An Automobile Claims Handling Perspective
Leading property & casualty claims handling organizations know that comprehensive, consistent and accurate injury
management is crucial to the handling of bodily injury claims. Ever advancing medical inflation, increasing utilization,
changing customer demands, uncertainty in the medical insurance coverage market, a stringent legal and regulatory
environment and continuing soft market concerns all combine to create an environment in which it is critical for property
casualty insurers to manage injuries arising out of 1st and 3rd party automobile claims in a prompt, fair, cost effective
and service sensitive manner.
Traditionally the property casualty insurance industry has relied upon on a combination of highly experienced claims
adjusters and skilled nurse case management professionals to achieve these goals.
Leading carriers know that they must do more and that there is an optimal combination of people, highly efficient
processes and sophisticated technologies that is achievable—today—that will accelerate their abilities to deliver prompt,
consistent and accurate injury claims handling. With the right combination in play, an insurer can leap ahead in terms of
claims productivity, cost effectiveness and claims service delivery.
Carriers who fail to optimize their injury claims handling people, processes and technologies may find themselves
struggling to remain as efficient, effective, accurate and service sensitive as they wish to be—as well as opening up the
possibility that they may be overpaying medical providers millions of dollars each year and potentially jeopardizing their
insureds’ coverage limits and/or private funds by paying inappropriate amounts.
This paper discusses these issues, explores the criticality of resolving them, offers some important tips to keep in mind as
insurers look at technologies and technology partners to assist them in solving for these issues—and describes Mitchell’s
DecisionPoint Claimant Treatment Guide as a solution for insurers to consider as they seek to achieve and advance their
claim service delivery goals.
Note: while this paper explores this topic from an automobile insurance claims handling perspective, many of the
trends, techniques and potential recommended actions are applicable to the handling of any injury claim, regardless of
coverage or line of business.
The Current State
The medical management of injury claims being handled by casualty claims organizations typically consists of an
individual adjuster reviewing medical treatment plans, medical reports and billings manually and then doing their best
to ensure that treatment plans are appropriate and followed, required documentation is generated or received and
any co-pays are assessed. For some of these adjusters the tools at hand to assist them in these efforts are simply their
experience and their best judgment as to the relatedness of the treatment to the injury, appropriateness of type and
duration of the treatment to the diagnosis and whether the billed amounts are proper for the treatment rendered and
the medical service location.
Even if an individual adjuster can manage to make this all happen on an individual claim, or even over their entire
pending claim workload, there are several issues that insurers following this model should be aware of that will likely
impact their future claims handling success.
Diminishing Adjuster Resources
For years leading consulting firms and industry publications have been alerting property casualty carriers to a burgeoning
crisis in the claims community—an impending shortage of claims adjusters.
In 2006 Deloitte Consulting predicted a shortage of 84,000 adjusters by 2014.
At that time 70 percent of carrier adjusters were age 40 or over. When Claims Magazine revisited these numbers 2008,
they reported that 70 percent of adjusters were over 45 with 33 percent over 55 years of age and only 4 percent age 35
Claims Business Process Inefficiencies
Exacerbating the impact of a diminishing claims adjuster workforce are claims business process inefficiencies. In fact,
studies report that more than 40% of claims adjuster’s time is spent on activities that do not actively assist in bringing the
claim to a prompt and reasonable conclusion. These inefficiencies can lead to longer claim settlement times potentially
impacting customer satisfaction, loss and loss adjustment expenses as well as opening up the possibility of higher
Expanding, Evolving and Increasingly Complex Claim Handling Requirements
As if the diminishing number of adjusters and process inefficiencies were not enough, the modern claims adjuster must
also work in a rapidly evolving environment where workloads, jurisdictions handled and regulatory and/or company
claim handling requirements may be in constant flux. This is especially true in Personal Injury Protection (PIP) and
automobile no-fault jurisdictions.
In the State of New Jersey automobile PIP claims must be handled within strict standard courses of treatment called Care
Paths. The Care Paths provide the injured party’s health care provider with general guidelines for the treatment of soft
tissue injuries of the neck and back (referred to as “Identified Injuries”). The Care Paths also require that treatment be
evaluated at certain intervals called “Decision Points” (called Decision Point Review). The Decision Point Review process—
completed by an appropriate medical professional—evaluates all services requested in relation to the treatment of the
injury to insure the level of care the injured party is receiving is medically necessary for their injury.
