MedMetrics®, LLC, an online Workers’ Compensation analytics company. MedMetrics provides “apps” online that link analytics to operations, thereby making them actionable. MedMetrics also monitors concurrent integrated data, including ICD-9 scores to detect potentially high risk or high cost events occurring in claims. karenwolfe@medmetrics.org


 

 

How to Tap the Secret Power of ICD-9's

by Karen Wolfe

The medical portion of Workers’ Compensation claims now meets or exceeds 60% of claim costs. That fact alone should easily convince payers to focus on the rich medical information in their data. Very powerful information residing in claims data is virtually untouched—diagnostic codes in the form of ICD-9’s. The problem is few in the industry really understand ICD-9’s or in what ways they could inform powerful medical management.

ICD defined

ICD-9 codes are not unique to Workers’ Compensation. ICD-9’s are the World Health Organization's International Classification of Diseases, Ninth Revision, Clinical Modification (ICD-9-CM). They are a standardized method of describing injuries, illnesses, and related issues worldwide.

ICD is the classification that codes and classifies mortality data worldwide. The ICD-CM is used to code and classify morbidity data from inpatient and outpatient records and doctor’s offices.

The purpose of the ICD and of WHO (World Health Organization) sponsorship is to promote international comparability in the collection, classification, processing, and presentation of mortality statistics. New revisions of the ICD are implemented periodically so that the classification also reflects advances in medical science.

ICD’s in standard billing forms

Those who bill for medical services in the U.S. are required to use one of two CMS (Center for Medicare and Medicaid) standard forms, the HCFA-1500 (Health Insurance Claim Form) for outpatient and UB-04 Unified Billing) for hospitals and other facilities. Both standardized forms require the medical provider to list ICD-9’s appropriate to the medical procedures for which they are billing. The verdant data derived from these forms should be analyzed and incorporated into managed care processes.

Unwieldy and ignored

Bill review organizations and payers capture data from the standardized billing forms in their systems. Nevertheless, while the ICD information is documented in systems, it’s use usually stops there. ICD-9’s are difficult to interpret.

ICD-9’s on bills are displayed in the form of codes, not descriptions of injuries and illnesses and they number in the thousands. Individuals cannot remember the codes, nor do they have the time to look up codes for interpretation. Instead, they simply ignore them.

Secret power of ICD

Incremental essential knowledge resides in ICD-9 codes that can be translated to powerful medical management. When they are monitored electronically and concurrently, they reveal and inform.

ICD-9’s reveal migrating claims

For instance, migrating claims accrue ICD’s. Migrating claims are those that are not going well, are becoming more complex and costly, often an insidious process that is missed by claims adjusters and medical case managers until considerable damage is done. What happens in migrating claims is the injured worker is not recovering for some reason and is referred to multiple specialists. Each specialist adds new ICD-9’s to the claim.

As a claims migrates, and the number of ICD-9’s associated with it mounts.

Computer monitoring

Using a computerized system especially designed to monitor ICD-9’s is a powerful knowledge solution. Alerts are sent to appropriate persons when the number of ICD-9’s in a claim increases beyond a designated point. Migrating claims cannot be missed and intervention is early, therefore far more effective.

ICD-9’s are predictors

Another way to tap the secret power of ICD-9’s is to score them individually for medical severity, the seriousness of the injury or illness. Each claim then contains a total ICD-9 score in the system for medical severity. As ICD-9’s are added during the course of the claim, the claim ICD score increases. As a claim migrates and accumulates ICD-9’s, an appropriate person is automatically notified by the system. Migrating claims cannot go unnoticed.

Claims with high ICD-9 scores are predictors of risk and cost. Claim ICD-9 scores can be monitored from the outset and throughout the course of the claim.

ICD-9’s scores level the playing field

The claim ICD-9 score reveals the seriousness and complexity of a claim. Medical doctors managing difficult claims can be differentiated from those handling less arduous claims, thereby creating fairness in measuring provider performance.

Many indicators are used for claim monitoring and provider performance including medical cost, frequency and duration of treatment, indemnity costs, return to work and multiple other factors. The claim ICD medical severity score automatically predicts trouble and alerts the appropriate medical managers.

