Bundled vs. Unbundled: The Organizational Cost of Human Capital

What is popular is not always right. What is right is not always popular. I remember this banner draping across the chalkboard of Mrs. Miller’s second-grade class at Nixon Elementary when I was a child. More valid words then could not have permeated my mind, and they continue to echo. Good thing I went into workers’ compensation. At this point in my career, I feel it is imperative to educate on areas lacking transparency. I hope to provide light into improving the human capital landscape for employees everywhere. How so? Read on. 

Many organizations today are faced with the same issue: organizational culture. We continue to move out of the pandemic into the new world of what has yet to come, including an increased remote workforce, greater flexibility, and a generational shift starting to take rise. As organizations take these factors into account to make their culture an attractive and sustainable sense of community, it is essential to be aware of outside factors that may inhibit this progress. One of these issues to bring to light is one which stems from claims, and more specifically, workers’ compensation claims.

If you are an employer, workers’ compensation claims are inevitable regardless of industry. How these claims are handled and how partnerships are drawn stems from power in the employer’s landscape; however, many are not aware of this, nor are they educated about this front. Employers hold power and should be asking questions!

The risk management aspect of claims administration looks to the “group-think” mentality of the insurance agent or brokerage firm, knowing the vital needs of the specific employer based upon the agency's niche or brokerage. Often, products and services relating to the workers’ compensation claims (and total claims landscape) process are lumped together into a “bundled” product. While this can make matters easier to manage or handle from a risk management standpoint, one poor experience with a workers’ compensation claim can change the trajectory of an organization’s culture moving forward.

An employee' sexperience while going through the workers’ compensation claims process is unique because it tends to stem from a vulnerable space. An unforeseen circumstance arose, and now a void needs to be filled while the body needs time to heal, rest, and rejuvenate. How the claims adjuster interacts with an injured employee can substantially impact how this employee feels towards their organization. It does not stop with the administrator of the claims. It spills over into all parties and partnerships with which this employee will interact throughout the recovery process and the claim's lifecycle.

If we look at workers' compensation, how employees feel toward their employer can be impacted in many ways. The relationship builds when the first injury report is filed with the claim’s administrator. Understanding the information needed at the onset and the expression of what is yet to come to alleviate the fear of the unknown with an employee can come from the claims administrator and be re-emphasized by the employer. Employers should remain active in this process because what you do not know can and will hurt you long-term. Staying active in the community extends beyond Human Resources or a workers’ compensation coordinator to the leadership levels of employees. 

During the beginning stages of a workers’ compensation claim, the employee interacts with various medical providers, the possibility of a pharmacy if prescriptions are prescribed, and medical billing on both aspects from physician to pharmacy. Understanding these parties are an extension of you as the employer is the first step to being aware. This experience is just the tipping point.  

An employee who is injured wants to receive the necessary medical treatment to secure a diagnosis and a plan to recover. In my almost two decades in the workers’ compensation claims space, I have learned that employee does not care who the claims administrator is, what medical clinic they are treating with, the pharmacy benefits manager they are requested to use, or the company who will process the medical bills because this experience is an extension of the relationship with their employer. If something falls through the cracks, the employee believes these issues fall to the employer to help fix the situation, and they are right. There is no blame shift because, at this point, the employer has selected the representation of their organization, and we want the best for our people, do we not? The employer holds power for what they will and will not tolerate for their people during this time. And that can make or break your culture, one we all want to continue to build positively. 

If a pharmacy transaction will not go through because the employee was not issued a first-fill card, what does the pharmacy benefit manager do about it? As an employer, I would find a way to fix the situation immediately. In 2023, there are a plethora of technology options, and one I have chosen to use in my prior claim’s life is the text-to-fill choice. If an employee is having a difficult time with their prescription medication filled at the pharmacy, does your current pharmacy benefits manager (PBM) have a solution? Some companies can text the injured worker a card for immediate fulfillment to resolve the situation. A quick key to resolving the issue should be the bare minimum we request for the well-being of our employees. How much say do you currently have with your claims administrator regarding who administers your pharmacy benefits program? Does it matter? Ask one of your injured employees about their experience filling prescriptions, and you can find out. 

The pharmacy benefits manager (PBM) is one example of a ‘bundled’ option in the claims administration role. Yes, it is easy to have all services and offerings bundled under one umbrella where the administrator has all these established relationships. And also…buyer beware! Do these established relationships mimic the mission, vision, values, and culture your organization reflects? They should! And if they do not, pick your relationships. 

There are times when bundled programming comes as the result of the more significant kickback the claims administrator can receive from a specific partnership. Why does that matter to an employer? These relationships are not flushed out through optimal outcomes but more so as a revenue enhancement for the claims administrator. These financial kickbacks are not passed along to the employer but are sold as a ‘one-stop-shop’ for ease of use at the risk management level. Tell that to an organization with a less-than-desirable outcome based upon the relationships dictated by their claims administrator. Human capital matters as we continue to see the ongoing talent crisis present in all industries. 

Another example is medical bill review. When an employee treats medically after sustaining an injury, information is needed to process the medical bill for payment. The employee may receive an invoice if the information is entered incorrectly or put as secondary insurance. Receiving an invoice for medical treatment related to the work injury concerns injured employees. If they do not communicate to you, the employer, or their claims adjuster that this has occurred, the medical provider could send the bill to collections. 

When an issue like this attempt to be fixed after notifying the claims administrator, if all things go well, the invoice is paid, and life is grand. There are also circumstances where this situation could be better. For example, the adjuster approves the invoice for payment. Yet, the bill review company denies the charge for an unforeseen reason. Some states require medical bill payment within 30 days of receipt under workers’ compensation; therefore, the responsiveness of the medical bill review provider is imperative. 

Sometimes a bill can get ‘stuck’ between the processing for payment cycle and the request for reconsideration cycle. At the same time, the injured employee continues to receive an invoice or request for payment. This relationship can cause anxiety and angst from the seat of the injured employee. Employees may feel that their medical treatment is not being paid and come to resent the employer because the payment of these services acts as an extension of the employer. 

Asking the right questions about the partnerships and relationships established with vendors is imperative to move an organization’s culture into a positive focus. The questioning and soliciting of responses can assist in illustrating a clear picture of employee perception of the employer. Understanding the partnerships and the ‘why’ behind specific partnerships is a need employers should be asking. Most people do not know the options or where to begin to look or ask questions. Awareness is the first step. 

If you are in a bundled program, why? Is it easier? Is it cost-effective? And look under the hood... is it cost-effective? How have your employees described their experience? How does it reflect on you as an employer and the perception of your organization? There are times when it is much easier to keep all claims-related matters in one space; there is the right way, and then there is the easy way. Make sure you know the difference. At least start by bringing awareness to this concept and exploring the various options' financials. 

If you are not in a bundled program, make sure to rethink your method to how you choose your strategic partnerships with your vendors. What does their impact look like on your employees? What data can they showcase to support what they tell you? Does anything they do make your life easier as a result? Does anything showcase the employer's stance as having done something extra, more, or valuable to your employees? What do this vendor's mission, values, and organizational culture showcase? Is it in alignment with what your organization stands for and hopes to achieve? 

We need more transparency to better educate our employers on one claim's impact on an organization. It starts with culture, from cultivating awareness about what matters to employees. The rest is just details.

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