Welcome to Salt Associates

Since 2003, Salt has been performing disability claim audits and reviews, claim data analyses, claim operation reviews and consulting to disability insurance companies, third party administrators, disability reinsurers and large employers¹. We've seen the good, the bad and the ugly. Recognizing that no one is perfect and understanding the complexities of managing claim operations in this day and age, we continue to find elementary claim management techniques missing. We call them The Five Deadly Sins:

1. Timeliness
2. Use of the Telephone
3. Use of Risk Management Tools
4. Written Communications
5. Something we call "Risk Management Critical Thinking"

1Based on over 80 claim audits and reviews in 31 different claim operations.

Risk Management Critical Thinking

Perhaps it's not as elementary as the first four newsletter topics, but definitely just as important.  It's something we call "Risk Management Critical Thinking" (RMCT) and many times the difference between claim processing and claim management.  That's why our claim audits and reviews take RMCT into consideration and that's why our proprietary audit application includes the following categories to assess and evaluate:

• Caseload Management
• Work Flow Design
• Decision Making

Caseload Management
What are the numbers of claims in analysts' caseloads and what are the characteristics or mix of those claims?  We've seen caseload numbers ranging anywhere from 75 to 400 claims for long term disability - a wide range. Compounding caseload numbers is the mix of claims. Very seldom are caseloads strategically allocated. There may be high percentages of test change claims and/or high percentages of claims with difficult or complex diagnoses. And, too often, active caseloads include permanent and total disability claims. Two noted examples:

• One sample of over 1800 claims in an active workload found 30% could have been managed in a separate PTD block.
• Another sample of over 2300 claims had nearly 60% with PTD characteristics.

Finally, some claim operations cross train their analysts to manage multiple products; for example, short term disability, long term disability and life waiver of premium claims.  Often times this model is deployed not for benefit of the analyst, rather to squeeze as much out of the staff as possible.  Unless you have the right staff, work flow and are doing this for the right reasons, it could backfire.

Work flow Design
Work flow, commonly known as the movement of tasks through a work process, is generally overlooked in a claim audit.  We're not sure why; it is the basis for all claims work.  It's the rules engine for performing claim tasks.  It dictates hand-offs versus ownership and decisions versus diary management.

Absent a clear understanding of the work flow, you can guarantee a lack of consistency and you will find it nearly impossible to manage, track and monitor performance.  Seems logical enough but we still observe claim operations with work flow deficiencies.  Our findings include:

• No clearly defined work flow
• The work flow focuses on moving diaries rather than managing them
• The work flow rewards for "widgets" and not outcomes
• Too many hand-offs making it easy to pass the buck and the decision.  This process also enables a narrow view of claim management

Decision making
Who makes the claim decision in your company?  Are the claims analysts making the decision based on their expertise and the gathering of facts and insight from their cast of specialists?  Or, are the specialists getting too involved and making disability determinations?  In some companies, teams get together and decide.   Our findings also show:

• The disability determination is often not made by the claim professional/analyst
• Restrictions and limitations and/or functional capacity are not defined or are neglected altogether
• Still asking medical resources, "Is the claimant disabled?"
• No clear claim management philosophy which leads to inconsistent decisions made by a variety of participants
• Team decision making, unless tightly facilitated is time consuming, expensive, and often leads to a "non-decision".