Fair Compensation: System Cuts Wait on Claims

The New York State Workers' Compensation Board is investing in document management to eliminate costly paperwork associated with claims processing and adjudication.

by / November 30, 1998
Will 1999 be the year that bureaucracy dies in state government? It's not likely, but a case can be made that a huge step has been taken toward ending the bureaucratic flow of paper that permeates agencies. That step was taken earlier this year in New York, where the state Workers' Compensation Board began rolling out a document-management system that, when completed, will integrate virtually every type of information needed to process and adjudicate a worker's claim for benefits. The $50 million system will be one of the largest of its kind in state government, and is expected to shave $500 million from the $5 billion in annual unemployment insurance costs.

It's true that other state compensation agencies use imaging to process claims, and there are agencies that have replaced paper-based processes with information systems. Too often, however, these solutions stop short of completely automating the entire business process. For one reason or another, a vital link in the chain remains enmeshed in traditional bureaucracy, negating some of the automation project's biggest benefits.

But the move by the board represents one of the most aggressive efforts to date at overhauling how information is processed from top to bottom. Yes, the board still must process paper. As a government agency serving the public, they can't get rid of it entirely. What the board did, however, was take advantage of technological trends affecting networking, software and enterprise computing to create a nearly paperless work environment that will produce significant benefits.

While it's still too early to tell whether the board's project will fully succeed, the agency appears to have in place the necessary components for realigning its entire business process for workers' compensation. The key is a full-fledged investment in imaging, workflow and document management.

Scanning Farm

The project, the Claims Information System, expands the board's existing imaging system to include case management and, through workflow, to make case documents accessible to board judges and other employees. More than 1,400 employees will have access to 29 million documents.

The imaging system eliminates the paper-based case folders in which the agency once stored, administered and processed workers' claims for benefits, employers' reports of accidents and illnesses, medical reports from physicians and reports from insurance carriers and self-insured organizations. By scanning all these documents into electronic case folders, the board has significantly reduced the time spent on filing and routing. It has also ended the problem of mislaid and lost folders.

These benefits are typical of what happens with an imaging application. But the board decided to push the envelope by using imaging to conduct business in an entirely different manner. For starters, the board didn't hire new workers or redirect existing employees to the task of scanning and indexing documents. Instead, it farmed the job out to QCSInet, a scanning facility in Binghamton, 134 miles southeast of Albany. There, workers scan tens of thousands of documents per day, index them according to case number and claimant name, and then transmit the data and images over high-speed T1 lines to optical disc jukeboxes and an Oracle database in Albany.

With the old paper files, the board staff handled cases with an assembly-line approach, each worker performing a task once the folder physically reached his or her desk. With electronic file folders, however, work is queued up and routed automatically, and multiple tasks are performed on the same folder at the same time.

Again, simultaneous or parallel workflow is typical of many imaging systems. but the Workers' Compensation Board has taken the workflow process several steps further. While claims are processed at nine district offices scattered around the state, injured workers, their attorneys, employers and insurance carriers can view the electronic folders at an additional 30 service centers. Interested parties now have far less distance to travel to view a claim while it's being processed or reviewed.

At the same time, judges throughout the state have access to the electronic folders and can adjudicate claims using the same workflow system. Cases that were sometimes kept open for weeks because documents weren't available when the judge needed them are now processed within a few days.

According to Barrett Russell, the board's deputy executive director, the new system will shave months off the life of a typical case. "That's going to add up to huge cost savings for the insurance carriers, who have to pay for all this," he said. The reduction in costs affects unemployment-insurance rates, which in New York have dropped 40 percent in five years. While other factors have contributed to that decline, Russell believes the document-management system will help keep rates low.

Like any state agency, the compensation board relies on an elaborate series of forms, rules, laws and terms that workers had to follow to process case claims. Any change took time to work its way through the process and inevitably led to inconsistencies, thanks to old paper-based distribution methods.

Because the board wanted its state-of-the-art document-management system to work as efficiently as possible, it installed an online documentation system called the Baseline Procedures Application. All employees have access to the statewide system, which runs on Lotus Notes, a groupware software program. The baseline application is similar to an Internet Web site, with terms and procedures that have hotlinks to documents explaining the latest meaning or procedural change. The database is updated nightly, and workers can file suggestions for improvements using the system's e-mail program.

Streamlining is also taking place at the front end. Despite the huge investment in imaging, the board is determined to reduce the amount of paper that must be scanned. Insurance carriers have been asked to voluntarily start submitting proof-of-coverage claims by electronic data interchange. This follows computer-to-computer processing of insurance forms. This application is expected to have a modest but meaningful impact on the document workload.

Big Test, Big Benefits

Starting with the district office in Albany, the board is rolling out the document-management system across the state, with completion expected sometime in 1999. Active cases for each district are scanned in Binghamton prior to going live. The project's big test will come when the district office in New York City is added to system. Right now, QCSInet scans an average of 120,000 documents per day at its facility. When New York City is added, the count will skyrocket to 1 million. According to Russell, the entire system will cost approximately $50 million, of which $10 million is for image conversion and development of the new service centers. Software development will cost less than $5 million, Russell said.

What does that get the board? Actually, the main benefits will be felt on the other side of the desk -- by workers and their employers. "The injured workers will have their cases resolved much faster. They will get their compensation benefits more quickly and they will get back to work faster," Russell said.

The average worker gets about $300 per week while on unemployment insurance. Not surprisingly, many want to get back to work and a full paycheck as quickly as possible. "Any delay in processing their claim hurts them," Russell explained. "With [the new system], we can shave weeks off the time it takes to resolve and settle a claim."

Employers also benefit from the system. With workers returning to the job faster, businesses spend less on temporary help to fill in for the injured worker. Russell believes the system will help reduce the time it takes to resolve the typical claim by as much as two months. Over time, the cost
savings on claims from the document-management system could reach as high as $500 million, he said, adding, "We've already reduced insurance rates by record-breaking numbers."

Once the system is fully operational, the board can expect to see those rates remain low, he said. "That's good for attracting and retaining businesses in New York state."
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