Rising medical costs — as a result of factors such as medical inflation, more treatment options, and increasing prescription drug costs — are affecting workers compensation costs. In its 2017 Annual Report, the National Academy of Social Insurance found that 33 states spent more than half of their workers compensation benefits on medical care for injured workers. In addition, according to the National Council on Compensation Insurance (NCCI), medical costs now account for 60 percent of all workers compensation claims costs. With the price tag of medical costs rising, businesses and workers compensation insurers are looking to find a solution in claims and injuries data.
The benefits of big data in insurance
Fortunately, most insurers have an abundance of big data to work with. And while that can be a good thing, what really counts is what is done with it. When used strategically, data analytics can be an effective tool to help control workers comp medical costs, providing a window of opportunity for early identification and intervention on claims that are driving those costs. In addition, data analytics can help injured workers get the right help at the right time, along with the resources and support they need throughout the recovery process. That’s why Liberty Mutual devotes significant resources to developing models and analyzing claims data to:
- Better understand the issues involved with the worker and his/her injury
- Quickly establish the most appropriate course of treatment
- Assign the right people and resources to drive the best outcome
“Today, most insurers have an abundance of data. But it isn’t just about how much you have. What’s important is what you do with it.”
—Debbie Michel, Executive Vice President, National Insurance Risk Management, Liberty Mutual Insurance
Improving efficiency and claims outcomes
When managing workers compensation claims, getting injured employees quality care and helping them return to work is the priority. Data and analytical tools help claims adjusters more efficiently manage claims and ultimately deliver better claim outcomes for the injured employee and employer. In order to be most effective, an insurer must do more than capture data—it must also understand the issues driving claims costs, build models that address those issues, and have processes in place that make the information actionable.
Here are three areas where Liberty Mutual uses big data to help businesses control workers compensation costs:
- Determining Compensability. Just because an injury occurs at work doesn’t mean an employee automatically qualifies for workers comp benefits. Using data analytics to create a compensability model is a highly effective way to calculate the probability of a claim being covered by workers comp. Proactively identifying likely ineligible cases minimizes the likelihood of paying unnecessary indemnity payments and medical expenses. For example, if the model shows a probability of less than 50 percent, the claim can be flagged for further investigation.
- Identifying High-Cost Claims. The escalation alert model identifies potential high-cost claims early, allowing claims staff to intervene sooner. For example, if psychosocial factors and medical conditions that are not related to the injury are identified, claim professionals can act quicker and accelerate recognition of the true risk of the claim. The model can also detect the presence of two or more health issues — known as comorbidity — which could affect a worker’s recovery, as well as claims that may need greater attention.
- Improving Return-to-Work Processes. The majority of workers comp claims don’t require special handling such as referrals or case management. Liberty Mutual’s model differentiates simple claims from more complex cases where medical expert involvement would improve return-to-work efforts and reduce overall claim costs. For example, the model can identify cases in which injured employees would benefit from additional resources, such as a nurse, during the recovery process.
“The escalation alert model notifies case managers to take specific actions and helps guide resources where they are needed to impact costs and outcomes.”
—Ezra Robison, Senior Managing Actuary, Commercial Claims Advanced Analytics
With so many issues affecting workers comp costs, there has never been a better opportunity for employers to partner with their insurance carriers to put their data to good use, providing benefits for both the company and its valued employees.
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