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Variable Cost of Risk Evaluator

Marsh Advisory's proprietary variable cost of risk tool for workers’ compensation programs that provides a comparison of claims administrators based on the estimated net variable costs charged per year. This tool is designed to assist you in identifying which workers’ compensation vendor(s) can best help you improve your financial outcomes. While claim-administrators comparisons are commonly based only on unit costs such as claim handling fees, bill review fees, and other administrative fees, these costs make up a small percentage of the variable cost. By providing comparisons of claims outcomes, we offer a more accurate way to compare administrators and reduce program cost.

Who It's For

  • Clients who have retained Marsh Advisory to place their workers’ compensation programs.
  • Marsh Advisory workers’ compensation clients who are evaluating costs charged by claims administrators prior to selection or contract renewal.

What You Get

  • A detailed comparison of estimated variable costs charged by claims administrators, including medical cost outcomes and claims administration fees.
  • An assessment of total cost outcomes to help you select the most appropriate claims administrator.
  • Valuable information for negotiating with claims administrators to reduce costs.
  • An innovative cost analysis tool available only from Marsh Advisory.

Service Highlights

One of the biggest challenges a company faces is how to control the variable costs of its workers’ compensation program. Differences in claims administration philosophy, policies, and procedures have made it difficult to accurately compare the total cost outcomes of competing administrators. We assists you with a consistent and accurate evaluation of claims-administrator cost outcomes during workers’ compensation placement or claims administrator selection. We uses actual data from competing claims administrators to level the playing field and provide side-by-side comparisons of estimated net variable costs. Our tool calculates anticipated workers’ compensation variable costs in two key areas—medical costs and claims administration fees.

More Accurate Estimates of Medical Bill Review Outcomes

The bill review service provided by claims administrators is intended to reprice medical bills to state mandated or usual and customary allowances. However, not all bill review programs are the same due to differences in procedure and software. In addition, not all claims administrators have the same network providers or the same discount arrangements. As a result, the total medical costs you pay may vary significantly among vendors.

  • Our tool uses a claims administrator’s medical bill review outcome data and estimates your net medical costs with that vendor by applying your specific geographic distribution, claims history, and exposure information.
  • The comparative breakdown of total medical cost outcomes can help you evaluate how well an administrator reprices medical bills, allowing you to better assess your total cost of risk and negotiate favorable terms.

More Precise Claims Handling Fee Calculation

Total claims handling fees vary based on the definition of “indemnity” or “medical only” claims and the price set for each type. These definitions can vary greatly among administrators, resulting in significantly different claims-handling costs.

Our tool estimates the total number of indemnity versus medical-only claims for a particular administrator by considering the vendor’s own definition of claims. This gives you valuable information about the projected total fees you might expect from different administrators.

The Value For Your Organization

With Marsh Advisory, you can better understand and manage the variable costs of your workers’ compensation program, including the claims-handling and medical-cost outcomes. By analyzing your variable costs, you gain a powerful tool for selecting appropriate vendors and better controlling your total cost of risk.