If an employer has a high exposure workers’ compensation claim, which scenario is more attractive?
- Close the claim file, reduce the reserve to ‘paid to date,’ and watch the case fall off the experience modification calculation [i]
- Service the claim for additional years
Obviously, the preferred action would be the first. While several things can prevent a successful settlement, the use of professional administration is not one of these items. In fact, employers are more often leveraging the benefits of professional administration to assist in settling claims.
Medical care after settlement often requires an injured individual to manage ongoing or long-term treatment and prescriptions needed for their injury. Professional administration is a third-party service that helps individuals manage their future medical funds after settlement. An administration service provides access to potential discounted drug, provider, and medical equipment pricing, as well as technology that provides a hassle-free experience with medical care, and a dedicated team of representatives to answer questions about all aspects of healthcare needs after settlement.
Often, there are misconceptions about a Professional Administrator’s role, particularly surrounding how they can assist in closing claims.
Professional Administrators Take Over AFTER the Claim Is Settled
For more than three years, the Centers for Medicare and Medicaid services has “highly recommended” that settlement recipients consider using professional administrators. Getting the best outcomes for all concerned involves having the right partners and being well informed on the use of professional administration.
One misconception about professional administration is that it requires ongoing assistance from another party – the claims examiner, the insurer, and the TPA. It doesn’t!
Professional administrators can be involved in the settlement process to help smooth the path. However, their real work begins after the claim has settled.
In other words, the professional administrator takes over after the claim has settled. The files are closed, off the books, and the ‘management’ of these claims falls solely to the professional administrator.
The professional administrator’s role is to take care of the injured worker, making sure he has information and access to the best medical care, and helping extend his settlement money to last his lifetime. The professional administrator is, in effect, the manager of the injured worker after the claim has closed; the insurer/TPA closes the file, and all other previous parties to the claim are no longer involved. The professional administrator becomes a trusted resource for the injured worker to reach out to for help.
This applies whether the claim is closed via a lump sum payment to the injured worker or a structured settlement. It takes effect as soon as the injured worker signs up as a member with the professional administration company.
“Once the membership agreement is signed, and the funds have been transferred, the adjuster’s files are closed out and, if challenges arise for the injured worker around authorization of care or billing, it’s not the adjuster’s responsibility, it’s ours going forward."
“Once the member agreement and documents are signed and the account is funded with the settlement amount — then you’re done!” explained Nicole Chappelle, VP of Settlement Solutions for Ametros, on the impact for the insurer/TPA/employer.
The injured worker gets continued care after settling his claim with support from the professional administrator. There is no further involvement for the claims examiner, nurse case manager, or any others associated with the insurer/TPA/employer.
“It comes off of the payor’s reserves, or the reserves go down to ‘paid to date,” Chappelle said.
“That case will eventually fall off the experience modification calculation. It’s a closed case.”
WCRIB California states, “Once the WCIRB determines a business is eligible for experience rating its experience modification is calculated by comparing the actual losses to the expected losses. Actual losses are the medical and indemnity claim costs resulting from a work-related injury that an insurance company has paid or expects to pay in the future. Expected losses represent a business’s projected losses for the industry in which it operates.”
By resolving the case via a settlement, the loss is removed from the claims history and is not calculated into the employer/carrier(s) projected costs in the future. This is beneficial to the employer when seeking coverage. The idea is that it’s a win-win to close lingering claims by involving a professional administrator into the settlement process. By resolving the case, the future risk is taken off the books, which is a benefit to the employer, TPA, or carrier, and provides a service to injured workers to extend and protect their funds through medical funds management.
Each settlement is unique, and some cases require more support than others to help all parties in in a settlement come to an agreement. Involving a professional administrator ensures that the injured individual is provided a dedicated resource after settlement to support their ongoing needs without any additional intervention.
Settling workers’ compensation claims at the appropriate time and handing it over to a professional administrator is the best scenario for the injured worker and the parties who have been involved with the claim. While the idea is fairly simple, there may be nuances that can be confusing.
If there is any confusion on post-settlement obligation on a specific case, a good professional administrator will consult with those involved to address any concerns regarding case specificities and discuss transitioning the case to the administrator after settlement to ensure closing the file is simple and successful.
If you’d like to learn more about common professional administration misconceptions and their realities, look out for future misapprehensions we address about the use of professional administration in subsequent articles.
[i] According to WCIRB California’s learning center, “An experience modification, which is expressed as a percentage, compares the loss or claims history of one company to all other companies in the same industry that are similar in size. Generally, an experience modification of less than 100% reflects better-than-average experience, while an experience modification of more than 100% reflects worse-than-average experience. Accordingly, an experience modification that is greater than 100% usually increases the cost of an employer’s workers’ compensation insurance premiums, while an experience modification that is less than 100% usually decreases the cost of an employer’s workers’ compensation insurance premiums.”
Source: WCIRBCalifornia. California’s Experience Rating System. https://www.wcirb.com/guide-to-workers-compensation/experience-rating