22 Aug Does Your Claims Administrator Make the Grade?

It is very wise to question the accuracy of your monthly loss runs because many different hands touch the data that creates the results for your loss runs, for example: the claims administrator who submitted it to the insurance carrier, the initial screening-claims adjustor, and the supervisor. The list goes on and on, leaving the door open for human error. Absolutely every dollar out-the-door is gone, and this affects your bottom line..

Ask, and then verify, when evaluating the performance of your claims adjustors. 

Are claims:

  • handled promptly and effectively?
  • properly verified?
  • properly documented?
  • governed by appropriate claims handling and control procedures?
  • departments complying with procedures in place?


  • Are payments and reserves accurate?
  • Are payments adequate, or excessive?

Because, every claim is different, it takes a seasoned staff to manage all the various nuances of a claim file. To perform a claim audit, the team should have the experience and credentials to make the proper evaluations. Typically, the team members should have years of hands-on experience in the claims arena. Note: several independent firms that provide this service do so, on an outsourced basis.

The auditor should have set criteria to judge the performance of the adjustors. He should be able to distinguish the strengths and weaknesses of the job to-date. 

A comprehensive audit should include the following:

Reporting: Verify that first reports of injury are made promptly.

Caseloads: A critical factor in claims handling is the caseload of the adjustors. Backup support and the make-up of the caseload should be taken into account.

Staffing: Does the claims-paying company have experience and adequate personnel?

Contact with claimants: The adjustor should contact the claimants within the first 24 hours of receiving the report?

Medical payments: To avoid duplicate payments, medical bills should be paid within the first 25 days to avoid the second billing cycle kicking in causing the adjustor may pay the same bill twice. Late bill payments also jeopardize goodwill in the medical community.

Diary system: An effective system to track all the activity on the claim.                              

This will allow: 

  1. a) open files for claims supervisors
  2. b) contact with claimants 
  3. c) the ability to check the status of open reserves
  4. d) prompt closure of the case.

Investigation: Although not every claim requires an investigation, one should be mandated when there is a question of fraud, subrogation, or compensability.

Temporary Disability Payments: The weekly disability payment should commence without delay. The carrier could face fines levied by states if payments are late. In addition, payments should cease as soon as the claimant returns to duty.

Denials: Careful investigation is needed prior to a denial of benefits. A hasty denial may entice the claimant to seek legal counsel.

Medical Management: Your professional employer outsourcing firm can often influence the choice of medical providers. This can have a dramatic effect on the final costs of the claim. Did the carrier negotiate with a medical care network?

Subrogation: When a negligent third party causes claims, the claim should be subrogated. Sometimes a timely process, but a substantial amount of the claim may be recovered.

Reserves: The reserves should be set at the ultimate expected final payout and reviewed frequently throughout the duration of the claim. 

Litigation: Close contact with defense counsel should be maintained throughout the life of the claim. The carriers should make all attempts to limit the number of litigated claims.

Rehabilitation: A well-structured rehab program can get claimants back to work and

temporary disability payments stopped.

Medical Cost Containment: All medical bills should be reviewed to make sure that the fees charged are in line with state fee schedules.

If you are planning an audit of your claims department by an outside party, ask for a detailed

breakdown of the services that they provide and verify that they spend adequate time on each file being audited.

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