The workers’ compensation sector, tasked with restoring employees to their pre-injury status and arranging for their needs to reach that end, is a maze of interrelated service providers from third party administrators to pharmacy benefit managers, and everything in between.  

As claims managers embark on new partnerships or seek to maintain or reinvigorate old ones in the current landscape, three elements rise to the fore as key considerations: labor, data and communicative prowess. 

Insurer Labor Challenges Complicate the Service Provider Landscape 

First and foremost is the labor shortage, which has remained stubbornly present since the COVID-19 pandemic shifted employment demographics and changed the efficiency calculus for hiring managers. In a workers’ compensation service provider relationship, this can manifest in several ways, according to experts. 

“Claims managers right now have tremendous issues regarding staffing,” said One Call CEO Jay Kreuger. “Finding adjusters to administer work comp claim files is very challenging. Claims managers are very busy, and they’re dealing with adjusters who have too many files or new adjusters. Having them as claims managers focused on the service of the care coordination partner so that adjusters can manage their caseloads effectively is really important.” 

That inexperienced staff with higher caseloads can also come with a greater risk for mistakes, especially as key segments of the workforce retire and the insurance industry struggles to recruit talent. 

“We know that there’s going to be a continued labor shortage. Therefore, the flexibility in managing the experience of claims handlers will be very important, because there’s a lot of people who are aging out of the industry and that experience is going with them,” said Erica Fichter, COO, medical management and accident & health, Broadspire 

“When I say they need to be flexible, what I mean is that there has to be an understanding that there’s new people coming into the industry, and we’ll have to provide very detailed training and very quality-oriented training, as well as advocacy training.” 

While step-by-step training is always an important part of onboarding, complex TPA relationships can make this even more of a challenge, just when claims managers are short on time. To reduce the friction, orient frontline staff at the start to understand what’s expected from the vendor relationships they’ll navigate as it relates to their day-to-day duties. 

“When you bring on new claims staff, it’s really important to help them understand your organization’s culture,” said Jason Wheeler, CorVel’s vice president, national sales & account management. “You’re relying on that TPA claims staff to be an extension of your team, so they need to be immersed in your culture and what the goals are.”  

Advocacy training is vital in the modern market, where employers, employees and  

medical professionals expect a biopsychosocial approach that cares for the whole person — for both ethical and pragmatic reasons.  

Data Rules the Day 

Just as the industry continually screens risks and identifies opportunities using data, so too should claims managers and their service provider partners.  

Unfortunately, the challenges posed by the range of service providers utilized within a claims organization means that it can be hard to parse the information tied to key performance indicators at a glance. This can make claim file reviews potentially onerous, without ever getting to the information that’s actually relevant to the company’s business model.  

“Transparency amongst all of those tools and that information is critically important,” said Jeff Gurtcheff, vice president, EC operations at CorVel.  

“A good TPA partner should be transparent about what the data says and not hide it. Having not just the dashboards and KPIs, but a means in real time for that TPA customer to see it and understand it and manipulate it so that we’re marching towards the same results. No surprises.” 

Transparency often starts at the beginning, with goal alignment in the initial vendor selection process feeding into contracting. 

“It’s developing scorecards and essential metrics — making sure they’re delivering what you’ve written out in a contract. You want to make sure that you’re tracking that from both a qualitative and quantitative perspective,” said Melissa Burke, vice president, head of claims integrated solutions, at AmTrust.  

“You want to make sure that the TPA that you’re working with is looking at your data and is analyzing it to continue growing outcomes for you, not just status quo.” 

Part of that effort is data protection and ensuring your partner has the appropriate staffing and IT infrastructure to keep highly sensitive information away from bad actors. As Burke put it, “data is value, and we want to make sure we’re protecting it no matter what.” 

This is especially true today. According to IBM’s latest report on the matter, the cost of a single data breach averaged $4.35 million in 2022, climbing 12.7% since the 2020 report. 

As partnerships evolve, exploring new ways of driving results allows claims managers and staff to remain in lockstep in a competitive and persistently marketplace, which the latest from Fitch Ratings indicates will likely persist in the near term. 

“Claims managers will need to be open to new ideas and strategies for managing the medical aspects of a claim,” said Fichter.  

“Work comp typically runs about five years behind group health in medical management strategies, and we need to embark on those new ideas and embrace them quicker than we have in the past.” She cited virtual reality platforms for pain management and telemedicine as examples of areas where workers’ comp has opportunities to improve. 

Regarding virtual reality in particular, Fichter explained younger workers are a positive test case for the cutting edge.  

“When people first hear about it, they think ‘people will just be playing games.’ That’s not true. We need to be more open-minded about what that technology is and also attuned to the labor force. If the employer happens to have a younger labor force, these people are not used to the traditional way of doing things, so anything we can find that gets them more excited about the rehabilitation process is important.” 

Sometimes It’s Simple  

As with all relationships in life, it’s not all about the numbers. Communication and consistency rank among the most important skills service providers should prioritize for the claims manager.  

“If we look at long term relationships, you can’t assume that there won’t be a level of complacency,” explained Wheeler.   

“After the relationship advances a number of years, it’s important to make sure that new ideas are being explored and new innovations are being considered to continue to drive down costs and make an impact. Measurable KPIs monitored consistently and evolving with the times to ensure accountability is a big part of that.” 

Transitioning out of the boardroom, though, are the responsibilities claims managers carry for their teams, which aren’t simply results driven. “Just because decision makers on both sides of an organization have agreed on a partnership and the keys to success for that partnership, it does not mean that the working teams in both organizations are aligned,” said Bardavon Health Innovations’ chief clinical officer Dorothy Riviere.  

Whether the relationship is new or long term, getting around the typical problems — misunderstandings and misgivings — are one constant for which claims managers must remain vigilant. &