2018 offers CFO’s a unique opportunity to set new expectations for improved control of risk and claim costs. Starting with the current data in key areas, CFO’s can model future goals for improved outcomes.
By example, the following areas are worth a review.
Medical Costs are rising on average 8-12% per year. This average is significant—and unless interventions and data assessment are improving outcomes—costs will continue to increase. Medical Bill Review, Case Management, Utilization Review and Pharmacy Review are related cost areas for improvement. Having a streamlined data interface and automation can expedite building workflow-based solution.
Indemnity Costs are rising on average 6-8 % per year.
Lost Work Days
Are Lost Work Days increasing in total and for specific types of cases? Time really is money when it comes to Lost work days that can cost on average $500 Per Day. So, a quick plan for improving (Lowering the Total and Per Case) RTW Days can add up as follows. RTW Qty Days Per Year X @500/day = Total. However, with a 20% improvement, the total decrease in RTW time can be significant.
Litigation Costs Are Often Rising 4 to 9 % per year? The average costs for litigation cost management can be significant and use a fee schedule can help reduce paid amounts. Also, creating a legal case management plan in online worksheets can be very helpful for oversight of actual versus estimated costs.
Insurance/Excess Insurance Costs
Getting credits for data quality and updated data can minimize insurance coverage cost increases. A credit of up to10% on a property premium is possible with better quality data.
Compliance Costs Rising
Fines and penalties for errors or lack of reporting correctly in CMS and EDI are significant. Over or under-reporting claims often lead to penalties which can be over $200 per day per claim and makes compliance automation a hot topic.
Adjuster & Examiner Staff Labor Costs
An average of 10% productivity benefits to adjusters using technology equals an amazing increase in productivity savings. See this example: ten (10) FTE’s @ 80K per year = $800,000 in payroll costs that have an easy $80,000 in productivity savings by funding newer and better technology automation.
Fraud Costs and Subrogation Costs
Soft fraud from abuse and more traditional fraud often goes unnoticed, but this can change using new programs. Similarly, Subrogation and Recoveries from property damage or other claims is a well-defined area to look to for improvement.
Some sample areas worth CFO oversight for improving risk and claims results in 2018 are as follows.
|Target Benefit Area||Goals|
|Reduce Injury Frequency||Reduce Injury Frequency by (x)%|
|Reduce Lost Time Frequency||Reduce Lost Time Days Per 100 FTE’s by (x)%|
|Reduce Disability Costs||Reduce Total Disability Costs Per 100 FTE’s by (x)%|
|Reduce Claim Expenses||Reduce Costs for Claim Expenses by (x)%|
|Reduce Claim Indemnity Costs||Reduce Indemnity Costs by (x)%|
|Improve Speed of Claims Management||Improve Time Reporting of Losses
(Date Reported vs. Date of Accident or Injury)
|Reduce Costs With Data Integration||Reduce Costs for Claims by Integration with Bill Rev, Nurse Case Management, Pharmacy, Utilize Rev, Predictive Analytics|
|Reduce Costs With Targeted Intervention||Reduce Delay of Initial Contact by (x)% or (x)Days
(Date of Loss Vs Date of Report or Contact)
Predictive Analytics and Data Analytics are generating more data points for cost control and producing higher value outcomes. Starting with a clear vision for percentage improvements and the value of traditional costs areas is still the best place to frame how to leverage new technology tools. For more CFO ideas for specific key performance indicators that can tie to goals for reducing the total cost of risk, contact Mark Dorn, President & CEO at email@example.com or by phone at 978 729-7539.