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The Ideal caseload is needed to produce the optimum throughput
The “ideal” caseload is elusive. These are some of the diverse factors that should be considered when trying to determine the “Ideal Caseload”:
Adjuster Skill and training. The most critical determinant of an adjuster’s caseload is the skill and experience of the individual adjuster. Senior adjusters who are efficient with their time, prioritize well and know their cases can efficiently handle more claims than inexperienced adjusters. With the Covid-19 pandemic, training of new claims adjusters can be problematic.
Litigation Ratio. Litigation should be the most significant determinant of an adjuster’s caseload. I once managed a claims department that had two offices with fourteen adjusters (each) in Northern California and Southern California. Throughout the year, we averaged 125 indemnity claims per adjuster. Over one thousand more claims opened and closed in the Northern CA office in one year. This was because Northern California’s litigation rate was much lower than Southern California’s. The expectations of the adjusters to handle litigation issues should also be factored into the caseload question. Is the adjuster qualified and experienced enough to do the deposition? Few are. Can the adjuster send the medical and legal cover letter to the doctor? Is the legal support in-house or outside counsel? (In-house attorneys tend to make fewer claims when adjusting on behalf of the adjusters than outside counsel).
The defense attorney’s duties, responsibilities, and skills (in-house vs outside counsel)
When I was a claims adjuster at a TPA and the caseload became overwhelming, I would assign all my litigated claims to a defense attorney. That way, I had a safety net to make sure that nothing was missed. This significantly increased the ALAE expenses on the file. When I worked at an insurance company with in-house counsel, that trick did not work because the in-house attorneys would not do the claims adjuster’s work.
Number of employers on an adjuster’s desk and their CSIs’ complexity.
Claims systems
The claims system and current technology can have an impact on claims outcomes. An automated claims system directly affects the productivity of the adjuster and the resulting caseloads. The more rote steps and activities the system does for the adjuster, the more the adjusters can focus on their interaction with the injured workers, negotiate settlements, and handle complex litigation issues. How much of the benefit notice system is automated? How automated is the diary process? Is there an internal automated audit system? Is there a computerized payment function for the adjusters to use? If so, what system checks are built to ensure no payments are missed and no overpayments are made? All of these directly impact the adjuster’s effectiveness and will determine the appropriate caseload.
Data capturing requirements
If a system facilitates it through either Optical scanning or at least you enter it once, and that transmits it everywhere else, that helps. However, the more manual data fields are required, the less time the adjuster can spend being an adjuster.
Medical Case Management
Are the adjusters responsible for managing the medical care of the claim? Do the adjusters make any medical decisions? Do nurses and other medical professionals make all medical decisions? Many adjusters still approve of medical treatment and spend a significant part of their day approving bills (“because they have always done so”). Most adjusters have little formal medical training and possess no actual insight into evidence-based medicine guidelines, what an ICD-10 is, or even have access to established disability guidelines. Studies have shown that adjusters approving medical treatment usually do not get injured workers the best evidence-based medicine on time. Requiring adjusters to approve the payment of medical bills wastes the adjuster’s time and delays payments to the medical providers.
The clam administrators’ Culture and Service Requests
What kind of transitional return to work and light and modified duties programs does the employer have? The more complex the programs offered, the more time it will take for the claims adjuster to help the employee transition back to work. How often and how comprehensive are the file review programs? File reviews are essential for employers to understand the benefits that are being provided and be comfortable with the quality of claims administration. Still, overly frequent or onerous file review programs can take the adjuster away from their day-to-day work. How quickly does the employer report all claims? Any delay in the claims reporting usually increases the time the adjuster must spend determining causation and compensability and causes increased litigation on the number of file reviews and files to review that is expected to be provided to the various employers.
Level of claims support and supervision
How many adjusters are supported by how many claims assistants? Is it a ratio of 1 to 2 or 1 to 4? How experienced are the assistants and supervisors? Does the claims supervisor handle and supervise a caseload? Serving two masters is very difficult. A supervisor responsible for the unit’s results, the training and development of their adjusters managing the relationship with the employer, and who also has a full caseload is not in an optimal situation to achieve outstanding claims results for the employer.
Settlement Philosophy
The claims settlement philosophy directly impacts claims caseloads and closure patterns. Many claims operations stipulate that future medical care should be provided if the employee is still employed at the same employer and if the employer is still “on risk.” This results in artificially high caseloads. In some jurisdictions, the “future medical” claims are as actively litigated and as complex as any claim in the inventory. In contrast, some Future Medical claims in some jurisdictions are relatively inactive and are just padding to measure a pending inventory. The settlement philosophy impacts litigation rates, a significant factor in determining caseloads. However, stipulations usually require less time and lower claims skills to achieve.
Jurisdictional differences
State laws, rules, and regulations directly impact the caseloads. Jurisdictions with few changes can have a higher caseload for the adjusters than in jurisdictions such as California or Florida, which have seen massive changes to the law’s rules and regulations since 2004. To ensure appropriate outcomes, in jurisdictions with many changes to the labor code over the past few years, one can segregate the claims by accident year or lower the caseloads for the adjuster. Some jurisdictions don’t allow settlement of medical or have no cap on “re-openings,” which can be challenging to manage.
