Commerce and virtually all other human activity have always involved risk. In recent years, the range of exposures facing enterprises in all sectors and geographies has become increasingly complex and more challenging to navigate. In response, a growing number of businesses and public entities have developed sophisticated ways of mitigating and managing their exposure to losses and liability.

The increasing imperative is to accomplish these goals while driving down costs. Along these lines, one strategy being adopted by many risk managers is to self-administer one or more types of claims.

Indeed, while the majority of risk managers outsource claims handling to an insurance company or third-party administrator, a growing number are finding self-administration to be an appealing option; it provides the most direct control over the management and settlement of any losses.

Located 40 miles northwest of Denver, the City of Longmont has experienced many of the advantages gained through self-administration. The city has 850 employees and is a full-service municipality including police and fire departments, electric and water utilities, refuse and recycle collection and disposal, parks and recreation, and senior and youth services. With a staff of nearly five employees (4.75 full-time equivalents) the city’s risk management department has a small but dedicated and knowledgeable team of claim adjusters.”

Their success with self-administration of claims includes expediting customer service for employees and citizens, managing costs, controlling data input and focusing on data analysis to drive remediation of exposures. The risk management department has found that self-administration offers a significant advantage over a TPA.

Given the strength of its claims team, it’s not surprising that the City of Longmont self-administers all lines of its insurance, including workers’ compensation, liability, auto and property claims.

Today’s economic challenges coupled with continuous advances in technology have increased the pressure on small risk management teams to do more with less. From a claims administration perspective, it’s of paramount importance to be able to identify where to focus efforts and resources, and to work as efficiently as possible.

For Longmont, efficiencies must be gained in all areas, ranging from small internal tasks to large interfaces with third parties. This imperative led the city’s claim team to eliminate paper claim files.

While this decision can involve simply moving old paper documents online, the claims team found it most effective to introduce online processes “upstream” where paper documents are eliminated before they are ever created.

Several years ago, Longmont upgraded its claims system with multiple objectives, one of which was to increase the efficiency of the claims management process. Thus, the department worked to automate repetitive tasks and take advantage of new technology that would allow the Longmont claims team to focus their resources on achieving better claim outcomes.

Automating Claims

Besides moving to a paperless system, eliminating or automating repetitive tasks, Longmont also worked to drive efficiency by collecting information on incidents and claims as they occur.

Today, when a loss occurs, Longmont sends adjusters to collect information and start the claims process on-site. They rely on tablets and smartphones, rather than paper notes or forms filled out by others and sent through the mail, to jump-start the workflow and follow-up process.

This not only generates an immediate claim file containing better quality information, it also saves time for customers and the risk management staff, who previously retyped handwritten or disconnected notes into a computer system.

Longmont’s claims system, implemented by Origami Risk, has a feature that allows for multiple input forms to accommodate different data requirements and different sized screens — that’s a must when using tablets and smartphones. This tool integrates with the workflow and additional data management requirements of the full claims system.

Longmont’s claims system also helps achieve workflow efficiencies by automating repetitive activities. As one example, previously when a workers’ compensation loss report was received by Longmont, its claims team filled out and mailed to the injured employee’s supervisor a letter that contained general information about the loss, employee demographics and the claim process.”

Today, the process is automated so the letter is generated, emailed to the supervisor and attached to the claim file the moment an adjuster enters the claim. Longmont also uses form letters and relies on the system’s mail merge functionality to populate information taken directly from the database.

Automated workflow is particularly important when integrating the services of third party providers who perform critical functions for the claims department. A typical example is bill review and re-pricing. While a number of vendors provide this service, a frequent challenge is how to integrate re-pricing into the claims management and payment process.

Longmont relies on its claims system to integrate with a third party vendor — CorVel — that handles their medical bill re-pricing. On a weekly basis, a medical bill payment file is automatically loaded into the claims system, which also generates checks to be paid to vendors.

Another point of integration and automation is the actual printing of checks. The checks generated from the medical bill payment import as well as any manually entered checks, are transmitted weekly to the City of Longmont’s financial system where the checks are physically cut and mailed.

The city also tracks employee information on claim records. This includes both injured employees on a workers’ compensation claim, as well as employees involved in a liability or property claim. An HR file is automatically loaded on a nightly basis to upload new employees’ demographic data into the system, which updates existing employee records.

This fully automated process allows users to select any employee’s data when entering a claim, and also ensures that the most current employee information is always populated on the claim record. On a nightly basis, additional critical employee information, as defined by the City of Longmont, is automatically updated to reflect the most recent employee demographic information.

The responsibilities of the city’s risk management team extend far beyond what may be considered typical for a department its size. In order to support this expanded set of needs, the City of Longmont has taken advantage of the configurability of its automated claims system in order to manage all contracts in a single-system environment.

Vendor Selection Keys

A claims system for a self-administered organization should support critical goals, such as ensuring all financial and regulatory compliance; adding value to the business and its stakeholders; enabling staff to determine the best place to focus efforts; and maximizing efficiency in all tasks and interactions.

As a result, claims systems need to have a wide array of features, ranging from the tactical day-to-day functionality to the ability to address longer-term strategic needs.

Workflow tools, such as notes, tasks and files are a must, and should be integrated throughout the system with the ability to establish pre-defined templates and automated schedules. A comprehensive system should also be able to infuse data from all areas of the claim system into third party tools, such as documents, spreadsheets and emails, while also seamlessly including these documents in the claims system.

Self-administered organizations will also benefit from a system that enables fast and accurate entry of financial transactions; this may include bulk entry, automated calculations and scheduled transactions. The system must also have fast and easy ways to view and export all detailed and summarized data, including clear dashboards that highlight various areas of focus and action.”

Because self-administered organizations are subject to many state and federal regulatory compliance requirements, a claims system must be able to accurately comply and integrate with various third parties. Examples include first and subsequent electronic reports of injury, state-specific forms and CMS Section 111 reporting.

Since self-administration adds a heightened security requirement, the claims system must also have robust and flexible security capabilities. Data moves in both directions between claims systems and a wide range of third parties, so the ability to import and export data with automated schedules and exception handling is also very important.

More than ever, information is coming from and going to individuals who are not users of the claims system and may not even be employees of the same organization. As such, a self-administered claims system should be able to easily accept and send information to these non-system users.

The self-administration environment is ever-changing; organizations are also constantly evolving and each is unique.

Codes, fields, screens, data tables, reports, imports and virtually every aspect of the system must be able to adapt without relying on custom programming or distant new product releases. All new codes, fields and even root data tables must be immediately available, not only in screens but in workflow tools, reports and interfaces to third parties.

Both self-administration and technology are critical, dynamic and changing environments. While not a system feature per se, the value and range of claims system implementation and support teams should never be underestimated.