Two items in today’s news indicate the growing significance of data analytics in managing workers comp claims and costs. While there are differences in focus, with Liberty focusing on provider identification and Crawford on claims and case management, Liberty Mutual and Crawford are both using data analysis to build the capability to improve results.
Crawford has worked with e-Triage to develop and implement a predictive modeling capability to enable the company’s claims adjusters to identify those claims that are more likely to be problematic.
“”Crawford Claims Advantage provides an objective means to identify from the beginning the 20 percent of claims that account for 80 percent of all workers’ compensation costs,” said Bob Kulbick, senior vice president of Crawford’s Risk Management Services. “This new proprietary system will ensure consistency in the handling of workers’ compensation claims and will give us an unparalleled advantage in the marketplace. We expect to see significant reductions in both costs and claims duration for our corporate clients.”
“The opportunity to apply objective criteria to identify those cases that can benefit from case management is significant,” said Larry Mattingly, senior vice president of Crawford’s Healthcare Management Services. “Rather than subjective assignments, our case managers will intervene on the right cases at the right time. Phase two of our association with e-Triage will incorporate the evidence based research into our case management process, providing an objective means of measuring improvement as a result of the services provided.”
Liberty Mutual also announced the preliminary results of their partnership with Thomson Medstat, the well-known health data analysis firm. Liberty has been working with Medstat to develop a data warehouse and analytic capability to enable the company to better understand the delivery of medical care to their insureds.
According to Insurance Journal,
“…Liberty Mutual uncovered what it believes are the two keys to managing workers’ comp medical costs.
First, the statistical averages for treating specific injuries in any city or state – for example, how many office visits are needed to heal a torn rotator cuff in Denver, or what does it cost to set a compound arm fracture in Pennsylvania. Second, how individual caregivers and facilities in the area compare to that baseline.”
Interesting that the keys do not include the level of discount, network penetration, usage of case management or utilization review. These tools have been viewed as critical; Liberty’s statement seems to imply that finding the right docs is more important than the traditional approach.
I wholeheartedly agree.
The people at Liberty are some of the most knowledgeable in the WC industry, and their application of analytics to this business is consistent with what others (Hartford, Aetna) are also attempting. While there are inherent challenges in dealing with WC data due to relatively small sample sizes (total WC medical expense nationally is about 2% of all medical expenses), historically poor data quality (little emphasis on capturing data at the bill processor level), and significant external complicating factors (co-morbidities, psycho-social factors, job satisfaction) this is a step in the right direction.
What does this mean for you?
Depends on how much data you have…

I am attending the national workers compensation and disability conference in Chicago this week, and will be blogging from here.
Impressions so far – even more exhibitors in the pharmacy benefits management space than last year, which was a drastic increase from the year before. My sense is the higher margins in WC Rx are attracting entrants, many of whom have little understanding of the difficulties inherent in identifying and managing eligibility, dealing with paper bills and third party billers, and interfacing with payers’ claims and bill review systems.
More to come…

Peter Barth presented an interesting overview of China’s occupational insurance situation at WCRI’s annual meeting yesterday. According to Dr. Barth, China passed a comprehensive workers comp law that took effect January 2004. WC is voluntary in the world’s most populous country, although employers that do not subscribe to the insurance program are required to pay the same indemnity benefits available through the program.
The employment situation in China is somewhat unique; a large percentage of the employed population works for government or military-owned firms; about half of the 800 million potential workers are in agriculture, and a large percentage of the remainder is employed by either small firms or foreign and domestic joint ventures. To date, 75 million are coverd by the state fund, which has a goal of 140 million by 2010.
Here are a few other highlights.
– the standard for an injury or illness is consistent with the US’; arising out of or in the course of employment
– premiums are in three bands, ranging from 0.5% of premium to 1.5%, with 2.0% for the worst case
– experience rating is in place, but a maximum of one point can be assessed for the worst risks
While the occupational health situation in China has been the subject of much negative attention, the inception of this state fund may well be the start of significant improvement. Much needed improvement.

