1. Presented by:
Gary Jennings, CPCU, ARM, ALCM, AIC, ARe, SCLA
Principal
Strategic Claims Direction LLC
November 14, 2013
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Strategic Claims Direction LLC
Atlanta RIMS
Monthly Meeting and Luncheon

2. TODAY’S TOPICS
 Introduction
 Define “Best Practices”
 Where are “Best Practices” applied?
 Professional observations
 The current quality of claims management
 Scoring “Best Practices” compliance
 Are Best Practices meaningless as quality measures?
 Additional metrics to measure performance
 Conclusion / Q & A
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3. What Is Most Important to You?
SIMPLE NEEDS
 Resolve the claims
 At a reasonable claims cost
 As quickly as possible
 While reducing or limiting allocated loss adjustment expenses
(ALAE) to the extent possible
 Reserve the claims accurately
 Inform me of
 The current status of the claims
 Changes in the environment or industry that affect me
 Help me quickly when I ask for it
 I assume you are going to use “Best Practices”
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4. What are the Possible Outcomes
of Claims Processing or Management?
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Low Claims
Costs, High Fees
& Expenses,
Slower Closure
Low
Claims,
Low Fees,
Expenses,
Prompt
Closure
High Claims Costs,
Low Fees &
Expenses, Prompt
Closure
$ ----------------------------------CLAIMS COSTS---------------------------$$$
$-FEES,LAE,SPEEDTOCLOSE-$$$

5. “BEST PRACTICES”
 Wikipedia – “…a method or technique that has consistently
shown results superior to those achieved with other means and
that is used as a benchmark. In addition, a “best” practice can
evolve to become better as improvements are discovered.”
 WhatIs.com – “A technique or methodology that, through
experience and research, has proven to reliably lead to a desired
result. A commitment to using the best practices in any field is a
commitment to using all the knowledge and technology at one’s
disposal to ensure success.”
 Businessdictionary.com – “…a business buzzword used to
describe the process of developing and following a standard way
of doing things that multiple organizations can use. “
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6. Where Are Claims “Best Practices” Applied?
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Claims Management Components Workers’
Comp
Casualty
General Claims Program Documentation &
Procedures
 
Claims System Capabilities & Functionality  
General Communication with Client, including
Management & Stewardship Reports
 
Claims Staff Qualifications, Experience, & Training  
Adjuster and Supervisor Caseloads  
Intake, Set-up, & Assignment  
Initial 2- or 3-Point Contact & Continuing Contact
with Client representatives, Claimants/Employees,
Medical Providers, Claimants’ Attorneys, Witnesses
 
Investigation/Gathering Information  
Fraud/SIU investigation  

7. Where Are Claims “Best Practices” Applied?
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Claims Management Components Workers’
Comp
Casualty
Recoveries (e.g., Subrogation, Apportionment,
Second Injury Fund)
 
Compensability Decision 
Medical/Cost Containment 
Disability Management/Return-to-Work 
Liability Decision 
Indemnity Payment Procedures  
Reserving Adequacy & Timing  
Damages Documentation (PD, BI) 
File Documentation, including Diaries, Action
Plans, Supervision
 
Negotiation & Settlement  
Litigation Management  
Claims Resolution  

8. Observations
 Observations from:
 Independent claims audits of insurers, TPAs, and self-
administered programs
 Claims quality reviews
 Reserve reviews
 Claims Department efficiency and procedural reviews
 TPA selection and implementation projects
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9. Observations
 What am I seeing?
 Most insurers and TPAs, especially the national or large
regional ones, have established their “Best Practices”,
and share these with their clients.
 Sometimes “Best Practices” are all that exist to measure
the claims administrators’ performance (e.g., no Special
Account Instructions were negotiated).
 Many companies have developed “Best Practices”, but
documentation varies widely due to concerns about
subpoenas for claims documentation and claim files that
might lead to unfair claims practices allegations.
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10. Observations
 What am I seeing?
 Claims handling is increasingly automated, with few
claims administrators keeping paper files
 Claims systems are being developed with more triggers
and fields for adherence to “Best Practices”
 Adjusting is virtually 100% telephonic
 Meaningful supervision is decreasing
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11. Findings
 What am I seeing?
 Claims handling quality is slipping on the whole.
 Outcomes have not been as good as hoped.
 Mystery in some circles on why desired outcomes have not
been achieved given their adherence to “Best Practices.”
 Remember one of our earlier definitions:
“A technique or methodology that, through experience and research,
has proven to reliably lead to a desired result. “
HOW CAN CLAIMS QUALITY AND THE DESIRED RESULTS BE
SLIPPING IF “BEST PRACTICES” ARE USED MORE THAN
EVER?
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12. Why is Claims Handling Quality Slipping?
 Automation and telephonic adjusting can easily morph to Claims
PROCESSING, not Claims MANAGEMENT
 Activity-based measurement, rather than results-based
measurement, motivates the claims staff toward activities.
 The claims handling identified in claims audits often looks like
sequential “check the box” claims handling.
 The adjusters successfully complete many activities in the time
required, but often inadequately use the information they
gathered to set a strategy/plan to successfully resolve the claim.
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Contact Investigate Pay TTD
Refer to MBR /
NCM
Negotiate PPD
Settlement
Assign to Def.
Atty.
Litigate /
Settle
Close