In addition, the administration of certain tests—regardless of injury diagnosis—also requires Decision Point Review.
These are listed in N.J.A.C. 11:3-4.5(b) 1-10 and include such diverse items as needle electromyography (needle EMG)
“when used in the evaluation and diagnosis of neuropathies and radicular syndrome where clinically supported findings
reveal a loss of sensation, numbness or tingling.” However, “a needle EMG is not indicated in the evaluation of TMJ/D
and is contraindicated in the presence of infection on the skin or cellulitis.” This must be managed within the caveat
that “this test should not normally be performed within 14 days of the traumatic event and should not be repeated
where initial results are negative.” Providers and claims adjusters must also remember that “only one follow up exam is
appropriate.” There are nine other tests of equally impressive use parameters and restrictions.
In addition there are multiple diagnostic tests that PIP medical expense benefits coverage will not provide reimbursement
for such as spinal diagnostic ultrasound, iridology, reflexology, surrogate arm mentoring, surface electromyography
(surface EMG) and mandibular tracking and stimulation.
Away from diagnostic tests, there are additional pre-certification requirements for certain services, tests or equipment
that must be followed by the injured party and their medical provider in order for the injured party to receive maximum
reimbursement of these charges under their PIP coverage.
Making this situation a bit more complicated are parameters indicating that treatment in the first 10 days after an
accident and emergency care does not require Decision Point Review or Pre-certification. However, for benefits to be
paid in full, the treatment must be medically necessary—thus adding additional “when was the treatment undertaken
in relation to the injury?” and “was the treatment medically necessary?” complexity to the adjusters workload as well as
a need to make these determinations, quickly, accurately, defensibly and in a uniform manner.
The combination of a shrinking adjuster pool, inefficient processes and increasing regulatory complexity make effective
medical management a challenge on even on a single claim. Multiply these issues by the hundreds of claims in an
adjuster’s workload or the tens of thousands in an insurer’s claims book and the impact on the ability to execute prompt
and effective medical claim management can reach crises proportions.
Medical Cost Inflation
Over the last decade, health care costs have continued to rise at rates that significantly outpace inflation. According
to the Bureau of Labor Statistics, medical costs have grown at nearly twice the rate of the Consumer Price Index (CPI)
between 2000 and 2010. This is largely due to soaring hospital and pharmacy charges as well as increases in costs related
to medical technological advances and the overall costs of medical services. This dramatic increase in costs requires
Property & Casualty insurers to find new and innovative ways to control these costs while providing ever increasing levels
of customer service to their member communities.
Trends in Injury Claims Frequency and Severity (BI and PIP)
For a time, decreases in auto bodily injury (BI) claim frequency meant that auto insurers could rest slightly easier around
medical cost escalation trends—medical costs might be high, but the number of claims with medical costs was on the
downturn. That situation has changed; bodily injury claim frequency is on the rise.
For automobile insurers handling personal injury protection (PIP—sometimes known as “no-fault”) claims, frequency
and severity trends are especially significant. Comparing PIP and non-PIP (bodily injury) frequency, PIP claim frequency
is approximately 60 percent higher. Some, of course, but not all of this discrepancy may be attributable to claims being
resolved within PIP limits and not evolving to becoming 3rd party liability claims.
As well as shifting claim frequencies, average claim severities are on the rise and do not currently show signs of abating.
Research into medical treatment patterns indicate that these severity trends in automobile bodily injury claims are at least partially being driven by increases in:
The number of medical procedures undertaken by the injured party;
The charges related to each procedure undertaken by medical providers.
Resulting in an overall increase in average provider charges per claim.
Why it Matters—a Crucial Balance at a Critical Time
A carrier’s traditional response to these trends has been to increase their medical utilization review efforts. However—
absent any change in technology, tools or workflow—additional focus on utilization management tends to negatively
impact adjuster productivity by requiring more time on each claim and medical bill to examine appropriateness and
volume of medical care provided. This leaves claims management with the difficult task of balancing the efficiency of
their medical bill review processes with the effectiveness of those efforts towards assisting to better manage their book
of bodily injury claims.
Exacerbating this situation and limiting claim’s organizations to actually spend more time on medical management
processes are significant strains on the availability of claims handling resources which can force claims management
to focus on maximizing adjuster closed claim productivity; sometimes to the detriment of the actual management of
medical care related to bodily injury claims.
