Outcome-based claims handling and defense

For this week’s article, I am bringing in my first guest blogger. My larger-than-life friend, James Swanner, offered to assist as needed when he found out I had entered the blogosphere. Even though I am only producing my third article this week, I couldn’t let the opportunity pass me by another week.

James worked his way from a claims adjuster, claims supervisor, then a claims manager, and not having reached his 40th birthday yet, is now the VP of Claims at AmFed National Insurance Company, which is one of the largest and most well-respected insurance companies in Mississippi. After you read his article about how to handle claims, how to really handle claims, you’ll quickly see how he has risen in the ranks at such a meteoric rate with some insight as to how you can better manage your claims.

Soon after I had started working for Markow Walker, I was invited to play in a golf tournament with James, as Amfed is a client of ours. He quickly made me stop the cart after one hole as my driving was “$#*&%!”. We went on to win the tournament (based off of our handicaps), and went to the crawfish boil afterwards. James took a liking to me and insisted I meet his friend, Stephanie.

Several years later, I am still happily married to James’s friend. She has since given me two healthy children that have blessed me beyond measure. I am very thankful for the friendship we have shared over the years with James and his wife, Jennifer.

Without further adieu, please read his article, which you will no doubt enjoy.

“Workers’ compensation insurance is relatively simple to explain, but difficult to turn a profit on. Basically, the underwriting (UW) department of an insurance carrier writes a policy for an employer based on factors, such as: class code, total payroll and past loss experience. The carrier will go through this process thousands of times with thousands of employers. Statistically, the insurance company knows there will be losses. It is the job of the actuary to determine the expected amount of losses in a given fund year for a given book of business. The hope is that if you are consistent in your UW practices, in the long run, there will be more premium collected in a given fund year than the company will pay out in claims and expenses. The major X factor in making this work is how well the inevitable losses are handled when they occur.

What is the goal of the claims adjuster when a case hits their desk? Most claims people would say something to the effect of, “to facilitate helping the injured worker regain good health and return to some form of gainful employment in the most cost-effective and expedient way possible within the laws set forth by the jurisdiction.” So how do claims people go about achieving these stated goals? To be honest, they cannot do it alone. It takes a team of people working together to provide the injured worker with good medical care while facilitating efficiency, communicating effectively and controlling costs.

The first piece of the puzzle is communication. The adjuster is the common link from the injured worker or the injured worker’s counsel to the employer, defense counsel, treating physicians, physical therapist, nurse case manager, vocational rehabilitation specialist and anyone else who might get involved in a workers’ compensation claim. Good communication with the employer is key right after an injury occurs. The faster the claim gets into the hands of the carrier, the better job they can do in making sure the injured worker gets the best care possible. It is a fact of life that patients with a payer on file get better care than patients without a payer on file. If the provider does not know it is a work-related injury with coverage in place, the outcome could be negatively impacted from the start.

Once the employer has reported the injury timely and provided the basic information, the next communication is with the injured worker, the worker’s family or that worker’s lawyer. This is a very important moment in the life of the claim. If the injured worker or his representative has confidence in the person working the case, the likelihood of a good outcome goes up exponentially. To achieve this, the case worker must set the expectations from the beginning and explain the benefits and limitations of the Workers’ Compensation Act openly and honestly. The claims adjuster should set realistic expectations from the beginning and then meet those expectations to the best of their ability. Little things like answering the phone when the injured worker calls, returning voice mails the same day and being patient enough to listen when the injured worker wants to vent about their frustration with their pain, their loss of income, their doctor or their benefits are all important to maintaining the trust of the injured worker. Sometimes just hearing what they have to say with an empathetic ear can buy an adjuster a lot of goodwill when dealing with an injured worker. It can also give the adjuster clues regarding how they are really doing physically and mentally. This also allows a seasoned adjuster to detect an injured workers motivations, and determine if the claim is moving in a positive or negative direction.

Cost containment is always a focus for a claims adjuster. Where do you draw the line between doing what the law says you can do, following the fee schedule to the letter and doing “the right thing” versus skipping some steps in the process that may be available to you, but don’t necessarily move you towards a good outcome. This is what I mean by outcome-based claims handling and defense. Ask yourself: “are you fighting a good fight or are you fighting because there is a fight to be had?”

