San Diego Revamps WC Claims Process with Software and Best Practices

Cost containment in the California workers’ compensation market can be difficult, but particularly if an organization is using an outdated claims system and obsolete business processes.

In Nov. 1999, the City of San Diego realized its legacy claims system, which was more than 15 years old, could not support the efficiencies required by its worker’s comp claims process. In addition, many of the processes themselves needed to be readdressed.

“We clearly needed a new claims system, but we couldn’t just buy software to wrap around our current business processes. Instead, we had to update our operations and system according to the latest best-practices,” Greg Bych, deputy director of Risk Management for the City of San Diego, said.

New processes, new software
Rather than immediately develop system requirements, the City first hired a risk management consultant to perform an operational assessment and gap analysis. This helped the City identify the best-practices that would improve their overall claims process.

“Our main goal was to replace inefficient practices with procedures that would deliver greater effectiveness,” Bych said.

One of the operations the City wanted to refine was its injury reporting. When employees were hurt, they filled out a form and gave it to their supervisors, who then filled in their portion and forwarded it to the payroll department; the form was then sent via interoffice mail to the workers’ comp claims center. It was a highly inefficient process that needed to be streamlined.

Efficiency gains were critical. As a full-service City, San Diego processed a high volume of claims from many departments, such as Parks and Recreation, Police, Fire, Water and Sewer. City adjusters handled an average caseload of 250 claims, exceeding the industry average of 150 claims. As such, any efficiency gains achieved via technology and best practices would greatly assist in managing this workload.

The operational assessment and gap analysis also helped the City determine the requirements for the new claims system.

“We needed a system that would track all claims activity, drive efficiency and improve our results,” Bych said.

The selection team
Bych’s job was to ensure the City took a balanced approach to the project. “The City knew from previous implementations that if it relied solely on technical staff, then the application might not meet the needs of the end users. As such, we wanted to have technical staff, management and end users fully involved. We also knew that if a system fixed one set of problems, it could potentially create another set of issues. It was our job to objectively manage the project such that it remained balanced between management’s needs, technical needs and the claims adjusters needs throughout the evaluation, selection and implementation process,” Bych said.

In the end, the City had a relatively large team of 14 people, including claims adjusters, clerical staff, management, and IT system administrators from the Risk Management Department as well as technical staff from San Diego Data Processing Corporation (DPC), the City’s non-profit corporation responsible for citywide IT operations and implementations.

“Central to this team was the strong working relationship between project manager Mary Davis and claims and insurance manager Pat Brogan. These two leaders helped to analyze system tradeoffs, manage project challenges and maximize the overall return the City would receive from this investment,” Bych said.

The evaluation process
Since the new claims administration system would affect all departments and employees Citywide, it was classified as an ‘A List’ project, meaning it was funded from a pool of city entities and required a formalized and extensive evaluation process.

“We partnered with San Diego DPC to formalize the evaluation process. The final request for proposal (RFP) was detailed and specific with 80 to 90 pages of mandatory requirements, which thoroughly spelled out system requirements,” he said.

In the final assessment stage, the City analyzed vendors to ensure they were well-established and had in-depth knowledge of system service providers, business practice issues, laws, and the overall claims management process.

In the end, Valley Oak Systems (VOS) was the winning respondent, successfully running the gauntlet of the vendor selection process and emerging as the best solution for the City.

A successful implementation
In March 2002, the City began its implementation of the VOS software. This included data conversion and mapping, establishing several new data interfaces, extensive testing, and comprehensive end user training.

The system went “live” in April 2003, and immediately provided many new efficiencies. Nonetheless, the claims department experienced a huge culture shock, as many procedures were new.

For instance, bill review for the City was previously a manual process. Now, it was automated, streamlining the 3,000 medical payments made each month. Another best-practice the City implemented was an improved injury reporting process. They established a call center with an 800 number available seven days a week, 24 hours a day. The center interfaced with the VOS system on a daily basis.The injury-reporting process, which once took up to four weeks, now took 48 hours.

“Our call center is now notified within 24 hours of when an injury occurs. This ensures that injured workers can rapidly receive the treatment they need, and allows our adjusters to manage the claims earlier in the process, one of the most significant claims best-practices,” Bych said.

Keys to success
The success of the implementation centered on a real team effort that developed among the City of San Diego, San Diego DPC and Valley Oak Systems.

With all the team members involved, it was critical that the City have several strong leaders and project advocates, who drove the selection and implementation, and escalated action items when necessary.

In particular, the respective project managers helped keep the project on track, including the IT leadership of Mary Davis, the claims management expertise of Pat Brogan, and the project management of Valley Oak’s Karen Sookikian.

“Excellent relationships developed across all entities involved in the project and was key to its success. Having the new claims system and processes in place has been a good experience. Eventually, everyone will fully adapt to the changes, and we’ll reap tremendous benefits in efficiency,” Bych said.

Robert Faulhaber is president of Valley Oak Systems, and Greg Bych serves as Deputy Director of Risk Management for the City of San Diego.

Topics Claims Workers' Compensation Risk Management