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Biggest not always best with workers comp claims systems

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Workers compensation claims management systems vary widely from vendor to vendor, say professionals who evaluate the systems for self-insured employers, brokers, insurers and third-party administrators.

Among other significant differences, the systems vary in how easily they adapt to a purchasers' business model, how intuitive they are to navigate and how simple they are to configure without requiring vendor programming modifications.

It pays, therefore, for self-insured employers to know what to look for when purchasing a claims management system from vendors eager to tout their products' capabilities, the claims system consultants add.

While the products differ greatly, vendors also have divergent business models. Some are small, independent startup companies, while large, established brokers also provide some of the best-selling claims systems, said Anita Schoenfeld, a Dallas-based senior consultant and national practice leader for risk management information systems at Tillinghast, a business unit of Towers Perrin.

But a vendors' size or business affiliations do not guarantee their product has state-of-the-art capabilities or offers the best fit for a particular employer's business needs, Ms. Schoenfeld said.

"There are small applications (developers) out there that are extremely good and may be right for you," Ms. Schoenfeld said.

Nor is a recognizable brand a guarantee that the vendor will stick around, added David Duden, national practice leader-risk management information systems for Deloitte Consulting L.L.P. in Hartford, Conn.

"You would think that the larger company or the broker sponsored (system) might have more stability, but I'm not sure that is the case," Mr. Duden said.

"There have been very large companies with large clients that have simply said, 'We are no longer going to support that product anymore,"' Mr. Duden continued. "So the size of the organization, or who is behind it, sometimes has very little to do with the viability of the company or how much longer they are going to support those products."

Additionally, a system purchaser might obtain more research and development benefits from a startup company with few clients, Mr. Duden said. In contrast, an established system provider with several hundred clients may have to expend so much of its resources supporting an older product that it limits the amount of time and money it can devote to research and development.

Look for systems that are easily configurable by the employer and are available on platforms provided by an application services provider, Ms. Schoenfeld advised.

In some cases, the company selling its claims system is also the application service provider. But the providers often are third parties that maintain servers and allow self-insured employers and others, such as TPAs, to access the claims application and data via the Internet.

The evolution of application service providers has allowed employers to forgo large capital investments in system hardware and data processing staff, Ms. Schoenfeld said.

An easy-to-configure system allows employers to change data fields to input information specific to their business, create a drop-down menu or run reports without having to contact the vendor to customize their product, Ms. Schoenfeld said.

Because employers increasingly want greater control over their data, a rule-enabled system is also a key consideration, added Mr. Duden.

Rule-enabled means the system allows the purchaser to, for example, determine routing and access to claims and which claims should be flagged for fraud analysis rather than going through a vendor to make such changes.

Because of consolidation, there are now fewer claims system vendors, and those that garner respect are producing products that are easier for users to configure without requiring vendor programming changes, said Mark Heinemeyer, president and chief executive officer in Dallas for P2P Link, which electronically connects claims payers' systems with medical providers.

The easier-to-use systems offer another advantage over older models in that they allow users to connect to outside data and software designed to augment their claims systems, Mr. Heinemeyer said.

Increasingly, employers want to connect their claims systems to outside data sources, such as those providing diagnostic and analytic information that can help predict when a claim might be fraudulent, according to Deloitte Consulting.

While vendors are moving to make their systems easier to manipulate, there are still plenty of products requiring vendor programming to make changes, observers say.

Some vendors may claim their systems are easily configurable, but that may not be the case, Ms. Schoenfeld said.

Vendors with systems that need to be customized to perform certain functions might also boast that the work required on their part is minimal, when in fact it can be substantial, Ms. Schoenfeld added.

"You need to look very carefully because a lot of the vendors will say 'oh yes, we are highly configurable,' but you have to sit down with them and actually go through certain types of tests."

One test Tillinghast puts vendors through involves asking them to perform several functions to see how easy or difficult it is for their system to accomplish the tasks, Ms. Schoenfeld said.

Mr. Duden said he checks to see how well a system helps meet rating agency reporting requirements and state regulations for reportable accidents.

"It will help you meet the needs of regulators, but it also says to us that (the vendors) have considered all data types that need to be in the system to process claims," Mr. Duden said.

It remains difficult to measure how intuitive a system is to operate, Mr. Duden added. But one good question to consider is how steep the learning curve might be for staff members with 10 or 20 years of experience managing claims. The answer to that question often requires knowing the culture of the company and the demographics of the people who will use the system, he said.

While "fully functional" workers comp claims management applications are often purchased separately from risk management information systems that are used to manage several lines of insurance, some large, self-insured employers maintain "fully-functional" claims management systems that are a part of their larger RMIS systems, Ms. Schoenfeld said.

They are considered fully functional because they allow tasks such as claims data consolidation, data management and risk management analytics all within the RMIS system.

Some employers, however, chose to leave claims management functions to their insurers or TPA.

Downers Grove, Ill.-based The ServiceMaster Co., for example, purchases a high-deductible workers comp program from Zurich Financial Services. The insurer also provides ServiceMaster with TPA services, said Greg Hoff, the residential homes services company's director of risk management.

But Mr. Hoff uses his risk management information system for a variety of workers compensation functions.

The employer, for example, downloads workers comp claims information provided daily by Zurich. That way the RMIS system, which also tracks other insurance coverages such as general liability, allows ServiceMaster to review claims activity and assure Zurich is adequately complying with the employer's return-to-work program.