Fresh look at high-exposure claims can free up funds, experts say
Basic but often overlooked tools can be effective in getting older, expensive claims settled and preventing newer claims from turning into high-exposure cases. By using a fresh perspective, companies can regain control of their most difficult claims — and their budgets.
Problem claims. Approximately 20 percent of claims typically drive 80 percent of a company’s workers’ comp costs. Most of these expensive claims are what some refer to as creeping catastrophic claims.
“The majority of claims that go to excess carriers are not catastrophic injuries,” said Mark Walls, vice president of claims for St. Louis-based Safety National. “They are a back injury or knee injury that has had multiple surgeries. The next thing you know, you’ve got a half million dollar claim on your hands or higher.”Walls, who moderated a session on identifying and settling big-ticket workers’ comp claims at the recent Risk and Insurance Management Society’s annual conference in Philadelphia, said escalating medical costs over the last decade have tremendously pushed up the costs of what once were fairly inexpensive claims.
Many of these more expensive claims have been on the books for years with no end in sight. Settling these claims can release millions of dollars that are being tied up in escalating reserves and insurance premiums.
The speakers promoted a team approach, involving the payer — insurer and/or excess carrier — and specialists in medical management, resolution, Medicare set-asides, and other areas. Once in place, the team can focus on moving claims toward settlement.
“These $100,000 claims deserve as much attention as catastrophic claims, so they don’t go sideways,” said Mary Proietti, risk manager for Packaging Corporation of America. The speakers had several suggestions for resolving these claims.
Move the medical forward. The fact that the indemnity of a claim has settled does not mean the case can settle, the speakers said. A claim that is only open for future medicals should not be treated as a medical-only claim. Those cases typically are moved from a higher ranking claims adjuster to one who handles future medical issues.
“Some of the claims that end up on the future medical examiner’s desk have significant future exposure,” Walls explained. “You end up with a situation where your highest exposure claims are being handled by the least experienced adjusters who also have the highest pending claims.”
Communicate. One of the first steps in the process is to open the lines of communication with the claimant. The lack of proper contact often derails a claim.
“Communication early on is very valuable,” said Greg Gitter, president of Gitter & Associates Inc., a San Diego-based consulting firm. Too often an adjuster or others involved will call the injured worker and leave a message.
“The case fails there,” Gitter said. “There is no real contact. They feel abandoned.”
The employer should keep them involved. “The more you can educate the employee about the system, the more likely to keep it under control,” said Donna S. Urbanski, a Connecticut-based independent claims consultant.
Be proactive. Instead of waiting for the claimant to propose a settlement amount, the speakers advised you take the first step. “Go to them with a specific number and just try it,” Gitter said. “It’s an unconventional way to negotiate, but it works.”
The tendency is to wait for the demand so you don’t offer too much. But that just leaves the claim open longer, requiring you to pay more in benefits.
“If you know how to evaluate the claim, you should be able to come up with the value and make a fair offer,” Walls said. “It’s a fallacy to think the other side will grossly undervalue the claim and you are going to get a great deal.”
Be prepared. If a Medicare set-aside is warranted, information should be sent to the Centers for Medicare and Medicaid Services only after the claim is under control.
“You basically get one shot at it. If [CMS] comes back with a number you don’t like, you are stuck with it,” Walls said. “The time to put the effort into getting things under control is before you send it in, not after you get the number back. Then it’s too late.”
For example, waiting until the claimant is stabilized on the proper amounts and types of medications can reduce the set-aside amount.
“You can’t start thinking about a set-aside when it is time to settle the claim. You have to think about it months before that,” Walls said. “Think in terms of what is beyond the medical treatment and what can we do to mitigate the exposure on medical. You have to do that before you start thinking about the Medicare set-aside.”