Steve Schmutz is a successful entrepreneur with an extensive technical background and more than 20 years of experience in software design and implementation. He has founded and run two software companies, including Origami Compliance (formerly, ClaimWire, LLC), which integrates with any claims management system to provide automated workers’ compensation forms, compliance resources, and regulatory information.
Q: Why is the “build or buy” question important to consider?
A: The “build or buy” decision isn’t limited to software. It’s a question that has been around forever. Homeowners evaluate whether to pour their own patio or have a professional do it. Budding artists wonder if it would be best to create their own website or have a more experienced web designer do it. But when it comes to enterprise software, the stakes are much higher than many other situations. Making the wrong decision can cost millions of dollars and put your project years behind. We’re talking about the type of mistake that can, quite literally, take a company down.
Q: Where should an organization begin?
A: They should start by creating an exhaustive requirements list. Making the build-buy decision before knowing its requirements is like arriving at the airport before knowing where you’re going. The list should be as thorough as possible. Creating this is absolutely worth the effort. Doing so provides a true picture of the scope—breadth, depth, and length—of a project. Without an understanding of these details, it’s impossible to make an informed decision.
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Complying with Bank Secrecy Act/Anti-Money Laundering (BSA/AML) regulations is a major challenge for financial institutions. Those found with deficient practices are subject to receive a Matter Requiring Attention (MRA) notification. The Office of the Comptroller of the Currency (OCC) states, “MRAs communicate specific supervisory concerns identified during examinations in writing to boards and management teams of regulated institutions. MRAs must receive timely and effective corrective action by bank management and follow-up by OCC examiners.”
This combined requirement of timeliness and proof of effectiveness makes delivering an acceptable response particularly challenging. Unfortunately, MRAs are not uncommon. The article Get to Know the “5 Cs” — BSA Matters Requiring Attention notes, “Most banks receive some sort of finding or ‘Matter Requiring Attention’ (MRA) or ‘Matter Requiring Immediate Attention’ (MRIA) regarding their BSA Program during a BSA exam.” Given the likelihood of receiving an MRA, and the burden associated with the response, developing a robust process to handle them is essential.
This post will examine how the right Enterprise Risk Management (ERM) system is uniquely suited to not only help efficiently and effectively respond to the challenges associated with MRAs, but also (when properly configured) help minimize them.
To understand how this is possible it is useful to “learn from the mistakes of others.”
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An analysis of the 2017 Public Entity Employee Safety & Loss Control Survey by Frank Altiere III, RIMS fellow and president of PMA Management Corp., highlights the importance of strategic loss prevention. “Now more than ever, the best strategy is to take a holistic approach to risk management to prevent claims from occurring in the first place with loss control strategies,” he writes. The most successful safety strategies cited in the survey involved employee safety training and improving the safety culture.
While 3 out of 4 survey respondents indicated that they planned to conduct more training, a majority also indicated that their safety programs were either underfunded or significantly underfunded. With that being the case, it’s hardly surprising that respondents listed “Developing strong safety attitudes among managers and supervisors” as the top challenge to workplace safety.
Risk pools to the rescue
Given the desire to improve safety culture through training and the reality of shrinking budgets of members, the services of loss prevention specialists associated with risk pools are especially timely. The ability to deliver training to member organizations that may not be able to otherwise afford it is a tremendous benefit. To truly change a culture, however, it may take more than training. Fostering the engagement of employees will go a long way toward developing the strong safety attitudes members demand.
“A hallmark of a strong safety culture is employees who are engaged in safety and are empowered to advocate for a safe culture,” Altiere notes, citing studies that confirm the dramatic effect engaged employees have on safety incidents. While these benefits are well documented, the steps necessary for actually engaging employees seem far less obvious. “Keep in mind that employee engagement must be earned, and that leadership is critical to engagement,” Altiere warns.
Pairing loss prevention resources with audit technology could be the key to creating engaged employees for your members and fostering sustainable safety cultures that deliver lasting improvement.
