Claim Handling: Workers Compensation Best Practices

“Best practices” are often referenced in the handling of workers compensation claims without an explanation as to what they are or what the insurance industry standards are for handling workers compensation claims. While “best practices” vary slightly from insurance company to insurance company, here is a synopsis of the basic standards of how the insurance adjuster handles workers compensation claims.

When an adjuster completes each of these “best practices,” the quality of the workers compensation claim file reaches a high standard and claim resolution is appropriate.

1. Coverage – The very first thing a workers compensation adjuster does is verify the coverage by checking the policy number, policy dates, and insured name.
2. 3-Point Contacts – The adjuster makes voice contact (in person contact on severe claims) with the employer, the employee, and the treating physician within 24 hours of the claim being reported to the claims office. Proper contact involves an exchange of information with the employee, the employer and the doctor’s office, not just leaving a voice mail or sending a form letter. On claims of questionable compensability or with subrogation potential, a recorded statementfrom the employee needs to be obtained.Note: The adjuster must ensure that a Work Ability Form (or similar) provides medical restrictions on the FIRST medical visit. If this information is not obtained on the FIRST medical visit, the claim will most likely become a lost time claim.
3. Investigation – The adjuster addresses all issues affecting coverage, compensability, subrogation, extent of injuries and benefits within 14 days of the receipt of the claim.
4. On-going Contacts – Consistent and on-going contact with the employee (or attorney), the employer, and the medical providers is essential in order to return the employee to work as quickly as possible.
5. Data Records – All data input is completed within 72 hours of receipt of the claim. These sample data items must be correct on every claim: loss location codes, body part codes, and description of injury codes.
6. Reserves – The initial file reserves are usually set at the completion of the 3-point contacts and within 72 hours of the claim being reported. Once the adjuster obtains the initial medical records, the reserves are reviewed for accuracy. Any subsequent medical records or other information impacting the value of the claim usually results in a reevaluation and changes in the file reserves. On severe claims where the file remains open for an extended period of time, the reserves must be checked for accuracy every 6 months.
7. Average Weekly Wages – The adjuster obtains information documenting the employee’s wages within 14 days of receipt of the claim.
8. Compensability – The basis for the acceptance or the denial of a claim is documented in the file within 14 days of receipt of the claim. Claims should be ‘paid without prejudice’ in claims where compensability is questionable.
9. Payment of Benefits – The file clearly outlines how the indemnity benefits were calculated and confirms the benefits were paid on time (varies per jurisdiction).
10. ISO Filing – The index filing is completed within 14 days of receipt of the claim. (Most companies have gone to index filings on only the lost time claims). If the index filing reflects a prior claim, the workers compensation adjuster follows-up with the prior insurer for information on the prior claim.
11. First Reports (Claims Handled by TPAs) – When claims are handled by a third-party administrator (TPA) rather than the insurer, it is standard for the TPA to provide a report to the insurer within 14 days outlining the coverage, jurisdiction, compensability, medical management, benefits, subrogation (if applicable), subsequent injury fund (if applicable), reserves, payments, and action plan.
12. Status Reports (Claims Handled by TPAs) – Regular scheduled status reports updating the insurer on file developments are completed by the TPA’s workers compensation adjuster. Depending on the status of the claim, the status reports may be every 30 days, 60 days or 90 days. However, important developments on the claim are immediately reported to the insured.
13. Action Plans – The file contains an outline of the steps the adjuster plans to take to bring the file to a conclusion. The outline contains a date for each issue, problem, or concern to be resolved. It must be a workable plan with solutions outlined.
14. Medical Management – The workers compensation adjuster knows the nature of the injury, the cause of the injury, the treating physician’s diagnosis, the prognosis, the treatment plan, and the return-to-work status.{include file=”ad-block-mid-page-1.tpl”}The adjuster has the ability to assess potential severity of the claim and proactively determine medical management resources needed either based on experience or a predictive modeling tool. Adjuster knows medical terms for “malingering” and is able to suggest physician peer review early on to assist in determination of causality and later on to evaluate treatment plan, RTW goals, and impairment rating.Adjuster understands the types of nursing support available e.g. triage, telephonic, field-based, mental health, chronic pain programs, and telephonic disability management. On severe claims, the adjuster coordinates the nurse case manager’s involvement with the claim.Adjuster directs claimant to network providers and use of medical management to identify optimal specialties and specific providers for ambiguous claims. Where applicable, the adjuster (or the nurse case manager) provides the treating physician with the necessary information for utilization review and pre-certification.If the adjusters utilize a medical bill review company to verify proper billing, the adjuster must be sure the medical bills are provided to the vendor for processing.
15. Return to Work – The adjuster coordinates with the employer and the medical provider the employee’s return to work as soon as possible on modified duty or full duty, as appropriate.
16. Subrogation – As part of the investigation, the adjuster determines if any third party can be held responsible for the employee’s injury. If so, the adjuster places the third party and their insurer on notice of the intent to subrogate. Once the claim is concluded, the adjuster or the designated subrogation adjuster pursues recovery of the amount paid on the claims.
17. State Filing – Properly completes and files on time, all state required forms.Subsequent Injury Fund/Other OffsetsIn the jurisdictions with a subsequent injury fund, the fund is placed on notice of the claim as soon as medical information reflects the potential for recovery from the fund. The file reflects how social security disability benefits, short-term or long-term disability benefits, unemployment benefits, or any other benefits the employee is receiving impacts the amount paid on the claim.
18. Litigation Management – All files requiring defense counsel are assigned to counsel on time. The initial assignment of the file to defense counsel provides instructions to counsel on how the adjuster wants to proceed on the claim. Any issues or disputes are brought to defense counsel’s attention with a request for recommendations. A litigation budget is submitted by the defense attorney outlining the projected cost of defending the workers compensation claim.The adjuster provides defense counsel with on-going instructions on how the adjuster wants to proceed on the claim. All reports from the defense counsel are reviewed and answered as appropriate. All billing from defense counsel is reviewed and approved, if appropriate or questioned, if needed.Note: Employers must have a fast-track approach to managing workers compensation claims and litigation; they must prepare specific instructions to outside counsel and to business units on internal investigation protocol, responses to discovery and preservation of evidence.
19. Diary – When the adjuster completes the initial 3-point contact, all further activity on the file is planned and placed on the adjuster’s calendar for completion. All issues noted in the Action Plan (also called a ‘POA’ – Plan of Action) are given a diary date for completion. The diary is kept current until the file is completed.
20. Progress Notes – Every activity completed by the adjuster is noted in the file notes. The file notes are clear, comprehensive, concise, and understandable which include a plan of action. Adjusters must be able to employ techniques and strategies to move a claim to successful resolution.These practices can serve as a template for an RFP for selection of third-party administrators (TPAs) or insurance carriers handling your claims or as a question set when selecting new claims administrators.