Carriers can—and have—looked to technology to assist them, but often struggle with smoothly integrating the wide
variety of cost containment tools required to effectively manage BI medical costs in to their existing systems and business
The combination of less adjusters, more demands on adjuster’s time, a wide variety of non-integrated systems to work
with and non-system supported claims business processes can lead to less than optimal claims handling and result in:
- Inconsistent evaluation or use of pre-existing condition information in recommending any restrictions on payment
approvals for medical bills submitted for consideration
- Inappropriate application of future care independent medical examinations (IME) restrictions to subsequent
medical treatment reimbursement requests
- Difficulty in accurately interpreting and uniformly applying guidelines defining appropriate medical care type,
duration and cost
Combining all of these challenges creates an environment where carriers’ claims organizations may become less
efficient, effective, accurate and service sensitive than they wish to be—as well as opening up the possibility that these
organizations may be overpaying medical providers millions of dollars each year. Additional concerns exist around
potentially jeopardizing their insureds’ coverage limits and/or private funds by paying inappropriate amounts (thus
eroding available limits) or providing inconsistent advisement and support of medical care and required procedures
leading to penalty co-payments that the insured must pay.
The DecisionPoint Claimant Treatment Guide
Mitchell Auto Casualty Solutions has developed a comprehensive solution that effectively addresses the challenges of
managing rising medical utilization at the same time increasing the overall timeliness, productivity and effectiveness of
the bodily injury medical review process.
The Claimant Treatment Guide™ (CTG) is a fully integrated medical management module within Mitchell DecisionPoint
and provides insurers with a series of advanced functionalities to better evaluate and handle medical bills related to
bodily injury claims.
CTG was developed in conjunction with top U.S. automobile insurers and effectively overcome the problems the industry
is facing today by allowing adjusters to:
- Consistently evaluate and apply appropriate medical utilization guidelines to claimants
- Ensure accurate restrictions or approvals of medical care related to pre-existing conditions
- Automatically enforce any IME restrictions relating to future medical care
- Efficiently process pre-certified medical treatment
- Increase productivity in reviewing medical bills through full automation of claimant- specific treatment rules
- Deliver focused management of bodily injury medical exposures by providing adjusters with true exceptions-based
medical bill review decision support
CTG has four core capabilities that deliver substantial value to the adjuster. These include:
- Development of general treatment rules
- Restrictions on pre-existing conditions
- Enforcement of IME findings
- Managing the pre-certification process
Setting approved treatment parameters or restrictions in the CTG is easy and intuitive. Treatment parameters are
established for each individual claimant based on the unique aspects of the injury. The restrictions applied by CTG may
include limitations around:
- Allowable current procedural terminology (CPT) codes
- Specific diagnoses
- Overall frequency or ultimate duration of approved care
- Use of IME benefit termination information (such as date of maximum medical improvement or the date benefits
CTG can apply these parameters or restrictions to automatically:
- Warn an adjuster when medical treatment exceeds established parameters
- Deny a line of a medical bill (or the entire medical bill if indicated)
- Refer medical bills to other specialized resources, such as nurse reviewers or SIU, for additional review, investigation
- Apply financial penalties on medical bills that violate pre-certification restrictions (such as in the State of New Jersey)
By using the CTG’s advanced business rules logic, adjusters can focus their attention on setting up appropriate medical
utilization plans and allow the CTG to enforce their claim decisions in the medical bill review process. Adjusters can be
confident knowing that the CTG will consistently and automatically apply their decisions, thereby reducing the risk of
overpayment to providers and increasing the adjusters overall productivity in making medical bill payment decisions.
Development of General Treatment Rules
The CTG’s general treatment rules allows an adjuster to uniformly apply the appropriate treatment parameters defined
by medical professionals based upon frequency of care, overall duration of care, location, and approved medical
specialty. This ensures that the treatments the injured party receives are:
- Delivered by the appropriate medical specialist
- Within the correct CPT code ranges for the type of care warranted
- Not excessive in frequency and exceed approved number of visits
- Not beyond anticipated timeline for recovery
- Accurate for those states or regional areas that mandate treatment restrictions either by type, frequency or duration
In addition to developing individualized treatment parameter for each unique claimant, the CTG can apply generalized
medical care guidelines and community standards for what constitutes appropriate medical care. These treatment
plan guidelines can be state driven or established using industry-standard medical protocols, such as Milliman™ or
Bandolier’s™ treatment plans.