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Greater efficiency in handling workers’ compensation claims can contribute to a reduction in claim costs and improved claim outcomes. These gains are quickly undone when errors result in penalties for the violation of state-specific workers’ compensation laws.
According to the article Avoid Workers’ Comp Penalties and Other Pitfalls, two of the five most common errors that result in penalties occur when filing First Report of Injury (FROI) and making mandated benefits payments to claimants. The use of workers’ compensation technology solutions can reduce the likelihood of making these errors, in addition to streamlining the claims process.
1. Simplify the process of completing First Report of Injury (FROI) forms
As mentioned in Improving adjuster efficiency and accuracy with an integrated forms solution, the process of locating a workers’ comp form and then keying claim details into form fields for every claim can be tremendously inefficient. This administrative burden reduces the time available for staff to engage in other activities that can have a positive effect on claim outcomes. This approach to populating forms also has the potential to add costs, including fines for late filing, errors, or the need to correct and resubmit forms.
The article states: “A reliance on manual data entry increases the likelihood of error and exposes the organization to the costs of bad data. In most cases, the work is also duplicative, with claimant and accident details having already been keyed into the claim system.”
The submission of inaccurate or incomplete claim details in the FROI can have consequences beyond the potential for incurring penalties. In the article First Report of Injury Accuracy Critical for Workers Comp Success, Rebecca Shafer, an expert in the field of workers’ compensation, points out that multiple parties typically use the information in the FROI when setting up their workers’ compensation files. As a result, even minor errors on the reports can be copied, creating complications down the road. And while these errors can be fixed by re-submitting a corrected form, Shafer writes that doing so “is a waste of time for all the parties involved. Plus, when the First Report of Injury is inaccurate or incomplete, it can often be exploited by the employee’s attorney.”
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An abundance of data accumulates in the claims management process. And while that data relays critical facts about each claim, that’s not the only insight it can provide. Data, no matter how seemingly unimportant, has the power to unleash valuable insight into your overall claims strategy. As the article Effective Data Discovery Can Be A Difference Maker For A Company’s Long-Term Success says, “Data that you may not even take into consideration can end up giving your company great insight after using proper analytics and data discovery techniques to make sense of it.” The failure to engage in data analytics means your organization may miss out on potentially rich data that sparks innovative strategy.
Benchmarking is one of the most powerful forms of data analytics. Used to measure competitor success and find areas for your organization to improve, benchmarking thrives on an abundance of data. With the right risk management information system (RMIS), you’ll not only be able to seamlessly collect troves of essential data, but also use benchmarking and other data analytics tools to extract meaning from it.
How does benchmarking make your data meaningful?
Data analytics can improve claim outcomes and, in some cases, help to prevent future claims by identifying trends and outliers that may otherwise go unnoticed. Benchmarking, specifically, involves comparing your data and performance against the industry’s best, which helps identify opportunities for improvement and establish long-term goals.
For example, risk managers, insurers, TPAs, and others who work with workers’ comp claims benefit from the annual Workers’ Compensation Benchmarking Study, conducted by Rising Medical Solutions. The study goes beyond merely reporting how claims payers are conducting business and outlines “how organizations turn the challenges identified in the prior studies into solutions and action.” The report’s mission is “to advance claims management in the industry by providing quantitative and qualitative research that identifies what high performing claims payers are doing differently than their peers.”
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Taking the time to evaluate your RMIS technology can play a part in ensuring your long-term risk management objectives are met. Equally important is an honest assessment of whether the RMIS support you’re receiving is meeting your expectations.
With apologies to the relationship health quizzes available in magazines on display in supermarket checkout lines, your responses to the following questions may indicate that the relationship between you and your RMIS service team is in trouble.
#1 Has there been significant employee turnover?
For years, the users of prominent RMIS platforms have been forced to deal with service issues that stem, in part, from the departure of experienced RMIS support personnel. Rather than reaching a point of stabilization, M&A activity over the past year has been followed by rounds of layoffs, as well as account reassignment for the service team members who remain.
