0. Keeping Score: KPIs and Metrics to Measure and Manage Contractor WC Claim Programs
Joe Picone, Claim Consulting Practice Leader
Jeff Seibert, National Director Casualty Claims
September 17th 2014

1. Famous Football Quotes
Who said it?
“Winning isn’t everything, but it beats anything that comes in second.”
“Winning isn’t everything, it’s the only thing”
“When I played pro football, I never set out to hurt anyone deliberately - unless it was, you know, important, like a league game or something.”
“Success is not forever and failure isn't fatal.”
“The road to Easy Street goes through the sewer.”
“When we get fancy we get beat.”
Don Shula
John Madden
Paul “Bear” Bryant
Vince Lombardi
Woody Hayes
Dick Butkus

4. Lombardi on Winning “If you’re not keeping score, you’re practicing.”
“Once you have established the goals you want and the price you’re willing to pay, you can ignore the minor hurts.”
“…we will all be judged on one thing: the result.”

5. Overview Metrics & KPIs Process of Establishing Metrics and KPIs
Primary Metrics
Secondary Metrics
Key Lagging/Current/Leading Indicators
Establishing Metrics for the Contractor
Pitfalls
Takeaways

6. Metrics & Key Performance Indicators
Metrics: A method of measuring something
Key performance indicator (KPI) is a type of performance measurement/metric:
To evaluate performance of particular process
Rely upon a good understanding of what is important to the organization
Depends on the department measuring the performance

7. Metrics & Key Performance Indicators
Lagging KPI: Last year we gave up 32 TDs
Leading KPI: This year, through 4 games, we’ve given up 15 TDs. If this keeps pace, we’ll allow 60 TDs this year.
Diagnostic
Passing Yards Allowed Per Game
Rushing Yards Allowed Per Game
Passing TDs Allowed Per Game
Rushing TDs Allowed Per Game
Sacks/Interceptions
Solutions: Data showed that we aren’t stopping the run, we’ll change formation, change personnel, come up with different defensive scheme, etc.

8. Metrics & Key Performance Indicators
Lagging KPI: Last year we generated 450 Lost Time Claims
Leading KPI: Last year at Q1, we were at 113 LT Claims, now at current Q1, we’re at 150 LT Claims. If this keeps pace, we will be at 600 LT Claims.
Diagnostic
LT Claims per $1,000 payroll last 3 years
LT Claims By Location
LT Claims by Cause
LT Claims By Body Part
Solutions: Loss Control, review RTW program, review layoff procedures, determine what happened at Location XYZ.

9. Primary Metrics Direct measurement (usually $$ or #) Clear correlation
Normalized for payroll/sales/employees
Developed where applicable
Historical data needed
Examples:
Closed Lost Time Claim Cost at 24 Months
Closed Medical-Only Cost at 24 months
Developed Cost per $100 of payroll
AFR per 100 FTEs

10. Secondary Metrics Indirect measurement (usually %)
Unclear correlation - an assumption
Further mining is needed
Examples:
Lag Time - 24 hour contact
Claim closure rate
Percent of PPO penetration
Percent of savings from Medical Cost Containment

11. Lagging Indicators Workers' Comp Experience Rating Modifier
Past results without consideration of the activities that influence the results, “after-the-fact.”
Workers' Comp Experience Rating Modifier
OSHA recordable rate
Total lost workdays
Average cost per claim

12. Feedback on present activities.
Current Indicators
Feedback on present activities.
Daily record of incidents
End-of-shift record of incidents
Daily job safety observations
Daily # of claims
Daily # Lost Time Claims

13. Leading Indicators
Metrics which can predict future performance based upon past and current history.
We forecast that claim counts will be 20% greater than last year.
Total claim costs, based upon Q vs. Q2014 show that we’ll incur $500K more costs in 2014.

