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Internet Claims Technology 
How Can It Improve Your Self-Insurance Program
By: Randy Wheeler, CEO, Valley Oak Systems
With many factors pointing to a prolonged hard market, many risk managers are attempting
to improve upon or expand their self-insurance programs. However, they
continue to be challenged on several fronts - the difficult economy,
rising health care and indemnity costs, increased severity and frequency
of claims, and a lack of leading-edge technology that could help
alleviate claims costs and process inefficiencies.
Excitement over the
Internet's role in addressing some of these concerns has increased, as
more risk managers, who were at first hesitant to adopt Internet
technology, are now seeing the Internet as a way to transform their risk
management and claims management processes. The Internet promises to
significantly improve communication and facilitate the sharing of claims
information among key stakeholders - including excess insurers,
employers, providers, nurse case managers and third-party
administrations (TPA).
Risk managers should be aware of the latest
Internet systems, including application service providers (ASPs),
browser-based applications, and Web services, so they can analyze the
potential benefits to their self-insured programs and become familiar
with possible barriers to implementation.
Latest Internet Technologies
The Internet has undoubtedly improved today's workflow and business
processes. As risk managers have felt increasingly comfortable with the
Internet in other areas of their lives, they have also begun to
implement the latest technology tools for their self-insurance programs.
The first critical step is to understand the various types of systems
available, and the advantages of each:
- Application Service Providers (ASPs). With an application service provider (ASP), self-insured
organizations gain access to state-of-the-art technology through
remotely hosted applications. Instead of paying for software licenses,
they can ÒsubscribeÓ to an application often based on the volume of
business or a set monthly fee. By utilizing an ASP model, self-insured
entities reduce their IT costs, and as a result, ASPs have gained
traction among selfinsured organizations in both selfadministered and
TPA-administered programs. Gartner Group expects continued growth in the
ASP market, estimating they will produce a $25 billion market for all
software applications in 2004.
- Browser-based Software. Browserbased
applications are specifically designed to run over the Internet, and as
the name suggests, they require only a browser to run. Middleware
products are not required, making it a more costeffective, secure and
improved Internet application model. With J2EE architecture, these
applications are platform-independent, meaning they run on Windows, UNIX
or any other operating system, and can be accessed from PCs, Macs and
personal digital assistants (PDAs).
- Web Services. Web services allow
disparate and diverse systems to communicate and perform business
functions over the Internet. Web services are still new, and as such,
many of the potential benefits and business uses are yet to be realized.
They will enable the insurance industry to conveniently communicate,
exchange information, and perform transactions - all at a reasonable
cost.
Internet as a Vehicle to Powerful Risk Management Capabilities
Self-insured organizations are now looking to the Internet as a way to
provide a real-time connection between critical information silos,
consolidate multiple data sources, and provide timely information key
decision-makers need to protect their assets and improve future
performance. In addition, today's Internet technology also allows
self-insured entities to achieve the following capabilities:
- Working in a distributed environment. Many self-insured organizations have
employees, managers, and claims operations scattered throughout the
country. These organizations need connectivity and communication with
all parties involved; as if these staff members were down the hall, not
clear across the nation. Coupled with proven technologies such as
document imaging, browser-based applications provide an effective means
to resolve these issues, allowing risk management and claims
professionals to work anywhere in the world regardless of the role they
play.
- Transparent integration of information: To busy risk managers,
convenience is of utmost importance. They want easy access to the
information they need, without being bothered with where the information
came from, how it was compiled, or what password to use. Browser-based
systems deliver critical information when and where it's needed most.
Transparent to the user, these systems seamlessly communicate and
exchange information as needed. Instead of having to access multiple
applications or Web sites, users simply retrieve what they need from one
convenient location. This saves an incredible amount of time, money and
hassle.
- Real-time notification for appropriate and immediate claims
response: By using browser-based business rules, an organization can
setup their application to immediately notify risk managers of an urgent
claim or loss through native Internet tools like e-mail, via wireless
notification to a pager, or cell phone. For instance, if a serious
accident occurred, the system could automatically notify key decision
makers, so they can initiate appropriate response measures. Realtime
notification also allows risk managers and executives to be better
informed, prepared for meetings, and compliant with statutory timelines.
Similarly, coverage compliance can be ensured through automatic
notification to excess insurers should an individual claim's financials
exceed specific reporting levels.
- Customization of risk management
reports. Under tremendous pressure to control costs, risk managers are
demanding a higher level of customization in their risk management
reports. In the past, risk managers had to request this information from
their IT staff or TPA. Browser-based reporting allows risk managers to
generate, as well as design their own reports without using Ôtechie'
reporting tools like Crystal Reports or a pre-set reporting Web page
with limited options. In this way, risk managers receive the specific,
drill-down details they need to implement timely and effective
interventions that save money and improve the bottom line.
- Meeting
unique needs. Clients utilizing Internet technology can fulfill their
unique business needs. One client's primary objective is to improve
standards of care. Another client's goal is to reduce IT costs, and
still another is aiming for increased efficiency. An important step in
obtaining truly ÒusefulÓ browserbased applications is for these
applications to be highly customizable to a broad range of users needs -
both technical and non-technical.
Internet Technology Streamlines
Workers'Comp Programs
Internet technology can be extremely useful to a
self-insured workers' compensation program. In workers' compensation,
the main goal has always been to obtain the best, most appropriate
medical care for injured workers, and return that individual back to
work as soon as possible. There are many ways that Internet technology
can facilitate these objectives through improved communications and
collaboration.
For instance, when a claim is first reported, accurate
information is critical to effective claims handling. By utilizing Web
services, tasks such as coverage confirmation, employment verification
and other validations can be performed in real-time. Browser-based
technology also allows these processes to occur, whether policy and
employee information is internal or external to the claims handling
organization.
A critical area in workers' compensation programs is
managing return-towork outcomes, as it affects the greatest areas of
cost, including indemnity and medical expenses. Nurse case managers are
now immediately notified of new injuries, so they can remotely
facilitate medical treatment and share information with adjusters until
medical oversight is no longer needed. Browser-based technology is the
infrastructure that enables and improves this collaborative effort.
In addition, browser-based technology ensures that proper communication is
occurring with the front line managers. These managers are critical to
ensuring that claims are promptly reported, injuries receive immediate
response, and return-to-work outcomes are improved. Since they are
literally on the front lines, they can also collaborate with adjusters
to make sure that injured employees follow medical instructions and
adhere to work restrictions, helping to avoid re-injury and additional
claims activity.
Communication with medical providers is also key to
successful outcomes. As such, employers are providing detailed job
descriptions, along with modified duty options through their
browserbased systems. This information is shared with the treating
physician to make an objective determination as to what capacity an
employee can return to work. These job descriptions allow providers to
create an appropriate treatment program designed to return the employee
back to normal duty, consistent with physical limitations that exist.
Today's risk manager also wants to get the most out of their TPAs and
other vendors to ensure their dollars are being spent wisely.
Browser-based software can be shared with a TPA, providing a means to
observe claims handling procedures, to oversee the efficiency of
operations, and to carefully audit performance measures. These Internet
systems allow risk managers to closely work with the TPA to achieve the
best results.
The Future of Internet Technology
The nature of Internet
technology can help self-insured entities institute effective claims and
risk management strategies. The quality of any initiative depends almost
entirely on risk managers receiving the ÒrightÓ information to do their
jobs effectively. The Internet is a powerful tool that enables
information access and communication that is a key to success in many
self-insured programs. Risk managers who use browserbased technology can
drive risk management initiatives with greater business intelligence,
simplicity, and control.
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Kevin Confetti