This turnover can leave you at a net deficit, as constant changes mean more work for you and your risk management team. As the article A Stranger is Calling: The impact of RMIS service team turnover points out, “a revolving door of service team personnel who need to be brought up to speed on the unique aspects of a RMIS and the risk management program it was put into place to support compounds the problem” of RMIS technology that may already be struggling to keep pace.
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Adverse safety events—some that lead to serious harm—occur every day, affecting people across entire health systems. The ability to collect and analyze this data is crucial for preventing future incidents and improving patient safety. Yet, according to a 2008 study, “only 13% [of U.S. hospitals] have broad staff involvement in reporting adverse events.”
With a full schedule of patients and life-or-death situations a part of daily life in hospitals, reporting efforts, not surprisingly, may end up taking a back seat. Sometimes, however, the issues that impact reporting run deeper. Hospital staff may fear repercussions from reporting safety events. In other instances, the reporting process may be so convoluted and time consuming that, despite good intentions, staff is discouraged from doing so. Or maybe, the biggest issue comes after reporting, with hospitals failing to share or apply healthcare analytics in a way that positively impacts the quality of care provided and makes staff feel a part of something bigger.
No matter the reason, any issue that negatively impacts patient safety event reporting has consequences for every person associated with a hospital or health system—especially the patients. In fact, the ECRI Institute listed “standardizing safety efforts across large health systems” as one of the top 10 patient safety concerns for 2019. Even events that seem minor have the potential to result in grave harm. The Joint Commission reported medication error and product and device events in the list of top 10 most frequently reported sentinel events in hospitals in 2018.
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Insurance carriers that rely on multiple-vendor application stacks to manage core functions such as policy management, billing, and claims administration may be placing limits on the strategic advantage IT departments can offer. As the number of supported vendors increases, more IT resources are forced to focus on managing application stacks rather than identifying and developing competitive technological advantages.
An Ivanti survey analyzed in The CIO’s Conundrum: Can IT Move From ‘Keep the Lights On’ to Creative Thinking? underscores the tension between maintenance and innovation. “In this survey, what became crystal clear was the counterbalancing of maintaining essential IT services with the desire to be bold and to act as a creativity dynamo.” Matthew Smith, President, Demand Generation at IDG Communications, notes that the survey results indicate that organizations “need to liberate their CIOs to think ahead of the curve rather than obsess over day-to-day operations. But today IT is all too often still regarded as a support function or information leaders are too stretched to drive competitive differentiation.”
Sandra Gittlen writes in Whittle down application sprawl, “out-of-control application stacks can jack up costs, introduce vulnerabilities, add to infrastructure complexity, jeopardize licensing and waste staffing resources.” This pulls resources toward the maintenance side of the spectrum and away from the strategic side. Glitten concludes, “IT’s value is not in supporting technology, but in understanding the business and using technology to achieve business goals.”
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Automation is great, except when it isn’t. Examples of the dark side include endless button pressing in automated phone trees that often conclude by yelling the word “operator” into the phone, and receiving form letters or emails containing incorrect, basic information. It’s no wonder the Aspect Customer Experience Index states that “nearly a third of consumers would rather clean a toilet than talk to customer service.”
Yet automation, when done well, remains a central tactic TPAs can deploy to gain competitive advantages in efficiency, accuracy, and resource allocation. When mismanaged, however, it can lead to impersonal service and damaged client relationships. The key to successful automation is to take advantage of technology’s benefits without losing the “human-centric” element. Kristin Smaby explores this concept in Being human is good business.
“In an era when companies see online support as a way to shield themselves from ‘costly’ interactions with their customers, it’s time to consider an entirely different approach: building human-centric customer service through great people and clever technology. So, get to know your customers. Humanize them. Humanize yourself. It’s worth it.”
In this three-part series we’ll examine how strategically balancing the human/automation mix can deliver a competitive advantage through:
- Improving customer service
- Enhancing employee retention/recruitment
- Boosting performance KPIs
Addressing these three initiatives from a human-centric perspective allows your organization to meet the personalized service expectations your clients demand, while gaining the productivity boosts smart automation delivers.
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