At the 2016 PRIMA Annual Conference, Frank Altiere from PMA Management Corp and Lori Gray from Prince William County, VA discussed how using data effectively is vital to improving your program and proving its value. In workers’ compensation you can significantly impact your results and metrics are the key to doing so. They can help gain buy-in for change and new programs from senior management, provides performance triggers to intervene, and prevent claims and save lives. Using data effectively involves the following steps:
What are my workers’ compensation risk issues? Ten years ago we were not focused on the aging workforce and co-morbidities. Now those are two huge areas of emphasis. It is important to keep redefining your risk issues as they evolve. In the coming years issues such as marijuana and the impact of ACA are going to become more prevalent.
How can benchmarking/metrics impact my program? Metrics can help you identify leading causes of accidents, types of injuries occurring, and profiles of workers who are more prone to injury. The data available now allows for very detailed analysis, not just to department level but to specific locations within departments.
Different areas to measure include overall costs per employee, claims per $1million in payroll, direct/hidden costs, ultimate losses per $100/payroll, pharmacy costs, medical costs, average cost of a closed claim, first year payments, closed claim durations, and budget measures such as injury incident rate.
How will I establish goals based on risk issues? Start by ensuring your workers’ compensation goals are SMART:
- Time Component
Some areas to focus on include timely reporting of claims, managed care issues, return to work, and settlements.
What metrics are aligned with my goals/risk issues? You need to determine which metrics are the most important in helping you achieve your overall goals and addressing your main risk issues.
How will I measure success? Pull in the appropriate data to effectively measure whether you are reaching your goals. It is important to make sure to account for variables that may be impacting your numbers. For example, you need to evaluate claims costs per payroll dollars, not just the cost numbers alone. A workforce reduction could make it look like you are achieving good results in your program while the opposite is actually true.
When evaluating the impact of settlements you need to look at the bigger picture. If you are self-insured on the group health side you could end up with costs getting shifted to that area when the workers’ compensation claim settles. If that happens, you end up paying twice for the same exposures.
Who is my audience? Your audience may include Finance Director, Senior Management, Department Directors, Claims Manager, Excess Carrier, Agent/Broker and your Board of Directors. You need to make sure to customize your messages for the appropriate audience. Some audiences may understand technical claims issues while others may not. Some audiences may want to see very detailed information and others may only want to see the big picture.
Where can I procure benchmarking data? You can get data from many different sources including you TPA, carrier, medical management vendors, Bureau of Labor Statistics, and brokers.
How do I make benchmarking/metrics actionable? A complete analysis is needed to identify a few areas where improvement is needed. You also need to set SMART workers’ compensation goals. Communicating the results through stewardship reports is important so people understand what is happening. Finally, set goals for improvement and adjust those goals as the situation changes.