Medical utilization trends were the subject of a presentation this morning. Here are some of the highlights which are based on research on back and neck injuries…
– use of MRI increased 11-14 points for non-specific back pain cases from 1998 – 2003.
– 40 pct of these cases had MRIs in 2003.
– the surgery rate for disc problems was stable over that period, although there was a shift in location with more performed in outpatient settings
– the typical back case received 4-7 more physical medicine visits over the 5 year period, driven almost entirely by trends in CA and TX

Here are a few highlights from today’s WCRI conference
– medical cost growth from 01/02 to 03/04 was in the 8-12 pct. range, driven primarily by increased utilization
– there is a strong correlation between utilization and disability duration, with a 10 pct change in utilization associated with a 4 pct change in duration.
– early returns from CA indicate the recent reforms are having a significant impact on medical costs with a particularly large drop in physical medicine expenses (around 50 pct)
– a study by CWCI (www.cwci.org) indicates that relatively few physicians’ treatment of claimants are consistent with ACOEM treatment guidelines. This particularly interesting as the new regulations state ACOEM’S guidelines are viewed as presumptively correct: they take precedence over the treating physician when there is a disagreement. The full study is available on CWCI’s site.
– MA and FL, two states with historically low physician fee schedules have disproportionally more complex office visits than the median state. This is consistent with other studies which indicate low fee schedules are associated with billing practices featuring a higher proportion of higher value services.
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I’m posting this from the WCRI Annual conference in Boston. For those who have yet to attend, this is perhaps the best short conference on WC on the calendar.
Topics this year include workers’ satisfaction survey results and the correlation with costs and outcomes: pharmacy in WC (driven by the 3 new WCRI members who are PBMs): a session on medical guidelines with an excellent presentation by CWCI’s Alex Swedlow on early results of CA’s reform measures (and other topics) and more to come tomorrow.

Another scandal is hitting the workers’ compensation world, as the CEO of the Maryland state fund known as the Injured Workers’ Insurance Fund (IWIF) has been indicted on charges of accepting bribes and racketeering in connection with his previous career as a state senator.
Thomas Bromwell, the individual in question, has been running the fund since leaving elected office in 2002. To quote Insurance Journal,
“According to the indictment, Bromwell received nearly $193,000 from Poole and Kent, a prominent contracting firm, with the money disguised as payments for a no-show job for his wife, Mary Pat, who also was indicted. The company also provided free or discounted construction services on his home worth $85,000, the indictment said.”
In what can only be noted as bizarre, the Board of IWIF voted to keep Bromwell on in his present position despite the indictment. This despite the government’s move to freeze his bank accounts. No leave with pay pending the outcome, no reassigned temporarily, no extended leave of absence. Why? Evidently the Fund has experienced solid growth during Bromwell’s tenure, which has earned him the loyalty and confidence of the Board.
What does this mean for you?
Another scandal means you’ll need a cheat sheet to track them all.

My colleagues at Workers’ Comp Insider have posted a helful list of research, calculation, and analytical tools on their site. They include reinsurance and health insurance glossaries, safety information, and Bureau of Labor Statistics links.
There are several other insurance, managed care, and workers comp links and info sources on the sidebar of Managed Care Matters as well.
Worth a bookmark for those times when you need the answer and can’t find it anywhere else.

Workers compensation insurance results are in for 2004, and the numbers look strong. The overall operating ratio improved to 93.7, up from 98.4 in 2003 and 100.3 in 2003.
(The operating ratio is simply total expenses/(total premium plus investment income))
The positive results, reported by John Burton’s Workers Comp Resources, were driven by a significant improvement in overall claims expense, with the claims ratio at 68.4, a ten-plus point improvement over the prior year. The good news on the claims side was counterbalanced by a ten-point drop in investment income performance from 2000 (20.9% return on investments) to 2004 (11.2%).
The net – claims costs are decreasing, investment results are tanking