13. Typical WC Self-Reporting Scorecards
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Claims Management Components Workers’
Comp
Typical
Score
General Claims Program Documentation & Procedures  Y
Claims System Capabilities & Functionality  Y
General Communication with Client, including
Management & Stewardship Reports
 Y
Claims Staff Qualifications, Experience, & Training  Y
Adjuster and Supervisor Caseloads – LT adjuster < XXX
open claims, MO adjuster <XXX claims
 Avg. w/in
limits
Intake, Set-up, & Assignment – w/in 1 workday  100%
Initial 3-Point contact & continuing contact with client
representatives, employees, medical providers,
claimants’ attorneys, witnesses – w/in 1 workday
 92%
Investigation/Gathering Information – Timely, complete,
continues as needed
 86%
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14. Typical WC Self-Reporting / Scorecards
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Claims Management Components Workers’
Comp
Typical
Score
Recoveries (e.g., Subrogation, Apportionment,
Second Injury Fund) – identified, investigated,
pursued, recovered
 100%
Compensability Decision - reasonable, timely  94%
Medical/Cost Containment – Reduce bills, timely,
PPO penetration
 100%
Disability Management/Return-to-Work – use of
modified duty, coordination with employer, medical
provider, and employee
 92%
Indemnity Payment Procedures -Timely, accurate  88%
Reserving - Timely, adequate/appropriate  93%
File Documentation – Thorough, timely diaries,
regular action plans (not copy & paste), meaningful
supervision and direction
 90%

15. Typical WC Self-Reporting / Scorecards
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Claims Management Components Workers’
Comp
Typical
Score
Negotiation & Settlement – early/prompt, prepared,
outcome vs. expected
 86%
Litigation Management – Necessary?, handle by
extension, timely assignment to defense,
appropriate adjuster and defense attorney
responsibilities, fee reviews
 96%
Claims Resolution – Finalized, claim/features
closed to reduce reserves to $0
 90%
AVERAGE ALL FUNCTIONS 92.85%
Which of these activities are more important than some of the others?
This score should indicate that excellent results are being obtained.
However, that is not always the case.

16. How Does the Claims Administrator
Measure Performance?
 System-driven metrics based on fields the adjusters
complete
 Timeliness
 Intake, Set-up, Assignment
 First Contact
 Investigation
 Reserves
 First indemnity payment
 Average turn-around for medical payments
 Date of assignment to defense attorney to date of attorney’s initial
analysis
 Supervisor audits (sometimes)
 Quality Assurance (regular schedule, random, targeted)
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17. How Does the Claims Administrator
Measure Performance?
 Dollars
 Medical bill reductions by method (e.g., fee schedule,
PPO)
 Subrogation, Second Injury Fund recoveries
 Excess Insurance recoveries
 ALAE, especially legal fees
 Other measures
 Adjuster caseloads
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18. Are “BEST PRACTICES” Meaningless?
 Absolutely NOT!
 Continue to insist on your claims administrator’s adherence to
industry “BEST PRACTICES”
 Obtain reports on their compliance
 Create reports that measure what you want to measure
 Require corrective action if needed
 Review quarterly
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19. Are “BEST PRACTICES” Meaningless?
Absolutely NOT!
 TRUST BUT VERIFY
 Don’t rely upon “Best Practices “ as your sole measure of
claims handling quality.
 Insist on more claims MANAGEMENT. Insist that your
administrator:
 Provide a higher quality of work - don’t just “check the box” but take
meaningful steps
 Create real action plans – Don’t just copy & paste from prior action
plan – develop meaningful and time-measured goals to meet specific
needs for closure
 Provide real supervisory direction, not just “Reviewed file”
 Reach closure faster, but measure results at the same time
 Maintain better control over ALAE
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20. How Do We Measure That?
 Develop benchmarks (“AS IS”) against which to measure
future performance and outcomes
 Require periodic audits (supervisor audits, QA reviews,
scorecards, your audits, independent audits)
 Use claims administrators that demonstrate that they can
and do capture a large number of fields so outcomes can
be measured against activities and early steps taken.
 Outcomes by date of first contact
 Medical costs by PPO penetration
 Many others
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21. Typical Measurements
 Number of claims per FTE (by jurisdictions)
 Cost per FTE (by jurisdiction)
 Claims Frequency - # of claims per FTE or per 100 FTEs
 Average paid claim (by jurisdictions)
 Average Incurred per claim (by jurisdictions)
 WC costs as % of payroll
 WC costs by location and/or product type
 Ratio of litigated cases to all cases (define litigation)
 Legal fees as % of total incurred cost
 Time to “adequate” reserves (closed file analysis to show
when reserves were at/near ultimate value)
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22. Other Measurements
 Number of Modified Duty Days to First Contact Lag, Use of
PPO, Location using modified duty
 Ratio of Lost Time Claims to Total Number of Claims
 Ratio of Medical Only Claims to Total Number of Claims
 Ratio of Lost Time Incurred Cost to Total Incurred Cost
 Ratio of Medical Only Incurred Cost to Total Incurred Cost
 Time lag between
 Intake date and assignment date
 Assignment date and first contact
 Assignment date and date of initial TTD payment
 Date of intake to date of reassignment
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23. Compare Total Incurred by Regions or
Locations to Lag Times
0
2
4
6
8
10
12
14
16
$0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000
Total Incurred
Days from
DOL to Intake
Date “ Lag
Time”
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24. Average Disability Duration to Average
First Contact Lag Time
0
5
10
15
20
25
0 20 40 60 80 100
Disability Duration by Average Intake
Average
Disability
Duration
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25. Other Measurements
 Do NOT base performance on
 Decreasing reserves without evidence of a long-term
change (e.g., actuarial evaluation)
 Faster closure without considering outcomes or
reopened claims
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26. Summary
 Require “Best Practices”
 Require more claims management
 Develop more meaningful metrics
 Require additional meaningful reports
 Trust, but verify
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27. Questions?
CONTACT INFORMATION
Gary Jennings, CPCU, ARM, ALCM, AIC, ARe, SCLA
Principal
Strategic Claims Direction LLC
Phone: (678) 520-3739
Email: Gary.Jennings@StrategicClaimsDirection.com
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