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Part I: Tackling Compliance Challenges with New Technologies
By Alfred Faber, National Account Executive, wcPrism, ISO, and Nick Floeck, Sales Consultant, wcPrism, ISO
In a recent web seminar, Al Faber and Nick Floeck shared their insights and expertise about some of the biggest compliance challenges that carriers face today and how analytics may be able to offset or mitigate some of those challenges. Here are some excerpts from that seminar. (This is Part I of a two-part series.)
AF: The discussion of analytics is popping up everywhere — from the financial services industry to the healthcare industry and finally to workers compensation. Analytics holds much promise in the way we look at data and use it to make critical business decisions.
Let’s start with an analogy. Imagine that the workers compensation industry is the ocean. A cluster of icebergs represents compliance reporting. Now your task is to navigate safely to the other side. Conventional wisdom suggests that the shortest distance between two points is a straight line. And from the surface, it may look like navigating through the icebergs by taking the shortest route is pretty straightforward.
In the workers comp world, this is the equivalent of relying on legacy technologies to make decisions that will impact the future of our business.
Unfortunately, it’s only when we’re able to see what lies beneath the surface that we understand the impact of those decisions. To navigate safely through or around the icebergs, we really need a pair of underwater goggles, which we’re going to call business intelligence and analytics.
Now let’s take a look at the biggest compliance issues facing carriers and see how business intelligence and analytics can help.
Identifying data-quality issues, such as missing data elements, and determining corrective action
AF: When I think of compliance issues, the first thing that comes to my mind is poor data quality. Using traditional technology and business workflows can make it difficult to take a proactive approach to ensure the quality of your data and determine causes of issues after the fact. Depending on how your business is set up, determining whether your problems are systemic or just a gap in the collection of data at the intake level can require a lot of effort.
NF: In regards to compliance, your data may look like it’s populating your output files correctly, but there can be mild underlying issues you’re unaware of until they compound, creating a bigger issue down the road. A strong business intelligence [BI] platform can help you identify those not-so-easy-to-recognize issues before and after file submission by providing the ability to organize your data logically. When there is a problem, a BI platform offers the ability to drill down into the details of your data to determine what the root cause may be.
For example, say you’re receiving multiple errors on job class code. Is the issue that one of your adjusting offices is not collecting job class code at all? Or is it that the job class codes are being collected but coded as SIC codes when the state requires NAICS codes? Either way, the end result is an error in that field.
To take it a step further, is this happening at one particular office or do you have an enterprisewide problem? A BI platform can help you bridge that gap and make business decisions accordingly.
Coordination of organizational data across a broad enterprise and coordination of multiple external data streams across third-party entities
AF: While these issues are related, each represents its own challenge. When trying to coordinate organizational data across a broad enterprise, there are challenges facing both the parent company, which is trying to stay on top of data quality and compliance across multiple subsidiaries, and the subsidiaries, which are trying to meet the technical demands set forth by a parent. The other issue is the challenge of coordinating data flowing outside the company, such as from third-party administrators and medical bill review companies.
NF: Depending on the size of your organization, this can be a very difficult task, especially if the data needs to be coordinated from multiple sources. A strong BI platform allows you to consolidate and maintain all the data in one place. Once the data is organized, you can look at it in a global fashion, making it easier to create outputs for compliance and identify problems.
Using a traditional or fragmented method for data collection in which you can have multiple TPAs, medical bill review companies, and other data sources, you may know there is a problem but not know where to pinpoint it. From a management perspective, using a BI platform is helpful in tracking data back to the actual collector to help monitor how effective a particular third party is at doing its job.
State data edits are growing in sophistication, and keeping pace with those changes can be a struggle for carriers
AF: Big changes keep coming that require carriers to reconfigure the way they do things. For example, a few years ago, the state of Massachusetts began requiring that carriers balance aggregate financial calls to unit statistical data and that both of these reports balance to annual financial statements.
Given the fact that most organizations store this data across disparate systems, this balance can be difficult for carriers to track or obtain.
By design, the BI platform is engineered to be a single source of the truth. With an integrated data warehouse, it serves as a proactive mechanism for measuring data consistency.
NF: BI platforms provide a logical and sophisticated way to query your compliance database, giving you the ability to institute new changes to your source system for new types of requirements and proactively identify gaps in the data you’re collecting, so that you are always in compliance.
Compliance penalties are becoming more common and are increasing in severity
AF: Clearly, the best way to avoid fines is to track compliance success or failure proactively. Today, error management is too often handled on a one-up basis without regard for trends in poor data quality. We believe that there is a better way and that there are tools to help.
NF: Because compliance is such a difficult thing to keep up with and carriers can be fined so heavily for noncompliance, we believe cube technology should be used specifically for tracking the operations of compliance efforts.
With cube technology, you can analyze and drill down into the different accepted, rejected, and pending acknowledgments to make sure your workflow is as streamlined as possible and to identify any holes where improvement is needed. You can also create your own sets of summary data outputs to compare your daily activities and help identify the best approach to error management.
Cube technology allows you to see how quickly you’re sending out different reports, when they come back from the state, what types of issues or errors you’re running into, and how quickly you’re making corrections and resubmitting the data. As states continue to become more stringent in their reporting requirements and develop more compliance outputs, taking advantage of cube technology is going to become even more essential for carriers.
Internal development and maintenance of a BI platform requires specialized, and often scarce, technical resources; justification of these resources may be difficult to illustrate
AF: These two issues definitely feed off of each other. You see, a business intelligence platform is a very complex thing. Internal development of a BI platform requires specialized, and often scarce, technical resources, and of course the request for these resources may be difficult to justify.
NF: It’s important to consider that a vendor-supported model for analytics provides the direct benefit of OLAP [online analytical processing] technology without the associated cost of owning it internally.
Different users have different needs for the same data
AF: Throughout your enterprise, different business functions use the same data for quite different jobs. For example, your adjusters, actuaries, and chief compliance officer have three very different perspectives on the value of the very same data sets.
NF: In this case, a BI platform actually combines a versatile front end and the flexibility necessary to satisfy a wide range of data users. A versatile front end can be used by the light user for quick access to scheduled reports or by the power type user to create measures and dimensions to drill through data sets in real time. This allows your organization to look at the summary level and the detail level of your data — or both — at the same time.
AF: In summary, compliance reporting represents a challenge to so many, requiring coordination on a massive scale across an entire industry. Compliance depends on the ability of all parties involved to deploy and maintain stable, yet flexible, systems. And it requires data reporters to stay on top of many different data standards that can vary significantly by state. Compliance reporting for workers compensation is daunting and can be a very expensive proposition.
NF: But there is an upside. Workers comp compliance has been around long enough for data reporting standards to become more refined. This refinement has allowed the industry to start collecting data more accurately and to clean up gaps in processing, which leaves us all with more mature data sets. And even though the task can feel like it’s getting increasingly difficult to coordinate, the tools being developed are increasing in power and scope as well, allowing us to do things with our data and processing that we weren’t able to do before.
In Part II of this discussion in the next issue of Perspectives, Al Faber and Nick Floeck will delve deeper into analytics and BI platforms and look at day-to-day uses of new technologies for the workers compensation field.
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