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Keeping Score: KPIs and Metrics to Measure and Manage Contractor WC Claim Programs Joe Picone, Claim Consulting Practice Leader Jeff Seibert, National.

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Presentation on theme: "Keeping Score: KPIs and Metrics to Measure and Manage Contractor WC Claim Programs Joe Picone, Claim Consulting Practice Leader Jeff Seibert, National."— Presentation transcript:

1 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 17 th 2014

2 Famous Football Quotes Quote 1.“Winning isn’t everything, but it beats anything that comes in second.” 2.“Winning isn’t everything, it’s the only thing” 3.“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.” 4.“Success is not forever and failure isn't fatal.” 5.“The road to Easy Street goes through the sewer.” 6.“When we get fancy we get beat.” Who said it? A.Don Shula B.John Madden C.Paul “Bear” Bryant D.Vince Lombardi E.Woody Hayes F.Dick Butkus 1

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5 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.” 4

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

7 6 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 Metrics & Key Performance Indicators

8 7 Metrics  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. Metrics & Key Performance Indicators

9 8 Metrics  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. Metrics & Key Performance Indicators

10 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 9

11 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 10

12 Lagging Indicators 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 11

13 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 12

14 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 Q1 2013 vs. Q2014 show that we’ll incur $500K more costs in 2014. 13

15 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

16 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?

17 EMR Total Claims By Year LT claims per $1K payroll #Open LT Cases Per $1K payroll at 12-24-36- 48-60 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 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 16 % LDFs: Comparison at 12-24-36-48-60-72 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 Clear as Mud!

18 Measure what’s important! 17

19 18 or Actuarial Report

20 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 19

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

22 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? 21

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