Timely and Accurate Feedback of Good and Bad Outcomes from a Decision Usually Will Result in Improved Performance

Timely and accurate feedback should be the result of effective collection and analysis of data.

This fundamental principal applies from; day to day decisions for claims examiners, to claims management decisions by supervisors, to policy decisions by company management, to the state administrative agencies on implementation of laws and regulations and by the state legislatures for overall policy development.

If we create a standardized list of data definitions and recommended list of data elements that need to be captured, it will be easier to perform industry comparisons, create best practices, reduce expenses, improve benefit provision to the injured workers as well as drive legislative agendas.

Another benefit from data standardization would be the ability to develop training programs for front line claims supervisors and managers on statistical management and oversight of the claims process.

If all claims systems captured (minimally) the same data, using the same data definitions it should be easier for companies to comply with various jurisdictional reporting requirements.

Standardized data definitions will make it less expensive and easier for self insured companies to change TPAs. That way they can select the vendor based on service and outcomes. However this may lead to some resistance against standardization by TPAs.

Currently the workers compensation insurance industry has:

  1. No single oversight body that sets data definition or collection standards for the industry. Though IAIABC, and NCCI occasionally try to perform this function. The ACCORD standards may be a reasonable vehicle to use to help create a standard. Another process would be to use ANSI (American National Standards Institute)
  2. No comprehensive list of data elements that are available, or that should be captured.
  3. No consensus concerning the definitions or standards of the data elements that should be captured.
  4. No established protocol to transmit, receive or share the collected data with all who need or can use the information. (Though the Federal Government has set standards for medical records transmission. HIPAA and NCPDP)
  5. No centralized repository of workers compensation data. (This may not be a bad thing.) There are competing and cooperative locations where data is captured or stored. The State Workers Compensation Departments, state Departments of Insurance, the insurance rating bureaus such as ISO, WCIRB and NCCI, self-insured agencies, research organizations such as CWCI, WCRI, AON and IBI. No one data base is comprehensive.

Data collection in the workers compensation industry is problematic. Data collection can be expensive. There should be a consideration of the cost of data collection relative to the expected return. Pure research does not always require that every transaction be collected and reported. A pure random sample of a statistically significant sample is enough for most research. However the front line reports for day to day claims management rely on comprehensive and accurate data.

Much of the workers compensation insurance industry (and the TPA industry) is utilizing relatively older legacy claims systems. These systems were developed in the 1980’s and 1990’s, and do not include data elements needed to oversee the provision of medical benefits such as pharmacy or physical medicine. Cost for adding data elements to these legacy systems varies, with the rule of thumb that the older the system the more difficult and costly it is to add data fields.

Because of the difficult insurance market through 2005, many insurance companies, TPAs and self insured companies were not financially capable of investing the financial resources needed to upgrading their legacy claims systems. Many of those legacy systems in use today still require millions of dollars to be upgraded.

Even when claims systems are upgraded, the integrity (and comprehensive collection) of the data is still problematic. Even if there are standards for data definitions, unless the claims systems are designed to verify the accuracy of the data fields (i.e. date of injury must be after date of birth) the results may be inaccurate data. Claims systems should also provide immediate feedback to the examiners, concerning missing data elements, or misuse of the data elements or the data accuracy will be compromised.

Many examiners do not understand the importance of accurate input of data. Many organizations do not hold their claims staff accountable for data accuracy. Most examiners do not consider accurate data input to be an essential function of their job. Examiners want to “adjust files and settle claims” and “do not consider themselves to be data input clerks.” The more input of data elements demanded by the claims system, the more difficult it is to retain staff. Some temps refuse to work on claims systems that they perceive as inefficient and menial.

Some of the newer imaged systems have fewer data elements. As insurance companies have migrated from system to system or as self insured companies have changed their TPAs each conversion of data has hurt the integrity and accuracy of the legacy data. If companies have not converted their legacy data bases, as companies loose their long term employees, it becomes more difficult for some of them to access or analyze the data in their older data bases.