Using standard medical care guidelines appropriate for most common injuries (e.g. neck sprains, lumbar strains), the
CTG can ensure adjusters are automatically prompted when the medical care provided exceeds established medical
utilization standards. Since these common diagnoses comprise over 80% of all automobile accident-related injuries, the
CTG allows adjusters to use pre-established guidelines to flag for only when medical care exceeds normal expectations,
thus enabling greater productivity and overall quality of the medical management practices.
Example Scenario: A claimant has suffered a minor soft-tissue injury and his physician has prescribed physical therapy
three times a week for six weeks. CTG gives adjusters the ability to set parameters that restrict approval of care to match
that physician’s directives and diagnosis. Treatment outside the physician’s orders is flagged for further adjuster review
or referral if necessary.
Restrictions on Pre-Existing Conditions
The Pre-Existing Conditions section allows an adjuster to enter detailed information about any injuries or ailments that the
patient had prior to the accident. Pre-existing injury information, such as prior diagnosis, provider information or date of
prior injuries is captured to further automate the review of medical bills. Any medical bills received for treatment associated
with these injuries can be automatically flagged for the adjuster to review or denied as unrelated to the accident.
Example Scenario: In a recent automobile accident the claimant injured her right leg, requiring medical care from an
orthopedic specialist. One year ago, the same claimant received chiropractic care for a soft tissue neck injury. To ensure
that the chiropractic care—unrelated to this latest motor vehicle accident—is not paid in error, the adjuster can establish
restrictions in the CTG to flag for medical care provided by that specific chiropractor, chiropractic procedure codes in
general, or other types of diagnostics or medical care not related to the treatment of the claimant’s right leg.
Enforcement of IME Findings
The IME Rules functionality allows an adjuster to set up approved medical care base on specific IME findings. By setting
parameters for the frequency of approved care, specific medical specialties, medical benefit termination dates or the
ultimate duration of appropriate treatment until the claimant reaches maximum medical improvement (MMI), the CTG
ensures that IME findings are consistently applied throughout the medical bill review process and substantially reduces
the risk of overpayment.
Example Scenario: Claimant has injured their back in an automobile accident. The claims adjusting team has requested
an IME to assist in determining the appropriate duration and type of medical care to achieve MMI. IME physician
examines the patient and determines that 4 more weeks of Physical Therapy with spinal manipulation are beneficial, at
which time the patient will reach maximum medical improvement.
CTG automatically disallows any treatment after the MMI date.
Managing the Pre-Certification Process
The medical bill review process can be especially challenging in states that require pre-certification of medical care
before providers can treat an injured party. In these jurisdictions, adjusters are required to apply the Managed Care
Organization’s (MCO) pre-certification decisions to the specific injured party’s care as well as managing any appeals that
the injured party may put forward within strict regulatory time-frames. This can be a complex and difficult process for
adjusters to execute accurately, consistently and within required time parameters.
CTG supports and streamlines the management of pre-certification required medical treatments by fully integrating
the MCO treatment plan into DecisionPoint’s bill review engine. This enables the uniform, accurate and transparent
execution and enforcement of the defined treatment plan as well as the automatic application of penalties or denials
for care outside approved parameters.
Example Scenario: Claimant has suffered a soft-tissue injury resulting from an automobile accident in the state of
New Jersey and is pursuing medical treatment within the terms and conditions of their personal injury protection (PIP)
coverage. Per state requirements, the treating physician has submitted a precertification request to the MCO requesting
approval for physical therapy treatment three times a week for a period of six weeks. The MCO approved this plan.
The Claimant Treatment Guide automatically recognizes and enforces any pre-certification restrictions for noncompliant
bills by flagging for adjuster review, denying payment and/or applying financial penalties if applicable.
The prompt, effective, reliable and accurate management of injury claims is a key priority for property casualty insurers in
achieving their claims service delivery goals. Diminishing adjuster resources, inefficient processes, a constantly changing
regulatory environment, increases in both injury claim frequency and severity combined with rapidly advancing medical
inflation are fueling insurer’s search for appropriate tools and techniques to meet their injury claims management needs.
Mitchell’s DecisionPoint Claimant Treatment Guide offers insurer’s the technology and process efficiency capabilities
they need to address and effectively handle the challenges they face in the handling of injury claims in a timely, effective,
efficient and service sensitive manner.