RIMS 2014

An ‘Arms Race’ to Provide Data Analytics

Analytics help identify actionable claims issues, but some tools are just "smoke and mirrors."
By: | April 29, 2014 • 3 min read

While an exploding availability of data analytics can help workers’ compensation payers focus claims mitigation efforts, there is potential for misapplication, observers said.

The mushrooming growth of data analytic tools was evident at the Risk and Insurance Management Society Inc.’s annual conference being held April 27-30 in Denver, where insurers, brokers, third party administrators, medical management companies and other workers’ comp service providers were all touting their recently developed or refined analytics capabilities.

“It’s an arms race” as companies market their ability to wield data analytics systems, said Ron Skrocki, VP of product management and development for managed care service provider, GENEX Services Inc. in Wayne, Pa. “Everyone wants to leverage the technology.”

Indeed, many workers’ compensation company marketing efforts now appear centered on how their data analytics systems can help payers determine the specific loss prevention or medical management services they would most benefit from.

Proponents said that using data analytics to evaluate claims factors — such as injury types by employee tenure or age, accident frequency, and medical treatments utilized — can help an employer identify the cost drivers specific to their employee population. That allows them to focus spending on services most likely to mitigate those issues.

“It’s a window for risk managers to know what is going on in their [workers’ comp] programs,” said Danielle Lisenbey, president of Broadspire, a third party administrator in Atlanta.

But data analytic offerings can also amount to “smoke and mirrors” — becoming self-serving marketing tools that direct payers to products and services vendor companies are most eager to provide, rather than steering clients to services that will benefit them most, Lisenbey and others said.

She said entities providing valuable analytics services evaluate an employer’s total loss costs, “whether it’s from the claim side and what is going in their demographics, what is going on from a geographic perspective, all the way through medical management and what is driving their results.”

Others said that offering data analytic evaluation services does not automatically generate revenue for them.

“We have come out of meetings where we tell [clients] to use [our services] less,” when GENEX’s analytics showed the client would benefit, Skrocki said.

Insurers, third party administrators and other workers’ comp companies have amassed employer claims data and analyzed it for years, said Elizabeth Carabas, managing principal in Portland, Ore., for broker Integro.

But now, as the economy improves, more employers are hiring, which increases their workers’ comp exposures. At the same time, they are more willing to spend on loss prevention efforts, she added.

That and other factors, such as the continuing rise in medical expenses and an aging workforce, are fueling interest in data analytics and propelling efforts to market applications, Carabas said.

There are still many employers who have not yet taken full advantage of the cost-reduction benefits that analysis of claims data potentially provides, experts at the conference said. That, too, means there is substantial room for the increased application of data analytics services to help worker’s comp payers, they added.

So more companies are developing and applying them.

Insurance broker Crystal & Company, for instance, is now helping clients analyze post-loss data to focus their pre-loss safety efforts, said Executive VP James F. Crystal.

“You can take the information and turn it into actionable knowledge,” he said.

That can further help an insured negotiate for better pricing and collateral requirements when purchasing insurance, he added.

Several companies marketing data analytics capabilities at the RIMS conference said they provide the service to customers free of charge, but some added that their expenses are built into the cost of other services the companies sell.

Some insurers already provide valuable loss control and data analytics services that can be “built into your program if you negotiate right,” Carabas said. “That is a huge benefit” for employers.

Overall, observers expect an increased use of analytics will reshape workers’ comp practices.

As employers more closely evaluate their claims activity, for example, they are more likely to take measures such as combining risk management and human resource efforts to implement wellness programs that address aging workforce cost drivers, said Paul Braun, managing director of casualty claims for Aon Global Risk Consulting in Los Angeles.

Roberto Ceniceros is senior editor at Risk & Insurance® and chair of the National Workers' Compensation and Disability Conference® & Expo. He can be reached at [email protected] Read more of his columns and features.

More from Risk & Insurance

More from Risk & Insurance

4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.

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That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.

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Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]