About Athens Administrators
Athens Administrators has administered claims throughout California for more than 30 years. Our clients include public agencies, regional businesses, insurance companies and Fortune 500 companies. We provide workers’ compensation and liability claim administration services.
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• Established 1976
• Privately Owned
• 120+ Employees
Metrics for Mastering Your Workers’ Compensation Program
Workers’ Compensation programs can be very difficult for Risk Managers to get their hands around. Several relatively easy to track metrics exist. This information will help you to better understand how your overall program is performing and how effectively your TPA is administering it. Once you have these basic metrics mastered you can begin to dig deeper into your data and really focus on driving results. An in-depth understanding of your program will allow you to establish goals and objectives. Once this occurs improved results will almost certainly follow.
- Frequency – It is important to track your year to year new claim volume. You need to know the number of first aid, medical only and indemnity claims per year that your company has experienced. This basic information will allow you to begin to make meaningful, focused decisions about your program.
- A useful variation of this tracking tool is monitoring your claim frequency with trailing twelve month averages of claim volume by claim type. Trailing twelve month averages will eliminate the volatility that month to month analysis often accentuates. Averages smooth out your data and allow you to more accurately identify developing trends versus. It is also helps to review this information in a graph format.
- Comparing your company to the workers’ compensation industry is also useful. Both the WCIRB and the NCCI regularly release frequency reports. When you understand your data you will be in a position to compare your program to the industry. Are you doing the same? Better?? Or Worse??? For the most current frequency data published by the WCIRB click here (PDF, pg. 13 of 20)
Closing Ratios – In a mature, stable workers’ compensation program (approximately five years worth of history) claims should be closing at a rate of at least one for every one new claim that comes in. If you have experienced a significant frequency decline in your mature program then you can expect more than one claim closed for every one claim that comes in. On the other hand if your frequency is rapidly rising, than you may see less than one claim closed for every one new claim that comes in.
Note – There are many things that impact frequency including: Loss Control, Safety, Ergonomics and Business Cycles (expansion or decline). When you know your numbers you can begin to understand and plan for how these factors might impact your programs performance.
- This is a simple ratio to calculate and it is also relatively easy to monitor.
- This ratio is one that should be discussed with your TPA partner at the beginning of each program year. Jointly define your closing ratio expectation and hold them accountable to it.
Beyond Frequency and Closing Ratios there are many other bottom line impacting data points that a workers’ compensation program manger should pay attention to. Awareness and attention to detail will deliver more favorable results for your program. At Athens, we work with our clients to develop customized Stewardship Reports that capture all of this data (and much more) on a regular basis. We have found that this open and direct team approach with our customers helps us to be more effective as a claim administrator. It also allows our clients to be proactive, successful organizations.
- Delay and Denial Rates – We believe that delay and denial rates are a strong indicator of how aggressive your claim administrator is managing your claims. Published industry wide data for these metrics are hard to come by. We believe that it is reasonable to expect that between 25%-30% of claims should be delayed for further investigation and that you can expect that at least half of those will ultimately be denied for one reason or another. If your programs results significantly lag below these numbers you may want to discuss philosophy with your TPA.
- Examiner Caseloads – It is critical to know the size of your examiner’s active indemnity claim caseload. We believe that a reasonable range is 135 to 165 open indemnity claims. If an examiner has a caseload of greater than 165, you can anticipate that your results will suffer. A caseload of 135 is exceptional and 150 is still very good. Caseload numbers exclusively do not represent the entire story. It is also important to consider what level of administrative support your examiners have, how many different clients they are serving, and how efficient their overall claim administration system is. If the examiner has an average caseload with minimal support and is working off of an outdated system they will have challenges in driving superior results.
- An optimal scenario may be an examiner with a caseload of 135 indemnity claims with a dedicated assistant working in a very efficient claim administration system.
- Another effective model is an examiner with a caseload of 150 indemnity claims with 2/3rds of an assistant working within a very efficient claim administration system.
- Medical Only to Indemnity Claim Ratio – It is common to see a new claim occurrence ratio of 50% medical only and 50% indemnity claims. If you start to see a ratio that looks radically different than that it may make sense to explore what is going on? If your ratio of indemnity claims is much higher it could be an indicator that Medical Only claims are not being properly reported. Or it could indicate that there are safety issues that need to be addressed.
- Ratio of Future Medical Claims to Active Indemnity Claims – This ratio has continued to climb over the past several years. In a stable mature workers compensation program in California it is not uncommon for Future Medical claims to represent 25% of your total claim inventory and can be as high as 50%.
- Knowing this percentage will help you to be able to best manage your program. This knowledge will also allow you to better set your performance expectations for the program.
- For an in-depth report on Future Medical Claims click here (PDF)
- Ultimate Claim Costs – This is one area where quite a bit of publically available information exists. In California the best source may be the WCIRB, as their information is California specific. The NCCI also provides exceptional data surrounding the total cost of claims. It is always a good idea to check your average cost of a claim versus everybody else. If your numbers are considerably higher or lower than the average you can then take action.
- For most current estimate on indemnity claim costs click here
(PDF, pg. 14 of 20)