If the claims systems rely on data imports, to pre-populate fields, the imported data may not be adequate or accurate. This is because the data that is produced by vendors is focused on their needs to perform their functions. If the claims systems have too many data elements for the examiners to use, or if there is a poor understanding of the data fields or if the data fields are poorly defined; then there is a deterioration of the quality of the data. If the claims systems are too tight with their design and confirmation process the examiners may be unable to actually adjust files.

System design should limit unnecessary activity by limiting the collection of data that will be useful. Automated collection of data should be encouraged. Direct input from medical providers, investigators, HR systems, bill review systems, ISO, NCCI, payroll systems, should be encouraged. Most legacy systems do not have the data fields and were not designed to allow integrated indemnity benefit administration for LTD, STD and WC.

Within many organizations the production of usable reports and the analysis of data are problematic. Even when data is collected, many times the information is siloed and unavailable to all who could use the information to improve company performance. There is a big difference between raw data, and the information needed to make decisions. Unless the organization has an ability to put the data into the hands of the decision-makers in a manner that will result in changed behavior the exercise is wasted. Most organizations underestimate the importance and under staff their analytics positions.

Example of problems with data definitions:
When is a case litigated? Is it when there is an application? When a case goes in front of the local appeals board? When there is a notice of representation? Different state jurisdictions have different definitions of what constitutes a litigated case.

For many organizations if the litigation box is not checked, the case is not a litigated case. However the checking of the litigated box is not necessarily the first order of business for most examiners. Some companies measure their litigation based on when the reserves are established for attorney fees.

What is a medical only file? Different States have different waiting periods (between 3 and 7 days) how can you compare MO vs. indemnity ratios if the waiting period is different?

Self-insurance vs. insurance data.

The insurance industry tends to collect data and measure results based on the premium dollars. This can be problematic because of the growth in the expansion of large deductible policies. As premium rates change, using premiums as the basis for analysis does not provide consistent results when determining frequency or severity of claims.

The self-insured industry tends to measure results bases on number of man-hours worked or based on payroll.

The difference between self-insurance and insurance is particularly striking when measuring frequency of accidents. Self insured data tends to be collected and analyzed based on accident year results. Most of the rating bureaus (NCCI and WCIRB) are focused on policy year instead of accident year data. Insured loss data is usually collected beginning one and a half years after the inception of the policy date. This delay in reporting is done because of the length of time it takes to develop accurate numbers with regards to reserves and losses. However this delay has a significant impact on policy decision-makers.

Historically there has been limited self-insured data collected by governmental bodies or even by research organizations. Loss data collected from insurance companies has been standardized to include data that will result in improved underwriting. Most governmental oversight of self insured companies is focused on benefit provision by the TPA or claims administration and not on data collection. Most of the self insured data collected by the State is not focused on comprehensive data needed to make policy decisions by the State.

Some states do collect data elements that overlap both self insured and insured companies. These are the FROI and SROI reports. (First report of injury and supplement report of injury). However most of the data collected is never used for oversight or for public policy management. The NCCI and IAIABC have been attempting to create some standardization of FROI and SROI data, but not all states comply. Proprietary ownership of data forms and formats create problems with standardization. AMA ownership of the CPT codes makes it difficult to create standardization for definitions of the medical treatment procedures. We can not create a standardization of medical terminology, if we have to pay the AMA for every time we use the codes in our system. I am not sure if the AMA also owns ICD-9 codes.

Data needs change as technology and workers compensation systems changes. SB-899 changed the data elements needed to be captured. For instance measurement of PD apportionment was not mentioned prior to the implementation of SB-899. However capturing apportionment data is problematic because of a lack of apportionment definitions and because of the legacy systems. It is necessary to understand that the data needs change as the workers compensation system changes.

