Earlier this month, we stressed the importance of initiating the claims process as soon as possible: after all, many jurisdictions only give the employer and insurer a 21-day window to accept compensability for a claim. In addition to beginning the steps of an incident analysis as soon as possible, it is also imperative for businesses to create a claims action plan that will initiate the claims process in a timely fashion to ensure that everything is done on a timely basis. Claims that are initiated and kept on track within the first 21 days typically reduce the claim cost by between 25 and 40 percent, so having a claims action plan is necessary to make the claims process more cost-efficient and easy for your business.
The Steps to a Claims Action Plan
Within the initial three weeks, your claims action plan should be divided into three sub-plans: a 3-day plan, a 7-day plan, and a 21-day plan. Each plan will work towards the ultimate goal of resolving the claim, but dividing the plan into these three separate deadlines will help you to organize the process and ensure that all of the details of the claims process get taken care of.
- 3-Day Plan – Within the first 3 days, you need to review the claim and assess whether or not it should be moved to a lost time adjuster. Many businesses make the mistake of only reporting small claims to their insurance company and the file is routed to a medical only adjuster. Medical adjusters have hundreds of files on their desk, and their main job is to ensure that the medical bills get paid timely, and they often miss red flags on a claim file. The mistake employers make is that they wait on the claim to become a lost time claim and let the file follow its natural progression from a medical only adjuster to a lost time adjuster. Even if it is a medical only file, if you have some red flags (developed through your root cause analysis), ask for the file to be moved from a medical only to a lost time adjuster. The lost time adjuster can give you a more detailed action plan to follow.
- 7-Day Plan – Within the first 7 days, the employer must make sure that the adjuster receives all of the necessary paperwork. Ideally, this will be done as quickly as possible, but giving it a hard deadline of seven days will ensure that the adjuster has sufficient time to review the file before the 21 days are up. Our Claims Action Plan worksheet will give you the outline you need to follow for the 7-day action plan.
- 21-Day Plan – Your job doesn’t end upon reporting the claim. The adjuster should take all of the information you sent and make a compensability decision within 21 days. They should always communicate the compensability decision to you so you understand why the claim has been accepted or denied.
Implementing a Claims Action Plan
Because workers’ compensation claims are so time-sensitive, you need to make sure that everyone in your business is aware of the plan and the claims process. You don’t want anyone to have an excuse to say, “I thought someone else would do it” or “I didn’t know that was my job.” Make sure to include these points in your claims action plan:
- Who will be responsible for initiating and continuing the claims process. You probably should designate one person as the claim manager, but also have a backup trained in case the claim manager is not available. In addition, it is often overlooked, but if you have multiple locations or multiple shifts within one location you need to train claims coordinators. The claims coordinator’s job is to initiate the claims process and hand then hand the file over to the claim manager. Failure to implement this framework could be a huge cost driver for your organization.
- What your employees should do. It’s not just about reporting the claim and communicating with the adjuster. Make sure that every employee knows their rights and responsibilities. Hopefully this is an ongoing effort during the year but when a claim happens it is critical that the employee understands his or her rights and responsibilities. A written document on this can be a huge benefit. We have a employee rights and responsibilities handout for all 50 states in our risk management library.
- Keeping everything in writing. The plan should be in writing, and every aspect of the claims process should also be kept in writing. This will help your employees with the process in the present and future, and it will keep a record of everything in the chance that a lawsuit develops. Be sure to keep your file in chronological order so it will be easy for you to track the life of the claim. This will also make it easier for you to conduct a claims review with your insurance carrier or TPA.
- What to do after the 21 days. Once you hit day 21st day, your work is not completed. The 21-day action plan is meant to start the claim on the right track, but keeping it on track after the 21 days is critical.
Here are some tips for keeping the claim on track:
- As we mentioned earlier, keep the file in chronological order.
- Utilize our Claims Action Plan Worksheet.
- Always keep the adjuster apprised of employee work status.
- Always follow up with the employee’s medical appointment. If the employee is out of work or on transitional duty, you should expect a work status report after every visit. This is critical to reducing lost time days.
- And, of course, follow up with your return to work process.
About Compass RMS
The risk management firm Risk Management, Inc. has specialized in workers’ compensation since 1996, creating the CWCP (Certified Workers’ Compensation Professional) program in 1999 and the P4 process in 2000. We launched our Compass Risk Management platform in 2008 and recently released version 4.0. For more information about our services, give us a call at (770) 534-2042 to speak with one of our consultants.