KPIs and Metrics to Measure and Manage Contractor WC

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 17th 2014
Famous Football Quotes
“Winning isn’t everything, but it beats
anything that comes in second.”
“Winning isn’t everything, it’s the only
“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.”
“Success is not forever and failure isn't
“The road to Easy Street goes through
the sewer.”
“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
Lombardi on Winning
“If you’re not keeping score, you’re
“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
Metrics & KPIs
Process of Establishing Metrics and
Primary Metrics
Secondary Metrics
Key Lagging/Current/Leading Indicators
Establishing Metrics for the Contractor
Metrics & Key Performance Indicators
Metrics: A method of measuring something
Key performance indicator (KPI) is a type of
performance measurement/metric:
 To evaluate performance of particular
 Rely upon a good understanding of what
is important to the organization
 Depends on the department measuring
the performance
Metrics & Key Performance Indicators
 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
 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
 Metrics
 Lagging KPI: Last year we generated 450 Lost Time
 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.
Primary Metrics
Direct measurement (usually $$ or #)
Clear correlation
Normalized for payroll/sales/employees
Developed where applicable
Historical data needed
 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
Secondary Metrics
Indirect measurement (usually %)
Unclear correlation - an assumption
Further mining is needed
 Lag Time - 24 hour contact
 Claim closure rate
 Percent of PPO penetration
 Percent of savings from Medical Cost Containment
Lagging Indicators
Past results without
consideration of the
activities that influence
the results, “after-thefact.”
Workers' Comp
Experience Rating
 OSHA recordable rate
 Total lost workdays
 Average cost per claim
Current Indicators
Feedback on present
Daily record of
End-of-shift record of
Daily job safety
 Daily # of claims
 Daily # Lost Time
Leading Indicators
Metrics which can predict
future performance based
upon past and current
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.
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
Factors To Consider When Setting
How will it benefit me?
How difficult is it to accomplish?
Is the data valid?
Clear as Mud!
Total Claims By Year
LT claims per $1K payroll
#Open LT Cases Per $1K payroll at 12-24-3648-60
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
% 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, 510, 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
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
Measure what’s important!
or Actuarial Report
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
What are the 3 reasons for
having fewer measures?
 It's less work
 It's more effective
 More people will read it
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?

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