The ratio of medical-only claims to indemnity claims in the adjuster’s caseload. Some claims operations have medical claims segregated from the indemnity claims and handled by a “MO adjuster.” Handling both MO and Lost time claims may not be the most efficient use of a senior adjuster’s time and skills. MO claims account for 82% of the claims and only 10% of the loss dollars. With a good, automated process to identify outliers and appropriate medical controls and oversight, it may be an innovative idea not to spend any adjuster time and minimize the ULAE expense on administering the medical-only claims.
Medicare Set Aside
These claims significantly add to the complexity and time needed to manage a claim.
Number of claims transferred between adjusters
Transferring claims to an office usually results in a significant deterioration of claims results. I expected a 20% increase in claims loss for every indemnity file transferred. Getting to know the new claim takes an hour of reading and discussions with the treating doctor and defense counsel. Transferring claims also eliminates any positive relationship that might have existed with the injured worker, even with the best possible “soft” handoff.
Issues and metrics for employers and claims offices to consider:
Insureds with risk retention and self-insured employers who have control of their worker’s compensation programs should focus on total claims costs and not on managing their costs through caseloads.
The caseloads should be adjusted to the skill level of the adjuster.
Optimum throughput of claims is a leading indicator of having the right caseload.
The ratio of litigated claims assigned to defense counsel indicates the right caseload.
A high litigation rate (considered when it is prosecuted in the life of the claim) is a soft indicator of improper caseloads.
The % of claims assigned to defense attorneys is a soft indicator of improper caseloads.
Throughput of claims on an annual basis.
The average cost of closed claims (medical only and indemnity claims compared to industry and internally over time).
Claims closure rate or throughput of claims.
Average number of lost time days per closed file. Is there a positive trend in reducing the number of days paid?
Turnover of the adjusters.
Retention rate of new adjusters.
Number of indemnity files transferred within the claim’s operations by month.
When the claim is litigated, it is an indicator of improper caseloads.
The % of claims assigned to defense attorneys is a soft indicator of improper caseloads.
The average cost of closed claims (medical only and indemnity claims compared to industry and internally over time).
Claims closure rate or throughput of claims.
Average number of lost time days per closed file. Is there a positive trend in reducing the number of days paid?
- Turnover of the adjusters.
- Retention rate of new adjusters.
- Number of indemnity files transferred within the claim’s operations by month.
In conclusion
The ideal caseload for every adjuster should be adjusted to accommodate the adjuster’s skill level. A more experienced claims adjuster who has the right claims system, a stable caseload, and a low litigation rate can manage more claims than an experienced adjuster with a high litigation rate who does not have the right systems support or the right administrative support.
The ideal claims load should be reflected by the claims results, such as a low average number of TD days per lost-time claim and a low average length of the file open.
Employers who focus only on claims loads and their ULAE costs would be better served if they pivoted and focused on what they could do to eliminate claims and support the adjusters with getting the claims closed as quickly as possible.
A caseload of about one hundred indemnity claims in California is appropriate. I assume this is for a qualified, well-trained adjuster with proper support from a claim, which is the adjuster’s job.
Appendix I
To analyze caseloads, one should understand the adjusters’ job.
Claims adjuster duties:
Gather accurate information to determine if there was a compensable accident if the insurance or self-insurance policy covers the injured worker, and if the injured worker was injured in the course or scope of the work.
Make “three-point contact” to explain the benefits to the injured workers, explain the decision-making process on the claim to the employer, and ensure that the treating physician understands the job and is focused on returning to work.
Ensure all appropriate medical care is provided to the injured worker to maximize recovery and prompt return to work.
Work diligently to ensure that the employee returns to work as quickly as possible, including using transitional return-to-work programs and permanent modified work.
Identify any subrogation potential and ensure a capture of all potential recovery.
Manage the temporary disability process and pay this benefit timely and accurately.
Set and manage the reserves on the cases.
Ensure prompt payment to all vendors (within the legal timelines and according to the local or contracted fee schedules).
Ensure compliance with all applicable laws and rules concerning benefit provision and notice processes.
Manage the relationship with the insureds/accounts to ensure prompt claims reporting.
Manage all litigation issues.
Communicate identified claims issues with management.
Resolve all issues and close files when benefits are fully provided.
Communicate loss trends with management and the employer.
Appendix II
In California, it takes forty-nine cents to provide one dollar of benefits
Of the forty-nine cents:
Twelve cents are for the defense attorney.
Twelve cents are for medical cost containment.
Seven cents are for applicants’ attorneys.
Nine cents are for medical-legal reports.
Nine cents are for other loss adjustment expenses.
Appendix III
In California:
“Losses” account for 68%
Loss adjustment expenses are 21%
“Other expenses are 23%
The total is more significant than 100% because the combined ratio is over one hundred.
**** 3% of the clams account for 60% of the dollars.
*** All the numbers mentioned in this paper are either from the CA WCIRB or from my experience as a VP of Claims, Risk Manager, Senior Fellow in a WC Institute, or an industry consultant. They are not those of the California State Fund.
** These numbers may vary significantly within different organizations and jurisdictions.
* These are my observations and comments, which are not supported by current studies.
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