Categories: Case Studies
      Date: Sep  2, 2009
     Title: Five Deadly Sins of Claim Management

Since 2003, Salt has been performing disability claim audits, claim data analyses, claim operation reviews and consulting to disability insurance companies, third party administrators, disability reinsurers and large employers.¹ We’ve seen the good, the bad and the ugly and although no one is perfect and recognizing the complexities of managing claims operations in this day and age, we continue to find basic claim management techniques missing. This is not an indictment of the industry (we’ve been there and lived it), rather, a call remember the blocking and tackling. We all talk a pretty good game but let’s face it, the foundation of our business hasn’t changed that much in over 20 years. The same basic contractual provisions, the same basic processes to sell, administer and adjudicate claims and the same basic systems. We implore, do the basics really really well and then, institutionalize the fundamentals and then deploy more innovative techniques.

What are the reasons for not paying attention to the day-to-day? Who knows for sure but we suspect it’s some combination of budgets, shortage of expertise and training, lost focus, conflicting/opposing philosophies, a “widget” mentality, off target performance metrics, inability to collect and analyze data or the marketing message has become more important than the discipline.

We believe some of the basics to be timeliness, use of the telephone, use of risk management tools, written communications and risk management critical thinking. Old school you say? Maybe. But we would enjoy the debate.

So, here’s what we see:

1. Timeliness

• Claims are filed on or after the benefit begin date
• Especially for LTD, there is little claim activity until after the benefit begin date
• The claimant is not contacted prior to benefit begin date
• Approval letters are sent after the benefit begin date
• Test change decisions are made and communicated after the test change date

2. Use of the Telephone

• The telephone is not the primary communication tool
• Lack of documented claimant interviews in the file
• The attaining physician not contacted directly by telephone

3. Use of Risk Management Tools

• Appropriate risk management tools not used
• No demonstrated RTW focus
• After initial approval, lack of appropriate ongoing use of risk management tools
• No documented supervisor review in claim file

4. Written Communication

• Often over used – takes the place of a the telephone
• Poor grammar and spelling – lose credibility and poor representation of your company
• Contract wording not used where appropriate
• Too complicated – not understood by claimant

5. Risk management Critical Thinking

• Caseloads
• Caseloads ranged from 75 to 400 for LTD
• Very seldom strategically allocated – high % of test change and high % of difficult diagnoses
• Often include high % of PTD claims
• Multiple products managed by same analyst -STD, LTD and sometimes life waiver of premium
• Workflow
• Lack of consistency
• Difficult to manage, track, monitor performance
• Not clearly defined
• Focus on moving diaries
• Too many hand-offs
• Decision-making
• Often not made by the claim professional
• Neglect restrictions and limitations and/or functional capacity
• Still asking medical “is the claimant disabled?”

¹Based on over 80 claim related Short Term Disability, Long term Disability and Life Waiver of Premium audits in 29 different claim operations, data analysis of approximately 50,000 STD claims, 70,000 LTD claims and 20,000 Life Waiver of Premium claims, manual claim audits or reviews of over 15,000 claims.