Moving on—ICD-10

The ICD-9 contains thousands of codes. Moreover, the ICD-10 revision will more than double the number of codes, making its information value exponential. ICD-10 is slated to be activated in October of 2014.

Karen Wolfe is President and CEO of MedMetrics®, LLC, an online Workers’ Compensation analytics company. MedMetrics analyzes data and provides “apps” online to link analytics to operations, thereby making them actionable. MedMetrics also monitors concurrent integrated data to detect potentially high risk or high cost events in claims and automatically alert the appropriate persons.

 

Diagnostic Scoring: a Powerful Predictive Indicator Uncovered

by Karen Wolfe
Wouldn’t it be great to know how medically serious an injury is at the outset of the claim without calling the doctor? Knowing the diagnostic severity for a claim is an invaluable decision support tool for many reasons. For one, knowing how serious the injury is helps in setting reserves.  It is also useful in applying resources appropriately for medical case management oversight. Moreover, scoring diagnostic severity on an ongoing basis is a means of capturing claims that are quietly migrating into greater complexity and cost.

Such knowledge has traditionally been elusive because the only available source was the doctor. It meant talking with the doctor to get a “feel” for how serious the injury is, not always a realistic approach. However, scoring  and monitoring claims for their diagnostic seriousness is a powerfully proactive medical management methodology.

ICD-9 documentation

Medical diagnoses are the way doctors describe medical conditions. ICD-9’s are required on standardized billing forms such as the HFCA 1500. The treating doctor uses ICD-9 codes, a standardized coding system, to describe injuries and illnesses.[1] While many factors can contribute to claim complexity, risk, and cost, a highly significant indicator of claim risk is the seriousness of the injury. It is almost too obvious.

Injury severity drives cost
The medical seriousness of the injury drives not only the medical costs of a claim, but also indemnity costs, return to work, claim duration, and even legal involvement. Sometimes more serious injuries spawn greater feelings of entitlement on the part of the claimant. Obviously, the more serious the injury, the more medical services will be required. Regardless of other factors, injury severity is the most basic driver of claim cost. Key decisions rest on how serious the injury is, but measuring severity by scoring ICD-9’s has not been done in the Workers’ Comp industry— until now.

Finding ways to measure and predict claim costs can be elusive, yet a necessary business requirement. The process relies on solid information gained early and throughout the course of the claim. Unfortunately, diagnostic severity has been overlooked as a source of information.

Predictive modeling
Predictive modeling using advanced mathematical devices is a valuable tool to estimate the end question of expected claim cost. It provides insight into future costs based on historic data found in similar cases. Analyzing historic data can often foretell the future when similar circumstances occur in a claim. Nevertheless, another easier and less expensive way to gain future cost insight is through diagnostic severity scoring.

Scoring Injury Diagnoses

A severity (seriousness) score is assigned to individual diagnoses found in medical bills. The bills found in bill review data can be monitored electronically throughout the course of the claim, beginning at the onset. Keeping a running score of diagnostic severity of a claim is revealing.

Elements of injury severity
Research has demonstrated what many professionals have long known: comorbidity adds to claim complexity and cost. Comorbidity means the claimant has other health conditions in addition to the workplace injury. For instance, the claimant might also be diabetic or have a cardiac condition or be grossly overweight.. These additional medical conditions can have an exponentially negative effect on recovery and therefore, claim outcome.

Research has also shown that age impacts claim complexity and cost, as well. Therefore, age should be factored into the scoring methodology.

Migrating claims accrue diagnoses
Claims adjusters and medical managers are well aware of another fact regarding diagnoses in claims. Claims accrue ICD-9’s as they migrate and become more complex. Consequently, it is important to score injury severity at claim outset and then continuously throughout the course of a claim. Claims that begin with a Medical Only status often insidiously creep into much more menacing levels without notice. Awareness of accumulating claim diagnostic severity scores prevents unseen slippage.

Timely knowledge saves money
The medical portion of Workers’ Compensation claims now accounts for 60% of claim costs, therefore, medical analytics is an even more critical component of claim management. Diagnostic severity scoring is a powerful addition to an organization’s portfolio of knowledge tools. Calling the doctor to determine how serious the injury is can be an unreliable and frustrating approach. A much better method is available.