For example, some adjusters spend more time trying to negotiate the rate of their nurse case manager than trying to pick the nurse case manager that best fits the nature of the injury or the personality of the claimant. You may save $10.00 an hour by using Nurse A, who you have a negotiated rate with; however, Nurse B, who commands a higher hourly rate, may have been able to facilitate a better outcome, saving you thousands, if not tens of thousands of dollars. Another example is where you might have the right to get a second medical opinion (SMO) or an employer’s medical exam (EME) on a procedure, such as a back surgery, before you allow it to be pre-certified. Is that the right thing to do on a particular case? If you have a very legitimate argument, it may in fact be the right thing to do, but in many cases, you could be delaying the inevitable and pushing back a surgery that is eventually going to happen. In Mississippi, the treating physician carries the big stick. The truth is, even if the SMO or EME does not agree with the treating doctor’s recommendation, you still need a third tie breaker opinion or independent medical exam (IME). These opinions can cost anywhere from $2,500.00 to $7,500.00 and the process could take many months. All the while, the claimant is not getting better and the good will is flying out the window. If the case was not litigated, it likely is now. Additionally, if the claimant had any faith in you before, that has evaporated. Are you better off fighting the fight or are you better off getting the surgery as soon as possible so the injured worker can start marching toward maximum medical improvement? That is a case-by-case determination that requires some thought beyond what the law says you are allowed to do. Hopefully your legal counsel is of the mind to push back when appropriate and move forward when the path is clear.

I could provide many examples where spending more money on the front end has saved big time in the long run as it relates to the overall outcome of a case. Allow me to give you a specific example. Several years ago, I had a brick layer fall 40 feet, suffering a spinal injury that resulted in paraplegia. When he left the hospital, our contract DME company provided him with a wheelchair that met the specifications of the ADA and was about $3,000.00 cheaper than the original chair ordered by the treating physician. The doctor agreed to allow us to use this chair rather than the more expensive model he had requested. Before the claimant could return home, we had to complete some extensive home modifications to make the home wheelchair accessible. The quote to renovate the home came in at $88,000.00. Much of this quote was related to widening every interior and exterior doorway of the home to allow the claimant to freely travel inside the house and get out safely in the event of a fire. We opted to pay extra to have a nurse case manager on the case who specialized in CAT injuries. Her rate was double that of any other nurse with whom do business. She reviewed the quote from the contractor and asked one simple question. Is there a wheelchair on the market that will work for the claimant that would allow us to use the standard doorways? The answer was yes. The chair originally recommended by the treating doctor was designed to fit through standard doorways… so we spent an extra $3,000.00 on the chair and cut the renovation quote by $35,000.00. There is an example where spending more on a highly-qualified nurse resulted in a solution to a problem and spending a little more on a higher quality DME product saved us a net $32,000.00!

So how do you know when to let your legal counsel push back. When is a SMO, EME, IME, peer-to-peer review or Motion to Suspend appropriate? When should you depose the treating doctor, order surveillance, employ a nurse case manager, or utilize a vocational rehabilitation specialist to help with your case? Should I pay for that electronic prosthetic or fight for the basic model, for example? Should I settle this case without admission of liability rather than a flat out denial resulting in protracted litigation? All of these questions vary case by case… but one truth always stays the same no matter what the facts of the case are. DO THE RIGHT THING.

No one has ever regretted doing the right thing for an injured worker. Keep in mind these are people you are dealing with, not just claims. Often, they are in pain, they have lost their income and they might be facing permanent disability. You can assume they have other stresses at home just like everyone with spouses, children, unrelated health issues and financial challenges. You cannot dismiss the impact external factors will have on your claim. You must recognize your own built-in prejudices and misconceptions that build up over years of handling workers’ compensation claims. You must also realize the injured worker is often pre-loaded to not like or trust the insurance industry after seeing one too many commercials on television. Do not add to the myth that claims professionals hang upside down in the offices in the dark waiting to suck the life out of the working man like a vampire in a suit. Show them, through your actions, that you are an honest, good person with integrity and that you are there to help them reach a good outcome within the limits of a law that you did not write.

When handling claims, you see something new every single day. You cannot think inside the box or even outside of the box… you must throw the box away and treat your claims like the living, breathing beings that they are. My mentor in the business told me very early in my career, “Nothing is harder to gain or easier to lose than your reputation.” Those are words to live by if you are a claims professional.”

James Swanner
Vice President of Claims
AmFed
P. O. Box 1380
Ridgeland, MS 39158-1380
Phone: 601-427-3870
1-800-264-8085, Ext 366
Fax: 601-427-1519
Email: [email protected]