14. Benefits of Establishing the Correct KPIs/Metrics
Better outcomes when combined with solutions
Balance sheet protection
Supports the continuous improvement model
KPIs/Metrics + “0” Change in Process = “0” Change in Results

15. Factors To Consider When Setting KPIs/Metrics
What?
Why?
How will it benefit me?
Who?
How difficult is it to accomplish?
Is the data valid?

16. Clear as Mud!
By Department by Total Incurred Claim Conversion rate from MO to LT By Treatment Type PPO Providers Spend Specialty Network Spend Non-network Spend/Treatment Lag/Strat. Non-network spend, % total paid Non-network spend, % of annual spend Non-network spend, % of first 90 day spend Non-network spend, MPN/HCN State Physical Therapy Paid DME Paid Diagnostic Imaging Paid PBM Paid: Brand PBM Paid: Generic PBM % Brand to Generic PBM Paid Physician Dispensed PBM % Physician Dispensed PBM Paid Outside Formular PBM% Paid Outside Formular PBM Opiods Paid PBM Opiods Paid as % of total PBM Hospital Paid Outpatient Hospital Paid Inpatient % Hospital Paid Outpatient to Inpatient TCM Paid Average TCM Paid Per LT Claim FCM paid Average FCM Paid Per LT Claim UR Fees Paid Average UR Fees Per LT Claim Peer Reviews Paid Average Peer Reviews Per LT Claim LTWD Per LT Case RWD Per LT Case
EMR Total Claims By Year LT claims per $1K payroll #Open LT Cases Per $1K payroll at Medical only Claims per $1K payroll Total Incurred By Year Total Paid By Year Total Medical Incurred By Year Total Indemnity Incurred By Year 18 Month LT Incurred vs. Final Incurred: Goal 80% Total ALAE Incurred By Year Total Medical Paid by Year Total Indemnity Paid By Year Total ALAE Paid By Year Average Cost of Medical Paid Average Cost of Indemnity Paid Average Cost of ALAE Paid Average Cost of Lost Time Claim Average Cost of Medical Only Claim # LT Claims vs. Medical Only Claims Indemnity Inc. vs. Medical Incurred Indemnity Paid vs. Medical Paid ALAE Incurred/Total Incurred By Year Closing Ratio Total Claims By Year with Savings from Frequency Reduction AFR/$1MM Payroll Last 5 years AFR/Occupation
% LDFs: Comparison at Months for both Paid/Incurred LDFS
Month by Month or Quarter by Quarter Variance Report=  Change in Developed Losses by Year vs. Change by Quarter.
Repeater Analysis
Obesity Analysis.
Aging Analysis
Average Claim Cost by Commuting Distance
Comparison Developed ALAE + Medical + Incurred as % Pie Chart Comparison Medical as % by Year
Comparison ALAE as % by Year and Total and Average:  Broken down into Categories:  Legal, Surveillance, etc.
Comparison Indemnity as % by Year and Total and Average:  Broken down into Categories:  TTD, TPD, PTD, etc.
Lag Time Analysis
Lag Time Average Cost by Group, 0-3, 4-10, 10-30, over 30 days
Loss Stratification By Average Cost of Claim.
Tenure, Average Cost by Group, 0-1, 2-5, 5-10, 10 and over
# claims reported per by Tenure Group, 0-1, 2-5, 5-10, 10 and over.
By Body Part by Average Cost
By Body Part by Count
By Body Part by Total Incurred
By Cause by Average Cost
By Cause by Count
By Cause by Total Incurred
By Department by Average Cost
By Department by Count

17. Measure what’s important!

18. or Actuarial Report

19. The Pitfalls Skip metrics Skip to metrics Fail to consider impact
Too many metrics
Not measuring correct things
Not understood by users
You don’t have solutions

20. What are the 3 reasons for having fewer measures?
It's less work
It's more effective
More people will read it

21. The game is a week away, what can you do tomorrow to get ready?
What results is team producing in the past, today?
What’s the line…what does the leading KPIs look like?
What’s important based on a review of all the data?
What’s not important based on a review of the data?
What solutions will you implement, what’s your plan?
When are you going to debrief on the game?

23. Questions?