Timeliness of data is relative. With most of the insurance loss data collected at 18 months post accident policy inception, obtaining immediate results to determine the efficiency of implementation or the impact of the change in the laws is problematic. Because the workers compensation loss development really takes 5 to 7 years to fully develop, making decisions based on undeveloped or raw data is also problematic.

Confidentiality of personal information. With the advent of identity theft, the implementation of HIPAA and the California confidentiality and privacy act, and the general increase of privacy concerns, the collection of data for research becomes more difficult on a daily basis. The sharing of the data will also become more problematic as integrated medical programs are developed. Research organizations try to scrub their data to eliminate any personal identifying information but in doing so they sometimes make it difficult to research important issues.

Additionally there is a conflict between confidentiality of medical information and the public’s right to access to items such as records at the WCAB. The confidential format for distribution of most medical information is HIPAA (ANSI X12 (837 and 835) the confidential format for distribution of pharmacy information is NCPDP.

Potential Information and Data Sources

  1. Insurance legacy claims systems
  2. TPA claims systems (underwriting, loss control, claims, actuary)
  3. Bill review company systems
  4. PPO company systems
  5. HMO systems (pharmacy, billing, and treatment)
  6. Medical Utilization Review Company systems
  7. Medical Credentialing company systems
  8. HR systems (people soft)
  9. Payroll systems (ADP etc.)
  10. Physician billing systems (Approximately 20 major systems)
  11. Hospital medical charts and billing systems
  12. Union health and welfare records
  13. ISO (Insurance Service Office index bureau)
  14. Bar Association (American and local State)
  15. Medical associations (AMA, CMA, chiropractic,)
  16. Medical treatment guidelines (ACOEM)
  17. Geographic software companies (Geo Access, Talisman)
  18. Physician practice systems
  19. Pharmacies (Safeway, Walgreens, Longs, Costco)
  20. Pharmacy manufacturers (Merck, Pfizer etc.)
  21. The MediCal system
  22. Division of Workers Compensation (FROI, SROI, Audit, PD rating bureau, WCIS data, etc.)
  23. Department of Insurance (Fraud Division, compliance)
  24. Office of Self Insurance Plans (self insured data)
  25. Employment Development Department
  26. DLSE (Dept of Labor Standards and Enforcement)
  27. Actuarial studies and reports
  28. Insurance Broker records and reports
  29. Academic studies and reports
  30. National Council on Compensation Insurance
  31. Workers Compensation Insurance Rating Bureau (CA)
  32. Social Security
  33. Medicare system
  34. School records (high school, college, vocational)
  35. Public records such as marriages, divorces, deaths property ownership
  36. Department of corporations
  37. County registrar offices
  38. State Department of Motor Vehicles
  39. Department of Transportation
  40. International Association of Insurance Accident Boards and Commissioners
  41. Google, Ask, MySpace, etc.

Research Organizations

California Workers Compensation Institute
The institute is based in Oakland CA. The data is primarily insurance company data. There has been a recent effort to collect self-insurance data to provide better research. The CWCI provides “data cubes” to its members who can compare their data and “results” to the results of the whole industry.

Integrated Benefit Institute
The institute is located in San Francisco Ca. The institute researches the integration and interaction of workers compensation with other benefits such as long term and short term disability and group health. Large self-insured companies or large companies that have large deductible insured programs supply most of the data.

The institute is located in Boston Ma. The institute researches comparative costs and benefits between the states. Primary focus is given on the larger exposure states (CA, TX, FL, MA, NY, OH, etc.) The data sources are insurance companies, state agencies, the CWCI, and large self-insured companies.

The California Commission on Health and Safety and Workers Compensation is based in Oakland CA. It was established by the legislature to perform policy research and to provide recommendations to the state for workers compensation and safety issues. Data is primarily provided by the CWCI and state agencies such as the EDD, and the DWC.

Most of its studies performed by Rand, in CA, are commissioned by the CHSWC. It is also a public policy institute that obtains the data separately for each research project. Most of the data it uses comes from the CWCI, and from state agencies.

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