The workers' compensation case management process has not changed in over a decade and is in need of re-engineering. Traditional case management models involve flat fees or hourly billing that reward ongoing case activity rather than outcomes. This leads to high costs and poor measurement of returns. Predictive modeling can help identify high-risk claims earlier for preventative case management. A new holistic model is needed that deploys the right resources at the right time to improve outcomes and define real returns on investment from case management services.

1. December 2006
Volume 54 K Number 12 K www.claimsmag.com
SALVAGe DirecTory . page 31
A publication of the
National Underwriter Company
E Cover Story
Time for
New Shoes
Re-engineering the workers’
comp case management
process.
page 22
K Special Report
Salvaging the
bottom Line
It’s time to break tradition
and innovate to reduce
claim loss ratios.
page 26
The Forensic
Advantage
Settle your claims more
accurately and effectively.
page 33
K Plus
best Practices page 15
Understanding cGL coverage page 18
No Pain, No Gain page 54

3. by Derrick AmATo . Cover Story
The world of workers’ compensation case management has not changed in
design in more than a decade. Just as people become accustomed to a pair
of old, comfortable shoes, many users and providers of case-management
services are unwilling to part with familiar methods that, while comfort-
able, are undeniably worn and outdated.
Time For
New ShoeS
Re-Engineering the Workers’ Comp Case-Management Process
P
urchasers of these services have cho- ties to manage the multifaceted issues involved with dis-
sen from two basic delivery models: ability and re-employment post injury.
task-based, in which there is a flat fee Although a timely and safe return to work is the
for services, and full case manage- desired end result, no one really has a quick and meaning-
ment, which consists predominantly ful answer to the question, Was the cost of services worth
of an hourly fee for services. Case the return on the “outcomes” investment? And this ques-
managers who serve as the clinical purveyors of these tion begs others. What are the benchmarks of a quality
services traditionally have been rewarded through ongo- vendor? Are the needs of the purchasers and the providers
ing case activity. The quality of these services and the aligned? If a predefined clinical expertise is desired, why
actual return-to-work outcomes have not been the pri- has this professional service been treated for so long as
mary benchmarks of success. a commodity versus a premium-value service? Beyond
Beyond being out of fashion, the “old shoes” are put- a depressed hourly rate, how does one national vendor
ting the industry in jeopardy of becoming a claim-mitiga- rate against another when buyers examine the services
tion tool of last resort. The cost of case management is provided? How does the user incorporate the guidance
too often driven by escalating per-case fees, and outcomes of case managers into an overall case strategy? What are
are poorly measured (if at all) against any independent or the other tools adjusters can use to preempt high case
reliable data to establish a return on investment. In the costs? Do more commonly engaged tools such as surveil-
small arsenal of claim adjusting, case management has lance and independent medical exams overshadow the
in some settings acquired the stigma of being costly and need for — and importance of — strategically creating
used only when all other efforts fail. Claim professionals the best position for case outcomes to be win/win? In
see “old-world case management” often as an option of short, we need a sure way to measure both efficiency and
last resort — with many files being referred 16-18 months effectiveness.
post-injury status. If we examine the traditional model and juxtapose
Each year, companies spend millions of dollars on this against a systematic process that deploys case-man-
these return-to-work services. Many purchasers (primar- agement services with a more front-ended approach, the
ily third-party administrators, workers’ compensation result may well be that case-management services are
insurance carriers, and self-insured employers) buy these more successful as a first-to-strike tool. Adjusters have
services in hopes of mitigating claim costs by achieving been trained to use surveillance and independent medical
timely, cost-effective medical or disability recoveries and, examinations, which are fast-acting “weapons” and pro-
in theory, earlier return-to-work outcomes. And yet “early” vide swift information flow. But what is the real problem-
referrals to case management are often oxymoronic; after solving value of that information? How does it get used
many months of lost time and/or complications in medical and where does it take a case in terms of the necessary
care, companies refer cases with universally high hopes of next steps? When viewed with a more holistic approach,
reversing negative trends and recapturing lost opportuni- I contend that the strategy would be better driven by a

4. Cover Story
qualified nurse case manager.
Holistic does not mean logic goes out the window. In fact, it
should mean identifying those cases that have a higher likelihood
Such predictive modeling has been
of developing the high-cost claims and in turn deploying the right used in the underwriting of risk for
resources with the right intensity more appropriately. Such predictive many years, and there are practical ways
modeling has been used in the underwriting of risk for many years, and
there are practical ways to use this analytical approach to skill setting
to use this analytical approach to skill
and managing claims. setting and managing claims.
Re-engineering the claim-management adjusting workflow,
deploying new logic techniques, and timing are all part of the solu-
tion. Implications of rethinking and reworking the old model versus adjusters wrestle with on a daily basis. The industry should both
the new are likely to improve disability durations, re-establish case- promote and provide back-to-basics training for claim professionals to
strategy development, and solidify a means to define the return on give them a better appreciation for the barriers that hinder return to
investment of such services. Several mono-line insurance carriers, state work. We should promote early identification of claims that have the
funds, and niche predictive workers’ compensation solutions are and most likelihood of going astray by using logic engines that bring the
have been deployed. The concept is simple: Define those cases that power of e-information to bear. Case management continues to have
have high probability of becoming high-cost claims and invest in the value, but its success in many ways rests in the hands of the industry
right resources to achieve the best outcomes. As is so often the case, that created it.
however, the actual move to such a design is not so easy. Now more than ever, it is time for the shift to begin. It is also the
How do we translate buyer investment into an outcome result? time to see who is ready to reposition the claim industry with new tools
Can predictive modeling bring greater insight to the early detection of and abandon the more comfortable options. K
high-risk claims? A path to engage these concepts is being constructed,
and the benefits of re-engineering workflows and mindsets should Derrick Amato is president of the care management division of
create a means to achieve sound and more cost-efficient outcomes. It Concentra, a national provider of health, network, and care manage-
frames the need for getting rid of the old, worn-out model and getting ment services for the workers’ compensation and occupational health
comfortable with a new one. industry. He has 30 years of experience in claim management, disability
Achieving case-management equilibrium is what insurance management, and return-to-work program design.
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