Learn more about diagnostic scoring services at MedMetrics. It’s easy, reliable, and affordable.

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[1] ICD is the abbreviation for the International Statistical Classification of Diseases and Related Health Problems. ICD-9 refers to the ICD version currently in use. The ICD-10 version will be in required use in October, 2014.

 

Your Data can Spot Creeping Catastrophic Claims

by Karen Wolfe

 “One of the biggest cost drivers in Workers’ Compensation is seemingly “average” claims that take a turn for the worst and result in several years of medical treatment and disability.”[i]

Too often seemingly innocuous claims lay under the radar, unnoticed until the damage is done. Mark Walls in this article does an excellent job of pointing to several conditions that should serve as indicators of impending trouble. He discusses issues such as return to work, comorbidities, and psycho-social factors that can contribute to claim deterioration. His ideas are good and there are many more indicators that can be added to the list to recognize creeping calamity.

More indicators

In fact, there are many subtle tip-offs in claims that could lead to effective prevention if noticed earlier. Delayed injury reporting and treatment is one. We know from industry research that a delay between the date of injury and first medical treatment is a predictor of claim complexity, regardless of the reason. Speculation regarding motivators of delay in filing a claim or to seeking medical treatment may not be as important as actually identifying the situation early and intensifying scrutiny of the claim. The opportunity is to discover claims with migrating intensity early, thereby avoiding unnecessary cost.

Knowing is not enough

Unfortunately, knowing what conditions in claims might lead to trouble is not quite enough. Trying to apply the knowledge without a defined process has variable results. Manually identifying claims with perilous conditions is an inconsistent and inefficient endeavor because mere humans simply cannot do it well. Professionals, busy with a myriad of tasks, cannot monitor claims consistently enough to detect insidious conditions. Better process tools are needed and, happily, they are available.

Computer-aided medical management
Technology can be made a powerful work tool in Worker’s Compensation. A specially designed computer software program will monitor current claim data combined with historic data continuously, something mere humans cannot do. A custom computer program will detect trouble every time and notify the appropriate person in the organization so that focused intervention is mobilized.

A software program designed to spot combinations of data elements that portend risk and cost is a powerful cost control tool. It continually searches the data without human involvement. When an adverse situation is discovered, it automatically notifies the right persons.

Work-in-progress tool

Computer-aided medical management programs are designed to be work-in-progress tools that inform the claims management process in real time. They are driven by combinations of data elements that when they appear together in a claim, portend developing risk. Importantly, the computer-aided management tool must continually monitor current and historic data to uncover risk from the broad spectrum. For instance, ICD-9’s in a clam are data elements that can reveal impending trouble in near real time when monitored by a specialized program.

ICD-9 ‘s as windows into risk
ICD-9’s (The International Classification of Diseases, 9th Revision), the medical description of the injury or illness in a claim, can disclose much more than previously thought. ICD-9’s are documented in each bill submitted by treating medical doctors and other providers. They are windows into claim complexity at the start, but they are also powerful real time predictors of impending trouble.

Migrating claim severity
One true thing about claims is as they migrate from medical only status to increasing complexity they accrue ICD-9’s. As the situation deteriorates, more medical providers enter the picture, more medical services are provided, and more ICD-9’s are added to the data. Stated simply, monitoring current and accumulated ICD-9’s will reveal those claims that are unstable and migrating downward. A system designed to monitor ICD-9’s for severity (seriousness) will spot migrating claims.

Smart systems
A system designed to monitor ICD-9’s is a smart system containing information about how serious individual ICD-9’s are. Like pharmacy programs that alert for unsafe drug combinations, an ICD-9 scoring system will alert for dangerous combinations of comorbidities, age, and accumulated diagnoses. A claim is dynamically and continuously scored for severity and the right persons are notified automatically.

Smart systems that monitor current and historic data for combinations that portend complexity and cost can significantly recharge managed care initiatives. They are the next generation business solutions that are available now for those who are serious about controlling costs.

To learn more about MedMetrics smart systems, contact karenwolfe@medmetrics.org.
 

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[i] Walls, Mark. Creeping Catastrophic Claims—How to Spot Them and Stop Them. Business Insurance. June, 12, 2012. http://www.businessinsurance.com/article/99999999/NEWS080105/120609913