It has been my experience that most C suite executives assume initial and ongoing training for workers compensation claim file handlers is a “discretionary soft expense.” This determination is incorrect and deserves a second look. An individual who is not trained, making significant decisions often produces measurable and avoidable claim cost inflation.
I would like to ask each of you to run one additional calculation before you reach a final position on that particular determination. The result is not what you might expect.
Simply stroll through the four separate cost centers that untrained claim file handlers might generate. This path would include reserve errors (both over and understated) that is a function of a lack of clinical understanding. An adjuster who cannot distinguish between an acute injury and underlying degenerative disease may reserve based on findings noted on imaging studies and not the clinical sequelae of the compensable event.
Additionally, not understanding the clinical aspect of the injury sustained can lead to approval of treatment not related to the identified injury. Moreover, a lack of familiarity in terms of claim duration and what is to be expected extends the injury beyond the clinical standard. There is a saying in orthopedic medicine that all bones heal, it is a function of time. Failing to understand this concept will lead to protracted duration scenario.
It is also noted that at times, litigation is triggered by less than defensible determinations made. These difficult to defend determinations are often a function of incorrect or inappropriate documentation. Each of these four items has a specific monetary impact on the file being addressed.
Here is a simple formula on which you can complete your calculus. The average claim cost multiplier from extended duration times the annual claim volume times percentage attributed to the adjuster decision quality and this would equate to the annual leakage estimate.
As an example, a midsize employer with approximately 200 lost time claims per year would be a conservative multiplier. The net result plans in the mid-six figures prior to litigation costs. The expense of the untrained adjuster is very real.
The solution to this problem is simply known as education. Reducing the cost per claim is a straightforward reduction tool solely based on the skill set of that trained claim file handler (CFH). The literature notes those CFH who have a more than cursory understanding of clinical reasoning close files faster, can establish reserves more accurately, and generate fewer unnecessary referrals.
When you effectively communicate with experienced and trained CFH, you can easily recognize the value that ongoing training provides. While noting this is somewhat anecdotal and noting there is no single peer-reviewed study measuring cost savings from trained persons untrained individuals, our collective experience demonstrates the overall utility of having ongoing education as part of the job description of each level of claim file handler.
Some argue (Amaxx & similar claims consulting sources) that the “claim leakage” runs between 5 and 15% of total losses paid. The single largest contributor to this leakage has been attributed to adjuster decision errors.
An additional reference would be WCRI who notes that “an adjuster who does not understand clinical milestones cannot intervene at the right moment.” This lack of education/understanding translates into significant dollars (WCRI Study: Key Factors in High-Cost Claims)
In short, just like the medicine we must endure in treating injuries has changed and continues to evolve, the overall methodology to handle files at the earliest level also continues to evolve. Education in this contest is not abstract. The CFH must be able to evaluate the entirety of the claim from clinical issues, sort out symptomology from objective findings, note expected recovery timelines, as well as other tangential patterns. Ongoing training is often categorized as an expense; however, in practice, this training is a form of loss control. The education requirement is ongoing and failing to do so can become expensive. Every claim will incur costs; the only variable is how much of these costs are driven by the injury versus those costs driven by a lack of appropriate education/training. To be clear, the difference is not subtle, and is easily measured in dollars.
